WSOl^ "^ajAiNii-awv^ ^omy^Q"^ '^.sodnvDJo^' ^tUBRARYO/c^ Aj^lllBRARYQ^ ,^>\E•UNIVERS•/A I- -^ ea "^AaiAiNa-Jwv^ '^tfojnvjdo^ '^^ojiivj-jo'^' &Aavaan#' ^>&Aavaan#' .^MEUNIVERy/A e — - "^JJHONVSOl^ vSclOSANCE ^/^83AINft RARYOc. ^^IIIBRARY <(513DNVS01^ ^^WeUNIVER% g ^t IIBKAMI c*/ ^J^UIBKARr %jnv3jo'«^ '^•yojiivjjo^ ^ 1 I/—' ^ ^itfojnvDjo'^ ^•lOSANCn^^ ^OFCAllFOff^jj^ ^ -^lUBRARYQ^, ^^^-UBRABYe?/ "^J^liONVSOl^ .^MEUNIVERy//v "^jajAiNrt-awv^ ^X?13DNVS01^ '%a3AINn3Wv ^^OJIWDJO'^ ^lOSANCnfj-^ ^OFCAllFOff;^ ^OFCAUFOR^j^ .5!flMINIVFR5"/A 5; ^j \ V ^ "^c^AHvaan-^ .!^EUNIVERy/A ^fJUDNVSOl'^ ^;J^t•UIJRARt•(>/ § 1 ir"^ CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE HEARINGS BEFORE THE COMMITTEE ON THE MERCHANT MARINE AND FISHERIES HOUSE OF REPRESENTATIVES SIXTY-FOURTH CONGRESS First Session ON H. R. 10500 A BILL TO ESTABLISH A UNITED STATES SHIPPING BOARD FOR THE PURPOSE OF ENCOURAGING, DEVELOPING, AND CREATING A NAVAL AUXILIARY AND NAVAL RESERVE AND AMERCHANT MARINE TO MEET THE REQUIREMENTS OFTHE COMMERCE OF THE UNITED STATES WITH ITS TERRITORIES AND POSSESSIONS, AND WITH FOREIGN COUN- TRIES, AND FOR OTHER PURPOSES FEBRUARY 10 to MARCH 9, 1916 WASHINGTON GOVERNMENT PRINTING OFFIOK 1918 COMMITTEE ON THE MEECHANT MARINE AND FISHERIES. House of Representatives. JOSHUA W. ALEXANDER, Missouri, Chairman. RUFUS HARDY, Texas. MICHAEL E. BURKE, Wisconsin. EDWARD W.SAUNDERS, Virginia. PETER J. DOOLING, New York. HENRY BRUCKNER, New York. LADISLAS LAZARO, Louisiana. WILLIAM S. GOODWIN, Arkansas. JAMES F. BYRNES, South Carolina. JESSE D. PRICE, Marj'land. CARL C. VAN DYKE, Minnesota. OSCAR L. GRAY, Alabama. DAVID H. KINCHELOE, Kentucky. WILLIAM S. GREENE, Massachusetts. ASHER C. HINDS, Maine. CHARLES F. CURRY, California. GEORGE W. EDMONDS, Pennsylvania. WILLIAM A. RODENBERG, Illinois. GEORGE A. LOUD, Michigan. LINDLEY H. HADLEY, Washington. FREDERICK W. ROWE, New York. J. C. Bay, Clerk. II n .^ 1^5 \ (^/X-^ LIST OF WITNESSES. Page. Bertholf, Capt. Ellsworth P., captain commandant, United States Coast Guard, Treasury Department 157-171 Benson, Rear Admiral William S., Chief of Naval Operations, United States Navy 239 Bush, Mr. Irving T., president of the Bush Terminal Co., New York 485-495 Barber, Mr. James, president Barber Steamship Co., New York. 539 Bhine, Capt. J. F., assistant manager Pacific Coast Steamship Co., Seattle, Wash 591 Baker, Mr. B. N., Baltimore, Md 609 Chamberlain, Mr. E. T., Commissioner of NaAagation, Department of Commerce 179 Childs, ^^r. Harris, export and import merchant. New York 532 Cowles, Mr. James L., president of the World Postal League, Washington, D. C. 665 Douglas, Mr. William H., chairman committee on merchant marine, Chamber of Commerce of the United States, New York 9 Ewell, Mr. James L., secretary of National Merchant Marine Association, New York 422 Farquhar, Mr. A. B., vice president of the Chamber of Commerce of the United States, York, Pa 161 Fahey, Mr. John H., ex-president of the Chamber of Commerce of the United States, Boston, Mass 455 Franklin, Mr. P. A. S., receiver International Mercantile Marine Co., New York 516 Gibboney, Mr. Stuart G., general counsel, Hudson Navigation Co., New York. 439 Gillett, Mr. J. N., ex-governor of California, San Francisco, Cal 561 Hampton, Mr. George P., editor Farmers' Open Forum, Washington, D. C 671 Humphrey, Hon. William E., Member of Congress from State of Washington. . 721 Ivj', Mr. Thomas P., forest engineer. South Conwaj', N. H 580 Knox, Mr. William H., exporter. New York 522 Kirliu, Mr. J. Parker, attorney at law. New York 540 p Lake, Mr. Devereux, manager American Cast Iron Pipe Co., New York 397 ^ Luckenbach, Mr. Edgar F., shipowner. New York 534 C") McAdoo, Hon. William G., Secretary of the Treasury 259 \ McSparran, Mr. John A., representing State Grange of Pennsylvania, Furniss, Pa 416 Penton, Mr. John A., editor of Iron Trade Review, Cleveland, Ohio 568 Peck, Mr. William E., importer and exporter. New York 533 Vy "" Redfield, Hon. William C, Secretary of Commerce 35 1 Rosenthal, Mr. Benjamin J., banker and merchant, Chicago, 111 203 Rhett, Mr. R. G., president Chamber of Commerce of the United States, Charles- ton, S . C 492 Strauss, Mr. Albert, representing John W. Seligman & Co., New York 486 Slechta, Mr. Joseph J., agent Brazilian Steamship Co., New York 639 Smith. Capt. W. S. A., Department of Agriculture 701-714 Starr, Mr. Western, farmer, Westover, Md 411 Wilson, Hon. William B., Secretary of Labor 385 Wescott, Capt. WilUam A., president ^Masters, Mates and Pilots of the Pacific, San Francisco, Cal 707 m H73Bl,l ^,4^^^/0 EXHIBITS. Page. Text of shipping bill (H. R. 10500) 5 Report of surveyor of customs, San Francisco, regarding language test of crew on steamship China .- -^6 Excerpt from London Economist regarding requisitioning of British ships for commercial purposes ^9 List of vessels under contract in private American yards, Feb. 1 , 191H 40 "War losses of shipping," by Mr. E. T. Chamberlain, Commissioner of Naviga- tion 48 Merchant vessels under construction abroad 49 Comparison of steel vessels building in United States, 1900 to 191.T 49 Requirements of the Italian law, regarding licenses for shij^ping trade 50 Letter from Mr. E. C. Gillette, superintendent of marine construction, regarding construction of vessels 53 Letter from Mr. P. L. Bell, Seattle, Wash., regarding "Cost of construction and operation of wooden auxiliary sailing schooners " 55 Letter from Mr. E. Piatt Stratton, regarding "^Construction of vessels" 58 Part of letter from American Bureau of Shipping, regarding Mr. Stratton's sug- gestions , 60 Detailed statement of Mr. E. Piatt Stratton, regarding "Method of constructing vessels " fiO Report of Mr. A. H. Boole, of the Interstate Commerce Commission [r. George S. Taylor, secretary Society for Development of Ameri- can Shipping, New Orleans, La., regarding ocean freight rates 227 Clipping from New Orleans Times-Picayune, regarding increase in cotton rates 227 Letter from Mr, B. Zalduondo, president Chamber of Commerce, Porto Rico, regarding steamship combinations and freight rates 229 Letter from Mr. Daniel Kelleher, Seattle, Wash., regarding lumber export situa- tion in the Northwest 230 Letter from Indiana Quartered Oak Co.. New York, regarding difficulties arising under present form of bill of lading 231 Letter from Paul C. Hani-sch & Co., London, regarding excessive freight rates. . 232 Letter from American Express Co., foreign department, Liverpool, regarding ocean rates 232 Letter from American Association of North China, Tientsin branch, Tientsin, China, regarding resolution adopted by executive committee 233 Report of merchant marine committee of Louis^^.lle Board of Trade 234 Letter from Mr. C. W. A. Veditz, commercial attach^, Paris, regarding proposed French shipping law 236 CUpping from Paris "Le Temps," indicating main features of French shipping law 236 Letter from Mr. Hugo Lorber, regarding Chin a- Java- Japan Line 238 Letter from Mr. A. B. Hammond, San Francisco, Cal., showing manner of dis- cussions before chamber of commerce 238 Letter from Acting Secretary of the Navy W. S. Benson, regarding "Require- ments in case of war " 245 Weeks resolution. No. 317. Sixtv-third Congress 259-339 VI EXHIBITS. Page. Statement of Secretary of the Treasury, August 7, 1914, regarding calling con- ference of representatives of shipping interests and bankers 263 Clipping from the Stockton (Cal.) Independent, "Steamer Robert Dollar is sold to Japanese " 274 Section 2 of Federal reserve act 277 Quotation from speech of Mr. Fairfax Harrison, president of Southern Railway Co., at New Orleans, January 28, 1916 , 287 Quotation from message of the President 310 Resolution adopted by the Pan American Congress 329 Quotation from letter of Dr. L. S. Rowe, secretary general of the Pan American 1 inancial Conference 329 Press notice issued by the State Department, February 11, 1916, regarding shortage of ocean tonnage 330 Additional statement by the Secretary of the Treasury 337 Exhibits of the Secretarv of the Treasurv 338 Exhibit No. 1: Senate Report No. 718, Sixty-third Congress, second session. United States Navy mail lines between United States and South America. . 338 Senate resolution 317, Sixty-third Congress 339 Fetter from the Secretary of the Navy to the chairman of the Commit- tee on Naval Affairs, transmitting information on Senate resolution 317 339 Exhibit No, 2: S. 5259, Sixty-third Congress, second session (a bill to estab- lish one or more United States Xavy mail lines between the United States and South America) 345 Exhibit No. 3: Extract from annual report of the director of Bureau of War- Risk Insurance, submitted to Congress December 7, 1915 346 Exhibit No. 4: Debate in Senate March 26, 1914, on Senator Weeks's resolu- tion (S. Res. 317) 346 Exhibit No. 5: Debate in the Senate August 3, 1914, on Weeks bill ...... 351 Exhibit No. 6: Congestion of freight and embargoes by railroads primarily on account of lack of ships to move our export trade 368 Exhibit No. 7: Extracts from newspapers, regarding freight congestion, due primarily to lack of ships to handle export trade 370 New York World 370-372 New York Tribune 371-373 New York Commercial 371-373 Louisville Courier-Journal 371 Scientific American (Herbert T. Wade) 371 Chicago Tribune. 372 Newark News 372 Washington Star 372 National Jeffersonian 373 Philadelphia Ledger 373 Exhibit No. 8: Exhibits from Document No. 673, Sixty-third Congress, showing vessels on the market at that time 374 Exhibit No. 9: Statement showing vessels purchased by the Navy during the Spanish -American War, the price paid for each, and the disposition made of those not now the property of the Navy 378 Exhibit No. 9A: Statement showing "list of vessels purchased by the Ignited States Navy dming the Spanish-American ^^'ar, showing names before purchase, dates of pvu-chase, and names of proA^itius owners 379 Exhibit No. 10: Letter from the Secretary of the! Navy regarding vessels chartered by the Navy during the Spanish-Ammcan War 381 Exhibit No. 11: Sales of ships in March, 1915, and February, 1916, as taken from Shipping Illustrated '.../ 381 Exhibit No. 12: Comparative statement of ocean freight rates on grain and ^ cotton. July 1, 1014, and February 10, 1916 382 Exhibit No. 13: Citizens arriving and departing, shown by months, during seven months ended February, 1914, 1915, and 1916. respectively 382 Exhibit No. 14: Statement of Mr. P. H. "\W Ross, president of the National Marine League of the United S :ates. ../ 382 Resolution adopted by the American Fedejmion of Labor at its convention in San Francisco, Cal., November 16, 1915.' 394 Resolution adopted by the Nineteenth Annual Convention of the International Seamen's Union of America 395 EXHIBITS. Vn Page. Resolution adopted by the Thirty-third Annual Convention of the Illinois State Federation of Labor 395 Resolution adopted by the National Cirange, Wilmington, Del 416 Resolution passed by Pennsylvania State Grange 417 Statement by the Philadelphia Bourse 437 Referendum No. 0. Chamber of Commerce of the United States 472 Letter from Mr. S3th Low. president of the New York Chamber of Commerce. . 496 Letter from Mr. George S. Dearborn, president of the American-Hawaiian Steamship Co 553 Letter from Mr. George L. Duval, chairman of maritime committee of the Merchants Association of New York 554 Memorial from the Philadelphia Board of Trade 579 Proposed bill of Capt. Blaine 607 Clipping from New York Times, "Fears coal competition" 611 Memorial of the Philadelphia Maritime Exchange 637 Legislative Committee of National Grange conference with Farmers' Union 672 Resolution of the Washington State Grange, favoring shipping bill 672 Resolution of the Idaho State Grange, favoring shipping bill 672 Clipping from Agricultural Grange News "Nation-owned ships against pre- paredness," by Slate Master C. B. Kegley 674 "Government ships and farmers' rights" by State Master C. B. Kegley 675 Clipping from Pennsylvania Cirange News, "Uow the price of a bushel of wheat is fixed," by Past Master William T. Creasy 676 Clipping from the Farmers' Open Foriun, "A live-wire farmers' problem," by Mr. R. L. ("ununings, chairman service committee. Maine Grange 677 "Where the fanners' profits go," by Mr. R. L. ("ummings 679 Editorial from Succossful Farming, "Ocean freight rates " 681 House Joint Resolution 311, introduced by Congressman J. W. Alexander, "Steadying the world's price of the staples" 083 Report of the ("oinniitlee on Foreign Affairs on House Joint Resolution 311 683 Excerjjts from debate in Congress on House Joint Resolution 311 684 Discustion of the resolution, "iSteadying the world's price of the staples," at the International Institute of Agriculture at Rome 685 Statement of Da\id J. Lubin, "Power of the ship combine to raise and lower the ])rice of the stajdes of agriculture " 691 L3tter from Hon. George A. Loud to Admiral Blue in reference to naval auxiUa- lioa 698 Letter from Mr. J. H. Dajiion, Acting Chief of Bureau of Navigation, Navy Department, referring to naval colliers 699 Letter from Hon. Jose])hus Daniels to Hon. L. P. Padgett, referring to naval colliers .' 699 StatemeiU from the Guild Gazette, giving discussion of the members of the British Parliament in reference to alien officers 711 Statement by Mr. Loud, "Naval auxiliaries" 718 (.'lipping from the Christian Science Monitor, "Trade proposals of Glasgow merchants " 719 ( 'lipping from the Post Intelligencer, entitled ' ' American seamen " 727 Letter submitted by Hon. W. E. Humphrey in reference to salaries paid seamen and officers 728 Salaries paid seamen and officers ; 730 Resolution by a committee to the Maine State Board of Trade 746 Resolution from the Maritime Exchange of New York 747 Resolution from the ^lobile (Ala. ) < 'hamber of ( "ommerce favoring shi])ping bill . 749 Letter from the Commissioner of Navigation showing why foreign ships are not taking out American registers 749 List of foreign-built vessels to which American registers have been granted under the act ol"^ August 18, 1914 749 Extract from letter of Commercial Attache Arnold's weekly report to Bureau of Foreign and Domestic Commerce, regarding shipping on the Pacific 755 Excerpt from letter of Mr. Daniel Kelleher to Secretary of the Treasury regard- ing shipping lumber on the Pacific 756 CUpping from ( ommerce Reports : ' ' World built fewer ships last year " 756 Text of shipping bill presented in the French Chamber of Deputies 757 Letter from Dr. E. E. Pratt quoting statement in the Agence Economique and Financiere relative to freight situation in Italy 760 (flipping from Commerce Reports: " ( 'oal freights from (^ardiff " 760 Yin EXHIBITS. Page. Letter from Hon. Frank L. Polk, counselor, Department of State, relative to letter received from President of Salvador in regard to shipping. 761 Letter from Department of Commerce in reference to bone deposits on the Pribilof Islands 761 Resolution by the Jefferson Grange. Moody County, S. Dak 763 Shipping catechism, by Capt. C. A. McAllister, Coast Guard 764 Extract of letter from Commercial Attache Baldwin, at London, regarding the "British Shipping Board " _• - - 766 Clipping from the London Gazette concerning functions of the ship licensing committee 766 Memorandum showing ocean freight rates on tobacco 767 Letter from the Freiberg Lumber Co., Cincinnati, Ohio, showing lack of ship- ping facilities 768 Letter from Mr. Arthur Hastings, president American Writing Paper Co., re- garding shipping conditions 768 Clipping from Montreal Gazette: "Government-owned line of Hudson Bay steamers " 768 Letter from Mr. William E. Peck, exporter, New York, regarding shipping conditions 769 Letter from the Secretary of Commerce, quoting letter from \\Tiite Star Line, regarding shipments to Liverpool 769 Letter from Dr. E. E. Pratt, quoting ca legram from Commercial Attach^ Veditz at Madrid, regarding shipping commission of Spanish Government.. 770 Clipping from Commerce Reports, "Suspension of Spanish Steamsliip Line " . . 770 Resolution of the American Cham' er of Commerce of ( liina 770 Letter from Mr. Lorenzo Daniels, New York 772 liOtter from Dr. E. E. Pratt, transmitting data on the su ject of ocean freight rates - - 772 Report ) y the New York office of the Bureau of Foreign and Domestic Commerce, "Increase in ocean freight rates from January 1. 1914. to January 1, 1916 " 775 Report . y the Boston office of the Bureau of Foreign and Domestic Com- merce, "Increase in ocean freight rates from January 1. 1914, to January 1,1916" 788 Report ' y the Seattle office of the Bureau of Foreign and Domestic Com- merce, "Increase in ocean freight rates to the Far East from January 1, 1914, to January 1, 1916 " 794 Report 1 y the New Orleans office of the Bureau of Foreign and Domestic Commerce, "Increase in ocean freight rates from January 1, 1914, to January 1, 1916 " 799 Ocean freight rates to and from ports of the United Kingdom 803 Freight rates on coal from British ports in the years 1909 to 1916 805 United Kingdom, outward and inward rates, 1897 to 1914 817 Report I y the San Francisco office of the Bureau of Foreign and Domestic Commerce, relative to ocean freight rates from the port of San Francisco. 818 Telegram from Mr. William Livingstone, president of the Lake Carriers' Asso- ciation, Detroit, Mich., in reference to length. 1 readth, and depth of locks of Welland Canal 819 CREATING A SHIPPLNG BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the Merchant Marine and Fisheries, House of Representatives, Wasliiiigton, D. C, February 10, 1916. The committee this day met at 10.30 a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. This hearing is on H. R. 10500, "A bill to estab- lish a United States shipping board for the purpose of encouraging, developing, and creating a naval auxiliary and naval reserve and a merchant marine to meet the requirements of the commerce of the United States with its territories and possessions, and with foreign countries, and for other purposes," which reads as follows: Be it enacted by the Senate and Houfe of Repre'entative^ of the United States of America in Congresis asyembhd, That a board is hereby created and established, to be known as the United States shi])])iii_G; board (hereinafter referred to as the board ") with powers and duties hereinafter enumerated. The board shall be composed of the Serretary of the Navy and the Secretary of C'ommerce, as members ex officio, and three com- missioners, to be appointed by the President, by and v,\\h the advice and consent of the Senate; one of such commissioners to be designated by the President as chairman of the board and one as vice chairman. The chairman of the board, subject to its supervision, shall be the active executive officer. The first commissioners appointed shall continue in office for terms of two, four, and six years, respectively, from the date of their appointment, the term of each to be designated by the President, but their successors shall be ajipointed for terms of six years, except that any person chosen to fill a vacancy shall be appointed only for the unexpired term of the commis- sioner whom he shall succeed. No commissioner shall engage in any other business, vocation, or employment, and any commissioner may be removed by the President for inefficiency, neglect of duty, or malfeasance in office. A vacancy in the board shall not impair the right of the remaining members to exercise all of the powers of the board. The board shall have an official seal, which shall be judicially noticed. Skc. 2. That each member of the board, except the ex officio membsrs, shall receive a salary of S10,000 per annum. The board .shall appaint a secretary, who shall receive a salary of .SS.OOO per annum, and it shall have the authority to employ and fix the compensation of such attorneys, officers, naval ai'chitects, clerks, and other employees as it may from time to time find necessary for the proper performance of its duties and as may from time to time be appropriated for by the Congress. The President may authorize the detail of officers of the military and naval services of the United States for such duties in connection with the board as may be deemed necessary. With the exception of the secretary, a clerk to each commissioner, the attorneys, naval architects, and such special experts and examiners as the board may from time to time find necessary to employ for the conduct of its work, all employees of the board shall be a part of the classified civil service and .shall enter the service of the board under such rules and regulations as may be prescribed by the board and the Civil SerWce Commission. All the expenses of the board, including all necessary expenses for transpartation, incurred by the members of the board or by its employees under its orders, in making any investigation, or upon official business in any other place than in the city of Wash- ington, shall be allowed and paid on the presentation of itemized vouchers therefor approved by the board. Until otherwise proA'ided by law the board may rent suitable offices for its use. The Auditor for the State and Other Departments shall receive and examine al! accounts of expenditures of the board. 5 6 SHIPPING BOARD; NAVAL AUXILIARY, AND MERCHANT MARINE. Sec. 3. That the United States, through the board and with the approval of the President, is authorized to construct in American shipyards and navy yards, as that capacity will permit, or elsewhere, or to purchase or charter vessels of a type, as far as the commercial requirements of the marine trade of the United States may permit suitable for use as naval auxiliaries and Army transports, or for other naval and military purposes, with a view to chartering, leasing, or selling such vessels to any corporation, firm, or indi\ddual, a citizen or citizens of the United States, desiring to use them in the transportation of the commerce of the United States with foreign countries, or with Alaska, the Panama Canal Zone, the Philippine Islands, the Hawaiian Islands, or the islands of Porto Rico, Guam, and Tutuila, and for this purpose the Secretary of the Treasury, upon the request of the board and the approval of the President, may from time to "time issue and sell or use for such purchases, chartering, or construction any of the bonds of the United States now available in the Treasury of the United States under the act of August fifth, nineteen hundred and nine, the act of February fourth, nineteen hundred and ten, and the act of March second, nineteen hundred and eleven, relating to the issue of bonds for the construction of the Panama Canal, to a total amount not to exceed $50,000,000: Provided, That any Panama Canal bonds issued and sold or used under the provisions of this section may be made payable at such time after issue not exceeding fifty years as the Secretary of the Treasury, in his discretion, may deem advisable and fix, instead of fifty years after date of issue, as in said Act of August fifth, nineteen hundred and nine prescribed: Provided, further , That payments for such purchases, chartering, or construction from the proceeds of sales of bonds, or delivery of bonds in payment therefor, shall be made only as ordered and directed by the board. Sec. 4. That the board is hereby authorized to charter, lease, or sell the vessels purchased, chartered, or constructed by the United States, as herein p^o^dded, to any corporation, firm, or individual, a citizen or citizens of the United States, desiring to use them in the transportation of the commerce of the United States with foreign countries, or with Alaska, the Panama Canal Zone, the Philippine Islands, the Hawaiian Islands, or the islands of Porto Rico, Guam, and Tutuila, upon such terms and conditions as may be prescribed by the board and approved by the President: Provided, That vessels constructed in American shipyards and navy yards, under the provisions of this act, may be chartered, leased, or sold to any such corporation, firm, or individual, a citizen or citizens of the United States, for use in the coastwise trade of the United States, particularly the trade between the Atlantic. Gulf, and Pacific coasts: And provided further , That such corporation, firm, or individual shall agree that any and all vessels purchased, leased, or chartered from the said board shall be operated under American registry or em'oUment unless otherwise authorized and approved by the said board, and that no vessel purchased, leased, or chartered from the said board will be sold, leased, chartered, or rechartered to any corporation, firm, or individual without the consent and approval of the said board : And provided further , That such corporation, firm, or individual shall agree that its or his interest in any and all vessels purchased, leased, or chartered from the board may be taken at any time by the United States, absolutely or temporarily, and the vessels used as transports, naval auxiliaries, cruisers, or for any other naval or military purpose, upon the pay- ment to the corporation, firm, or individual interested of the fair actual value of its or his interest therein, based upon normal conditions, if the vessels are taken absolutely, or the reasonable rental value, based upon normal conditions, if taken temporarily, such fair actual value or reasonable rental value, ae the case may be, to be determined by the board and approved by the President. When vessels purchased or constructed by the board as herein provided, and owned by the United States, become in the opinion of the board unfit for the purposes for which purchased or cnistructed, the same shall be appraised and sold, either by sealed proposals for the purchase of the same or by public auctii">n after advertisement of the sale for such time as in the judgment of the board the public interests require, the pror-eeds of such sales, after ])ayment therefrom of the expenses thereof, to be covered into the Treasury of the United States. Sec. 5. That tlie President of the United States is hereby authorized to transfer to the board such naval auxiliaries belonging to the Naval Establishment of the United States as are suitable for commercial uses, and which are not required for use in the Navy in time of peace, and Aessels belonging to the War Department suitable for commercial uses and not required for military transports in time of peace, and to cause to be transferred to the board vessels now owned and operated by the Panama Railroad Company, and not required in the business of such company, and the board, subject to the approval of the President, is hereby authorized to charter, lease, or sell such vessels to any corporation, firm, or individual, a citizen or citizens of the United. States, desiring to use them in the coastwise trade of the United States, particularly SHIPPING BOAUD, NAVAL AUXILIARY, AND MERCHANT MARINE. 7 the trade between the Atlantic, GuU', ^an' not above the rank of lieutenant commander, provided they are citizens of the United States, under such regulations as may be prescribed by the Secretaiy of the Navy with the approval of the board. All persons thus enrolled in the said reserve shall be entitled to receive retainer allowances from the United States while so enrolled, at rates to be fixed by the board, not to exceed an allowance of $5 per month for enlisted men, $10 per month for petty officers, $12 per month for warrant officers, and $15 per month for officers. Sec. 12. The board shall, on or before the first day of December in each year, make a report, which shall be transmitted to the Congress, and copies of which shall be dis- tributed as are the other reports transmitted to the C ongress. This report shall contain a record of all transactions of th<> board and of all expenditures and r< ceipts under this act, and of the operations of any corporation or corporations in which the United States may have become a stockholder, and the names and compensation of all persons employed by said board. Sec. 13. That for the purpose of carr\'ing out the provisions of this act, there is hereby appropriated out of any money in the Treasury of the United States not other- wise appropriated, the sum of |50,000'000, and the Secretary' of the Treasury may issue and sell so many of the Panama ( anal lionds authorized to be issued and sold by section thre?. and on the same terms, as may be neccssay to secure the amount of $50,000,000, and set apart and us<' the proceeds thereof for such purpose. Sec. 14. That all acts and parts of acts in conflict with the provisions of this act are hereby repealed. Tlie hearing has been sot down for this morning, and will continue from time to time as maj' be necessary, to give those interested in this legislation an opportimity to be heard. We have with us Mr. William H. Douglas, of New York, chairman of the special committee on merchant marine of the Chamber of Commerce of the United States. I have invited him to be present, and, as he has many engagements, I have suggested that we would be pleased to afford him an opportmiity at this time to be heard with reference to tlie bill. I take pleasure in introducing to you Mr. Douglas. STATEMENT OF MR. WILLIAM H. DOUGLAS. Mr. Douglas. Mr. Chairman, I appreciate the com'tesy of the Sec- retary of Commerce, and also of the Secretary of the Treasury, in allowing me to speak first. I would like to preface my remarks by the statement that I have no authority from the board here; that is, from the chamber of com- merce, to make any statement, but, of com^se, our records are official and have been published, and therefore I will confine myself strictly to the official records of the chamber of commerce in connection with this matter. I wouJd state that we took the matter up last year, and very thorouglily went into it, and we made a report at the annual meeting, which took place in February, 1915. We then sent out a referendmn, which is lanly well known to all the gentlemen present, and therefore I do not thmk it is necessary to go over that referendum in its entirety or to any extent. I will simply state that we did not favor the purchase or construction and operation of vessels by the United States Government, as a vote on the referendum. We then voted on whether, in case the Government should lease these vessels, and not operate them as a Government operation, the coimtry would favor that or not, and the vote again was adverse to any such action by the Government. We then requested the constituent bodies of the chamber to signify their approval or disapproval on the question of subventions and subsidies, as that was a protection feature in connection with the 10 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. merchant marine, and they voted largely in favor of subventions to create the mail and freight lines, which we all acknowledge we desire. We then asked if it would be desirable to consider the question of subsidies to offset the cost of operation between sailmg imder the American flag and under foreign flags, which, of course, has been a much-discussed proposition, and again the vote by the constituent bodies of the chamber was in favor of that proposition. We asked various questions with reference, fii-st, to the creation of a Federal sliipping board, which, in our judgment, should be a non- partisan board; that is, we did not favor having the officials of the Government a party to that board, in ex officio positions, and the idea of the committee was sustained by leferendum by the constitu- ent bodies in that paiticidar. We then asked about a marine development company, mth a view to the loan of money to help the merchants in this country to biiild the steamers necessary for our commerce, but we did not receive a two-thirds vote, and, therefore the chamber is not in any way com- mitted to any such proposition, and have not advocated it since that time. The Chairman. Did I understand that the chamber, by a two- tbirds vote, decided against Government o-svnersbip and operation of vessels ? Mr. Douglas. They decided that by a vote of 690 opposed, to 89 in favor. The Chairman. And on the question of subsidies, how did they vote ? Mr. Douglas. The question of subsidy was 713 in favor and 52 opposed. Mr. Curry. How did they vote on a Government loan ? Mr. Douglas. On a Government loan, the vote was 416 in favor, and 314 opposed. Not being two-thirds, of course the chamber at once ceased any activity along those fines. Mr. Byrnes. Did I understand you to say, too, that you had voted upon the question of whether or not a member of the Cabinet should be a member of ttiis board ex officio ? 5klr. Douglas. That is in our report, and the recommendation is that we consider it would be wiser, in the judgment of the constituent bodies of the chamber — of course I am speaking entirely on the referendum, which was in favor of a nonpartisan board — not to have them on the board. The committee then asked whether they would advise that the ocean mail law of 1891 shoulfi be amended, lowering the speed of the first-class steamers from 26 to 16 knots and the second-class steamers from 16 to 12 knots and allowing a board, if estabfisheel, to grant such compensation as, in their judgment, would be desirable, so as to create these foreign lines, and the vote on that proposition was 692 in favor and 58 opposed. We favored the board having real direct authority to establish lines by subventions, but this question also was asked, because we thought it had a great bearing, as many gentlemen, we understood, both in Congress and, of course, many out of Congress, perhaps thought that the amendment of the 1891 act was a desirable thing to do ; in fact at various times bills have been introduced to have that carried out, but I think they have always been defeated. The committee recommended — and in that particu- SHIPPING BOARD, NAVAL AUXILIAKY, AND MERCHANT MARINE. 11 lar I think we iully concur with Mr. Alexander's committee and you gentlemen — that legislation thould be adopted with a view to the abolishment of deferred rebates, supervision of rates, and regulations for filing rates and agreements among oversea lines. There were 601 votes in favor, as against 130 opposed. I will call attention, however^ to the fact that in our report and in the vote we used the word "super- vision" as against "regulation." I do not know that there is any difference between those two words, but, judging from the popular impression, the one is rather more strong than the other, but perhaps "regulation" is required bv reason of the law in any bill. Wo believe that logulation should bo adopted. Wo do not want drastic legislation that is going to interfere in any way with shipping moasuios or shipping companies or the proper regulation, by those who may run linos, of our shipping; but wo do tliink that a board should have the same rights of supcn-vision which, under the railroad system, is now working quite successfully in this country; that is, if shippers fool that thoy are in any way injured by the rates or by anything else which a company which is running rcgidar lines^ carries out as a policv, that tlioy should have the right to go to the board and domr.nd a htir and proper hearing. Wo presume the board naturally also would grant a hearing to the shipping company rnd then, in their good judgment, thoy would d(>(ido as to who was justified and regulate the rate — and thoy should have tlio power to do so, of course — if, in their judgment, the rate wore not what it sliould bo. I want to make that distinct, simply because we did use the word "supervision," and I want to look out that I do not transgress in any way beyond my referendum, because^ as I said, I have no authority to come here; so to that extent only do we differ, although pcrsonall}' I am inclined to think that the word "regulation" is a fair and ])ropcr word, because "supervision" might not give them enough authority. The Chairman. The Interstate Commerce Commission was created a great many yeais ago, and it had the power of supervision, but it was only within the last decade tliat it was given the power to "regulate," and it is only within the last decade that thoy have had real power over the railroads in the matter of transportation rates. Now, if you will study this bill you \vill find that the power is vested in this board to regulate. It does not say that they shall do it, but that they shall supervise, and, whenever it is necessary, they shall have power to stoj) in and compel the observance of reasonable regulations. Air. Douglas. PorsomiUy, Judge, I take no exception to your position; but I felt that it was necessar}', by reason of the refer- endum word, suuplj" to make that clear. The committee then took up the question of Federal license, and we asked the people their opinion, and the chambers of commerce throughout the country wore in favor of having that as an established feature in any bill which might bo ])assed; and I am pleased to say, because I am thorouglily hi accord, that there were 610 votes in favor of that to 120 votes op])osed, which is a decided and pro- nounced majority. The question of regulation, as voted upon by us, covered lines which were run under the American flag to foreign lands, and also lines which would be run by foreign corporations. We made that a very em- 12 SHIPPING BOARD, NAVAL AUXILIARY, AXD MERCHANT MARINE. phatic statement and plain point, because I feel it would not be justificable or right, nor do I assume for a moment, although I have endeavored to get enlightenment on that subject, l)ut have not suc- ceeded, as to what the present bill intends to do in that particular— I think that foreign lines need a license to be taken out far more than American lines do; that is, that you can not discrkninate. If you are going to put a license on an American line — and I am in favor of douig so in a proper way, with proper regulations, which the board, of course, will have authority to promulgate— I feel that it would be almost a slap at American shipping if we did not include that, and also incorporate a license feature for all foreign vessels that run a regular line. I hold and contend this ])oint: ^yhere a foreign line comes here and establishes a home and becomes a regular part of our system of Government, where they are practically the same as ourselves and run regular lines, establishing their offices and ])rac- tically making themselves a part of our shi])])ing. even though they fly a foreign flag on tlieir vessels, that in that cnse we are perfectly justified m feeling that the American pu])lic shoifld have some justi- fication and some rights, and that we should not l)e under the burden which we have been for 25 years and over of hci^ing to submit to a great many irregiflarities and a great many, you might say, perse- cutions whi( h are not justified, by reason of the fact that those men are here enjoying our ])rotecti(>n and enjoying the jirotection of the American flag, even though their vessels on the ocean tlo not fly the American flag. The Chairman. I will say to the gentleman at this point that sec- tion 10 of this bill says that^n and after January 1, 1917, no corpora- tion, firm, or individual shall engage in the business of transporting passengers or property by water between the ports of the United States and not entirely within the limits of a single State, or between the United States and foreign countries, or between the United States and its teri'itories and possessions, or between the teiTitories and pos- sessions of the United States without fii-st obtaining a license so to do from the board hereby created. That section applies to foreign as well as domestic vessels; but if there is any question about it, we would amend it by saying that on and after January 1, 1917, no cor- poration, firm, or individual, domestic or foreign ^because it is in- tended to apply to foreign vessels as weD as to American vessels. 'Mr. Douglas. I do not question. Judge, that that was your inten- tion; but I felt, in view of the fact that I asked vou that question by letter twice, we had better emphasize it and make quite certain that that was your intention under the bill, so there could not be any doubt on that point. Mr. Byrnes. Coidd you make the language any clearer than that ? 5^Ir. Douglas. I thiiik I coidd. I think it should say that all cor- porations o^^'ned and operated b}^ United States citizens or corpora- tions, and all lines operated by foreign agencies, or where the line was owned by foreigners, shoidd equally become a party to the license. Mr. Byrnes. Do you think that would be any stronger than this language, which says that no boat shall clear for a foreign port ^Ii'. Douglas. I think you should always state just what you mean. The Chairman. There is no question about that. We will make that plain, because we agree thoroughly. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 13 Mr. Douglas. I am glad to hear j^ou say so. Tho question has been raised as to these Ucenses on the point of whether a tramp steamer coming here from any port of the world, with no intention to enjoy our hospitality for more than, perhaps, a few days, \vithin wliich to discharge her cargo, and, perhaps, take on other cargo here or go away in ballast, was subject to this license, and I liave not known how to answer that ([uestion. I have stated that, in my o])inion, you did not intend that a tramp steamer, merely coming here in that way, that might not be here again for many years, was to take out a license. The CiLviUMAN. Of course, one benefit that will come from these hearings will be to bring out all these exceptional cases, because in drafting a ])ill it is not always possible to have everything in mind that we might have. Mr. Douglas. I wanted to bring that out, because there is a wide distinction l^etween the two, and 1 hope the committee will kindly give tliat consideration. The Chairman. Yes; I think tliat is worthy of consideration. Mr. Douglas. Those are the main features, and I am glad to be able to say that wliile we do not accord entirely with the learned gentlemen around this board with reference to tliese matters, yet to quite a considerable extent we feel that we are in sympatiiy with them in our report. The main tiling in which we are not in sympathy, of course, is the* cj^uestion t)f how we are going to establish these lines and how we are going to put the American commerce on the ocean. We are all liable to mistake, and we all get hobbies, and naturally we enjoy tlie privilege (^f speaking for our hobby; and the hobby of the chamber of commerce. I might say, seems to be clearly tliat it is a cheaper, more expetlient, and an easier way to accomplish the putting on oi these lines by a direct sulivention, or by amending the law ot 1891, than it is to eiuh'avor to start those lines in the way that you gentlemen propose. We all r»'alize that whether we start tlu'se lines or do not start tiiese lines to foreign countries, there must be, besides that, a large amount of commerce which can not go on those lines and for which it is necessary to provide accommodation, if we are going to take tlie standard of commercial world power, which we all hope we will, and I h()])e the board intend in this ])ill which they finally may pass to consider that thing verv carefully, because the bill does not cover that point under any possibility of conception. Now, let us see what we would secure under this ])ill. The entire amount of money provided for in the bill is S50,000,000; that is all that is appropriated. It is, of course, in doubt, but so far as our judgment would go, as a committee we did not feel that under that bill you could secure more than perhaps GO vessels of the right ty{)e, standard, aiul size to go on, you miglit say, d(H^p-sea business. To-day we have only about 1,700,000 or 1,500,000 gross tons of sliipping engaged in the deep-sea business, and of that sliip- pin^ there is a very considerable portion which pertains entirely and solely, you might say, to special instrumentahties of transportation — vessels which are built for a specific purpose, and which, of course, are used for that purpose, but they do not go under berth and do not carry general car^o, and, consequenth^, are of ver}^ little use except to those who build them for special purposes. We might refer, for example, to a tank steamer built and owned by the Standard Oil 32910—16 2 14 SHIPPING BOARD^ NAVAL ATJXILIAEY, AND MERCIIANT MARINE. Co. This country needs to-day, iindoiibtedly, for any kind of reasonable protection at least eight to ton million gross tons of shipping, and I understand, as does perhaps everybody here, that we can not acquire that shipping except by, you might say, a gradual process covering a number of years, and that to-day, under the war conditions which exist, our yards are full of work and the yards abroad are full of work, and we are unable, by reason of the restric- tions put upon it by foreign countries, to buy vessels abroad. These are very, very serious problems, and I sincerely hope the committee — because I do not believe the public will condemn any action of this committee; in fact, I think tliey will uphold it most heartily — will give any man in this country, no matter what part he may live in, who desires to acquire a few ships of his own an opportunity to have them built, so that he can overcome, in some measure, the difference in cost of operation of the American ship under our laws — and I understand and realize that we can not change all our laws to meet the ideas of the whole public; there always will be that difference in cost, by reason of the difference between our system and European systems, but I want to appeal to this committee most urgently to give that feature careful thought. I believe that you should give the board something to do, something to work on for the benefit of this country, and say to them, practically, ''We will allow any man who will come to the board, and who wishes to build a ship for the good of American commerce, if he will present his plans, and if he wiU build his ship along lines which will commend the board's ap- proval, which will be useful for commercial purposes and useful in case of war or for any other requirement of the Government — we will meet him fairly, if he will meet our views as to his ship, and wa will pay him in some way." Now, I do not care in what way, and I do not think the public cares. This idea that the public is espe- cially entitled to any one judgment on this subject is erroneous, and I do not think they themselves care particularly about the method, but give the board authority to pay for those differences. You might start in and say that the payment should not be more than a million dollars a year for the first year, and it might reach a maximum, and if you did that, you would get, in my opinion, in five or six years four million or five million tons of shipping, and I do not believe it would cost this Government, if you put a maximum on it, say, more than five million dollars in putting those four or five million gross tons on the water under the American flag. Mr. Loud. In any one year? Mr, Douglas. Yes; in any one year, and you would not reach the maximum for six or seven years. I do not believe that the public of the United States would for one moment dream of criticizing Congress under a provision of that kind. It is absolutely essential. You will never get the ships, except by waiting many years, unless you do something of that kind. The Chairman. Have you ever made an estimate of how many ships we could get by paying an annual subvention or subsidy of $5,000,000? Mr. Douglas. Yes, sir; I did. About 10 years ago I went into it very thoroughly, very deeply, and paid, myself, some of the best experts in the East to look that thing up, and to talk it over with me, and I found at that time— of course, thmgs are entirely changed, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 15 fentlemen, and you can not do it to-day, and I recognize that — but found that about between four and five milhons of dollars at that time — 10 years ago, say — would have given us at least eight lines to foreign countries, and it would have enabled us to have increased those lines as time went on, and I figured at that time that we would have had about, say, at the end of 10 years, under the $5,000,000 appropriation, which would have run 10 years — that would have been $50,000,000, it is true — but I think we would have at least two or three hundred steamers. Of course, those estimates were based on conditions which existed then, which were, of course, a lower cost of building and everything favorable to purchases and operation. That is as far as I can answer the question, but, of course, what I am advocating now is entirely different, because I understnad the Imes will be established in a different way. I want to touch upon just one or two pomts, if I am not taking up too much time, Mr. Alexander, in connection with the present bill, because it is a very serious question. The fu-st point I would like to bring up is your section where you state that it is the int(nition to build, lease, or buy here or elsewhere these vessels with a view to leasing them to American citizens or corporations. I was disappointed, and I tliink many others were, that the very pronounced and very admirable statements of the Sec- retary of the Treasury did not come into play in that bill a httle more on that feature. I beUeve he is ])rGsent, and I hope I am not quoting him \\Tong when I say he is thoroughly in accord with the desire of having linos established as quickly as possible, and this because there is an inference on the part of the pubhc that it is a little sidetracked. I think that the bill should say distinctly that the fust intent and purpose of the building of these boats, if they are built, means the establishment of these lines, and then make it plain that that language "^\-ith a view to'' means that those lines are to be first established under private ownership, if it be feasible to do it. I understand that the intent of the gentlemen present here in this committee is. the same as I am urging, but if you \nll just make that plain to the public, your ways will be greased; they will have more ■sympathy ^ith the bill than if you do not make it plain. There is not a man in this country who does not say that he wants hues to South America and to Africa and to Australia, and in every other direction where the commerce of the United States can be benefited; and I hope that will be made clear, because the people have the idea that it will not do that. The Chairman. You mean, to pay for the estabhshment of cer- tain lines ? !Mi". Douglas. That would be the prime object, for this reason, Judge: Fifty millions of dollars ^\ill not establish those lines, because the vessels built by that $50,000,000 will probably be entirely taken up in the establishment of those lines, so you must look at it as a cold fact that you will not have any more ships after those lines are established, if they are established, to lease or to sell to individuals, nor wiU you ever have, because you have a coastwise provision as well in this ]>iU, vrhich I did ]iOt mention, and I have no authority to speak about. Our committee did not take up the coastwise business, but that is a mo:t important and a most necessary featsn'e. 16 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. The Chairman. You will note that this bill provides that if these ships are built in an American shipyard, they may he used in coast- wise as well as in foreign trade. Mr. Douglas. That is quite proper. The Chairman. We are not willing to commit ourselves to a propo- sition that a ship built in an American shipyard should not be used in coastv/ise as well as in foreign trade. Mr. Douglas. I do not see how you could. That is altogether proper. If a man builds a ship here, he has the right to use it in the coastwise trade, beyond question, in my judgment. IVIr. Curry. Even though she is assisted by the Government? Tkli". Douglas. I do not think it makes the slightest difference whether she is assisted or whether she is not. That is for the judg- ment of the committee. I can only express myself personally on this proposition; I consider and I miderstand that some of my committee, perhaps, and others differ with me on that question, but I am very glad you asked that question, because I can express myself personally, and personally I do not think it is essential, if she is built m an American shipyard, to give her that difference of cost when she is engaged hi deep-sea business, and if I were framing a bill, 1 would distinctly state in the bill if she were engaged in deep-sea business for a continuous service of, say, not less than six months at one time, that, in the discretion of the board, they might have authority to give or grant some compensation, but I do not think for a moment that it would be fair or proper to give that grant if she were engaged in the coastwise trade. The Chairman. It would be an anomoly if one of these ships built in an American shipyard and chartered or leased by this board to a private i]Klividual or a corporation, and trading from New York to Japan or China, might not carry passengers or freight from New York to San Francisco, and then proceed on her journey to the Far East. I say that would be an anomoly to say they should not do that. Of course, I assume the purpose of this bill is that these vessels should, primarily, be used in foreign trade. Ml". Douglas. Yes, sir. The Chairman. But, as one link in her trip, they might trade from coast to coast, because this is a great empire itself. Mr. Douglas. You mean, and also carry a cargo that was going farther on ? The Chairman. Yes; or carry a cargo from New York to San Francisco and then a cargo from San Francisco to the Far East. Mr. Douglas. Part of the cargo, you mean ? The Chairman. Yes. Mr. Douglas. Of course, if she had no cargo after she left San Francisco she would, of course, start a new voyage. The Chairman. Oh, yes. Mr. Douglas. I think that is understood by the committee, and I am entirely in sympathy with the proposition that a vessel should be permitted to go from New York to San Francisco and discharge 50 per cent of her cargo at San Francisco, and she should be eliminated from payment for any part of that cargo. That would be perfectly proper. Naturally we are not going to pay them a subsidy for run- ning on the coast. That would be all wrong. SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MAIUNR. 1? The Chairman. We would not pay any sliip subsidy for engaging in the coastwise trade; that is dead sure. Mr. Curry. An American-built vessel could go from Liverpool to San Francisco by way of New York, unload part of her cargo at New York and take on some cargo at New York for San Francisco and then load again at San Francisco back to Liverpool. Mr. Douglas. I think it would be unfair to the rest of the shipping for her to do that and receive full remuneration in subsidy. The Chairman. I am not talking about subsidy at all. I was speaking about an American-built ship. This bill provides that if a ship is built at an American shipyard she may be used in the coastwise trade. Mr. Douglas. Yes; and you can not stop her. The Chairman. I do not think there is any reason why it should be done. Mr. Douglas. No. They should be subsidized only for particular trade. Mr. Greene. In your experience in the shipping trade and in your knowledge of general business throughout the country have you found, to a large extent, any opposition to the use of subsidy or the use oi the word "subsidy' in relation to building up an American merchant marine ? Mr. Douglas. I can best answer that question by stating, if the gentleman has heard what I have just said as to the viewpoint of others throughout the country on that subject, he will recall that I said they overwhelmingly feel perfectly agreeable to take subventions or subsidies, if Congress is willing to grant it. Mr. Greene. The experience I have had here during the years I have been in Congress is that, in reality, there is no real opposition to the use of the word "subsidy'' or to subsidy itself, except on the part of some Members of Congress who represent dry districts, where ves- sels never go and can not exist; they think that subsidy is a horrible thing. Mr. Douglas. I can best answer that, Mr. Greene, by stating this: You can meet 10 men in the street and you can indulge in a contro- versy — because it is always a controversial question, as we know — with all those 10 men, and after you have discussed it with them and talked about it a long time, you may finally say, "You are in favor of having the American flag on the ocean, are you not?" and every- one of those 10 men — I do not care what section they are from — will say, "Yes; I am." Then if you say, "Gentlemen, do you care how the flag goes on the ocean ? Are you wedd.'d to this special way you have told me about?" And they will say, "No; I do not care how; I want the American flag on the ocean, and I will indorse anything that Congress does to put it there." That is the sentiment, and I am that way, too; I do not care anything about it. If you will provide the way, I will indorse your scheme; I do not care whether it is sub- sidy or what not. Mr. Saunders. Are you about through with your remarks, Mr. Douglas ? Mr. Douglas. Practically through. 18 SHIPPING BOARD, NAVAL AUXILIARY, AND -MERCHANT MARINE. Mr. Saunders. The re:ison I ask Is because I want to ask you a number of questions, pnd to get some information, l)ut I do not want to inteiTU])t j-'ou if you are not through. Mr. Douglas. I will be through shortly. I hope it wiU be fair to call attention to the fact thftt we ho};e that the bill will make promi- nent the question of the commercial needs of the country. We are all thoroughly m sympathy with the naval requirements, too, but I do not thinl: the naval requirements should be put ahead of the com- mercial requirements. The Secretary of the Treasury, by courtesy, for which we thank him, was agreeable to have us incorporate in our fourth annual report this question, the addendum in relation to what the Secretary of the Navy desired in the way of boats to ])e built to meet the Navy requirements, and I think if you gentlemen will care- fully analyze that statement, if it is intended to build on that line, I am afraid we would run against a good many snags, and that we would not get quite the commercial vessels that we require. Mr. Hardy, Ninety per cent or more of the people want an Ameri- can merchant marine, and do not care how they get it. Nevertheless, does not your chamber of commerce, m the presentation you are making now, tend to upset the obtaining of that merchant marine by the means proposed in this bill, and to hold us down to the one idea of obtaining it by subsidy only ? If your people can not get it in an3'^ other way than through this bill, will they obstruct it and filibuster it to death ? Mr, Douglas. Mr. Hardy, I would like to answer that question, but it would involve a big argument. I shall not control Congress. Unfortunately I am a Republican, I regret to sa}'-; I would, perhaps, rather be a Democrat under this administration. Mr. Hardy. Would ycu favor beating this bill, rather than to accept it in its present form ? Mr. Douglas, I will answer you right straight: Personally, if you stick to stubborness, I think we should, but if you yield to the hand of good-fellowship — and understand, now, I am talking personally, I am not talking for the chamber of commerce or for anybody else, I am only talking for myself — if you will extend the hand of sympathy and good-fellowship to the American people in your bill, and if you will incorporate in it those reasonable and proper changes, I believe the public will be with you. Mr, Hardy, In other words, if we wiU go your way, you wiU be with us, but you wiU not go our way ? Mr. Douglas, No; but there is give and take in good-fellowsliip, and we are willing — I am not speaking for the pubhc, only myself per- sonally — I believe that the great obstacle and the serious obstacle with your biU to-day is the fact that you do not come out definitely and positively and say that you intend to spend this ^^50,000,000 for the benefit of the country, and also that you are not for Government operation. Mr. Hardy, Then, you are very definite in your position, unless it goes your way ? Mr. Douglas. Oh, no, Mr. Hardy; not any more my way than your way. There are two ways you could go. Mr. Hardy. And if we snould propose to put the American mer- chant marine on the sea in our way, will you help us ? SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 19 Mr. Douglas. I am sorry to say I can not give you much help, but I will tlirow out a suggestion for your consideration. Mr. Hardy. You would compromise, your way ? Ml'. Douglas. Yes; I want a compromise, because by compromise is the only way we will get into this good-fellowship that I hope we will get into. You can do but one thing to meet the views of the American public on this question, and the American public beyond any doubt, is against you, Mr, Hardy, on that proposition — abso- lutely. The Chairman. On what proposition? Mr. Douglas. On the proposition of permanent Government opera- tion. Now, why do you not do this: Why do you not say, ''We will take you into our confidence." Why do you not incorporate in the bill u provision that the Government, if it is forced to have operation, will limit that operation to a reasonable number of years after the war, and take the sting out of your bill, because what is the use of having Government operation with §50,000,000 ? It is a farce on the face of it. Mi*. Hardy, oecausc what are you going to do when you get your 60 steamers with your $50,000,000? Are you goiti^ to go to Congress next year and say, "We made a mistake; the United States does not want 100 vessels; they want 1,000 vessels," and ask them for $100,000,000 more? You will not get it. The Chairman. If we should put in a limit of, say, five years, would the Chamber of Commerce of the United States get behind this bill? Mr. Douglas. I can only answer that by saying that, so far as I am personally concerned, I would hope they would try to meet you on lair grounds, but understand, as I said when I came here this morning, I coidd not get hold of ^Ii-. Fay, or anybody else; therefore I can only speak for the Chamber of Commerce on the referendum and reports; but, personally, I do not think I would do much kicking. The Chair:sian. There is one thing I am disposed to resent, and that is the implication that you are speaking for the American people. Mr. Douglas. So far as the referendum goes, yes. The Chairman. I question that very seriously. Who were the members of the subcommittee, of which you were chairman, that framed this report? Mr. Douglas. The last report or the present report ? The Chairman. The present report. Mr. Douglas. They are here in the book, and I will leave it with you, Mr. Alexander. The Chairman. Who are some of them ? Mr. Douglas. I will read them off, if you wish. The Chairman. Yes. Mr. Douglas. Paul C. Bates, of Portland, Oreg. The Chairman. Who is he ? Mr. Douglas, I could not say exactly who he is, without referring to my letters. The Chairman. What is his position as to the steamship hues and the raihoads ? Mr. Douglas. He has taken a great deal of interest in it, I under- stand, and he has also taken an interest in the referendum in that part of the country in which he lives. He sent me a very large 20 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. number of letters, which he told me to file with the chamber'of commerce, which he had had from 50 or 60 other chambers of com- merce or other parties in Portland, The Chairman. I spent a month in Portland last summer, and it was my privilege to meet many of the members of the chamber of commerce and of its different subcommittees, and I have a notion of the influence that dictated the report of that chamber, and I told the subcommittee to be sure, when that was written, that some railroad man's hand was not over their shoulder, directing their opinion. I said that to the subcommittee. I just felt that influ- ence was so predominating that I said that to them — but do you know Mr. Bates ? Mr. Douglas. I do, but I do not remember what company he is associated with, now, ^Ir. Chairman, from memory. The Chairman. He is connected with a steamship line, is he not ? Mr. Douglas. I do not know; really, I am not sure; not to my knowledge; it is not on his letterhead. The Chairman. Are these reports by the subcommittee referred to the members of the chambers of commerce, and does each mem- ber of the chamber of commerce express his opinion ? Just give us the modus operandi by which you ascertain the sentiments of the chambers of commerce. Mr. Douglas. I thought the judge was pretty well advised about that without needing any explanation from me. We appomt a committee; that committee, presumably, study the subject and get what mformation and advice and judgment they can on the matter. If it is deemed proper to make a report and the presi- dent of the chamber desires us to do so, that committee makes a report. That report then goes to the board of directors of the cham- ber and they O. K. it or make changes in it. You will note we have a little memorandum here m our present report, by which we star cer- tain men that we could not get on the committee, could not get hold of them in time, and we state that since the report was submitted there were certain suggestions made. That report, I want to say, in the amended form, was handed to me not one mmute before I went to the platform to present it. I knew, of course, its contents, but it had to be reprinted with those things added. Then, after that is done, if there is anything in the report which justifies our going to a referen- dum, why, of course, we go to referendum, and then we get an expres- sion, and the committee itself and the board of directors never take any action, as you know, Judge, on' any question, until they have the authority by a referendum confirmed by two-thirds of that vote, before they feel justified m making any expression whatever. The Chairman. That is a two-tliirds vote of the chambers of com- merce, is it not ? Mr. Douglas. No; it is two-thirds vote of the constituent bodies. There are between six and seven hundred of them to-day scattered all over this country and some in foreign lands. The Chairman. What I want to know is how do jou get the senti- ment of the individual members of the chambers of commer.ce. For instance, in Portland — I suppose you all have the same rules — how did the Chamber of Commerce in Portland get the sentiments of the membership of the Chamber of Commerce of Portland with reference to this legislation ? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 21 Mr. Douglas. Of course that depends on the rules of the various bodies. It does not matter whether they are chambers of commerce or other commercial organizations, because they are not all chambers of commerce — these constituent bodies. The Chairman. The Chamber of Commerce of Portland is one of your constituent bodies ? Mr. Douglas. Oh, yes. As to how the Chamber of Commerce of Portland took that referendum and what way tliey acted on it, I hnve no knowledge. The Chairman. Individual members of that chamber of comm.erce told me that, so far as they have knowlerlge, tlie cjuestion was never submitted to the membership of the chamber. Mr. Douglas. That I do not know. Judge. The Chairman. Herice, I say it is questionable whether or not, if that is the method, those reports of the chambers of commerce reflect the sentiment of the indivi(iual members of the chamber. Mr. Douglas. I can only sav on chat question that I am willing to go with you, leaving out a small section of the South, to any chamber of commerce m the United States to which you want to go with me, and let us see whether tlie sentiment in that chamber of commerce agrees with me or with you. I will he willing to take the chance. The Chairman. I just want to find out how you ascertain the sen- timent of the individual members. Me. Douglas. I can not say. In New York they have, for in- stance, ascertained it in a lot of diflerent wa3^s, so it is an impossi- bility to answer the question frankly. Mr. Edmonds. On page 19 you have a statement here which says that on May 8 nine questions were placed before the members of the chamber separated on two ballots accordingly as the questions were based primarily upon issues raised by the report of the special committee or were added by the board of directors of the chamber. Under the by-laws of the chamber the voting closed at midnight on June 22, when 282 organizations had filed ballots. These organiza- tions are situated in 39 States, the District of Columbia, Alaska, Hawaii, the Phihppines, Porto Rico, and Paris, France. In the bal- loting each organization casts as many votes as it may have delegates at an annual meeting of the chamber. Was that done ? Mr. Douglas. Yes. Mr. Edmonds. That is the way you got your vote ? Mr. Douglas. Yes. Mr. Edmonds. Does not that answer the chairman's question, then ? Mr. Douglas. It does, except that the chainnan is perfectly right, I think, in making his point. I can not say to him how any individual constituent body reac hed the result. Mr. Edmonds. But that is the general rule of your chamber ? Mr. Douglas. Yes. Ml*. Edmonds. And that is the way it should be done ? Mr. Douglas. Yes. I find out that ^Ir. Bates — I have a letter from him in my pocket — his name is Paul C. Bates, Portland, Oreg., and he is a member of the firm of McCargar, Bates & Lively, and the heading — I am taking it from the heading — it is down as "General insurance agents." Mr. Greene. You are going to give the remainder of the names on that committee ? 22 SHIPPING BOARD, NAVAL AUXILIARY, AND :\rKKCHANT MARINE. Mr. Douglas. If the committee wishes it. The Chairman. They are in the report ? Mr. Douglas. Yes. Mr. Greene. I would like to ask Mr. Douglas this question: In case of any lines being leased under this bill for the foreign trade, do you think it would be a fair proposition — assuming, as I do, that if they are leased in the foreign trade they will be leased at a low figure, in order to compete with foreign-built vessels, running under foreign regulations — would it be a fair proposition for those leased lines to be admitted in competition with the coastwise trade ? Mr. Douglas. I do not understand that there is a special desire to do so, under the bill, unless there is that one provision of the bill which gives them authority to do that. Mr. Greene. Yes. Mr. Douglas. That is a great question, because it depends upon to whom you lease them. You may lease them to people who are already in the coastwise trade. Mr. Greene. Yes. Mr. Douglas. Of course, if they get one or two or more of those steamers, I presume they are benefiting to some extent, and I sup- pose citizens of the United States will have to take a chance on that proposition; but I say if you start your lines, there wiU be no vessels to lease. That is all there is to it. The Chairman. Is it true or not that the expression of the opinion of the constituent members of the Chamber of Commerce of the United States is not made through the board of directors or through their executive committees ? ]\Ir. Douglas. The board of directors here or of the constituent bodies ? The Chairman. Of the constituent bodies. Mr. Douglas. Judge, I have answered that three times aheady. I do not know the by-laws of these six or seven hundred constituent bodies. I presume each one of those bodies acts in accordance with its by-laws. WTiether or not they have authority to pass judgment on it, I do not know, but I hope they are men of ordinary intelli- gence, and I hardly think they would fly in the face of the member- ship of their body and put in a report that was not indorsed by the average membership of that body. It seems to me they would not do that. The Chairman. I simply wanted to know the modus operandi. Mr. Douglas. Mr. Goodwin, the secretary, might be able to en- lighten you very much better than I could on that subject, hecause he gets the reports. The Chairman. You say that under the by-laws of the chamber the voting closed at midnight on June 22, when 282 organizations had filed ballots, and that these organizations are situated in 39 States, the District of Columbia, Alaska, Hawaii, the Philippines, Porto Rico, atid Paris, France. Mr. Douglas. Yes. The Chairman. How many are there, all told ? Air. Douglas. Between six and seven hundred to-day. The Chairman. Then, less than one-half of them had filed ballots? Air. Douglas. Yes; that is true. There is one other point I would like to bring up, and then I do not Imow I will have anything more to say, unless there are some questions. SHIPPING BOARD, NAVAL AUXILIAEY, AND MERCHANT MARINE. 23 The supervision of firms is quite prominent in the bill. There seems to be a good deal of opposition to that, Judge. Our chambers of com- merce have not passed on it at all, but I hope the committee will think that over very carefully, so that the supervision or regulation of firms will be so that they will not interfere too much with corpora- tions. Some people called my attention to the fact — in fact, quite a few during the present convention— that they were a little afraid of too close looking into their private affairs, so that I only mention that as a point which people bring up. The Chairman. I do not think we have that in mind at all — that is, undue interference with people's private affairs. Mr. Douglas. The only other provision I want to bring up is that we make no suggestion in regard to the question of that very impor- tant feature of the bill dealing with through bills of lading, because we felt that we did not have enough information or enough views of the public to really warrant our going into that very fully. I dare say Secretary Redfield, however, will tell the committee about that, because he knows what is in the minds of the Government, and we were not quite sure, and we felt, therefore, we should be a little care- ful and simply say it should be thoroughly looked into, because I understand, if I am right, you confine that to American ships; that is, those through bills of lading would not be given where they would go on other alien ships. The Chairman'. No. ]\rr. Douglas. Of course, that is an important provision. The Chairman. Yes. Mr. Douglas. Because the number of American ships, for a long time, will not be nearly sufficient to carry a large quantity of freight which will endeavor to secure those prefcrentials, and we certainly do not want great big corporations in this country to monopolize room. Every statement we have endeavored to make has been along the lines of giving the small man protection; that is, we want the small manufacturers and the small merchants throughout the country to have the same rights and privileges which the larger corporations of the United States may have. The Chairman. I think it is the intention that these preferential rates may be given not simply to those ships leased or chartered from the Government, but to all sliips, whether domestic of foreign, to facilitate the extension of our foreign commerce. Mr. Douglas. If they fly the American flag. The Chairman. Yes. Mr. Douglas. I just wanted to know that, because a great many people have asked us what we thought about it. The Chairman. I am glad you called attention to it, because we want that perfectly clear. Mr. Douglas. Twill be glad to answer any questions. Judge. Mr. Sal-nders. There is a great deal of tonnage to-day engaged in deep-sea traffic. That shipping is owned by foreign capital that either had their ships constructed or bought them already con- structed, and put them into this trade. There is plenty of private capital in the United States just now — I imagine more than anywhere else in the world; that capital is just as willing to make money in dividends on that deep-sea trade as in any other direction. Tell mc why it is that American private capital to-day, under our present 24 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. laws, can not buy ships or have them constructed, put them on the high seas, and get the profit in competition with their foreign com- petitors; and, if they can not do it, just what are the obstructions now that hinder them from doing it? Mr. Douglas. The gentleman knows probably that question as well as I do. He knows that there are certain laws Mr. Saunders (interposing). I just wanted to bring that out, and put it in the record. What are the laws ? Mr. Douglas. They are a hardship, and then, when you come to regular lines, you must recognize the fact that the ocean is not any longer what we used to think it was — a great big body of water where every man could sad his ship ; of course, if it is a pleasure ship, he can; but we are new to this business, in a sense, as against the older Euro- pean nations, and when 3^ou come to lay out routes and lay out serv- ice in this country, they are past masters in that; they know just what they are going to do; they know where their cargoes are coming from; they know the port they are going to, and they know they will get a cargo from that port also. For instance, if we grant under this bill the right to corporations to run these vessels, and you run them to South America, you are not going to be able to compete, to save your soul, with foreign lines, nor will anybody else. The man who lives in London or Liverpool, who runs a regular line from New York, he sends her over with such cargo as he can get, and he puts her on berth for South Am.erica. He knows he will get a full and remunerative cargo and make money there. He then sends her to Buenos Aires, where he knows he can make money. For 40 or 50 or 60 years, per- haps, they have been interested in the South American trade. He knows the hide business, the coffee business, the grain business, and, therefore, before his ship ever leaves Liverpool, a cable goes over, and there is a cargo prepared for that ship, and then she can come back in the other direction with a cargo of frozen meat, or something of the kind. He knows the business, and he knows how to get it. He then goes to that other port, and there he gets a cargo ; he gets a full cargo everywhere he goes, and then she makes the rounds again; but what will we do ?. You ask me about starting a line. Unless the proposition is backed up by proper Government payments, j^ou might say, of some character, we have got to learn these things and do what the other people have done; we have got to go out there and find that there is no cargo there for us; the chances are nine out of ten we will, and it will cost us dearly for that experience. That is the condition of the business, and the Government must meet that condition. Mr. Saunders. So far as you have gone, there is no difficulty in the conditions, except those that arise from the fact that our competitors have been longer at the business than we have been. You have not stated anything else, so far, except that. Mr. Douglas. I am talking of navigation laws, seamen's wages, etc. Mr. Saunders. But you have not brought up those things yet. All you have mentioned are the superior advantages that our com- petitors have. Mr. Douglas. The gentleman knows them as well as I do; he does not have to write them into the record. Mr. Saunders. I want them put into the record for the purpose of use in the work on this bill. I want, in a concrete way, put into the record whatever obstructions there are, if any, which would prevent SHIPPING BOAllD, NAVAL AUXILIARY, AND MERCHANT MARINE. 25 an American capitalist from building a ship or buying a ship and putting it into the deep-sea trade, and making money on it ? Mr. Douglas. To answer that, it would take me an hour and a half, and you have not the time to give me. I will be glad to send you some papers on that subject. If you will only review ancient history, you will have all the information you want on that subject. Mr. Saunders. We will give you all the time you want. Mr. Douglas. I will mention fii-st the navigation laws. Mr. Saunders. Wliat are the navigation laws that obstruct such an enterprise as I have mentioned ? Mr. Douglas. I do not think you want to get down to the details of navigation laws. There is the inspection, the question of registra- tion of ships. For instance, an American ship going through the canal to-day is at a disadvantage as against foreign ships. Why? Because she has less registry. You know it and I know it. Mr. Saunders. An American ship that is a deep-sea ship, operated by American capital, gomg through the canal, from a money point of view as a result of registration, would be at a disadvantage with a foreign competitor ? Mr. Douglas. I understand so. Mr. Saunders. Is that due to our legislation? Mr. Douglas. Yes, the registry bill. Mr. Saunders. Then that is a matter which we can change? Mr. Douglas. (Vrtiiinly. Mr. Saunders. So as to relieve that handicap ? Mr. Doltglas. T'ndoubtcdly. Mr. Saunders. What is the next obstacle ? Mr. Douglas. The question of wages is another difficulty. Mr. Saunders. How much would that amount to? Mr. DougLxVS. Tliat has ])een estunated l)y much more able men than I tim. It runs nil tlu^ way from 1 per cent to 100 per cent. You can take your choice. Mr. Saunders. I will put it this wa}^: WTiat would be the average tonnage — you spoke of the number of ships this $50,000,000 would buy, and t sup])ose that is about correct. What would ])e the aver- age tonnage of those ships ? Mr. Douglas. In my judgment, I woidd not make one of those ships less than S,000 or 10,000 tons if I were building them. The Chairman. You mean gross tons? Mr. Douglas. Yes; l)ut I would not make any of those ships less than 6,000 to 8,000 tons dead weight capacity. Mr. Saunders. A great man^^ of the ships operated by foreign capital are operated as tramp ships, and a great deal of the traffic of the world is handled by tramp ships ? Mr. Douglas. Oh, undoubtedly; yes. Mr. Saunders. Take one of these ships, operating as a tramp, and owned by American capital. The first handicap that she would suffer, as I understand from you, in competing with a foreign tramp, would be this question of registration at the canal ? Mr. Douglas. That might be. Mr. Saunders. And the next would be the matter of wages. In the course of a year, suggesting now that that tramp would ply between the ports that a foreign competitor, British or otherwise, would ply between, what would be the difference in the operating 26 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. cost of the American tramp as compared with the foreign tramp, just approximately? Mr. Douglas. Those are technical questions which are very diffi- cult for a man who has never run ships to state. There are men in this room very much better qualified than myself to give you that information, and they are going on the stand, I believe, to be interrogated. Mr. Saunders. Well, if you are not eciuipped to answer the ques- tion I will not press it. ilr. Douglas. I have studied that question to some extent. Mr. Saunders. There is the question of wages that American capital undertaking to run a ship would run up against? Mr. Douglas. Yes. The Chairman. We have no law regulating wages in American ports, have we ? Mr. Douglas. Not to my knowledge. The Chairman. So, there is no law to be removed to remedy that condition? Mr. Douglas. No; but the fact remains, Judge, that the Amer- ican wages are higher than the wages of any other country in the world, and when you compare them with the Jap wages or the Nor- wegian wages, it would make a very heavy difference in the cost of operation. Mr. Saunders. I am not gainsaying that, but I just want to de- velop the fact and the extent of it. ' "V\Tiat is the next handicap, num- ber three ? Mr. Douglas. There is the general impression — it has been con- tradicted by some — that the space allowed is better or larger for American seamen, and the food they receive in some cases unques- tionably is very much more. Mr. Hardy. You know that the space allowed is not less ? Mr. Douglas. I do not know whether it is or not. Mr. Hardy. Do you not know the law on that ? Do you know that up to the passage of the seaman's bid, 72 cubic feet was allowed on Ajnerican vessels, and 120 feet on English vessels? Mr. Douglas. I do not know; but I do not assume that is of gi-eat importance, the question of a little space one way or another. The Chairman. In the seaman's bill, as it was reported, we pro- vided for increase of crew space from 72 to 100 feet. Afterwards we read the report of the Commissioner of Navigation, m which he called attention to the fact that on foreign vessels the crew space is 120 feet, and we thought we would at kuist make the crew space on American ships equal to that on foreign ships; hence, this contention that that might be a handicap was entirely exploded, because our laws were not so hberal as foreign laws, and so far as the food is concerned, that is all moonshine, because, under our navigation laws, while we have a very elaborate menu set out, it is expressly provided that the captain and the crew may agree on it, and they have not paid any attention to the law. Mr. Douglas. Notwithstanding all that, wliich somids very well, I do not believe it. The Chairman. It is true, nevertheless. Mr. Douglas. I will take the Pacific Ocean, and if I can have all Japs or all Chinese, practically, and onh^ a few men to man her, I SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 27 think if you aro trying: to produce the results with American seamen, you will find I will walk away with the money. The Chairman. I am speaking with reference particularly to the Atlantic. I will agree there is a peculiar situation on the Pacific. Mr. Hardy. Is there not a law requiring American seamen on American ships ? Mr. Douglas. There is a law requiring a language test. Mr. Hardy. That was not there, even, until last year? Mr. Douglas. Mr. Rhett, of South Carolina, is chairman of that committee, and I do not want to go into the seaman's hill, because I have no authority to discuss it in any way whatever. Mr. Hardy. Even with the language test, did you know that the vessel China with a Chinese crew passed that language test ? Mr. Douglas. I believe, Ky the kindness and the indulgence of the Secretary, they did. Mr. Hardy. Do you know that Mi*. Schwerin's testimony here was that his Chinese crews did understand the orders of the -officers? That was his testimony before this committee. Mr. Douglas. He is a very great enthusiast and advocate of his proposition, but I think, as I say, that is a little outside of my sphere, to go into the seaman's act. Mr. Hardy. You at least know that if that law does interfere it did not interfere until last year, when it was passed ? Mr. Douglas. I admit that. Everybody must. Mr. Hardy. You say it is bad laws that have prevented our mer- chant marine. We want you to point out or to put your finger on some specific law. After Judge Saunders gets through I want to go into that. Mr, Saunders. Those are three handicaps that hinder American capital from being disposed to make this venture. What is the fourth one that you have in mind, if you remember? Mr. Douglas. You will romombor that it is only recently, as the judge says, that there havo boon some other laws passed. You did pass a law allowing American citizens to build abroad, and you took off the limit of five years. Mr. Saunders. Yes. Mr. Douglas. But since that law wa,s passed there has been no opportunity, by reason of the war coming on, for any availing of that law. Mr. Saunders. I know; but previous to that? Mr. Douglas. We will have to wait to see whether it will develop after the war is over. Mr. Saunders. That is not in the wa}^, at an}' rate. Mr. Dol'GLAs. No: but that is a question of cost. Again, there is a freat controversy— you have five years' limitation to build your ship, have always believed and still believe that we have not been able to build in this country within 40 to 50 per cent of the cost of a ship as against a European builder. Mr. Saunders. But that can not possiblj' be any difficulty in the future for this reason, because if we can buy cheaper abroad than at home, we can do it, and if it is more expensive, there is no reason to go abroad, and our foreign competitors have not an^^ advantage over us in that respect. What is the ne st handicap ? 28 SHIPPING BOAED^ NAVAL AUXILIARY, AND MEPiCHANT MARINE. Mr. Douglas. You are dealing in the future. That is something that I am a little careful about, because I do not know anything about it. You had better deal in the past. Do not let us get into the realm of speculation. Mr. Saunders. But this whole scheme is for the future. Mr. Douglas. Yes; but you are theorizing. Mr. Saunders. No; I am not theorizmg. Mr. Douglas. Yes; you are. Mr. Saunders. Let us see if I am. I am trjang to find out what the handicaps are that exist to-day that would deter American capital from entering into competition on the deep seas in the way of tramp steamers with foreign capital. Now, you can not say, with respect to that competition, that a law which has been repealed is a present hindrance, so I am not theorizing at all 'about it. What is the next handicap ? 'Mr. Douglas. You can not buy or build ships to-day to any extent, you know? Mr. Saunders. Yes ; I understand, at this moment ; but I mean, so far as the laws are concerned. Mr. Douglas. After the war is over, if their shipyards can build cheaper than we can, very naturally Americans vnW go there. There is no doubt about that. Mr. Saunders. Then, that handicap is out of the way? ]Mr. Douglas. But you will remember, again, that we are in a different position than England, for instance, for she is the best example to take. You have to look at facts and not theories. You exemphfied the fact that an American citizen should be as well able to sail a tramp ship as anybody else, but that is not so. The law goes according to nationality. England is a great power; she has her home trade, which is largely export; she has her colonies in India; she owns Egypt, and she has New Zealand, and South Africa, and pretty soon she may have the rest of the world. Now, English people, of course, trade with themselves; they had been in this business long before we ever dreamed of going into it; even when our clipper ships were in the water, they were in it; and since then, of course, they have driven us off. Take all these Enghsh ships going to all these English colonies, they have a decided advantage over an American ship. Mr. Saunders. I will admit that. Mi\ Douglas. That is a serious handicap. I do not care whether she is a tramp or a liner; the liner has a gi-eat advantage, but the tramp still has a considerable advantage. Take the people who load tramp ships and do not load linei-s abroad. They have their afhUa- tions in Australia; they go out there at certam seasons of the year and they got their wool cargoes, and they go from Austraha to South Africa. All that has been built up by a process of evolution, cover- ing a great many years. Mr. Saunders. I admit all that. Mr. Douglas. You say you admit it, but you do not admit it. It is a fact which is overlooked by Congress. Mr. Saunders. You will agree that is a restatement of handicap No. 1? Mr. Douglas. No; it is altogether different. SHIPPING BOAKD, NAVAL AUXILIARY, AND MEECHANT MARINE. 29 ]VIr. Saunders. I admit the force of all that; but you are simply amplifying what you have already stated, namely, that as a result of having been long in the business and as a result of their experience in traduig, and because of the trade with their colonies, they have that advantage, and I admit all that, but I am trying to find put some additional handicaps. Mr. Douglas. I tliuik you have admitted enough to get the con- ditions that exist. Mr. Greene. Do not England and other foreign countries own termmals and warehouses at the ports; for instance, in South America- where there is a large trade wliich we hope to get, have the}^ not estab- lished means and methods of reaching the ulterior that we have not, and will not have for many years ? Mr. Douglas. They own, of course, a very much better system of coaling stations than we do, unquestionably, but whether they have any advantage going uiland, I hardly thijik so; not so far as my knowledge goes. Mr. Greene. I thought they did. Mr. Douglas. They may have; but not to my knowledge. Mr. Edmonds. On subsidies m the preferential freight rates the German vessels get handicaps against our American ships. The Chairman. We do not want to take it for granted that is a fact. Mr. Douglas. Oh, yes; in Germany that is a different proposition. All dockage charges at our ports are very much in excess of what they are in Germany and in England. The Chairman. How about the extra officers on the ships, and the water tenders required on freight boats; does not that cost us more ? Mr. Douglas. Yes; it costs more money, and that emphasizes one reason why I am in favor of having a ship run in accordance with the wishes of Congress, flying the American fla^; but if she docs, then do not let Congress try to demand certain things without trying to pay for them. Mr. Saunders. You spoke of the dockage charges being higher. Do not those foreign ships, when they come in heie, have to pay those dockage charges ? Mr. Douglas. Yes. Mr. Saunders. How is it that our ships will be at any disadvantage, then ? Our tramp ship competing with the English tramp ship would have to pay the dockage here, I assume, and the dockage charge in England, if we were trading between the United States and England, and would not an English competitor trading between those two ports pay exactly the same charges ? ^Ir. Douglas. That has been a question that has been debated in the chamber of commerce. I claim, from all the statistics I could get, she would not have to pay as much. Mr. Saunders. Wliat do you mean ? Mr. Douglas. I think the English boat gets preferential treatment. Understand, that is disputed, and was disputed then; but I believe that the English ship does not pay what the American ship does, or anything like it. In fact, you have admitted yourself that she has an extra registration, which means a discrimination. Take a difference of 1,200 tons on a 10,000-ton ship and see what the difference amounts to. 32910—16 3 30 SHIPPING BOARD^ NAVAL AUXILIARY^ AND MERCHANT MARINE. Mr. Saunders. I have not admitted anything, and you and I are not engaging in any controversy at all. Mr. Douglas. No. We want to get the facts. Mr. Saunders. I understand you to say that you do not state it Positively, but that it is your impression, upon the state of facts that have cited, that the English tramp steamer would have the advan- tage over the American tramp steamer in that she would get prefer- ential consideration at English ports and would not have to pay as much dockage charges as the American tramp ? Mr. Douglas. I would not say dockage charges alone, because, as I stated, there is a difference of opinion on that subject. I have never been able to get the absolute facts necessary to make it as a definite statement; but I do believe there is some little difference in the charges, and that we do not get the same treatment. Mr. Saunders. That is important. Can we get at the facts with regard to that ? Mr. Douglas. I think you can get at it very much better than I can. As I say, it is denied, but I do not accept the denial. Mr. Saunders. That is just a moot question. Are there any other facts you have in mind that would deter American capital from invest- ing in a tramp ship ? Mr. Douglas. I think you have been into it enough to make it apparent to my mind, if not to yours. Ml*. Saunders. I do not think that is a very satisfactory answer to my question. Ml-. Douglas. I can not answer it in any other way. I do not have anything in my mind very special. Mr. Saunders. That is different. Ml*. Douglas. I think we have brought out enough. Mr. Saunders. The question of whether or not we have brought out enough is not involved. I am trying to get at the facts. If there are any other handicaps you have in mind, I wish you would state them. Mr. Douglas. I do not know of any. 'Mr. Saunders. Then we have covered the three handicaps which, in yom- judgment, will deter American capital from investing in a tramp ship for the purpose of deep-sea trading ? Ml'. Douglas. Yes; three or four or five. Mr. Saunders. Let me ask you about another feature of this bill. You have pointed out that the number of ships we could buy would be absorbed in the lines and that there would not be any more for promiscuous trading. What, in your judgment as a business man, would be the effect on business conditions of the number of ships operating under this biU ? Mr. Douglas. If you put them on the regular lines, it seems to me the condition would be about like this, you would simply perpetuate the control of ahen shipping, as against the United States. There is no way of getting around that, because it is a self-evident fact. You have 60 ships you are going to utilize on these lines; you put on a line for one or the other coast of South America, Africa, or Australia; you have the right to fix your rates if you operate yourselves, and you will fix them, and we presume you will fix them fairly. You are going to run six boats in that service; that would probably be what you would have to run to have the service every two weeks. Do you SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 31 think the foreigners care anything about whether you put those six boats on or not? No; the}' do not. In my opinion the ahen lines would be only too glad to have you put those boats on, because you would perpetuate their control. You will not carry more than 10 per cent of the trade, and you will establish rates which, in all prob- ability would be fair rates. Now, what is the foreigner, who is going to run those boats with the other 85 or 90 per cent, going to do? He has got to do one or two things; if your rates are too low for him, then, of course, he is not going to enter into competition at that mo- ment with you; he will let your boat get away, and then he will fix the rate. You have kept private enterprises from going on the berth, and you have left the berth to the mercy of the alien ship. Then, in my judgment, if the Government should try to operate them, they are not only going to fix the rate too high, but they are, perhaps, going to have a ship tJiat will not compete. The honorable Secretary says we should have 16-laiot ships or 14-knot ships for Buenos Aires. Hon. W. G. McAdoo (Secretary of the Treasury). I have not fixed any speed. Mr. Douglas. I would fully agi'ee with you if you had. Secretary McAdoo. No; but 1 wanted to correct you. Mr. Douglas. I was approving it, if you had. Wliat are you gomg to do ? The alien steamship owner is sending his ship there regularly, too, with a speed of say, 9 knots. He has a great big ship of ten or twelve thousand tons, with every possible cubic foot avail- able for cargo and dead weight, with a big deck load, and you may not have quite so good a ship. He will make money, and good big money, too, while you, operating under the Government system, will lose money, and I do not believe the Government is smiply going into this business, if they do go into it, to throw money away. I am not advocating that you should, but I think you will put yourselves in a very grave position, because to-day there is a chance that some see, if we live long enough, by American enterprise to come in and help run those lines, and what I have been trying to point out to Judge Alexander, who has been very fair and courteous to me always, is that you want the American public to come in; you do not want $50,000,000 of Government money to be spent, and then have no money left. You want to attract $500,000,000 of the public money, and if you start a line to South America, start it on a safe basis, so that if that line pays American enterprise and American capital, they will be able to supplement that line and put more vessels on, which they can build abroad or build here, according to your judg- ment, and build up the line. The Government will not be able to do it, because they have not any more money. One Son a tor said last year — or a member of the House — he said, "If thi bsill passes, I am going to raise Cain if I do not get my quota of ships for my part of the world, where we can send them to foreign ports." He was on the west coast, I believe. Mr. Saunders. I understood you to say that the condition in the ship-yards of the world to-day is such that there would be no immedi- ate chance of having the ships built ? Mr. Douglas. Very little. Ml'. Saunders. With respect to the purchase of ships at the present prices of ships in the world, are they very high as a result of that ? 32 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Douglas. Yes, sir; very high. You can not buy many ships. You can buy some. ]VIr. Saunders. Suppose they can be purchased at these high rates by the expenditure of the money contemplated by the bill; now, suppose they are leased to private shipowners to operate; if they are leased to these private shipowners on such rates as will represent a profit to the Government, what advantage, then, would that ship- owner or that lessee have over any other person with capital who wanted to lease a ship anywhere in the world and go into the deep sea business ? Mr. Douglas. He would not have any. ^ir. Saunders. If they are leased to these people who are going to lease them on terms that will represent a loss to the Government so far as its investment is concerned, what would that be except a subsidy to that individual lessee ? Mr. Douglas. Certainly, that would be a subsidy to him, un- questionably. Ml'. Saunders. That is all. Mr. Hardy. I wish to get clearly and candidly your statement: Outside of the question of measurements, of which you spoke just now, what handicap, prior to the passage of the seaman's bill, was there by law on the American merchantman in the deep-sea trade ? !Mr. Douglas. I never made a very thorough study oi the seaman's act. Like a good many other laymen, perhaps, with a good deal of ignorance, I have condemned it. I would liKc to answer the judge on those questions, so far as the seaman's act is concerned, but, to be candid, I have never given it proper study and attention which it should have. Mr. Hardy. You will allow me to say something, and then you may comment upon it, if you desire. Mr. Douglas. Yes. Mr. Hardy. For two yeai-s I have been trying to get somebody to put his finger on a single American law that is a handicap to the American trade on the high seas. ^Mr. Dollar here two years ago stated that our measurements subjected us to greater charges m foreign ports than foreign measurements. That was the first time that was ever called to the attention of this committee or any member of it. I asked him the question had he ever sought to have our laws on that amended or changed, and he said he never had. Mr. Chamberlain differs with him about it, but I am not going into that, and I am permitting that to stand as an objection under our law. I have sought from every witness who has come before us to get him to point out some one of our laws that is a handicap, but no one has ever done it. Can you do it ? Mr. Douglas. Judge. I would be glad to later on advise you by letter on that point, and I think it is very possible to do it, and I think you can get all the men 3^ou want who are well quahfied to give you that advice in New York, Boston, and Philadelphia. Mr. Hardy. I have asked all of them who have come before this committee, and none of them have told me. Mr. Douglas. I am afraid j^ou have asked them with a ])rejudged impression. Mr. Hardy. No. I SHIPPING BOARD, NAVAL AUXILIAUV, AND MERCHANT MARINE. S'.l Mr. DoUGLA.s. I know you are ti very able man, but i know you have vorv strong convictions, and I think you ought to have some Httlo reasoning on that subject from our standpoint. Mr. Hardy. Mv })rojudgmejit does not prevent you from pointing out the lian(Hcaps. Mr. DoiGLAS. I have given a various number of handicaps. Mr. Hardy. What are the various number of liandicaps ( Mr. Doi'(iLAs. I refer you to the record. ^Vhat is tbe use of going over it again ? f Mr. Hardy. The wages are not fixe«l by law, are they ? Mr. Douglas. Thev are fixed l)y usage. That is just as good as i law. ' ' Mr. Hardy. I am not asking you what is as good as law. Mr. Douglas. I liave answeretl. and you do not agree. I say usage is law. Mr. Hardy. We can not rej^eal usages Mr. DoKJLAS. Xo; but it exists, Mr. Hardy. Have your people — the shipowners — ever come before Congress in the last 20 years and asked to have any of the so-called an ti( plated laws repealed ( Mr. Douglas. I su])])Ose there were not enough to come. Mr. Hardy. You seem to be getting together pretty thoroughly every lime we meet. Have you ever asked for the re])eal of any so-called antiquated navigation laws'! Mr. Douglas. I er of Commerce, and some other organi- zations of that character, they might behav-e in like manner, and send resolutions up here asking us to vote for the bill? Mr, Douglas. Of course, I can not answer those questions. My advocacy of the chamber of commerce is along the lines of the work they are trying to do. The Chamber of Commerce of the United States can not regulate the whole business of this country; they recom- mend what they think is best, and we hope that it will eventually be of value to the country. If there is nothing else, I would like to' get down to the Pan American, if I can. The Chairman. I thank you very much, Mr. Douglas, for coming here. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 35 Mr. Douglas. I just want to say that I thank the two Secretaries for what they have done, and I want to say that I realize those gentlemen have done everything" the}' could to stir up jjublic opinion and create a desire to have this subject thoroughly investigated throughout the country, and I urn sure that tlie chamber of com- merce appreciates their efforts, and I am sure that the public does, and although we may not agree with them, and may differ with them on some propositions in relation to the question, I want them to feel that they have our sympathy, and that we are entirely in accord with them in trying to reach a fair conclusion. I thank you very much. Secretary McAdoo. ^Ii". Chairman, may I say just a word to the committee ? The Chairman. Yes, Secretary McAdoo. I came here this mornmg with the expectation that I would have the opportunity of answering any questions ohat the conmiittee might vlesire to ask me, and to make a statement about the pending bill, but hearing that Mr. Douglas was here attendhig a meeting of the chamber of commerce, I yielded to him, and I regret very much to say that my engagements are of such an imperative character ^ that I can not possibly tippear before the committee to-day. I will be very glad if you will give me some other day. (After informal discussion it was understood that IVIr. McAdoo will appear before the committee on Wednesday, February 16, 1916, and the committee thereupon took a recess until 2 o'clock p. m.) AFTER RECESS. The committee reconvened at 2 o'clock p. m. The Chairman. Gentlemen, we will proceed with the hearing. STATEMENT OF HON. WILLIAM C. REDFIELD, SECEETAEY OF COMMERCE. Secretary Redfield. Mr. Chairman, in order to save the time of the committee it would seem to me that I might briefly touch upon certain points raised by Mr. Douglas this morning and then briefly describe the actual conditions of our merchant marine as it is to-day and the very extraordinary facts in relation to it out of which con- ditions, as well as out of current business conditions, this measure arose, and then taking up the measure try to show what is attempted to be done by it. If I may, then, briefly speak of certain points raised by Mr. Douglas, I want to say that there is no disadvantage, either as regards the Panama Canal or elsewhere, in the matter of the registered tonnage of American shipping. All vessels, as far as their measurements are concerned in the Panama Canal, are treated alike, the Panama Canal rules applying to every vessel of every nationality in the same way, and as regards the rest of the world, the rules used by the United States are substantially the rules of Great Britain, with the difference that in certain details we are a little more lenient than Great Britain and do not make ships' tonnage quite as large as her rules do. In that respect an American ship would be at an advantage rather than a disadvantage wherever any impost was 36 SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. placed upon tonnage. Mr. Chamberlain, the Commissioner of the Bureau of Navigation, is here and he has that matter entirely at his tongue's end and would be very glad to give the information in detail. Tiie Chairman. Right in that connection I will say, after you have concluded your statement, Mr. Secretary, I have requested Mr. Cham- berlain to appear before the committee and I would be very glad if every member would be present at that time, particularly the new members of the committee. He will tell what, if any, antiquated navigation laws we have and if there are any discriminations against American shipping in the matter of measurements of vessels in foreign ports. Secretary Redfield. May I add, Mr. Chairman, in that connection, that the Bureau of Foreign and Domestic Commerce in our depart- ment has caused to be collected the navigation laws of all the leading maritime countries, and they are now at the service of the committee. In so far as they relate to the laws of foreign countries they have been verified by the officials of those countries, and for the first time the entire subject has been presented in one pamphlet. Mr. Hardy. When were they sent to the Members '^ Secretary Redfield. Day before yesterday in the evening, when they first came out. . » The Chairman. That is right. Secretary Redfield. I may say also, Mr. Chairman, that a few months ago, having reference to what Judge Hardy said this morning, I had in my office a group of gentlemen representing several of the largest American steamship interests. I asked them what changes they desired made in the navigation laws and received no answer. None of them was willing to suggest — none of them did suggest any changes as desirable. I have, as Judge Hardy said he had done, sought for a year past patiently to get from any steamship company or any person familiar with nautical matters a statement as to what change they desired in the navigation laws, and thus far I have failed entirely to get a definite suggestion as to what was wanted. Mr. Hardy. Right at that point, if you will allow me: Neverthe- less, for the last 10 years you have been hearing talk about our mer- chant marine disappearing on account of our antiquated navigation laws? Secretary Redfield. Yes, indeed. I have written back to ask the gentlemen who complained of the navigation laws what suggestions they had to make as to changes. 1 do not recall receiving a reply. As regards the facts concerning the oriental crew of the steamship China under the seaman's law, 1 have the original report of the sur- veyor of customs of the city of San Francisco, and, with the com- mittee's approval, will have it put in the record. I will read the section of it which has reference to this matter. It is dated January 11, 1916: I devoted much of the day Wednesday and most of the night attf^ntively listening to the questioning of the ( hinese cr^^w by the officers of the steamship China in the presence of the three prot. stants, Messrs. Patrick Flynn, Paul Scharrenberg, and Eugene Steidle. I thoroughly realized the importance of the proceeding, and was keeyily al'^rt in an effort to be completely impartial and fair. My conclusions were that out of the 32 men employed in the deck d< partment 6 failed the requisite knowl- edge of the language of thiir officers, also 1 man in the steward's department failed out of the 57 employed, and 28 men in the engineer's d' partment were deficient out of a total of 65 employees. The following day I was pres-nt at the examination of the 20 Filipinos, of whom 12 were s'^lected. which was the necessarv number to fill the quota essential in the engineer's department. That afternoon the China sailed at 3 o'clock, SHIPPING BOAED^ NAVAL AUXILIARl', AND MERCHANT MARINE. 37 two hours after the scheduled time. Later the manner of conducting the hearing elicited congratulations both from the labor men, -who were the protesfants, and the owners of the steamship company. In truth, the steamship company people publicly announced that they immediately intended to purchas? three additional steamera in view of the treatment accorded them by the Government officers. Mr. Hardy. That was the language test contamed in section 13 of the seaman bill ? Secret aiy Redfield. Yes, sir; that was the former Pacific Mail steamship China, with presumably the same crew that she had under the Pacific Mail Co. She is now" ow^ned by the China Mail Steams hip Co., wdiich, I am informed, is capitalized by Chinese merchants in (he city of San Francisco. The}" have since attempted to purcijase (he Government transport Justin, and I thiidv they intend to purchase it. Mr. Hardy. As far as you laiow , is there any varying from a right construction of this law to make it more lenient ? Secretary Redfield. I took the trouble to consult the statements made in debate by the members of this committee, including the statements of the chairman of the committee and yourself, and the conclusion which had been reached by the law" ofRcere of the Depart- ment of Commerce and by myself before I read the debates w"as con- firmed by the statements made by this committee in the debates. Mr. Hardy. So that the construction placed upon that bill by your department was the construction that v/as understood to apj)ly to it by the advocates of the bill when it was passed ? Secretary Redfield. It was. Mr. Hardy. The reason I asked that question is that it has been occasionally said by somebody w"ho has been abusing the bill that your department has failed to construe what the huv meant, and that it clid not mean w^hat you construed it to mean. Secretaiy Redfield. I have heard that statement made. In the matter of the cost of operating ships, let me say that there is a very large amount of sw"eeping and general statements made and very little detail given. The cost of tw"o ships of the same line, of the same size, and of the same w^ork is not alike. A w^asteful or negligent captain or steward can radically alter the cost of operating a ship. It is quite as important, and perhaps in some respects more important, to know what a ship costs at the dock as it is to know what it costs when she is at sea. To illustrate that, let me say that I have an acquaintance who is the superintendent of one of the large steamship companies which utilizes Norw^egian, English, and American freight steamers. I sent £or him, because I knew he would tell me the truth, and I talked to him very frankly about the cost of operating the vessels. He said what, of course, is obvious, that the cost of operating a ship depends very largely upon her equipment, and that his experience was that a Nomvcgian vessel cost, as far as outlay w"as concerned, about $500 a month less than an American ship of the same size and capacity, but that since the Norwegian vessel in company with the European vessels generally w"as equipped wdth single winches for each hatch and was not erpiipped w"ith side ports, the American vessel took two days less in port at each end of her voyage, and consequently in going to points, say, four or six days distant made a complete extra voyage per annum more than the Norwegian ship, and as a result she earned as much as the Norwegian vessel did. The American ship, I neglected to state, has double winches and is equipped with 38 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. side ports. Consequently her idle time at the dock is greatly reduced. I might say that that is a problem upon which so much brains has been spent in connection with the lake traffic — to reduce the idle time, which is the nonearning time of the ship. Furthermore, his expe- rience was that upon the Norwegian ship it was impossible to get the best class of seamen because the accommodations were so bad better men sought the better ships; that at the end of 20 years there was not much left of the Norwegian ship, whereas the American vessel was good for 10 years more, under ordinary care; that from every point of view, as a practical man, speaking for himself personally and not for his company, he would rather have American vessels in the freight traffic than foreign ships. That was in the fall of 1915. The statement was made that we are not able to build within 40 per cent or 50 per cent of the foreign price. I may have something to say about that a little later on, but I point out to the committee that ship plates are absolutely cheaper in the United States in or- dinary times and structural steel of that character is made more cheaply here than in any other country in the world, our capacity being so vastly larger than that of Great Britain, Germany, and France put together that we produce steel of that character more cheaply than it is made in other countries. As to there being conditions which deter American capital from entering into shipping business, I shall have the pleasure of pointing out that American capital is entering into shipping at an unprece- dented rate, that it has never entered into it as rapidly in the history of our country as it has in the past year, and is only deterred at present by the inability to get ships built as fast as they need them. The point was made as to the advantage of British ships all over the world, through the presence all over the world of British invest- ments. That is in a measure true. It is, of course, a fact that England has investments outside of her own territories of about $20,000,000,000. They derive a great advantage from dealing in foreign lands with Englishmen or Scotchmen. The remedy for that does not, however, lie within the scope of the merchant marine, but is to be sought in tlie extension of American banking and investment facilities abroad, and that process is going on. There have been American banks established in many foreign ports in the past year, due to the Federal reserve law and new American investments are being made in various parts of the world. The reason why the Secretary of the Navy and the Secretary of Commerce were put upon the board proposed by this bill is because they represent the two great maritime departments of the Govern- ment. We need hardly say what the Secretary of the Navy has in the way of vessels. The Department of Commerce had, upon the first of the year, 136 vessels in operation, not counting smaU launches, and 7 building, making 143 ships of its own on almost all the oceans, and designing our own vessels and familiar with their repair and con- struction. It was for that reason thought desirable that whatever might be gained from touch with the civilian maritime world through this board should be supplemented by all that the Government had in the way of maritime work of its own, Ivtiowing that through the Secretary of the Treasury we should be able to get the assistance of the splendid service commanded by my friend, Capt. Bertholf, and also the aid of the War Department running its own fleet of trans- SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 39 ports. The purpose, then, was simply to unite all that was best in private as well as in public knowledge in the development of this scheme. Speaking for myself, if I may do so, there would be no objection on my part to having myself ehminated from the board, if the committee thinks it best. The Chairmax. Well, the Department of Commerce is charged with the administration of our navigation laws, is it not ? Secretary Redfield. Yes; it is. The Chairman. And presumably knows more about them than any other branch of the Government ? Secretary E-edfield. The suggestion was made about this $50,000,000 not being sufficient to go a great ways, but I think it was forgotten that this money may be used in large part over and over again, and we should be very glad to see the bill, if it is not perfectly clear in that respect, made so in this way: That if a ship is sold tho funds received from the sale of that ship may be utilized for the further pursuance of the objects of the bill. The Chairman. I will say at this point that I have an amendment to propose to make that perfectly clear. Secretary Redfield. I think now I may pass, if the committee will, to the condition of the merchant marme at the present time, and certain very interesting and notable developments that are taking place in it which seem to make this an opportunity of such a peculiar character unlike any condition wliich any of us had ever faced con- nected with the marine, such as would seem to make it a great pity if tliis opportunity is not seized to the full. I may say that in drawing this measure, so far as I had a minor part in it, the purpose has been to draw a measure which did permit the widest possible scope of action, with a declared purpose, subject to a double supervision or a triple supervision, if that may be possible, namely, that the acts should be subject to the approval of the President on the one hand and that on the other hand they are always subject to the review of Congress which can at any time alter or amend them, and that all that the board proposed by this bill can do must be done in the open and in a manner subject to constant correction by public opinion. That, in brief, is the purpose of this measure. The American merchant marine has added to itself in the last year more than was lost in the two bad years of the war between the States. It never was as large as it is to-day. The increase in it was never as large as in the last calendar year. It grew much faster than it ever grew before. We never needed ships as badly as we need them now. We never were more dependent upon foreign ships than we are now. Never did tliis dependence rest on a more shaky foundation. Never had we so much of a marine. Never did we suffer so much from lack of one. Never did we add to it so fast. Never was our present helplessness to add to it sufficiently so marked. I call your attention to an excerpt from the London Economist of November 13, which has great significance: In future the government may requisition for the carriage of grain and other mer- chandise any ship registered in the United Kingdom, and after December 1 no British ship of over 500 tons may carry cargo from one foreign port to another without first obtaining a license from a committee in London. All British shipping is liable to be requisitioned for commercial purposes. All trade in British bottoms between foreign ports is to be under direct government control. 40 FHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. These are revolutionary measures which nothing but urgent necessity could justify and the full effects of which it is impossible to foretell. I have in my hand the list of vessels under contract in private American yards on February 1 . Mr. Hardy. Do I understand that article to mean that a British vessel is not allowed to trade between two foreign ports without special leave of the British Government? Secretary Redfield. On November 10, 1915, there was an order of council prohibiting British ships carrying cargo between foreign ports unless licensed by the board of trade. Mr. Hardy. I just wanted that clear. Secretary Redfield. There were under construction in American yards the first of this month 2.30 vessels of a total merchant tonnage 01 901,871 gi-oss tons. That means that 67 new vessels of 231,073 gross tons, represent the new orders received during the months of December and January, or at the rate, as you will observe, of a new vessel every day, or a little more. As a matter of fact, there are a few yards on the Pacific from which we have not yet heard, and this is perhaps something of an underestimate. I will file with the com- mittee a statement showing the merchant and Government ship building in each yard on the 1st day of February, 1916. (The statement follows:) Kinds of vessels included in the statement of shipbuilding for Feb. 1, 1916. Class. Num- ber. Gross tons. Bulk oil vessels . . . 64 71 10 16 19 3 5 3 2 19 13 1440,962 309, 741 Passenger and cargo combined 49,378 47,118 17,290 15,000 3,454 11,297 925 • Num- ber. Gross tons. Special vessels: For foreign Governments 4 1 5 1 1 1 1 1 3 1 15,500 500 1516 ""m 300 500 900 100 Wrecking tug . Yach ts Holster L igh ter Elevator Trawlers Fireboat 18,616 Not stated 17,590 Total 230 1901,371 Incomplete. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 41 Merchant and Government shipbuilding, Feb. 1, 1916. Name. New York Shipbuilding Co : Newport News Shipbuilding & Dry Dock Co Fore River Shipbuilding Corporation Wm. Cramp & Sons Ship & Engine Building Co Diihuque Boat & Boiler Works Charles Barnes Co Bath Iron Works Maryland Steel Co Harlan & Ilollinpsworth Corporation Union Iron Works - . Staten Island Shipbuilding Co Great Lakes Engineering Works Great Lakes Towing Co Baltimore Dry Docks & Shipbuilding Co Manitowoc Shipbuilding & Dry Dock Co A nierican Shipbuilding Co Moore A: Scott Iron Works Clinton Shipbuilding it Repair Co Johnson Bros Howard Ship Yards Co Seattle Construction A Dry Dock Co.^ Lake Torpedo Boat To Call ornia Shipbuilding Co American I^ridge Co Ellicolt Machine Corporation Spedden Shipbuilding Co Hartmann-Oreiling Co Pusey & Jones Co } 6 Chester Shipbuilding Co 7 Chicago Shipbuilding Co I 1 Toledo Shipbnilc'ing Co ' 7 United Kngineering Works ' 1 HerreshoU Manufacturing Co I 1 Quintard Iron Works ! 1 Merrill-Stevens Co Milwaukee Bridge Co I 1 American Shipbuilding Co ' 1 James li ees t*i: Sons Co j 1 Tampa Foundry & Machine Co j 1 Merchant Government construction, construction. No. Gross tons. No. 119,744 124,856 166,000 72,600 25 300 1 1,900 71,300 63,481 140,658 1,697 42, 530 Total 230 1901,471 24,500 . 1,000 , 63,300 I. 110,000 i. 1560 L 4,600 19,000 10,388 750 1, 684 34,000 2,100 17,900 3,500 178 900 20 2,000 Displace- ment. Tom. 61,495 63,400 » 31, 892 4,450 647 720 6,295 1.000 800 1. 125 11,750 1,955 620 (2) 170 1176,319 Merchant construction completed since July 1, 1915. No. Gross tons. 24,470 11,837 6,621 525 39 17,490 6,685 6,323 1,535 4,242 325 882 2,122 7,180 222 560 94 91, 113 • Incomplete. ^ Not reported. 3 Detailed statement not available. Steel merchant vessels under construction or under contract on Feb. 1, 1916. NEW YORK SHIPBUILDING CO., CAMDEN, N. J. VesseL Gross tonnage. Speed. Owner. Trade. Probable date of laimch. Standard Arrow Royal Arrow Bristol 10,250 10, 250 3,971 10,250 5, 188 10,250 10, 250 10, 2.50 8,500 5,266 750 750 750 750 5,266 Knots. 11.0 11.0 10.0 11.0 11.5 11.0 11.0 11.0 10.5 10.5 Standard Transportation Co do BuIkoiL... ...do Spring, 1916 Winter, 1916 Coastwise Transportation Co Petroleum Transport Co Collier Bulk oil.... do Afloat. No. 170 Winter, 1916 No. 172 Gulf Refining Co Fall, 1916 No. 173 do do Spring, 1917 Do. Sylvan Arrow Standard Transportation Co do Broad Arrow do .. .do Fall, 1917 No. 176 Darrow-Mann Co Collier do Winter, 1916 No. 177 do Spring, 1917 Spring, 1916 Do. No. 178 New York Central and Hudson River Railroad Co. do Carfloat do No. 179 No. 180 " do do Fall. 1916 No. 181 do ...do Do. No. 182 10.5 Coastwise Transportation Co Collier Spring, 1917 42 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Steel merchant vessels under construction or under contract Feb. 1, 1916 — Continued. NEW YORK SHIPBUILDING CO., CAMDEN, N. J.— Continued. • Vessel. Gross tonnage. Speed. Owner. Trade. Probable date of launch. No. 183 3,289 5,266 765 765 765 765 5,188 10,250 Knots. 10.5 10.5 Pocahontas Navigation Co Darrow-Mann Co CoUier do Summer, 1917 No 184 Do. No 185 New York Central & Hudson 1 Carfloat.... Winter, 1916 No 186 River R. R. Co. do do Do. No 187 .do do Spring, 1917 No 1H8 ..do do Do. No 189 11.5 11.0 Gulf Refining Co Bulk oil.... do Winter, 1917 No 190 Petroleum Transport Co Spring, 1918 Total, 23 vessels of 119,744 gross tons. FORE RIVER SHIPBUILDING CORPORATION, QUINCY, MASS. Texas New York. Cu'-adist.. No. 248.... Sucrosa . . Mioiero No. 251 . . . . No. 253.... No. 25i.... No. 255.... No.26t.... No. 265.... 6,000 11 6,000 11 5,000 101 6,000 12 6,000 10\ 5,000 10\ 6,000 12 6,000 11 6,000 11 3,000 m 6,000 12 6,000 12 The Texas Co do Cuba Distilling Co Lucken" ach Steamship Co. Cuba Distilling Co do Luckenliach Steamship Co-. The Texas Co do Argentinian Government... Luckenl ach Steamship Co . do Spanish Government Oil do Molasses.. . Freight Molasses do Freight Oil do Naval Freight do Submarine. Launched. Feb. 16,1916 Apr. 15,1916 June 1,1916 Mar. 1, 1916 Total, 13 vessels of 06,000 gross tons. HARLAN & HOLLINGSWORTH CORPORATION, WIL.MINGTON, DEL. Gold Shell Pearl Shell Georce E. Paddle- fori. Benjamin Brewster W.H. 'liiford No. 443 No. 444 No. 445 No. 446 No. 448 No. 449 No. 450 No. 451 No. 452 5,605 11 5, 605 5,347 11 U 5,605 5,605 750 10\ lO'i 15' 2,010 10 8,490 10} 5, 605 2, 750 5,605 101 10' 11 4,500 12} 4, 500 1,404 12} Shell Co. of California. ....do Petroleum Transport (^o Standard Oil Co. of New Jersev. . ....do "... AVilmington Steamboat Co Baltimore & Carolina Steamship Co. Standard Oil Co. of New Jersey. . . ....do Vacuum Oil Co . ....do Ocean Steamsliip Co. of Savannah .do. New York Central R. R. Co. Bulk oil tanker. do do do do Passenger and freii'ht. Freight Bunk oil tanker. do Freii'ht Bulk oil tanker. Freight and pas- senser. do Ferrv Launched. Mar. 1,1916 Feb. 15,1916 Jime 1,1916 Sept. 15, 1916 Feb. 1,1916 June 1, 1916 Dee. 1,1916 Jan. 1.5,1917 Dec. 15,1916 May 1, 1917 Sept. 1,1917 Apr. 1,1918 Sept. 1,1916 Total, 14 vessels of 63,481 gross tons. NEWPORT NEWS SHIPBUILDING & DRY DOCK CO., NEWPORT NEWS,VA. Charles Pratt... H. H. Rogers Edgar F. Lucken- bach. Ant'verpen Henry ±i. Mallory. . . Munalbro Wm. G. Warden F. Q. Barstow 10,935 10,935 8,000 10 V 10 V 10" 8,374 6,000 i? 4,387 10, 900 10,900 10 lOV 10} Standard Oil Co. of New Jersey. — d3 Edgar F. Luckenbach Standard Oil Co Mallory Steamship Co . Munson Steamship Co . Standard Oil Co do OD carrier.. do Freight Oil carrier.. Freight and passenger. Freisht Oil carrier.. do Feb., 1916 Do. Apr., 1916 July —,1916 Oct. —,1916 Apr. —,1916 Nov. — . 1916 Dec. —,1916 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 48 Stetl meixhant veasch under conslnictioyi or under contract on Feb. 1, 1916 — Coritinuad. NEWPORT NEWS SHIPBUILDING & DRY DOCK CO., NEWPORT NEWS, VA.— Contimied. Vessel. Gross tonnage. Speed. Owner. Trade. Probable date of launch. No. 198.... No. 199.... No. 200.... No. 201 ... . Torres EI Mirante El Capitan No. 205.... No. 206.... 5,900 5,900 4,600 10, 900 5,125 4, 500 4, 500 8,400 4,600 Knots. 10 10 lOV 10| 11 11 11 10.^ loi Crowell & Thurlow Steamship Co. . do Muns3n Steamship Line Standard Oil Co Southern Pacific Co do do .\ tlantic F efinins Co Munson Steamship Co Freight do do Oil carriec. do Frei'iiht . . . . do Oil carrier.. do Sept. — , 1916 Dec. —,1916 Feb. —,1917 Aug. —,1917 Mav —,1917 "Do. June —,1917 July —,1917 Nov. — , 1917 Total, 17 vessels of 124,850 gross tons. CHESTER SHIPBUILDING CO., CHESTER, PA. Unnamed 5,000 5,000 4,000 5,000 5,000 5,000 5,000 For foreign account Oil carry- ing. .. ..do June — 1916 Do .... do July —,1916 Oct — 1916 Do For local owners Frei2:hter . . Oil carry- ing. .. ..do Do For foreign account Do Do do Do do .. ..do ... Jan. — , 1917 Do do .. ..do . Apr. —,1917 Total, 7 vessels of 34,000 gross tons. ELLIOTT MACHINE CORPORATION, BALTIMORE, MD. No. 6190-1 No. 0190-2 yo. 6190-3 250 2.50 250 11 Pennsylvania R. R. Co 11 do" 11 do Tan. 2.5,1916 Feb. 25.1916 Mar. 25,1916 Total, 3 vessels of 750 gross tons. WILLLIM CRAMP & SONS SHIP & ENGINE BUILDING CO., PHILADELPHIA, PA. No. 428. Jalis?o.. Coahuila.. No. 131.... No. 432.... No. 133.... No. 434.... No. 435 Santa Rosa.. Santa Paula. No. 440 No. 441 7,100 11 2,900 10; 2,900 loi : 7,100 11 7,100 11 ! 2,700 12 8,000 17 1 8,000 17 6, .300 12 6,300 12 7, 100 11 7,100 11 Petroleum Transport Co Bulk oil Mexican Navigation Co Pass, and freight. do do Sun Co ; Bulk oil do do Florida East Coast Ry. Co Car ferry. . . Atlantic, Gulf & West Indies Pass, and Steamship ("o. freight. do do W. R.Grace & Co do Petroleum Transport Co . do Freight do Bulk oil.... do Launched. Do. Do. May 15,1916 June 15.1916 July 20,1916 Mar. 1,1916 Jan. Oct. Nov. Oct. Nov. 2,1917 2,1916 1,1916 1,1916 2, 1916 Total, 12 vessels of 72,600 gross tons. BALTIMORE DRY DOCKS & SHIPBUILDING CO., BALTIMORE, MD. No. 74 No. 75 No. 76 No. 77 No. 78 No. 79 No. so 3,500 114 3, .500 lU 3, 500 11* 3,500 lU 3,500 lU 3,500 m 3,500 Hi Trans-Atlantic Motor Ship Co. do do do Christoffer Hannevig do do Bulk oil... do.... do.... do.... do.... do.... ....do.... Apr. 1, 1916 Do. Oct. 1,1916 Do. Total, 7 vessels of 24,500 gross tons. 44 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Steel vierchant vessels binder conslniction or xinder contract on Feb. 1, 1916 — Continued. MARYLAND STEEL CO., SPARROWS POINT, MD. Vessel i ^"""^^ ^ ®^^®^- 1 tonnage. 1 Speed. Owner. Trade. Probable date of launch. Artisan 5,800 5,800 3,450 3,450 3,450 3,800 3,800 4,000 10,000 10,000 7,150 7,150 3,450 Knots. lO.i lOi 9" 10 10 12 12 10 lOV 10* 10" 10 9 American Hawaiian Steamshiip Co. do Freight do Jan. 15,1916 Feb. 26,1916 Arborean Margaret A. H. Bull Steamship Co Munson Steamship Lo do do Mar. 15,1916 Munsomo „.. Mav 15,1916 Munplape . do Apr. 15,1916 Julv 15, 1916 Cornelia Bull Insular Steamship Co. . do. Helen do do .. Sept. 1,1916 -Aug. 15,1916 Nov. 1.1916 No. 157 .do . A. C. Bedford Standard Oil I BulV oil . . . do W. C. Teazle do Jan. 1,1917 Mavari Spanish-American I. Co do Freight do 4-»r — 1917 Daiquiri. May —^917 Not. 164 Christopher Hannevi;:, jr ... .do jTpb. —,1917 Total, 13 vessels of 71,300 gross tons. SPEDDEN SHIPBUILDING CO., BALTIMORE, MD. John T. Donohue Northern Transportation Co Standard Oil Co Northern Transportation Co Tug Oil barge... Tug June 1 1916 Do Northern Dec. 1 1916 AMERICAN BRIDGE CO., PITTSBURGH, PA. 590 Crucible Fuel Co. . . Coal trade.. do do do do Car transfer do do do do do do Grain Pleasure. .. Car transfer Sand. . Mar. — 1916 590 ... do 590 .do 590 .. .do 590 do 960 Lehigh Valley R. R. Co do May —1916 June — , 1916 960 960 do Do. 960 do July — , 1916 Do. 580 do 580 ...do Aug. — , 1916 Do. 580 do .. 160 Smith-Hippen Co F.D. Stout Korean's Louisiana & Texas R. R. & S. S. Co. Rogers Sand Co May — , 1916 Feb. — , 1916 38 1,350 Aug. — , 1916 June — , 1916 310 Total, 16 vesse lEof 10,388 gross tons. MANITOWOC SHIPBUILDING CO., MANITOWOC, WIS. Geo. A. Wallace, jr. . 300 300 300 100 Bay State Fishirg Co., Boston, Trawler... Mass. do 1 do -do. City of Cleveland j Fire boat May 15,1916 June 15,1916 July 15,1916 May 15,1916 Total, 4 vessels, of 1,000 gross tons. AMERICAN SHIPBUILDING CO., CLEVELAND, OHIO. No. 713 No. 714 No. 715 No. 716 No. 717 No. 718 No. 459 No. 460 7,000 10 7,000 10 7,000 10 7,000 10 6,400 9J 7,200 11 2,100 n 2,100 9i At Lorain (Ohio) yard. TnterlaVe Steamship Co.. Pittsburgh Steamship Co. Herbert K. f a^-'es Pittsburgh Steamship Co. . M. A. Hanna & Co CarlD. Bradley At Cleveland yard. X.B.. Skaugaards. . Arthur Mathiesen . Freight. do.. ....do.. do.. do.. do.. .do. .do. Spring, 1916 Do. Do. Do. Do. 1917 delivery Spring, 1916 Do. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 45 Steel merchant vessels under construction or under contract on Feb. 1, 1916 — C'outiniied, AMERICAN SHIPBUILDING CO., CLEVELAND, OHIO— Continued. Vessel. No. 105. No. IS !. No. 197. No. 198. No. 79. No. 524. Gross tonnage. 2,100 2,100 2,100 2,100 2,100 7,000 Speed. Knots. 10 9i 9\ 9i 10 Owner. At Detroit yard. Geo. Hall Coal Co. A. O. Lindvig do Erling Lund do. At Chicago yard. Erling I.und At Superior ( Wis.) yard. Roy M. Wolvin do Trade. Freight . do.. do.. do.. Probable date of launch. Spring, 1916 Do. Do. Do. Do. 191C delivery Total, 14 vessels of 63,300 gross tons. THE HERRESHOFF MANUFACTURING CO., BRISTOL, R. L 178 J. F. Brown Pleasure. .. Apr. — 1916 COWLES SHIPYARD CO., BUFFALO, N. Y. No 60 . ... 20 8 Harry J. Hutchings Mar. — 1916 THE CHARLES BARNES CO., CINCINNATI, OHIO. Australia . 300 South Australian Government. . River im- p o V 6 - ment. Fall, 1916 HOWARD SHIPYARDS CO., JEFFERSONVILLE, IND. 450 500 550 500 500 900 1,200 W.F.Mayo Baton l.'oiige Transportation Co. . . L'nion Ferrj' Co , do..... .\mesville Ferry Co L. & J. Ferry Co I. N. Co. of New York Ferry ...do ...do ...do Passenger. Total, 7 vessels of 4,600 gross tons. QUINTARD IRON WORKS CO., NEW YORK, N. Y. Mary Chilton 900 17 ' Nantasket Beach Steamboat Co Apr. 1, 1916 DUBUQUE BOAT & BOILER WORKS, DUBUQUE, IOWA. No. 35 1 25 Evansville R. R. Co Pass Mar. 20,1916 STATEN ISLAND SHIPBUILDING CO., PORT RICHMOND, N. Y. No. 675. No. 676. No. 677. No. 680. No. 681. No. 684. 178 178 500 300 300 241 Magnolia Petroleum Co i Towing Standard Oil Co I do International Elevating Co Elevator. . . Pennsylvania R. R. Co Stm. lighter New York Central & Hudson House bge River R. R. Co. Lehigh Valley R. R. Co Tug. Launched. Feb. 5, 1916 Total, 6 vessels of 1,697 gross tons. 32910—16 -4 46 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. Steel merchant vessels under construction or under contract on Feb. 1, 1916 — Continued. BATH IRON WORKS, BATH, ME. Vessel. Gross tonnage. Speed. Owner. Trade. Probable date of launch. No. 69 300 800 800 Knots. 29 P.N. Rouse Yacht Car float... do Apr. — , 1916 No 71 No 72 No. 73 26 26 Yacht do No. 74 Total, 5 vessels of 1,900 gross tons. UNION IRON WORKS CO., SAN FRANCISCO, CAL. No. 123. No. 124. No. 125. No. 126. No. 127. No. 128. No. 129. No. 130. No. 131. No. 132. No. 133. No. 134. No. 135. No. 136. No. 137. No. 138. No. 139. No. 140. No. 141 . 7,100 11 8,100 11 7,100 11 6,430 11 9,728 16 8,100 11 7,200 11 7,200 11 7,100 11 6,200 11 6,200 11 10,500 11 10,500 11 6,200 11 6,200 11 6,200 11 6,200 11 7,200 11 7,200 11 Union Cil Co. of California \ Oil tanker. . Standard Cil Co. of Californli do Standard Transportation Co. of' do Delaware. Rolph Navigation & Coal Co General cargo. Matson Navigation Co Cargo and passenger. Standard Cil Co. of New York I Cil tanker.. J. W. Van Dyke do. ....do : Vacuum C il Co Walker- .\rmstrong Co Rolph Navigation & Coal Co Standard Gil Co. of New Jersey. . . ...do Standard Transportation Co. of Delaware, do. do do General cargo. do Cil tanker.. do General cargo, .do. (Not given) j do. (Not given) Wilhelm Jebsen (Not given) -do. Oil tanker. . do Feb. 5,1916 July 5, 1916 Aug. 5, 1916 Apr. Nov. 1,1916 4, 1916 Aug. 12,1916 Nov. 18,1916 Dec. l';,19]6 Jan. —,1917 Oct. 2, 1916 Do. Jan. 2, 1917 leb. 2,1917 Nov. 25,1916 Do. Jan. 25,1917 Do. Mar. 5, 1917 Do. Total, 19 vessels of 140,658 gross tons. TOLEDO SHIPBUILDING CO., TOLEDO, OHIO. No. 131 No. 132 No. 133 No. 134 No. 135 No. 136 No. 137 1,700 7 1,700 7 1,700 7 1,700 7 1,700 7 1,700 7 7,700 10* Smith Shipping Co. (Inc.).. do ....do do ....do do Gieat Lakes Steamship Co. Freight. do.. do.. do.. do.. do.. do.. Apr., 1916 Do. May, 1916 June, 1916 July, 1916 Aug., 1916 Do. Total, 7 vessels of 17,900 gross tons. CHICAGO SHIPBUILDING CO., CHICAGO, ILL. No. 79. 2,100 9J For Norwegian interests I Passenger and freight. June, 1916 MOORE & SCOTT IRON WORKS, OAKLAND, CAL. No. 108. No. 109. No. 110. 5,000 5,000 For French owners Hopper barge. Rolph Navigation Co Cargo Port Costa Steamship Co do Total, 3 vessels of 10,000 gross tons. JAMES REES sequent to July 31, 1914, only 1,848 2,249 3, 776, OH Prior to and later than Aug. 1, 1914 2,249 1 5,578,784 5, 578, 784 Total 3 323 s s.^"; fi.=in 4,097 9,354,795 It will be seen that 1,074 vessels engaged in American commerce the first year were withdrawn therefrom the second year. Of these, 368 were withdrawn on account of war expedients and 706 for other reasons, such as transference to other trades, wrecks, collisions, fires, and obsolescence. To replace these 1,074 vessels and such others as were in service for short periods during 1915 and thereafter withdrawn, there were placed in service during the second year 1,848 vessels. Table II of Appendix A shows in detail the number and net registry tonnage of vessels thus placed in foreign trade of the United States from the following sources: 66 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. (1) New eonstruclion of American and foreign vessels; (2) diverted from coastwise and other trades; and (3) admitted to American registry. Of newly constructed vessels, aggregating 169 of 480,106 net registry tons, but 8 of 30,342 tons net registry were built for American owners; the remainder, 161, of 449,764 tons net registry were built for foreign owners. Other additions to American foreign commerce during the second year under con- sideration were contributed by the transference of enrolled vessels in coastwise trades through the exchange of registries for enrollments. One hundred and eighty- five vessels, both sail and steam, aggregating 222,862 tons net registry, were trans- ferred in this manner. Some of these vessels, however, remained in foreign serAice for but short periods, when they were again reentered in the coastwise trades. The number here stated includes several very old vessels, built in the eighties or seventies, or even earlier. But 14 foreign vessels, aggregating 21,806 net tons registry, were added to United States trades after admission to American registry under the ship registry act of August 18, 1914. While 150 foreign vessels, of 341 ,905 net tons registry, were admitted to Amer- ican registry under this act during the second 12 months' period under review, the record shows that 118 of these, aggregating 286.307 tons net registry, were already en- gaged in American commerce prior to change of registry, and 18 did not engage in the American commerce under review after change to American registry. Instances of these latter are the steamship Evangeline, wliich continued in Canadian trade, the steamers Foxton Hall and Sacramento which sank after obtaining American registry, the steamer Gargoyle, which was seized, and the Glenpoole, which was laid up, all before engaging in American commerce after receiving American registry. Tabulation of the 132 vessels admitted to American registry, just referred to, dis- tributed with respect to their former registries, is shown in Table III of Appendix A. This number includes vessels such as the steamship Connnunipaw , admitted on July 8, 1915, the bark Paolina, admitted on July 26, 1915, and others which, although admitted prior to August 1, 1915, were under American registry too short a period to figure materially in our foreign trade as American vessels. Table IV of Appendix A shows in detail the abnormal withdrawals of vessels from commerce of the United States, due to war expedients. Comparing now the character of all vessels engaged in American commerce for the two periods under review, in the light of the foregoing analysis, a study of all Tables in Appendix A will show that the mthdrawal and replacement of foreign vessels re- sulted (1) in a greater diffusion of nationalities and (2) in the substitution of an inferior merchant marine of greatly decreased working efficiency. VESSEL-TON EFFICIENCY. The number, character, carrying capacity, and nationality of vessels engaged in American commerce having been shown, the service rendered in vessel-ton efficiency is important in considering the extent to which American foreign commerce was affected by withdrawals and decreased number of voyages. During the first 12 months preceding beginning of the war there were 11,700 voy- ages from and to foreign ports, by 3,323 vessels. The vessel-ton efficiency performed on both incoming and outgoing trips by 593 sail vessels aggregated 531,326 ship-tons on the incoming and 468,117 ship-tons on the outgoing trips. By 2,730 steam vessels there were 31,715,814 ship-tons on the incoming and 31,187,577 ship-tons on the outgoing trips, making a total of 32.247,140 sliip-tons incoming and 31,655,694 ship- tons outgoing of 100 cubic feet each for the period. During the second 12 months immediately following commencement of the war there were but 11,560 voyages from and to foreign ports by 4,097 vessels. The vessel- ton efficiency performed on both incoming and outgoing trips by 747 sail vessels aggregated 652,201 ship-tons on the incoming and 721,314 ship-tons on the outgoing trips. By 3,350 steam vessels there were 26,931,956 ship-tons on the incoming and 26,740,456 ship-tons on the outgoing trips, making a total of 27,584,157 ship-tons incoming and 27,461,770 ship-tons outgoing of 100 cubic feet each for tliis period. Stated in per cents, the decrease in vessel-ton efficiency the second year was 13.2 for vessels entering and 14.5 for vessels clearing. This, notwithstanding the fact that there was an increase that year of 12.23 per cent in the carrying power of all vessels. This decrease was attributable to four distinct causes, (1) to longer periods of time consumed at loading and discharging ports, (2) to more sail vessels and slower steam vessels, (3)_ to longer ocean routes traversed to escape war zone, and (4) to detention from exercise of the "right of search" by belligerents. The following summary will show the United States territorial spheres in which the vessel-ton efficiency, first shown, operated, both as to arrivals and departures and the per cent of increase or decrease thereof: SHIPPIXG BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. 67 1914 1915 Increase or decrease. Net ton- nage. Net ton- nage. Net ton- nage. Per cent. North Atlantic: Entries Clearances 19,865,362 18,589,741 3,529,530 4,290,969 6,685,507 6,624,949 2,166,741 2,150,035 14,755,906 13,878,317 4,803,998 5,587,787 6,219,497 6,197,515 1,804,756 1, 798, 151 5, 109, 456 4,711,4^4 1,274,468 1,296,818 466,010 4£7,434 361,985 351,884 S5.7 25.3 South Atlantic: Entries 36.1 Clearances Gulf: Entries Clearances Pacific: Entries Clearances 30.2 7.0 6.4 16.7 16.4 Italic denotes decrease. This summary, as indicated by the per cents, shows that the most marked decreases in vessel-ton efficiency were at North Atlantic ports, next at Pacific coast ports, and least at Mexican Gulf ports. Reference to Table I of Appendix A will show that of all ports the greatest reductions were at Boston, New York, and Philadelphia, which to some extent were offset by increases in vessel-ton efficiency at the South Atlantic ports of Baltimore, Newport News, and Norfolk, and at some ports on the Mexican Gulf. Table II of Appendix B shows that during the first year the ton-efficiency of vessels under American registry was but 10 per cent of the total ton efficiency of all vessels, i. e., 3,218,568 of 32,247,140 tons for entries and 3,057,488 of 31,655,094 tons for clear- ances, while during the second year it increased to 16 per cent of a much less total ton efficiency of all vessels, i. e., 4,390,909 of 27,584,157 tons for entries and 4,527,543 of 27,461,770 tons for clearances. The increase in American vessel-ton efficiency, i. e., 1,172,341 tons for entries and 1,470,055 tons for clearances was employed the second year to some extent in our trades with Germany, Portugal, Russia, and the Scandinavian countries, but to a greater extent in our Central and South American trades. The increase here shown in American tonnage was insufficient, however, to make up the great retrenchment in vessel-ton efficiency of British and German vessels. While such retrenchment was made up in part by increased efficiency of other vessels, there still remained the deple- tion shown in our total foreign mercantile movement. Stated in detail, with respect to continental groups, the decreases were as follows: West Indies and the Bermudas: Entries I 5, 100, 631 Clearances I 4, 730, 985 Central A merican States: i Entries \ 4, 135, 471 Clearances I 3, 853, 207 SOUTH AMERICA. Argentina: Entries Clearances Brazil: Entries Clearances Chile: E ntries Clearances Colombia: Entries Clearances Other South America: Entries Clearances 608, 843 465,952 879,695 517,861 405, 188 374, 678 65,713 495,991 388,793 3,168,171 2,901,709 421,840 410, 562 514, 555 624,671 397. 730 268,551 99,589 48,422 355, 237 374,339 187, 003 65,390 366, 140 106, 810 7,468 106, m 9,701 17, m 140,754 14,454 30.7 11.9 41.6 20.6 1.8 S8.S 10.8 S6.S S8.4 3.7 68 SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. SOUTH AMERICA— continued. Europe: Kntries Clearances Asia: Entries ?.. Clearances Oceania: Entries Clearances Africa: Entries Clearances 1914 Net tonnage. 18, 349, 242 18,993,148 1,296,266 1,262,319 406,175 551, 215 479, 750 451, 823 1915 Net tonnage. ,583,024 , 890, 470 , 210, 303 ,151,865 427, 721 552, 219 660,889 418,460 Increase or decrease. Net 1, 766,318 e, 102, 678 85, 963 110,454 21,546 1,004 181, 139 Per cent. 9.6 11.1 5.3 .2 37.8 7.4 Italic denotes decrease. Table ITT of Appendix B sliows tliat a greater proportion of ship tons entered and cleared by sail vessels during the second year than during the first year. The increase in sail-vessel units, i. e., from 593 the first year to 747 the second year, indicates the ext.reinity to which American commerce exerted itself the second year to secure bot- toms for its over-seas transportation. As already shown, with 774 more vessels, sail and steam, in serv^ice the second year the total thereof, i. e., 4.097, contributed 4,662.983 less vessel tons entered and 4,193,924 less vessel tons cleared than did 3,323 vessels the year before. CURRENTS OF TRADE. (Ocean routes.) Reference to Table IV in Appendix B will show that during the first year embraced in this report there were 433 established currents of trade from and to foreign countries and the 28 ports in the United States herein considered. During the second year 75 of these routes were abandoned and 70 were added, so that but 428 were in operation that year. While the dislocation of these currents of trade are shown in the above table in connection with other features, for convenience they are here stated in detail: Eliminated. Added. Countries. Num- ber of routes. Ports. Num- ber of routes. Ports. EUROPE. Austria-Hungary Belgium 5 12 Portland, Me.: Boston, Mass.; Newport News, Va.; Nor- folk, Va.; Galveston, Tex. Newport News, Va.; Charles- ton, S. C; Savannah, Ga.; Fernandina, Fla.; Jackson- ville, Fla.; Tampa, Fla.; Pensacola, Fla.; Mobile, .\la.; Port Arthur, Tex.; Sabine, Tex.; Astoria, Oreg.; Portland, Oreg. None 5 3 2 None. Denmark France 3 11 Tampa, Fla.; Sabine, Tex.; Tacoma, Wash. Charleston, S. C; Fernandina, Fla.; Jacksonville, Fla.; Tampa, Fla.; Mobile, Ala.; Sabine, Tex.; San Pedro, Cal.; Astoria, Ore?.; Port- land, Ores.; Port Townsend, Wash.: Tacoma, Wash. C: Mobile, Ala.: San Pedro, Cal.; Tacoma, Wash. Key West Fla • San Pedro Germanv Cal.; Astoria, Oreg. Portland, Me.; San Diego, Cal SHIPPING BOAKD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 69 Countries. Eliminated. Num- ber of routes. Ports. Added. Num- ber of routes. Ports. Greece. Italy Netherlands. Norway.. Portugal . Russia... Spain... Sweden. United Kingdom. Other Europe NORTH AMERICA. Central American States Mexico West Indies Other North America. SOUTH AMERICA. .\rgentine Brazil. Chile.. Colombia Other South America. . ASIA. Asia OCEANIA. Oceania AFKICA. Africa. Total. None. None Port Townsend, Wash . Jacksonville, Fla; Tampa, Fla, Portland, Me.; Boston, Mass.; Tampa, Fla.; Mobile, Ala.; Sabine, Tex. Boston, Mass.; Norfolk, Va.; Savannah, Ga.; Galveston, Te.x. None Fernandina, Fla.; Key West, Fla.; Tampa, Fla.; Pensa- cola, Fla.; Sabine, Tex. Fernandina, Fla.; Port Aran- sas, Tex. Tampa, Fla Port Arthur, Tex.; Port Aran- sas, Tex. Portland, Me.; Pensacola, Fla.; Portland, Oreg. Portland, Oreg None Portland, Me; Savannah, Ga.; Fernandina, Fla.; Jackson- ville, Fla.; Tampa, Fla.; Astoria, Oreg.; Seattle, Wash. Portland, Me.; Charleston, S.C; Tampa, Fla.; Astoria, Oreg. Jacksonville, Fla Charleston, S. C . Tacoma, Wash . Tampa, Fla.; San Diego, Cal.. Port Arthur, Tex.; Sabine, Tex. 75 Philadelphia, Pa.; Baltimore, Md.; Newport News, Va.; Norfolk, V'a.: Savannah, Ga.; New Orleans, La. Portland, Ores;. Jacksonville, Fla. Norfolk, Va.: Savannah, Ga.; Mobile, Ala.; San Francisco, Cal. Port Arthur, Tex.; Galveston, Tex. Tacoma, Wash. Portland, Me.; Port Arthur, Tex. Charleston, S. C; Savannah, Ga.; Mobile, Ala.; I'ort Ar- thur, Tex.: Galveston, Tex.; San Francisco, Cal. Key West, Fla. Portland, Me.; Baltimore, Md.; Savannah, Ga.; Key West, Fla.; New Orleans, La.; Sa- bine, Tex.; Astoria, Oreg. Savaruiah, Ga.; Sahioe, Tex.; San Diego, Cal.; Seattle, Wash.; Tacoma, Wash. None. A.storia, Oreg.; Tacoma, Wash. Baltimore, Md.; Jacksonville, Fla.; New Orleans, La. Tacoma, Wash. San Pedro, Cal. Portland, Me.; Newport News, Va.; Galveston, Tex.; Ta- coma, Wash. Newport News, Va.; Norfolk, Va.; Port Arthur, Tex. San Pedro, Cal.; Seattle, Wash Newport News, Va.; New Orleans, La.; Sabine, Tex. Portland, Me.; Mobile, Ala.; Galveston, Tex.; Sau Diego, Cal. Key West, Fla. The resultant effect upon our commerce of these changes in ocean trade currents can only be fully determined, however, when considering in connection therewith the still further factor of vessel-ton efficiency in the respective ocean routes them- eelves. By some sailings were greatly increased, while by others they were materially reduced. For example, from Baltimore, during the first year, there were 718 depar- 70 SHIPriXG BOARD, NAVAL AUXILIARY^ AND MERCHANT MARINE. tures to foreign countries, while during the sec-ond year there were 1,005. From Boston, during the first year, there were 446 departures, while during the second year there were but 319. The total number of voyages for the two periods, however, varied but 140 — i. e., from 11,700 for the first year to 11,560 for the second year — so the only test for determining the effect upon commerce is that of vessel-ton efficiency, the result of which has already been stated . IMPORTS AND EXPORTS. WTiile the number of vessel-tons entered and cleared must necessarily be the maxim* measures of cargo imports and exports, they are not dependable indices of the actual amounts in weights or other measures of cargo received or shipped ,_ as vessels arrive and sail with empty space. It is therefore possible to only approximate the volume of cargo moved from vessel-ton entries and clearances. Furthermore, Government statistics of total imports and exports are expressed in monev values, without stating the weight or number of packages (except in the case of certain commodities). Because of this and the almost impossible task of correctly computing the volume of trafF.c (when carried at ocean rates based upon vessel space occupied), where no weight is stated, it has been impracticable to do other than adopt the practice just alluded to, followed by the Department of Commerce, of making comparisons in cash values. AVhile, therefore, such comparisons have been made as are possible by this method, and are shown in Table I of Appendix C, it is proper to state that, as the prices of staple imports and exports vary from week to week, the results therein shown, while indicating increases or decreases in money values, do not necessarily reflect increases or decreases in cargo volume movement. • . . . Thi3 is particularly true for the two-year periods under review in this report. For example, the price of wheat increased from 91 cents per bushel in July. 1914. to $1.60 per bushel in January, 1915, while the price of cotton decreased from 12.5 cents per pound to 7.7 cents per pound for same months. Nor are these differences altogether accounted for by ocean freight-rate advances actually taking place. It will be seen that the price of wheat went up, while the price of cotton went down, although ocean freight costs increased in both instances. A still further anomaly is that, vdth a mate- rial curtailment in vessel-ton clearances, the exports actually made, expressed in cash values, increased over 28 per cent the second year as compared with the first year. However, reference to Table I of Appendix C will show that imports decreased in value $251,621,292, or about 14.4 per cent, which is only slightly higher than the percentage of decrease in vessel-tons entering, i. e., from 32,247,140 to 27,584,157 ship-tons. As an aid, therefore, in deducing the relation of cargo movement to A-essel move- ment. Table I of Appendix (' has been prepared. OCEAN FREIGHT RATE ADVANCES. Since August 1, 1914, many letters have been received from exporters and importers throughout the country- by the Departments of Tommerce, State, Treasury, and the Interstate Commerce Commission, protesting against onerous ocean freight rate advances. These protests are supported by daily published rate quotations author- ized by steamship agents, which show that an advance in ocean freight costs has prevailed during the second 12 months under review. It is estimated that seven-ninths of American foreign commerce is carried under vessel charter rates; that is, a rate based on some fixed unit for use of the entire ves- sel. Such commodities as oil, coal, phosphate, lumber, and grain shipped in bulk and bale cotton represent this class of ocean fixtures. These rates fluctuate with great frequency through the influence of many factors, such as the dead weight and measurement of carrying capacity, of the vessel offered, whether sail or steam, the insurance rating, whether for liner or tramp and whether a return cargo is obtainable at port of discharge. Considering, in a general way. full cargo charters before and after outbreak of the war, the weekly reviews published in Shipping Illustrated point to liberal offerings of vessels at fairly steady rates up to the beginning of August, 1914. By the middle of August a large number of steamers were chartered for coal to South America at prices of 100 per cent over those asked prior to August 1. Other rate advances of 30 per cent on coal and grain cargoes were made to the West Indies and quantities of other goods ready for shipment to these markets were held in warehouses in consequence. At the beginning of December, however, rates de- clined matfirially, due to an increase in the number of vessels available and the firm SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 71 establishment of war-risk insurance. While for a time, charter rates declined to nearly the same levels prevailing before the war, further advances were made in October, 1914. Rates continued to increase during November and December. By the middle of January, 1915, rates had reached a greater level than at any other time in history. Not imtil June were there indications of a break in charter rates, as the demand for boats fell off considerably, but by the end of July, 1915, owners of vessels were holding off in anticipation of still higher rates which soon became effective. Table I, Appendix D, shows the rates of specific charters and are considered repre- sentative for the months indicated. Where no rate is shown for any particular month it indicates either that no charters were reported or that charters were negotiated at private terms and not published. Berth rates are the charges made by regular steamship lines for specific shipments of various commodities and are usually m_ade from week to week, according to the supply and demand of cargo and its relation to the supply and demand of vessel space. Table II of Appendix D shows the increases in berth rates from month to month for the vears ended July 31, 1914, and July 31, 1915. Such factors as increase in tlip cost of fuel and ship stores, extra stevedores expenses for tiering cargo before its final handling and for unloading and loa> "^ ^■^ Be COi-H cDco^HOOi-iaocsico r^ 1-^ •'-. CC 05 C^ OJ CO CO 1:0 CO w 10 (NOit-COi^OCOTrOi CO (N 30 CO 00 QC »0 CO o r- O) o oc o 00 OS I ^ CO CO --H I-^ 00 1-- l-^ cs ic o ■^ c^ oc 00 CO oc o »o CO ■"-TocTcrco'^o -1^ CO Tt* t^ c^ CD -H 00 -COCOC^COiC>-HCOOSCOa5 C^IiCC^TTCOMOOiOr-tcoOOOOCO rMC2i0»O--Jt-C00CCCOC0-*'C0000itO iA*»?.!i British 127 1 127,441 1,332 s 1761887 89 1 204 328 Chilean 1 t 1,332 5 i 11,047 27 1 78 .")68 Cuban 5 S27 11,047 3 78,568 German Italian 1 1,198 1 1198 Me.xican 4 1 1 3,989 442 3,059 4 ' 3*089 Norwegian 1 595 2 i;637 1 3,059 Roumanian Total 130 130,566 U02 « 277, 547 132 308, 113 1 Includes 1 vessel 330 tons net register wrecked. 2 Includes 1 vessel 1,8.';6 tons net register seized and 1 vessel 2,139 tons net register sunk by mine. ' Includes 2 vessels 4,4."4 tons net register seized. • Includes 3 vessels 6,310 tons net register seized and 1 vessel 2,139 tons net register sunk by mine. 32910—10- -G 78 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Table IV. — Number and net tonnage of sail and steam vessels in the foreign service of the United States withdrawn for causes oficar during year ended July 31, 1915. SAIL VESSELS. Nationalitj^ of vessel. Interned or laid up. Taken under Government charter. o„j,«^ ^, «„^ Destroyed or tured ^' disabledhybel- tured. ligerents. Total with- drawn. Num- ber. Net tons. *> am- ber. Net tons. Num- ber. Net tons. Num- ber. Net tons. Num- ber. 3 Net tons. British 3 3 6,014 6,014 French 6,352 1 3 6,352 9 31 19, 594 937 4 7,191 13 5 26,785 4 6,733 7,670 1 Total foreign.. Total Ameri- can and for- eign 10 20,531 4 ! 7, 191 10 19.099 ! 24 46. 821 10 20. .=531 1 1 4 i 7.191 10 i 19,099 1 24 46,321 1 STEAM VESSELS. American 1 1 3 5,789 3 6,718 6 12,507 , 1 39 I 1 95 119,892 1,908 315,916 1 2,170 40 2 199 3 1 218 1 4 3 1 122, 062 1 41 2 885 116,563 2,905 2,793 British 49 227,731 14 1 41,540 829 701,750 3,734 1 1 3,834 3,834 178 21 740,014 1,135 38 114,897 2 8,4.57 863,368 1,135 1 944 3 2 1 6,759 2,960 1,023 7,703 1 4,844 7,804 Swedish 1,023 1 Total foreign . . 314 1,178,865 51 236,409 55 160,380 52 139,552 472 1,715,206 Total Ameri- can and for- eign 314 1,178,865 51 236, 409 58 166, 169 55 146, 270 478 1,727,713 TOTAL, ALL VESSELS. American 3 5,789 3 6,718 6 12,507 39 11 95 119,892 1,908 315,916 1 2,170 40 2 202 3 4 231 1 9 3 1 122,062 Belgian 1 44 2 3 2 88.5 122,577 2,905 6,352 8,457 2,793 British Danish 49 227,731 14 1 41,540 829 707,764 3,734 1 3,834 10. 186 German 187 2 1 31 759,608 1,135 937 42 122,088 890, 153 1 1.135 1 1 944 7 2 1 13,492 2,960 1,023 15.373 1 4,844 7.804 1,023 " Total foreign.. 324 1,199,396 51 236,409 59 167,571 62 1.58,651 496 1.762,027 Total Ameri- can and for- eign 324 1,199,396 51 236.409 62 173.360 65 165,369 502 1,774.534 • At Cronstadt blockaded. * At Ensenada; formerly a German steamer. 3 .\t Riga blockaded. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 79 Appendix B. Table I. — Net tonnage of sailing and steam vessels entered and cleared at the leading ports of the United States during the years ended July 31, 1914 and 1915, distributed with respect to domestic ports of entries and clearances. ENTRIES. Leading ports. Atlantic coast: Portland, Me Boston, Mass New York, N. Y Philadelphia, Pa Baltimore, Md Newport - 'ews, Va Norfolk, Va Charleston, S. C Sav annah , Ga.i I'ernandina, T la Jack"sonville, Tla Gulf coast: Key West. Tla Tampa, 'la.* Pensacola, " la.'' Mobile, Ala.3 New Orleans, La.s Port Arthur, Tex Galveston, Tex Port Aransas, Tex Sabine, Tex Pacific coast: San Diep:o, Cal Los Angeles (San Pedro), Cal San " rancisco, Cal Astoria, Oreg Portland, Oreg Port To wnsend. Wash Seattle, Wash Tacoma, Wash Total Year ended July 31- 1914 1915 Number. Net tonnage. Number. Net tonnage. Net tonnage. Per cent. 76 315,096 66 214,919 100, 177 31.8 617 2,2.57,647 542 1,541,533 716,114 31.7 3,747 14,680,310 3,739 11, 148, 853 3,631,457 24.1 1,137 2, 612, 309 898 1,850,601 761,708 29.2 669 1,5^2,499 931 1,966,644 414,145 26.6 216 547,375 454 1,224,343 676, 968 123.7 286 709,301 476 1,122,548 413,247 58.3 127 239,370 68 108,326 131,044 54.7 161 360, 036 194 351, 260 8,776 2.4. 32 50, 025 7 5,082 44,943 89.8 52 70,924 22 25, 795 45, 129 63.& 596 580, 714 423 422,800 157,914 27. » 168 312,023 64 63, 833 248, 190 79. S 219 372,073 81 124,003 248,070 66.7 655 690, 650 466 438, 775 251,875 26.5 1,472 2,843,838 1,504 2,972,469 128, 631 4.5, 148 383,746 170 485,361 101,615 26.5 603 1,324,299 721 1,534,414 210,115 15.9 23 53,341 2 3,822 49,519 92.8 50 124, 823 72 174,020 49, 197 39.4 73 73,405 63 35,889 37,516 61.1 35 101,662 38 101,325 337 .S 413 1,326,898 361 1,028,769 298, 129 22. S 50 104. 191 53 107,442 3,251 3.1 31 68, 104 30 54,409 13,695 20.1 101 336.212 95 286.641 49, 571 14-8 31 120, 286 31 122, 250 1,964 1.6 11 35, 983 20 68,031 32,048 89.1 11,799 32,247,140 11, 591 27,584,157 4,662,983 13.3 ' Includes entries and clearances at Brunswick, Ga. * Includes entries and clearances at Port Tampa, I la. 3 Includes entries and clearances at Gulfport, Miss. 80 SHIPPING BOARD, NAVAL AUXH.IARY, AND MERCHANT MARINE. Table I. — Net tonnage of sailing and steam vessels entered and cleared at the leading ports of the United States during the years ended July 31, 1914 and 1915, distrilnited vnth respect to domestic ports of entries and clearances — Continued. CLEARANCES. Leading ports. Atlantic coast: Portland, Me Boston, Mass New York, N. Y Pliiladelpliia, Pa Baltimore, Md Newport ews, Va Norf IV, Va Charleston, S. C Savannah, Ga.' Ternandina, 3 la Jac son\ ille, 7 la Gulf coast: Key West, T la Tampa, " la. 2 Pensacola, la.s Mobile, Ala.3 New Or eans, I a.' Port Art ur, Tex Galveston, Tex Port Aransas, Tex Sabine, Tex Pacific coast: San Diego, Cal Los An^e.es (San Pedro), Cal. San rancisco, ( al Astoria, Oreg Portland, Oreg Port Townsend, Wash Seattle, Wash , Tacoma, Wash , Total. Year ended lulj' 31— 1914 1915 Number. 79 446 3,597 986 718 339 459 92 213 13 28 587 130 237 655 1,464 134 606 22 57 64 24 378 69 47 102 41 25 Net tonnage. Number. 11, 602 324, 978 1,721,989 14,3 2,929 2, 199, 845 1,632,945 802,6.6 1, 136, 057 173,342 501, 705 10, 808 33,466 576, 210 192,281 407,979 72-1,615 2,820,913 336,2-2 1,382,837 52, 398 131,434 27, 654 67, 194 1,227,178 118,7.^0 113,220 319,015 182,847 94,177 Net tonnage. 31,655,694 319 3,542 867 1,005 590 680 52 221 6 14 418 49 104 492 1,459 170 688 1 70 56 34 357 48 54 83 37 34 247, 789 857, 627 11,015,880 1,757,021 2, 038, 993 1,515,779 1,519,104 70,602 418.257 4,155 20, 897 413,195 33, 537 183, 141 444,660 2,895,472 469,406 1,572,970 1,911 183,223 26, 229 84,280 1,030,046 102, 132 105, 877 219, 786 132,961 11,529 27, 461, 770 Increase or decrease. 77, 189 864, 362 , 327. 049 442, 824 406.048 713,133 383,047 102, 740 S3, 44s 6, 653 12,569 163,015 158,744 224, 838 279.955 74, 559 133, 124 190, 133 60, 487 51, 789 1,425 17, 086 197,132 16,618 7,343 99, 229 49, 886 2,663 4, 193, 924 23.8 60.2 23.2 20.1 24.1 88.8 33.7 69.3 16.6 61.6 37.6 28. 3 82.6 56.1 38.6 2.6 39.6 13.8 96.4 39.4 6.2 25.4 16.1 13.9 6.5 31.1 27.3 28.3 14.6 Italic indicates decrease. 1 Includes entries and clearances at Brunswick, Ga. 2 Includes entries and clearances at Port Tampa, Fla. 3 Includes entries and clearances at Gulfport, Miss. Table II. — N'et tonnage of sail and steam vessels entered and cleared at leading ports of the United States in its trade with foreign countries during the years ended July .31, 1914 and 1915, distributed with respect to foreign countries and registries. Registry. Entries, year ended July 31— Clearance s, year ended July 31— Foreign coun- tries from which entered and for 1914 1915 1914 1915 which cleared. Net toimage. Per cent. Net tonnage. Per cent. Net tonnage. Per cent. Net tonnage. Per cent. EUROPE. Austria-Hungary British German Other foreign.. Total... American British German Other foreign. . Total . . . 108, 184 3,148 323,529 25 1 74 6,210 32 86,037 3,148 206, 199 29 1 70 8,660 67 is, 683 68 4,405 33 431,861 100 19,893 100 295,384 100 13, 065 100 Belgium 189,673 513,229 6,980 412,743 17 45 1 37 15, 854 53, 929 20 68 188,436 628, 781 9,764 427,214 15 50 1 34 7,927 40,842 15 76 9,590 12 4,897 9 1,122,616 100 79,373 100 1, 254, 195 100 53,666 100 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 81 Table II. — A^et tonnage of sail and steam, vessels entered and cleared at leading ports of the United States in its trade ivitk foreign countries during the years ended July 31, 1914 (i^d 1915, distributed with respect to foreign countries and registries — Continued. Registry. Entries, year ended July 31— Clearances, year ended July 31— Foreign coun- tries from which entered and for < 1914 1 1915 1914 1915 which cleared. Net tonnage. Per cent. Net tonnage. Per cent. Net tonnage. Per cent. Net tonnage. Per cent. EUROPE— contd. Denmark American British German Other foreign. . Total... American British German Other foreign. . Total... American 1,797 22, 143 27, 246 205, 065 I 10 SO 46,562 6,427 9 1 58,872 3,329 s 42, 754 37,972 210, 160 14 13 73 1 417, 822 90 661, 982 91 256,251 100 470,811 100 290, 876 100 724, 183 100 France 16,116 223,811 86, 957 827. 173 1 19 8 72 21,815 914,045 38, 525 694, 222 1 55 2 42 9,007 466,489 103, 936 895, 040 1 32 7 60 59,932 1,748,122 2 68 780,097 30 1,154,057 100 1,668,607 100 1,474,472 100 2,588,151 100 Germany 42,916 12, 226 49,237 12, 758 37 10 43 10 541 648,028 2, 785, 205 88,513 1 18 79 2 45, 576 86 British German Other foreign. . Total... American 422, 536 3, 000, 866 112,967 12 84 4 5,182 1,864 10 4 3,536,369 100 117, 137 100 3, 522, 287 100 £2, 622 100 Greece 7,927 63, 638 4 28 British German 36,695 18 58,888 44 193, 889 5, S72 176,720 51 2 Other foreign. . Total... American British German Other foreign. . Total . . . American British German Other foreign. . Total... American 168, 158 82 152, tS3 68 74,461 56 47 204,853 100 223, 748 100 133,3-19 100 376, 181 100 Italy. . . 326 462, 969 217, 982 929, 860 1 29 12 58 73, 923 918,371 3 37 326 627, 259 282, 940 969,484 1 33 15 51 67,937 948,816 1,818 1,565,981 3 36 1 1,504,613 60 60 1,601,128 100 2, 496, 907 100 1,880,009 100 2, 584, 562 100 Netherlands 12, 832 274, 069 106, 700 952, 951 1 20 8 71 67, 793 90,386 9,664 1,249,534 5 6 1 88 3, 275 490,511 164,936 1,064,335 1 28 10 61 61,623 121,361 4 9 1,227,439 87 1,346,552 100 1,417,377 100 1,723,067 100 1,410,323 100 Norway 1,797 43, 591 4,369 207, 332 1 17 2 80 British German Other foreign. . Total... American 113,110 6, 926 212,249 34 2 64 17,283 4 11,627 4,807 421,911 3 1 430,969 96 96 332,285 100 448,252 100 257,089 100 438,345 100 Portugal 6,358 28,035 8 14, 580 17,304 23 British German Other foreign.. Total... American 49,484 11,826 69,484 37 9 54 35 45, 8f 5 16,391 54,773 39 14 47 28 44, ICO 57 30,732 49 130,804 100 78,553 100 117,029 100 j 62,C16 1 100 Russia 1 ... . 1 10,2(3 26,3f9 9 779 7 British German 22,872 1 13 7,353 8 16, 776 2,835 119,951 12 2 19 2 Other foreign.. Total... American 155,487 1 87 90,187 92 86 99;9e0 72 178,359 1 100 97,540 100 139, 5P2 100 139, 414 100 Spain 5,479 238, 447 1 41 129 119,5(0 25,017 260, 125 1 n r.7Q 2 Briti.«h German Other foreign.. TotaL.. 269,954 19, 576 216, 333 53 4 43 29 6 64 125,353 25 328, 825 58 361, 175 73 505. 8C3 100 572, 751 100 404,831 100 498.207 100 S2 SHIPPIXC BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. Table II. — Net tonnage of sail and steam vessels entered and cleared at leading ports of the United States in its trade with foreign countries during the years ended July 31, 1914 and 1915, distributed with respect to foreign countries and registries — Continued. Registry. Entries, year ended July 31— Clearances, year ended July 31— Foreign coun- tries from which entered and for 1914 1915 1914 1915 which cleared. Net tonnage. Per cent. Net tonnage. Per cent. Net tonnage. Per cent. Net tonnage. Per cent. EUEOPE— contd. American 31,277 14,236 2,876 193,743 13 6 1 80 599 6,622 33,706 27,455 1 10 49 40 64,961 17 British German Other foreign.. Total... American British German Other foreign.. Total... American 4,642 1,999 38,473 11 4 85 324,964 83 45, 114 100 242, 132 100 I 68,382 100 389,925 100 United Kingdom 241, 148 6,740,2.39 169,012 195,799 3 92 2 3 308,015 7,099,284 47,186 957, 636 4 234,126 1 3 84 6,760,302 1 92 1 176,427 2 11 178,627 3 279, G57 6,540,067 6,597 541,886 3 89 1 7 7,346,198 1 100 8,412,121 100 1 7,349,482 | 100 7,368,207 100 Other Europe... 1.276 161, 536 2,361 72,649 1. 12,213 128,452 6 British German Other foreign.. Total... American British German Other foreign.. Total... A merican British German Other foreign.. Total... j^ merican British German Other foreign.. Total... A meri-an British German Other fore i;in.. Total... A meriean British Other foreign.. Total... A merican British German Other foreign.. Total... A merican British German Other foreign. . Total... 89, C45 57 42,428 27 24,859 16 68 1 30 51.816 16.297 15,031 62 19 19 67 50,348 27 156,932 100 237,822 100 1 83,144 1 100 191,013 100 Total Europe 561,892 9,353,574 3,591,646 4,842,130 3 51 20 26 629, 195 9,631,406 149, 849 6,172,574 4 1 438,236 | 3 58 10,093,279 53 1 ' 3,662,943 19 37 i 4,798,690 | 25 695, 120 9,914,211 2(i,74S 6,254,391 4 59 "'"'37 18,349,242 100 16,583,024 100 18,993,148 100 16,890,470 100 JffORTH AMERICA. Central Ameri- can States. .■)16,374 79.1,517 101, 255 516. 743 27 41 5 27 989,681 318,719 57 19 531,472 770,638 97,042 574,324 27 39 5 29 922,954 238,0.34 5, IS? 465,596 56 15 1 4"0,642 24 28 1,929,889 100 1.729,042 100 1,973,476 100 1,631,766 100 Mexico 709,8.30 769, 771 30'i, 935 419,046 32 35 14 19 641,247 383,947 12, 143 401, 792 45 26 1 28 517, 699 705, 158 262, TO? 394, 672 28 38 14 20 593, ■■•08 34 ',979 13, '37 320,519 47 27 1 25 2, 205, 5S2 100 1,439,129 100 { 1,879,731 100 1, 269, 943 100 West Indies 1,094,762 1.783,729 323,714 1,592,595 23 37 7 33 ],386,9f6 761,268 6,003 1,405,100 39 1,174,915 21 1,480,093 1 279. 727 39 1,482; 525 27 33 6 34 1,600,068 720, 9 T) 1,697 1,338,188 44 19 1 36 4,794,800 100 3,559,297 100 4,417,260 100 3,660,879 100 -Other North America. 703 302,227 2,901 1 98 1 49,204 122,521 14,076 26 66 8 1,414 308,626 3,685 1 98 1 5.5,648 103,975 35 65 305, 831 100 185, 801 100 313, 725 100 159, 623 100 T«tal North America. 2,321,669 3,651,244 731,904 2,531,285 25 39 8 28 3,067,0.58 1,586,455 18, 146 2,241,610 44 23 1 32 2,225,500 3,264,515 638, 971 2,455,206 26 38 8 28 3,171,878 1,405,914 20,116 2, 124. 303 47 20 1 32 9,236,102 100 6,913,269 100 8,584,192 100 6,722,211 100 SOUTH AMERICA. Argentina 36,499 507, 730 6, 9S4 57, 630 6 84 1 9 5S, 630 292, 942 14 70 16, 348 363,561 10,033 7(), 010 4 78 2 16 43,408 252, 708 11 61 70,268 16 114,446 28 608,843 100 421,840 100 465,952 100 410,562 100 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 83 Table II. — Net tonnage of sail aud steam vessels entered and cleared at leading forts of the United States in its trade with foreign tovntries during the years ended July Sly 1914 and 1915, distributed with respect to foreign countries and ngistries— Continued. Registry. Entries, year ended July 31— Clearances , year ended July 31— Foreign coun- tries from which ei.tered and f.r 1914 1915 1914 1915 which cleared. Net tonnage. Per cent. Net tonnage. Per cent. Net tonnage . Per cent. Net tonnage. Per cent. SOUTH AMER- ICA— continued. Brazil .* merican British German Other foreign.. Total . . . ^ merican British German Other foreign.. Total... ." merican Briti-sh German Other foreign.. To'.al . . . A meri<^^'an British Gorman Other foreign.. Total... A merican British German Other foreign.. Total... 'merican British German Other foreign. . Total... A merican British German Other foreign. . Total... ' meri-ran British German Other foreijn.. Total... ' merican Briti'-h German Other foreign.. Total . . . 46,662 ■ 695,105 53,214 84,714 5 79 6 10 88,064 287, 549 "'i.3S,'942 17 56 "27" 34,994 38.5,620 54,969 42,278 74 11 8 115,993 345,969 3,641 159,068 19 56 1 24 879,695 100 514, 555 100 517,861 100 624,671 100 Chile 16,552 254, 239 97,5.3 36,874 4 63 24 9 73,230 205, 781 5,573 113, 146 18 52 2 28 15.583 224; 493 104,858 29, 744 4 60 28 8 57, 168 126,585 21 47 84, 798 32 405,188 100 397.730 100 374,678 100 268,551 100 Colombia 599 66,986 16, 359 5,944 1 75 IS 6 V7,674 12,383 78 12 3,022 22, 263 29, 177 11,251 5 34 44 17 24,532 9,994 51 20 9,532 10 13,896 29 89,888 100 99,589 100 65, 713 100 48,422 100 OtherSouth .\ merica. 37,676 343, 169 21,103 94,043 7 70 4 19 90, 151 £08,427 3,638 53,021 25 58 1 16 37,012 267,648 17, 730 66,403 9 69 4 18 107,879 189,662 29 50 76, 798 21 495,991 100 355, 237 100 388, 793 100 374,339 100 Total South America. 137, 988 1, 867, 229 195, 183 £79,::05 6 75 8 11 387. 749 1,007.082 9,211 384,909 22 56 1 21 106,959 1,263,585 216.767 225,686 6 70 12 12 348.980 924,918 3,641 449. 006 20 53 1 26 2,479.605 100 1,788,951 100 1,812,997 100 1,726,545 100 MISCELL.^NEOUS. Asia.. . 157,430 64. ',541 ]4?,1'97 353,998 12 50 11 27 150,049 . 67:, 032 16,343 371,879 12 56 1 31 151,418 610,474 112,746 387, 681 12 48 9 31 152,786 636, 755 18 55 362, 324 32 1,296,266 100 1,210,303 105, 949 230,456 " 91,'316 100 1,262,319 100 1,151,865 100 Oceania 126,442 23'^3S8 19, 963 27, 3s:: 3) 57 5 100 .■? 67 r 24 25 54 124,537 317,344 63,270 46,064 23 57 12 8 118,614 361,921 "" 71,684 22 65 is 406, 175 427, 721 100 551,215 100 552,219 100 Africa 13.147 3-:2,300 27,425 116, S3S 479, 7.W 50, 909 377, f;9' 3,0 6 2:9,262 ■ 660, 889 8 57 1 34 10,838 272,221 46,231 122, 533 3 60 10 27 40, 165 277,025 ""i6i.'276 10 66 '""24 100 100 451,823 100 418,460 100 Total all coun- tries. 3,918,568 ! 6, 009, 276 4,80'-',45S 8,150,838 10 50 15 25 4,390,909 •3, 505, 1''.-? 196, .575 .9,491,550 16 49 1 34 3,057,488 15,821.418 4,740,9''8 8,0? 5, 860 10 50 15 25 4, 5'^7, .543 13,5'^0.744 50, 505 9,362,978 17 49 3'',f47,140 100 "^7.584,157 100 31,655,694 100 27,461,770 100 1 Less than one-half of 1 per cent. 84 SHIPPING BOAllU^ NAVAL AUXIIJAIU, AND MERCHANT MARINE. Table III. — Net tonnage entered and cleared at leading ports of the United States in its trade ivith foreign countries during the years ended July 31, 1914 and 1915, distributed with respect to sail and steam vessels, and their registry. Entries and clearances of vessels under- i^ears of entries and clearances and power of vessels. American reg- British regis- istiy. try. German regis- try. Other foreign registry. Total all regis- tries. Net ton- nage. Per 1 Net ton- cent. 1 nuge. Pe- cent. Net ton- nage. Per cent. Net ton- nage. Per cent. Net ton- nage. Per cent. ENTRIES. 1914— Sail 171,239 '^.?,1: 1.30 763 0.81 99.19 2.5,251 4, 783, 207 0.53 99.47 204,073 7,046,705 2.50 97.50 531.326 31,715,814 1 65 3 047 323i 94 6S ^^ 9:^S hvx 3,218,568100.00 ' ' Total 16 (\m 5>7ri im no 4,808,458 100 00 s i.^n sas 100. OC 32, 247, 140 100 00 ' ' 1 ! ' ' i 1915— Sail 22i,8J2' .=;. lol lU.fl37 .85 99.15 313,712 Q 177 SMK 3.31 96. C< 652, 201 26,931,956 2 36 Steam 4,167,057 94.90 13,-390,486 196, 575 100 00 97 64 Total 4, .390, 909 100.0013,505,123 100. 00 196, 575 100.00 9,491,550 100. 0( 27, 584, 157 100. OO CLEARANCES. 1914— Sail 153, 179 2,904,303 5.01 94.99 112,388 15, 709, 030 .71 99.23 23, 704 4,711,224 .60 99.40 172,846 7,863,014 2.15 97.85 468, 117 31,187,577 1 48 Steam 98 52 Total 3,057, 488 inn. on' 1.T s2t 41s 100. 00 4,740,92S 100.00 8,035,860 100.00 31,655,694 100 00 1 ' - ' -— 1915— Sail 231,741 4,2j5,802 6.44 93.56 118,322 13,41,2,422 .88 99.12 311,251 9,051,727 3.32 90. 68 721,314 26, 74U, 456 2 63 Steam 50, 505 100. 00 97 37 Total 4,527,543 100.00 13, 523, 744 100.00 50,505 100.00 9,302,978 100 00 27,461,770 100 00 Table IV. — Net tonnage of s"H and steam vessels entered and cleared during the years ended July 31, 1914 and 1915. PORTLAND, ME. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Nura- Der. Net ton- nage. Num- ber. Net ton- nage. Europe: Austria-Hungary 1 2, 486 2 4,723 Denmark 1 2 4 1 2 2 1 434 France 2 6,906 2 3,650 8,334 215 Germany 1 215 Italy 3 4,450 1 2 1 1,501 4,770 2,147 5,238 Netherlands 3,874 Portugal 1 2,147 Spain 1 59 1 1,205 207,255 2,346 Unite J Kingdom Other Europe 56 270, 123 61 295,619 62 220,902 t ' i Total Europe 63 296. 112 69 312,410 62 211,021 73 239,997 North America: Mexico 1 7 2,266 6,011 West Indies 8 5,712 2 484 3 3 510 Total North America... 8 5 712 8 8,277 2 484 3 3,510 South America: Argentina 1 2 2,408 5,599 I Brazil 1 1,964 Chile 1 1,715 1 1 715 Total South America... 3 8,007 1 1,964 1 1,715 1 1,715 Oceania 1 1 1 868 Africa 2 5,265 1 2,327 1 i,699 ■ 1 699 Total all countries 76 315,096 79 324,978 66 214,919 1 1 79 247, 789 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 85 'I'ABLE IV. — Net tonnage of sail and steam vessels entered and cleared during the years July SI, 1914 and i9i5— Continued. BOSTON, MASS. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Nura- bsr. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Europe: Austria-Hungary 1 25 10 2 43 21 22 3 1 2 8 5 179 2 4,536 111,311 24,382 1,310 254,578 137,471 79,874 6,614 3, 1.52 5,964 16,482 14,297 990,208 17,326 Belgium 15 5 1 33 17 18 2 74,895 11,344 3,226 210,981 115,231 65,634 3,737 2 14 1 5 15 19 9 8,920 29,439 3,619 20,078 103,937 64, 114 20,063 1 8 2 4,384 15, 494 7,246 Germany Italy 12 9 7 70,616 Netherlands 30,517 Norway 14,196 Russia 1 Spain 4 2 165 2 7,594 5,662 921,582 17,326 7 12 179 2 14,792 20,691 695,737 11,038 Sweden 2 121 3,726 United Kingdom 459, 989 Total Europe 324 1,667,505 264 1,437,212 265 992,428 162 606, 168 North America: Central American States. . Mexico . 43 9 149 89,503 20,455 188,116 39 79,691 33 3 133 71,585 3,901 161,207 27 59, 129 West Indies 122 147,365 104 127,975 Total North America. . . 201 298,074 161 227,056 169 236,693 131 187.104 South America: Argentina 14 1 4 29,409 2,729 15,009 9 1 15,301 829 27 1 2 1 6 61,115 886 6,301 717 16,405 8 1 17,774 Brazil 886 Chile Col mbia . 2 1 2,800 1,432 Other South America 7 14,839 1 2,125 Total South America . . . 26 61,986 13 20,362 37 55 10 6 85,424 10 20,785 Asia 60 209,3.52 18, 160 2,570 6 20,033 181.354 1 7 32,0.58 4 13,. 576 1 5 24,309 Oceania 12,450 Africa 2 17,326 6,811 Big" Total all countries 617 2,257,647 446 1,721,989 542 1,541,533 857,627 NEW YORK, N. Y. Europe: Austria-Hungary Belgium Denmark France Germany Greece Italy Netherlands Norway Portugal Russia Spain Sweden United Kingdom Other Europe Total Europe North America: Central American States Mexico West Indies Other North .\merica. . . 60 105 34 188 241 22 221 112 24 27 19 87 2 587 21 1,750 209 18^1 1,000 91 Total North America... jl, 489 30"!, 716 65Q, 408 141, 820 831,332 1,953, 5-^8 202, 495 1,08 ,083 (191,080 135,091 70, 727 81,429 203, 3f;6 2,895 3,470,018 117,129 40 103 30 227 191 21 202 147 30 25 12 52 11 520 10 9,970,223 il,C21 C20, 503 540, 237 1, 875, 180 302,353 217 152 928 93 3,347,273 1,390 187, 577 641,l>15 133, 708 923, (01 1, 732, 720 130, 991 1,092,140 830, 034 158, 511 65, 057 50,284 127,787 21,387 3,315,513 50, 713 9, 461,138 635, 461 455, 854 l,819,f42 308, 925 3, 219, 882 3 5 82 291 16 47 272 249 53 16 10 79 43 767 25 1,958 158 136 946 61 1,301 13, 040 21,(70 247, 541 1,031,4(9 40, 407 158, 615 979, f 00 870,557 222, 739 3^,2 9 34, 545 189, 540 87, (i71 3, 324, 879 72, 532 7,336,074 1,8'^3 2 5 119 393 9 5() 245 228 (2 14 22 59 73 548 516, 710 3 8, 9 1 1,536,518 168, 756 133 93 907 56 2,590,945 1,189 13, Of 5 23, 4r2 305, 297 1,305,433 18,(01 21 9, 828 903,119 815,407 230, 333 32, 118 65, 422 144,117 159, 227 2, 73^1, 383 112,850 7, 134, 722 44''', 908 263, 271 1,654,090 158,547 2, 522, 876 86 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July .31, 1914 and ^9^5— Continued. NEW YORK.N. Y.— Continued. 1914 1915 Foreign countrj- served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. South America: 90 134 11 31 121 2">5, 203 358, 183 27, 675 83,467 284, 043 76 140 25 24 113 225, 346 379, 616 82, f 55 54, 142 230, 327 68 101 19 31 110 198,635 223, 4r 8 49,884 89, IfO 218,941 43 124 1 17 100 112,816 Bra il 311, 2'U Chile 57,700 Co'ombia 38, 505 Other South America 198, 714 Total South America.. . 387 1,018,571 378 978, 086 329 783,088 285 718,996 43 21 57 130, 907 54, 809 158, 527 83 r,2 63 282, 810 18 1, 733 213,780 55 23 73 170, 147 61,045 207, 554 92 62 51 310, 379 1(.7 443 101,404 Total all countries 3,747 14, 680, 310 3,597 14,342,929 3,739 11, 148, 853 3,542 11,015,880 PHILADELPHIA, PA. Europe: Austria-Hungary... 24 26 14 25 64 63,933 90,693 31,351 43,298 255,787 9 37 26 29 41 25,826 137, 1S6 60,298 56, 848 163,442 1 2 14 29 3 7 55 29 33 3 1 41 16 211 6 2,068 6,366 27, 381 70, 709 14, 784 13,539 152,297 79, 158 84,746 6,070 1,773 93, 824 24, 414 594,977 13, 873 Belj^ium ... ... 1 26 59 1,982 Denmark . . 50, 723 France 142,468 Greece 7 63 42 23 13, 825 Italy 23 33 53 7 3 39 5 205 91,476 108, 022 151,949 18,326 7,941 92,385 15,404 625,966 35 46 19 5 1 13 8 178 2 121,486 148,481 48, 144 12,006 2,337 36, 134 19,889 564,808 4,475 168,468 Netherlands 116,469 Norway . . . 57, 507 Portnsral Russia Spain 19 21 163 3 46, 365 Sweden 33, 405 United ICinedom 487, 629 Other Europe 6,301 Total Eiu-ope 521 1,596,531 449 1,401,360 451 1,185,979 427 1, 125, 142 North America: Central American States. . Mexico 4 41 452 2 8,414 142,507 585, 450 1,429 3 39 426 2 9,792 103, 344 533, 950 1,685 14 24 345 1 26,200 70, 305 415, 167 2,746 4 24 357 4,880 65, 574 West Iniies 429, 798 Other North America Total North America. . . 499 737,800 470 648,771 384 514,418 385 500,2.52 South America: Argentina 16 16 9 2 13 25, 008 39, 318 27, 712 1,983 18, 791 10 9 3 4 9 14,989 19, 961 5,847 3,591 15, 514 13 5 14 24,979 9,672 41,883 14 14 6 3 2 31,426 Bradl 34,937 Chile 14,322 Colombia 2,071 Other South America 3 4,664 2,605 Total South America... 56 112, 812 35 59, 902 35 81, 198 39 85, :361 Asia. . . 35 3 23 102, 229 6,491 56, 446 23 1 8 65, 492 1,609 22, 711 12 1 15 34, 319 2,509 32, 178 10 3 3 28 997 Oceania 11,414 Africa 5 "^55 Total all countries 1,137 2, 612, 309 986 2, 199, 845 898 1, 850, 601 867 1,757,021 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 87 Table IV.- — Net tonnage of sail and steam vessels entered and cleared during the year July 31, 1914 and i9i5— Continued. BALTIMORE, MD. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Europe: 10 9 9 58 32, 126 22,325 27,601 310,081 11 11 24 62 37,141 26,733 68, 949 333.098 1 90 98 1 7 122 (5 44 2,962 Denmark 48 41 76,589 103,469 127, 754 245,990 5,182 7 130 56 16 2 16,786 316,0.38 172, ISO 44,858 2,265 17.229 Italv 15 28 2 2 5 25 2 60 35, 194 123,520 3,042 2,273 15,001 58,214 5,5C4 226,715 25 40 2 4 5 15 57,381 151,512 2,972 7,621 13,516 34,054 298,002 Netherlands 191.502 .57, 468 3 13 29 145 3 7,537 40 13 222 12 &3,757 25,927 525,3(1 22,234 28,844 45,2.30 81 263,059 394,958 3,915 Total Europe 231 881,656 280 996,036 587 l,389,4f4 621 1,426,573 North America: Central American States.. 5 25 330 67,954 420,440 29 43 315 43, 143 103,484 361,545 5 26 218 1 7,926 63,485 283,014 1,872 20 33 224 28,586 84.362 254, 968 Other North America Total North America... 300 495,864 387 508,172 250 356,297 277 367,916 South America: 10 23 12 3 48 24.973 .52,719 31,403 7,107 12 6 4 3 28.715 16,973 10,221 7,889 12 21 S 3 29,672 49,331 25,704 5,384 42 8 2I 96,878 Brazil 16,3.58 Cliilc 11,137 Other South America 49,041 Total South America... 116,262 25 63,798 44 110,091 76 173,414 Asia 10 2 IS 27,270 6,527 44,920 3 4 19 7,921 11,127 45,891 4 5 41 9,lf8 11,353 90,271 3 2 26 7,(59 Oceania 5,389 Africa 58.042 Total all countries 609 1,552,499 718 1, 632, 945 931 l,966,f:44 1,005 2.038,993 NEWPORT NEWS, VA. Europe: 1 10 3 19 43 2,571 23,167 7,691 41,111 113,674 Belf;ii;m Denmark 7 1 7 19 17,359 2,854 16,295 57,665 12 56 2 2 88 10 11 1 12 13 149 8 21,170 169,836 6,501 6,024 245,399 27,988 24,407 1,1S6 28, ISO 24,346 455,091 23,842 13 100 21,540 France 289, 774 Greece . . 2 89 17 17 1 11 16 165 7 5,309 Italy 7 15 5 17,803 37,943 11,951 20 26 3 1 3 48,156 61,337 7,651 1,163 4,984 249,332 Netherlands 45,824 Norway 30, 380 2,800 Spain 3 1 54 2 4,995 2,312 154,999 4,768 23, 988 Sweden 26,632 United Kingdom Other Europe , 86 237, 447 517,236 19,694 Total Europe 121 328,944 215 548, 952 364 1,033,970 438 1,232,509 North America: ( entril American States. . Mexico 5 9 68 10, .5.52 25,616 145,956 4 12 97 8,318 23, 557 192, 888 4 4 37 11,874 8,249 62, 730 3 7 79 11,191 12,370 West Indies 116,619 Total North America . . . 82 182,124 113 224,763 45 82,853 89 140, 180 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 1914 and i9i.5— Continued. NEWPORT NEWS, VA.— Continued. 1914 1915 Foreign country sensed. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. South America: Argentine 2 3 5,630 10,754 1 1 2,024 3,539 4 8 8 1 5 8,023 20,622 23,288 915 6,736 8 25 7 1 8 18,335 48,444 Brazil Chile 18.905 Colombia 915 Other Soith America 2 4,826 2 4,826 12,576 Total, South America.. 7 21,219 4 10,389 26 59, .584 49 90,175 Asia 1 1,774 1 1 12 3,495 1 5 2,999 12,089 2 5 5,916 12,626 3,300 Africa 18 46, 162 37,120 Total all countries 216 547,375 339 802,646 454 1,224,343 590 1,515,779 NORFOLK, VA. Europe: Austria-Hungary 7 17 3 5 28 19, 503 35,. 559 7,235 12,779 68,512 8 20 4 16 46 22,522 45, 458 9, 882 :53, 853 117,191 BelErium. 1 8 25 3 6 135 15 4 3 2,201 12,437 68.008 8,914 14,6.39 363,398 43,320 10, .384 7,337 2 24 38 2 9 168 18 5 7 3 551 Denmark 33 112 France 100 623 3,814 Greece 21,401 Italy 27 16 80,634 36,885 80 29 229, 466 76, 201 460, 807 Netherlands 38, 722 Norway 10, 467 Portugal 1 2,071 12,912 Russia 1 8 3 71 3 3,951 21,8.^3 6,683 190,306 7,974 Spain 5 2 36 2 12, 19.3 4,642 96,631 5,104 12 6 84 8 25, 103 9,021 207,089 13,455 IS 11 89 5 36 747 Sweden 17,477 United Kingdom Other Europe 223, 891 4,011 Total Europe 149 381,748 289 765,340 310 785,216 396 967, 535 North America: Central American States.. Mexico 4 12 51 2 9,090 27, 739 100, 368 2,046 21 13 71 4 48,387 30,310 113,742 2,715 6 9 62 3 22, 904 22, 438 96, 777 4,514 26 13 87 1 69,823 29,447 Wet Indie < 131 063 Other North America 1,076 Total North America... 69 139, 243 109 195, 154 80 146,633 127 231,409 South America: Argentina 11 24 5 27,307 68, 159 19,542 8 12 7 19,627 39, 179 26,265 14 26 15 1 3 35, 120 43.432 46,222 2,389 8, 219 23 59 11 1 22 53,359 98,220 29 699 Bra il Chile Colombia 2,389 Other South America 8 20, 846 9 20, 125 40,075 Total South America... 48 135, 854 36 105, 196 59 135,382 116 223. 742 Asia 3 11,862 3 4 18 11,862 12,410 46,095 4 5,342 6 7 28 13 746 Oceania 24 010 17 40,594 23 49,975 58, 662 Total all countries 286 709, 301 459 1,136,057 476 1, 122, 548 680 1,519,104 SHIPPIXG BOARD, NAVAL AUXILIAKV, AXD MERCHANT MARINE. 89 Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July .31, 1914 and 1915 — Continued. CHARLESTON, S. C. 1914 1015 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. N et ton- nage. Num- ber. Net ton- nage. Num- l)er. Net ton- nage. Num- ber. Net ton- nage. Europe: te.gium 3 6,609 2 4,050 Denmark 2 2,334 7 1 9 111 France 1 34 2,451 76, 250 842 Germany 24 1 1 1 3 4 55,045 2,891 2,327 722 3,473 6,987 Italy 2 2 1 1 2 1 13 3 587 2 1 9 4 4,902 722 10,391 8,257 7 2 9 I 19 15,481 1,327 9,465 13, 785 1,914 39, 721 3 871 Portugal 1,220 3 713 Spain Sweden 1 914 United Kingdom 20 53, 709 16 56, 183 25,676 Total Europe 74 163,291 62 131,678 47 84,027 30 50,598 North America: Central American States.. Mexico West Indies 4 1 31 2,148 5,635 25,825 4 1 29 2,148 5,635 23,405 3 1 13 4,328 1,461 7,524 3 1 16 4,804 1,461 9 279 Total North America... 36 33,608 34 31,188 17 13,313 20 15,544 South America: Brazil 2 8 4 2 4,765 26,426 3,171 6,662 Chile Colombia 3 3 8,045 2,431 3 9,108 1 2,998 Other South America 1 1 462 Total South America... Africa 16 1 40,024 2,447 6 10,476 3 1 9,108 1,878 2 4,460 Total all countries 127 239,370 92 173, 342 68 108,326 62 70,602 SAVANNAH, GA. Europe: l!el 'ium 3 4, 038 5 3 26 83 11,089 5,402 56,031 206,490 1 r>enniarlc 6 3 4 2 11 12 6 9, 463 5, .580 10,927 4,554 20,8.36 23. .539 9; 459 2,997 32 8 5 48 980 France 10 55 20.015 132; 902 18,503 13,436 Germany Greece Italy 1 13 2,726 33,311 1 18 2,726 45,836 9 IS 4 2 2'' 877 Netherlands. . . . 39 311 Norvrav 5 951 Portup,al 3 3,162 1 1 13 851 1,573 29,319 3' 125 Russia Spain 10 19, 492 9 10 88 2 17,288 1.5,253 174,.'^05 2, 765 16 30 79 1 31 282 Swe len 37 431 United Kingdom Other Europe 24 59, 457 42 99, 274 166,309 1 137 Total Europe 119 275, 103 193 458,591 1.55 290, 866 204 388,342 North .^ mcrioa: Central American States . 1 1 12 59 1, .526 10, .360 Mexico 1 2 7 5,315 9,077 2 5 2,812 8,612 West Indies 11 15,402 Total North America... 9 14, 392 7 11,424 14 11,945 11 1.5,402 South I merica: Argentina 6 5 6 6 12,688 10.949 16; 777 6,717 2 3,078 Bra il 1 4 2 1,660 11, 103 1,999 1 1 1 660 (hile 1 2 2,759 4,756 5 323 Other South A. merica Total South America... 23 47. 131 5 10,593 7 14, 762 2 6,983 Asia 1 1 8 3, 189 2,874 17,347 5 14, 578 1 1 16 2, 875 669 24, 143 1 2,610 Oceania Africa 3 6, 519 3 4,920 Total all eoantries 161 .300,036 213 501, 705 194 351,260 221 418,257 90 SHIPPIXG BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 1914 a7id 1915— Cor\tim\ed. FERNANDINA, FLA. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- bsr. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Europe: Belgium 1 1 1 1,797 2,284 554 1 1,797 Spain ..'. 2 1 1 2,248 599 1,797 1 299 United Kingdom . . 4 12, 119 7 16, 754 5 6,441 1 299 North America: 2 18 4,196 21, 868 1 4 1 1,021 1,245 400 1 2 1,021 i 1 299 544 728 1 Total North America... 20 26,064 6 2, 666 2 843 3 1,749 South America: 1 990 1 1 699 1 271 1 Total South America.. . 1 699 1 990 1 271 Africa 4 6,508 1 711 4 3,968 2 2,107 Total all countries 32 50,025 13 10, 808 7 5,082 6 4,155 JACKSONVILLE, FLA. Europe: 1 7 1,174 15, 993 1 1 1,174 2,193 Germany Netherlands 3 3,518 1 1,415 Norway 1 1 2,518 267 3 3 6,190 8,019 1 2 1,939 3,410 United Kingdom .. 3 7,485 14 31,376 4 6,152 6 8,867 4 8,900 North America: Central American States . Mexico 1 3 27 720 5,639 20,456 6 3 14 5,514 6,068 13, 128 1 2 5 3 1,400 3,278 3,621 2,265 2 2 4 1,709 3,076 3,521 We^t Indie ^ Other North America Total North America. . . 31 26, 815 23 24,710 11 10,564 8 8,306 South America: 1 2 1 2 2,604 4,312 2,734 2,816 1 2,604 Brazil 1 1,408 ChUe Other South America 3 3,400 i 2,135 Total South America.. . 6 12,466 1 2,604 4 4,808 1 2,135 Africa 1 267 1 1,556 1 1 556 Total all countries 52 70,924 28 33,466 22 25,795 14 20,897 SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MAEINE. 91 Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 19 U and 1915 — Continued. KEY WEST, FLA. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Europe: ] ranee 2 1 1 5,099 2,042 1,758 4 1 6,511 2,522 2 2,529 i 1 2,042 Italv 538 Sweden 1 2,121 United Kingdom 4 9,725 Other Europe 2 4,121 Total Europe 5 9,033 3 4,650 8 18,624 4 6,701 North America: Central American States. . Mexico 9 1,463 2 3 579 141 3,209 568, 210 8 4 402 5,408 8,244 388,541 3 3 408 3,695 4,896 582 570, 218 397,903 Total North America . . . 591 571, 681 584 571, 560 414 402, 193 414 406,494 Africa 1 1,983 Total all countries 596 580, 714 587 576,210 423 422,800 418 413,195 TAMPA AND PORT TAMPA, FLA. Europe: 2 4 3 5 4 1 1 3 7,665 8,538 8,963 13,502 12,262 1,692 1,939 6,243 4 10 3 3 1 8,747 18,637 9,706 7,942 4,105 Italy 3 1 8,555 2,575 2 3 1 5 3,499 5,681 1,.564 17, 737 Spain 4 8,669 5 9,134 United Kingdom 18 1 57,922 1,425 5 11,985 1 2,680 Total Europe 42 120, 151 32 77,618 13 31,784 6 11,814 North America: Central American States. Mexico 3 48 53 7,005 81,200 52,641 1 52 40 59 76,237 26, 198 1 23 24 59 10,950 15, 191 1 22 20 59 13,865 West Indies . . . 7,799 Total North America... 104 140,846 93 102,494 48 26,200 43 21,723 South America: 4 6 1 10,300 16, 734 2,512 1 2,193 1 2,345 11 29,546 1 2,193 1 2,345 Asia 1 3 2,267 7,709 11 21,480 2 3,504 Total all coimtries 168 312,023 130 192, 281 64 63,833 49 33,537 92 PHIPriNG BOARD, NAVAL A C X I I.I.Mt V, AND MERCHANT MARINK. Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 1914 and 1915— Cor.thmed. PENSAOOLA, FI.A. 1914 1915 Foreign country sorved. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Nun:- ber. Net ton- nage. Num- ber. Net ton- nage. Europe: JJel'vium 4 8, 135 2 4 15 15 22 11 1 13 1 33 5,404 6,458 35.358 38,470 46, 026 24,803 658 20, 713 2, 737 74, 120 Denmark 3 2 1 10 1 1 4 4,163 4, 783 2.357 l'i;401 9-1 1,149 8,151 5 4 6, 255 Fran?e 4 20 12 3 2 5 7,086 42, 049 26, 399 5,339 1,823 10,330 8,001 GGrmany Italy . 13 27 492 Netherlands Portu^'al . . Spain SweJen 3 3,191 United Kingdom 25 50,139 24 38, 892 38 81,372 Total Europe 75 151,300 117 254, 747 46 81,820 63 126,311 North J* merica: ( entral American .States . Mexico 11 4 54 21,365 6,143 55,494 10 1 43 13,191 1,261 25,310 5 7,811 2 2,197 19 12,583 18 12, sis Total Xorth America. . 69 83,002 57 39, 768 24 20,394 20 14,515 South A merica: 14 29 2 8 27,245 49. 845 6,030 12. 074 21 9 2 9 41,814 15, 137 4, .345 11,261 3 3 1 6.311 6,071 2,759 7 2 10 479 Bra il Chile 6,398 6 11,010 Total South America... 53 95, 194 41 72,557 7 15,141 15 27, SS7 Asia 1 1 20 3,177 2, 914 36, 486 3 1 IS 9,468 '■. 914 28,525 1 1 4 2,959 2,707 Oceania Africa 4 6,648 8,762 Total all countries 219 372,073 237 407.979 81 124,003 104 183, 141 MOBILE, ALA. Europe: Belgium 3 6,733 8 17,836 1 1 Denmark 2 3,192 6 2 8,618 France. 3 11 1 6 6,909 27, 705 2,444 13, 441 7 19 5 11 19,568 47, 531 10, 851 28,241 1,947 Germany .... Italy. 1 3 538 4,231 4,167 3 1 3,583 Netherlands 2,006 Norway Portugal 3 12 3,456 25,094 1 10 1,164 16, 843 Spain 10 1 33 15,353 856 66,646 9 1 40 14, 232 Sweden 529 United Kingdom 27 81, 717 45 120, 213 75,707 Total Europe 66 167, 499 106 262,247 51 94,9S3 62 106, 622 North Am-^rica: Central American States. . Mexico 224 48 265 143, 554 65,913 215,612 212 34 257 130, 786 44, 4.58 206, 393 194 44 161 112,815 53, 202 154,544 190 32 184 110, 146 35, 001 West TnrliRs . 160, 269 Total North America... 537 425, 079 503 381,637 399 320, 561 406 30.5.416 South America: * Argentina 13 20 1 1 7 29, 745 33,478 1,754 208 14,386 17 9 33,907 13,952 1 3 1,970 3,308 12 5 1 1 4 15,750 Brazil 5,644 Chile 2,674 Colombia 2 12 1,690 21,738 1 3 452 2,706 452 Other South America 6,267 Total South America. . . 42 79,571 40 71,287 8 8,436 23 30, 787 Oceania 1 1 1 3 5 8,016 6,779 Africa 10 18,501 6 9,444 1 1,8.35 Total all countries 655 690,650 655 724,615 466 438, 775 492 444,660 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 93 Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 1914 and 1915 — Continued. NEW ORLEANS, LA. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Europe: 15 17 4 31 36 34,687 53,362 10, 790 108,777 137, 749 16 47 9 38 53 49,844 136,544 18,441 119, 179 178, 146 3 2 8 50 4,785 5,667 13,082 139,916 1 25 105 1 2 76 30 7 8 24 21 5 235 4 1,637 41,893 292,982 2,139 5, 572 Italy 24 32 2 11 25 3 64,872 109, 758 2,818 11,337 65,111 6,665 33 55 4 15 25 6 2 128 89,937 171,812 9,571 17,319 64,988 11,077 4,180 467,771 69 23 6 4 24 7 3 276 12 172,433 70,829 13,096 5,979 61,222 14,894 6,171 834,5.57 26, 705 19U, 690 Netherlands 84,686 15,8^9 Portugal 8,289 Russia 58,463 Spain 39,512 10, 893 United Kingdom 137 509,755 741,626 15,725 Total Europe 337 1,115,681 431 1,338,809 487 1,369,336 544 1,509,996 North America: Central American States.. Mexico 550 306 191 734,909 420,403 332,952 552 283 168 731,768 378,636 286,773 474 249 183 2 714,816 329,970 301, 180 3,788 468 242 162 704, 761 310,482 West Indies 266,037 Total North America... 1,047 1,488,264 1,003 1,397,177 908 1,349,754 872 1,281,280 South America: Argentina 21 49 4 1 7 63,565 132,275 11,151 1,059 17,332 16 6 2 1 4 48,387 16,631 4,781 1,059 10,945 10 43 11 4 7 29,281 95,024 24,471 5,719 18,242 12 8 1 3 1 32,868 Bra.il 13, 105 Chile 3,163 Colombia 4,090 Other South America 1,113 Total South America... 82 225,382 29 81,803 75 172,737 25 54,339 Asia 2 1 31 7,0.36 2,798 70,808 7 1 10 22,018 Oceania 1 5 1,025 13,486 3,006 Africa 1 3,124 24,833 Total all countries 1,472 2,843,838 1,464 2,820,913 1,504 2,972,469 1,459 2,895,472 PORT ARTHUR, TEX. Europe: Belgium. .. 7 20,288 13 1 5 7 1 15 3 34,670 2,491 12,588 16, 090 2,575 38,239 9,238 Denmark 2 4 1 6 4 2 1 1 4, 416 8,194 3,202 17,303 10, 724 2,086 1,035 2,664 1 4 1,279 France 4 5 1 12 11,436 12,490 2,575 31,670 9,907 Germany. . . Italy...: 8 3 4 1 2 2 95 1 22,012 Netherlands 9,011 Norway 9,199 Portugal 1,035 Spain 4,231 Sweden 2,357 United Kingdom Other Europe 65 2 189,559 6,153 47 1 133,799 2,656 109 1 343.298 2,869 304,775 4,119 Total Europe 96 274, 171 93 2.52,346 131 395, 791 121 307,925 North America: CentralAmerican States 1 26 7 4,068 52,813 11,545 Mexico.. 22 7 44,911 10,239 22 5 40,470 7,130 22 10 43,005 West Indies 11,456 Total North America... 34 68,426 29 55,150 27 47,600 32 54,521 32910—16 7 94 SHIPPING BOARD, XAVAL AUX li.IAKV, AXD MERCHANT MARINE. Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 1914 and i9i5— Continued. PORT ARTHUR, TEX.— Continued. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Not ton- nage. Num her. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Nat ton- nage. South America: 6 4 13,826 8,887 2 4,712 1 I 1 2,111 16, 197 237 2,767 5 3 12, 898 Brazil 5,545 Other South America 1 589 2 4,289 1 2,141 Total South America. . . 11 23,302 4 9,001 6 21,312 9 20,584 Asia 1 2 5 2,750 5,606 11,429 3 7,599 3 8,963 Oceania i 6 2,831 15,016 Africa 3 13,059 5 17.413 Total all countries 148 383,746 134 336,282 170 485,361 170 469,406 GALVESTON. TEX. Europe: Austria-Hungary 23 73 1 16 22 6 2,321 48,534 8,428 65,027 232,640 2,358 49,220 60,643 14,025 10 2 12 31 1 10 13 8 24,249 4,599 34,279 102,258 2,358 30.497 40,073 18,406 1 8 20 2,679 11,577 49, 198 1 19 57 4 12 58 9 4 1 2.679 29,664 146,. 584 7,133 Denmark France Germany G reece 4 34 9 4 3 9.591 83.513 19,035 8,529 4,801 43,017 Italy Netherlands Norway 151,204 23. 579 5,361 1,117 1 13 2,913 35,403 1 26 2,9i3 76,490 Spain 21 12 211 16 53 607 21,380 578,448 37 850 45 28 172 6 112,552 44,384 United Kingdom 95 2 309.294 5,027 120 373.436 495 117 Other Europe 13,635 Total Europe 198 609,356 313 936,035 343 880,208 416 1,076,026 North America: Central American States . Mexico 96 164 80 83,410 317,655 153,953 92 141 47 73,701 275,999 68,639 68 184 51 73,923 321,940 85,671 53 158 37 45,202 279,295 40,925 Total North America... 340 555,018 280 418 339 302 481.534 248 365,422 South America: Argentina 27 29 63,615 77, 102 6 4 12,435 7,582 8 19 1 5 19,424 45, .542 1,830 12,125 Brazil 4 78,425 Chile Other South America. . . . 2 3,543 1 2 4.287 Total South America.. . 58 144.260 10 20,017 33 78,921 6 82.712 Asia 1 2,337 2 5,599 3 5 34 7,756 13,505 72,490 9 2 7 28,043 4.812 15,9.55 Oceania Africa 6 13,328 1 2,847 Total all countries 603 1,324,299 606 1,382.837 721 1,534,4)4 688 1,572,970 PORT ARANSAS, TEX. Europe: United Kingdom 2 6,025 4 9,845 North America: Central American States . ■? 3,820 43,496 18 42,553 2 3,822 1 1 911 Total North America... 21 47, 316 18 42,553 2 3,822 1 1,911 Total all countries 23 53,341 22 52, 398 2 3,822 1 1,911 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 95 Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years Julij 31, 1914 and i9i5— Continued. SABINE, TEX. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Europe: Bel<'liini 1 3 3 1 3 1 2 5 1,637 8,261 8,571 2,154 4,912 2,071 3,5f.0 14,843 3 1 1 2 8,2G1 2,847 2,154 4,945 Italy 2 2 5,058 4,129 3 6,093 United Kini;dom 7 20,073 18 3 64, 120 8,313 19 1 68,883 3,509 Total Europe 14 38,280 19 46.009 24 78, 526 24 81,579 North America: Central American States 1 26 14 91 27 4 73,474 3,3t;8 31 1 74,490 291 26 17 77,680 9,255 84,600 West Indies 7,077 Total North America... 31 76,842 32 74,781 43 86,935 41 91,768 South America: Argentina 2 1 3,426 1,555 2 2 3,426 2,498 2 1 1,080 1,146 ' 6,844 Total South America... 3 4,981 4 5,924 3 2,226 4 6,844 Asia 1 1 3,301 1 3,032 Oceania 1 1 2,236 2,484 1 1 2,236 2,484 Africa 1 3,032 Total all countries 50 124, 823 57 131,434 72 174,020 70 183,223 SAN DIEGO, CAL. Europe: Germany 1 1 1,979 2,232 i United Kingdom 1 2,773 1 2,773 Total Europe 1 2,773 ^ 2,773 2 4,211 North America: Central American States. . 3 57 8,507 21,283 2 53 5,037 19,304 Me.xico 70 64,696 61 18,945 Total North America . . . 70 64,696 61 18,945 60 29,790 55 24,341 Asia 2 5,936 2 5,936 1 .1 . _ Oceania 1 1,888 1 1,888 Total all countries 73 73,405 64 27,654 63 35,889 56 26,229 SAN PEDRO, CAL. Europe: Beleium 4 13,293 2 6,639 3 2 1 11,955 5,795 1,969 1 1 1 3,826 3,121 Denmark France 1,969 Germany 1 1 3,010 2,159 1 3,010 United Kingdom 3 10,833 3 12,672 Total Europe 6 18,462 3 9,649 9 30,552 6 21,588 North America: Central American States . Mexico 12 7 36,665 17,892 11 6 34,071 10,593 2 6 9,255 3,133 3 5 9,929 1,185 Total North America... 19 54,557 17 44,664 8 12,388 8 11,114 =— ; . ■ = 96 SHIPPING BOARD, NAVAl. AUXILIARY, AND MERCHANT MARINE. Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 1914 and /9i5— Continued. SAN PEDRO, CAL.— Continued. 1914 1915 Foreign country served. I^ntries. Clearances. Entries. Clearances... Num- ber. Net toQ- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. South America: Argentina 1 1,130 1 1 6 1,135 Brazil 1 5 6 3,788 20,800 11,063 3,788 Chile 3 11,701 2 8,540 20,507 11,063 All other South America. Total South America.. . 4 12,831 2 8,540 12 35,651 14 36,493 Asia 3 3 8.257 7,555 7 2 19, 139 3,595 5 1 12,411 Oceania 2 4,341 2,674 Total all countries 35 101,662 24 67, 194 38 101,325 34 84,280 SAN FRANCISCO, CAL. Europe: 7 1 2 13 1 5 19, 767 2,895 6,627 36,226 326 9,351 3 7,637 3 1 2 2 3 2 2 35 2 7,388 2,232 3,878 3,801 7,281 3,114 2,391 93, 706 4,488 1 6 2 2,729 Denmark 17,684 r ranee 2 8 1 6,627 22, 679 326 4,826 Italv 1 1,929 1 58 3 930 United Kingdom 16 47,379 19 52,575 160, 500 6,720 Total Europe 45 122, 571 33 89,844 62 128,279 72 195,317 North America: Central American States.. 57 49 1 135, 107 168, 764 563 60 45 147,462 148,093 63 21 2 127, 518 19,782 5,712 48 20 3 113,418 15,580 7,745 Total North America... 107 304,434. 105 295, 555 76 153,012 71 136,743 South America: 1 53 13 2,826 189, 913 26,509 2 23 10 2,730 61,951 18, 785 CMle 48 22 168, 716 52,097 26 8 72, 618 13,584 Other South America Total South America.. . 70 220, 813 67 219,248 35 83,466 34 86,202 Asia 122 68 1 492,306 182,911 3,803 107 65 1 442,990 175,925 3,616 113 83 2 460,413 201,053 1,946 104 75 1 425, 676 Oceania 185, 494 614 Total all countries 413 1,326,898 378 1,227,178 361 1,028,769 357 1,030,046 ASTORIA, OREO. Europe: Belgium 2 5,476 France 1 2,723 1 2,723 1 6 4,437 11, 815 United Kingdom All other Europe 14 32,209 6 11,568 21 1 44,809 1,996 6 16,252 16 37,685 6 14,291 23 49,528 North America: 5 10,578 2 2,880 2 1 4,619 1,789 West Indies 6 10,578 2 2,880 3 6,408 I-. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 97 Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July SI, 1914 and 1915 — Continued. ASTORIA, OREG.— Continued. 1914 1915 Foreign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- oer. Net ton- na};e. South America: 1 2,826 Brazil 1 10 9 2,332 18,716 10,263 Chile 9 7 11,835 7,549 13, 8 20,053 13,489 1 5 496 All other South America. 6,539 Total South America... 20 31,311 17 22, 210 21 33,542 6 7,036 Asia 10 9 29,330 16,720 13 9 2 36,955 16,857 2,163 8 11 4 23,362 23,655 6,184 7 9 3 22,880 Oceania 17,317 Africa 5,372 Total al 1 countries 50 104, 191 59 118,750 53 107, 442 48 102, 132 PORTLAND, OREG. Europe: 1 5,993 1 3 157 7,366 1 157 1 2,057 Italy . ' 1 7 2,707 13,293 United Kingdom 2 4,425 12 27,226 27 53,618 • Total Europe 6 11,948 14 35,276 9 16,157 27 .w.eis North America: 1 3 3.209 6,225 1 1 1 3,^09 2,115 3,669 1 2,597 4 9,434 3 8,993 1 2.597 South America: Chile 5 3 6,247 7,778 9 2 9,619 5,985 9 3 16,811 4,746 3 3 6,076 Other South America 4,859 Total South America... 8 14,025 11 15,604 12 21,557 6 10,935 Asia 7 3 3 21,203^ 6,361 5,133 12 4 3 37,698 8,958 6,691 4 4 1 12,264 2,9.35 1,496 8 10 2 23,121 13,036 Africa 2,570 Total all countries 31 68,104 47 113,220 30 54,409 54 105,877 PORT T0WN8END, WASH. Europe: 1 2 1 12 2,997 6, 153 4,170 49,970 3,791 3 1 6 10,996 4,170 22,037 United Kingdom 14 49, 113 13 36,851 Total Europe 16 63,290 10 37,203 15 52,904 13 36,851 North Europe 1 10 2,724 16,596 2 11 6,613 19,197 1,335 430 1 1 Central American States.. Mexico 523 513 Total North America. . . 11 19,320 13 24,810 1,765 2 1,036 South America: Chile 10 3 13,495 5,784 6 3 8,813 7,361 11 21,823 1.188 7 2 13,44S Othei- South America 2.376 Total South America. . . 13 19, 279 9 16,174 12 23,011 9 15,824 98 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Table IV. — Net tonnage of sail and steam vessels entered and cleared during the years July 31, 1914 and /9i5— Continued. PORT TOWNSEND, WASH.— Continued. 1914 1915 Foieign country served. Entries. Clearances. Entries. Clearances. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Num- ber. Net ton- nage. Asia 43 17 1 163,769 67,561 2,993 44 24 2 166, 520 68, 603 5,805 47 19 170,866 38,095 30 27 2 107,619 55,586 2,S70 Total all countries 101 336, 212 102 319,015 95 286,641 83 219,786 SEATTLE, was: Europe: 1 2 7 3,499 6,937 33,511 1 1 8 3,736 1,930 35,026 2 6,454 2 5 7,331 22, 225 United Kingdom 9 30, ees Total Europe 7 29,556 10 43,947 10 40,692 11 37,119 North America: 1 1,806 1 1 3,197 2 9,637 1 2.824 483 Total - orth America. . . 2 9,637 1 2.824 1 1.806 2 3,680 South America: 1 1 752 1,040 1 1 1 752 1.040 605 Chile 1 1 1,876 1,762 •l 1 819 Otlier Soutli Vmerica . 3,267 Total South America. . . 2 1,792 3 2,397 2 3,638 2 4,086 Asia 16 4 57,943 21,358 20 7 91,244 42,435 15 3 54,969 21,145 18 4 70,849 17.227 Total all countries 31 120, 286 41 182,847 31 122,250 37 132,961 TACOMA. WASn. Europe: 1 2,224 1 2 1,958 8,091 Germany. . . 1 3,654 Russia 3 8 7,992 United Kingdom 3 18,000 3 12, 270 17,231 Total Europe 1 3,654 6 28,049 3 12, 270 12 27,447 North America: Central American States. . 1 2,803 1 1 2,803 2,842 Total North America. . . 1 2,803 2 5,645 Bouth America- Argentina.. 1 3 1,-389 10,148 ""2 Chile 6,95i Other South America. . . . 1 2,287 1 2.287 Total South America... 1 2,287 1 2,287 4 11,537 2 6,951 Asia 8 1 27, 199 2,843 16 2 58, 196 5,645 11 1 38, 619 2,802 9 9 33,009 Oceania 23. 698 Total all countries 11 35,983 25 94, 177 20 68,031 34 96,840 SHIPPING BOARD, NAVAL AUXILIAKY, AND MERCHANT MARINE. 99 Appendix C. Table I. — Foreign commerce of the United States ' — Principal imports and exports of domestic and foreign merchandise for the years ended July 31, 1914 ond 1915. (From monthly summaries of the Department of Commerce, Bureau of Foreign and Domestic Commerce. J Country from which im- ported and to which ex- ported. Europe: Austria-Hungary Belgium Denmark France Germany Greece Italy Netherlands Norway Portugal Russia Spain Sweden United Kmgdom All other Europe Total Europe North America: Central American States Mexico West Indies Other North America . . Total North America. South America: Argentina Braiil Chile Colombia Other South America . . Total South America. Asia Oceania Africa Total all countries Imports. For the year ended July 31- 1914 Value. 1915 Value. $20, 287, 105 41,634,197 3,319,937 137,981,348 192,268,339 3,850,6801 56,778,318j 35,669,418 9,523,9701 6,033,396; 20, 805, 776 24,219,798 11,613,389 293,297,268 36, 685, 268 893,968,207 17,918,766 92,261,831 156, 680, 305 2, 727, 500 269, 588, 402 48, 869, 466 104,176,924 25,319,765' 16,382,989 35, 236, 755 i S8, 189, 6,201, 3,036, 73,263, 74,996, 4,425, 53,467, 31,967, 10,291, 5, 429, 1,423, 18, 795, 11,434, 253, 757, 25, 558, 582, 238, 925 21,007,599 81,130,491 214,516,017 1,895,020 318,549,127 Increase or de- crease. 097, 769 432, 660 283, 339' 717, 955 272, 129 574,905 310, 963 701,771 767, 742 603, 762 382,629 423, 940 178,731 540,011 126,270 Exports. For the year ended July 31— 1914 Value. 311,729,282 3,088,833 11,131,340 57,835,712 832, 480 48, 960, 725 74,734,666 25,865,200 98,020,512 6,156,412 29,969,937 4,650,172 16,004,106 2,621.117 42,607,099 7,370,344 229, 985, 899 291,800,691 43,654,352 19,480,411 1,748,477,962 264,336,320 34,350,421 249,165,129 42,635,562 55,721,709 12,067,357 26,845,460 7,365,049 1, 496, 856, 670 251, 621,292 $22, 705, 651 62,544,808 15,453,434 160,136,020 341,777,555 1,220,993 73,888,266 114,931,362 8,897,713 5,360,1.58 30,434,215 29,370,779 14,381,080 597, 246, 044 10,696,472 1,489,044,550 38,897,939 37,473,741 96,439,792 3,483,770 176,295,242 1915 Value. $40, 15,073, 82,593, 406,440, 13,974, 24, 867, 194,444, 135,553, 41,233, 5,223, 54,289, 39, 949, 80,734, 961,728, 10, 297, 2, 066, 444, 794 34,512,570 35,293,236 103,125,554 2,922,565 175,853,925 42,988,040 28,657,810 17,690,834 6,666,571 24,682,550 120, 685, 805 111,504,049 84,023,662 28,405,223 2,010,018,531 35,027,285 25,928,908 11,884,834 6,797,332 24,429,404 104,067,763 121,143,049 83,315,989 28, 536, 774 2,579,362,294 Increase or de- crease. 664, 817 471,147 140,310 304,397 802, 994 646, 619 556, 555 621,964 335,568 136, 805 855, 009 578, 802 352,983 482, 627 577, 400, 244 4,385,369 2, ISO, 505 6,685,762 561,205 441,317 7,960,755 2, 728, 902 5, 806, 000 130, 761 263, 146 16,618,043 9,639,000 707,673 71,551 569,343,763 Italic denotes decrease. 1 Exclusive of commerce with Canada. 100 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARIN H. Q H SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 101 £ o o_ o .■:; -o -o ^ c 5 " c 5 fe ►5q oca® " 3 M^ ooooooo c<>wNcocoeococQcccocc-v »o:c'^*;'co«;^ooas as vftO •"J" CO NMCO 5 " c 5 «3 CO 05 C0003050COCO CO CO CO CO •* CC oc oooo— ^oo O Oi CO O OS t-i to 0>05000<©CO C^ CO •* CO CO •* t^ t^l^^OOOO ■»** O t^ -^ O ^H »c^>e-j co>* >> 102 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. U Ji & fe o a « \-> u H ?> h-l ■^ a C3 '-^ e ►J ^ < i"" o a. u 1 o »-! ;z; U H H n « < w tH Pi cc u H <1 « tf w H rt <1 H o w > H < H ^ M rrt W « PLI H <« •a .CO o • o •0<0 OO o • o cT '. C3 -^ .'O -H ' o Ii-HOCO lO ; ^ ' »n Sr3 1< -* 'S a S^^'Kfe « N (M -.H -H .-1 -Hrtr-(rtrt • NO-l-H • CO CO CO CO ^ CO CO XI g • oootcoi -xiooooco .COcOOOO OOO^OOO 3 o O.t! •N— lOOt^ul lOiOTlOOlON .caciot^o c? 00 oi -* o t^ o w "= W C< -H r-l ^ rtrt^rt.-(.-l • Ctd-Hrtd C< CI C» CO CO CO CO 1 , •O lo • o ioo '. >.o 1 loiraoo cJ . N • o> ;0 ■ oicn •CI • CI CJ o o c4 :-* • ci :^^ • ci 1 ci CO ■* ■* p:) •2 o lo . lO OiO 1 mio '. IOU5 '3 05 00 ooo • C^CI CO a (N ■ f-i , ^ ci i-i 'cici coco .2 i-J m -3 ^ a cn OT ooooo oo .oo lo loo oo 1 rn ^ « O 05 o t^ Cj^O • o • 00—1 lOO ^ gs ci N c4 Pi .-< ci ^ ^,4 lei lei CO coco 1 O o d OirSO >rao ira tr> lo • >n OiO a lO ■ C! W J^ "o lO • O o lOO o O lO k4 i . C4 M Ol 1^1^ CI mci o :z; C3 fl ci ci -* ~iri ci coco 6 o" o "x f=^ S3 t4 $1.90 2.00 1.85 1.75 1 «A I t2 K 8 •o ci coco si t3 ooo ooo Q) g l-H-HO »0 lO 'f <5S CI CI CI -t-fTtI o -d^ o fficoooococoocooo oo fl • r- M rtO—iooscococoeooo uom ,-1.4,-lr-l ^^^r-lCIC^ •* Tl" >. O "cS w- S ^ooooe: 050COOOO o ooc oooooo p. ^ t^MCl M — rf^OOOOJ o cooc 000 10U5N C3 iz; CI rtCJCT co-v ^ •* ■*■* fl"i- ■13 o O CO 05 OOiOO =s b c3 03 P5 — « o o CQ cocoof- ^ ^ ^ CO ys ^OO o o>o tooo ooo CO O Ol • C M m S !: » •t^M CO rt-HOO coirao uo t: «— ' ■*'«<■«< CO p^;^ iJ 3 a >> 11 a a CO T]i ! lO '. d s o> • S 1 , 4 3 ; t> > fc- [J > i 3 < a> P c 3 > 6i 3 <1 i p X3 o o E o a O 5 ci 3 C OS a 3 Ul .p « 1~. a -< 1 3 4 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 103 IS-§e CO Oi :D CO I^ ^ O » t^ r- t^ t^ 1^ t- '^ OM CD :0 O . CO 00 00 t^ to 00000500 Tf -^ Tj< CO tM (M ■<*' §1 T3 CO OiOO O . Gi O ^H OS "^ CO OS CO O <0 CO Ol tJI ^ ^ CO CO ^ ^ CO CO CD Oi CO CO CO 00 00 l^ 00 00 QO 00 (O CO^<:D CD <:DCO 1^ t>. t^ t* t^ r^ 00 '^ coco OCOCD . 00 OS O O l^ CO CD CO C(5 CO CD CD r^ i^ r* !>. r^ r^ t-^ ■^ (N CD "^ CO Oi 5 00 Oi Oi 00 l- 1-1 1-H f-4 r-l C^ CD CD -D :D CD CD t - t- t* OS o ® § ?5 tr* r^ o m o aso ooN a> ooo cocooo -H— ncOCOC0NIN(N ooco «0 CO CO CO CD CD O 00 ST. IM rt 00 t^ OO i-f ^H ^ --H 1>J CO CO CO C^ 04 CO CD CO CO CO 0>cOi-i ^ oi CO ^ oor- r^cOrH I OCJO oooco -O CD O CO O O O 00 -< CO IM O .2 1>. sal * 2 3 a s ^0' .3 M ►, 3 ^^® •S98 i.g.a o2" ^ o o fS'tS' NNCJrl Mi-dlrH s t^ s •<>< N mooe^Noooto « o ' * ■ ■*<0-,-H o CO •< J3 1 to 1^ U DO Pi Sg5 ?^ CO § 00 00 o oc cou- CO S ■Ego 2.2 2, •9 : : 1^ e o» g ^ i 1 to V B «> e < 1 a .a c O 1 o t c. p 13 03 > C fc. s c a 'c 3 ■-1 > 1 < s a a CO X! 3 •o O B e o £ U5 s C C3 l-> > 15^ a < > 1 3 > 1-1 ( SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 105 .9° P5 ai £w ^ S-2 M .H 5 =* r^ eocc o OO CO CO CO CO CO cc o (M N (N 1-1 w ^ (N .a lO CO -^r -v CO CO CO CO CO CO CO CO ^ 0(0 OCO O ao CO "^ *r -Ci OO too OO too to to too Oto ot>- OCOOOO OI^OOO ^1 TT iO to to • to 005 too .t~Ot)0(NiO ft^ lO-V CO -V CO COtOtOCOCOOOOJOtOOO toc-i-HONOoe^oio cococococococococo-^too* tocoeooooo r^ to ^H io lO o o d -H .rf W -- -H .«• tsasg-a « 3^ c I- o = ti <» t: riZ! o : t-,iiiS<;si-.i-» 106 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Si C3.> B . O coo ^ lO 3— t u. CO So. c o o "^ — r« 000 coir r-. 00 mo OOOC5 •no>n-< o; to 00 CV) too IMO tOMOtOOOUS - CO 10 CO CO . .^ — . -J . ^ ^ ^ocoooo . m r- m o m 60 cr m -^co ^^ ococoooco o cq — lO "o N oc 0000 to c 03^ g. Q O '.O •004 occoococoocococoo ocooiCr-eoocMeoh-o *irTjHTrcoeocO'^w5io*oco OOeocD or- CO CO 5® 1^ D m o o « S ® eS ac9 g— 3 g'o o S Sctse-'sS'S SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARIN K. 107 OO COCDO 22 : : : : : : :r^S^ OO 60 lO ^ 050COCDCDOOCD CCCOCQCOCO^OCO t^OOOtOOtO 00 O CO IC ^J ^^ c^ ''SMOtOtOOJ otoomooootoocotDO O^C0C0»0*Q10t>-05O00C0 oootoooo lO o -^ r^ o > C'SJ : : : :i?E"Sa § ®^ o.« S-g = oo o S •-^ 2 ,h' : : : : 1-5 (i| S <, S t-S »-> 108 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Table II. — Berth rates in the foreign trade of the United States. [From quotations published in the Xew Yor'< Journal of Commerce.] FLOUR,i IN SACKS (PER 100 POUNDS). From New Yor'.c, N. Y., to-- Date. United Kingdom. un, rp. Nether- lands, Rotter- dam. Bristol. Glasgow. ,^ „ Liver- --^"- pool. London. Man- ^°*^' Chester. 1913. Aug. 1 $0.18 .18 .19 .19 .18 .17 .17 .15 ,15 -15 .15 .15 ,17 .17 .25 .26 .30 .30 .40 ,40 .45 .45 .45 .45 $0.16 .16 .18 .18 .17 .17 .15 .15 .15 .15 .15 .13 .14 .14 .23 .25 .29 .29 .40 .40 .40 .45 .45 .45 $$0. 18 .18 .20 .20 .20 .18 .17 .17 .17 .17 .17 .15 .17 .17 .25 .26 .30 .30 .40 .40 .40 .45 .45 .45 $0.14 .14 .15 .15 .14 .14 .12 .12 .12 .12 .12 .10 .12 .12 .35 .21 .26 .26 .40 .40 .40 .45 .40 .40 $0.16 .16 .15 .15 .14 .15 .13 .13 .13 .13 .13 .11 .13 .13 . .21 .22 .27 .35 .40 .40 .40 .45 .45 .45 $0. 14 $0. 20 .14 .20 .15 .20 .15 .20 .14 .20 .14 .20 .12 .18 .12 .18 .12 .18 .12 .18 .12 .18 .10 .18 .12 .18 .12 .18 .20 .18 .21 .18 .26 .18 .26 .18 .40 .18 .40 .18 .40 .18 .45 .18 .45 .18 .45 .18 $0.18 Sept. 2 .18 Oct. 2 .18 Kov. I .18 Dec. 1 .16 1914. Jan. 3 .15 Feb. 3 Mar.2 .13 .13 Apr. I .12 Mav 1 .12 June 1 .12 Julv 1 .10 Aug. 1 .12 fiept. 1 .12 Oct 1 .21 Kov. 1 .25 Dec! .33 1915. Jan. 2 .55 Feb.l .60 Mar.2 1.25 Apr.l .80 Mav 1 .80 .65 Julv 1 .65 1 1 ton of 2,240 pounds stows in space of 55 cubic feet. LEATHER (PER TON).i From New Yorli, N. Y., to - Date. United Kingdom. France, Havre.'' Bel- gium, Ant- werp. Nether- lands, Rotter- dam.* Bristol. Glas- gow. Hull. Liver- pool. Lon- don. Man- chester. 1913. Aug. 1 s. d. 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 s. d. 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 35 35 35 35 35 35 35 35 s. d. 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 35 35 35 35 35 35 35 35 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 30 •30 30 30 30 30 30 30 $0.10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 .10 «. d. 30 30 30 30 30 30 30 3a 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 $0.45 Sept. 2 .45 Oct.2 .45 Nov. 1 .45 Dec. 1 .45 1914. Jan. 3 .45 Feb.3 .45 Mar. 2 .45 Apr. 1 .45 Mavl .45 June 1 .45 July 1 .45 Aug. 1 .45 Sept. 1 .45 Oct. 1 .45 Nov.2 .45 Dec. 1 .45 1915. Jan. 2 .45 Feb. I .45 Mar.2 \ .45 Apr 1 .45 Mavl .45 June 1 .45 Julyl .45 '1 ton of 2,240 pounds stows in space of 120 cubic feet. ' Per cubic foot. • Per 100 pounds. SHIPPING BOARD, NAVAL AUXILJAKY, AND MERCHANT MARINE, 109 Tablk II. — Berth rates in the foreign trade of the United States — Continued. COTTON 1 (PER 100 POUNDS). Aug. 1.. Sept. 2. Oct. 2.. Nov. 1., Dec. 1.. Jan. 3. . Feb. 3. Mar. 2. Apr. 1. May 1 . , June 1. July 1.. Aug. 1. Sept. 1. Oct. 1.. Nov. 2. Dec. 1. Jan. 2 . Pell. 1. Mar. 2. Apr. 1. May 1. June 1. July 1. Date. 1913. 1914. From New York, N. Y., to- United Kingdom. I/iverpooI. Manchester. •SO. 2.5 .25 .35 .35 .30 .28 .28 .28 .28 .28 .28 .20 .20 .20 .35 .40 .60 .75 1.00 1.25 1.25 2.00 1.''5 1.25 .75 1.00 1.25 1.25 2.00 l.?5 1.25 France, Havre. 0.35 .35 .45 .45 .40 .35 .25 .25 .25 .25 .25 .25 .25 .25 .45 .45 1.00 1.00 2.00 2.00 2.00 3.00 1.50 1.50 Belgium, Antwerp. $0.40 .40 .40 .40 .40 .25 .25 .25 .25 .25 .25 .20 .20 .20 .20 .20 .20 .20 .20 .20 .20 .20 .20 .20 Nether- lands, Not- terdam. («) «0.45 .45 .30 .30 .30 .35 .25 .25 .25 .25 .25 .25 .25 .25 .25 .25 2.00 2.50 2.25 2.25 2.25 2.00 2.00 1 1 ton of 2,240 pounds stows in space of 130 cubic feet. CHEESE I (PER TON). ' No quotation. From New York, N. Y., to - Date. United Kingdom. France, Havre.'-' Bel- gium, Ant- werp. M ether- lands, Rotter- dam.' Bristol. Glas- gow. Hull. Liver- pool. Lon- don. Man- chester. 1913. Aug. 1 s. d. 25 25 25 25 25 25 25 25 25 25 25 25 25 25 (') 25 25 25 25 25 25 25 25 25 *. d. 25 25 25 25 25 25 25 25 25 25 25 25 25 25 (') 25 25 25 25 25 25 25 25 25 s. d. 22 22 22 22 22 22 22 22 22 22 22 22 22 22 (') 22 22 22 22 22 22 22 22 22 s. d. 26 26 26 26 26 26 26 26 26 26 26 26 26 26 (.') 26 26 26 26 26 26 26 26 26 s. d. 25 25 25 25 25 25 25 25 25 25 25 25 25 25 (3) 25 25 25 25 25 25 25 25 25 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 (') 20 20 20 20 20 20 20 20 20 $0.45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 s. d. 35 35 35 35 35 35 35 35 35 35 35 20 20 20 (') 20 20 20 20 20 20 20 20 20 $0.45 Sept. 2 .45 Oct. 2 .45 Nov. 1 .45 Dec. 1. .45 1914. Jan. 3 .45 Fe^.3 .45 Mar. 2 .45 Apr. 1 .45 May 1 .45 June 1 .45 July 1 .45 Aug. 1 .45 Sept. 1 .45 Oct. 1 (') Nov. 2 .45 Dec. 1 .58 1915. Jan. 2 .58 Feb. 1 .58 Mar.2 ■ .58 Apr. 1 .53 May 1 .53 June 1 .53 July 1 .53 1 1 ton of 2,240 pounds stows in space of 70 culiic feet. 32910—16 8 2 Per 100 pounds. ' No quotation. 110 SHIPPING BOARD, NAVAL AUXILIAKV, AND MERCHANT MARINPL T.\BLE II. — Berth rates in the foreign trade of the United States — Continued. BACON 1 (PER TON). From New York, N. Y., to- - . Date. United Kingdom. France, Havre.2 Bel- gium, Ant- werp. Nether- lands, Bristol. Glas- gow. Hull. Liver- pool. Lon- don. Man- chester. Rotter- dam.' 1913. s. d. 20 20 20 20 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 35 22 6 35 35 45 50 60 60 60 60 s. d. 20 20 20 20 22 6 22 6 22 22 22 22 22 22 22 22 32 6 32 6 32 6 35 40 45 60 60 60 60 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 30 30 30 30 40 40 60 60 60 60 «. d. 17 6 17 6 17 6 17 6 20 20 20 20 20 20 20 20 20 20 30 30 30 30 35 50 60 60 60 60 s. d. 20 20 20 20 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 30 30 30 35 35 45 60 60 60 60 s. d. 20 20 20 20 25 25 25 25 25 25 25 25 25 25 30 30 30 30 35 45 60 75 75 75 $0.30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .40 .30 .40 .40 .75 L25 1.25 1.25 1.25 1.25 s. d. 20 20 20 20 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 SO. 24 Sept. 2 .24 Oct 2 .24 Nov. 1 .24 Dec. 1 .28 1914. Jan. 3 .28 Feb. 3 .28 Mar. 2 .28 Apr. 1 .28 May 1 .28 June 1 .28 July 1 .28 Aug. 1 .28 Sept. 1 .28 Oct. 1 .38 Nov. 2 .38 Dec. 1 .38 1915. Jan. 2 .75 Feb. 1 .75 Mar. 2 .75 Apr. 1 1.75 May 1 1.75 1.00 July 1 LOO li 1 1 ton of 2,240 pounds stows in space of 65 cubic feet. BUTTER I (PER TON). 2 Per 100 pounds. From New York, N. Y., to- Date. United Kingdom. France, Havre. 2 Belgium, Antwerp. Nether- lands, Bristol. Glasgow. Liverpool. London. Rotter- dam.' 1913. Aug. 1 s. d. 30 30 30 30 30 30 30 30 30 30 30 30 30 30 (3) 30 (3) (3) (3) (=<) (') (3) (') *. d. 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 45 45 45 45 45 45 45 45 s. d. 45 45 45 45 45 45 45 45 45 45 45 45 45 45 60 45 60 60 60 60 60 60 60 60 s. d. 50 50 50 50 50 50 50 50 50 50 50 50 50 50 75 50 75 75 75 75 75 75 75 75 SO. 45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 .45 (3) .45 .45 .45 .45 .45 .45 .45 .45 .45 s. d. 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 $0.45 Sept. 2 .45 Oct. 2 .45 Nov. 1 .45 Dec. 1 .45 1914. Jan. 3 .45 Feb. 3 .45 Mar. 2 .45 Apr. 1 .45 Mav 1 .45 Jiuie 1 .45 July 1 .45 .45 Sept. 1 .45 Oct. 1 .58 Nov. 2 .45 Dec. 1 .58 1915. Jan. 2 .58 Feb. 1 .58 Mar. 2 .58 Apr. 1 .63 May 1 .53 .53 July 1 .53 1 A ton of 2,240 pounds stows in space of 70 cubic feet. ' Per 100 pounds 3 No quotation. SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. HI Table II. — Berth rates in the foreign trade of the United States — Continued. LARD.i IN TIERCES (PER TON). Date. 1913. Aug. 1 8ept.2 Oct. 2 Nov. 1 Dec. 1 1914. Jan. 3 Feb. 3 Mar. 2 Apr. 1 May 1 June 1 July 1 Aug. 1 Sept. 1 Oct. 1 Nov. 2 Dec. 1 1915. Jan. 2 Feb. 1 Mar. 2 Apr. 1 May 1 June 1 July 1 From New York, N. Y., to — United Kingdom. Bristol. s. d. 20 20 20 20 22 6 22 6 22 6 22 6 22 6 22 6 35 22 6 35 35 45 50 60 60 60 60 Glas- gow. s. d. 20 20 20 20 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 32 6 32 6 32 6 35 40 45 60 60 60 60 Liver- pool. s. d. s. d. 20 17 6 20 17 6 20 17 6 20 17 6 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 30 30 30 30 30 30 30 30 40 35 40 50 60 60 60 60 60 60 60 60 don. Man Chester. s. d. 20 20 20 20 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 30 30 30 35 35 45 60 60 60 60 i s. d. 20 20 20 20 25 25 25 25 25 25 25 25 25 25 6 30 30 30 30 35 45 60 75 75 75 Bel- France, gium, IIavre.2 Ant- werp. s. d. SO. 20 20 .20 20 .20 20 .20 20 .30 25 .30 25 .30 25 .30 25 .30 25 .30 25 .30 26 ..30 25 .30 25 .30 25 .40 25 .30 25 .40 25 .40 25 . 10 25 1.25 25 1.25 25 1.25 25 1.25 25 1.25 25 Nether- lands, Rotter- dam.* $0.24 .24 .24 .24 .28 .28 .28 .28 .28 .28 .28 .28 .23 .28 .38 .38 .38 .75 .75 .75 1.76 1.75 1.00 1.00 1 A ton of 2,240 pounds stows in space of 65 cubic feet. BEEF (PER TON).i « Per 100 pounds. Date. 1913. Aug. 1 Sept. 2 Oct.2 Nov. 1 Dec. 1 1914. Jan. 3 Feb.3 Mar. 2 Apr.l May 1 June 1 July 1 Auir. 1 Sept. 1 Oct.l Nov. 2 Dec. 1 1915. Jan. 2 Feb. 1 Mar.2 Apr.l May 1 June 1 July 1 From New York, N. Y., to- United Kingdom. Bristol 2 6 4 7 9 9 Glas- gow. «. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 32 6 20 35 35 35 35 35 35 60 60 Liver- pool. s. d. «. d 20 17 6 20 17 6 20 17 6 20 17 6 20 17 6 20 20 20 20 20 20 20 20 20 30 20 30 30 30 30 30 30 60 60 17 17 6 17 6 17 6 17 6 17 6 30 17 6 30 30 30 30 30 30 60 60 Lon- don. s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 35 20 35 35 35 35 35 35 60 60 Man- chester, «. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 30 20 30 30 30 30 30 30 60 60 France, Havre.8 Bel- gium, Ant- werp. s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Nether- lands, Rotter- dam.* .22 .22 .22 .22 .22 .22 .22 1 1 ton of 2,240 pounds stows in space of 50 cubic feet. ' Per tierce; 1 tierce equals 336 pounds. ' Per 100 pounds. 112 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE, Table II. — Berth rates in the foreign trade of the United States — Continued. OILCAKE » (PER 100 POUNDS). Date. 1913. Aug. 1 Sept. 2 Oct. 2 Nov. 1 Dee. 1 1914. Jan. 3 Feb. 3 Mar. 2 Apr. 1 May 1 June 1 Julyl Aug. 1 Sept. 1 Oct. 1 Nov. 2 Dec. 1 1915. Jan. 2 Feb. 1 Mar.2 Apr. 1 Mayl June 1 Julyl From New York, N. Y.. to— [Jnited Kingdom Bel- Nether- F'-ance, Havre. gium, Ant- werp.' lands, Bristol. Glas- gow.2 Hull. Liver- pOOl.2 Lon- don.2 Man- cUester. Rotter- dam. $0.17 $0.16 $0.18 $0.16 $0.15 $0.15 $0,15 s. d. 13 9 $0.15 .17 ,16 .18 .16 ,15 ,15 ,15 13 9 ,15 ,17 ,16 .18 .16 ,15 ,15 ,15 13 9 .15 ,17 .16 .18 .16 .15 ,15 ,15 13 9 .15 .17 .16 .18 .16 .15 ,15 .15 13 9 .28 .17 .16 .18 .16 .15 .15 .15 13 9 ,28 .17 .16 .18 .16 ,15 .15 ,15 13 9 ,28 ,17 .16 .18 .16 ,15 ,15 ,15 13 9 .28 ,17 .16 .18 .16 ,15 ,15 ,15 13 9 .28 .17 .16 .18 .16 ,15 ,15 .15 13 9 .28 .17 ,16 .18 .16 ,15 ,15 ,15 13 9 ,28 .17 ,16 .18 .16 ,15 ,15 .15 13 9 • ,28 .17 .24 .18 .16 .24 ,15 .15 13 9 .28 ,17 .24 .18 .16 .24 ,15 .15 13 9 ,28 .25 .23 .25 .22 .23 ,20 ,25 13 9 ,21 ,35 .22 .25 .22 .23 ,20 ,40 13 9 ,20 ,30 .29 .30 .26 .27 .26 ,40 13 9 .32 .30 .29 .30 .26 .35 .26 .40 13 9 ,55 ,40 .40 .40 .40 .40 ,40 1.00 13 9 ,60 .40 .40 .40 .40 .40 ,40 .75 13 9 L25 .45 .40 .40 .40 .40 ,40 ,75 13 9 ,80 .45 .45 .45 ,45 .45 .45 .65 13 9 ,80 .45 .45 ,45 .40 .45 .45 .58 13 9 .65 ,45 .45 .45 .40 .45 .45 .58 13 9 .65 ' One ton of 2,249 pounds stows in space of 46 cubic feet. 2 Same rates quotea in sterling per ton converted into cents per 100 pounds for comparative purposes. « Per ton. POEK.i From New York, N. Y., to - Date United Kingdom. Bel- Ha^?e' S'"™- Nether- lands, Rotter- dam (per 100 pounds). Bristol (per barrel). Glas- gow (per ton). Hull (per Ion). Liver- pool (per ton). Lon- don (per ton). Man- Chester (per ton). (per 100 K-ilos).s Ant- werp (per (ton). 1913. Aug.l Sept.2 Oct. 2 Nov.l De?. 1 1914. Jan 3 s. d. 3 3 3 3 3 3 3 3 3 3 3 3 3 3 6 3 C 6 6 6 6 6 6 12 8 12 8 «. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 32 6 20 20 20 20 20 20 20 60 60 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 30 20 30 30 30 30 30 30 60 60 s. d. 17 6 17 6 17 6 17 6 17 6 17 6 17 6 17 6 17 C 17 6 17 6 17 C. 17 6 17 6 30 17 6 30 30 30 30 30 30 60 60 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 35 20 20 20 20 20 20 20 60 60 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 30 20 20 20 20 20 20 20 60 60 $0.75 .75 .75 .75 .75 .75 .75 .75 75 .75 .75 .75 .75 .75 .88 .75 .88 .88 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 $0.22 .22 .22 .22 .22 .22 Ieb.3 Mar.2 Apr. 1 .22 .22 ;22 Mav 1 .22 June 1 ,22 July 1.. .22 Aug. 1 .22 Sept. 1 .22 Oct.l .38 Nov. 2 ,23 Dec. 1 .22 1915. Jan. 2 .22 Feb. 1 .88 20 .22 Mar 2 .88 20 .22 Apr. 1 .88 .88 .88 .88 20 20 20 20 OL .23 Mav 1 .22 June 1 .22 July 1 .22 • 1 barrel equals 400 pounds; 1 ton of 2,240 pounds stows in space of 50 cubic feet. • 1 kilo equals 2i pounds. SHIPPING BOARD, NAVAL AUXILIARY, AND JVIERCHANT MARINE. 113 Table II. — Berth rates in the foreign trade of the United States — Continued. GRAIN (PER BUSHEL). From New York, N .Y.,to— Date. United Kingdom. France, Hawe.i Nether- lands, Rotter- dam. Bristol. Hull. Liver- pool. London. Man- chester. 1913. Xxifn. 1. d. 34 3 44 44 (») 3 24 24 24 24 2 2 4 4 7 84 94 10 12 12 12 12 d. f 44 44 3i 3 2| 2 2 2 2 2 24 24 3| 4 7 9 94 9 12 12 11 11 d. 24 2i 2i 2i 2i 2 2 14 14 14 14 24 24 24 4 4 64 84 11 12 12 12 11 11 d. 2i 3 3 24 5* 2 2 2 2 2 2 2 34 4i 7 9 12 12 12 11 11 d. 24 '^ 3 24 14 14 14 14 U 24 3? 64 84 10 12 12 12 12 12 «. d. 3 3 3 3 3 3 3 3 3 14 2 9 2 74 2 6 2 6 2 6 2 6 2 2 44 2 44 2 9 4 4 (^; (») (2) (^) (^) e) (^) Cents. 7 Sept. 2 54 Oct. 2 B* Nov. 1 Doc. 1 54 1914. Jan .3 5i Feb. 3 4* jlar.2 41 Apr.l 4i Mav 1 4} June 1 4i Julv 1 e 6 6 Sept. 1 Oct 1 (') Nov. 2 11 Dec. 1 15 1915. Jan. 2 30 Feb. 1 30 Mar.2 (') Apr. 1 h) Mav 1 (') (2) July 1 (^) • Per quarter: 1 quarter equals 8 bushels. TALLOW > (PER TON). » No quotation. From Newr York, N. Y., to — Date. United Kingdom. France, Havre.2 Bel- gium, Ant- werp. Nether- lands, Rotter- dam.' Bristol. Glas- g0V7. Hull. Liver- pool. Lon- don. Man- chester. 1913. Aug.l «. 20 20 20 20 22 22 22 22 22 22 22 22 22 22 35 35 35 35 45 50 60 60 fiO 60 d. 6 6 6 6 6 6 6 6 s. d. 20 20 20 20 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 e 22 6 22 6 32 6 32 6 35 35 40 45 00 60 75 75 s. d. 20 20 20 20 20 20 20 20 20 20 20 20 20 20 30 30 30 30 40 40 eo 00 60 60 s. d. 17 6 17 6 17 6 17 6 20 20 20 20 20 20 20 20 20 20 30 30 30 30 35 50 60 60 75 75 s. d. 20 20 20 20 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 22 6 30 30 30 35 35 45 60 60 25 25 s. d. 20 20 20 20 25 25 25 25 3 25 25 25 25 25 25 30 30 30 30 35 45 60 75 75 75 $0.30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .30 .40 .40 .40 .40 .75 1.25 1.25 1.25 1.25 1.25 s. d. 20 0- 20 20 20 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 SO. 24 8ept.2 Oct. 2 .24 .24 Nov. 1 .24 Dec. 1 .28 1914. Jan. 3 .28 Feb. 3..: .28 Mar.2 .28 Apr. 1 .28 Mavl .28 Jurio I .28 Julv 1 .28 Aug. 1 .28 Pept. 1 .28 Oct.l .38 Nov. 2 .38 Dec. 1 .38 1915. Jan. 2 .76 Feb. 1 ,75 Mar.2 .75 Apr. 1 1.75 May 1 1.76 June 1 1.00 July 1 1.00 1 ton of 2,240 pounds stows in space of 65 cubic feet. » Per 100 pounds. 114 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Appendix E. Table I. — Rates of premium announced by the United States Bureau of War Risk Insur- ance {exclusive of rates applicable to special ports). Nature of policy. Tot voyage: > Cargo — freight and ad\anees— L Between ports of the United States, Its possessiuns, or anj' nonbelligerent ports in the Western Hemi- sphere 2. Between ports on the west coast of the United States and Japan 3. Between ports on the west coast of the United States and China or the Philippines i. To nonbelligerent ports other than above mt north of Havre, in Europe, nor east of Sicily, in the Med- iterranean 5. To all other ports Vessels— 1. Between ports of the United States or any nonbellig- erent ports in the Western Hemisphere 2. Between ports on the west coast of the United States and Japan and (or) China 3. To nonbelligerent ports other than above not north of Ha\Te, in Europe, nor east of Sicily, in the Med- iterranean 4. To all other ports For time: « Vessels — 1. Without warranty 2. Warranted using only nonbelligerent ports in the Western Hemisphere Rates in effect from- Sept. 17, 1914. PcT cent. i i i Dec. 15, 1914. Per cent. Jan. 11, 191.5. Per cent, i i i Feb. 15, 191.5. Per cent, i I From port of loading to not more than two port s of discharge. • Period of 90 days. I SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 115 'i^ I 8 s s. n El 4 § 'a 5 a a a O- o 1 1 (-1 o cap- ture or de- ten- tion. «*»HN n|ceHN«1ce t ® M W <*• lO-"!" "M - nW xz n»^ ® »-* L- « pq © "^ « - XX - X I ® a u i2 a § i 1^ r+* d ii 1 -o HM -w rt«o H« -H a—I nln Hn -» ■ -d d '- i-H CO I-H -*< -♦» -*< ^H CO -*« HN ■-4N o PQ ii ^ 1^ HN f^ nH*-*^ mao t i Hw-Vn ..^ I o § M o a ea 2 o nt^MN p/rvr^ niocHw lO|Kt«>» XI - a! <*r moo HM •*• f*« IX X o =: d M m 03 » "^ M a^ Het «w 1 ^^'Uh' X NO O a, nW - a! - ■♦• JJ CONN a| - i o i d o »<- — j3 0.2-a a a ^t- Ok; w 03 3 " So a, N HN d a, «1 a^ c»co N ■0 - ^1 a, OS 1 10 ^1 aJ usttS"-* CO 511 U5 - a| lO-* f -v IP I lA 2 c O > O > o > o 00 PI > o c S3 > a C 3 00 c d 3 116 SHIPPING BOARD, NAVAL AUXILIAKV, AND MEKCHANT MARINE. i 1 s *3 a 1 a a & I a O -e l§^i a, H* till ffl ?i =" p^-* 00 p. 1 e3 >-> o F'ree of British cap- ture or deten- tion. N ^ a as P o 05 w asi a^ W (N 10 CO ft a c 1 Free of British cap- ture or deten- tion. S"^ Ih' a^ (N'-HM—l ^^ (N |lti a< '^l IM ;? C^4 1 W a> f > © a^ He* CO o 1 <^a CI, "5 He* 1N(N (N Free of British cap- ture or deten- tion. f^ ^ "** c3 s 1 rt"** ^'"' e*o -*0 a, nw 1-e* 1 Hce 12, * 1 -d ^1 a, HN -+« HtN Oh r-ICO r*l J. T U'i 5I & ^ 10 CO N 1-1 1-t *-l <»«»+* «. c*w <-K* HP* ^ UO fC W i-H CO C^ HnHff «WHn 1 g ^ > oc CM > iz; ft U3 s CV CD c CM ll c <; a > C3 c 3 OC 01 C 3 Oi c 3 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 117 1 1 1 'a a o ft a a> u n CO ft 3 O u. s CO c3 N 6 o •o a S '5 a C3 Amer- ican vessels. trflH"-** r-flNP3iC0 ^ ^ J J - > ■** HwwM-nt* HnKM H»egt9GH« •-«M>-tcO<-*M ot->lM HN ""S-c^ rs-c.;^ " 1 . ■a a o MWHW WW -4^ wtcCHoo «|oeHoo«)|oo X '^'^''X a; nH" (*) HN wN-^rtl-* j7 C S M -** r»<"*0 1 ^^^ Hn .-*--+* ♦-HT-1 ^ r^ca X a; HN r** W-* rH JXI a o .a ft 3 o O T^ree of British capture or de- tention a; CO Egg a^ ■* CO lo - a; OOO iO CO lO ft o ft 6gi a; o > a; -« pa a> © a; ' ft—' SM cs o s . «2 a; " » S M p5 0) © a^ N : t. 5 C .2 5?; i 'c I u 15 o ^1 "c 3 < -.IS ; s J ■^ ?£ ^ 3 C 3 ^ >5 118 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. •5 I ^ 't^ '5> N 1 ^ q II 0?& 11 If •»• lit '■• an £8 r H .3 P-m" . 3 0) o o l"f 1 1 a! -+• -? a, T -+» •*• -c a. "X HB •« •*• '«'«• •^ p< § o 1 < > .♦• •e a, HC1 '^ -s pq ? S"5 a. M-H CO »-< •-•a 1 1§I a. Hn '^ 'W -s 11 1^ a. -* c^"^ '*' •40 < a.» CO Hn CO n 4. 1 S C "CJ O > O > •3 CI > c oc 1 "3 US C c 1 CM IS -a o ■< < > (N 0^ c 3 > I SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 119 a. s e» t> ■5 a < "3 m "O a ej 1 « QQ « a t> e X) a 1 0. s 5 B S3 i > <^ -** r** I •« > a, •*< H« *3M *II'XX X -«« « -*« p4^ nw J.. 4, 3 a < 0^ Oh ■** HM H'* »K-+» HS S « - fsH RM -« (u - P** r** p*0 % F*, - HN p** P4 0, r-coi-H rH*'*^ t*» X X ■*• !^ ••J He* oooiooi . 2 • S (>. _j 03 s. S a a •5 asi •< > (1, §21 > ■SSS 1 aSi < > ft, rt< •^ r«e»<>«Hc« -^ ii| t a, <««HN OK *** •^-W-t^ r«e « !a m t^ lO V N N CO .1 f-l i-l -Ht-I ^ ft, T" JlU-l* a "S s fl OS m a 8 < > •5'*" ft. ill > ft, i,*» in ill ■Sine* ( s c C > c > c > z 2 ?5 c k 10 ir 1 g 1 04 1- 1- s u 0; 1. < < > i.e( 5 s ■e h1 120 SHIPPING BOABD, NAVAL AUXILIARY, AND MERCHANT MARINE. M a ^ eS O O O lis >P3. i,B >ff.-; ">^ss ^ aw. o Q, >-» OS o o o >o oa >5* anetnc* r MtH — — PJ.HN— <-H I 'cccq 03 fl 0o O^ ^^ o a, *- OJ C^ 3 a o a T-C ?i Sm rt5 K> SHIPPING BOAliD, NAVAL AUXILIARY, AND MERCHANT MARINK. 121 «i . -*• : Sm »> ! ! 'c^ c3 S3 O fe : ; Ph" (^ ; : C3 cj e 1 IS fc : : f^ : : o o a 1 S ; ; n^ • C-O o 1 J, ? 1 o '-' Id, : : ra^ • B "o (^ : : J ^ ■ ■ • • 5S 1 : : :" iS* j 1- fc • ; : 1=^ : ; : lis i iMr ■» -" • 03 > SS- i ^ i i : ^ t, : ; "3 £■3 ' £" : : :« : 9 "^8 i ^ : ; ' ~ ■ ■ ■ a 9 Sfi i £ : : : o^ ■ fe : : : « ft, : : : •rn ' 1 O. o "O t . 1 M ^ nN ] Im ^ > • • o E— o fe : : : ^ : : : • S^ iF^o : ■SMtT "Ert i^ c3 o fc : p- « a; ■ § a fe : ■«• '•■V iS'-' 0, : •— ' •^Hn ^*» ; J* ^tS a ' S r-o-a- rt e^ '• c c c i j; c &0 o fc. <30ffl ^ "3 2§ S mm' 1 n m °s t O 1 c > > > i^o O o c o 1 x.O^^. ZZZ ! 122 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. a *♦> 13 o •5 f^ ft C3 o M •9 X) a> c ■n ft. t5 S S o a e k4 e a. 5g .2 a (3 o p, .2^td >° 5g .2 a SI 03 =3 .2.-§ ^a .2 5^0 .25c'a >'aa° o3 s s < > ?;> ^ rH rH .-H -H (N Jol^H^ Hn H« •-*» WW jgt^iOC0C«C«CC»-iw nNHwrWoico • • HPirtto ■ -+* ^^s- resident of the American Cast Iron Pipe Co., Mr. J. R. McWane, is now in Chile and will arrive in Buenos Aires \vithin the next few days. Mr. McWane will cable us shortly to find out what we can do in the way of freights. We would like to be able to tell him that the United States Department of Commerce will undertake to assist us in making a reasonable freight rate that would protect us in oisr quotations in competition with British manufacturers. It occurs to writer that this situation is well worth bringing before the Congress of the United States, or the committee wliich has in charge the merchant marine bill. The writer would be glad to go to Washington if you should think it achdsable, to put the details before the proper authorities. Yours, very truly, American Cast Iron Pipe Co. r>EVEREUx Lake. Mr. Hardy. Have you any definite evidence that these companies that have been carrying for the United States trade are really charg- ing our shippers double prices to what they charge the English shipper? Secretary Redfield. Well, no, Judge Hardy. Mr. Hardy, The reason I asked that question is that in normal times private shipping companies have appeared before this commit- tee, whether English, German, or otherwise, and they all claim that they give the American shipper fair treatment; that it is a matter of business and not of country. Mr. Edmonds. Mr. Secretary, isn't it a fact that after the Pacific Mail went off the Pacific Ocean the Japanese rates were raised going out and left the same coming in % Secretary Redfield. I don t know. I think it is quite possible. I have a statement here which I was about to read. It is a statement from our commercial attache to our minister in China. Mr. Edmonds. The statement has been made in the newspapers that the Japanese fines from San Francisco had raised their rates on goods going to the Orient from this country, but had left their rates the same coming into this country. Secretary Redfield. It is a matter that can be very easily found out. Mr. Edmonds. That statement was made in the Philadelphia Ledger, I think. Secretary Redfield. I have several examples of discriminating rates; one even worse than that you speak of. The one that the 128 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. chairman hands lue is a communication from our consul in Auckland, New Zealand. (The statement follows:) The Secretary of the Treasury, Washington, January W, 1916. Dear Judge Alexander: I hand you herewith for your information copy of a letter from the American consul general at Auckland, New Zealand, addressed to the Secretary of State, relative to freiglit rates from that port to London and New York. Faithfully yours, W. G. McAdoo. Hon. J. W. Alexander, House of Representatives. SHIPPING RATES STILL GREATLY IX FAVOR OF LONDON. [From Consul General Alfred A. Winslow, Auckland, New Zealand, Oct. 2&, 1915.) I have the honor to report that there is still much complaint on the part of merchants iu New Zealand relative to freights between New York and this country and vice versa. It is claimed that freight rates are higher between New York and New Zealand ports than between New Zealand ports and London, and that now the Panama Canal is closed still another advance is made to and from New York. However, the sky is beginning to clear away some, for new lines are entering for the trade, but even these are quoting rates in favor of London, and it seems that this will continue until American lines can enter for this business. The latest rates quoted for New York, via London, on Kauri gum is .$17.03 per ton against but .$12.16 for London, with a primage of 10 per cent and a .var surtax of 25 per cent in each case. Now a new line is quoting a new rate to New York of §14.60, with a primage of 10 per cent and a war surtax of 25 per cent, making the rate •S2.44 more to New York direct than to London, although New York is much nearer to New Zealand than London, and entirely without the war zone. These matters quite seriously affect trade with the United States, and are quite a handicap that should be overcome if possible. I have the honor to be, sir, your obedient servant, (Signed) Alfred A. Winslow, American Consul General. Secretary Redfield. I have a statement also from our commercial attache to'^our minister in China which is of quite recent date, being dated December 28. It appears that unless an American concern declines to sell to an enemy of Great Britain — in China not in a belligerent country, but an enemy residuig m China — the consular authorities of Great Britain threaten to put this firm on the blacklist, and unless the orders are canceled this means that British ships will not accept cargoes from that firm and will not advance it credit, and so on. A parcel was shipped by an American manufacturer to Shang- hai via Wells Fargo Express Co. It comprised American goods shipped on an American steamer and through an American and con- signed to a German subject in China. The agent of Wells Fargo & Co., Shanghai, being British, was obliged to withhold the delivery of this parcel. Thus the consignee could not secure it without the consent of the British consul, which it appears has not been given. The British white and black lists are published for the benefit of British merchants and all warned to have no business wdth those whose names appear on the blacklist. Ordinarily speaking, the only recourse for an American fu'm on the blacklist is to go to the British consulate with a sworn statement that he will no longer have any business flavoring of enemy taint. As the American firms have to depend in China upon other than American shipping or banking facilities, the majority must come to SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 129 '^.ompl3dng with the British orders sooner or later, if they woiikl eoii- iniie to do business in China. Where British consignees are permit- ed to take delivery of goods on their own responsibility, xlnierican firms are often obliged to disprove *' enemy taint '" before such delivery is permitted. Cases are cited by our consuls of goods of American manufacture having been accepted by British ships in the United States for shipment to China and after arriving there, because of suspicion of being ultimately destined for German consumers or German merchants, held by the British authorities, pending proof of lack of "enemy taint." In other words, without multiplying these cases, our dependence at sea is being enforced by those who can do so in their own interests, because we need to use their means of transit, and none of us, as Americans, can ship on our own ships to any very large degree. We are carrying more than we did. We are carrying 11 per cent or 12 per cent, but with small exceptions we are in hands which while we can not call them unfriendly, are not primarily acting in our interests but are primarily acting in their own. Mr. Byrnes. Whom did I understand vou to say held the package up? Secretary Redfield. It was held up right in China by an agent of the express compan}^, who was a British subject. Mr. Edmonds. The express company is an American company i Secretary Redfield. Yes; but the agent was British. It merely illustrates the processes they use as to American goods. The Chairman. That is, under the enforcement of their enemy shipping Secretary Redfield. Yes; trading with the enemy act. Mr. Edmonds. Will you tell us whether the special rates given to the Japanese over the Manchurian railroads have been stopped ? Secretary Redfield. I do not know. Mr. Cltrry. This particular package is an American article, shipped by an American manufacturer, on an American ship through an American express company ? Secretary Redfield. Yes. Mr. Curry. This shipping bill would have nothing to do with that * Secretary Redfield. No; it illustrates a method of holdup. Mr. Curry. The}^ hold it on the other side after it arrives ? Secretary Redfield. They refuse shipment, and by reason of the supervision exercised over neutral ships, the goods have to remain there. We are in that embarrassing position. Mr. Curry. That is pretty close to an unfriendly act. Secretary Redfield. Here is a statement concerning the shipment of enameled ware to Buenaventura, Colombia, in which there appears to have been a discriminatory rate in favor of. Great Britain as com- pared with the United States, and without reading it I will put it in the record. (The communication follows:) 130 SHTPPIXG BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. United States Department of Commerce, Bureau of Foreign and Domfstic Commerce, January Jfi. 1916. KXEIGHT rates FROM ENGLAND TO SOUTH AMERICA. ChIEV iiUREAL OF FOREIGN AND DOMESTIC COMMERCE, Department of Commerce. Sir: In reply to your letter of the 16th ultimo, relative to a shipment of enameled ware by the lirra of "Albert Hurt & Co., of New Orleans, and the suggestion that freight charge.? on this shipment were excessive as compared with freight rates from Great Britain, I beg to advise that I have obtained the following information as to the rates in question as they were on December 15 last: At that time the'rate to Buenaventura, Colombia, was 62s. 6d. per ton, and, according to the method of measurement of enameled ware, the shipment by Hurt & Co. would probably have been taxed at the rate of Ih tons, the classification of such products being double the actual weight. In addition to the freight rate of 62s. (id., there was a surcharge of 10 per cent, with an additional overtax of lO'per cent, the latter tax having been increased to 20 per cent within the last three weeks. This would work out at about S27.25, while the present rate would be nearly $30. It is possible that the classification made use of in New Orleans is not identical with that in effect here. This might make the rate practically the same as that charged for a shipmer)! from England to Colombia. Respect full v. A. H. Baldwin, American Comm.ercial Attache. . Socretaiy Redfield. I h-dxe here a very inti resting coDimunication from {ho German-x\mcrk?n Button Co., j^eople of good chrr-icter, and a large concern m Rochester, X. Y. Tliey go fully mto this question of discriminatory freight rates, and ihcy point out that the success of our commerce for which there has never been !^-o great an opening r;s there is at present, depends upon the speeds dev(^lo]nng o^ American shipping, and they say here : Under such conditions it appears that the manufacturers of the United States are not only now, but will be after the close of the war, practically at the mercy of the foreign Governments as regard their freight rates and shipping accommodation unless some steps are taken by our Government either to sub.eidize steamship companies or to form steamsliip companies which will be controlled by our Government in the nterests of our manufacturers and exporters. (Tlie letter follows:) Rochester, N. Y.. February 7. 1916, The Hon. Wm. C. Redfield, Secretary Commerce, Washington, D. C. Dear Sir: The Department of Commerce has been for some time past very active in urging the manufacturers of this country into a foreign business on well-laid-out and carefully analyzed plans so as to provide for its future growth and development. A great deal" of interest has 'been shown by the manafacturers at large and also a great deal of progress lias been made, as is indicated by statistics of exports to many differ- ent countries. There is one phase of the situation, however, in wliich the Departrnent of Commerce does not seem to take such an active interest, which, to our minds, is one of the most essential features if the manufacturers and exporters of tliis country are expanding into the foreign fields with a view of the future growth and development of the foreign commerce of this Nation rather than for "present-time " business. That to which we refer is the great lack of sliipping accommodations and the unreasonably liigh freight rates it is necessary to pay when one has finally been able to secure accommodations for a shipiaent. this lack of shipping accoinmodations is felt especially whenit is necessary to forward shipments to Australia or New Zealanl, v,diile the exhorbitant freight rates applv to sliipments destined to practically any part of the globe. We know that nothing can be gained by citing our own individual cases, because they are only trivial as compared to the many others who are having the same trouble, but for the "sake of illustration we shall give four incidents that have occurred just recently in connection with our business. SHIPPIN(4 BOARD, NAVAr. AUXILIARY, AND MERCHANT MARINE. 131 Date ot shipment Date shipments from Rochester Destination of goods. finally cleared Freight rate paid, to New York. fiom New York. Dec. 21, 1915 Melbourne Jan. 29, 1916. Do Adelaide Jan. 31, 1916. Dec. 27, 1915 Sydney do Dec. 24, 1915 Auckland Feb. 5, 1916. $1.08 per c. f. S1.02 per c. f. Collect — not known. SI. 18 per c. f. These shipments were all for delivery at their various destinations on or about January 20. Such delays cause great dissatisfaction on the part of foreign customers, and the prevailing high freight rates help very materially to make the price of Amer- ican goods unreasonably high, because it is an evident fact that this additional cost of transportation must ultimately come out of the foreign customer, either directly or indirectly. Therefore, it is also evident that these conditions form a great handi- cap to the manufactiuer in the United States when endeavoring to expand into foreign fields and to compete with foreign manufacturers or producers of similar goods. It is a recognized fact that there is at the present time a hea\'y' demand for manu- factured products from the United States because of the war. No one at this time can predict the outcome of this deplorable war. but if the countries now engaged remain the same, or practically so. geographically, when peace again prevails — as they undoubtedly will from all indications at the present time — those countries will again imaiediately .send their salesmen out to regain the position they once held in the foreign markets of the world. Latin America and other neutral countries will be infested with salesmen from all of the countries now at war; the British possessions, such as cited above, for instance, will immediately become the prey of England herself, to a much greater extent than they are at the present time, and also of France and Italy; and, too. the interchange of products among the allies and between the entente powers will become brisk also immediately at the close of the war. We believe that the foreign commerce of those countries can be regained and carried on much more easily after the close of the war than the increased foreign commerce of the United States can be retained. In explanation of this statement we would cite the following reasons, which we believe will work decidedly to the advantage of the manufacturers and exporters of those foreign countries and to the disadvantage of the manufacturei's and exporters of the United States. First. After the close of the war, even if shipping conditions do become somewhat better, the present high cost to our foreign customers of the products from the United ■States, due to the terribly high freight rates, an^' the poor deliv^eries which the manu- facturers ana exporters in the United States have been giving their foreign customers, due to lack of shipping accommodations, will both remain very vivid in the minds of the foreign buyers, and these facts will carry considerable weight when they are later deciding between the line of a manufacturer in the United States and the com- peting line of a manufacturer in one of the European countries. Second. Wlien a steamship company i.s subsidized by a foreign goA'crnment, it serves the interests of that government first of all. This is well illustrated in the case of the Union Steamship Co. TLtd.X which is subsidized by both the Canadian and New Zea- land Governments. Since there are no regular saiUngs between the Atlantic ports and New Zealand , it might be possible to send important shipments at times via the Pacific coast ports were it not for the fact that the Union Steamship Co., due to reasons stated above, gives preference to the bookings of Canadian freight and handles only such reight from our ports as it wishes to fill out its cargoes. And in addition to thi.s the Union Steamship Co. has practically a monopoly of the Pacific coast shipping to New Zealand and can charge about whatever freight rates it wishes. Under such conditions it appears that the manufacturers of the United States are not only now, but will be after the close of the war, practically at the mercy of the foreign governments as regards their freight rates and shipping accommodations, unless some steps are taken by our Government either to subsidize steamship companies or to form steamship companies which will be controlled by our Government in the in« terests of our manufacturers and exporters. We believe that the manufacturers in the United States do not generally fear but, on the other hand, rather like fair competitioi but it is rather problematical whether or not they will be keen about competition ^ .jh as is possible under the above condi- tions. A great deal has been said and more has bv;en written on this subject, and we are well aware that you are familiar with these facts, but this is simply to urge r.pon you a re- quest to use your influence to the greatest extent to see that something is actually done 132 SHIPPING BOARD, NAVAL AL'XILIARY, AND MERCHANT MARINE. to bring about a betterment of the existing conditions! It seems to us that if the country is to retain its increased foreign commerce, which has been obtained since the beginning of the war, that some such measures will have to be taken to protect the interests of our manufacturers and place them on a fair competitive basis with the manuf actiu'ers of the rest of the world . It does but little good to urge our manufacturers to reach out in an effort to grasp the world's markets only to find after business is secured that it is almost impossible to ship the goods; or, if "they can be shipped within a reasonable time, only at such a cost that it means either a loss to the manufacturer or prohibitive prices to the foreign customer. Very truly, yours, Germax-Americax Button Co. R. C. Lamb. Secretary Redfield. Tliese are the conditions which confronted us and the ciuestion was what we should do about them. It is per- fectly obvious, Mr. Chairman, that something had to be done. The concensus of opmion of the country seemed to be that something had to be done, that this was a matter requiring the continued thought of the best in civil life and the best in public life that was available, and that all the knowledge that both had should be, if possible, condensed into one board; that there should be a forum with power before which these things could be brought, and which had authority to act, and to my mind this measure has that as its chief characteristic, that it does provide a definite forum where all men may go into the open and be heard, and which has at the same time power to act in the premises, while it is mider the constant guardianship of the Executive and of Congress, So you will observe that the title of this bill is evolved out of that decision to estabhsh a United States shipping board, and that is its single great feature. The powers of this board were made broad in order that action might be taken under these changing and difficult circumstances suitable to the circumstances as they might from time to time arise. Therefore the board was authorized to construct in American ship- yards and navy yards — ^for there are navy yards which are available for merchant construction, which have never been used but which can be used, for example, the yard at Charleston, where slips could be laid down speedily and in which a number of small merchant vessels could be built. The idea was for authority to use all that we had, all that we could get, in the construction of vessels, and if it should be thought in their judgment necessary, and the oppor- tunity should offer, that they should be permitted to purchase or to charter a vessel, in any way necessary and la^^ul, to get a vessel which could be utilized for the purposes of our commerce. I would call your special attention to the language on page 4, fine 8, that these purposes are to be exercised ''with a view to chartering, leas- ing, or selling such vessels to any corporation, firm, or individual, a citizen or citizens of the United States desiring to use them m the transportation of the commerce of the United States." It is a declaration of purposes that this board is to exercise these broad powers "with a view" to utifizing them for the benefit of individuals, firms, or corporations desiring to use them in the commerce of the United States. The Chairman, At that poirt it was complamed that this bill was Dot as specific as the former bill was, in that it does not say "in the transportation of the commerce of the United States with foreign SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 133 countries * * * ai^d with Central and South America," and it was thought there was some sinister piu^pose in that. Secretary Redfield. Aren't they loreign countries ? The CiL\.iEMAN. Yes; but it was thought it would be an assurance if we had named them especially. We include our insular posses- sions and the Territory of Alaska, and then say foreign countries. Secretary Redfield. If that will relieve the committee's mind, I should be perfectly willing to have that inserted. But I had always understood that the countries of South America and Central America are foreign countries. You will observe that means are also provided for the sale of these vessels. Mr. Edmonds. I would like to ask a question. It says here that the board is authorized to charter, lease, or sell the vessels purchased or chartered. Do you think that is right I Secretary Redfield. Oh, no. ^h\ Edmonds. That is what it says in the bill, section 4, second line. I don't know whether you want to legalize embezzlement, but that is what it looks hke. Secretar}^ Redfield. I thmk that could be safely left to the com- mittee. I am quite sure that there was no purpose to charter a vessel and then sell it. I doubt if a title could be given. Mr. Edmonds. I want to ask you a sensible question. I didn't suppose }ou put that in nleaningl3^ You have given these boats the privilege of dealing with the Philippine Islands, the Hawaiian Islands particularly. Supposing you chartered an English vessel, how would you give it the privilege of trading under our registry laws with the Hawaiian Islands or with porto Rico ? Secretary Redfield. You would have to transfer its registry. Mr. Edmonds. How can you transfer the registry of a chartered vessel ? Secretary Redfield. I shall have to put that up to the solicitor, Mr. Thurman. Mr. Thurman. That is the only way he could do it. Whether it would do it or not, I do not know. - Secretary Redfield. He would have to consent to the transfer of his flag. Mr. Edmonds. How could he put it on a chartered vessel? Secretary Redfield. Not without the consent of the owner. Mr. Edmonds. He v\'ould have to put it under the American flag. Secretary Redfield. He could not do it. Mr. Edmonds. I think he could not, and yet you mention it in there. The Chairman. How is that? Mr. Edmonds. I am trying to find out how you can charter an English vessel under this bill. The Chairman. You could not put an English vessel under an American flag simply by chartering it. Mr. Edmonds. Then they could not deal with the Hawaiian Islands nor with Porto Rico. The Chairman. Who could not ? Mr. Edmonds. Those vessels. Tlie Chairman. What vessels? Mr. Edmonds. That were not under the American flag. 134 SHIPPING BOABD, NAVAL AUXILIARY, AND MEECHANT MARINE, The Chairman. I presume we could charter a vessel under an American flag. Mr. Edmonds. I am talking about foreign vessels. The Chairman. I don't think that could be done unless they were vessels belonging to an American citizen or an American corporation. Mr. Edmonds. I just wanted it explained. That is what the solic- itor said. A little further along in section 6 you are requiring that all vessels chartered should be registered or enrolled under the laws of the United States. Therefore you are prohibiting absolutely from chartering or leasing uny foreign vessel. I was wondering where you expected to get your vessels from quickly. The Chairman. There would not be any foreign vessels now. Mr. Edmonds. That is true. The Chairman. I had in mind all the time that it was American vessels. Mr. Thurman. This bill, which would specifically authorize the enrollment and the registry of a foreign vessel under the American fla^, would have the effect, as I take it, of repealing any other pro- vision preventing that. Mr. Edmonds. In other words, then, we could lease an English ship. I think we could under this bill. Mr. Thurman. I think you could. Mr. Edmonds. Of course, this bill is not made for the time of the war. There would be a time come when the provision would be useful or not useful. Mr. Thutjman. Under this bill I think you could charter a foreign- built ship and put it under the American flag, but could not, under this bill, use it in coastwise trade. Mr. Edmonds. Does your department agree to that ? > Secretary Redfield. Yes. I call your attention to the fact that vessels would not under the provisions of this bill be authorized to trade in coastwise trade, because the bill limits it to vessels constructed in United States shipyards. Mr. Edmonds. But I know the Hawaiian Islands have been con- sidered coastwise trade, and they have been taken out of the coast- wise line and put in a class by themselves. Mr. Thltiman. They coidd trade there, not from port to port. Mr. ED:\roNDS. But we are applying the coastwise provision to all vessels. I suppose j'ou w\]l have to treat all vessels alike. Mr. Thurman. That is correct. The Chairman. Of course, that is why the question will have to be exan:iined with some care, and I do not understand — at least, that is not my construction of the bill — that foreign-built ships brought under American legistry under the provisions of this bill can be used for coastwise trade. Secretary Redfield. Now, pardon me just a moment. That is the proviso to Mr. Edmonds. That is the proviso under section 4, page 5, line 20. The Chairman. Now, there is this exception generally under the provisions of this bill, that these vessels may be used in the foreign trade — Provided, That A'es.sels constructed in American slu]>yards and na,\'j yards under the provisions of this act may be chartered, leased, or sold to any such corporation, firm, or indi\ddual, a citizen or citizens of the United States, for use in the coastwise SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 135 trade of the United States, particularly the trade between the Atlantic, Gulf, and Pacific coasts. Now, that would include, of course, all of the coastwise trade of Porto Rico and the Hawaiian Islands, because they are included in coastwise-trade laws of the United States. I do not understand, under the provisions of this bill as it is written, that a foreign-built ship brought under American registry can be employed in the coast- wise trade; that is, in the coastwise trade or between Porto Rico and the Hawaiian Islands. Mr. Edmonds. But right in that section right before that you say that these foreign charters, chartered or constructed by the United States, can be used with the Hawaiian Islands and Porto Rico, and after that you say, provided that they can go in the Atlantic, Gulf, and Pacific coastwise trade. Certainly, you have excepted from the coastwise trade Hawaii and Porto Rico. You have put them in a class by themselves — in the class of foreign trade — and excepted them for American-built ships in Atlantic, Gulf, and Pacific trade. The Chairman. That is a question that we ought to consider very carefully. Mr. Hardy. I don't think there is any trouble about it. It is clear that vessels chartered by this coimtry may be used in trade of every kind, in the foreign trade and with that of Alaska and that of the Hawaiian Islands. Mr. Edmonds. These are the exceptions. But I want to get our understanding of the position of the matter while these gentlemen are here. We are taking them out of the coastv/ise trade and putting them in the foreign trade in this bill, Alaska, the Panama Canal Zone, the Philippine Islands, the Hawaiian Islands or the Islands of Porto Rico, Guam, and Tutuila. Mr. Hardy. So far as these vessels are concerned, if the vessel is budt here although it belongs to a foreign corporation, it can trade. Mr. Edmonds. But it can't trade with Atlantic, Pacific and Gulf coasts. 1 only wanted to bring that out for the sake of argumen in the committee later on. Mr. Hardy. I don't think there is any trouble about the interpre- tation of it. Mr. Edmonds. I just want to get the interpretation of the attorney on it so we may know how we are commg on. Mr. Hardy. Some suggestion has been made that under this bill you could charter a foreign built vessel. I think you can, but it would be limited to foreign trade. Mr. Edmonds. You could charter a foreign vessel under this bill? Mr. Hardy. I think so. Mr. Edmonds. They say you can. Secretary Redfield. I think on cjuestions of law I shall have to ask Mr. Thurman, our solicitor, to answer. I am not competent to do so. There are certain features put in the bill for defuiite purposes. Take the provision in section 5, which is intended to provide that vessels belonging to the United States for other service and idle may be utilized temporarily in the commerce of the United States. It has been a very gaUing fact to us to have lymg at anchor, unused, 136 SHIPPING BOARD, NAVAL AUXILIAKY, AND MERCHANT MARINE. half a dozen, perhaps more or less, large vessels belongmg to the Government when we have no legal power to use them. We could have utilized them to carry coal to Spain to a market which was otherwise closed. That is the purpose of section 5. Mr. RowE. Have you any idea how many vessels ? Secretary Redfield. I think 6 transports. The Chairman. And we have those vessels belonging to I lie Ignited States and are not permitted to use them ? Secretary Redfield. You will recall, Judge Hardy, that we sent a collier to Europe to take goods from the Mediterranean, to San Fran- cisco exposition, and another collier to take goods back from the exposition. We have no power whatever to do that for our com- merce. These vessels are at times idle. Dr. Pratt just hands me now a conununication from our consul in the Canary Islands, advising of the arrival there of the Chilean transport with a full cargo from Chile to the Islands. Chile is ahead of us. The Chairman. W"e might tramp on some one's toc^ if v.e used our own things for our own good. Secretary Redfield. These vessels are vessels that would be ad- mitted in the coastwise trade. Mr. Edmonds. Couldn't we have the use of those vessels by a resolution ? Secretary Redfield. You could. The Chairman. Have we American-built vessels that are not al- lowed to carry freight ? Secretary Redfield. Yes; we have magnificent colhers, and they are vessels that we can not use in commerce at all. We have no legal power to do so. Mr. Byrnes. Congress could authorize the Secretary of the Navy ? Secretary Redfield. Or the President. The President should be authorized with the Secretary of the Navy, or the ^^-my. Ml". Edmonds. A little legal question there, on hue 19, section 5, "The President is hereby authorized to charter, lease, or sell" such vessels. Would that authorize the board to sell such vessels ? Secretary Redfield. I think those two vessels of the Panama Raihoad Co. Mr. Edmonds. No; everything in the j:)aragraph, as I understand it. I don't think the Navy Department would want to let you have many ships. Mr. Tiiurman. They can always be taken back. The President is authorized by the bill to take them back at a fair valuation. Mr. RowE. Just like the English. Mr. Hardy. It is not right to suppose that the different branches of the admijiistration will not work together. Secretary Redfield. I remember that word "sell" caused a little discussion, but it seemed necessary that the board should have broad powers and not be tied up. Mr. Hardy. And the Secretary of the Navy is on the board ? Secretary Redfield. Yes. Mr. Hardy. He would hardly sell his ships against his own interests. Mr. Thurman. There is an amendment going in which is not in this printed bill. It provides that the proceeds from the sale of all ships, instead of being covered into the Treasury, shall go back to the SHIPPINC BOaKD, naval AUXILIARY, AND MERCHANT MARINE. 137 board to be used for the purposes of the act. In- other words, if a vessel is sokl the money can be used to replace it. Mr. CuBRY. That is the British system. The Chairman. Yes. Secretary Redfield. There is a question at this point which I would like to call attention to. I am not perfectly certain that sec- tion 5 provides clearly that the vessels of the Panama Railroad Co., if used by the board, should be iiiuler the control of the board. There ought to be no question of divided control, as to whether the War Department or the shipping board should cojitrol rates and things of that kind, and if there is any doubt in your judgment, in the judg- ment of the committee, it ought to be cleared up. They should be under the control of one or the other. The Chairiman. Line 15 says that they are to be transferred to the board. Secretary Redfield. Yes; the vessels are. But the right of mak- ing rates. I suggest the thought, that is all. Mr. Edmonds. Panama to be subjected to the rate, I suppose, the same as anybody else ? Secretary Redfield. I suppose so. I just want it to be clear in your minds. The Chairman. 1 haven't gotten the thought yet. Secretary Redfield. I thought there should be no question arising in case the vessels of the Panama Railroad were taken over for any purpose, any question of doubtful or double jurisdiction between the War Department, and the shipping board, as regards the manage- ment and control and fixing of rates, etc., on those freight vessels. The Chairman. It seems to me that it is quite clear that when they are taken over by the shipping board that they are in control of that board for all purposes. Secretary Redfield. That is what I want to be exact about. The final clause on page 9 of section 6 requirmg the consent of the board to sell or transfer to foreign registry, arose from the fact that foreign buyers are buymg American-built ships now on the stocks and incomplete. Several such have recently been purchased. Mr. Hardy. You mean putting them under foreign flags ? Secretary Redfield. Yes. Mr. RowE. You mean those two in California ? Secretary Redfield. No; three on the Atlantic coast. These were ships contracted for by Americans, intended for American use. Mr. Hardy. Incidentally, have any of these Governments got any laws regarding ships built in America being registered under their flags ? Mr. RowE. England has not. Secretary Redfield. That is what is happening. Now every other important maritime country has laws forbidding the transfer of ships from its flag without its authority. Mr. RowE. Is that so in time of peace ? Secretary Redfield. That is so now. Mr. Hardy'. They just reverse our process. We forbid them com- ing to our country except in a limited way ? Secretary Redfield. Yes. ^Ir. Curry. Mr. Secretary, isn't it true that recently Great Britain, France, Germany, Austria-Hungary, Sweden, Norway, and Brazil 138 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. had absolutely prohibited the transfer of any of their shipping to a foreign flag? Secretary Redfield. I think that is correct. Mr. Edmonds. Was that recently? Mr. Curry. It is a war measure. Mr. Edmonds. A temporary war measure ? Mr. Curry. A permanent proposition. Mr. RowE. Wouldn't it tend to stop the building of ships in American yards if a man was limited to sell to Americans ? Mr. CuRiiY. What is the use of building up our shipping if we are to sell to foreigners ? ;Mr. Edmonds. We have in Wilmington to-day three ships building for the British-American Oil Co. Under this law they would not be able to sell them ? Secretary Redfield. Let me think a moment. Mr. Thurman. They are not registered as American vessels ? Mr. RowE. But they are building in our yards. The Chairman. I don't think that bill covers that case. Mr. Edmonds, How would they go out of our ports ? Secretary Redfield. As Enghsh ships. Mr. Edmonds. Would they get an English registry here ? Secretary Redfield. Yes; through the English consul. I don't know what the detail of the procedure is. Mr. Chamberlain. They get a temporary registry until they get back to England. Mr. Edmonds. There would be no trouble at all. Mr. CiLVMBERLAiN. No, uonc whatever. The Chairman. They can have as many ships built as they please. Mr. Curry. I want to show that there is no chance under this law or any other for the United States to lease or buy foreigji ships. Mr. Edmonds. This is a bill for the future. Secretary Redfiei-d. As far as those nations are concerned. Mr. Edmonds. I want to ask another question on that feature: Does this affect any of our treaty rights in any way ? Secrettuy Redfield. I think not. Section 8 is the provision providing that the board may form a corporation or corporations for the purpose of carrying out the pro- visioris of this act if it shall be necessary to do so. You will observe, Mr. Chahman, that this must be interpreted in the hght of the declared purposes of the measure in section 3, that essential purpose being that the board is formed '•with a view to charteruig, leasmg, or selling such vessels to anj' corporation, firm, or individual, a citizen or citizens of the United States." It is necessary to carry out the purpose of this. In other words, as I understand it, we have the pur])oses for which the board is formed. If the purposes can not be carried out otherwise, if it is necessary, then the board may form a corporation or corporations for the purpose herein described. The Chairman. That is, that some individual, firm, or corporation would say, "We will lease these ships, or we vnM charter these sliips, or buy these ships, but on our owaa terms. We wiU take them and we will enter them in trade to meet the demands of American commerce." Now, if you omit section 8, it would simply place it in their power to dictate their terms to the board. Secretary Redfield. Absolutely. . SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARIKE. 139 The Chairman. /Viid this section 8 simply reserves to the Govern- ment, to the board, the power to enforce reasonable terms on which these ships may be operated. Secretary Redfield. Yes. And you will observe it is further safe- guarded in the authorization in the final words that they may at any time part with the stock of the corporation thus owned. There are sections of the world, Mr. Chairman, in which it is very important that American commerce should go, but to which it may not for a time be possible that a private individual, firm, or corpora- tion should be able to carry it. Now, the altcu-native without this clause would simply be that it would not go, and we do not feel — I do not feel-- that we should in substance put an estoppel upon its going by refusing to give the board the power in such an emergency to make it possi})le for it to go. That is the whole story, to my mind. This bill carries, as its avowed purpose, the assisting of firms and corpora- tions in the development of American commerce. That is what it is for. Now, if they can not, as in the case just suggested, if they can not, th' n this j)ow( r is h( Id in reserve. It is um re ly the expression of a i)ow('r which always exists, and it is expr' ^^^sly )irovid( d that it may sell stock of such corporations that ai\> so friiu( d at any time, and tliis should be taken in tlie light of a stateuK nt made formally by the President to Congress, that any procedure of this kind would be of temporary character; that anything else would be a false interpreta- tion. Mr. Byrxes. What objection have you to including that state- ment or something to that effect in the bill ? Secretary Redfield. None, so far as I am concerned, if it can be so done as not to involve a limitation which might be very unfor- tunate at some unforeseen time and some unforeseen occasion. Mr. Byrnes. As to the operation and limitation upon the operation. Secretary Redfip:ld. Yes; in length of time. Mr. Byrnes. What would be the objection to the limitation of five years, say at the close of this present war? Wliat is your objection ? Secretary Redfield. My only thought would be this: I hesitate to put a limitation imder circumstances of which we can not now know. Putting a limitation on the unlvno\Am is a thing which as a matter of practice I hesitate to do. Here is a body acting in the open. That, to my mind, is the greatest of all limitations. It is an open book, an open forum, and it can only act with the approval of the Executive. It has another limitation. It must act responsibly in the matter; it comes again in the presence of Congress, which in a few months at the most can discuss the whole matter and remove the conditions. It can not escape these threefold checks. Mr. Byrnes. Yes. The checks are ample if the object was to establish a permanent corporation; but if it is to be of a temporary character, and that is the idea, what is the objection to making it certain that it is temporary by putting some limitation ? Secretary Redfield. I can oiilv say that I should be afraid of some unknown difficulty arising under it. Mr. Hardy'. Among the unknown difficulties might it not be an unreasonable result that if the life of this corporation was known and it was sought to sell these vessels, interested parties might take advan- tao:e of that limit and force them to sell ? 140 SHIPPING BOABD, NAVAL AUXILIARY, AND MERCHANT MARINE. . Secretary Kedfield. Yes. Mr. Byrnes. Suppose we did this, limit the corporation but do not limit the time in which the equipment can be sold I Mr. Hardy. Then you would have to sell for nothino; to keep our vessels out. Mr. Byrnes. Wouldn't it be based upon the idea that when you sold in the open market you could get a ])etter price ? Mr. Hardy. You might have a falling market. Secretary Redfield. You see, this is a corporate operation, not a Government operation. The board is not authorized to operate. It is a corporation which the private interests are supposed to operate if need be. Frankly, I am afraid of the limitation. If you could get assurance that there never should be such causes, that there never should be any emergencies arising, that capital would always be forth- coming — if that could be assured in anyway — then, of course, there iv^ould be no necessity. But there are cases, unquestionably, where, either temporarily or perhaps in some places permanently, private capital could not of itself alone always do the work. IVIr. Byrnes. The object is to make it permanent? Secretary Redfield. I do not mean it to be understood in that way. I mean that there might be a port, for example, a single port, to which private capital could hardly afford to run a line of vessels. But while that might always be so, it might become possible to link that up with other ports so that a line could run for such a time as was necessary to get the thing moving, and this would give an op- portunity^ of getting it going, and then it could be turned over to the Erivate interests which are most competent to handle it. I think you ave got to interpret this in the light of the intention, the expressed purpose of section 3, ''with a view to chartering, leasmg, or selling such vessels to any corporation, firm, or individual, a citizen or citi- zens of the United States, desiring to use them in the transportation of the commerce of the United States." Take the port of Vigo, Spain. It might well happen that a fruit line could not undertake to go to Vigo, Spain. There is not enough of it. But from developments now progressing it is highly important to have vessels going there. In due time private interests will come along that can not go to Vigo but will go to Barcelona and Cadiz, and will take over that Vigo vessel. That is my idea. Mr. Byenes. Suppose such a declared purpose was included in the bill some way, would it not be quite reassuring to private lines. Secretary Redfield. That is a question, I think, of the committee's judgment ;\ii'. Byrnes (continuing). Not to be used in competition on the line, but to develop a line between two ports such as you have mentioned. Secretary Redfield. Isn't that the statement of section 3 ? IMi". Byrnes. Perhaps it is. Secretary Redfield [reading]. "And military purposes, with a view." The Chairman. As I understand you, ^Mr. Secretary, you do not want to fix a time limit because to do so you might destroy the very efficacy of the act, and defeat the purposes we have in view, of giv- ing to American commerce ample facilities and provide trade routes SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. 141 whore private vessel owners would not be willing to enter for the time being. We might say two years, and while we are in the very midst of the development of that trade, the time limit comes, and the effort is lost. Mr. Byrnes. In other words, it might not be a definite time before the line would be taken up by the individual owner? Secretary Redfiei.d. Quite so. Mr. Burke. IMr. Secretary, in your opinion, would the including of a time limit in this bill wJien this shipping board would go out oi existence, have a tendency to retard the develo}nnent of commerce in the lines in which you put these ships. Secretary Redfield. I think so. I would not subscribe any stock in a corporation wliich had to expire at a fixed time. Mr. Burke. Isn't it also true that there might be instances where customers in foreign countries might refuse to patronize these lines because they were only temporary lines ^oing out of existence in three years or five years, whatever the limitation might be ? It strikes me it might hnvo a tondenc}^ to retard the development of commerce along those lines. Mr. Edmonds. My opinion woukl be that you should pass a bill without a time limit in it. Secretary Redfield. You see to establish — take the case of Vigo again — to. establisli a line to Vigo moans the investment of a large sum of money for buildings, docks, etc. Now if the thing is subject to a certainty, and at the end of five yeai*s some private interest is not read}^ })ut it has got to stop anyway, I doubt if any one would build the docks. ^Ir. Byrnes. The idea is that you want to carry to the people of Vigo the assurance that it is not to be temporary ? Secretary Redfield. So far as the line is concerned. Mr. Byrnes. Carry with it the assm*ance that Congress may do with it as it pleases later on. Mr. Hardy. And that the line will be established as promised. ^Ir. Byrnes. That the Government will maintain it until private capital comes in. Mr. Curry. Do you feel sure that private capital will invest in this corporation under the provisions of the bill ? Secretary Redfield. No. You put a very strong question to me. I can not be sure of that. !Mi\ Curry. Then it looks very much as if it was the enactment of a permanent law for permanent Government ownership ? Secretary Redfield. No; not at all. It is expressly provided that at any time it may sell. Mr. Hardy. That is, assuming that we want to. Secretary Redfield, Yes, of course. Here is a company doing a certain fine of business, and they have developed a good business in theu' line and have a large trade. At the end of a isw years the business has become highly profitable. It has become highly profit- able while we maintained a boat line. Then we had to sell out and the business is lost. Mr. Curry. If it is good for .5 or 10 years it might be good for perpetuity. vSecretary Redfield. But you can not escape. It all has the supervision of Congress. 32910—16 ^10 142 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Edmonds. If I can ask you a legal question again, exactly what liability the Government would have in these chartered vessels in case of accident. Mr. Thurman. It would depend entirely upon the agreement that you made with the charter, that you might make with the vessel from whom you lease. Mr. Edmonds. ^Vlien you lease a vessel, who supplies the crew ? Woald you be liable for any damages occasioned by that vessel? Mr. Thurman. I assume so. This chartering does not carry with it the necessity of taking the old form of charter. We do not have to take the crew with it. Mr. Edmonds. Isn't there any Jiavigation law with regard to chartering a vessel ? Mr. Thueman. I do not thhik there is. Mr. Chamberlain. No. Mr. Edmonds. Then it would depend entirely on the character of the contract which was made ? Mr. Chamberlain. We do not assume any liability that comes along. That is true. Secretary Redfield. The provisions as to preferential rates, page 11 at the bottom. The board has the power to do that as a means of overcoming such preferential rates on the part of our competetors against us. This is how it operates. A manufacturer in Germany desiring to compete with an English manufacturer in South America on application received at 45 per cent reduction in freight rates through. That is the habitual practice, and has been used as a very potent means in the hands of our foreign competitors against Ameri- can business, and this is meant to give to this board power in the event that such rates shall be necessary to protect foreign commerce of the United States, or to give authority to make such preferential rates. Mr. Edmonds. This would also give the board the privilege of making a minimum rate in case they wanted to fill out a cargo with some freight that was going to be carried from port. I notice you follow Mr. Raker very closely in this biU. Mr. Thurman. The book was written after the bill. Secretary Redfield. The form of preferential rates is a regular {)ractice with the German Government. Two German steamship ines, the German East Africa, and the German Levant lines, are granted largely reduced rates on goods on through bills of lading for Africa or the Levant. The system was introduced, the former in 1890 and the other in 1895. It is a very common thing in American ex- port trade to run against preferential rates granted by the Govern- ment-owned roads in Germany. Mr. Kincheloe. Is there any other country which has a law like or similar to this '( Secretary Redfield. In this respect? Mr. Kincheloe. In the encouragement of the merchant marine. Secretary Redfield. I know of nothing that is like it. Mr. Lowe. England has a board which has very extensive power over their ships. Mr. Kincheloe. Is there any other country? Is there any other country in the world which has a law similar to this ? Mr. Chamberlain. I don't know of any. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 143 Ml-. KiNCHELOE. Is there aii}^ country in the world that has absohitely Government-owned vessels? Mr, Chamberlain. Yes; there are a number that have Govern- ment-owned vessels. Mr. Curry. Brazil? Mr. Chamberlain. Brazil is an example w^hich is suggested. Brazil had lieavy subsidies and the line got so embarrassed the Government had to take it over. Mr. KiNCHELOE. All her vessels? Mr. Chamberlain. I mean only the Lloyd-Brazilian line. Then, the Roumanian Government, in connection w4th its railways, has its own steamships, with two branches, one that runs up — or did before the war — runs up to Dutch ports and to Antwerp, and another that runs in the Black Sea, to Constantinople principally, and the Mediter- ranean. Then, the Government of South Australia had a small fleet, I think there were only two, possibly three, small steamers operate'd as a Government venture. The Chairman. Does the Russian Government have any ? Mr. Chamberlain. No; the Russian volunteer fleet is not a Gov- ernment institution, although the relations are very close. It was organized when there was a possibility of w^ar between England and Russia and a number of wealthy Russians raised the money to buy a fleet of vessels, and that has been continued ever since, but it is really a private company, just as any other steamship company, but it receives very liberal subsidies from the Russian Government. The Government pays the tolls on these ships when they go through the Suez Canal. Mr. KiNCHELOE. What has been the present increase on freight rates from this country to England, Germany, and HoUand since this .war began ? Mr. Chamberlain. 1 do not know. I think this committee had the figures last year. The Chairman. I am having Dr. Pratt, who is Director of the Bureau of Foreign and Domestic Commerce, collect that data. (See page 772.) Mr. KiNCHELOE. Much obliged. Mr. Hardy. Along the line just stated by the Secretary, I should like to ask him if it be a fact that Germany has given on her Govern- ment-owned railroads special rates to goods brought in German ships. Isn't that a close shave to a violation of the treaty between Germany and the United States insuring equal treatment? Secretary Redfield. You have got the wrong man to answer that. I am not a lawyer. Mr. Hardy. You have a great deal of power of analysis. A con- cession is made here which amounts to a remission of tonnage dues, to the grant of special rates, and it seems very clearly a discrimination. Secretary Redfield. There is no question of the German habit of giving preferential rates on their railways. I had never considered the question of its being a violation of the most favored-nation clause of the treaty. Mr. Hardy. It is certainly, I think we w^ill all agree, a discrimi- nation. Secretary Redfield, But the case that I spoke of, a 45 per cent reduction of freight rates, was all done within a day. There was no 144 SHIPPING :^OAED, NAVAL AUXILIARY, AND MERCHANT MARINE. question of a hearing. It was regular routine. That happened to be the German branch of an American concern. I find that Russia makes a loan to the volunteer fleet free of mterest for the acc^uisition of six new steamers. That is their form of caring for them. The Roumanian Government maintains not only two lines of steamers but also a line of river steamers on the Danube owned and operated by the Roumanian Government. Mr. RowE. England has loaned 2^ per cent. Secretary Redfield. Yes. I should not see any particular occa- sion for the German Government to give a freight subsidy or any government paymg a subsidy. Mr. Hardy. But the English Government does not pay any sub- sidy to freight lines. Mr. Edmonds. That is why the Germans have built up their trade and the English haven't. Mr. Hardy'. Yes. Secretary Redfield. There is one important provision on behalf of American commerce in this section which I have had personal experience with, and that is the provision in Hue 17. authorizing ship- ments for specific sailings. There is one of those little things that plan's havoc with American business at times. A factory shipping from the interior, let us say, for example, taking a shipment of mining machinery from a concern in Denver for South America. It is the condition now that they can not ship to catch a certain vessel. Raih'oad companies are forbidden to receive goods to catch a certain vessel. The reason of that is because if they do so they may be held in an action at law if they fail to do so, and the Interstate Commerce Commission thought that was a form of rebate and forbids the whole thing. That is important. It is frequently the case that there is a ship only once a month, and if the goods do not arrive they are held up three or four weeks. There is serious damage, and if the goods are perishable they are sometimes destroyed. It is one of the mean Uttle obstacles in the way of the ordinary flow of trade, which ought to be as free from those things as possible. This was put hi to remove that handicap. It frecpiently amomits to this, that if you can not ship perishable goods with a certainty that they will catch a steamer, you v.'ould not try to get the business. That is why this was put in here. Mr. Hardy'. Does the Interstate Commerce Commission hokl that they can not make provision that it must reach its destination at a certain date. Secretary Redfield. I can not saj. Thej will not allow them to ship for a certain sailmg. You want to get a bill of lading to be for- warded by a certain steamer. You can not advise your correspondent in South America that the goods will be there on a certain sailing. Mr. Hardy'. As I understand it, if the companj^ is ^viUing to under- take the shipment, and it is an honest contract, there ought to be no objection to it? Secretary Redfield. None whatever. There is under section 10 the license fee, the fact about which Mr. Douglas spoke this morning, and in view of the very arbitrary treat- ment of shippers in our ports by steamship lines of all countries, I think it is high time, if we admit them, as we always will, to the great SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE, 146 benefits to be derived from our commerce, that we should establish the condition under which they shall be so entered. The Chairman. If we deepen our harbors and extend our docks, we ought to have some contribution. Secretary Redfield. And Mr. Thurman tells me that this is con- stitutional. I want you to think of the condition a man would be in who has a large supply of lumber. He goes to them and they say they do not care to ship it. They had a contract to do it, but they don't care to keep it. It was better to break the contract than to carry the goods. There have been many cases of that kind where goods have been delivered to the seaport and the steamship company says they won't take them. They exercised the right (which would put any railroad man in jeopardy) to say not only the rate the}^ shall take them at, but whether they shall take them at all or not. That, it seems to me, is an intolerable condition, and we ought, as the Chairman says, if we admit them at large expense to ports which we prepare and light and chart and maintain at large Government expense, to have something to say about the terms on which they shall use these ports. There ought to be some guarantee of equitable treatment to all Americans alike. Mr. Byrnes. Do you think the}^ ought to be restricted by agree- ment to certain rates ? Secretary Redfield. Oh, no; I did not say that. Mr. Byrnes. I was wondering about it. Mr. Thltrman. I can not recall the exact book or page, but the general proposition is that the Government has control over the commerce in the ports of the United States Mr. Hardy. Is it not absolutely essential that both foreign and domestic trade shall be subjected to the same rules and regulations ? Secretary Redfield. Undoubtedly. Mr. Hardy. Otherwise there would be a discrimination in favor of foreign vessels ? The Chairman. I think it is, however, wholly impracticable ior this board, if created, to make specific rates and require them to be filed with the board. Mr. Rowe. Mr. Redfield, what other countries have license? Secretary Redfield. Great Britain — just established. Mr. Rowe. That is just recently. Has Germany ? Secretary Redfield. I do not know. Perhaps Mr. Chamberlain does. Mr. Chamberlain. They have particular license for a particular line of trade between foreign ports. Mr. Edmonds. Every vessel or every firm ? Does the board require a firm to license or a vessel to have a license ? Secretary Redfield. It says "firm, or corporation, or individuals." Mr. Edmonds. What would you do with respect to a tramp ship ? Secretary Redfield. That is a question that came up this morn- ing, and that I suppose would have to come under a regulation in the form of what might be called a "temporary permit." I think that is a matter of administration. Mr. Edmonds. Have vou an idea of charging for this license ? 146 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Thurman. I think it Avould be up to tho board, which would make rules and regulations. Secretary Redfield. Here is th(^ situation as it stands to-day, Mr. Edmonds. Take the product of the Southwark Foundry & Machine Works, or the Sugar Refining Co., on the Philadelphia water front, say, to the Baldwin Locomotive Works, ''No; we do not care to carry your stuff." That sort of thing has happened. It actually happened that the Baldwin Locomotive Works was refused transportation and had to go out and get its own ship in order to get its goods delivered to South America. They are arbitrary about it. A man shipped a lot of goods from central Pennsylvania down to Baltimore, and they told him they did not want to take it, and left it on the dock, and he had it all sent back. Mr. Edmonds. We have some woolen goods manufactured in Philadelphia and can not get it out. The Scandinavian Line will not take them. Secretary Redfield. That is what this license is for, to give us some control over the situation. There are in the United States Navy at. the present time 24 fuel ships, with a combined cargo capacity for carrying over 132,000 tons of coal and 38,000 tons of fuel oil. I am advised that half of this fleet could be spared at this time, as, owing to a deficiency in the appro- priation for their maintenance, it will very soon be necessary to tie them up. There have been times this year, Mr. Chairman, when, if we could have had three of those ships to carry coal to Spain, we could have had business which did not exist. Mr. Edmonds. Does this condition still exist ? Secretary Redfield. Yes. Mr. Edmonds. I do not see why we could not put a resolution through transferring those vessels to the Department of Commerce. Mr. Price. Is it your construction that barges or schooners plying between States will have to take out a license ? Secretary Redfield. Yes, I think so. Coastwise vessels, you mean ? Mr. Price. Yes, Secretary Redfield. Yes. Mr. RowE. If you put a license on foreign ships you realize they will compel us to do the same thing on American ships to foreign ports very shortly ? Secretary Redfield. Very likely. Mr. RowE. Will it not be a grat deal of embarrassment to shippers, and give them a good deal of trouble? Secretary Redfield. They want our business. Our commerce is the great prize of the ocean. Mr. Rowe. But it works both ways; they have the ships. Secretary Redfield. You have got to depend on the board to exercise ordinary sense. It is up to them. If they got arbitrary and behaved badly, I take it Congress woidd remove the power. Mr. Hadley. What additional element of control has the Secretary concluded would be authorized over foreign owners imder a license system? He spoke o^ that a moment ago. Secretary Redfield. I can find it very hard to say in detail, but I can see what it would be aimed at. I can see the object to be accomplished, but it h a good deal to jump right in and say how SHIPPING BOARD, NAVAL AUXIJ.TARY, AND MERCHANT MARINE. 147 I would accomplish it. I think, however, we ought to stop by the license feature the arbitrary exercise on the part of any steamship company as to which American citizen they will oblige by taking his goods and which they will not oblige by refusing his goods, too. I should aim a license feature at that. Mr. Hardy. In other words, you think if those vessels were required to have a license our administration might require them to treat all customers equally? Secretary Redfiei.d. Exactly. Mr. Hardy. Or else revoke their license and destroy their privilege of doing business in our ports ? Secretary Redfield. I should object to an arbitrary clause in bills of lading in aimual contracts which permitted a power not at war whenever for its own convenience it saw fit to withdraw its ships without notice. That is what happened to the man in Winona, with his flour. I do not think that ought to be permitted. If we give our great and profitable business, and if we give them the use of our ports, I think they should give reasonable notice. The Chairman. If some line should use fighting ships to prevent competition, you would add that to the conditions, that they should discontmue that practice ? Secretary Redfield. Quite so, and it would give us the same con- dition of control, I am reminded, over these international conferences, these quiet gettmgs together. The Chairman. It might include this provision that no foreign ships or general ships trading from American ports should practice or engage in the practice of deferred rebates ? Secretary Redfield. Yes; all that whole thing. It might prevent unfair discrimmation between ports. The Chairman. And between individuals ? Secretary Redfield. And between individuals, and between ports. You can easily see there is a broad field for a firm but entirely just and well-balanced regulation there. Mr. Hardy. Would that be possible as a regulation, without a law to back it up ? For instance, the prohibition against discrimination between ports ? Secretary Redfield. This is the law. They have power to pres- cribe the terms of those licenses. Mr. Hadley. Would not about the only element of final action that could be imposed by law be the forfeit of the license ? Secretary Redfield. Ah. But they could not be cleared without the license; that winds them up. Mr. Hadley. It cuts them out of business; that would be the ulti- mate language of the law ? Secretary Redfield. Yes; they could not be cleared. Mr. Edmonds. We have a lot of wool and yarn in Philadelphia that can not be shipped to Scandinavia because the Scandinavian- American Line will not take it. That is one of these cases you have spoken of? Secretary Redfield. Yes. Mr. Edmonds. If we had an American ship and we loaded it on, what would happen to it ? Secretary Redfield. Now ? I do not think it would have any diffi- culty; it would go right straight through. 148 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Edmonds. It would go right straight through? Secretary Redfield. I think so. Mr. Edmonds. Has not England prevented thp import of a large amount of material to Scandinavian countries ? Secretary Redfield. On the part of neutrals ? 'Mr. Edmonds. On the part of neutrals. Secretary Redfield. I think not; not noncontraband goods. Mr. RowE. They have an agreement with Nonvay thafthey are only to be used in their country, and that would be a limited amount. Secretary Redfield. And the vScandanavian steamship lines ac- ceded to that agreement. It would be up to the American lines to say, No : we will not accede to your agreement. Why should we ? Mr. RowE. They are not contraband? Secretary Redfield. Under those circumstances our country could carry it straight through. I think there is no difficulty about it. Mr. RowE. I will tell you, Mr. Secretary, you spoke here about us getting together and not having any politics, and I am agreed there ought not to be any politics, but I want to ask you a question: To accomplish in a round-about way exactly what we would accomplish as near as we can see if we gave a subsidy * . Secretary Redfield. I do not think the subsidy has ])een a howling success. Ml". Edmonds. We are going to utilize a great deal of money, and {)robably going to utilize more money as time goes along, in paying the osses of these hues or the losses of ships in the operation thereof. If we were to subsidize a line of steamers at the present day, going to South America to ports that we wanted, could we not by close super- vision of that line find out it was making profits, keep it on a reduced subsidy until we got the amount of money put up by the taxpayers to the minimum ? Secretary Redfield. That is not the result of experience, Mr. Edmonds. The Japanese lines are heavily subsidized, and they pay the dividends out of the subsidies and run at a loss. They are under the strictest kind of regulation. I hold in my hand Senate Docu- ment 152, which gives the details. They are under a degree of supervision that would frighten us, I am afraid. The passenger fares and freight charges are subject to the approval of the ministry of state. He may specify the kinds of passengers and of cargo for which the charges are to be reduced. It goes into a minute|detail of regulation. Mr. Edmonds. A subsidy of about $1,300,000? Secretary Redfield. A very large subsidy, and their dividends are paid out of it. They run at a loss. Mr. Edmonds. While I was in Japan, the newspapers there stated that the Toyo Kish;;n Kaisha Co. intended to go out of business, but when they heard the Pacific Mail Steamship Line went out of business they stayed in, so that they could charge us more for our stuffs and bring their own back cheaper. Secretary Redfield. In 1906, 1908, 1909, 1910, 1911, and 1912 the dividends were paid out of the subsidies. Mr. RowE. If the Government had run it, they would have run it at a loss and paid thek own losses ? Secretary Redfield. No; the Government is not concerned in the operations of the vessels under this bill. These vessels are run by individuals, firms, and corporations in private business. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 149 Mr. RowE. If the corporation loses money, it is organized, and it is United States money; have you not got to stand it? Secretary Redfield. In the first place, that can not take place until after the whole object of the bill has failed, because nobody else can be fomid to do it. Mr. RowE. Mr. Secretary, suppose you can not lease your vessels, because they would rather run under the English flag or under the Norwegian flag, on account of labor conditions, and you can not lease your vessels, you have got to run them; you can pay a rate of interest ? Secretary Redfield. No: I do not see that you have. Ml". Rowe. What are you going to do with them? Secretary Redfield. I do not quite understand where they would come from in the first place. Mr. Rov/e. You are building vessels with the idea of leasing them ? Secretary Redfield. I do not ivuow v.iiat I should do as a mem- ber of that board, but I am very much inclined to think that just as I would not build a factory without some reasonable expectation of having use for it, so I would not go aher.d and charter ships unless some reasonable expectation of use existed. They have got to exercise ordinary business judgment as a board. Mr. Rowe. Up to this time the preference has been to run under other flags of late years; up until the war began the tendency has been that way strongly ? Secretary Redfield. Yes. Other nations have developed their individual marines more. I do not think you can quite put it justly in that way. We have not had the money to invest in this country in merchant marine. We have been a nation that has been getting a large part of its money from other people. We built our raih'oads with foreign money, we have built our miUs with foreign money, and constructed our public utilities with foreign money; we borrow for- eign money for our cities. The St. Paul Raikoad issued bonds in French. We had to borrow over five thousand millions abroad. When the war broke out we owed that amount of money abroad. We have had no money with which to go ahead. That situation has entirely altered. From a debtor nation we have become a credit nation in less than two years. We now have the money to invest and the record shows we are puttiag it by chimks into the merchant marine, and that we have 900,000 tons buildmg at this muiute. Mr. Rowe. Well, then, why put any Government money in it? Secretary Redfield. Because we need more, very much more. Mi\ Rowe. Not if there is plenty of private money? Secretary Redfield. I ought to have said — I think I am perfectly safe in saymg that we are about 400 ships short of what we should need to keep our present-sized Navy at sea in time of war, and we would have to use battleships as colliers to come back and get their own fuel. Mr. Hardy. If this bill should become a law and the question of drivmg private individuals out of business comes up, and those pri- vate individuals desire to enter the business, does not this bill give your board the right to make any kind of reasonable inducement to them to enter it ? 150 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Secretary Redfield. The bill declares that the board is created for the purpose of helping individuals, firms, and corporations. Mr. Hardy. And for the purpose of inducing individual enterprise to go into it ? Secretary Redfield. That is its excuse for existence. Mr. Hardy. And if you can induce individual enterprise to go into it the Government proposes to stay out, as I understand it ? Secretary Redfield. Certainly. The law says it is with the view of doing this, if mdi vidua! firms and corporations do not. It is as plain a declaration of purpose as can be made. Mr. Hardy. And only m case you fail to induce individuals, firms, or corporations, then you organize your corporation ? Secretary Redfield. Of course. The Chairman. If there is a trade that can be developed in the interest of American commerce ? Secretary Redfield. The illustration is there, that when it is necessary to carry out the purposes of the act — the purpose of the act is to build or purchase ships, with a view to leasing, chartering, or selling to private firms or corporations. Mr. Hardy. As far as this law can, it intends to try to pursuade private individuals to go, with certain advantageous terms, into the business ? Secretary Redfield, So it says. Mr. Hardy. And if it can not, it will do it itself ? Secretary Redfield. So it says, it wiU do it itself just as plainly as it can be said, to organize with a view to providing this assistance to corporations, firms, or individuals. Mr. Hardy. Then why has private enterprise been so upset ? Secretary Redfield. I do not believe it is. Judge Hardy. My own belief is that there is a very general and widespread approval of this measure without regard to party and without very serious regard to interest, and I think that Mr. Douglass showed that very plainly this morning. Mr. Hardy. And there is a pretty fairly well disseminated mis- representation of the purpose of the bill? Secretary Redfield. I think there is a fairly disseminated attempt to make some portions of it misunderstood. I think that we have a parallel case in the seaman's act. You are not unfamiliar with the statement that the seaman's act operates to deter capital from en- tering into shipping, yet more vessels have been ordered constructed since the seaman's act went into effect than for several years prior to that time. Mr. Edmonds. It may be because of their misunderstanding of the bill is the reason they are in favor of it. I did not know whether you were trying to get at that or not. [Laughter.] Mr. Curry. You stated there were about 400 ships short for fuel carriers ? Secretary Redfield. Of aU kinds. Mr. Curry. Have you taken into consideration the privately owned oil carriers of the Standard Oil Co. and Union Oil Co. ; all of those _? Secretary Redfield. Oh, yes. I think I am not mistaken in stating they wanted 250 colliers alone, and they wa,nted as many as possible of the oil carriers and others. SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 151 I think, looking at it soberly, if we had to keep our fighting fleet at sea, we are about 400 ships short of what is necessar}^ to keep them moving this minute. The Chairman. It might be interesting to read the part of this clipping from the New York Herald, under date of February 6, entitled "Wlience will come merchant marine? shipping men ask. Reported offer of Pacific Mail Co. to Govei-nmert considered pos- sible," and other matters of interest. One feature is this [reading]: Not long ago in a speech at the Advertising Chib Willard D. Straight, who was one of the organizers of the corporation, said that his purpos'^ was to handle s'^curities for contractors and others who desired to compete with foreign corporations in obtaining business abroad . (The entire newspaper clipping here submitted by the chairman is as follows:) (NTew York Herald, Feb. 6, 1910.] Whence Will Come Merchant Marine? Shipping Men Ask -Reporte:> Offer OF Pacific Mail Co. to Government Considered Probable. A report that the newly reorganized Pacific Mail Steamship Co.. now under control of the American International Corporation, has offered to operate the ships which the Government will purchase if the 850.000,000 appropriation for that purpose is passed by Congress aroused intense interest in shipping circles yesterday. At the'offices of the International Corporation and the Pacific Mail Co. confirmation of the report was refused, but shipping men generally believe that if no offer has been made directly to the Government in connection with this matter one will be made just as soon as the legislation is passed. It is admitted that the Pacific Mail Co. may not itself make the offer nor even have it under consideration. However, the statement was made that one of the avowed purposes of the American International Corporation is to float the bonds of individuals and concerns whose purpose is to promote foreign trade. Not long ago in a speech at the Advertising Club "sVillard D. Straight, who was one of the organizers of the corporation, said that its purpose was to hand'e securities for contractors and others who desired to compete with foreign corporations in obtain- ing business abroad. Recalling that statement, shipping men' said yesterday that undoubtedly the corporation would back any reliable company of representative maritime men who might desire to operate the Government fleet. Ihere is the utmost confidence in shipping circles that should the bill pass there will be no diffi- culty in getting a coi-poration to operate the vessels. As a matter of fact, it Avill be more difficult, it was said, for the Government to obtain the bottoms than it will be to operate them successfully after they have been obtained . whence will they come? Practically i very shipbuilding yard in the country is running to full capacity day and night, it was said. Therefore shipping men are asking whore the Government will obtain the ships. The proposed appropriation can not purchase more than 40 or 50 vessels of comparatively light tonnage, but even this number could not be built in a short period of time unless, it is said, the Government us' s the Federal yards at Pensacola, Portsmouth, and New Orleans. These yards, it is said, have been prac- tically idle for some time, but shipping men believe that if a large Navy program is adopted they will be occupied with building war ships of the smaller types. It is possible that the corporation which agrees to operate the ships may also agree to build them if the present war drags on indefinitely. In the event the war stops soon, one prominent shipper said he believed that it would be possible to purchase that number of foreign bottoms at a reasonable price , He said ; "Contrary to the general opinion, which seems to be that European nations, and especially thos" at war, are going to put all their merchant ships in operation to regain lost foreign trade, I would saj'- that I believe they will have little or no us ■ for a trem- enduous number of ships for s 'veral years after the war. Those nations do not want to S'dl bottoms now, first, because they have us" for them in transporting war materials and, secondly, because they don't know justhow trade conditions will be after the war. With the possible exception of Germany, who will need her foreign trade badly to recu- 152 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. perate from the effects of the war, I believe that all the belligerent nations will have enough for their labor to do in rebuilding their devastated countries and in supplying their own people with those necessities of life and the luxuries which they have been lacking for some time. I believe that there will be plenty of ships ol)tainable. BELIEVES GERMANY WOULD SELL. "Even Germany isn't going to jump into the front trenches of trade immediately after the war. Her system of foreign credits is completely upset. Her merchants who have dealt with foreign customers and extended to them long time credits are impoverished. They won't be able to do an extensive credit business on long time periods for years after the war. I believe that German bottoms will be obtainable in large numbers when the hostilities are over." The majority of shipping men seem to think that the $50,000,000 appropriation ehould be increased at least tenfold to do any material good in the effort to restore the American flag on the high seas. It was admitted, however, that the amount now stipulated would tend to stimulate American investments in shipping enterprises. Another phase of the question which is of interest is just what trade routes the Gov- ernment vessels must ply. One of them suggested was the trans-Pacific lane from which the principal American company recently withdrew. American ships could also be profitably used, it was said, in the trade between the Pacific coast and the Far East, Australia, and Vladivostok, Russia. Some of them should also be put in operation to the west coast of South America from Atlantic ports and to the east coast from Pacific ports by way of the canal. Secretary Redfield. I think I can say from knowledge that there is no opposition on their part to this measure. Mr. Edmonds. Do you think, Mr. Secretary, that the trade regula- tions here will meet with the approval of the shipping people or will it deter them ? Secretary Redfield. No disapproval has been expressed. Mr. Edmonds. Have you heard any approval expressed? Secretary Redfield. I can not say I have had any communication either way. Mr. Edmonds. 1 was just wondermg whether it might have a de- terring effect on the building of ships ; whether we were trymg to build up ships on the one hand and knocking them down on the other ? Secretary Redfield. Mr. Chairman, may I just call attention to one or two other small matters ? I hold in my hand a statement sent us by the surveyor of the Port of San Francisco, givmg the complete crew and the steamer list of an English and an American steamer in the Australian trade, and the amounts are set side by side. The salary list of the English vessel is $4,340 a month, and of the American vessel $5,705 a month. When you come to reduce that to the unit of tons, the American vessel bemg a little bit larger, it works out that the salaries and wages list of the American ship is $1.46 per net ton and the English ship $1.79 per net ton ; so that any statement that we made based purely upon the actual pay roll would be misleading, until you come to figure what it is you get for your pay roll. (The letter and statement here submitted by Secretary Redfield are as follows:) Treasury Department, United States Customs Service, San Francisco, Cal., December 14, 1915. Hon. William C. Redfield, Secretary of Commerce, Washington, D. C. My Dear Mr. Secretary: Herewith I am inclosing a crew list of the steamship Sonoma, owned by the Oceanic Steamship Co., and the steamship Moana, owned by the Union Steamship Co., a foreign corporation. I am told by Mr. Samuels, man- SHIPPING BOARD^ NAVAL AUXILIARY^ AND MERCHANT MARINE. 153 ager of the Oceanic steamship Co., that the Union Steamship Co. is in receipt of a subsidy of £20,000 a year from the New Zealand Government. In addition to that, of course, it receives an unknown sum from the French Government for carrying the mails between Tahiti and this port and money from the Australian Government for conveying the mails from that Commonwealth. I do not know whether this data will be of any value ; but it is interesting to note that the wages of the crew of the American ship are very much higher than those paid by the Union Steamship Co., and that, despite this difference, the Oceanic Steamship Co. found it profitable to place on the run between here and Australia another steamer in the last 30 days. AMERICAN. \ ENGLISH, Sonoma, gross, 6,279; net, 3,911; oil burner. Passenger capacity, 150, first class; 72, second class; 28, third class. Captain, 1 $250, 00 First mate, 1 125. 00 Second mate, 1 95. 00 Third mate, 1 80. 00 Fourth mate, 1 Go. 00 Chief engineer. 1 \ 1 80. 00 First assistant engineer, 1 125. 00 Second assistant engineer, 1. . . 100. 00 Second assistant engineer, 1. . . 90. 00 Third assistant engineer, 1. . . . 85. 00 Ref . engineer, 1 70. 00 Ref. engineer, 1 60. 00 Electrician, 1 70. 00 Purser, 1 125. 00 Surgeon, 1 75. 00 Wireless operators, 2, at ,$25 .... 50. 00 Carpenter, 1 50. 00 Boatswain, 1 50. 00 Quartermasters, 4, at |45 180. 00 Seamen, 1 2, at $40 480. 00 Deck bov. 1 25. 00 Cadets, 3. at $20 60. 00 Chief steward. 1 100. 00 Second steward .1 60. 00 Second cabin steward, 1 50. 00 Steerage steward .1 35. 00 Stewardesses, 2. at $25 50. 00 Storekeeper, 1 50. 00 First cook, 1 75. 00 Second cook, 1 60. 00 Third cook, 1 45. 00 Fourth cook, 1 35. 00 First baker, 1 75. 00 Second baker, 1 50. 00 First butcher, 1 60. 00 Second butcher, 1 35. 00 First paritr\anan, 1 45. 00 Second pantrj^man, 1 35. 00 Third pantryman ,1 30. 00 Second-cabin pantryman, 1 . . . 35. 00 First messman, 1 40. 00 Second messman, 1 30. 00 Third messman, 1 30. 00 Seamen's messman, 1 30. 00 Firemen's messman, 1 30. 00 Saloon watchman, 1 30. 00 Steerage watchman, 1 30. 00 Janitors, 2, at $30 60. 00 Moana, gi-oss, 3,914; net, 2,414; coal burner. Passenger capacity, 74, first class; 49, second class; 40, third class. Captain, 1 $180. 00 First mate, 1 92. 00 Second mate, 1 78. 00 Third mate, 1 63. 00 Chief engineer, 1 146. 00 Second engineer 102. 00 Third engineer, 1 87. 00 Fourth engineer, 1 73. 00 Fifth engineer, 1 58. 00 Sixth engineer, 1 58. 00 Seventh engineer, 1 58. 00 Donkevman. 1 . 53.00 Purser* 1. . . . ^ 68. 00 Surgeon, 1 63. 00 Wireless operators, 2, at 24 cents .48 Carpenter, 1 65. 00 Boatswain. ] 44. 00 Seamen, 10, at $39 390. 00 Seamen, 2. at $29 58. 00 Deck boy, 1 10. 00 Chief steward, 1 68. 00 Second steward, 1 37. 00 Second cabin steward, 1 37. 00 Steerage steward, 1 32. 00 Stewardess. 1 24.00 Stewardess. 1. 20. 00 Storekeeper, 1 27. 00 Chief cook. 1 70. 00 Second cook. 1 49. 00 Third cook. 1 36. 00 Third cook. 1 36. 00 Ship's cook, 1. 44. 00 First baker, 1 53. 00 Second baker, 1 37. 00 Butcher, 1 39. 00 Pantr\Tnan , 1 32. 00 Scullerv m&n, 4, at $32 128. 00 Pantryman. 1 32. 00 Firemen's messman. 1 20. 00 154 SHIPPING BOARD, NAVAL AUXILIARY", AND MERCHANT MARINE. A MERicAN — coiitiuued . E N ( jLisH — coiitiuued . Barber, L |0. 25 Barber, 1 Linen man, 1 35. 00 Porter, 1 35.00 Printer, 1 35. 00 Water tenders, 3, at $60 180. 00 Water tenders, 3, at .?55 165. 00 Oilers, 6, at |45 270.00 Oilers, 2, at $49 198.00 Storekeeper (Eng.), 1 45. 00 Storekeeper (Eng.j, 1 49. 00 Firemen, 10. at $55 550.00 Firemen, 12, at |49 588.00 Cadets (Eng.), 3, at |20 60. 00 Trimmers, 9, at $39 351. 00 Silver man. 1 35. 00 Waiters, 20, at $30 600. 00 Waiters, 13, at $27 351. 00 Waiters, 14, at $24 336. 00 Total, 118 5, 705. 25 : Total, 105 4. 340. 48 Mr. Curry. Mr. Secretary, there was some talk about the reasons for American money not havmg been invested in the merchant marine. Do you not think tliat the primary, reason is tiiat there are more profits and more inducements for American money in develop- ing the undeveloped natural resources of the country than there was to be made by investing the same amount of money in the merchant marine in the past? Secretary Redfield. That is true. Mr. Curry. Conditions have changed now ? Secretary Redield, Undoubtedly that is true, Mr. Curry, and it is also true that we did not have enough money for developing our own internal resources; we had to borrow it from abroad. Ml'. Curry. But there were more profits in developing the internal resources of the country? Secretary Redfield. Yes. Mr. Curry. Than there was in putting the money in the merchant marine ? Secretary Redfield. Unquestionably, and that argument finds a sound support in American history. We were at the origin a mari- time country, because maritime occupation in our early days was the most profitable occupation. Money could be made in the sea. As we became agricultural and became industrial, we passed tlu'ough an evolution when money could be made in those projects. Now, the pendulum has swung again. Mr. Curry. Yes; ])ut, Mr. Secretary, we used to charge 10 per cent more duty on imports that were brought in foreign bottoms than we charged on those brought in domestic bottoms. Secretary Redfield. It was a preferential tariff for some time. Mr. Had them not to invest under our flag ? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 155 Secretary Redfield. I am not sure a certain amount of it was not foreign money. Mr. Hardy. But American capital invested a vast amount of money in foreign shipping. So there is some other reason. Mr. Curry. Possibly that was the foreign subsidy. Secretary Redfield. A great many reasons led to that one result. Mr. Hardy. And there are ships which received absolutely no subsidy ? Secretary Redfield. Tliat is true. Mr. Hardy. Is not that very easy to understand, inasmuch as when an American wants to buy ships for the foreign trade he can get a British ship cheaper than an American ship ? Secretary Redfield. That was true for a great many years? it has ceased to be true now. Mr. Hardy. I do not think it will l)e true under certain conditions. Secretary Redfield. We have had to build ships as a jobbing oper- ation, one ship at a time, and go to an English yard. We did not make that kind of a ship. Mr. Hardy. When our commerce was flourishing on all the seas, it was a fact that we built ships not only for ourselves but for other nations, too, did we not ? Secretary Redfield. Yes. Mr. Hardy. And we built the best ships for the money ? Secretary Redfield. We built a standardized ship. Mr. Hardy. We at least built the best ships for the nlone3^ is my understanding. Secretary Redfield. Yes; they were famous all over the world. Mr. Curry. Then we stopped the preferential duty and they com- menced paying subsidies ? Secretary Redfield. Great Britain does not pay subsidies on freighters. Mr. Curry. They pay subsidies only on liners, Mr. Rowe. Germany "works" us to get a subsidy. Secretary Redfield. I would like to file with the stenograplier a memorandum on the British control of merchant shipping, giving the British acts of the last few months, and to call attention to Senate Document 673, parts 1 and 2, last year, embodying the complaints of business men at that time and the rise in freight rates up to that period, and also to refer to page 137 of my own annual report, in which the cost of operation of the larger vessels in the Lighthouse Service is given in great detail, reduced to cost per mile run. I put that in there thmkmg I would draw fire from some private parties, and I have not drawn it so far. (The statement of Britisli control of merchant sliipping, etc., here submitted by Secretary Redfield is as follows:) Department or Commerce, l^uREAU OF Navigation, Washington. Febrvary 9, 1916. Memorandum for Secretary Redfield. BRITISH control OF MERCHANT SHIPPING. The following are the principal war measures by which the British GoA^erninent has taken control over merchant shipping, as far as I know: 1. August 5, 1914. British act passed prohibiting British ships from carrying con- traband between foreign ports (including neutral ports). 2. March 16, 1915. "British act passed prohibiting transfer of any i5ritish ship or any share therein to foreigners. 156 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 3. April 13, 1915. Order in Council requisitioning all refrigerated space in British ships in trade with Australia, Xew Zealand, and later River Plate. 4. July 6, 1915. Made an offence to take intoxicating liquor into a dock or on a ship. 5. November 10, 1915. Order in Council prohibiting British ships fi"om carrying «ars:o between foreign ports after December 1, 1915, unless licensed so to do by board of trade. 6. November 10, 1915. Board of Ti'ade authorized in emergencies to requisition merchant ships to carry foodstuffs and other necessary supplies to the United Kingdom. (This indirectly, of course, gives control over rates). The measures above do not, of course, cover requisitions of ships directly for mili- tary and naA'al operations. Sir Norman Hill, Secretary of the Liverpool Steamship Owners' Association, and probably the best authority in England on the subject, reported to his association on October. 1915. that the Admiralty had taken up for Government service about 800, i. e. 20 per cent of the steamships belonging to the United Kingdom, which are of 1,000 net tons and upwards. Of these ve.?sels about 250 are Liners and 550 general cargo boats. Amongst the liners are vessels certified to carry as passengers and crews 125,000 persons. The Admiralty has in addition taken up nearly 300 trade steamships of less than 1,000 net tons and a very large number of tugs, yachts and trawlers. He estimated that as a net result, the war, by losses and by the requirements of the Admiralty, has diminished by about 25 per cent the number of British vessels available for the ocean over-sea trade. Through causes incidental to the war the number of seamen available for the ocean over-sea trade has also been reduced about 25 per cent. E. T. Chamberlain, Comniisdoner. Secretary Redfield. I think that is everythiiig. Mr. Chairman, unless you wish something more from me. The Chairman. Are there any further questions desired to he asked the Secretary ? Mr. Cltiry. I do not Iviiow whether the Secretary is in position to give the information or not, but there have been some claims made before this committee at the last session, and some few references at this time stating that the American merchant marine was under a handicap on account of the difference in tonnage. I do not think there is very much merit in that. The Chairman. Tlie Commissioner of Navigation will come before the committee and go over that matter with us. Secretary Redfield. While they say that these ships have been transferred under the ship registry act, many of them are going back to the other flag, and while my good friend Dollar is quoted as an example of doing that, I think Mr. Chamberlain says that ship has not been transferred. ^li\ Chamberlain. One has been transferred. Secretary Redfield. But no ship put under the American flag has ever been taken out from under it. Tlie Chairman. Right at that point, all his ships were under the English flag until the war in Europe commenced, and then he put them under the American flag. Secretary Redfield. And he has kept them there, except one sold to Shanghai. It was a British ship and came under the American flag and was sold to Shanghai, and the nevr owner put her under the British flag. The point T was going to make is that while these ships are under the American flag, these hundred and odd vessels, the officers of these ships show a most commendable desire to become American citizens; and out of 900 quite a few more than 500 are already American citizens, over a hundred more have taken out the first papers, so that substantially two-thirds of them either are citizens or are becom- ing such, which is not an exact suggestion that they are expecting SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 157 to be transferred back to a foreign flag in the near future. It is a little side light upon that situation. The Chaikmax. It is to be hoped they will not do so, and that conditions will not compel them to do so. ]Mr. Edmonds. I met a Japanese captain who said he would like to be an American captain because he got pie every day. STATEMENT OF CAPT. ELLSWORTH P. BEETHOLF, CAPTAIN COMMANDANT, UNITED STATES COAST GUARD, TREAS- URY DEPARTMENT. The Chairman. Capt. Bertholf, state what your position is, that it may go into the record; I know myself. Capt. Bertholf. Commandant of the Coast Guard, which in- cludes the Revenue-Cutter Service. The Chairman. And for how many years have you been such ? Capt. Bertholf. Five years now. The Chairman. Capt. Bertholf, we want to call your attention to section 11 of the bill. Will you explain its provisions and what the practical effect will be, and what the cost will be if certain of these vessels are designated as part of the United States Naval Auxiliary Reserve ? Capt. Bertholf. I had a memorandum of that. I gave it to some- body this morning, and I have not a copy now, but I can get it for you. The Chairman. I have a copy. Capt. Bertholf. If I may have it, please. (The memorandum referred to was handed to Capt. Bertholf.) NAVAL RESERVE FEATURE OF THE SHIPPING BILL. The monthly allowances proposed in section 11 of the biU seem to be fair and reason- able. The annual cost on a basis of 500,000 gross tons would be about $631,000 (approxi- mately $1.26 per gross ton per annum) divided among the units as follows: 8 ships of Great Northern type $118, 176 20 ships of Havana type 229, 440 25 ships of Suwanee type 115, 300 40 ships of Atlantic type 168, 480 631, 396 Great Northern, owned by the Portland & Seattle Raihoad Co. and operating be- tween San Francisco, Loa Angeles, and Honolulu: Type, fast passenger and freight steamer; speed. 23 knots; gross tonnage, 8,225; built, 1915; cost, $1,250,000. Crew: Per annum. 9 officers, at $15 per month " $1, 620 3 warrant officers, at $12 per month 432 20 petty officers, at $10 per month 2, 400 172 men, at $5 per month 10, 320 204 14, 772 Havana, owned by the New York & Cuba Mail Steamship Co. and operating between New York and Havana: Type, medium speed passenger and freight steamer; speed, 18 knots; gross tonnage, 6,391; built, 1907; cost, $960,0|00. Crew: Per annum. 8 officers, at $15 per month $1, 440 3 warrant officers, at $12 per month 432 20 petty officers, at $10 per month 2, 400 120 men, at $5 per month 7, 200 151 11,472 32910—16 11 158 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Suwanee, owned by the State Street Trust Co.: Type, slow passenger and freight, steamer; speed, 13 knots; gross tonnage, 3,648; built, 1911; cost, $550,000. Per Crew: annum. 5 officers, at $15 per month $900 3 warrant officers, at $12 per month 432 8 petty officers, at $10 per month 960 52 men, at $5 per month 3, 120 68 5, 412 Atlantic, owned by John S. Emery & Co. (Inc.): Type, bulk freight carrier; speed, 12 knots; gross tonnage, 5,330: built, 1914; cost, $540,000. Per Crew: annum. 5 officers, at $15 per month $900 3 warrant officers, at $12 per month 432 8 petty officers, at $10 per month 960 32 men, at $5 per month 1, 920 48 4, 212 RESUME. Number in crews. Gross tonnage. Cost for Naval reserve allowances per annum. 8 Great Northerns 20 Havanas 25 Suwanees 40 Atlantics 93 Total Approximations 1,H32 3,020 1,700 1,020 66,040 127, 820 91,200 213, 200 8,272 8,300 498, 260 500,000 .?118, 170 229, 440 115, 300 168, 480 631,396 631,000 The object sought under that is sort of a corollary to the other pro- vision whereby any of these vessels leased or sold by the board must be obligated to become available as auxiliaries in time of war. This section 11 acts, in a measure, to provide for the crews of those vessels and to encourage a naval reserve in the personnel, the idea being that the officers and men on these various board ships should, in consideration of a small monthly retainer, obligate themselves to enter the service of the Navy whenever required in time of war or other national emergency. In estimating on the cost of this feature of the bill, we take as examples four types of ships now in existence. First, the Great Northern, operating on the west coast. She is a fast passenger and freight steamer, making 23 knots. Presumably, as auxiliaries, they would need several of those ships — as we figured on eight of them. Next, 20 ships of the Havanna type. She is a medium-speed pas- senger and freight steamer. Next, 25 ships of the Suwanee type, this vessel being a slow passen- ger and freight steamer. And next, 40 ships of the Atlantic type. She is a bulk freight carrier. Taking a total of 93 ships of these four types, we figured what the total cost would be under section 1 1 of the bill, if all of the personnel of those ships were enrolled under the naval-reserve feature. This would give approximately 500,000 gross tons for naval auxiliaries, a personnel of 7,300 men, and would cost annually only $631,000. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 159 Of coiu'se, to have a larger reserve would simply be a question of multiples, but this is the maximum amount section 11 of the bill would cost, providing the crews of all of these ships would enroll. The enrollment is voluntary, and, of course, all persons to be enrolled must be American citizens. Mr. Edmonds. It does not say so in the act. Capt. Bertholf. I thought it did — that is, provided that they shall be citizens of the United States in line 19. Mr. Edmonds. $631,000? Capt. Bertholf. $631,000 would be the maximum cost under this section for 500,000 gross tons of sliipping. Mr. Edmonds. Of course all the men on the ships would not bo eligible ? Capt. Bertholf. Oh, no; and possibly all the men on the ships would not volunteer. So it would not cost us this much, although in estimating the cost we assumed a full crew for all these vessels. • Mr. Edmonds. Is that money to come out of the $50,000,000, Mr. Chairman ? The Chairman. Yes; it is well spent. Mr. Edmonds. It is well spent. I was wondering where it was to come from and who was to pay it. Capt. Bertholf. The biU provides that later on all expenses are to be paid from the sum provided. Furthermore, all of these naval- reserve features must operate under rules and regulations prescribed by the Secretary of the Navy, but with the approval of the board, so that the military feature is not unduly emphasized. It must be made subordinate to the trade requirements. Mr. Edmonds. If the average pay of a man on an American ship was $30, would it only be $25 under this ? If so, it would act just the same as the subsidy to a ship in reducing the wages of the ship; or would they still pay the fuU salary and take this as an aside ? Capt. Bertholf. I do not know just how that would work. In the English service the enlisted men of the reserve receive an annual retainer; the officers do not and are paid only when called for training or for actual service. Mr. RowE. In other words, if given that extra pay it would tend to secure a higher grade of men ? Capt. Bertholf. Naturally, and not only that, I think experience has taught there is something more besides the pay. These men will be very glad to enroU as reserves. It gives them a certain standing and steady income right along. The Chairman. And provides that they must be American citi- zens? Capt. Bertholf. That they must be American citizens. The Chairman. Under existing law, the crew of the vessel, aside from the watch officers, are not required to be American citizens ? Mr. Edmonds. I did not object; I was only trying to see what the effect would be. Here is the proposition : Take a ship with 50 men, 25 go into the Naval Ixeserve, say, getting $30 a month as wages. Twenty-five of those get $30 and 25 get $30, together with the $5 from the Naval Reserve. What would be the result of these men getting $5 more than the other feUow? Would that be to reduce their wages to $25 a month, because they are getting this ? 160 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. Capt. Bertholf. I could not say how it would act. In the case you speak of, 25 men belonging to the auxiliary reserve, and 25 not, and the rate for that ship being S30 a month, it does not seem to me that the sIitjd would be successful if they reduce the wages of those 25 men $5. Those men would go to other ships where they would be allowed to keep this as extra, and if they were good men they would get it. Mr. Edmonds. It looks to me as if that would work out that way, because I do not think there would be any ship go mider that rule where every man would be in the reserve. Capt. Bertholf. No; because the tendency of the shipping people is to keep their crew if they can, and it is much more economical to do so. Mr. Curry. I have some information on the nativity of sailors in certain ports, that is, other than officers, if it is worth while putting into the record. The United States supervising inspector at San Francisco reports that up to January 28 of this year 2,064 sailors have qualified under the seaman's act; of that number the native born were 8 per cent, 168; the naturafized 17 per cent, 345; foreign- ers, 75 per cent, 1,551; the total of 2,064. Of the nine largest ports in the United States, including San Fran- cisco, New York, Philadelphia, and Baltimore, and others, I would like to submit the following: [San Francisco Daily Commercial News, Feb. 9, 1916.] The foreign trade department of the San Francisco Chamber of Commerce has pro- cm-ed from the United States local inspectors at the principal ports an official statement of the number of seamen who have received certificates since the seaman's law became effective. Ports. Total number passed. Native- born Ameri- cans. Per cent. Natural- ized Ameri- cans. Per cent. Aliens. Per cent. 891 226 2,064 288 293 752 3,163 742 699 9 11 168 29 15 543 455 185 161 1 5 8 10 5 72 14 25 23 18 44 345 20 10 17 199 89 25 2 19 17 7 3 2 6 12 4 864 171 1,551 239 268 192 2,509 468 513 97 76 75 Galveston 83 New Orleans 92 26 80 63 Philadelphia 73 Total 9,118 1,576 17 767 8 6,775 75 Capt. Bertholf. Of course, under this provision there would be an added incentive for a man to become a naturafized citizen. There is probably a considerable percentage of those men now enti- tled to be naturalized, but vnih no particular advantage in naturali- zation under existing law, they are either careless in the matter or they did not have the time to attend to it, going from port to port, and never remaining long in one port. This section 11 would be an inducement to men who wanted to be citizens to quafify. The Chairman. We will now adjourn until to-morrow morning at 10.30. (Thereupon, at 5.20 o'clock p. m. the committee adjourned to meet to-morrow, February 11, 1916, at 10.30 o'clock a. m.) CHEATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D. C, Friday, Fehrvary 11, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. Gentlemen, we have present this morning Mr. A. B. Farquhar, who is one of the vice presidents of the United States Chamber of Commerce. He has other business this morning, and if there is no objection we wiU let him make such a statement as he cares to with reference to the bill, H. R. 10500, known as the ship- ping bill. STATEMENT OF MR. A. B. FARQUHAR, YORK, PA., VICE-PRESI- DENT CHAMBER OF COMMERCE OF THE UNITED STATES. The Chairman. Mr. Farquhar, please state to the committee your business connections. Mr. Farquhar. I have been in business 60 years the 7th of next April, and have been in the foreign trade for 50 years, shipping to export establishments in New York. The Chairman. What class of goods? IVIr. Farquhar. Mainly machinery — steam engines, boilers, agri- cultural implements, and machinery of various kinds. I have an agricultural implement factory, and also a large machinery factory in York, Pa. Of course, we had no difficulty in obtaining shipping at low rates until the war came on, and I took no very special interest hi the question of mercantile marine, exoept that I felt it was very essential for the support of our Navy. Since then I have seen plainly that we are suffermg very much in many w^ays by not having a mercantile marine of our own. You see, when you get a competitor to carry your goods and have no way of shipping them except through a com- petitor you are at a disadvantage. He will, of course, give his own people the preference in rates and he will give them preference in very many ways, especially when there is more shipping than there is room for. We are delayed both in loading and in delivery, and it is impos- sible, in our opinion, that we can successfully hold our export trade in competition with the world unless we have our own shipping. So I have reluctantly come to the conclusion that it is essential that there should be a subsidy or subvention sufficient to pay the difference between the cost of running American ships and the cost of running foreign ships, unless, of course, all the restrictions are removed. itil 162 SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MARINE. Now, I find in England, although the labor unions are stronger there than any^vhere else in the world, that they interfere in no way with the shipping. They see it is to their advantage in the long run, because it gives them more work. I believe our labor unions would see the matter in the same way if the facts were pointed out to them, and that they would oppose all restrictions of any kind upon our having it. Of course, with restrictions against shipping, it will be impossible to get capital in America to invest to any great extent in ships unless they are assured the Government will pay thom enough to make the difference between the cost of American and foreign labor, and in the long run that would pay us richly. We would be hundreds of millions of dollars better off now if even five or six million dollars had been expended annually in the last 15 or 20 years in subventions or subsidies, and we would now have a large mercantile marine. And that mercantile marine, of course, if the Government subsidized it, should be available for the Navy in case of any trouble. Om- Navy is of no use without it. We had difficulties enough in the Spanish War, when we had to buy old, wortliless vessels at tremendous prices. We have idle navy yards in New Orleans, Pensacola, and Ports- mouth that could be occupied right now and started to work build- ing ships. Of course, it would cost more than it would for private concerns to build them, but our individual yards are filled lor at least two years to come. Those navy yards are of no use while they are idle, and it would be of great advantage to give them work, to have the men trained, and, as a business man, I tliink that in the long run it would pay the country richly. But a mercantile marine now is absolutely essential it we are to carry on our export trade. We are paying from 200 to 300 per cent, and as high as 800 per cent, more than we paid four years ago for shipping goods. In very many cases we can not ship at all. The railroads are clogged up, so that we can not even get raiboad trans- portation to the vessels. And as an exporter and a manufacturer for export I find it, in my judgment, absolutely essential that some- thing should be done, and, although I do not approve of Government ownership — it costs far more for the Government to build ships and to run them and to manage them and, for that matter, to manage anything else, than it does individuals — yet in tliis emergency I cordially approve of the present bill, wliich I have read carefully. I think tiie country has lost very heavily by not passing the bill a year ago. I did not favor it then, but there is no question that at that time we could have bought ships from Italy, Norway, and elsewhere, and we would have had ships to the value of at least $100,000,000 more than it was proposed to pay for them, and it would have saved that much more. That, however, is past; but even this bill as it stands will be a step, at any rate, and wifh a competent board appointed — and it would have to be an expert board, of course, on the plan of the Interstate Commerce Commis- sion, which has been of vast benefit to shippers — there would be no trouble about any imposition. The board, I think, would see that nothing must be done to interfere with Americans building ships, because we need not $50,000,000, but $500,000,000 to build even a fair amount of ships to carry on our own trade. The English have SHIPPING BOAED, NAVAL AUXILIARY^ AND MEECHANT MAEINE. 163 20,000,000 or 21,000,000,000 tons, and we have only about 750,000 tons, and yet we do a little over a quarter of the export trade of the world. I do not think I have anything special to say, but I would be glad to answer any questions that I can answer. Mr. Curry. You said an expert board would be necessary. Have 3^ou noticed that this bill does not require any experts on the board ? Mr. Farquhar. Yes; I have noticed that. I think that is a mistake that the President would see the wisdom of correcting as he appoints the members. I see no special objection to having the Secretary of Commerce and the Secretary of the Navy on the board if the other three men were all ex])erts who understood shipping and all that pertains to it. They would be in the majority but, of course, the Department of Commerce and the Navy Department would have a good deal to do with it. Men should be educated for the mercan- tile marine service on those vessels. The idea of having apprentices is a good one, I think. Mr. Curry. Do you think that the Secretaries in the Cabinet, with theh other multitudinous duties, could pay sufficient attention to the details of this work ? Mr. Farquhar. I think it is of such ]iaramount importance they would take the necessary time. I haA'^e found as a business man that I could always find time to do what it was necessary to do. The busier I was the more time I would find. Mr. Curry. But you have never tried to do something you did not know something al)Out ? Mr. lARQUHAR. No; I have always taken great pains to study it. This bill I have taken pains to study from its very inception, and I have followed the proceedings of Congress for the last 30 years. Mr. Curry. You have said something about the disadvantages that the American merchant marine was under. Do you know what they are? If you do not, I do not want to ask the question, Mr. Farquhar. I only know such as have come under my personal notice. The shipping companies give preference to the people of their own countries in shipping, and if there is a scare tiy of shipping we do not get it; we have to await their convenience. Preference is given also by way of advertisement — the flag is an advertisement in the ports. I remember very well that in 1856, when I went in busi- ness, in my travels I would see our flag in pretty nearly every port, and we do not see it now at all. That would be a great advertisement to our business and our trade. Mr. Curry. Of course, the giving of that preference is natural. Is there anythmg in the American law that would prevent an American ship from giving preference to an American shipper ? Mr. Farquhar. No; there is nothing in the law at present, but I think that if we appointed a board whatever restrictions are made against American shipping would gradually be made f gainst foreign shipping and they would all be put in the same class. Mr. CiTRRY. At the time you speak about, when the American shipping was first or second in the shipping of the world, you remember that America allowed a difierential of 10 per cent on goods carried in American bottoms ? Mr. Farquhar. Yes; from 5 to 10 per cent. I think the most of it was 5 per cent. 164 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Curry. Five per cent across the Atlantic and 10 per cent to the Pacific. Mr. Farquhar. Yes; that is correct. Of course, we had the advan- tage when the ships were nearly all of wood. When steel was sub- stituted for wood it gave the English an advantage over us, but now we make steel just as cheaply as they do. Mr. Curry, tor the past 20 years the only difference in cost of construction between a British ship and an American ship, as far as material, not labor, is concerned, has been tliree-eighths of I per cent. Mr. Farquhar. Yes; it amounted to very little. But it costs so much more to run American ships on account of the higher price of labor and various restrictions in our navigation laws. Mr. Curry. I think if you will look that up you will find that, ton for ton, it does not cost so much more as you imagine. Have you looked into that ? Ml*. Iarquhar. Oh, yes. The difference is not so great as people commonly think, but it takes but a very small difference to swing the trade one way or the other. I have been opposed to giving the American ships the preference in the way of tariff, but I have come to the conclusion it is so necessary that if we want a mercantile marine we should change that. I think the American ship should have 95 per cent advantage. Mr. Curry. Om* treaties contain a provision requiring one 3^ear's notice from this country or the other country Mr. Farquhar. Yes; and notice has been given to most of the countries, so that they can be changed this summer. Mr. Curry. That notice has been given, so far as the seamen's law is concerned, but not so far as the 5 per cent is concerned in the Underwood bill. Mr. Farquhar. No. Mr. Hardy. Mr. Farquhar, you say that at this time when our merchant marine was so flourishing there was a differential of 5 per cent on the Atlantic and 10 per cent on the Pacific on goods carried in our own ships ? Mr. Farquhar. Yes. Mr. Hardy. Do you remember back as far as 1828? Mr. Farquhar. No. In 1828, of course, we commenced to do the vast majority of our shipping. By 1830 we did nine-tenths of all the shipping. But I do not remember back that far. The first thing I remember is the death of Gen. Harrison and the cannon fired over his grave, but I was too young then to give the shipping question any attention. [Laughter.] Mr. Hardy. Do you know that there has been no differential or discriminatmg duty allowed to ships bearing our flag since 1828? Mr. Farqlthar. I thought that change was made in 1836 ? IMr. Hardy. In 1828, under Anderw Jackson, the last vestige of a discriminating duty was done away with. Now, you have no recollection of a time when discriminating duties caused our ships to be on the seas ? Mr. Farquhar. Oh, I think that had a great deal to do with starting them on the seas in the first place, but not in keeping them there. I have no recollection of the time when a differential was allowed. I SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 165 Mr. Hardy. So you are mistaken, I suppose, about the time when you say you saw our ships on the seas, when you say they were enjoying a 5 per cent differential or 10 per cent? Mr. Farquhar, No; I do not think I said that. I think the mer- cantile marine was started and built up largely b}'^ that discrimination, by the disposition shown by Congress Mr. Hardy. Do you think, then, that if up to 1828 we had discrim- inating duties that would have carried us on to 1861 ? Mr. Farquhar. I think so; yes. I do not think there woidd have been any falling off if we had had this discriminating duty, up to 1856, probably, when iron took the place of wood so largely in ships. There was a falling off then when England had the advantage in material. Mr. H^vRDY. I confess there was a considerable diminution in the percentage of our trade along about 1856, England beginning to build better ships. Mr. Farquhar. Yes; it commenced to fall off very much about that time. Mr. EU.RDY. Did you ever look into the question to see whether the prosperity of the American merchant marine was not always co- existant with the fact that the American shipper had the best ship for the money ? Mr. Farquhar. Yes; those grand old clipper ships they used to lun were the best on the ocean. Mr. Hardy. And they were the best up to 1856 ? Mr. Farquhar. Yes. Mr. H.VRDY. And as long as we had the best and cheapest ships we won our way on the seas, didn't we? ]Mr. Farquhar. Yes; that is true; but we must remember there was comparatively little difference in labor. Mr. Hardy. Yes; and just as soon as our ships commenced to cost more than they cost in England they commenced to build better vessels and began to crawl up on us. Mr. Farquhar. Yes. Mr. Hardy. And when the war came on and we lost part of our shipping and put a heavy duty on shipbuildmg material and it began to cost us more to build ships we then fell still further behind, and every day we have been behind has been a day when our vessels cost from 50 to 100 per cent more than theirs. Mr. Farquhar. No, not altogether; because of late years there has been comparatively little difference. Mr. Hardy. I suppose the propulsion we already had toward the bottom of the sea has been keeping us down. But, as a matter of fact, is it not practically impossible for this nation or any other nation to compete on the open seas with vessels that cost 50 to 100 per cent more than the vessels of their competitors ? Mr. Farqltiar. It is absolutely impossible. But vessels do not cost here more than 10 or 15 per cent more than in England. Mr. Hardy. That, of course, is a question. Mr. Farqlhiar. I only hear it from our builders of ships. The Chairman. I do not think any shipbuilder at this time would insist that it costs any more to build a ship in an American shipyard than it costs abroad. 166 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Farquhar. No; because we have been trying to buy them- The Chairman. The difference in cost has been gradually lessening during the years I have been in Congress. Mr, Farquhar. Tliat is correct. Mr. Hardy. I am of the opinion they can be built here as cheaply as anywhere. Mr. Farquhar. That is shown by the very fact that I can export in competition with every nation in the world. Several years ago I was talking with an English manufacturer who was manufacturing for South Africa the same class of o;oods that I was making. He told me what the goods cost, what his expenses were. He said at that time, which was a good many years ago — 1884 — "I can manu- facture those goods cheaper than you can in America. My material is cheaper; my iron and steel are cheaper." "No/' I said, "j^our labor is very much higher. You have one process there that you pay 64 cents for; I make the same thing for 6§ cents. If I find there are enough of those goods wanted to warrant it, I can compete with you and you will have to stop making them." "All right," he said, "beat me if you can," Well, some time later, when a new contract was made, the contract went to me and he could not touch it. We made a profit on it in competition with England, Mr, Hardy. There are ways of meeting competition if you have to. Mr, Farquhar, We are the most wasteful and careless nation on the earth. Mr, Hardy, Is it not your opinion that just so long as our ship- builders are given an absolute monopoly in the coastwise trade and not required to compete for it they are very likely to charge more for ships than if they had to compete ? Mr. Farquhar. That is absolutely true. Mr, PIardy, Has it occurred to you that in all the discussions of the fading away of our merchant marine you have seen very little from the interested parties in reference to that difference in the cost of ships, but you have heard about wages and things of that sort, and about our restricted and antiquated navigation laws. Have you ever found anybody who could tell you what those "anti- quated navigation laws" were? Mr, Farquhar. Not anyone who could give a complete answer. Mr. Hardy, I wish you would inquire from now until the next Congress, and if you find anyone I would like for you to report it to me. Mr. Farquhar. I am a practical business man, you know Mr. Hardy, You have not studied the law — — Mr, Farquhar, Yes; I have. Mr, Hardy. You have just heard that song about the antiquated laws? Mr. Farquhar. Yes; I can not give you a satisfactory answer, although I have studied it, I only know that in England the ship- pers are all encouraged, and in this country they seem to be dis- couraged because in all the discussions in the Houses of Congress there has been no disposition to encourage the shipbuilders of this country, Mr, Hardy, Can you find any law that is on our statute books that the shipowners have ever asked us to repeal? Of course, you might mention the seamen's bill « SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MAEINE. 167 Mr. FARQL^^AR. Oh, yes; there are some mistakes there. Mr. Hardy. But the merchant marine had gone down before that. Now, will you find out from them or anybody el^e what law there is on our statute books that ship owners have asked us to repeal ? Mr. Farquiiar. The shipowners have not taken sufficient interest in their ships, except in domestic trade, as you say. They have not organized and have not done their part; I am willing to say that. That has hurt us and hurt our mercantile marine. Mr. Hardy. Mr. Hill only a little while ago made the statement that the cost of an American ship was from 50 to 100 per cent more. Mr. Farquhar. Mr. Hill made a mistake. Mr. Hardy. Possibly he did. Even if it is 25 per cent, or even if it is only 15 per cent, do you, as a business man, believe that any carrier will use a vessel that costs 15 per cent more than he could buy one for elsewhere ? Mr. P^ARQUHAR. No; and it is possible that if similar subventions were started up Mr. Hardy. Does it occur to you that without subvention our shipowners would give the shipyards the same support if you would let them buy them ? Mr. Farquiiar. I believe that if our navy yards were encouraged to run at their full capacity tliey could buy very much cheaper. In England, you know, they have standardized the shipbuilding busi- ness until they can turn them out just like cutting pieces off a roll of tape. Mr. Hardy. But what business have we got in the shipbuilding business if our shipbuilders can not standardize as well as any other country ? Mr. Farquhar. The whole trouble is in starting up. If they are encouraged to start I believe they would continue. Mr. Hardy. I am afraid we are arguing now. Mr. Edmonds. You made the statement to Mr. Hardy, I believe, that you thought our coastwise trade should be op^n to foreign ships ? Mr. Farquhar. Oh, no. Mr. Edmonds. I understood that you did. But you say it would be a good thing and would encourage shipbuilding if the coastwise trade were open. Do you believe it is a good thing to continue our navigation Jaws so our coastwise trade can be protected? Mr. Farquhar. Oh, yes; I think it should be protected. Mr. Edmonds. And you a-so think that the islands of Hawaii and Porto Rico should be kept in our coastwise trade ? Mr. Farquhar. I think they should be kept in our coastwise trade. And I will go further than that: I think they ought to be made a part of the country really. Mr. Edmonds. Do you think that if this war were not going on in Europe, and ordinary conditions prevailed we would be able to build ships in this country as cheaply as they do in Europe? Mr. Farquhar. Not unless we built them in large quantities. We would have to arrange to build them in large numbers. Mr. Edmonds. Well, wo have to consider that this war is not going to last forever, and afterwards this bill is going to be in operation. Now. you do not think for a minute that with the difference between the class of labor in this country and the class of labor in the shipyards 168 SHIPPING BOAED, NAVAL AUXILIAEY, AND MERCHANT MARINE. of England it is possible to build a ship within 15 or 20 per cent of the cost of an English ship, do you? Mr. Farquhar. Yes; because I think we can furnish the material cheaper. The making of steel is the greatest expense. We make it cheaper than anywhere else in the world, and were exporting in large quantities even before the war. I think that would make a difference in our favor. And I think the American workmens will do more than English workmen; they do it in every other bu iness that is standardized and run on a large scale. The shipbuilding busi- ness heretofore has been run in a haphazard way, and they have not built them anjwhere near as cheaply as they could. Mr. Edmonds. But we are gradually approaching the point where we can build them cheaper? Mr. Farquhar'. I think we can come within about 5 per cent after the war is over. Mr. Edmonds. Before the war it was a difference of 40 per cent on the same class of ships? Mr. Farquhar. Oh, no The Chairman. The testimony has been that it was not to exceed 25 per cent, and before the war in recent years it was 15 per cent. Mr. Edmonds. There was published in the Philadelphia Ledger a case where a man took an English boat and an American boat of the same class, and he figured that the difference in price was 40 per cent. This was about two years before the war. Mr. Farquhar. It was the same class of ship ? Mr. Edmonds. Possibly it might have been a ship that they had standardized and we had not standardized. But I remember very distinctly taking the figures at the time and figuring out it was about 40 per cent difference. !Mr. Hardy. Let me say right there that last year a shipowner in the oil business told me of ordering a ship here for which he paid $600,000, which he could have got abroad for $375,000. Mr. Edmonds. That boat is being built by Harlan & Hollingsworth at Wilmington. Mr. Hardy. I have forgotten the details, but that is the difference he told me. Mr. Edmonds. I realize that, Mr. Hardy. I realize that the price is growing closer. Wliether that situation wiU continue after the war is over, I do not know, and I do not think anybody knows. Mr. Farquhar. So many have been killed over there and so many ships have been destroyed I have an idea that labor will advance in price after the war. Mr. Edmonds. I would not be surprised myself. jVIi-. Curry. Are you acquainted with the system of the British Board of Trade by which they practically compel the business men of Great Britain to assist in building up their merchant marine ? I have a statement here and wiU give it to you, if you are not. lyir. Farquhar. There is some truth in that. The Government is always ready to help them. Mr. Curry. The Government does not help tramp ships. The British Board of Trade has a way to force English manufacturers, exporters, and importers to subscribe for minority stock in privately-owned vessels and to make their investments permanent. Such required investment is based on the volume of trade of the indi\'idual firm or corporation, as the case may be. SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 169 No English business naan dare refuse to make such investment wheri requested. If he should, he would be punished by not being allowed to ship his goods. He would find that every vessel on which he attempted to make a shipment had a full cargo. On January 19, 1915. the Washington Times published an article explaining the English method of building up, developing, and perpetuating their meichant ma- rine. From that article I have gathered and present the following account of their system: ® Subsidies or subventions are paid to certain classes of liners, and private invest- ments in merchant vessels are made permanent. All British merchant ships are divided into 64 equal shares. The ownership of 33 shares absolutely control her. The managing owners hold the 33 shares, which represent control. The rest are dis- tributed among investors, and the investors in the minority shares are practically compelled to buy them. Exporters, importers, and manufacturers are requested to subscribe for the mi- nority shares, and in order to insure the shipment of their goods at reasonable rates they find it to their advantage to do so. It enables them to import and export their goods at reasonable freight rates and insures a market and a profit on their mer- chandise. The managing owner, under his contract, receives 2 per cent of the gross freight earnings plus the earnings on his 33 shares, which gives him a large return. The average minority owner rarely receives over 2 per cent on his investment in the ship. The managing owners always write into their contracts a provision that if a ship should be lost and the insurance collected, that the insurance money shall at once be reinvested in a new vessel. It is never distributed to the shareholders. When a new ship is turned out from a British yard it is registered at Lloyd's as "A* 1* 100," the highest index designation. It sails under that designation for 10 years and is insured, with its cargo, on the most favorable terms. After 10 years its rating is "A* 100," and its insurance rates are higher. When the vessel, after years of use, can not get so good a rating of insurance, it is sold and transferred to some foreign flag, and the money is reinvested in a new ship. Mr. Farquhar. That is rather exaggerated, in-view of the enormous amounts that stockholders invest in England. They would not do it if they did not make as good or better returns than the}" do on other investments. You mention some extreme cases there. The Chairman. From what are you reading, Mr. Curry? Mr. Curry. I am reading from a speech I made at the last session of Congress, and I obtained that from reliable information. Mr. Farquhar. That 2 per cent is the average though. Mr. Curry. They could not get more than 2 per cent. That comes from a British source. Mr. Farquhar. You try that source again. They may be mis- taken. Mr. Cuery. That is where the business men are forced by the British Board of Trade to assist m building up the British merchant marine. Mr. Farquhar. The all important thing is to get a merchant marine. You all admit we must have it. We must have it for the Navy and for our export trade. We can not depend upon our com- petitors to carry our goods with any safety to our export trade. Mr. Greene. I have been unavoidably absent and perhaps you may have answered this question. Outside of the cost of the vessel — which seems to be a matter of doubt in the mind of my friend from Texas, Mr. Hardy; possibly you can buy just as cheaply here as you can abroad — have you taken up the cost of runnmg the vessel after it is built ? Mr. Farquhar. Oh, yes; it costs more under our present laws, especially under the seamen's bill, which has added to the cost. It- costs more than it costs abroad, unless the board will have power to license and equalize. It may take a considerable change in it to give them that power. It is the fuU-crew idea that shipowners 170 SHIPPIXG BOAED, XAVAL AUXILIARY, AND MERCHANT MARINE. object to, like the full-crew provision for the railroads which forces them to employ men who have nothing to do at all. I asked a rail- road man a short time ago what he had to do, and he replied, "I do not do anything at all except to go and draw my pay." Then the language test is all wrong. With the gre%t majority of seamen it does not make a bit of difference whether the.y understand the language of the captain or not, because the captain does not give the orders. The orders all go through the subordinates, and we ought to be privileged to employ the cheaper labor abroad. Those restrictions, of course, all affect the shipping, but the all- important question now is to get shipping, and I am sure if you will look into it as carefully as we business men have been forced to you will see it is absolutely essential. Whenever a bill is introduced that will give us those ships I will favor it. I favor the present bill as a start. I object very much to Government owmership, as as rule, and especially to the Government running the vessels, but I am willing to do something as a start. Mr. Hardy. In other words, if you can not get what you want you will take the next best thing? Mr. Farquhar. Certainly. The great trouble is the need of stand- ardization. Making one or two ships of different styles they cost so much more to make than to make a large number of vessels of the same style. It is utterly impossible to compete in any manufacture unless you standardize. Mr. RowE. You said that three members of this board should be familiar with shipping ? Mr. Farquhar. Experts; yes. Mr. RowE. Do you think you can get those men at $10,000 a year? Mr. Farquhar. Oh, yes; I think they would serve, just like the members of our Chamber of Commerce of the United States, who give a large portion of their time. Our president gives all his time and gets nothing at aU but travehng expenses — if he draws them. I have never asked for that. We find we are doing good; we are doing a great deal of good, and that is fair enough. And there is a large number of business men who have that feeling that they are doing good. There is a great deal more of that patriotism among business men than you would suppose, Mr. RowE. And you believe there is a good deal of patriotism among shipping men, too, do you not? Mr. Farquhar. Certainly. The Chairman. Do you think the bill ought to define the class of men who should be employed? Mr. Farquhar. I think so; I think that is true, and there would be no objection then to having the Secretary of the Navy and the Secretary of Commerce on the board. Mr. RowE. Do you think we should have seven members if the Secretary of the Navy and the Secretary of Commerce are members ? Mr. Farquhar. I would prefer having it seven; yes. I would advocate that strongly. The Chairman. I think Mr. Farquhar has made some very valuable suggestions. Mr. Farquhar. I wish I could be of further use, and I wish you would get together and give us some ships. I am sure you are in earnest. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARIN L. 171 STATEMENT OF CAPT. ELLSWORTH P. BERTHOLF, COM- MANDANT UNITED STATES COAST GUARD— Resumed. The Chairman. I do not recall, Capt. Bertholf, just where you left off yesterday afternoon. Will you continue your statement ? Capt. Bertholp\ I think, Judge, I had about completed the state- ment concerning the naval reserve feature in section 1 1 . The Chairman. You were saying something about the personnel on these naval reserve vessels. Now, I know you have also made an investigation of the oil-burning steamships and also of the types of freight carriers using the Diesel type of engine, have you not ? Capt. Bertholf. The Secretary asked for a memorandum con- cerning the cost of operation of typical ships which it was presumed would be used under the shipping bill. We have made the memo- randum, but it is rather long, and perhaps I had better submit it for the committee and make a general statement. We assumed that the typical cargo ship of the world was one having the following dimensions: Gross tonnage, 4,665; net registered tonnage, 2,930; dead weight cargo capacity, 7,880; steaming radius, 3,500 miles ; average sea speed, 10^ knots; indicated horsepower, 2,500- The Chairman. Without going into the details, have you worked out the different costs ? Capt. Bertholf. We took the cost of operation on the Pacific Coast, and compared a typical new American ship, with Diesel engine, American crew, American wages, and American standard of food, with the typical existiiig foreign competitor with average efficiency, of steam propulsion, Asiatic crew, cheap wages, and poor food; both these vessels making five or six round trips a year between the west coast of the United States and the west coast of South America, a distance of about 5,000 miles. We found that the increased annual cost for the American ship under this plan was $17,472 for the cost of the wages and the food, the food being estimated at 50 cents a day for American ships and 20 cents for foreign. There would be a de- creased annual cost to the American ship, because of the saving in the cost of oil over coal, of S18,664. That left a net annual saving for the American ship of $1,175. That is for the operation. And it should be stated that our figures are based on conditions as they existed prior to the war. By using the Diesel engine instead of the steam engine there would be an annual increase in earning cppacity of this American ship of about 400 additional tons for freight space, which would bring an annual revenue of $32,000. That would give in favor of this Ameri- can ship an annual operating return of $33,000 — that is, as I have said, using a new American ship, with Diesel installation, American crew, American wages, and American standard of living, against the present existing steamship on the Pacific coast Mr. Edmonds. While you are on that subject, may I ask a ques- tion? You are using the very highest type of ship in comparison with the very cheapest grade of ship ? Capt. Bertholf. Precisely; because if anyone builds a ship now he would ordinarily build the most economical type, and not an out- of-date uneconomical type. Mr. Edmonds. Well, there is no special hold on the Diesel engine. Any nation can build it. 172 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MAEINK. Capt. Bertholf. That is true. Mr. Edmonds. In fact, it is a German invention and improved by German patents. Capt. Bertholf. That does not stop us from usin^ it. Mr. Edmonds. Any shipbuilding company in this country that builds that ship has to pay a royalty on that? The Chairman. You are mistaken in that; that is not correct. I had occasion to investigate it. We have installed the Diesel type of engine in a little plant in my home town. The Allis-Chalmers people build the Diesel type of enghie; the Snow people build it; the Busch- Sulzer people build it. Tliose patents have run out. The Diesel type — I will not explain the process, though I have investigated it thoroughly, but anybody can build an engine of that type now. Mr. Edmonds. I will agree with you fully on that point; but it has been found that for the successful operation of the ship it is necessary to use inventions perfected by another inventor — a Mr. Bolinger, I believe it is. That is a patent that is in existence to-day, and the New York Shipbuilding Co. and another company are licensed under that patent to make these ships. I am infonned by a Danish captain, with whom I talked recently, that these ships can not be operated successfully with the ordinary type of Diesel engine, and that is one reason why the patent has run out without very many of the engines being installed in the marine service. The new patent has made the operation of these ships successful, and all German ships and all Danish ships that are now being built are using this patent, and it is only recently, within the last month, that the New York Shipbuilding Co. and another company in this country have been licensed under that patent to use it. The Chairman. But the Diesel principle Mr, Edmonds. I agree with the chairman on the first point, of course. I am not contesting that at all. The Chairman. Tliere may be something added to it that is patented. Mr. Curry. I think it would be nothing but fair, if the captain has it in his mind or can get the infoiTnation, if he would let us know the difference in cost in rumiing a Norwegian ship, say, and an American ship of sunilar type with a Diesel engine. My informa- tion is that Nonvay is transforming all of her ships to the Diesel system. Capt. Bertholf. Perhaps I should explain this former statement. Mr. CuTiRY. That would be better. I would like to know exactly the difference in cost. Capt. Bertholf. The very pertinent suggestion was made that other countries could build these ships as well. That is quite true, but this memorandum was made for the purpose of ascertaining what could be done if a building program were entered upon, and naturally anybodj' building ships would make use of the best type, both hull and machinery. It may be said that our foreign com- petitors can also build these ships, which is quite true; but the fact remains that they are handicapped by their existing fleets of coal- burning vessels, with expensive types of steam machinery which can not be scrapped. This ^vill give this country an advantage for a period of at least six years. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 173 Mr. Curry. Would it be possible to change one of those coal- burning ships into a Diesel engine ship ? Capt. McAllister. It would not be practicable. Capt. Bertholf. I am speaking now of the fleet which would be contemph-ied possibly under the shipping board. What could they do ? They would naturally build the modern types. Then, if you take the types of existing ships with which we must compete — they can not throw those ships away, and Capt. McAllister says that from an engineering standpoint tliey can not transform them. Capt. McAllister. They can transform them, but it would cost too much. Mr. Curry. But the}^ coidd build new ships. Capt. Bertholf. Oh, yes. Mr. Curry. Then how would the cost of running compare ? Capt. Bertholf. But while that is going on we will have a start on this thing. Mr. Curry. Not if they would commence to build as we do. Capt. Bertholf. They would not build at once. Mr. RowE. Some nations might — like Norway. The Chairman. There would not be that same necessity on their part, assuming that their steam-driven ships can be operated under existing conditions more cheaply than we can operate ships. In other words, they would continue to use their existing vessels, whereas we would at once adopt this new type to compete with their ships. Mr. Edmonds. We nave another advantage in favor of our country in this respect; that is, that we virtually have control of the oil supply. Capt. Bertholf. Sixty per cent. Mr. Edmonds. Have you ever considered the very dangerous position in which they would be if they could not get oil ? That is, to my mind, one of the reasons for the trouble in Mexico — the increas- ing use of oil in marine vessels and the increasing demand on the Mexican Government for concessions for oil from different nations in an endeavor to make themselves independent of the United States as to oil supply. Mr. Curry. Norway, I understand, is changing all her sailing ves- sels and installing Diesel engines. Capt. McAllister. It is impracticable at present to build Diesel engines of more than 2,500 horsepower in one unit. With twin screws that gives you 5,000 horsepower. For anything above 5,000 horsepower they have to resort to steam. There are eight Norwe- gian steamships being built in this country now, at Chester. They are all probably of more than 5,000 horsepower, and for that reason they are all going to be steam driven, using the new turbine reduction gear. Mr. Curry. Do you understand that they are putting these engines in their sailing ships ? Capt. McAllister. A few, I think. But auxiliary vessels do not to more than 6 or 8 knots an hour with these Diesel engines; they ardly get up to 10. Mr. Curry. They will use both ? Capt. McAllister. Both sail and auxiliary power; yes, sir. For anything above 5,000 horsepower they can not at present use the Deisel engine. We have only used them in this country a short time. 32910—16 12 • 174 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Thei e is one large Diesel engine being built in this country, and that is in the Brooklyn Navy Yard, for a collier, the Maumee. Mr. Loud. What power is that being built for? Capt. McAllister. I think she is a twin-screw vessel of about 5,000 horsepower. Mr. Edmonds. About how fast would you think that 5,000 horse- power would drive an average coasting vessel? Capt. McAllister. About 10 or 11 knots. Freight vessels do not try to go more than 10^ or 11 knots. Mr. Edmonds. I understood from the captain of this ship I was on that he could make about 10 or 12 knots. Capt. McAllister. They might get up to 12. Mr. Curry. Diesel engines, then, would not be suitable for naval reserve purposes? Capt. McAllister. I think so. Ml'. Curry. You think that a ship propelled by a Diesel engine would be good for naval auxiliary purposes ? Capt. McAllister. It would for bulk carriers; of course, not for fast transports. Mr. Curry. Not for oil carriers or anything of that kind ? Capt. McAllister. Oh, yes; for fuel ships they would be all right. That is the way one of the naval colliers is being equipped now. Mr. Loud. Wliat power do they put into naval coUiers of the Neptune class ? Capt. McAllister. About 6,000 or 7,000 horsepower. Mr. Loud. That would be too much for this type of engine ? Capt. McAllister. That would be too much; they would use steam. They have used steam-driven reciprocating engines in all the colliers, except one building with Diesel engine, one with reduc- tion gear, and one with electric drive. Ml'. LoLT). There is one with electric drive building now, or already built? Capt. McAllister. Only one already built, but from now on they wiU probably put in the reduction gear. Mr. Kincheloe. You say that oil-burning engines of more than 2,000 horsepower are not economical ? Capt. McAllister. In one unit it is impracticable to use over 2,500 horsei)Ower. It is not a question of their economy. Mr. Kincheloe. Wliy can they not use more than 2,000 horse- power ? Capt. McAllister. The limitation comes in the size of the cylinder. The heat is so intense that cast iron will not stand it. It is internal combustion, you know, with the fire right agamst the iron. When you get a cjdmder up to 25 to 28 inches in diameter, you can keep it cool with circulating water, but above that the heat is so mtense that you can not cool it. Cylinders of that size develop about 250 to 400 horsepower, and you have about six cylinders to one engine. They do not get much more than 2,000 horsepower on account of in- ability to cool the surface properly. No metal will stand that intense heat. That is what limits the size of the Diesel engines. The Chairman. Capt. Mc^Ulister has that whole matter worked out very carefully, I know. I have a copy of his memorandum, and I suggest that it go into the record, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 175 Mr. Loud. Is the Diesel engine suitable for high speeds, as in destroyers, for example ? Capt. McAllister. No, sir. Mr. LoLT). It is not suitable for them ? Capt. McAllister. No; they can not get the horsepower. Those vessels use from 10,000 to 16,000 horsepower and the oil engines will not develop that. The C'hairivl4.n. I think both those memoranda are very valuable and will ])rove of intense interest if you wiU put them in the record. (Tile memoranda are as follows:) Shipping Bill — Costs of Operation — Typical Ships, Using Average Wage and Freight Rates Which Obtained Before the European War. In the report of the discussion of the relative merits and costs of different types of ship-propelling machinery, which took place at successive meetings of the Northeast Coast Institute of Engineers and Shipbuilders in England, it was decided that the typical cargo ship of the world at the present time is one having the following dimen- sions, etc.: Gross tonnage 4, 665 Net registered tonnage 2, 930 Dead-weight cargo capacity 7, 880 Steaming radius 3, 500 Average sea speed (knots) 10^ Indicated horsepower 2, 500 A large proportion of the proposed naval auxiliary reserve fleet contemplated by the shipping bill will naturally be vessels of that size. In order to compare the rela- tive costs of operation of an American vessel and of the average existing foreign com- petitor in the Pacific Ocean, this type of vessel will be used. The cost of wages and of fuel are the main items of expense in the operation of any vessel. This vessel will have a crew of 44 officers and men. From various sources it is found that the cost of wages per month on the Pacific Ocean for an American vessel with an American crew was $2,210 ($26,520 per annum) while for the average foreign competitor with Asiatic crew it was $1,150 per month ($13,800 per annum). The American vessel was thus handicapped in the Pacific trade with an additional cost of $1,060 per month on wages alone ($12,720 per annum), which it is claimed is the principal item in the difference in cost of operation. Assuming that our typical new freighter is equipped with the modern type of Diesel engine, burning crude oils by internal combustion, there will be certain elements of economy of operation incident to this type of propulsion, as follows: 1. Less cost of wages of operating force, due to the smaller number of men required. — There seems to be, in the opinion of experts, a question as to the economy of operation of a Diesel engine (excluding cost of fuel) due to higher initial cost, greater insurance rates, and possibly greater cost of repairs, altliough the preponderance of opinion points out that there is a tangible saving in cost of operation. For the purpose of this comparison this item will be ignored, in order to be entirely conservative. 2. Less cost of fuel for operation. — There is absolutely no question concerning the great saving in cost of fuel. To arrive at a comparison we will assume this typical freighter as operating between San Francisco, Cal., and Valparaiso, Chile, and that she makes only five round trips per annum. Tlie distance between ports is 5,140 miles. On each voyage the average consumption of oil will be 231 tons, the same ship, fitted with the average steam machinery using coal, will use 597 tons. The cost of coal on the Pacific coast may be taken at $6 per ton, and of oil at $7 per ton. Applying these factors, we find a saving in-cost of fuel each one-way voyage of $1,965, or $19,650 for five round trips. 3. Gain in freight-carrying capacity, owing to less space occupied by the propelling machinery, and less space necessary for storing fuel, which, it has been demonstrated, can be carried in a ship's double bottom — a space in steam-propelled vessels heretofore utilized only for water ballast. — The increased capacity incident to Diesel-engined ships is variously estimated by writers on the subject as from 5 to 10 per cent on the dead weight cargo rating. To be well within conservative limits, the assumption is made in the typical ship that her dead-weight capacity is increased from 7,880 to 8,280 tons (400 176 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. tons) , a trifle over 5 per cent. Prior to the existing war the freight rates between Chile and the United States, on the average of all bulk commodities, is shown by the Consular Reports to have been approximately $12 per ton. At the present time they have in- creased about 80 per cent over that figure, and in the case of nitrates, the principal article of export, the increase has been 100 per cent. Again, taking a conservative estimate, we will assume an average freight rate of but $8 per ton, weight or measure- ment. In a 400-ton increase in capacity this will amount to $3,200 per one-way voyage, or $32,000 per annum for five round trips, in favor of the typical ship having Diesel engines. RESUME — PACIFIC COAST. Typical new American ship with Diesel engines, American crew, American wages, and American standard of food, versus typical existing foreign competitor with average efficiency of steam propulsion, Asiatic crew, cheap wages, and poor food, both vessels making five round trips a year between the west coast of the United States and the west coast of South America, a distance of about 5,000 miles: Increased annual cost for American ship: Wages of 44 officers and men $12, 720 Food at 50 cents per day instead of 20 cents 4, 752 $17,472 Decreased annual cost for American ship: Saving in cost of oil fuel over coal 18, 644 Net annual saving for American ship 1, 172 Annual increase in earning capacity of American ship from 400 tons addi- tional freight space 32, 000 Operating returns in favor of American ship, per annum 33, 172 ATLANTIC COAST. For the typical bulk carrier on the Atlantic coast the conditions are somewhat different from those on the Pacific coast, as follows: 1. The difference in cost of crews was less, as competitive vessels in these waters do not operate with Asiatic crews, and their standard of food is higher than for Asiatic crews. The American scale of wages for officers and crew can be taken a^ the same as those for corresponding vessels on the Pacific coast, but for foreign competitors with Cauca- sian crews on the Atlantic coast the average wage scale for the typical freighter will be approximately $1,500 per month ($18,000 per annum). Food cost 30 cents per day at least. 2. Coal being more plentiful and the various seaports nearer to the mines, the cost is less than on the Pacific coast. The ports on the North Atlantic particularly are farther removed from the oil wells, and in consequence the average cost of oil is higher than on the Pacific coast. The average cost of coal at various Atlantic ports will be $4 per ton, while the average cost of fuel oil should be taken at $8.75 per ton, a price somewhat above the normal average. The average length of voyage will be assumed the same as from San Francisco to Valparaiso (5.140 miles), as the distance from New York to Rio Janeiro is 4,441 miles, and from New York to Montevideo is 5,497 miles. The freight rates are approximately the same as those on the Pacific coast, and for purposes of comparison we \vill assume it to be an average of only $8 per ton, weight or measurement freight. Apphdng these modifications for the Atlantic coast to the typical freighter assumed we would have the following: RESUME — ATLANTIC COAST. ■ Typical new American ship with Diesel engines. American crew. American wages, and American standard of food versus tyi^ical existing foreign competitor with average efficiency of steam propulsion, European crew, fair wages, and fair food, both vessels making five round trips a year between the east coast of the United States and the east coast of South America, a distance of 5.000 miles. Increased annual cost for American ship: Wages of 44 officers and men $8, 520 Food at 50 cents per day instead of 30 cents 3, 204 $11, 724. 00 SHIPPING BOAED^ NAVAL AUXILIARY, AND ^MERCHANT MARINE. 177 Decreased annual cost for American ship: Saving in cost of oil fuel over coal $7, 672. 00 Net annual loss for American ship 4, 052. 00 Annual increase in earning capacity of American ship from 400 tons addi- tional freight space 32, 000. 00 Operating returns in favor of American ship per annum 27, 948. 00 SHIPS FOR PASSENGERS AND FREIGHT. As has been stated, the larger mimber of the proposed naval auxiliary fleet will naturally be freight carriers, and consequently of slow and economical speed. While the internal-combustion engine is peculiarly adapted to this class or merchant vessel , there are limitations to the size of this engine. Under existing conditions it would be impracticable to use internal-combustion engines of above 5.000 horsepower (twin screw), and the use of the Diesel engine is therefore practically limited to slow freight ships of not exceeding 5.000 gross tons. There would be in this fleet of board ships a number of A^essels of about 6,500 gross tons and 18-knot maximum speed, for passenger and high-class freight service, and such vessels would be utiUzed in time of war as transports. This class of vessel re- quires machinery of over 5,000 horsepower, which is beyond the limit of power for which internal combustion engines may be used. However, such great progress has been made in steam machinery that a very pronounced saving in fuel can be made by modern installations. Upon certain routes, where American steamship lines are desirable, further economies may be made by burning oil instead of coal. As illustrative of what can be accomplished in the South American trade we will make the following comparisons: The steamship Havana, of the Ward Line, running to the West Indies, is of the typical size, and the following data are well authenticated. This ship was built in 1907 and consequently represents a vessel somewhat more efficient than the average of all passenger steamers of similar size and ty]:>e. Gross tonnage 6, 391 Dead-weight capacity 5, 084 Horsepower 5, 000 Bunker capacity (tons) 1, 010 Speed at sea (average knots) 16. 6 Coal consumpti3n per day (tons) 145 Number of crew (mcluding 39 firemen and coal passers) 147 Monthlv wage cost |5, 623 Cost of food ($12 per man) $1, 740 The same data would apply to the typical existing foreign vessel to be met in com- petition, with the exception of wages and food. The pay and cost of food for the for- eign slii]3 was practically 30 per cent less. Hence we would have for the operating ex]ienses of the average existing coal-burning foreign steamer the following, taking a 3,200-mile 8-day voyage, or one roimd trip per month: Waoes (70 per cent of $5,623) $3, 936 Food (70 per cent of $1,740) 1, 218 Fuel (145 tons per day, at $4 per ton, 16 days) 9, 280 Monthly operatir)n charges, existing foreign steamer 14, 434 In the proposed American steamer with up-to-date geared turbine, burning oil fuel, the crew would be reduced to 124 men by cutting out 21 men from the fireroom force and 2 from the steward's force. There would be also a decided decrease in fuel con- sumption, so that the operating expenses would be as follows for the same service: Wages, 124 men at American rates ($5,623— $1,080) $4, 543 Food, 124 men at $12 per month 1, 488 Fuel (65 tons of oil per day,^at $8.75 per ton) for 16 steaming days 9, 100 Monthly operation charges, new American steamer 15, 131 In addition the oil-burning American vessel, by carrj^ing this fuel oil in her double bottoms, will gain at least 10 per cent in her freight-carrj-ing capacity, or, at a very conservative estimate, she can carry 500 tons additional revenue-producing freight. Note. — The proportionate gain in freight-carrying space is greater in a faster vessel than in a slow one. The faster a vessel the greater must be her bunker space, which 178 SHIPPIXG BOARD, KAVAL AUXILIARY, AXD MERCHANT MARINE. correspondingly reduces the freight space. Hence, when bunkers are eliminated and oil carried in double bottoms there is a greater proportionate gain in freight-carrying capacity than in slower vessels, which do not have to carry so much fuel. A very conservative freight-rate estimate for a 3,200-mile voyage is $4 per ton (weight or measurement). One round trip per month would give an increased earn- ing capacity of $4,000 in favor of the American vessel (500 tons additional freight at $4 each way). A further sa\dng in oil-burning vessels is a marked reduction in the cost of upkeep of boilers, cost of painting the ship, etc., which items, however, are ignored in this comparison. RESUME — ATLANTIC COAST. Typical new fuel oil burning ship with geared turbines, American crew, American wages, and American standard of food, versus typical existing foreign competitor with average efficiency of steam propulsion, European crew, fair wages, and fair food, both vessels making one round trip a month between the Atlantic Coast of the United States and the east coast of South America on a route of 3,200 miles. Increased annual cost for American ship: Wages $7, 284 Food 3, 240 110, 524. 00 Decreased annual cost for American ship: Savingin cost of oil fuel over coal 2, 160. 00 Net annual loss for American ship .-. 8, 364. 00 Annual increase in earning capacity of American ship from 500 tons addi- tional freight space 48, 000. 00 Operating returns in favor of American ship, per annum 39, 636. 00 To illustrate what actually has been done on the Pacific coast, the follo^ving data concerning the 5,218-ton American steamship President is quoted from "'International Marine Engineering" of July, 1914 (p. 283-284): "The President, which has just returned to service, has been converted at the Seattle yards on a contract working time of 35 days. Her capacity is 5,600 barrels of oil and on her maiden run following the change this fast steamer added one knot to her steaming speed. "In making the oil installation the vessel's double bottom was converted into fuel tanks to carry her capacity. "Using coal, this vessel formerly filled her bunkers with about 1,350 tons upon each call at Seattle. The operation required 9 working hours, which frequently meant from 12 to 15 hours, including waste time. Now the vessel can fill her tanks while working cargo, thereby having a considerable saving in time, which is no in- significant item because these vessels are almost constantly moving and rimning on a schedule almost as good as that of an express train. "Roughly estimating the value of coal at §3.30 per ton, and that of fuel oil at 80 cents per barrel (S5.60 per ton), it is figured that the President will effect a saving in fuel cost alone of between $800 and $1,000 per voyage. (She makes four voyages each month.) "There are, however, other importaat features of oil burning which appeal to her owners. With the elimination of coal bunkers each vessel has approximately 600 tons of additional cargo space, which is of much value considering the demand for such space, especially at certain seasons. Probably the most important economy effected, however, is that in crew. Formerly the President carried a total of 136 men, and nou- her roster is but 113. The reduction of 23 men is apportioned, 21 men in the engine department and 2 in the steward's department, the latter being elimi- nated following the reduction of the fireroom force. Whereas the engine-room_ crew formerly numbered 44, there are now but 23 required. In addition to the saving in wages and subsistence of these men, the quarters formerly occupied by them have been turned into added cargo space." Of course, it may be said that our foreign competitors can also build these modem ships, but the fact remains that they are handicapped by their existing fleet of coal- burning vessels with expensive types of steam machinery, which they can not afford to put into the scrap heap. This'will give us an advantage for a period of at least six years before the competing fleets can be brought up to the same state of efficiency as this proposed American fleet of new ships. The United States is peculiarly well endowed by its natural resources to enter into a world-wide competition in shipping, since it will be reduced to a battle for the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 179 supremacy in economical equipment. Oil will be the most vital factor in this com- petition, on account of its many advantages, and, as is well known, 60 per cent of the world's supply is within the borders of the United States. It is a matter of common knowledge that American shipowners are deterred at present from equipping their new vessels for oil burning owing to the extreme fluctuations in the price of oil. For- tunately, the Government has reserved large tracts of oil-producing lands from the public domains, and should the machinations of private producers tend to deter the development of our merchant marine, it is, of course, possible to resort to the Govern- ment's own oil supply. Note. — While the foregoing comparisons were based on wage scales and freight rates as they existed prior to the war, it should not be overlooked that since the out- break of war the wage scale on foreign ships has increased rapidly, until at the present time it approximates the American scale of wages. Freight rates have increased enormously as is generally known. If there is nothing further from Capt, Bertholf, we will ask Mr. Chamberlain to come before the committee. STATEMENT OF HON. EUGENE T. CHAMBERLAIN, COMMIS- SIONER OF NAVIGATION, DEPARTMENT OF COMMERCE. The Chairman. You have held the position of Commissioner of Navigation how long, Mr. Chamberlain ? Mr. Chamberlain. Since 1893, in December. Ml*. Chairman and gentlemen, by the courtesy of the chairman I come before the committee for a few minutes to make a statement in regard to the ''antiquated navigation laws" which have been re- ferred to by several of the gentlemen who have addressed you and still more frequently by certain members of the press of the United States. Tlie origin of this phrase, I might say, was in a book pub- lished by Mr. David A. Wells in 1891, that book being an assemblage of articles that had appeared in the New York World in 1880. The substance of this condenmation of our laws can be found beginning on page 73 of this publication. After devoting 72 pages to historical research, Mr. Wells says: Such, then, is a brief history of the inception and growth of our present navigation laws. Conceived in sin and brought forth in iniquity, they seemed to have entailed a curse (not yet fully worked out, but in the process of completion), general for the whole country, but more especially on that section whose fathers sold their honor to accomplish the result, and who thereby merited execration for having entailed, for 18 long years, the horrors of the African slave-trade. And when one journeys through New England, and sees how thick are the graves of her sons, slain in a war which slavery originated, the question might suggest itself: Would these graves exist had the ancestors of those who fill them not consented to strengthen and perpetuate domestic slavery as a consideration for the privilege of doing another wrong; namely, that of restricting their fellow-citizens from freely exchanging the products of their labor? Mr. Hardy. Wliat is the date of that book ? Mr. Chamberlain. It was published in 1891, being a resume of articles published in 1881. Mr. Wells followed that with specific criticisms of 14 statutes. I recently wrote to Senator Fletcher on the subject. Part of this , letter is not immediately pertinent to your inquiry, but it is not very long, and with your permission I will read it. If you think it desirable I will leave this book here and have inserted in the record the 7 or 8 pages of Mr. Wells's summary, to which the letter refers. The Chairman. If there is no objection, that will be done. 180 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. (The excerpt referred to is as follows:) Chapter V. THE PROVISIONS OF OUR NAVIGATION LAWS. Having traced the inception and growth of the navigation laws of the United States, let us next inquire into their provisions. They may be in the main stated and illus- trated as follows: 1. No American citizen is allowed to import a foreign-built vessel, in the sense of purchasing, acquiring a registry or title to, or of using her as Ms own i^roperty; the only other absolute prohibitions of imports, on the part of the United States, being in respect to counterfeit money and obscene publications or objects. (Rev. Stats., sec. 4132.) I urthermore, while we are the only people in the world who are forbidden to pur- chase foreign-built vessels, we freely permit all the world to enter our ports with ves- sels purchased in any market. Frecluded. therefore, by the first provisions of our navigation laws, from engaging on equal terms in the carrying trade with foreigners; we wonder and complain that the carrjdng trade of even our own products has passed from our control. 2. An American vessel ceased to be such if owned in the smallest degree by any per- son naturalized in the United States who may, after acquiring such ownership, reside "for more than one year in the country in which he originated, or more than two years In any foreign country, unless such person be a consul or other public agent of the United States." (U. S. Rev. Stats., sec. 41.34.) 3. If a native-born American citizen, for health, pleasure, or any other purpose, except as a consul of the United States or as a partner or agent in an exclusively Amer- ican mercantile house, decides to reside ("usually") in some foreign country, any American vessel of which he may be, in all or any part, owner, at once loses its register and ceases to be entitled to the protection of the flag of the United States, even though the vessel may have been of American construction, and have regularly paid taxes in the United States, and the owner himself has no thought of finally relinquishing his American citizenship. (U. S. Rev. Stats., sec. 4133.) To illustrate this provision of our na\dgation laws, let us suppose Capt. John Smith, not a naturalized citizen, but a native American, is an owner, in all or part, of an American vessel. He becomes afflicted with a disease of the lungs, and, for his health, goes to live in the south of f'rance, on account of the balmy atmosphere that prevails there. The moment that Capt. John thus, under the law, begins to "usually reside" in a foreign country, his vessel is liable to lose its register and the protection of the flag of his country. 4. Every citizen of the United States obtaining a register for an American vessel must make oath "that there is no subject or citizen of any foreign power or state directly or indirectly, by way of trust or confidence, or otherwise, interested in such vessel or in the profits thereof." (U. S. Rev. Stats., sec. 4142.) We invite foreign capital to come to us, and help build our railroads, work our mines, insure our property, and even buy and carry our Government bonds as invest- ments; but if a single dollar of such capital is used to build an American ship, and thereby represents an ownership to any extent of the value received, we declare the ship to be thereby so tainted as to be unworthy of the benefit of American laws. 5. A foreigner may superintend an American factory, run an American railroad, be president of an American college, or hold a commission in the American Army, but he can not command or be an officer of a registered American vessel. (U. S. Rev. Stats., sec. 4131.) Notwithstanding this express provision of law, it is an indisputable fact that there is hardly an American vessel engaged in foreign trade that haa not one or more for- eigners employed as officers; and instances, it is said, are not rare, of American vessels which have no citizens of the United States on board except the master. If Capt. John Smith, being a foreigner, took command of an American vessel, and falsely swore that he was an American citizen, he would "forfeit and pay the sum of $1,000." If one of the owners should take such oath, Capt. Smith not being in the district, the vessel would be subject to forfeiture; but no such case of forfeiture has ever occurred. She would, however, not be subject to forfeiture "if Capt. Smith had been appointed the lowest officer on the vessel." To be sure, the law requires that "officers of vessels of the United States shall in all cases be citizens of the United States"; but there is no penalty whatever imposed on the vessel if they are not. Many American citizens, on the other hand, undoubtedly own vessels under foreign flags. Some of them transferred their vessels to English colors during the war to SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 181 escape cajjtiire by Confederate war vessels, but there are many who adopt this expedi- ent to obtain cheap ships. They engage a trustworthy English clerk, for instance, and buy the vessel in his name, holding a m.ortgage for her full value as security. Some years ago the American consul-general to China — Mr. Seward — in a report to the State Department stated as within his personal experience from 1862 to 1875 "that the rigid enforcement of this lavv^ would often have forced the owners or agents of those vessels engaged in that part of the world to lay up their ships or transfer them to other flags. " C^. No foreign-built vessel or vessel in any part owned by a subject of a foreign power can enter a port of the I'nited States and then go to another domestic port with any new cargo or with any part of her original cargo that has been once unladen without having previously voyaged to and touched at some other port of some foreign country under penalty of confiscation. By a comparatively recent construction of the law all direct traffic by sea between the Atlantic and Pacific ports of the United States via Cape Horn or the Cape of Good Hope, or across the Isthmus of Panama, is held to be of the nature of a coasting trade or vovage in which foreign vessels can not participate. (U. S. Rev. Stats. .W. 4347.) In view of the fact that there has been no attempt in recent times on the pn.rt of the English, French, or Dutr^h Governments to interfere with the transport of mer- chandise by American ships by the common highway of the ocean between the home ports of these countries and their colonial possessions this construction of law, not contemplated at the period of its enactm.ent. was regardel by Europe as a bit of very sharp and mean practice on the part of the L'nited States, as it undoubtedly was. 7. An American vessel once sold or transferred to a foreigner can never be bought back again and become American property, not even if the transfer has been the result of capture and condemnation by a foreign power in time of war. (U. S. Rev. Stats., sec. 4165.) 8. A vessel under 30 tons can not be used to import anything at any seaboard port. (U. S. Rev. Stats., sec. 3095.) 9. Goods, wai'es, and merchandise, the produce of countries east of the Cape of Good Hope, when imported from countries west of the Cape of Good Hope, are subject to a duty of 10 per cent in addition to the duties imposed on such articles when im- ported directly. This law is interpreted so stringently that old second-hand gunny bags, nearly worn out, do not lose their distinctiveness to an extent sufficient to exempt them from additional duties if they finally come to the United States, in the process of using, from a place west of the Cape of Good Hope. A few years ago a vessel from China destined to ^Montreal, Canada, was sent, on arriving, to New York without breaking bulk. It was held that the voyage ceased in Canada, and that the new voyage to New York subjected the cargo to an additional 10 per cent. By the original navigation laws (act of 1790) it was provided that the tariff on all articles imported in American vessels shall be less than if imported in foreign vessels. On "Hyson" tea the duty in American vessels was 20 cents per pound, in foreign vessels 45 cents. The present discriminating duties on products of countries east of the Cape of Good Hope, imported indirectlv, are a remnant and legacv of these old restric- tions. (U. S. Rev. Stats., sec. 2501.) 10. If a vessel of the United States becomes damaged on a foreign voyage, and is repaired in a foreign port, her owner or master must make entry of such repairs at a customhouse of the United States, as an import, and pay a duty on the same equal to one-half the cost of the foreign work or material, or 50 per cent ad valorem; and this law extends so far as to include boats that may be obtained at sea from a passing foreign vessel in order to assure the safetv of the crew or passengers of the American vessel. (U. S_. Rev. Stats., sec. 3114.) To the credit of former days it should be said that this provision of law was not a part of the original navigation laws of the United States, but was incorporated into them by special statute passed July 18, 1866. entitled "An act to prevent smuggling, and for other purposes." Under the Treasury regulations it is held that, although no part of the proper equipment of a vessel arriving in the United States from a foreign country is liable to duty, such equipment, if considered by the United States revenue officers as redundant, is liable to the payment of duty as a foreign import, although there may be no intent of landing, disposing of, or using such extra equipment, except in connection with the vessel. Thus, for example, when two sets of chains were found on board of a foreign vessel, and one set was held to be all that was necessary, the other set was made chargeable with duty. In another case, wdiere anchors and chains were bonded on importation, and at the same time entered for exportation, and placed on board the vessel as a part of her equipment, it was held by the Treasury that the legal duties shoiild be cidl^'cted on t\\(^ samf>. 11. Foreign vessels losing rudder, sternpost, or breaking shaft, and arriving in the United States in distress, can not import others to replace these articles here without 182 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. payment of the duty on the same. In one case of actual occurrence, a foreign line of steamers left — during a trip interval — thtir mooring chains, of foreign manufacture, on an American wharf. Some ov(r- vigilant revenue officer reported the occurrence to the Treasury Department, and it was decided that, as the chains were landed, the legal duties should be collected from them as an importation. A foreign vessel can not even land copper sheathing for the sole purpose of being recoppored by American workmen, without paying duties on the old copper stripped off, and the new copper put on, as S( parate and distinct imports. During the year 1871 the owner of a Dutch vessel entf red at Boston, ignorant of the peculiar features of the tariff of the United States in respect to the ocean-carrying trade, put on board at the foreign port of clear- ance a quantity of sheet copper sufficient to sheath the bottom of his v( ss"l, it being intended to have the w'ork done in the United States upon her arrival in order to save time and put the vessel in good order for her return voyage. The agent, ad\T.sed of this arrangement, referred the matter to the officials of the Boston customhouse for instructions, only to learn that the new shf^athing metal could not be used in the United States as proposed without paying a duty of 45 per cent, while the copper taken off the ship's bottom must also pay a duty of 4 cents per pound as an importation of old copper. The agent signified his willingness to pay the latter and sell the old metal for what it would bring, but requested to be allowed to land the new copper in bond for reexportation, as it would be carried out l)y the same vessel that brought it in. He was informed, however, that the bond for exportation required for its can- cellation a certificate of the landing of the bonded goods in the foreign port for which its export was declared which could not be obtained if it was entered at the port of destination upon, and not in, the ship carrying it. The consequence was, that when the ship discharged her cargo at Boston she sailed for Halifax, N. S., carrjdng her sheathing copper with her, and after having been there coppered by the shipwrights of the British Provinces returned in ballast to Boston for her return cargo — all this costly proceeding being cheaper than the payment of 45 per cent duty for the pri^dlege of employing American workmen to take off the old sheathing and put on the new. 12. If a citizen of the United States buys a vessel of foreign build which has been wrecked on our coast, takes her into port, repairs, and renders her again serviceable and seaworthy, he can not make her American property unless it is proved to the sat- isfaction of the Treasurj^ Department that the repairs put upon su?h vessel are equal to three-fourths of the cost of the vessel when so repaired. (U. S. Rev. Stats., sec. 4136.) The following is an illustration of the working of this statute: In 1871 a citizen of Baltimore purchased a foreign-built vessel Avrecked on the American coast and abandoned to the underwriters and, by spending a large sum in reconstruction, ren- dered her again seaworthy. He then, being desirous of employing his capital embod- ied in this instrumentality of trade in the most profitable manner and assuming that the reconstructed wreck was his lawful property, arranged for an outward e-irgo under the flag of the United States. But when the vessel was ready to sail re-istry was refused by the customs officials on the ground that the vessel was of foreign con- struction, the sum of the repairs put on the wreck being a little less than three- fourths of the original cost of the vessel; for, in other words, the substance of this decision, which was correct in law, was that while the citizen under the laws of the United States might lawfully buy and acquire title to a wreok and use it for any purpose other than navigation — as, for example, as a dock, a house, or a coal bin — he could not acquire title to it and make it American property lawful to use as a vessel even after he had paid duties on its old materials as imports unless he could show that he had expended upon the abandoned construction for the purpose of restoring it to its original quality for service a sum nearly equivalent to the cost of building an entirely new vessel. The owner by law, most mercifully, in such cases la not, however, deprived of the pri\dlege of selling the property to a foreigner. 13. Every vessel belonging to the mercantile marine of the United States engaged in foreign trade — vessels employed in the fisheries excepted — must pay annually into the Federal Treasury a tonnage tax at the rate of 30 cents per ton. (U. S. Rev. Stats., sec. 4219.) At the commencement of the war there were no tonnage taxes; but by the act of July, 1862, a tonnage tax of 10 cents per ton was imposed, which was afterwards in- creased to 30 cents, the present rate. Although there was nothing specific in the recent enactments to warrant it, and American shipping engaged in foreign trade was in such a condition as to demand the kindliest consideration from the Government, the Treasury officials, interpreting the statute accoreling to the invariable rule for the benefit of the Government and to the disadvantage of the citizen, were in the habit, up to 1867, of collecting this tax at every entry of a vessel from a foreign port; but by the act of March, 1867, tonnage taxes can now be levied but once a year. On a SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 183 ship of 1,000 tons the present tax, amounting to $300 per annum, represents the profits or interest — reckoned at 6 per cent — on an invested capital of $5,000, and on a ship of 2,000 tons of $10,000. Mr. F. A. Pike, of Maine, in a speech in the United States House of Representatives, May, 1868, stated that this tax was equiva- lent, in many instances, to 3 per cent on the market valuation of an inferior class of American vessels, employed only in the summer months, and largely owned by his constituents. Vessels belonging to foreign States, between whom and the United States ordinary commercial relations are established, pay the same tonnage taxes as American vessels. But if any person not a citizen of the United Slates becomes an owner to the extent of the merest fraction in a ship of American build, then such ship is not entitled to the privileges accorded to ships owned wholly by foreigners, but must pay on entering a port of the United States a tonnage tax of 60 cents, or double rate, and such vessel at once ceases to be entitled to registry or enrollment as a vessel of the United States. Here, then, we have piled up, as it were, on the top of all other provisions, another direct, odious, and stupid discrimination against the employment of foreign capital, provided it should so incline, for the developing of the American shipping interest and the employment of labor even in our own dockyards and harl^ors. Supposing a similar law to be proposed, discriminating in like manner against the investment of foreign capital in American railroads, mines, factories, and mercantile enterprises generally, does any one doubt that the proponent would be at once hooted into con- tempt? ' And yet the hypothetical law is no more absurd than the law that actually exists upon the statute book. Practically the law is a dead letter. In the case of ordinar)^ vessels rigid inquiry as to ownership is rarely or never instituted, and the oath required is regarded and taken as a mere form. In case of incorporated American ocean-navigation com- panies (if there are any such) the president of the company has only to swear to the ownership of any vessel by the company, and the Federal officials will not care if the ownership of one or a majority of the shares of the corporation vest in citizens of for- eign nationalities, the provision of the statute, as with a view of making the law of noneffect being that, in this swearing to ownership by a company, it shall not be necessary to designate the names of the persons comprising such company. The result of this is that any foreigner can purchase shares in any American navigation company, and not a vessc'l of their fleet will thereby lose American registration and American protection; but if a foreigner became the owner of the small* st fraction of a 100-ton steamboat, plWug between Key West and Habana, the registration of such vessel would be immediately vitiated. If a Sunday school or a picnic party, out on an excursion, happen to come into an American port on a foreign (Canadian) vessel (as was recently the cas<^' on one of our upper lakes) for mere temporary and pleasure purposes, the vessel is lialsle to a ton- nage tax; and a Ubel against the vessel, instituted by an overzealous official for its payment, was decided by the Treasury' Department (August, 1876) to be a proceed ing which the Government must enforce. 14. By the act of June 6, 1872, all materials necessary for the construction of vessels built in the United States for the purpose of foreign trade may be imported and used free of duty. But no American vessel receiving the benefit of this act can engage in the American coasting trade for more than two months in any one year without payment of the dutif s which have been remitted. 15. The several ports of the United States are classified by districts; and in each district one port is designated by statute as a "port of entry." and others as "ports of delivery." All vessels, on arri\'ing from a foreign country in any district, must first report at the established port of entry, and there conform to the details of the cus- tomhouse service; after which the vessel, if American, can proceed, if desired, to any port of delivery in the district for the purpose of unloading. But if the vessel be foreign, it can only discharge at the port of entry, even though its cargo be imported exclusively for the use of American citizens at a port of delivery. A ship, therefore, may pass almost within hail of the point of destination of its cargo, and yet be com- pelled to unload many miles away, thus necessitating reshipping and repeated hand- ling, at much additional expense. Thus, the customs district of Boston and Charles- town comprises only one port of entry — Boston — while Cambridge, Medford, Hing- ham, Cohasset, etc., are all ports of delivery only. If a foreign vessel arrives from abroad with a cargo of hemp for Hingham, instead of proceeding direct to the wharf in that port, she must first sail right by, enter herself and cargo in Boston, and then unlade at a Boston wharf, when the goods may be reshipped by packet or railroad for Hingham. Again, if a foreign vessel is loaded 'W'ith a cargo for Saybrook, a port of delivery at the mouth of the Connecticut River, she must pass directly by her desti- nation, and proceed 40 miles up the river — often with difficulty navigable — to Middle- town, the port of entry for the district, and there discharge and pro-vnde for the recon- 184 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. veyance of her cargo by some other method of transportation to the place where it is wanted. The following will also illustrate in some degree the manner in which the naviga- tion laws of the United States have been executed: All vessels of the United States engaged in the coasting trade are required to be en- rolled and licensed: and vessels engaging in trade and transportation without pre- viously procuring such enrollment or license are liable to seizure and heavy penalties. On the east bank of the Hudson, in the City of Troy, State of New York, there are extensive ironworks, the coal and ore supplies for which are largely transported over the Erie and (hamplain Canals. Boats coming down these canals loaded with such supplies are locked into the Hudson at West Troy, a point on the west hank nearly opposite to the furnaces: then, after crossing the river, delivering their freight, and recrossing, reenter the canal, and return on their route for another similar cargo. Some years ago the officials of the United States Treasury Department decided that under our navigation laws this temporary entry of boats from the canals into the Hudson for the purpose of delivering cargo, and their subsequent return into the canal, consti- tuted a coasting voyage, for the engaging in which it was obligatory on the owners of the canal boats to have pre\'iously taken out a license. Of course the owners, not anticipating any such official interpretation of the law, had not provided themselves with licenses: but this nevertheless did not prevent a large number of boats from being seized and libeled for violation of the navigation laws, from which they were only released after expensive and annoying litigation and the payment of considerable sums in the way of costs or penalties. ]yir. Chamberlain. My letter to Senator Fletcher was as follows [reading :] Washington, D. C, October 14, 1915. Hon. Duncan U. Fletcher, United States Senate, Washington, D. C. Dear Senator Fletcher: At your recent call at this office to inquire about changes in the "antiquated navigation laws," I told you that many of those who discuss ques- tions relating to the American mercantile marine seem to overlook the many desirable changes in the old navigation laws, effected by Congress between the years 1895 and 1914. The Democratic national platform of 1880 favored "free ships and a living chance for American commerce on the seas and on the land." This plank, as I recall it, was drawn by Col. Henry Watterson of the Louisville Courier Journal, and that paper and the New York World, then edited by Mr. W. H. Hurlburt, undertook an active cam- paign in behalf of changes in the navigation laws and more particularly the old registry act, which prohibited the American flag and register to vessels, except those built in the United States. This movement had the support of the leading Democrats of that time, like Senator Beck of Kentucky, Senators Vest and Cockrell of Missouri, Lamar of Mississippi, and the strong support of President Cleveland during his second admin- istration. The "free ship " plank of 1880 meant the admission of foreign-built ships to American registry, which was not fully carried out until the act of August 18, 1914. The ship registry bill of 1914 was in effect the tardy fulfillment of a party pledge and was an emergency war measure only in the sense that war conditions made plain to every one in Congress the desirability of its enactment. To promote the reform of our navigation laws favored in the national platform of 1880, Mr. David A. Wells, cooperating with Mr. Hurlburt of the New York World and Col. Watterson of the Louisville Courier Journal, prepared a series of articles criticizing the navigation laws of the early years of the Republic. These articles appear in the World in 1881, and were afterwards assembled in a little book called "Our merchant marine. How it rose, increased, became great, declined, and decayed. With an inquiry into the conditions essential to its resuscitation and future prosperity," pub- lished in the series of Questions of the Day, by Putman's Sons, New York, in 1890. This book is still the standard textbook of those who condemn the antiquated naviga- tions laws, although practically every law criticized in the publication has been repealed or greatly changed since 1894. Mr. Wells subjected 15 statutes to destructive, and in most cases, deserved, crit- icism, and I wisli to summarize for you now what Congress has done with these several laws. 1. Section 4134, Revised Statutes, provided that an American vessel ceased to be such if owned in part by a person naturalized in the United States who, after acquiring such ownership, resided for two years in a foreisjn countrv. This section was repealed by section 10 of the act of March 3, 1897. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 185 2. Section 4133, Revised Statutes, provided that if a native-])orn American citizen owning any share in an American vessel took up his residence abroad, the vessel ceased to be an American vessel. This section was repealed by section 16 of the act of March 3, 1897. 3. Section 4142 of the Revised Statutes provided that every citizen of the United States in registering an American vessel must make oath ''that there is no subject or citizen of any foi'eigu power or state directly or indirectly, by way of trust or confidence, or otherwise, interested in such vessel or in the profits thereof." Under a ruling of Hugh McCulloch, Secretary of the Treasury, January 30, 1869, this oath is not required in the case of vessels owned by corporations. Foreign capital to an indefinite extent may be invested in corporations owning American ships, and, as you are aware, practically all ocean steamers are owned by corporations under modern business conditions. Secretary McCulloch's ruling was reaffirmed by Attorney General Brewster and again by Attorney General Wickersham, and the criticism of section 4142, under current conditions of ownership, has very narrow application. That was true at that time, and it is true now, I must say in justice to a man who really did a great public service. 4. Section 4165 of the Revised Statutes pro\'ided that an American vessel once sold to a foreigner can not again receive American registry. This section was mate- rially modified by section 10 of the act of March 3, 1897, and was entirely repealed by the act of March 4, 1915 (to provide for provisional certificate of registry of vessels abroad). 5. The act of March 6, 1872, provided that material necessary for the construction of vessels built in the United States for foreign trade may be imported free of duty, but American vessels receiving the benefit of this act can engage in the coasting trade only two months in the year. The Payne-Aldrich tariff extended this coasting privilege to six months in the year and the Panama Canal act of 1912 and the Under- wood tariff provided for the admission, free of duty, of materials for the construction of ships, regardless of whether the ships be engaged in the foreign or in the coasting trade. 6. Section 4219, Revised Statutes, required every vessel to pay tonnage tax at the rate of 30 cents p?r ton. By the acts of 1884 and 1886 the rate was reduced to 6 cents a ton on vessels from transoceanic ports and 3 cents a ton on vessels from near-by ports, payable not to exceed five times a year, and this lower rate of 3 cents a ton was reduced to 2 cents by the Payne Tariff Act. In fact, tonnage dues levied in the United States are now materially less than the corresponding charges levied in the ports of all European nations. They amount nowadays to an annual charge of about $1,200,000 on a seaborne commerce of the United States valued last year at $3,957,- 000,000. That was written in October, and I think the revised figures for the foreign trade make it about S4, 000, 000,000. 7. Section 3114 of the Revised Statutes provides a duty of 50 per cent ad valorem on repairs to American ships abroad. Mr. Wells did not state correctly the pro- visions of section 3114, which applies only to repairs of Great Lakes vessels in Canadian ports. That never had any appUcation to repairs on the seaboard at all, but Mr. Well's oversight was natural, because in reading the text of section 3114 anybody would have drawn the same conclusion that he did. There is no duty on the repairs to American sea-going vessels effected in foreign ports. 8. Section 3095 of the Revised Statutes provides that a vessel under 30 tons can not be used to import anything at a seaboard port. This statement is only partially correct as it does not apply to ports adjacent to the Dominion of Canada on the north, or to Mexico on the south, and very small vessels under 30 tons, of course, are not suitable for foreign voyages, except between our border ports and the adjacent ports of Canada and Mexico by sea. In other words, I did not think that criticism at that time was a vahd one. The law remains unchanged. 9. The system of ports of entry, subparts, and ports of delivery, established by various sections of the Revised Statutes, was criticized by Mr. Wells with good rea- 186 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. son. This system was completely changed by the reorganization of customs dis- tricts, carried through by Representative Fitzgerald and approved by thePresident Taft at the end of his administration. 10. Section 4131, Revised Statutes. An alien may not act as officer of a registered American vessel. This was partially repealed by section 2 of the ship registry act of August 18, 1914, and by the President's order of September 4, issued pursuant to that section. Congress at the coming session will doubtless determine a permanent policy on this subject. 11. Section 4132 prohibits an American citizen from registering a foreign-built vessel . This law was partially repealed by the Panama Canal act of 1912, and entirel / repealed by the ship registry act or free ship act of August 18, 1914. The exemptions, you will recall, under the presidential order apply in most cases only for two years. That period will run out in Sep- tember, and I assume that this committee, if it has not now, will have under consideration the determination of a definite policy. That will be very desirable, of course, if the registry law is to remain to be practically effective. 12. Section 4136 of the Revised Statutes provides for American registry for a foreign-built ship, wrecked in the United States, if repairs equaling three-fourths of the cost of the vessel are effected on the wreck in American yards. So far as ves- sels in the foreign trade are concerned, that section is a dead letter, as the wreck can be admitted to American registry for foreign trade regardless of the amount of repairs. The old law was reenacted, so far as the coastwise trade is concerned, by the act of February 24, 1915. 13. Mr. Wells in his eleventh point deals with the importation of equipment, such as rudders, shafts, etc., for foreign vessels. It has nothing to do with the American merchant marine, although it does relate to American commerce. Section 17 of the act of March 3, 1897, permitted the transfer, free of duty, of articles for the legitimate equipment of vessels belonging to regular lines engaged in foreign trade from one vessel to another vessel of the same owner. You see, that is a limited repeal of that requirement, but it deals with foreign vessels only and not with our own, 14. Section 4347, Revised Statutes. Foreign-built vessels can not engage in the coasting trade of the United States. This is the only feature of our navigation laws, designed to protect American shipbuilding, which remains on the statute books. It does not, of course, affect the American merchant marine in the foreign trade. Mr. Hardy. Was that one of Mr. Wells's criticisms ? Mr. Chamberlain. Yes, Judge Hardy; it was. Mr. Hardy. The fact is, we limited our coastwise trade strictly to domestic-built vessels ? Mr. Chamberlain. Yes, sir. [Reading:] 15. Note.— Mr. Wells's criticism of section 2501 of the Revised Statutes (impor- tation of articles east of the Cape of Good Hope) requires no discussion, as the section was repealed on January 18, 1883, as noted in Mr. Wells's book. The campaign for the revision of the navigation laws, begun in 1880, you will see, has been carried to a successful conclusion, of which some of the very recent volunteers to the cause do not seem to be aware. Sincerelv yours, E. T. Chamberlain, Commissioner. That is the argument, as I understand it, of the greater part of the criticism of our so-called "antiquated navigation laws." From time to time Congress has taken these laws up and revised them and, so that now the two important remaining ones which Mr. Wells criti- cized, are the reservation of coasting trade to Ainerican vessels— and I do not think there is any very strong disposition to change that — and the restriction of the nationality of oflicers of our ships. That, of course, is a question of large policy. Some important maritmie SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 187 nations do not have restrictions of that kind, but I shall not take the tune to go into that. Mr. Greene. If I may interrupt you, in what way did the 30 cents tonnage tax hinder American vessels ? Mr. Chamberlain. It could not have hindered them at aU; it is applied equally to American and foreign ships. As a matter of fact, as I have stated, the present rates are very much less than those that are charged anywhere else in the world, so far as I am aware, and I have given the matter, of course, some attention. Mr. Greene. Does this apply to foreign ships ? Mr. Chamberlain. Oh, yes; absolutely. It is a matter of entire equality under our treaties. The exceptions are those nations with which we do not have treaties. There is a special tonnage tax on them. Mr. Edmonds. Mr. Chamberlain, will you teU us now what nations open their coastwise trade to foreign ships ? Mr. Chamberlain. As I recall it, the only nation which does that absolutely is the United Kingdom, not the Provinces and self-govern- ing dominions of the British Empire. Mr. Hardy. Let me understand the question. Do you mean na- tions that open their trade to foreign flags or to foreign-lbuilt ships ? Mr. Edmonds. Foreign-built ships in the coastwise trade. Mr. Chamberlain. I understand the question to refer to foreign flags. Mr. Hardy. In other words, what I want to get at is this: Does not England in regard to Great Britain and Ireland reserve that trade to herself? Mr. Chamberlain. That is the one exception. That is entirely open to the ships under any flag. Mr. Hardy. Can American ships trade between Glasgow and Liverpool ? Mr. Chamberlain. Absolutely. Mr. Hardy. Can they trade between the Dominion of Canada and England ? Mr. Chamberlain. Yes; we can trade between Canada and Eng- land, but we can not go from one Canadian port to another Canadian port. Between the Dominion of Canada and England, so far as British and Canadian laws aie concerned, navigation is precisely the same as navigation between England and some foreign country; and so far as Canada is concerned, it is the same as navigation between Canada and a foreign country. Mr. Hardy. Then an American ship could trade between English ports ? Mr. Chamberlain. United Kingdom ports. Mr. Hardy. Yes; United Kingdom ports. Or it could trade between Montreal and Liverpool without any difficulty? Mr. Chamberlain. Oh, yes. Mr. Hardy. But there is no other nation that does not reserve its coastwise business to itself ? Mr. Chamberlain. The rule that most nations have — there are some slight exceptions — is the rule of reciprocity : ' ' We will allow your ships to go into our coastmg trade if you will allow our ships to go into your coasting trade." But if you will stop to think of the vast difference in coasting trades you will see that reciprocity in 188 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. some instances would be a matter of swapping dollars for cents. For example, what is the coast of Germany? It is practically nothing. On the North Sea, it is less than 200 miles, I am sure, and I think it is in the neighborhood of 150 miles. Now, you see, the entrance into that trade would be a privilege that would not be worth having. Mr. Loud. Would it be permissible for an American ship to take a cargo from Quebec, for instance, to Vancouver? Mr. Chamberlain. No. That, you see, is between two Canadian ports. Mr. Loud. That is what I am getting at. Mr. Chamberlain. Here is the rule of Canada and the other British self-governing dominions: That the ships of any nation can engage in the coasting trade of Canada between Canadian ports if the other nation will admit ships under the British flag to engage in its coasting trade. Norway, for example, has such an arrangement. The ships of Norway can carry between Canadian ports, and in return for that privilege British ships are permitted to carry between ports •on the coast of Norway. Mr. Hardy. How many treaties of comity of that kind has England now, and with what countries ? Mr. Chamberlain. There are seven or eight of them. I have the list at my office. Mr. Loud. What have you to say as to the detrimental effect upon our merchant marine of the existing laws as to tonnage ? Mr. Curry. Before you get away from this point I should like to ask you this: You have stated that an American ship may engage in the coastwise trade of the United Kingdom; that is, England, Scotland, Wales, and Ireland. Is it not true that Great Britain practically protects her coastwise trade by charging a larger tonnage tax and port dues on foreign ships in that trade than it charges the British vessels ? Mr. Chamberlain. I have never heard of it. Mr. Curry. I have heard that, and you ought to be in a position to know. Mr. Chamberlain. If you will show me your authority for that I may be able to look it up. Mr. Curry. You can find it out from the British Board of Trade Hules and the port rules. Mr. Chamberlain. We have both of those at the office and I have given them some attention. Mr. Hardy. Have we not a treaty with Great Britain which directly forbids her charging heavier dues to our ships than to her ■own? Mr. Chamberlain. Since 1815, I think it is. Mr. Hardy. 1828. Mr. Chamberlain. I do not think there is anything of that kind. Mr. Curry. How about light charges ? Mr. Chamberlain. Those are not heavy. The British changed their law to correspond with our law as nearly as you can reduce shillings to cents. I think where we charge 30 cents they charge 28| cents — as near as they can get it. Now, Mr. Chairman, there has been recently a real effort made to criticize the navigation laws, and I have it here. It was the effort SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MARINE. 189 made by a committee of which Capt. Dollar was one member and Capt. Allan Lockhurst, American superintendent of the International Mercantile Marine Co., was another. There were one or two other members whose names at this moment I do not recall. They were appointed, you will all recall, shortly after the outbreak of the war. Tnere was c[uite an assemblage here at Secretary McAdoo's office to take up shipping and other matters. They reduced their criticisms to writing, and I have prepared copies for the members of the com- mittee. I might say that the references to the navigation laws are to the edition of 1911 and not the new edition of 1915, and I think you gentlemen have them. [Reading:] After we have permission to import foreign-built ships and give them the American flag the next and all-important consideration is that we must have our laws amended and changed so as to permit us to successfully operate our ships in the foreign trade in competition with those of all nations. The American shipowner asks no advantage of any kind or descriyition over foreign competitors, but we must le put on a fair competitive basis. Therefore the following changes are essential and necessary: Page 30 of navigation laws: The measurement to be changed to conform to the standard of Great Britain, so that the American ships will ha\ e the same measurement. Page 54, section 62, of navigation laws: Any ofhcer ser\ing on foreign ships that will be transferred to the American register shall 1 e entitle 1 to ser^e in a like capacity for one year. At the expiration of one year, if he shall have declare 1 his intention of becoming an American citizen, then on examination he can get American papers. The President's order, as you all well know, covers that for the time being. The permanent policy, I take it, will be settled by this committee and by Congress. Mr. Greene. Is not that determined by the President for a term of years— seven years ? Air. Chamberlain. Yes; it is determined as to the continuance of officers that are on ships which have been admitted or that will be admitted up to September. After that it does not hold. Mr. Greene. But it runs for the term of seven years? Mr. Chamberlain. For those that are now on board; yes. Page IIG of navigation laws, fusible plugs: Inasmuch as these are not required or used by the ships of any other country, these should be abandoned. That is a matter that is entirely within the jurisdiction of the in- spection service and I am not competent to express any opinion on the subject. Mr. Hardy. It is a very trivial matter, is it not ? Mr. Chamberlain. It is not a large matter. It certainly can not be called a handicap on the American merchant marine. Mr. Hardy. Can you tell us just what a fusible plug is ? Mr. Chamberlain. It is a little plug of brass with a soft metal in- side of it that will melt as the temperature rises, I do not remember to what degree, but at what is assumed to be the danger point. The Chairman. Capt. McAllister, will you explain that for us? Capt. McAllister. This fusible plug is a precautionary measure that they use for boilers. In the table sheet in the back connection of the Scotch boiler they insert a little plug. In the interior of this plug is a composition of metals which melt easily. If the water gets down below this plug the temperature rises so hi^h as to melt this fusible alloy, and that will blow out and give warning that the water is low. 32910—16 13 190 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. The Chairman. That is in the interest of safety ? Capt. McAllister. That is in the interest of safety; but there is no ship in the United States Navy using it to-day, and there is no revenue cutter which uses it to-day. They have other precautionary measures which do not make it necessary. Mr. Hardy. It is nothing but a safety valve ? Capt. McAllister. It is really a little safety appliance; yes, sir. they cost from §3 to !^5 apiece. They are not expensive, but what the ship people complain of is the delay and bother of fitting them. They have to insert new plugs each year, and they have to cool the boilers down to put them in. It is more bother than expense really. Mr. CuRRY'. And it involves delay ? Capt. McAllister. Delay; yes, sir. The Chairman. It could be dispensed with without militating against safety ? Capt. McAllister. As I say, the United States Navy and the Coast Patrol dispensed with them long ago. Mr. Hardy. What do they have in lieu of them ? Capt. McAllister. We simply watch the water. We have water gauges and gauge cocks, and we do not allow the water to get down. Mr. Hardy. Is it not very necessary, with a man that is not par- ticularly careful that he be provided with a sort of automatic safety valve ? Capt. McAllister. There should be no steam boilers operated that do not have men to watch them all the time. Mr. Curry. Are there any engineers employed in the American merchant marine that are not qualified ? Capt. McAllister. I think the engineers in the American merchant marine are the equal of any anywhere. Mr. Curry. It takes a man from 10 to 15 years to work up to be an engineer. By that time if he does not know his business he ought to get out ? Capt. McAllister. I think so. Mr. Edmonds. Do not our navigation laws require water tenders ? Capt. McAllister. I think they do; and they are very essential men, too. Mr. Edmonds. That is one of the things complained of. With fusible plugs and water tenders both we ought to have pretty safe boilers. Mr. Hardy\ It is just suggested to me here that we had a vessel last year where the fusible plug failed to fuse, and the result was an explosion of the boiler with the killing of eight men, on the Ohio River. It seems to me we need some safety device of that kind. Mr. Curry. This is a rule of the department. Sometimes the laws are blamed for what possibly are proper rules of the department. The water tender is not required by law. No foreign government requires, either by their rules or by law, water tenders on ships. Our rules of the department do require them. So that is an extra expense; it is simply an expense that is provided for by the rules of the depart- ment and could be rectified by repeahng the rules. If they ought to be retained, they should be retained. Mr. Chamberlain. The plugs are a statutory provision. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 191 Mr. CuRRY. But the water tenders are simply a regulation of the department ? Mr. Chamberlain. Quite so. [Reading:] Page 118, section 128, of navigation laws: In importing ships it will be impossible to have the places stamped previous to the construction of the boiler; therefore this should be modified so as to accept stamping and certificate of the nation under whose supervision the boilers are built; in other words, the steamer as she stands with her country's certificate shall be accepted. This, you will find, is covered by the act of March 3, 1897. It covers that fact quite fully. These gentlemen seem to have over- looked that. Page 119, section 131, of navigation laws: Our law proA ides that once a year there shall be applied a hydrostatic pressure equal to one and one-half the steam pressure. Except Canada, this is not required by any other nation; therefore this should be given up except in the case where the inspector thinks the boiler from any cause has been weakened. That is purely the steamboat-inspection statute, and I do not feel competent to express any opinion on the subject whatever. It has been a matter of discussion off and on for years. You will recall that there was some talk of that over at the London conference from time to time. Page 123, section 133, of navigation laws: All steel ships should have the bulkheads run from the tank top up to the main or weather deck. All such vessels should have a water-tight double bottom. No vessel that will be built hereafter to carry passengers shall be permitted to do so without hav- ing a double bottom. Without going into the merits of that proposition, it is not in the law now. It certainly is not a handicap to American ships. It is not an "antiquated navigation law"; it is a new bill that you may deem it wise to enact. The Chairman. And if wc carry out the international convention on safety devices at sea with reference to the construction of new ships, all nations will approve the construction in the interest of safety, Mr. Chamberlain. It will be amply covered, and a great many other things, too. Page 132, section 139, of Navigation Laws: _ Vessels not permitted to carry passengers or those having passenger certificates for limited number should be allowed to carry workmen from one place to another in the United States where they will be required to handle cargo or while doing repair work on the ship. That is permissible now, and I do not quite see the point of the criticism. Mr. Hardy. They must have had the idea that our coastwise navigation laws forbid it — about which I do not know? Mr. Chamberlain. This just refers to men who are engaged in repair work on the ship. They are not passengers in any sense of the word. !N'Ir. Hardy. Your idea is that under the law as it exists one of these vessels, while it could not carry passengers from one i^ort to another, could on its return voyage, for instance, from New York to Gc Iveston, carry workmen? Mr. Chamberlain. I have never heard of a case where a vessel went quite that distance. Usually they go just a short distance, as 192 SHIPPING BOARD, NAVAL AUXILIARY^ AND MERCHANT MARINE. from the dock to a repair yard which is somewhere near by. Very seldom is it farther than from New York to some of the Delaware Bay shipyards, and sometimes not even that far, Mr. Hardy. Strictly speaking, those men are passengers, are they not? Mr. Chamberlain. I think that may be a question. I am very sure we have held in the case of stevedores that they are not, and if this case came up I think there would be a similar ruling. At all events, you will see it is such a detail, a thing that happens so seldom, it can not, it seems to me, be charged as a serious statutory drawback on the development of American shipping. Page 134, section 140, of na\dgation laws: The law at present is that when a ship's inspection certificate expires she must stop at the United States port that she is in, even if there are no inspectors there but have to come from a distant port. All vessels should be permitted to go to their home port for inspection, provided that the time occupied does not exceed 15 days. Owners then are able to look after and superintend the repairs which generally can be done cheaper and quicker at the home port than at other places. That is also a matter of sufficient inspection laws, about which I really do not care to express any opinion. Of course it is perfectly obvious that if you have enough inspectors that situation will not arise. Mr. Curry. You are the head of that department ? Mr. Chamberlain. Not of steamboat mspection; that is quite distinct. Gen. Uhler is the head. Page 136, section 141, of navigation laws: This provides that the licensed officers must point out all the defects and imper- fections known to them, in the hull, equipment, and boilers. Mr. Greene. That is a recent law ? ^Ir. Chamberlain. That was just passed a short time ago. This should read that on arrival at any port they shall immediately communicate with the owners and report any defects or imperfections in the ship as well as to report to the inspectors. That is not "antiquated," because that was only passed a year Mr. Greene. Would it not be wise to add that to this provision, "that licensed officers must point out all defects immediately." Would it not be wise to have them do it at once rather than to have them delay until they get ready to sail ? Mr. Chamberlain. My recollection is — although that is also a steamboat-inspection iiile and I ought not to say anything about it — that this was substantially the law until it was changed about a year or so ago. The Chairman. The only change in the law — if I know what you are referring to — is this: Officers on vessels may complain of defects or insufficient equipment directly to the inspector and without hav- ing knowledge of the fact come to the ship owner. Heretofore the officer has been under restraint; he was afraid to make complaint for fear he would be discharged. Now, if a communication is made to the inspector the inspector, of course, verifies for himself whether or not the conditions exist. It is to prevent that restramt on the captain and at the same time to insure safety to the ships. Mr. Greene. I do not object to that at all, but from what Mr. Chamberlain read I thought it would be wise to provide that when a SHIPPING liOARD^ NAVAL AUXILIARY^ AND MERCHANT MARINE. 193 vessel arrived in port these defects should be reported at once rather than delay until the vessel was about ready to sail and then report a defect and have to wait and get it fixed. Mr. Chamberlain. An officer ought to do that anyway, without having an act of Congress to tell him to do so. Mr. Greene. I think so myself, but it ought to be provided that the defects shall be remedied when the vessel arrives in port rather than allow it to be delayed until they get ready to sail. There ought to be some definite time. Mr. Chamberlain (reading) : Page 136, section 141 o/ navigation laws: After the licensed officer has signed the articles he should be compelled to proceed with the ship unless through sickness or some reasonable cause. That in a sense is a criticism of the lack of law, not a criticism of an existing law. That is a steamboat-inspection matter — all matters pertaining to licensed officers are — and you would not expect me to go into a question of that kind. Page 166. section 1 83 of na^dgation laws: This section provides that it will be illegal for any person to board a ship until she is completely moored without permission of the master. This should read that no person should be allowed to board a ship at anchorage or dock or any place where she is Avithout first haAing obtained the consent of the captain or the officer in charge. The penalty provided for in this section should remain. That does not seem to me to be necessarily a matter for legislation at all. That is a matter of the discipline of the ship. If the captain chooses to say you can not come on board, you can not, and that is all there is to it. That is the way it works practically. So far as the large companies are concerned which have extensive docks and piers, they have fences, as you will recall, and a man can not get on the pier unless he has a pass, which is a perfectly proper matter of internal administration of the company or the ship. It hardly seems to me to be worthy of the dignity of congressional action w^hen men can do it themselves. But you may think differently about that. Mr. Cltrry. Under the pohce regulations of some States, are not the captains required to permit certain people aboard ? Mr. Chamberlain. Only those who come for public purposes, such as quarantine officers and it is perfectly proper they should. I do not think that is what the criticism means. Mr. Edmonds. They can not fence off a wharf in most States, be- cause the State law says that the opening to a water front is public property, and they must provide passageway through there for any- body tliat has business there. I have been forced, in the case of a wharf of mine in Philadelphia, to have an open gate at all times and a watchman to let people in and out. If they want to have access to a boat, we have to let them go in. Mr. Chamberlain. But you do not lease the wharf? Mr. Edmonds. I lease the w^harf, and I am forced to put a watchman there and have an open gateway there to let people go in and out that have boats moored there or are going to have boats moored there. That is a State regulation of Pennsylvania. The Chairman. It is very desirable, too, is it not? Mr. Edmonds. Yes; but I really think a captain should have the privilege, and that he has the privilege, of, preventing anybody from getting on his boat. 194 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Chamberlain. The matter did not strike me generally as a proper subject for Federal legislation. [Reading:] Pages 118 and 119, section 129, of navigation laws, re-vased edition, April 5, 1913: This provides that the local inspectors shall designate the number of officers and engineer's crew that are necessary for the safe navigation of the ship — All this part has been modified in some respects by the passage of the seamen s act — On American ships they have been putting on considerably more men, especially in the engine room, than are carried by foreign ships. The number of men that they should put on should be limited to the same number that all similar foreign ships are permanently carrjdng. That, in so far as it is a valid criticism, is not a criticism of the law but a criticism of the acts of individual inspectors here and there, which are alwaj^s subject to review, first, by the supervising mspector of the district, and then in the last analysis by appeal to the Supei'vismg Inspector Getieral at Washington. It certainly is not a valid criticism against the law; it may at times be a vahd criticism against the acts of individual inspectors. ]Vlr. Hardy. Would it not be a very strange law if we told our inspectors, "You must conform to what some other country does with reference to the number of officers?" Mr. Chamberlain. I think it would be a very difficult law to enforce. Mr. Hardy. And it would be next to a "fool" law, would it not? Mr. Chamberlain, If it were a fool law, I can not believe for a minute that Congress would pass it, Judge. It might be a fool biU. [Laughter.] This next paragraph will particularly interest you, Judge: On page 2 of the Re\dsed Statutes, which requires that all ships of a thousand tons QT over shall carry three mates, this should be changed to read 2,000 tons shall carry three mates. That, I take it, is a reference to the Hardy mates act. IVIr. Hardy. Not an antiquated law, at any rate ? Mr. Chamberlain. It is not antiquated; we all know that. Mr. Edmonds. Do these shipowners recommend that ? Mr. Chamberlain. This is then- criticism of the "antiquated navi- gation laws" that was submitted. Mi\ Greene. I suppose they think that om- friend Hardy's law ought to have been antiquated. %h\ Chamberlain. There is a great deal to be said on that subject, by the way, some time or other. Mr. Hardy. That is the law that cast its shadow before it and destroyed our merchant marine before it was enacted. IVir. Chamberlain [reading]: Temporary register of a ship: Rules and regulations should be laid down so that, as in the present crisis caused by the European war, a ship should be able to obtain the American flag without any delay while in a foreign port to bring her temporarily to this country. That biU was mider way at the time this criticism was \\Titten. It was passed, and is the act of March 4, 1915. So of course that criti- cism should be withdrawm. Apprentices: Any ship carrjdng American boys as apprentices should have a rebate from her tonnage dues amounting to 150 a year for every apprentice carried. i SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 195 You can take that for what it is worth. I will not go into that. A continuous discharge certificate book shall be carried by all men in the merchant marine service, which is a certificate of character and efficiency showing on what ships the man has served and the time. This is essential, as it will make it easier to get efficient and competent men. I might say that a great many years ago I tried to carry out a scheme of this kind, but its success, you will see, depends on the seaman keeping the book and his discharges. Mr. Greene. They keep them in the Navy apparently. Mr. Chamberlain. They do, because they get all sorts of privilege3 as the result of keeping them. I was rather sanguine in those days, when I was much younger than I am now, that the men would take this up, because on the basis of these certificates of discharge a man gets admission, for example, into Sailors' Snug Harbor, New York, and they get other advantages in the way of marine-hospital treat- ment and all that sort of thing; but as a voluntary proposition it failed. That of course is a matter that can not be carried out very successfully unless the seamen themselves are willing to keep these books. • Mr. Greene. They do in the Navy. Mr. Cha:mberlain. But the Navy conditions and the merchant marine conditions are quite different. [Reading:] Where licensed officers and engineers combine to compel us to put on more men on board the sliip tliau tlie ship's license calls for, some drastic measures should be taken to deal ^^•itll licenses. That is another licensed-ofhcer matter and comes under the Steam- boat Inspection Service. That, of course, is a matter of combination of men, and I do not know to what extent the statute could regulate that if you tried. And then there is the question of the disposition to do it. Stowaways. They should be prosecuted for trespass and imprisoned. There has been a bill to that effect before Congress off and on for a number of years. The Chairman. I have the draft of a bill here now. I have not had time to work it out, but it ought to be stopped. Mr. Chamberlain. If there is ever time to consider it I do not think there will be serious opposition. It is one of those things that has not attracted attention. That is a summary of the objections of several gentlemen who are certainly among the most competent men to criticize the navigation laws, and it was the result of careful study. I take it that it fairly represents the criticism Mr. Hardy. As a serious criticism it is almost comical, is it not? That is my opmion. Mr. Curry. There is one thing here I am very much interested in and I would like to get some information on it. I have been trying to get information and I have not been able to. That is the proposi- tion of how the American system of registration handicaps, so far as cost of operation is concerned, American ships in foreign ports. Mr. Chamberlain. I have reserved the matter of measurement for the last, because it is a matter quite apart. Mr. Curry. You mentioned this measurement proposition at the start ? 196 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. ]\Ir. Chamberlain. Yes; and I have reserved that to this time, and I will go ahead now if you wish. The criticism is not at the present time a valid one, because we have almost identically the measurement regulations of the United Kingdom. Our laws, in fact, will give certam kinds of ships less tonnage than the British laws do. The Secretary, Mr. Redfield, referred to that yesterday. It will give the ships less tonnage in these respects Mr. Cltiry. That is one of the direct charges against the laws, and and I have not been able to find out wherein it is detrmiental to the American ships. Mr. Chamberlain. I do not think it is. There have been times when it was Mr. Curry. Please take your time so we can get this information. It is not only for us but for people who are probably misinformed on this proposition. Mr. Hardy. We want you to make that as clear as you can. Mr. Chamberlain. In the first place, in considering the matter of ship's tonnage you want to dismiss from your mind all thought of weight. The term "ton" has not anything to do with weight at all. It refers to the cubic contents of the ship, fOO cubic feet to the ton. The gross tonnage is the entire cubical contents of the ship. That cubical content is made up of two kinds of spaces: The spaces that result in a revenue to the ship — namely, those that are devoted to the carrying of cargo and the carrymg of passengers, from which the ship makes money; and the spaces that cost money — namely, the spaces occupied by the crew, the spaces occupied by the engines, the bunkers, the coal for the boilers to make the steam, and a few minor matters, such as the boatswain's stores, the chart room, and several other details. Mr. Curry. The entire gross tonnage of the ship includes the cubical contents of the interior of the ship, added to which is the cubical contents of everything on the deck of the ship that is inclosed, figured on the basis of 100 cubic feet to the ton. Mr. Chamberlain. Permanently inclosed. That is the gross ton- nage. Now, that being determined by measurement, you next determine what to take out. The engine-room spaces, the bunkers, the crew's quarters, and these other minor matters are measured and taken out from the gross tonnage. "\^Tiat is left is the net registered tonnage, on which most ship charges are imposed — for example, our tonnage taxes in this country. They are about the only Federal charges that we will have. To go back again, the system now in general use by maritime nations — I do not think there is any exception to it — is what is called the Moorsom system, which was developed in England in 1855 or 1856 by a man named jMoorsom, although its foundation was laid by a French marine architect. The chances for difference in the application of the system arise from the necessary ambiguit}' of the words. You can not very well help that. Up to 1882 the laws of the United States provided simply lor the ascertainment of the gross tonnage. We made no deductions whatever to determine the net tonnage. Consequently up to 1882 the American ship would pay charges on its entire cubical contents; the foreign ship, more particularly the British ship, would not. It would pay on the remainder after the machinery spaces and all that SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. 197 sort of thing had been deducted. It would pay only on the net ton- nage. At that thne the criticism of our measurement laws would have been perfectly valid, and it was a very important factor. Con- gress in 1882 corrected that in part. A sailmg vessel, of course, is pretty nearly all cargo space. The amount that is requhed for the crew, for the boatswain's stores, and that sort of thing, is very small, so you can dismiss that. That is the same everywhere, and there has never been any question about that, so far as I know. Wlien you come to the deductions for engines and the accompany- ing coal bunkers there are two distinct rules which are really quite radically different. Without going into the details, because they are quite elaborate — I might say that this matter was taken up fuHy in my report for 1911 if anybody has curiosity enough to go into it. The two rules for the deduction of propelling power are called, first, the Danube rule, and, second, the board of trade rule, which is the rule employed by the British Government and it has been pretty gen- erally adopted. Without going into all the details of the differences between the two systems I will say that the Danube rule in the case of most ships makes a much less deduction for propellmg power, and consequently it increases the net tonnage on which charges are paid. The act of 1882 which I spoke of appHed the Danube rule. In other words, it reduced but continued the handicap. Before 1882 we did not have any deductions. It was an improvement, but it did not bring our law up to the current British practice and the practice of most other maritime nations. The Danube rule is the rule appUed under the Suez Canal measurement and the Panama Canal measure- ment. Those are money-making concerns; they want to get just as much revenue as they can, of course, so they make the smallest de- duction for machinery, thus creating the largest net tonnage. By 1895 the Frye measurement law was passed, and we changed to the British Board of Trade rule, and since 1895 we have had the same rule. The remaining factor, which is really quite important, depended on the different interpretations of the words ''permanent closed-in space.'' That refers, of course, to spaces on the upper deck; and down in the hull of the ship. You can see there is a great chance for differ- ence between men as to what should be regarded as permanently inclosed and what should not. For example, take this room. If you take the doors off and the windows out someone might say, "That room is not permanently inclosed; it is open there, open there, and open there." If you put the doors and wmdows in a man might say, "That is permanently inclosed; the windows are shut and the doors are shut."' Another man might come along and say, "Oh, no; that is not permanently inclosed. You can open the doors and you can open the windows.'' You might have this situation. The doors might be taken off and the windows taken out, but you might have angles running up and down the sides where you could slip in planks and calk them up. Then one man would say, "Yes; that is permanently mclosed." Another man would say, "No; those things are put in there only temporarily.'" I am stating only the simplest of cases that occur to me; there are all sorts of chances for different interpretations of the words "permanently closed-in spaces." 198 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. The British interpretaticn of that phrase has been in the way of greater Uberahty. That is, practically anythino; they could call an open space they have called an open space. The tendency of our regulations for years was to apply the strictest construction; any- thing that we could call closed in we would call closed in. Mr. Curry. That is the nub of the whole proposition. Mr. Chamberlain. Yes; that is the nub of the whole proposition. Mr. Curry. The rules of your department have been to consider as net tonnage everything that could possibly be considered as net tonnage. ]Mr. Chamberlain. I say that is the tendency. Mr. Curry. And the rule of Great Britain is to eliminate as much as they can ? Mr. Chamberlain. That in a general way describes the tendencies. Mr. Curry. That is the rule of the department ? Mr. Chamberlain. Oh, yes; and as I say we have changed that gradually from time to time. The question is not about an act of Congress, but about the technical meaniiig of words. The criticism is ]iot a legitimate charge against the law, but it is a fair charge against the administration of the laws. I might say that years ago we began modifying that and tending toward the British rule. But there is another thing to be borne in mind about the British rule. Take this room, with the doors out and the windows off, with this table in it. The British would call that an open space. If this table represents cargo, then under the British system a specific law provides for the measurement of what is called deck cargo, which is cargo in these so-called open spaces. They would measure the table and say, "While the whole space is open, this space occupied by cargo we are going to measure in and charge you light dues on that space." The British law covers that; the United States law does not. We have no authority to do that at all. We would have to measure the whole space or none of it. We have to say that this entire space shall be counted or it shall not be counted. The British law says, "We will not count the space if the space is empty; if there is any- thing in the space we will make you pay for space so occupied by cargo. That situation was perfectly well known and fuUy explained at the time the measurement law of 1895 was passed. And I may say Mr. Curry. That was taken up by Senator Frye. Mr. Chamberlain. As I say, in the enforcement of these rules we have had to consider that matter all the wliile, that we could not go half way as the British can, because we do not have the laws that would authorize us to do that. We could not charge for the deck cargo and let the rest go clear, so we considered we had to lean toward taking it all. That is the revenue theory, and it is the usual theory of all Government officers. Mr. Curry. Under the conditions we have in our merchant marine, do you not think we could be a little more hberal ? Mr. Chamberlain. For some years we have gradually been modify- ing these rules, with a tendency in the direction of greater liberahty. But I have hesitated for a long time to make the change, which is quite radical — to take the British rules in toto. After you passed the ahip-registry act, which suspended the measurement laws and other laws altogether, it seemed to me that the act was an instruction to SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 199 modify our regulations. In fact, when we were considering the draft of the ship-registry act, you will doubtless recall. Judge, when you and Mr. Underwood were in my office, we took up the question of measurement, and I stated it was not absolutely necessary to cover that in the bill because it could be done by regulation. But it was thought desirable to put that into the law, and I have regarded that as an expression by Congress, although it was not in terms, in favor of the British rules. ^Uso, if we did not, we would have this singular situation. We would have tliese 150 and odd slups that were ad- mitted with this very considerable deduction, and our own ships — the few with shelter decks — in tliis country would not have it. That act was passed August 18. Early in September we sent around word to all collectors that anybody who applied for remeasure- ment of these shelter-deck spaces could apply to our office for ap- proval of remeasurement. We asked them to pass that word around among all interested persons. Nobody heeded it. Nobody applied. The truth of the matter is that we have never built very many qf these shelter-deck ships — very few of them, indeed. We have adopted different types. It may be said that the reason we have not built them was that they did not have the advantage of the de- duction. That may be, but there are other advantages connected with the other style of ship. The American-Hawaiian ships, for example, are not shelter-deck ships, and they are the principal cargo ships we have. They do not get the advantage of any change under this new rule; they measure the same under the British rules and under our rules. It has only been within a relatively short time that we have had any very considerable number of bulk-cargo carriers under the American flag. Mr. Curry. The service for deck cargoes is very small ? Mr. Chamberlain. Yes. But you are using the words "deck cargo" in one sense and I in another, and I am afraid our minds do not quite touch. You mean a cargo right out on the deck, open to the weather. I am talldng about the cargo that is in these spaces. Mr. Curry. I mean the inclosed spaces for cargo; I am not talk- ing about a lumber ship. Mr. Chamberlain. I was going on to say that on September 5, 1914, right after this ship-registry act was passed, we sent word around to the collectors to advise the owner of every seagoing Ameri- can steamer that he could apply for a revision of measurement on the ground that sheltered places with openings at the sides or ends had been included in the tonnage. None came in. On March 16, 1915, revised regulations on shelter decks were issued, and on July 13, 1915, these modifications were carried into a general revision of the American measurement regulations, printed in a separate pam- phlet, together with the Suez Canal rules. A special form of certifi- cate in accord with the Suez rules was also issued for American ships which may make use of that canal. Mr. Curry. Of course, we did not have that kind of ships built at that time. I suppose there are some of them being remeasured at present ? Mr. Chamberlain. Yes, sir. Mr. Curry. I would hke to ask before you go if an American ship pays more tolls going through the ranama Canal than an identical sister British ship pays ? 200 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Chamberlain. I do not see how it can. |l| Mr. Curry. The charge has been made that it is possible. * ' Mr. Chamberlain. I do not see how it can happen. Mr, Curry. In the foreign trade you had a rule, under the law passed March 2, 1895, that—' Upon application by the owner or master of an American vessel in foreign trade, collectors of customs, under regulations to be approved by the Secretary of Commerce and Labor, are authorized to attach to the register of such vessel an appendix stating separately, for use in foreign. ports, the measurement of such space or spaces as are permitted to be deducted from gross tonnage by the rules of other nations and are i not permitted by the laws of the United States. Under that section could not an American ship, even before you put the British rule into operation, have taken advantage of that sec- tion and not have had to pay more port duos or tonnage dues ? Mr. Chamberlain. Absolutely; that is what it was passed for. That is part of the act of 1805, is it not? Mr. Curry. Yes. • Mr. Chamberlain. It was passed for just that purpose. ^t Mr. Curry. So that in reality there is nothing in the claim that an ^| American ship is handicapped so far as cost of operation is concerned * on account of the American system of measurement ? Mr. Chamberlain. I do not see how anybody can take the view that it is. Mr. Curry. If you wdl be more liberal in the future in reference to the measurement' of these ships, and figure, tor instance, the upper- deck space on that ship the same as they do in Great Britain, possibly there will not be. I think that is not a matter for legislation; I think it is a matter for a rule. 'Mr. ('hamberlain. Now, you have referred to that ship [pointing to photograph of a Clyde liner on the wall]. You speak of the passen- ger space above the upper deck. Under the American law those Mi passenger spaces are not measured at aU. Tender the British law a m\ British shij:> like that wUl have those cabins all measured. So we de- ^' duct a very large amount which, in the case of some of these big liners goes iip to 1,000 or 2,000 tons. There we are reaUy very much more liberal. We are too liberal. Congress passed a law years ago to exempt such passenger accommodation on Mississippi River steam- boats, but it was passed in general terms, and it applies just as much to the sea as it does to the Mississippi River. Again, the deductions for propelling machinery, in the case of very high-powered steamers more particularly, like the Lusitania and some of the big French ships, are so large that it will run in some cases up to 72 per cent of the entire tonnage of the ship. It got to be so large that the British Government sometime ago said, "You can not deduct more than 55 per cent for that purpose." We have not any such limitation. It has been called to the attention of Congress, but you have not had an opportunity to take that up. Again, take that Imiitation'on deck cargo. That is all counted in foreign ports; we do not count it at all. Instead of our laws being more severe on the subject of measurement, my dear sir, they are very, very much more liberal in those particular types of ships we are talking about. Mr. Curry. In the tramp ships or raerchant ships, of course, you can be a little more liberal in counting out space ? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 201 Mr. Chamberlain. Not any more than wo are under our regula- tions. Mr. Curry. But more than you have been. It is another evidence to my mind that these "antiquated navigation laws" are simply a matter of — — - Mr. Chamberlain. Of administration, to a very large extent. Mr. CiTRRY. Simply putting into operation a rule of the department. Mr. Chamberlain. If anybody has a guilty conscience on the subject of these matters it must be men in places somewhat like the one I hold, rather than you gentlemen in Congress. There is not any doubt about that in my mind. Mr. Curry. And when it is likely we will appropriate $50,000,000 for an American merchant marine, it seems to me the department of the Government for which we are appropriating should be just as liberal as possible and give these ships ail the advantage they can, not only in coastwise trade but in foreign trade and through the canal. Mr. EDAjONrs. If this shipping board were to charter a new ship and recharter it to some line to operate, is it required under this bill that that ship shall have an American registry ? Mr. Chamberlain. Oh, no; I do not think the bill means that. Mr. Edmonds. I was informed yesterdav they would get a tem- porary American registry. They told us that yesterday. Mr. Chamberlain. A chartered British ship ? Mr. P]da[onixs. Yes. If wo charter a Britisli ship this board may want to recharter it to somebody that wants to run it on one or two voyages. Mr. Chamberlain. I think there must have been some misunder- standing about that in the way the question was put. The charter of the ship does not change its flag. A change of owner is necessary. Mr. Edmonds. It saj-s here in section 6 that all vessels purchased, chartered, or leased from the board shall be registered or enrolled under the laws of the United States as vessels of the United States and entitled to the benefits and privileges appertaining to vessels of the United States, and shall, when and whde employed solely as merchant vessels, be in all respects subject to all laws, regulations, and liabilities governing merchant vessels. Now, you would not be liable to charter an American vessel. In time of stress you would probably have to charter a British or Ger- man vessel. Under this law you could not charter it, could you ? Mr. Chamberlain. I have not read that biU with close attention to the details, and do not want to express an opinion without reading it more carefully. Mr. Edmonds. I am glad you do not, because I would hate for you to try to charter such ships. Mr. Chamberlain. Surely. But I do not recall that, and there must be a misapprehension if Mr. Redfield said so. I do not think he quite gathered your meaning, because the change of flag means a change of ownership, not a charter. Mr. Edmonds. A British ship chartered by this board and rechar- tered could not take American registry, could it? Mr. Chamberlain. Not by virtue of the charter. She might change her owner, and the change of flag would go with the change of owner. 202 SHIPPING BOARD, NAVAL AI'XILIAEY, AND MERCHANT MARINE. The Chairman. When that question came up yesterday I think I made the statement in the record that a foreign vessel chartered by this board could not thereby be entitled to American registry, nor do I think it is true, nor do I think the bill contemplates it. I can not say just what Secretary Redfield said about that, but I am quite sure if he said they could, he did it inadvertently, Mr. Edmonds. The question was brought up whether this bill absolutely forbids the chartering of a foreign vessel, because it requires that any vessel chartered be enrolled. The Chairman, I think it does. I think none but an American vessel could be chartered. If the committee wants to liberalize that they will have to do it by amendment. Mr. Curry. Mr. Chairman, before we adjourn I would like to ask one or tv/o questions which are not exactly pertinent to this inquiry, but it will take but a moment. A great deal of the tonnage through the Panama Canal from the Pacific coast to the eastern coast will be lumber schooners ? Mr. Chamberlain. Yes. Mr. Curry. The lumber that we manufacture out ther^ will have to be sent to the eastern coast in competition with lumber that it does not cost as much to cut, to manufacture, to make into lumber, or to bring to the eastern coast for sale, and it will be foreign lumber that we will have to compete with. Now, I understand that the department Mr. Chamberlain. Our department or the War Department? Mr. Curry. Your department is discussing the proposition with the War Department of having a charge on the deck load of lumber. Personally, I do not think that would be fair. That would be charg- ing for air space and not for water space. It is all right for them to charge for the tonnage or draft of the ship, but to charge as tonnage going through the canal this lumber that simply occupies space in the air and would not displace the water in the canal— I do not think that is fair. If there is water displacement it is all right, but for air displacement I do not think it is a fair charge, and I think that your department and the War Department ought to be liberal toward American commerce and toward American shipping. If there is anything of that kind I wish you would think it over seriously. I know there is a bill before Congress, and it is being considered. Where it emanated from I do not know, Mr, Chamberlain, That did not emanate from our department. That is a matter of the administration of the Panama Canal, It has been talked over informally, but that was just on account of its having something to do with measurements. The Chairman, I tried myself to have the deck loads of those lumber schooners exempted from that measurement. Mr. Curry. They ought to be, (Thereupon, at 1 o'clock p, m,, the committee adjourned to meet Saturday, February 12, 1916, at 10.30 o'clock a, m,) CREATING A SHIPPIiNG BOARD, A iNAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the Merchant Marine and Fisheries, House of Representatives, Washington, D. C, Saturday, Fehruary 12, 1916. The committee met at 10.30 o'clock a. m,, Mr. Alexander in the chair. The Chairman. We will continue the hearing on the bill H.- R, 10500. IMr. Rosenthal, of Chicago, has consented to come before the committee this morning and give us his views on the shipping bill. STATEMENT OF MR. BENJAMIN J. ROSENTHAL, OF CHICAGO. ]\ir. Rosenthal. Mr. Chairman and gentlemen, yesterday morning I stopped to pay my respects to Judge Alexander on my way to Florida, and the judge suggested that I appear before this com- mittee; so that if I am someAvhat unprepared I hope you will accept that as an apology. If I had had more opportunity I should like to have presented what perhaps would be a better argument. So that my motive in appearing here may not be misconstrued, I want to state, if I may be permitted, for just a moment, that I am a business man, have been engaged in business in Chicago all my lifetime, and my interest in the subject of merchant marine started nearly 20 years ago. At that time a conference was held in the city of Chicago, and leading business men of the country were invited. The culmination of that conference was the organization of the National Business League of America. This league prepared a platform, and one of the principal features of it was the advocacy of an American merchant marine. The Chairman. Wlio were the members of that league, can you say? Mr. Rosenthal. They comprise leading business men, professional men, and bankers throughout the United States. I will give you the names of some of them in a moment or two. The Chairman. Very well. Mr. Rosenthal, In 1911 this league called a congress, which was held in the Gold Room of the Congress Hotel, in the city of Chicago in December, 1911. At this congress some of the leading business and profession?] men of the country were present. A large body attended. Different plans were presented for the establishment of a merchant marine in connection with other projects, which are enumerated in this plat- form that I have before me. 203 204 SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. The congress, after listening carefully to tlie different plans sug- fested, adjourned after appointing a committee of 20 of the leading usiness men of the country. Now, if I may be permitted, I will give you the personnel of the resolutions committee of the National Business Congress, held December 13 to 15, 1911. George W. Sheldon, Chicago, president G. W. Sheldon & Co., customhouse brokers. Henry M. Wallis, president J. I. Case Plow Works, Racine, Wis. Edward J. Nally, vice president (now president) Postal Tele- graph & Cable Co., New York. Alfred H. Mulliken, president Pettibone, MuUiken & Co., railway supplies, Chicago. Frederic E. Boothby, president chamber of commerce, Port- land, Me. Frederick S. Fish, president Studebaker Corporation, South Bend, Ind. George M. Reyiiolds, president Continental & Commercial National Bank, Chicago. Silas H. Bumham, president First National Bank, Lincoln, Nebr. John Kirby, jr., president National Association of Manufac- turers; president Dayton Manufacturing Co., Dayton, Ohio. Edwin Chamberlain, vice president San Antonio Loan & Trust Co., railway and general business man, San Antonio, Tex. George R. Brown, secretary board of trade, Little Rock, Ark. Arthur H. Devers, Closset & Devers, wholesale grocers, Portland, Oreg. William H. Parlin, president Parlin & Orendorff Co., agricul- tural implements. Canton, 111. R. H. Downman, president Bowie and other lumber com- panies. New Orleans, La. Albert M. Marshall, president A. M. Marshall & Co., wholesale hardware, Duluth, Minn. WilUam P. Ketcham, lumber merchant and real estate, Seattle, Wash. Philetus W. Gates, president Hanna Engineering Works, fonner vice president Allis-Chalmers Co., Chicago. Robert J. Lowry, president Lowry National Bank, Atlanta, Ga. £ George H. Barbour, vice president Michigan Stove Co., Detroit. Charles B. Booth, president automobile company, real estate, and general business, Los Angeles, Cal. I dare say, gentlemen, that this is as representative body of business men as you will find anywhere in the Unite States. This committee, after carefidly considering the different plans suggested, met in the Blackstone Hotel, in Chicago, six months after this congress was held. In the meanwhile they had investigated as carefully as they could different plans suggested for the upbuilding of the merchant marine. This is the resolution which they finally adopted : II SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 205 Resolved, That as an effective means for the creation of an American merchant marine a law be enacted empowering tlie Government to construct or purchase trans- ports for the slups of the United States Navy, to be operated by naval seamen as merchant vessels in time of peace and as auxiliaries of the Navy in time of war. This, you will see, gentlemen, without any equivocation, is a straight out-and-out Government owned and operated merchant marine, in so far as it would apply, at least for enough ships fo prop- erly augment the Navy as naval auxiliaries. That is the platform upon which the National Business League of America stood. Mr. Lazaro. What year ? Mr. Rosenthal. 1911, mark you, and 1912, long before the war started. Mr. Greene. May I ask you a question? Mr. Rosenthal. Certainly. Mr. Greene. Did your committee ever send a representative to Washington to appear before this committee ? ^Mr. Rosenthal. Yes, sir; our committee appeared before commit- tees in Washington very frequently. Mr. Greene. Before what committee ? Mr. Rosenthal. I imagine before this very committee. I never appeared before them, but I appeared before a committee on the consular reform bill. Mr. Greene. I notice nearly all the names you read are names of men located in Chicago or west of Chicago. The Chairman. They may have appeared before the Senate Com- mittee on Naval Affairs when Mr. Weeks of Massachusetts introduced his Government-owned naval auxiliary merchant-marine bill. Mr. Greene. That might be; but I never knew of them appearing before this committee. I see there are no representatives on that list from east of Chicago, and there is quite considerable merchant marine on the Atlantic coast and quite a large interest in an American merchant marine in the Eastern States as far as I have been able to observe. The Chairman. The origmal proposition for a merchant marine was introduced by Mi'. Weeks, of Massachusetts, when he proposed that the Government take over naval auxiliaries and operate them as a part of our merchant marine. Mr. Greene. That was better than nothing, of course. Mr. Rosenthal. I want to say in passing that what I shall now read is part of an argument that I made before the National Business League. I will just refer to these few lines. In case of war between any of the great shipping nations, instead of having our conmierce paralyzed as we would have under present conditions, on account of inability to secure ships for our commerce, we would go right on attending to our own business and shipping the exports of our own nation in our own bottoms. Now, gentlemen, if I was in favor of a Government-owned merchant marine in 1911 I certamly have seen nothing to change my view- point in 1915 and 1916. I want to call attention to this, too, before I go on. There appeared, I noticed in the press, a gentleman representing the National Chamber of Commerce of Boston, and I understand his statement to this committee was that he represented some several 32910—16 14 206 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. hundred organizations, and these organizations had voted against any form of government ownership and had voted hi favor of subsidy. The Chairman, That was IVIr. Douglas, of New York. Mr. EosENTiiAL. Up to January 1, gentlemen, when I retired from the board, I was a director of the Association of Commerce of Chi- ' cago. I appeared before this association on three or four occasions to express my views and present them on the subject of the merchant marine. I have here before me a copy of the last address, which I delivered on Friday, December 17, 1913. I make the statement now to you gentlemen without fear of honest contradiction, that this association of commerce which comprises over 4,000 members, would vote 75 per cent for this Alexander bill if it was put before them for a vote. Now, I will tell you gentlemen exactly how this vote was arrived at, and to make assurance doubly sure, I will mention the fact that I happened to meet Mr. Nickerson, who is a member of the association of commerce, and was one of the subcommittee of two. I met him last night at the New Willard Hotel. He was here attending this con- ference of the United States Chamber of Commerce. I asked him, just to be sure, just how that vote was arrived at, and I will explain just exactly what he said, and that was my understanding. The request came to the executive committee; the exceutive committee referred it to a committee of two. Mr. Nickerson was one of that committee and Mr. Buchanan was the other. That committee of two had probably never even read the Alexander bill and did not know, perhaps, all of the provisions of it. This committee reported that they were not in favor of Government ownership, but in favor of some form of subsidy, and the executive committee indorsed this action of the committee of two, and it was sent to the National Association of Commerce, and in that way the National Association of Commerce attempts to bind an organization of 4,000 men. The Chairman. I think that was the process m Portland, Oreg., too. Mr. Rosenthal. But I can only speak authoritatively for this organization, because I was invited to appear before this committee of two, which I did. Mr. Greene. Wliat association are you speaking of ? Mr. Rosenthal. The Association of Commerce of Chicago, which has a membership of 4,000 business men in Chicago. Only this morn- ing I took breakfast with the president of that organization and told him how unfair it was to attempt to bind the association of commerce by the recommendations practically of two men, and he said it was unfair, but he did not know how else they could arrive -at it. He said they received these notices from the association of commerce, and that they had to have a vote by a certain date. He said it was impossible to get a vote of the members and the best thing they could do was to refer it to a committee, and for this committee to make a report. Now, gentlemen, there is nothing in the Alexander bill that need frighten the most timid or conservative citizen of the United States. Perhaps my plan may frighten some, but the Alexander bill certainly Deed frighten no one. Now, what are the provisions of the Alexander bill? You are familiar with them. I have made an analvsis of them. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE, 207 First, the bill calls for an appropriation. Then the appointment of a commission. And in passing let me say this — and I spoke to the Secretary of the Treasury and to the Secretar}^ of Commerce yes- terday about this — ^I do not consider the salary of $10,000 a year adequate. If you want to get the biggest uk n, the men you should get, to serve on this important commission, $12,000 a year should be the minimum salary paid. I only stop at S12,000 because a Cabinet officer receives $12,000, and perhaps it would not be right to pay any commission more than a Cabinet officer receives. You are familiar with its powers: I will not go over that with you. You are familiar with the clause that permits the Government to sell or lease these ships so that there will be no Government o^vncrship at all, much to my regret, if people are willing to purchase them or lease them. Now, in connection with leasing, you have heard so much talk about what England does for its Navy. As a matter of fact the only thing that England does for its Navy and has done for years is to pay for the carr3dng of its mail. It also loaned for the building of these two great big ships — because it wanted to have the biggest ships afloat— some money at a low rate of interest. Now, this board, under the Alexander bill, ^viU do much more than that. It does not require the investment of a penny. It says to the man who wants to operate a ship, "Pay us a fair return on the capital the Government has invested; we do not require you to invest a penny, and we will lease you the ships" — certainly a much fairer proposition that any foreign Government offers. The Government also has the right to seize these ships in time of war. There is no man around this table who does not want that right given. It has the right to condemn these ships if they are too old. Everyone wants that, of course. It has the right to transfer any of its equipment that it now has that is suitable for merchant marine purposes to this commission to be used for transportation purposes. Mr. LoLT). Wliat ships are those ? Mr. Rosenthal. The ships that we now have. It requires that all vessels so transferred shall be registered under American registry and shall be under all laws, regulations, and ha- bilities governing merchant vessels. SureW everyone wants that. Now, gentlemen, it especially stipulates that none of the ships now in American registry shall be sold or transferred to foreign owner- ship. Is there a man in this room or is there a citizen in the United States at this moment who is not a shipowner or is not interested in ships that does not want to see that part of the law passed as quickly as possible ? Over 800,000 tons of ships formerly saihng under for- eign flags were voluntarily transferred, under the recent registry law, to American registry. They have had the advantage of the pro- tection of the American flag. The}^ have had the advantage of the insurance that this Nation has given them — the marine insurance, I refer to — ^and you know if this Government had not taken action as it did to insure them we would have had no shipping at aU, They have had the advantage of the most outrageously high rates that have ever been perpetrated on the American Nation or any other nation. 208 SHIPPING BOARD, NAVAL AUXILIARY^ AND MERCHANT MARINE. i. And now, forsooth, are you going to let them, as soon as the war is over, just because they can operate for a httle less in wages, are you going to let them go back to a foreign flag? I say no. And there is not a Member of Congress who would dare go before his con- stituents and ask for reelection if he permitted a single ship that voluntarily accepted American registry to go back to foreign owner- ship after taking advantage of the advantages that this Government has given them. The board may also regulate rates and regulate the operation of common carriers by water. Now, we have all inveighed against the discrimination of the foreign shipowner toward the American shipper. This bill gives the right to regulate that, and if you will read the report of the committee of Congress— it covers some 600 pages (I think your chairman was chairman of that committee, were you not, l^lr. Chairman, the committee that investigated shipping combina- tions ?) you will probably agree with me that regulation is quite necessary. The Chairman. Yes. Mr. Rosenthal. And if you will read the admissions, their own admissions, these owners oi foreign ships, when they admitted this discrimination against the American shipper, they admitted these rebates; there is not one of you who will not want that clause in this bill. Now, then, it also gives us the right to establish preferential rates. If you have listened to Mr. Farrell, the president of the United States Steel Co., if you have listened to any of these financial men, talk about Germany and the benefits that the Government gives to its manufac- turers, through some cohesive organization, an arrangement between the Government and manufacturer so that preferential rates are given, so that the manufacturer in some small point in Germany can ship his goods to America on a through route, at a preferential rate, you would be very glad then to offer the American manufacturer some of these benefits also. Many have complained because we don't give preferential rates to them in this country. We would give it to them under this bill if it could be arranged with the Interstate Com- merce Commission and the railroads, and I think the railroads would be glad to join in that. Now, it also provides that the crews on these ships can become members of the Naval Reserve. That is just what we want. Instead of building a naval ship and sticking the men on there and paying them the wages that the Government pays them and letting them stay on the ship all the year, let them enter this merchant service and be members of the Naval Reserve. But I would go further than that, gentlemen. I would put some clause in this bill whereby they would be compelled to serve at least one or two weeks in each year on a naval vessel, so that they would be under the discipline of the United States Navy and that they would be familiar with the naval ships as well as the merchant ships. Now, the question of thi-ough routes. No one would argue, I thmk, for a moment that it would not be very advisable to have that incorporated m the bill. Now, here is another important point. You hav(> all heard the jSI cry. I have gone all around the countr}'' and have addressed different »l bodies, and they all say, 'Well, the Government binds us hand and t SHIPPING BOARD, NAVAL AUXILL4KY, AND MEECHANT MARINE. 209 foot with morchant-marine laws that are unfau"; if the Government would amend these merchant-marine laws we would build up American 6lii])ping." This biU gives the commission just that right, and I would make it a little more far-reachmg. It just says that it can investigate the laws of the United States in reference to common carriers in marine transportation. I would give it the right and make it the duty to investigiitc the laws of lort>ign countries too, and theh regulations, so that they will have before thorn a perfect resume of the laws not onlj' of the United States but of foreign coun- tries in relation to marine transportation; and if it is true our laws are inifiuitous, if it is true they hamper American shippmg, then this commission would be just the one to remedy that. Is there anybody who objects to that ? Xow, then, there is a clause that provides that the commission should have the ])OWei*s that the Interstate Commerce Commission has — only so far, of course, as it rel ites to water carriers — and then it also re([uires after eTanuary 1, 1017, that uU ships engaged in for- eign trade sh;ill be subji'ct to a license. Is it not right that every ship that comes into this < ountry, that takes advant; ge of or has the right to the advantages that this Government offers, should be under a license from this Government, and if it does not act ])ro]ierly that we should revoke its license ? We have agreed that we have not control over foreign shi]>s, and" this would give us control over them in so far as rates and fair regulations are concerned. Now, is there anytlung in this biU, gentlemen, as I said, that need frighten the most timid, the most conservative citizen of the United States? Is there anything in this bill that anyone could rightfully condemn ? Now, you have heard so much talk. It has been shot at me very often, well, there is a difference in the labor cost in the operation of American ships as against the cost of operating a foreign ship. I will grant you there is suc-h a difference, but, gentlemen, there was also a aifference — perhaps not quite so marked, but still a difference — in 1855 when this country had the greatest amount of shipping of any nation in the world. And yet there was no one objected and Amer- ican commerce on the high seas went untrammelled, and did not make any complaint. Let me call your attention to the lake rate. The seamen on the Lakes receive a much higher wage in proportion than those on the ships under foreign governments. Yet we make lake rates out west much lo ver than are made by some of the foreign carriers and yet we pay higher wages. Now take inio consideration also this fact. The foreign coimtries have aU their ships built. They could not change these types of ships. They would not burn them up, would they? They would have to go on with these ships, of com'se addmg new ships from time to time. Now, this country would build their new ships with the new Deisel engines; they would burn oil. They would standardize shipbuilding, just as they have standardized the manufacture of automobiles. That is why ships have cost so much more ; each ship has been a dif- ferent pattern. In the automobile industry — this concern did not pay me for advertising them and so I will not mention any names — a concern I have in mind pays $5 a day to common labor as against 5 210 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. francs for the same kind of labor in France, and 5 marks for the same kind of Libor hi Germany. They could pay $10 a day and still make a fortune. But they have standardized the manufactm-e of auto- mobiles, and so have other manufacturers in this country. And so if we give it out to the country that we are in earnest about this shipping, that we are going to build up a merchant marine, you will fuid capital coming forward quickl)', and it wiU build sliips as cheap as they build them abroad. Why should it not? We have the materials here. We produce iron and steel and everything that goes into the building of a ship just as abundantly as they do abroad, m fact, we ship these materials abroad and sell m competition abroad. I will say nothing about American ingenuity in manufacturing. You know as much about that as I do. I want to say this in passing. In my judgment if this Alexander bill is passed we will have more applications for ships than we can possibly supply. I hope from the bottom of my heart that we wiU not. I hope we will have to operate these ships ourselves; but do not be uneasy about the people not coming forth and asking for the lease of these ships. I want to point this out to you, too. In 1912, you are probably familiar with this fact, the Pan American Line was organized to carry commerce from New Orleans, and Mobile to South America. The ships of that line left with full cargoes. I believe the governor was there, and the mayor, and leading citizens, to wish them bon voyage. They were paying American wages "and were glad to pay them. They adhered to the American standards of living. They went do\\Ti there, and what happened ? They could not get a pound of cargo for the return voyage. Why not? Because the tnist said: You will lose your rebate, Mr. Shipper, if you give them any carj^o to go back to America, because you have a^raed to ship only on our boats; and, furtlipr, you have agreed to ship all your coffee on our boats, and we will not carry your coffee to England if you give tliese ships any cargo. And so these boats had to come back to America without cargo and the company was disbanded. The Chairman. That is the history of that venture, surely. Mr. Rosenthal. This is all history. And I hope, gentlemen, that I am not misstating anything. I have tried to be very careful check- ing up any statements that I make here, and at my own expense I keep employed an organization for this work, and I liave very careful people about me. Now, just one more question I want to revert to, the question of subsidy. Why, gentlemen, from 1868, from the time of the nomina- tion of Grant and Seymour, you have heard of subsidy in every Con- fress from that time on. There have been 50 sessions of Congress, think, during that time. I dare say that there has not been a session where there has not been a subsidy bill introduced. The Nation will not stand for a subsidy. If we could not get a merchant marine in any other way, I believe I would even stand for a subsidy, but a subsidy is out of the question. It is un-American, it shows favoritism. If you give a subsidy to the shipowner, forsooth, you say because we can take his ships in time of war, then you must give it to the munition manufacturer ; you must give it to the manu- facturer of anything that the Government uses in time of war. You must give it to the farmer, because, as Napoleon said, "An Army SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. 211 fights best on it» belly," and so the Government is dependent on the farmer above all others in time of war. And so it would be out of the question to give a subsidy to one class unless you gave it to all. And even if you gave a subsidy — you are giving subsidies now, and what has happened. Every subsidized American ship to-day is a member of the shipping trust. There is no question about that, is there, Mr. Chairman ? The Chairman. Our investigation of the so-called Shipping Trust showed that the only ships we have in the trade between the United States and Europe belonged to the International Mercantile Marine Co. Mr. Rosenthal. Now, if you subsidize a ship it has to join the trust or fight the trust. If it joins the trust then it is not independent, and we have not accomphshed anything except that we can get it back in case of war. And if it did not join the trust, what would happen ? It could not get a cargo and it would come back and say, "Gentlemen, you must give me more subsidy because the trust has cut the rate, the trust has put its fighting ships alongside of mine, and I must have more subsidy," and so where would this end? So that I say to you, gentlemen, that you must not give a subsidy. No one must think of giving a subsidy. Now, you say, what would happen if we received no apphcations for ships ? Why the simplest thing in the world would happen, and, as I said, I would be happy if it did — wh}^ the Government would simply operate those ships. The Government would not discourage capital, but it would encourage capital; the Government would say, "Go on and build ships and operate them, we will put these ships of ours on new routes, we will pioneer." If any erf you gentlemen' went into the taxicab business to-day, you would put your taxicabs in the center of the city and not in the suburbs. And so if capital comes into the shipping business it is going to take the routes that are most profitable, and the Government would put its ships on trade routes that would open up new commerce, develop new trade for the business men of the country. Now, there appears to be some fear of putting the Government into the shipping business. Personally, I have no fear of that. First, we would give private capital a chance. If it does not avail itself of the chance then I think it would be proper for us to go into the shipping business. Did anyone object to the Government going into the marine insurance business ? Did these very gentlemen who are objecting now object to the Government msuring their cargoes, and stabilizing the insurance rate ? The Government would stabihze the carrying rate in the same way. Here is a copy of the book which I pubhshed at my expense and which I distributed throughout the country. It is entitled "The need of the hour" An American Merchant Marme. I think every Member of Congress has had a copy of it. If any Member has not had one, I would be glad to give him a copy. I am in business and am a business man. I am not interested financially 411 shipping or anything hke that. I think I am in a posi- tion to get the true sentiment of the business men of the country. But not only the business men, the whole nation is aroused to the fact that we must have a merchant marine. It ought to be American manned, it ought to be American built, and it ought to sail under the 212 SHIPPING BOAED, NAVAL AUXILIAEY, AND MEKCHANT MARINE. American flag, and I appeal to you as business men, that you pass this Alexander bill. Mr. Greene. May I ask your business ? Mr. Rosenthal. I am engaged in a number of enterprises. I am interested in two large mail-order houses in Chicago. I am interested in a chain of millmery houses throughout the country, and am interested in the drug business, also restaurants, also pubhshing business. Mr. Greene. What are they? Mr. Rosenthal. Which? Mr. Greene. These different companies that you are interested in? Mr. Rosenthal. The Chicago Mail Order Co., the Philipsborn Outer Garment Co., also a chain of millinery interests, with depart- ments throughout the United States. I am also interested in the drug business. We are publishers of magazines. I am interested very largely in real estate and banking and in the wholesale millinery business. And I have some other interests. I hoped that that question would not be asked me. I am not interested in any way in the shipping business. The Chairman. If there is nothing further from ^Ir. Rosenthal, these gentlemen are waiting. Mr. Hardy is chairman of the sub- committee and he will conduct the hearing in which the ferryboat companies are interested. I may state that the next hearing on the shipping bill will be Wednesday morning at 10. .30 o'clock, and Secretary McAdoo and possibly others will be here. For the benefit of the members of the cominittee who may have interests they w&nt heard on the shipping bill, I would like to have them notify me as early as possible, because while I am going to give opportunity for everyone to be heard as far as possible, we are not going to continue these hearings indefinitelv, and we want to utilize the time. I make that as a suggestion. I'lease inform me of any one whom you would like to have heard, and we will arrange to have the hearing as early as we can, with the view of giving every one a chance. Mr. Hardy will now take the chair, and his subcommittee will have their hearing. Committee on the Merchant Marine and Fisheries, House of Representatives, Wednesday, February 16, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. I have a message from Secretary McAdoo saying his engagements are such that he can not get here this morning, but that he will be here to-morrow. I also have a letter from Secretary Wilson to the effect that he would like to appear to-morrow morning. Admiral Benson was to be here this morning and we will hear from him. First, however, I have received certain communications which I would like to offer for the record, if there is no objection. The first is a communication from the president of the Port of Seattle, Wash., going into discriminations against the publicly owned water front SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 213 terminals of Seattle. As the committee doubtless know, they have municipally o%vned terminals there, or docks, which cost several millions of dollars, and the steamship companies which are reputed to be in combinations will not use those terminals, it is alleged, for unloading or receiving freight. And that is a feature that I can assure the gentlemen from Washington, as well as the other members of the committee, mil be relieved if the provisions of this bill relating to Government supervision and control of water-borne traffic become law. Mr. Greene. A man told me that Capt. Dollar stated the other day he was going to move over to Vancouver and there would be room for everybody then. The Chairman. They have splendid docks at Seattle and I doubt if there are as fine anywhere else in the United States. Do you know what they cost? '~^ Mr. Hadley. I do not know exactly; several millions. I think it is three or four millions. I was over them last summer and I heard the statement made, but I do not recall the amount now. (The letter above referred to is as follows:) Department of Commerce, Office of the Secretary, Washington, December SO, 1915. My Dear Judge Alexander: Your attention is respectfully directed to the inclosed communication from the president of the port of Seattle, Wash., and to the case of discrimination therein shown against the publicly owned water-front terniinals of Seattle. You will note that the president of the port asks that proper legislation be recommended to c(»ver such matters. The subject is respectfully recommended to your thoughtful consideration. May I venture to point out in this connection that the draft of a proposed shipping measure which has already been sent you contains a provision that the shipping board thereby created should have the power to license vessels using American porta and to determine the conditions under which such licenses should be issued. This provision, cither in the form in which it was submitted to you or in a form which you no doubt can readily suggest, could, I presiime, be made to cover cases of this kind. Yours, very truly, William C. Redfield, Secretary. Hon. J. W. Alexander, Chairman Committee on Merchant Marine and Fisheries. House of Representatives, Washington, D. C. [Port of Seattle.— Commissioners: Robert Bridges, president; C. E. Remsberg, secretary; Gen. H. M. Chittenden, member American Society Civil Engineers. Executive stafE: J. R. West, chief engineer; C. J. France, counsel; Hamilton Higday, assistant secretary and traffic manager; W. S. Lincoln, auditor. General offices, Bell Street warehouse.] Seattle, Wash., December 10, 1915. Hon. William 0. Redfield, Secretary of Commerce, Washington, D. C. Dear Sir: The port of Seattle is a public body just completing the expenditure of 5:5,000,000 in new public water-front terminals in Seattle embracing six groups of whar\es, warehouses, luinber pier, grain elevator, cold-storage plants, public railroad switches, and the like. Prior to the construction of public harbor terminals with the proceeds of the bonds voted by the people of the Seattle port district (which is coterminus with King County, Wash.) "the water-front facilities for serving commerce, both foreign and domestic, m this harbor were privately o^vned and operated, and the majority of such private wharves were and still are railroad owned and controlled. (See Report of the Com- missioner of (Corporations on Transportation by Water in the United States, published by your department, 1910-1912.) 214 SHIPPING BOAKD^ NAVAL AUXILIAEY^ AND MERCHANT MABINE. The same report indicates a considerable interest in. if not actual control, of water carriers by transcontinental railroads. (Same ref^ort. Part IV. ) Where the public interpose? a disinterested intermediary on the waterfront to serve as a connecting link between raih'oads and water carriers, both foreign and domestic, the (luestion is presented as to what ])\iblic body is empowered to regnlate the rela- tionships lietween railroads and steamiships at said point of contact. It is a twilight zone or "No Man's Land," where the jurisdiction of tlie Interstate Commerce Com- mission or the State Public Service Commission apparently does not fully reach. Accordingly your honorable attention is called to the specific instance by the Seattle Port Commission of the apparent discrimination by a steamship company operating out of this port against the public wharves and warehouses, and you are tespectfully requested to make a further investigation into this instance and into similar practices with the view to discovering the jurisdiction to properly check such discriminations and to recommend appropriate legislation to the President and Congress of the United States. Mr. J. A. Campbell, 903 Western Avenue, Seattle, solicited the agent of the Bell Street Terminal for services in receiving 750 tons of sulphur. The rates quoted were the regular published tariff rates of the Seattle Port Commission. The shipment was to arrive over the Frank Waterhouse line of chartered steamers. A few days later, Mr. Cauipbell obtained storage quotation on 150 tons of sulphur to be stored in the concrete warehouse of the said Bell Street Terndnal, and was quoted 20 cents per 2,000 pounds per month storage and 15 cents per 2,000 pounds for loading and unload- iug cars. The Frank Waterhouse Co. absolutely refused to land this cargo at the public dock designated by the importer, although the usual custom in this port is for a steamship to shift to another dock where the cargo is 500 tons or over. They refused to shift in this case with a cargo of 750 tons. As an excuse they asserted that the port of Seattle had n) right to an existence; that they would not contribute to its support; that the public had no business to go into a wharf and warehouse business. This cargo, how- ever, was not landed at the Waterhouse Dock, but the vessel was landed at Pier A, owned by the Pacific Coast Co. and operated by Frank R. Hanlon. an opponent of the port commission, who was formerly in its service, and who latterly has devoted a great deal of time to extensive published criticisms of public wharves and warehoiises. Below is a comparison of the charges made anl compiled by the port's agent, Mr. Green, showing that the water carrier not only discriminated against the public wharves and warehouses, but against the shipper as well: pier A., Mr. Hanlon's dock: Wharfage, per 2.000 pounds $0. 50 Handling from ship's .sling charge to Mr. Campbell, per 2.000 pounds 15 Loading out charge to be, per 2,000 pounds 25 Total cost per ton 90 Port commission's Bell Street dock: Wharfage, per 2.000 pounds 20 Piling on dock, per 2,000 pounds 08 Loading out, per 2,000 pounds 15 Total , .43 From the above it will be seen that this shipment cost Mr. Campbell 47 cents per ton more at Mr. Haiilon's dock than it would have cost over the port's dock. Not only this, but the insurance is considerable. The point to be explained is:- First. Why would the Waterhouse Co. refuse to land a cargo at port's dock, but be willing to land at Pier A . which has a very small slip? Second. Why should the Frank Waterhouse Co. make the statement that they would not contribute to tlie support of port facilities? Robert Bridges, President. The Chairman. I have also another communication addressed to the Secretary of Commerce from Robert Bridges, president of the port commission of Seattle, referring to the discrimination against the mmiicipally owned docks of Seattle. SHIPPING BOARD, NAVAL AUXILIARY_, AND MERCHANT MARINE. 215 (The letter referred to is as follows:) • Department op Commerce, Office of the Secretary, Washington, February 12, 1916. My Dear Judge Alexander: Koforring to my letter to you of December 20, in which I handed you communication from the president of the port of Seattle show- ing discrimination against the publicly owned water front terminals pf that city, I now hand you copy of letter from the president of the port commission of Seattle, together with copy of the telegram to which he therein refers. I suggest that in connection with the pending hearings on the shipping bill, some reference might be made to this matter in order to show how necessary the right to license may be. Clearly a public board would not license vessels on any basis which would permit them to discriminate against publicly owned terminals, as appears to be the case in the example of Seattle. Yours, very truly, William C. Redfield, Secretary. Hon. J. W. Alexander, Chairman Committee on Merchant Marine and Fisheries, House of Representatives. (Port of Seattle. Commissioners: Robert Bridges, president: C. E. Remsberg, secretary; Carl A. Ewald. Executive staff: J. R. West, chief engineer; C. J. France, counsel; Hamilton Higday, assistant secre- tary and trafBc manager; W. S. Lincoln, auditor. General offices, Bell Street warehouse.] Seattle, Wash., Fehrnary 5, 1916. Hon. William C. Redfield, Secretary of Commerce, Washington, D. C. D.ear Sir: Refemng to previous presentation of discrimination against the public docks and warehouses, Seattle, and the apparent necessity for some Federal regula- tion over such matters needing new legislation, there is attached hereto telegram on an acute situation this day presented. Very truly, yours, Robert Bridges, President of the Port Commisi^ior} . [Night lettergram.] Seattle, Wash., February .5, 1916. Sperry Flour Co., Tacoina, Wash.: Seven hundred thousand bushels wheat stored in Hanford Street ]iublic terminal situated on turning Basin east waterway, which is 900 feet wide, 1,600 feet long. Waterway channel 750 feet, depth 80 to 40 feet. Calmest water on Elliott Bay. Next to Smiths Cove public pier; this dock is largest and most commodious berthing place in Seattle and capable of accommodating any vessel plying the North Pacific Ocean. Serves Japanese liners 425 to 500 feet long mthout tug or pilot. Kerr-Gifford Co. advises that Pacific Steamshi}) Co. refuses to take your grain, alleging danger to vessel which is preposterous. Real reason probably sufficient higher-priced freight. Service am])le. Men plentiful. Company opposes municipal ownershi]!. Should not be permitted to hide behind misrepresentation. Robert Bridges, President Port of Seattle. Also a communication from Mr. D. M. King, secretary of the San Francisco Chamber of Commerce, transmitting a communication received by the board and signed by a large number of the more prominent shippers of merchandise between San Francisco and the Orient, expressing their views in regard to shipping conditions in the American trans-Pacific and Orient trade. 216 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. (The letter referred to is as follows) : * San Francisco Chamber of Commerce, February 3, 1916. Hon. J. W. Alexander, Chairman Merchant Marine and Fisheries Committee of the House of Representatives, Washington, D. C. Dear Sir: The board of directors of the San Francisco Chamber of Commerce transmit herewith for your information and consideration a copy of a communication received by the board and signed by a large number of the more proroinent shippers of merchandise between San Francisco and the Orient, expressing their views regard- ing the necessity for Amercian shipping in the trans-Pacific trade. This communication was sent to this chamber by the signers for the purpose of going formally on record on this question as shippers of merchandise as distinct from shipowners, and it is respectfully transmitted to you as expressing their views in the matter. Respectfully, yours, San Francisco Chamber op Commerce. D. M. King, Secretary. San Francisco Chamber op Commerce, San Francisco. Cal., January 25, 1916. Board op Directors, San Francisco Chamber of Commerce, San Francisco, Cal. Gentlemen: We. the undersigned importers, exporters, and shippers of merchan- dise trans-Pacific, respectfully but urgently request such immediate action on the part of the chamber of commerce as will look to the restoration of the American flag upon the Pacific Ocean. As San Franciscans, as Californians, and as Americans, we feel that this matter warrants your best and most energetic attention. To ship and to receive all of our merchandise under a foreign flag spells, in our opinion, ultimate commercial disaster, not only for the Pacific coast but wherever ocean rates, service, and an intimate knowledge of the business of American merchants are a part of commercial endeavor. We entertain no false ideas as to American ships or American shipping, we know that they must of necessity stand on their own competitive feet, but we do know from experience that American merchants, American commerce, and American goods are on a sounder, a fairer, and a more satisfactory competitive basis when dealing with people of our own country and nationality than under the present conditions. The remedy we leave to your broad knowledge of conditions commercial, your wide experience in matters of this character, and your weight and Influence In the world of commerce. If the fault I'ea with the shipowners, we ask your earnest efforts to the correction of the existing evils. If National, State, or other legislation lies at the bottom of the conditions as they now exist, we request that your energetic endeavors be used and that our representa- tives — State. National, or otherwise— be made acquainted with your ideas and sugges- tions, and requested to lend their hearty and loval support thereto. We have operated under both conditions — when American sliips sailed our seas and now when they do not. We formerly shipped in American ships — there are no American ships trans- Pacific at this time — we want them restored. We want what we had, but are now without — American ships for American shippers. Yours, truly. Ames Harris Neville Co., Tubbs Cordage Co., Zellerbach Paper Co., Somers & Co.. S. L. Jones & Co., M. J. Brandenstein Co.. Western Import Co., Cowen Heineberg Co., E, T. B. Mills, H. M. Newhall Co., Henry W. Peabody & Co.. Pacific Bone-Coal & Fertilizing Co.. Selby Smelting & Lead Co., Califoriia Fruit Cauners Association, Parrott & Co., The Parafiine Paint Co., Hills Bros., Clayburgh Bros., C. Solo- mon, jr., S. H. Frank & Co., United States Rubber Co. of Caliiornia, Bemis Bros. Bag Co., Charles Harley Co.. A. Schilling & Co., M, Phil- lips & Co., J. A. Folger & Co., Garcia & Maggini Co., Kron Tanning Co. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 217 Also a report to the Secretary of the Treasury by Hon. Edmund Billings, collector of customs at Boston, Mass., in reference to shipping conditions at that port; and a report made by the collector of customs of New York on the same subject. (The reports above referred to are as follows :) . The Seceetary of the Treasuky. Waahimiton, December 28, 1915. Mif Dear Judge Alexander: Permit me to hand you herewith copy of a very interesting report recently made to me by Hon. Edmund Billings, collector of customs at Boston, Mass.. with reference to shipping conditions, etc., at that port. I also send you copy of a reporl made by the collector of customs at New York on the same subject. Faithtully, yours, W. G. McAdoo. Hon. Joshua W. Alexander, TTomsr. of Representatives. Treasury Departmemt, UviTED States Custom^ Service, Boston. Mass.. Dcemher 1.5. 1915. Hon. William G. McAdoo, Seiretary of the Trensunt, Woshl/if/t.on, D. ''^. My Dear Mr. Secretary: Thinking it might be of value to you at this time, and in view of the many reports which are current regarding the congestion of export freight at Atlantic shipping ports. T have had a careful investigation made of export conditions now existing at this port. In order to ascertain as accurately as possible the fundamental factors governing the shipping of commodities to Europe, I instructed two of our most efficient employees to personally interview all of the export forwarders, the i^rincipal individual exporters, the agents of the railroads which receive and dis- charge export merchandise to the various wharves, agents of all European steamship lines, and the secretaries of commercial organizations Interested in foreign trade. Their report, which I submit herewith, discloses. I believe, essential facts which should be known to yen and to your department. Briefly analyzed, this report ehows: First. That to insure shipment of their commodities exporters or their agents must make steamer reservations from two to six weeks in advance of sailing, and that there is more export freight moving than ever before with little confusion and con- gestion, shippers having been educated to meet existing conditions by not forward- ing merchandise for export faster than the steamship lines are able to provide space for it. That undoubtedly there is a large quantity of freight awaiting exportation to Europe which would be shipped by way of Boston provided cargo space could be procured. Six of the seven steamship agents admit that there is a shortage of ocean steamer tonnage at this port. Second. That for the five months, from July 1, 1913, to December 1, 1913, 105 steamers, of a total net tonnage of 607,465, cleared for European ports; for the corre- sponding period in 1914 77 steamers, of a total net tonnage of 416,543 (a decrease of 31 per cent), cleared for European ports; for the corresponding period of 1915 81 steamers, of a total net tonnage of 326,491 (46 per cent less than 1913), cleared^ for European ports. That the value of exports to Europe for the above-named perioda was, respectively, 130,251,903, $31,375,699, and $42,926,643, the value of the exports in 1915 showing an increase of 41 per cent over the same period in 1913. Third. That exporters complain of the exceedingly high freight rates quoted by steamship agents, the percentage of increase from July 1, 1913, to December 1, 1915, being, on provisions 309 per cent, on cotton 400 per cent, on flour 400 per cent, and on grain 1,166 per cent. (It appears that steamship agents have no tariff schedules and experience little or no difficulty in securing their own quotations. The general opinion prevailing among export agents and individual exporters is that steamship companies are taking advantage of an unprecedented situation and are in a position to demand and receive their own prices, freight rates on many commodities being only a secondary factor — the essential point is delivery overseas.) That the large volume of American commodities imperatively needed by European consignees, regardless of exorbitant freight rates, and the totally inadequate supply of ocean carriers necessary to meet present freight offerings are not only important factors in 218 SHIPPING BOABD^ NAVAL AUXILIARY, AND MEECHANT MARINE. maintaining liigh freight rates, but incidentally form in no small number of cases an effective barrier in preventing American manufacturers from engaging in com- petitive commerce in foreign markets. Fourth. That exporters and the secretaries of commercial organizations interested in foreign trade are practically unanimous in declaring that the opportunities for American merchants to engage in overseas commerce were never brighter than at present, and the local Bureau of Foreign and Domestic Commerce reports that it is estimated that at least 100 firms previously not interested in foreign markets for their products have gone into this branch in earnest and that about 10 commission houses have been established during 1915 for exporting New England-raade goods. May I add that we were obliged to promise most of the firms and corporations quoted in this report that they would not be quoted publicly without our first obtaining their permission? May 1 also ask if you see any objection to my giving to the Boston press the substance of this report? I inclose, also, a copy of a statement from the Boston News Bureau under date of December 1, 1915, giving another viewpoint on the same question. I am, with sincere respect, yours, faithfully, Edmund Billings, Collector. Boston News Bureau, December 1, 1915, Railroad presidents of all business terminals at New York, Boston, Philadelphia, Baltimore, and Newport News attended a conference yesterday at New York for the purpose of deA-ising means to relie^'e terminal situation along the Atlantic seaboard, which is especially serious at New York and Philadelphia. The situation at New York was found more serious than at other seaports. Phila- delphia reported congestion in certain commodities, but the general situation is not severe. Boston, Baltimore, and Newport News report no congestion and facilities ample to handle additional traffic. The situation at New York is aggravated by heavy movement of munitions and a factor is that many contracts on goods destined abroad call for delivery f. o. b. New York. Steamship facilities are lacking to handle the volume offered. No action has been decided on. Probably attempts will be made to discourage shippers of certain commodities. Distribution of eastbound traffic to ports with free facilities will undoubtedly be attempted. The New York Central may find it necessary to put an embargo on certain special commodities that accumulate faster than they can apparently be taken away by the steamships. Treasury Department, United States Customs Service, Boston, Mass., December 9, 1915. Hon. Edmund Billings, Collector of Customs, Boston, Mass. Sir: Follo\Ting your instructions to make an investigation into export conditions existing at this port we have the honor of submitting for your consideration the following report: In order to ascertain as accurately as possible the essential factors governing the shipping of commodities to foreign ports, we had personal interviews with practically all of the export forwarders, the principal individual exporters (who attend to their own shipping details), the two agents of the railroads which receive and discharge export merchandise to the various wharves, agents of all European steamship lines, and the secretaries of commercial organizations interested in foreign trade. export forwarders. There are located in Boston about 12 firms engaged in the foreign freight-forwarding business. Each of these brokers represents from 3 to 60 indi\'idual exporters on every outgoing steamer to Europe. They attend to steamer reservations, freight rates, insurance, customs formalities, and all transportation details. The situation as it appears to these firms is herewith summarized: American Express Co. — -Have from 50 to 60 shipments on each steamer out- going to the United Kingdom. The greater number of these originate in New Eng- land, although other sections of the country, particularly the Middle West, forward for export via Boston. Consignments-cover all kinds of merchandise, but motor trucks, brass goods, and cartridge belts are the principal additions since the outbreak of the war. Lumber shipments are overbooked and steamship agents refuse to quote at present on this SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE.- 219 cla.«s of merchandise. Steamers are practically all booked up on weight cargo. Agents give preference at this time to measurement cargo. Steamer reserAations must be made at least two weeks in advance on measurement cargo and six weeks in advance on weight cargo. More business moving than ever before with little confusion and congesfion, because shippers have been educated to meet existing conditions. Little or no competition among steamship lines. Enough freight offered to satisfy all their demands. Boston could export more if increased ocean-going tonnage were available. Enough business in New England to warrant establishing a line direct to Archangel. Freight rates have advanced on general merchandise from 10 cents per cubic foot in normal times to 38 cents. Rates continually soaring. Steamship agents have no tariff schedule but get about Avhat they ask for. Will only make limited contracts not to exceed 3 months. For many commodities freight rates are a secondary con- sideration: The vital point is delivery overseas. Stone c{- Downer Co. — Average 25 shipments of general merchandise from all sections of the country on each outgoing steamer to the United Kingdom. This firm represents a large number of big leather establishments. Have no difficulty in booking shipments, except perhaps with the Allan Line to Glasgow. Reserva- tions, however, are made from 2 to 4 weeks in advance. Congestion is not apparent. Freight rates are high because steamship owners have no trouble in obtaining their own figures. It would seem that the steamship people are reaping a good harvest, Caldwell & Co. — About 10 shipments of general merchandise on each steamer outbound for the United Kingdom. Leather and cotton waste are principal additions since the war. Bookings must be made from two to four weeks in advance of sailing. Not sufficient steamers to handle export business. Freight offerings run froni 30 to 40 per cent above AAhat can be accommodated. Merchandise occasionally diverted to other ports for shipment on account of lack of cargo space. Hudson automobile agent tried through this firm to contract for cargo space for 20 autos each month, but steamship agents would not accept. Freight rates are high, but the consignee pays. Many lirves have been ordered to give preference to food supplies — result: Less space for general merchandise with continually increasing freight rates. Export merchants understand shipping conditions better than formerly so that commodities are not forwarded by rail until final arrangements have been made. Many shippers will take a chance for export at New York with booking in advance — I'esult: Little con- gestio:i in Bostoii, with opposite conditions prevailing in Nev.- York. Aualin Baldwin s allowed. Freight rates are high, but the question of delivery is the important factor. Little war supplies are exported from Boston for the reason that the firms a:ting as agents for the allies are located iji New York, and they Tiaturally see that such supplies travel via New York in order to collect their commissions. Adams Express Co. — From 7 to 10 shipments of general merchaTidise on each out- going steamer to United Kingdom. Could ship more merchandise from Boston if proper tonnage were available. Not sufficient vessels in Boston service. Book ship- ments from two to four weeks in advance. Have some bookings up to March 1, 1916. Can not get space on Cunard sailings to London. Steamship agents do not desire lumber, steel, or any hea\-y cargo. Unable to book 40,000 cases canned salmon and 3,000,000 feet lumber, because freight rates are beyond reason. Some manufacturers have been asked to quote prices c. i. f.. but the present high rates prevent them operating in foreign markets. Stearnship lines are reaping enormous profits due to limited tonnage and immense freight offerings. T. D. Downing Co. — D. C. Andrews & Co. — Judson Freight F&rwarding Co. — A. E, Freeman. — The foregoing firms have from 3 to 15 shipments each on every outbound steamer to the United Kingdom. They report that little physical congestion exists, due to better understanding of shipping conditions. They make booking arrange- ments from one to four weeks in advance of scheduled date of sailing. In the Man- chester and Glasgow services there appears to be some difficulty in securing cargu space. Freight rates are high, but there are sufficient freight offerings to maintain such figures. In many cases delivery is the important consideration. Certain American manufacturers would go into the foreign trade, but present transportatioo conditions are an effective barrier. 220 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. INDIVIDUAL EXPORTERS. Lawrence & Co. — Probably largest exporter of hosiery in New England. Estab- lished foreign market about two years ago. Ship approximately 350 cases to England each month : 500 per cent increase in business over last year. Bookings are now made up to end of March. Shipping 200 cases this month to London via New York because Cunard Line is unable to accept this offer outbound from Boston. Freight rates are extremely high. Before the war the freight figured $3.50 per ton measurement December, 1914, it amounted to $5.75: at this time they are paying $14.04 per ton measurement — an increase of 300 per cent over rates in force prior to the war. A. C. Lavrence Leather Co. — One of the largest exporters of leathers in the United States. Average 10 shipments of $50,000 each every month from Boston to the United Kingdom and Scandinavian ports. Can secure sufficient cargo space to above-named points by booking in advance. Have also about 10 shipments each month to France and Mediterranean ports via New York. Would prefer to make all shipments via Bos- ton if accommodations could be arranged. Freight rates seem unreasonably high; to Scandinavian points the rate before the war was 30 shillings per ton; at present it fluctuates from 120 to 200 shillings per ton. Furthermore, the ton is now figured on a measurement basis which makes a difference of 60 per cent in favor of the steamship companies. Export business in excellent condition. Nowes Bros, (leather). — Ship about 500 tons leather per month to European ports. Are able to book consignments to English ports without serious delay. Export business increa.sed greatly since beginning of the war. Before the war practically all ship- ments made direct from Boston. Now about two-thirds of shipments made via New York because space can not be secured in ships from Boston. Have great diflSculty in securing space for shipments to Holland. Beggs & Cobb (leather). — Ship 80 to 100 tons of leather per month from Boston. On account of insufficient number of sailings from Boston divert 30 to 40 tons per month to New York. Space not refused on Boston ships but at times can not wait for sailings. Before the war practically all shipments made from Boston. American Nirle & Leather Co. — Ship 60 to 100 tons leather per month to Europe. Divert about 50 tons per month to New York for shipment because of lack of sailings from Boston. Have little trouble in booking shipments to Liverpool and London, but have difficulty in booking to Switzerland. Boston Rubber Shne Co. & .American Rubber Co. — Combined exportations from Bos- ton average 122 tons per month. Are able to secure sufficient space in steamers sail- ing from Boston by booldng about one month ahead. Have diverted no shipments to other ports. Hood Rubber Co. — Ship from 1,500 to 2,000 packages of rubber goods per month to Europe. Have no serious difficulty in securing space on steamers saiUng from Boston. Ship goods to Italian ports via New York and have considerable difficulty in securing bookings. United Shoe Machhienj Co. — Have less difficulty now in booldng shipments than six months ago. Shipments vary in ([uantity from month to month. Last month exported to Europe 570 tons machinery from Boston. Experience some delays in bookings but not serious. B. F. Sturtcvant Blower Works.— Ship 60 to 70 tons machinery per month from Boston. Have met with no refusal of space on steamers but some delays and at times annoyance, caused by steamship companies splitting shipments, i. e., a part of ship- ment left on the wharf to be taken by a later steamer. Ship some freight by way of New York because of more frequent sailings. Blal'e & Knowles (machinery). — pjxport principally through New York. No par- ticular difficulty in shipping from Boston. Would probably ship more goods from Boston if sailings were more frequent. Cargo space has not been refused them by Boston Steamship companies. Potter Drug & Chemical Co.— Ship about 50 tons of their products per month to Great Britain. No delay or other difficulty experienced except with shipments to Glasgow (amounting '^to about 8 tons per month). For the past year Glasgow ship- ments have been delayed at times one month by steamship company due to lack of space or infrequent sailings. Armour & Co. (meats and meat products).— S^hi]) 125 to 1,200 tons per month. At times are unable to get sufficient space on steamers. Not enough refrigerator space available. Part shipments of refrigerator goods have been shut out by steamers and company has been obliged to place same in cold storage in Boston. More goods would be shipped if shipping space were pro\'ided and rates were within reason. Practi- cally no trouble before the war in securing ample space. SHIPPIXG BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 221 Sii'ifl & Co. (meals and nuat jyroduds).- A\?.\e shippe)t) Eni/Jand Shoe and Leather .4ssoriat inn .- Grent increase in volume of exports of shoes and leather in general. A considerable part of these commodities is exported through the medium of customs brokers. There appears to be a lack of vessels for the export trade, and the impression ])reviiils among manufacturers that the steam- ship people are taking advantage of the situation to obtain all they can for trans- porting merchandise overseas. In some cases the cost of the freight rate is not con- sidered of primary importance — delivery is the principal requirement. Mr. Phillip Abbott, head salesman for the A. C. Lawrence Leather Co. — The above- named gentleman has just returned from a tour of England, France, and Italy in the interests of his concern. He spoke mainly from the point of ^iew of European buyers. They found the present freight rates exorbitant and the rates of exchange outrageous. Mr. Abbott declared that American manufacturers have the greatest opportunity in the history of the country to entrench themselves in overseas trade. He criticized the poor service given by the .\merican Line, and suggested that something be done to increase American vessels, lower freight rates, and establish strong commercial ties between the V 4ted States and European countries. STE.\.M.SH1P .^GKNTS. Jnternational Mercantile Marine. — Cargo capacity of steamers in Boston service about the same as last year. Hor.ses are loaded on steamers, account of British Government, which fact reduces cargo space by approximately 20 per cent. Freight rates are high — due to the great demand for accommodations. Grain, cotton, and provisions receive some preference in booking. War supplies (everything except ammumtion which is not shipped via Boston^ are also given consideration in booking. The result is less space for general merchandise. Ocean tonnage is scarce everywhere in America. Boston better off than New York. Freight rates are not a great issue; shippers seem willing to i^ay any quotation, as the consignees must have the commodities and are willing to pay the price. Congestion does not exist at Boston, but rather in ports of arrival in the United Kingdom. Delay in unloading and taking on new cargo at these ports hamper the serAdce and result in less frequent trips. The Canard Steamship Co. — All steamers now in Boston service are chartered ves- sels. Not sufficient ocean tonnage at Boston to handle freight offerings. No con- gestion at this port, but delays and difficulties are features at Liverpool. From Jan- uary 15, 1914, to October 1.3, 1914, Cun.ard service to Liverpool had 18 sailings, carry- ing"54.899 tons of cargo; from January 2, 1915, to October 1?>, 1915, K! saihngs, carrying 102,711 tons of cargo. Freight rates are based upon the law of supply and demand. The Allan Steamship Co. — All regular liners in Boston service have been either commandeered by the British Government or are running from other ports. Steamers now running from this port are all chartered steamers. No congestion at Boston, but at Glasgow much trouble is experienced. The present high freight rates may be attributed to the excessive charges made by the ovvners of the chartered steamers 32910—16 15 222 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. and other abnormal expenses incuiTed in the ocean freight business during the war. Sufficient steamers in the Glasgow service to handle freight offerings. Wilson Sterimship Line. — Maintain two sailings per month from this port to Hull, England, ^^a New York. Have been obliged to refuse bookings of freight for'some of local exporters, because of space reserved for New York shipments. Have not space enough to book all grain offered. Patterson Wylde & Co. — ^laintain average of two ships per month to Manchester, England. Are able to provide spice for all local freight but bookings must be made about one month ahead of sailings. Great demand for space for grain shipments, which they are unable to meet. Could fill 20 to 30 steamers with export grain. Furness Withy & Co. — Maintain three sailings per month to Liverpool, England. Generally able to meet all requirements for export cargo space except for grain. If had more ships could book very lirge quantities of grain. A. C. Lombard's Sons. — Maintain sailings of two steamers per month to Copenhagen. More general cargo offered for export than can be provided in present number of ships. Could fill 10 steamers per month while demand for grain space lasts. Could fill four boats per month outside of grain shipments. Have to refuse cargo offered from the West from Canada and from New Yoik State. Local shippers well provided for, but these are not a large factor. RAILKO.\D AGENTS — ^FOREIGN FREIGHT DEPARTMENTS. Boston & Albany and New York Central Railroads: Cars. Merchandise in East Boston yards for exportation 462 Merchandise on East Boston piers for exportation 126 Merchandise in AUston yards for exportation .- 262 Grain sidetracked In yards outside of Boston for exportation 520 Merchandise sidetracked in yards outside of Boston for exportation 200 Boston & Maine Railroad: Merchandise in yards in Charlestown for exportation 394 Grain in yards in Charlestown for exportation 73 Merchandise on piers in Charlestown for exportation 318 Total 2, 355 In the Boston & Albany Railroad grain elevator in East Boston are 635,000 bushels grain Ccapacity of elevator, 1,000,000 bushels). Owing to variety of shipments stored is tilled practically to working capacity. ' ' In the Boston & Maine Railroad grain elevator at Hoosac Tunnel Docks, Charles- town, are 414,000 bushels of grain. (Capacity of elevator 1,000,000 bushels.) In the Boston & Maine Railroad grain elevator at Mystic Docks, Charlestown, are 252,000 bushels of grain. (Capacity of elevator 350,000 bushels.) Total in elevators in Boston for exportation, 1,301,000 bushels of grain. Foreign freight agents of the Boston & Maine, New York, New Haven & Hartford, Boston & Albany, and New York Central Railroads state that more freight is being offered than can possibly handled by the steamers now sailing from this port. The agent of the Boston & Albany and New York Central Railroads states that the Ray- mond Hadley Corporation (a New York firm) recently offered to deliver to him §1,000,000 worth of flour if he would secure the necessary steamer space for its expor- tation. The offer was declined because no space was available. STEAMSHIP PIERS AND TERMINAL YARDS. The steamship piers at the port of Boston are not now, and have not been, during the present year in a congested condition. The terminal yards of the Boston & Maine and of the New York, New Haven & Hartford Railroads are not now and have not been during the present year in a con- gested condition. The terminal ysLrds of the Boston & Albany and of the New York Central Railroads, situated in East BoFton and Allston, are filled as full of export freight as working conditions will permit. Congestion of the.se yards has been avoided only by side- tracking freight in yards further out of Boston; 520 cars of grain and 200 cars of general merchandise destined for exportation via these terminals are now being held on side tracks outside of Boston, pnncipally along the line from Albany to Boston. In conclusion, we may state that there is no serious congestion of export merchan- dise at the railroad terminals or on the steamship piers at this port. That congestion does not exist in Boston is due to the fact that merchandise is not forwarded for export faster than the steamship lines are able to provide space for it. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 228 Without question there is a larga quantity of freight awaiting exportation to Europa which would be shipp3d by way of Boston provided cargo space could be procured. Notwithstanding the exceedingly high freight rates now quoted by steamship agents the demand in Eurcpa for certain classes of American merchandise is so inip.irative that freight rates are a secondary consideration. With normal freight rates prevail- ing, more American products would undoubtedly be exported. Respectfully, M. B. Mann, Deputy Surveyor. Joseph F. Scanlan, C.7m>/ Cleric Entry Divisiov. . Clearances and net tonnage of vessels to European ])orts. Month. 1913 1914 1915 Vessels. Tonnage. Vessels. Tonnage. Vessels. Tonnage. Julv 20 20 21 125. 096 124,472 131.333 20 11 13 17 16 129,546 61,245 75, 523 77, 735 72,494 14 13 13 18 23 60,364 August 55.456 51. 1S7 24 < 126.020 20 1 100,-544 70,301 88.913 105 607,465 77 416,543 81 326,491 1914 tonnage=31 per cent less than 1913 tonnage. 1915 tomiage=46 per cent less ttan 1913 tonnage. Value of exports. Month. 1913 1914 1915 July $5,744,442 $5, 146, .'599 7,119.032 3,153.394 6.227.487 4. 185, .=^24 6,518,390 9.766.318 4,642.552 j 9,123,8W «9. 104.337 8,606,114 7.177.360 8. 703, 362 9, 245, 470 Total 30,251,903 31,375,699 42,926,643 Value of exports, 1915, increased 41 per cent over same period in 1913. Comparison of freight rates to Liverpool. [Quoted in cents.] GRAIN, PER BUSHEL OF 60 POUNDS. 1913 1914 3 -6i 3 -4 4 -5i 4 -8 24-6 3 3-5J 4-6J 4*-6 6i 1915 July August September October. .. November. Percentage increase from Julv 1, 1913. to Dec. 1, 1915, 1,166 per cent. FLOUR, PER 100 POUNDS. July August September October. .. November. 14 10-12 14-16 12-14 14-16 12-23 15 12-21 15 18-20 20 20 20 -30 36 ^0 401-38 4S 45 45-60 60-70 70 Percentage increase from July 1, 1913. to Dec. 1. 1915, 400 per cent. 224 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINK. Comparison of freight rates to Liverpool — Continued. PROVISIONS, PER 100 POUNDS. July August September. October November. 1915 65 65 65-80 80-90 90 Percentage increase from July 1, 1913, to Dec. 1, 1915, 309 per cent. COTTON, PER 100 POUNDS. July ; I ^,25 August (') September ! 25-30 October 25 November I 24-30 12 SI. 00 ('J 1.00 30 ll.OO- 1.25 30 I 1.25 30-35 1.25 Percentage increase from July 1, 1913, to Dec. 1, 1915, 400 per cent. LUMBER, SOFT WOOD, PER 100 POUNDS. July : («) 22 August («) 29 September (2) i 29 October i («) 29 November ! 32-38 76-70 70 70 75-80 80-95 2 Rates not available. I Rates not quoted. Increase from July 1, 1914, on soft wood lumber is 331 per cent. Rate on hardwood lumber shows increase of 415 per cent. Treasury Department, United States Customs Service, Port of New York, November 30, 1916. flon. William G. McAdoo, Secretary of the Treasury, Washin'jton, D. C. Dear Mr. Secretary: Pursuant to your request last week in Washington that an estimate be made of the export merchandise on hand at this port and the ocean ton- nage available for purposes of exportation, the representatives of the different trunk lines of railroads and steamship companies with terminals at this port and large manu- facturing and exporting interests have been consulted and their views ascertained, based upon figures at their command. Below is given the number of cars held within the metropolitan district awaiting exportation: * Cars. New York Central Railroad 2, 000 Erie Railroad 1, COO Baltimore & Ohio Railroad 5, 000 Delawai-e, Tyackawanna & Western Railroad 1, 300 Lehigh Valley Railroad 1, 700 Central Railroad of New Jersey 1, 300 Pennsylvania Railroad 5, 000 This is exclusive of grain, about 7,000,000 bushels, representing about 150.000 tonnage now^ held at this port awaiting exportation. In addition to the cars within the port of New York, there are many thousands of cars laden with export merchandise awaiting a chance to come into the port. All the railroad sidings are choked with such freight. The cars above referred to may be said to contain general merchandise, chiefly of American production, steel products and war munitions predominating. This large number of cars constitutes a practically unprecedented congestion which may be ascribed to different causes, but the great predominating cause is the lack of vessels to carry the freight. This lack is caused by the withdrawal of vessels ordinarily engaged in commerce; the complete withdrawal of the German and Austrian com- mercial fleets, and in a smaller degree the destruction of commercial vessels by mines and submarines. An expert shipping authority at this port has estimated the losses SHIPPING BOARD, NAVAI, AUXILIARY, AND MERCHANT MARINE. 225 from the above causes as a1 least GO per cent of the commercial tonnage of the world. In addition to this the export business of the United States has increased sc enormously as to tjreatly accentuate the prevailing scarcity of ocean tonnage. It has been repre- sented to us by practically all of the railroad officials with whom we have conversed that the congestion in the matter of cars at this port wovdd be practically reduced by oO per cent if needed ships might be obtained. If we accept this percentage as cor- rect, we may figure as follows: It is estimated that there are 30 tons to the average freight car, and since the number uf cars held at this port, a'-cording to the statistics above gathered, amoiint to 17,900, it will be seen that there is a car tonnage at this port of 537,090. If, then, 50 per cent of this is due to inadequate export tonnage facilities, it will be seen that there is a con- gestion at this port of 2G8,500 tons directly due to this shortage. Attention is invited to the fact that the average vessel tonnage per day leaving the port of New York at the present time may be placed at 50,000 tons. In this connection it should be borne in mind that vessrd tonnage should be differentiated from car ton^ uage, in that the former represents 100 cubic feet, while the latter representts 40 cubio feet. In order, therefore, that intelligent comparison may be drawn it is proper thai the vessel tonnage should be {)laced at 125,000 per day. In other words, a 50,000 vessel t(mnage would be equal to 125,000 car tonnage. Taking into consideration the total tonnage at this port awaiting exportation — General merchandise 268, 500 (irain 150, 000 Total 418, 500 it will be observed that it would recpiire nearly four days average total tonnage from this port to ])rovide exportation fafilities. It should be realized that the actual conditions of to-day would be duplicated to-morrow or the next day, since there are held t>utside of the immediate district of New York thousands of cars awaiting opportunity for entry here. Under the circum- stances it is my opinion that the piesent e.^port tonnage facilities do not meet more than 25 per cent of the present demand. Experts state that the congestion at this port will increase in the near future and that ocean freight rates will be higher than ever before. Attention is invited to the following excerpt from the "Literary Digest" of a recent issue, which is in a measure in agreement with the facts as ascertained upon investi- gation. In fact, the conclusions would be practically similar except that the greatest degree of conservatism has been exercised in the formulation of our conclusions: ''The railroads coming into New York are handling the largest amount of trafBe iu their history, and the congestion at terminals here in the next two or three months ie likely to be the greatest ever seen. This will be due to the inability of ship lines to move the freight sent to the city, which is already sufficient to fill five times over every vessel available for export purposes." In the conduct of the investigation it was ascertained that present conditions are such, owing to the extraordinary high rate of freight now levied by steamship com- panies, that certain American products are completely shut out from exportation. This is due to the fact that merchandise of a comparatively bulky nature and small unit value is unable to meet the exorbitant freight rates at the present time. To illustrate the degree in which rates have advanced, I may state that cotton, which was hitherto transported to the United Kingdom at from 18 to 20 cents per hundred and to Mediterranean ports at 25 cents per hundred is now assessed in both cases at $1.50 per hundred. I may further state that all freight rates have been advanced about 500 per cent, and in some instances very much higher. As an illustration, the value of a barrel of lubricating oil is about $'G. The freight rate to Mediterranean ports was formerly from 75 cents to $1 per barrel. To-day the freight rate is from $5 to $8 per barrel, easily exceeding the value of the article. A very large list of similar instances could be enumerated. The agent of one of the largest steamship lines in New York stated that he had recently purchased several steamers which had been relegated to the scrap heap, paying more than three times their value for them. He estimated that at present freight rates the ve.ssels would earn the purchase price in two or three trips. He further stated that this condition would become more acute in the immediate future. These facts afford incontrovertible evidence of the insufficient ocean tonnage at this port, since the rates governing freight movements are inevitably subject to the law of supply and demand. Yours, faithfidly, Dudley Field Malome, CollccWr, 226 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Basis of figuring. — General merchandise, 30 tons to the car; grain, 37J bushels to the ton, 47 cubic feet to ton; car tonnage, 40 cubic feet; ocean tonnage, 100 cubic feet. I have also a copy of a resolution adopted by the Canners League of California relative to the need of an American 'merchant marine, together with copy of a letter addressed to Asst. Secretary Vrooman of the Department of Agriculture in connection with the International Paper Co., on the same subject. (The resolution and copy of letter above referred to are as follows :) The Secretary of the Treasury, Washington, January 17, 1916. My Dear Judge: I send you herewith copy of a resolution adopted by the Canners J^eague of California relative to the need of an American merchant marine, together with copy of a letter addressed to Assistant Secretary Vrooman, of the Department of Agriculture, by the president of the International Paper Co., in connection with the Bame subject. Faithfully, yours, W. G. McAdoo. Hon. J. W. Alexander, Ifouac of Representative.^. (Copy.) Whereas the United States has reached a point in its development where it has become ncce.ssary to find new and increased foreign markets for its products and manufactures to insure the prosperity of the country, the farmer, the manufacturer, and the people at large; and Whereas the question of steamships to foreign countries is now becoming a serious handicap upon our manufacturers, owing to the uncertainties of freight rates and the abnormal rates demanded by the ship-owning interests: Therefore be it Resolved ht/ the Canners League of California in annual convention ossemhled, That we favor plans for the establishing of an adequate American merchant marine by the United States Government, and that we favor legislation by the ])resent Congress now- assembled in A\'ashington that will relieve the tremendous burden from which the manufacturers are now suffering in their efforts to get goods to their foreign markets, and that we favor laws that will lead to the establishing- of an-adequate American merchant marine by the L'nited States Government which can be used as a naval auxiliary in time of war but in time of peace can be used for the preservation and development of our industries. International Paper Co., 30 Broad Street, New York, January 8, 1916. Subject: Lack of shipping facilities. Hon. Carl S. Vrooman, Assistant Secretary Department of Agriculture, Washingtoii, D. C. Dear Sir: Replying to inquiry of January 5, it is true that this company has expe- rienced great difficulty and indeed, inability to secure bottoms for foreign shipments in the last few months. At this time this company has or can secure immediately orders for more than 7,000 tons of its paper for shipment to France, Argentina, and Australia, if space could be secured. The nominal quotations for freights at present are four to five times above those prevailing before the war, and are so great as to be prohibitive — in some instances the freiglit being almost equal to the value of the merchandise f. o. b. It is probable, however, that a very substantial foreign business can be built up, if bottoms could be eecured on any reasonable terms. Yours, very truly, P. T. Dodge, President. SHIPPING BOARD^ NAVAL AUXILIAEY, AND MERCHANT MARINE. 227 Also a communication of Mr. George S. Taylor, secretary of the Society for the Development of American Shipping (Inc.), of New Orleans, addressed to me, giving a transcript of the published ocean freight rates on the leading commodities exported through New Or- leans which were in effect just prior to the outbreak of the war in Europe and also the rates prevailing at stated periods since that time. There is attached a clipping from the New Orleans Times-Picayune of January 22, 1916, on the same subject. (The letter and newspaper clipping above referred to are as follows :) [The Society for the Development of Am"Ti?an Shipping (Inc.), New Orleans. Office of the secretary, 304, 305, Hennen Annex.] January 22, 1916. Hon. J. W. Alexander, Chairman Committee on the MercHant Marine, Washington, D. C. Dear Sir: Responding to yoii.r request of January 15, we are pleased to supply transcript of published ocean freight rates upon the leading commodities exported through New Orleans In effect just prior to tlie outbreak of the war in Europe, also of the rates prevailing at stated periods since that time: [In cents per hundred pounds.] July 4, 1914. Feb. 6, 1915. Dec. 18, 1915. Jan. 15, 1916. Cotton to T iverpool 28 20 22 11 125 95 95 32 200 130 135 None. 300 Luniher to Rotterdam 155 Flour to Genoa None. None. The advance in freight upon other commodities to other ports progressed in rela- tive proportion, the maximum prevailing at the present date. Upon the declaration of war over-seas commerce suspended, being resumed cau- tiously and gradually as contending cruisers disappeared from the sea. Gradually increasing rates of freight developed as the destruction and diversion of tonnage became more and more a factor in the disturbed ralationsh'.p between supply and demand, with the consequent absence of competition. Foreign commerce through New Orleans is transported almost exclusively by European steamship companies, the serA-ice being augmented by tramp cargo carriers, also of foreign ownership. Numbers of these vessels have gradually been withdrawn from service in the Gulf, with freight rates advancing proportionately. Much uncertainty prevails at the present time. Rate quotations and space offer- ings are subject to immediate acceptance, or are being refused entirely. The demand for bottoms ^.s heavy and continuous. A vessel in convenient position may practically name her own terms, then collect the freight in advance. Ship's time has grown to such value that the few additional steaming days required to serve ports in the Gulf Jempt vessels to shorten the voyage in faA'or of Atlantic ports, where cargoes are either waiting or will be rushed tliere if the bottoms are offered. If we have abbreviated too freely and a more exhaustive statement is required, please command us. Our serA-ices are yours when and where needed. Very respectfully, Geo. S. Taylor, Secretary. [The New Orleans Times-Picayune, Jan. 22, 1916.) LIVERPOOL COTTON RATE IS INCREASED TO $3 PER HUNDRED — STAPLE CAN BE SENT CHEAPER FROM NEW ORLEANS TERRITORY VIA NEW YORK. A rate of $3 per 100 pounds on cotton from New Orleans to Liverpool February, and March shipments, was the quotation sent out by freight traffic managers of local rail lines to their agents in the cotton belts of Louisiana, Mis.sissippi and Texas Friday morning, and from the fact that the rate is quoted so far in advance, railroad and steam- 228 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. ship men and shippers generally are inclined to the belief that ocean tonnage is liabli to become scarcer even that it is to-day. While the rate at New Orleans remains at the high record market set for Januarj shipments, the Liverpool rate from New York on cotton has shown a considerable fall. The latest quotation from New York on Liverpool cotton was $2.50 per 100 pounds, 50 cents cheaper than the New Orleans rate, and combining the rail and water rate from Ulterior points in Mississippi and North Texas to points to Liverpool, it is far cheaper to ship the cotton through New York than through New Orleans, although the cotton belongs in what is known as New Orleans territory. The New York rate on cotton to Liverpool went up to $2.75, and the difference, combining the rail and water rate between New York and New Orleans was not con- siderable. But the decrease of 25 cents on the New York rate puts New Orleans practically out of the running, and railroad traffic managers are at their wit's end to find a solution of the problem. The rate from interior points in Mississippi to New Orleans, that is, from the cheap- est points, is 23 cents ship side. The 23 cents, combined with the S3 ocean charge, makes the through export rate to Liverpool via New Orleans 83.23. The rail rate on the same cotton to New York is 51.06 cents, and this, combined with the ocean rate of * $2.50, makes the through rate to Liverpool ^da New York $3.0106, a saving of more than 20 cents per 100 pounds. The difference on the North Texas cotton through the two ports is even greater. The rate on this cotton by rail is 52J cents per 100 pounds to New Orleans, and the com- bined rail and water rate from North Texas points through New Orleans to Liverpool figures out exactly $3.52i. The rate on the North Texas cotton to New York by rail is 74 cents, and this, add'ed to the S2.50 ocean rate to Liverpool, makes a through rail and water rate of ?3.24, or a saving of 28 cents per 100 pounds. It was hoped by local interests that the §3 quoted for January shipments of cotton out of New Orleans would be decreased at least to a figure thai would put New Or- leans on a parity with New York on what is really New Orleans cotton. But the war- rins; Governments have confiscated so many ships that ocean tonnage is daily becoming scarcer, and it was found necessary Friday to put up the $3 quotation for February and March cotton. New York has more ships than New Orleans, and the ships loading Avith machinery and heavy war material are glad to take lighter freight as fillers. While cotton is required to be compressed to a density of 22-h pounds per cubic foot, it is considered as light freight compared with the heavy iron and steel shipments, and is taken by the ships in New York as cargo fillers. However, it is being handled as first class freight, and satisfactory insurance rates are obtained on it. In issuing notices Friday on February and March quotations on Liverpool cotton, the railroads made it clear that the tonnage was limited. Also copy of a letter received by the Secretary of the Treasury from the Chamber of Commerce of Porto Rico giving the steamship situation between the United States and that island, together ^\^th copy of a letter from Mr. Daniel Kelleher, of Seattle, Wash., in regard to the lumber export situation in the Northwest. (The letters above referred to are as follows:) Thk Secretary of the Treasury, * Waahingfon, Deceiiib/r 24. 1915. My Dear Juixjk: I am sending you herewith, for your information, copy of a letter received from the Chamber of Commerce of Porto Rico dealing with the steamship sitxiation between the United States and that island, and also copy of one from Mr. Daniel Kelleher. of Seattle, Wash., in regard to the lumber export situation in the Northwest. I thought you \v( uld like to have this data. Siiirerelv, voiir><. W. C. M(Adoo. Hon. J. W. Alexander. Unnat of Rcvre.tfntntiif.'!. SHIPPING BOARD^ NAVAL AUXILIARY^ AND MERCHANT MARINE. 229 ICamara de Comercio de Puerto Rico, fundada en 1875 y reformada en abril de 1899; San Juan, P. R.; presi- dente, Don Benito Zalduondo; vice presidentes, Don Eudosio de la Cuetara, Mr. John M. Turner; sec- retario-tesorero, Don Arturo Carreras.] December 8, 1915. Hon. William G. McAdoo, Secretary of the Treasury, Washington, D. C. Sir; We coufirm the letter which we had the honor of addressing you on November 19 last, and now take the liberty of inclosing copy of a communication we wrote on the 3d idem to Gen. Frank Mclntyre, Chief of the Bureau of Insular Affairs, Wash- ington, D. C. We are desirous that you become thoroughly cognizant of the serious injury which the steamship monopoly pljdng out of here is causing our commerce and the export trade of the United fetates proper, the last exemplification being an arbitrary increase of 150 pr-r cent on Porto Ivico sugar destined to the United States. In addition to this the steamship companies, and more particularly the New York & Porto Kico Steamship Co., have announced publicly that, beginning with January 3, 1916, they purpose making changes in other freights between the United States and Porto Kico. They do not specify' the tendnecy of such changes, but we have received information from private but reliable sources that the same will consist of an increase of 25 to 30 per cent over the already high rates charged. The most adverse feature from the viewpoint of our trade interests is the fact that having developed a plan — the outgrowth (>i one year's study and labor — to start our own steamship line at this time, the combine has tlireatened to wage a relentless and ruinous rate war if we venture to carry our plan into execution. This is why we feel emboldened to crave the protection of the United States Govern- ment, so that our interests may not be left open to the attacks of the steamship monop- oly, which, actuated by inordinate greed, seeks to sweep aside all attempts to establish reasonable freights, and why we respectfully petition that a recommendation be made to the Congress to enact legislation regulating the freight rates between Porto Rico and the United States under the supervision of the national Executive. Such an act of Congress would be the greatest boon that could be conferred upon the trade element and people of Porto Rico, and the chamber of commerce therefore prays that you will interpose your valuable influence to such end. We ask you, Mr. McAdoo, kindly to pardon our insistence, but you will admit that in order to procure justice it must be sought through the proper channel. Please accept our thanks in advance for all that you may do in our behalf. Respectfully, f.sEAi..] Chamber of Commerce of Porto Rico, By B. Zalduondo, President. (Copy.) December 3, 1915. Gen. Frank McIntyre, Washington, D. C. My Dear General: Having heard of your return from the Philippines, I gladly avail myself of the present opportunity to convey to you the most respectful and cordial greetings of the above chamlsor of commerce. On different occasions we have written Secretary of Commerce Redfield asking him to bear in mind the urgent necessity of recommending to the present Congress the passage of a legislative measure providing for Government regulation of ocean freight rates between this island and the United States. A promise to the desired effect was made by Secretary Redfield to the committee of the undersigned chamber of com- merce, which had the honor of calling on him during February last, and we have no dotibt that he will comply therewith. You will remember the complaints which we filed with the said functionary in Washington at that time. Subsequently we have forwarded considerable corroborative evidence anent the inexplicable rise in ocean freights between here and there for want of regulative legislation. We are now constrained to submit a new datum, which will undoubtedly sway the national administration in our favor and induce the Secretar>^ of Commerce to include in the Government legislative program a nmeasure governing traffic changes as praved for. We have reference to the following: The agencies of the steamship companies which are operating a carrying servic between Porto Rico and the United States have received instructions from their respective head offices in New York to eharge 30 cents for every 100 punds of sugar 230 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. shipped from this island to the United States. The freight cliarged up to this time is" 12 cents, and in corroboration of our statement we are prepared to furnish the United States Government signed contracts entered into by and in the possession of several shippers of svigi^.r bas^d on a consideration of 12 cents for every 100 pounds. The island of Porto Rico will produce during the present crop at least 3,000,000 sacks of sugar containing 250 pounds each. Of this output about 2.000,000 sacks will go to the United States. "With the freight at 30 cents per 100 pounds, the carriage of each sack will cost 75 cents, as against 30 cents paid at present. So that, reckoning the increase of 45 cents a sack on 2,000,000 sacks, we find our trade balance will be reduced by $900,000, which will go to swell the coffers of the monopolizing steamship com- panies plying out of here, to the grave detriment of this unfortunate island. This chamber of commerce submits that it is neither equitable nor lawful that ocean carriers should be allowed to raise the freight of a staple product like sugar 150 per cent at 24 hours' notice and such high procedure on their part is made possible only by the lack of adequate and necessary legislation for the regulation of freights. The commerce of the United States is safeguarded by the interstate commerce act, which proWdes for and creates a commission to enforce the regulation of interstate freights. But Porto Rico, which is included under the coastwise regulations does not enjoy the benefits of this or any other analagous act, and on the other hand is deprived of the advantages accruing to freight carried in foreign bottoms. It is thus left naked to the machinations of the steamship combine which controls our traffic, and divested of means to neutralize the disastrous effects resulting therefrom. In view of the foregoing, this chamber of commerce respectfully and earnestly petitions Gen. Mclntyre and the Secretary of Commerce, as well as the other officials of the national administration, to recommend to the present Congress the passage of appropriate legislation authorizing Government regulation of freight rates and of other conditions affecting the transportation trade between this island and the United States. For the past 12 months we have been urgently petitioning your bureau and the Sec- retary of Commerce to recommend the adoption of such legislation, and we refuse to be Jeve that compliance with our just request will be longer deferred. You are at liberty to refer this letter to Secretary of Commerce Red field or to any other Government official, and we respectfully invite and confidently hope for your valuable cooperation in support of the petition of this chamber of commerce in fur- therance of the general interests of the Island of Porto Rico. Respectfully, Chamber of Commerce of Porto Rico, By B. Zalduondo. [The Seattle National Bank, Seattle, Wash. Daniel Kelleher, chairman of the board: Frederic K. Stnive president; J. W. Spancler, vice president; R. V. Ankeny, vice president; E. G. /.mes, vice president; W. S. Peachy, cashier: H. C. MacDonald, assistant cashier: C. I.. LaOrav^e. assistant ca.shier; J. H. New« berger, assistant cashier.] December 7, 1915. Hon. W. G. McAdoo, Secretary of the Treasury. Wushington, D. C. My Dear Mr. McAdoo: I was very sorry to lie obliged to telegrajih you to-day that I could not attend the meeting of the return visit committee in >.ew York next week. I have but recently returned from ray trip to the East and the South, and find it impossible to get away again at this season of the year. It was a gi'eat disappointment to me that I was not in the city when you were here in Octol:er. I want to say, however, that your \isit has done a great deal of good here, and I have heard many favorable comm-ents on your remarks while here. I was very much interested in the talk we had in Washington in September on the shipping bill. We certainly need something of that kind to l)e put through immedi- ately, and I trust that you will be able to effect the proper legislation to that end. The whole country seems very prosperous excepting the Pacific coast. We are still Buffering out here from the bad effects of the war, and have had really no good effects. The lumber industry has not picked up here, as it has in the middle and Southern States, and throughout the Eastern States. There is a little better feeling, but really not very much improvement. The shipping of our lumber by cargo is cut off to the extent of aljout 500,000,000 feet a year. This is on account of the lack of ships. The cutting off of this Inisiness is just enough to spoil the rest of the lumber business here. Personally, I can not see any hope for recovery on this until the war is over or until we get by proper legislation some ships to transport om- lumber. The only other product we would have out here to sell on account of the war would be our wheat, and the ship rates for transporting this to Europe are practically prohibitive. For many reasons, outside of our local reasons. I hope you will be successfiil in shaping SHIPPING BOARD, NAVAL AUXIT,IARY, AND MERCHANT MARINE. 231 up some legislation to give the United States ships in which to do our business. It is certainly a shame that in this great country we practically have no ships to do our foreign commerce. If I can be of any service to you at this end of the line at any time, please do not hesitate to call upon me. Very respectfully, yours. Danikl Kelleher. I have also a letter from the'Indiana Quartered Oak Co., addressed to the Secretary of Commerce, relatmg to difficulties arising under the present form of bill of lading which we think would be corrected by the provisions of this bill by placing our shipping under some responsible governmental control, as proposed. (The letter above referred to is as follows:) (Indiana Quartered Oak Co., (Inc.), wholesale lumber, 52 Vanderbill Avenue, New York, WlUard Wlnslow, president and treasurer; Herbert MeM, jr.; vice president; M. G. Taylor, secretary.] December 21, 1915. Mr. Wm. C. Redfield, Secretary of Commerce and Labor, Washiyiglon, D. C. Dear Sir: We wish to call your attention to a matter which may come within your province, or possibly that of the Interstate Commerce Commission, viz, that steamship companies taking lumber from Atlantic i^orts refuse to give "clean" bills of lading unlesf the shipper is a member of the National Lumber I^xporters' Association. This association compelled the steamship companies to issue and sign bills of lading -ndthout inserting the clause "more or less," "shipper's count," or some phrase of that sort, which enable the steamship companies to refuse to make good any shortage. If we get a clean bill of lading, we can make the steamship company produce the number of pieces or bundles shipped or pay the difference. The steamship companies will not state openly that such a condition prevails, but tlus is a fact, that they discriminate between members and nonmembers of the National Lumber Exporters' Association. We were members ot this association for several years, but resigned because we only export occa.^ional carloa'ds of certain specialties, and the dues for membership in the asr^ociation amount to a considerable sum. We do not think that lumber exporters should be compelled to be members of the export asvSO( iation in order to get fair treat- ment. As a matter of fact, there is practically always a shortage claimed when the bill of lading is stamped "more or less," or words to that effect. The practical result of this I onditiou is that the profits on lumber exported are just about used up by shortages in every case. The steamship companies count the number of btindles or pieces in every case, but where the bills of lading bear the clause "more or lers," etc., they do not take the trouble to handle the goods properly. Yours, very truly, Indiana Quartered Oak Co., WiLLARD WiNSLOw, President. Also a letter from Paul C. Hanisch & Co., American Leather Manufacturers' Agents, of 46 St. Thomas Street, Bermondsey, Lon- don, in regard to the exacting of excessive freight rates. (The letter above referred to is as follows) : Department of Commerce, bure.at- f)f p'oreion and domestic commerce, Washington, December 21, 191.5. Hon. J. W. Alexander, Chairman Committee on Merchant Murine and Fisheries, House of Representatives, Washinyton, D. C. Dear Sir: I am inclosing for the information of your committee and for any atten- tion which may seem advisable a copy of a letter from Messrs. Paul C. Ilanisch & Co., 46 St. Thomas Street, Bermondsey, London, and inclosure, in regard to excessive freight rates. Very truly, yours, E. IC. Pratt, Chief of Bureau. 232 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. (Copy.) [Paul C. Haniseh A Co.. .\merican Leather Manufacturers' Aj,'ents, 46 St. Thomas Street, Bermondsey, London.] December 2. 19L5. The Commercial Government Department, Washington, U.S.A. Gentlemen: We are strictly American importers of American leathers. It seems to us it is about time the American Government took some steps in ref;:ulating freight rates of the American liners. We have been paying advances right along on freight rates. We are getting goods through English lines and are paying from 75s. to lOOs. per measurement ton for our goods, which are glaced kid and calf made in America by the leading houses. The war risk is verv little nowadays, and that is insured by the purchasers in America. War and marine risk combined, we are paying only 1^ per cent. For the privilege of shipping on an American ship, in common American phrase, we are "soaked " by the American lines. We inclose you a letter we received on our complaint; the contents will speak for itself. We are taking this matter up with your department, and ask you to look into it and see if something can not be done to stop these outrageous charges that the American line is making. W^e have instructed all our shippers not to .ship a single thing in future through the American line. Yours, truly, Paul C. IIanj.sch & Co. (Copy.') |.\merifan E.xpress Co., Foreign Department, 10 James Street, Liverpool.] .VovEMhtKR :;o, 19 ir.. Messrs. Paul C. Hanlsch & Co., 4fi St. Thomas Street, Bennondbcy, Lonrhn. DtAR SiR;>: We are in receipt of your letter of the L'9th in.stant regarding rate, and beg to state we have no control whatever over the ocean freight. The actual rate paid by is to the steamsliip company was 79 cents per cubic fcot, and w e regret xerv much not being able to rduce it. We are just as concerned over high ocean freights of this kind as you are yourselves, as we know how it interferes uith business, but at the present time when space in the steamers is at a premium the steamship companies are taking advantage of the position to increase their rates, which as far as we are concerned we do not consider just, but we have nfi option but to accept the situation. \^'ith regard to the charge for cii.stonis entry and attendance, we believe if you could see the additional time and trouble expended on clearance of goods at Tiverpool that you woiUd not for a moment object to pay the charge of is. The quays are greatly congestel. and it frequently takes one of our men half a day to locate two or three jiackages due to the cargo of several steamers being on one quay. We will, however, reduce this item to '2s. fid., and shall be ple.isei to receive remittance for the amount of,£filOs.2d. We believe you will get full sati.-'fnction with re:4ard to the ocean raie if you will communicate with .senders. Yours, truly. American Express Co. . Ay,'nf. A letter from J, H. Arnold, commercial attache of the American Legation at Pekin, forwarding copy of a resolution passed by the executive committee of the American Association of North China, Tientsin branch, which is accompanied by a letter from Mr. E. E, Pratt, chief of the Bureau of Foreign and Domestic Commerce of the Department of Commerce, to the secretary. (The communications and resolution above referred to, are as follows:) SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 233 Department of Commerce, Bureau or Foreign and DoMEtsric Commerce, Waskinglov, Februanj 7, 1916. The Secretary of Commerce' The attached copy of a resolution ol the American Association or North China, Tientsin branch, has been forwarded to the bi'.reau w-ilh the request that it be handed to you for your personal consideration. The lollowing extract from a letter from Commercial Attache Arnold will also doubtless be of interest to you in connection with the pioposed administration shipping bill: "As repeatedly po'.nted out by ihis office, the P^uropean war has created opportuni- ties in China for the expansion of American trade unparalleled in the history of this trade. Our principal competitors in the China trade are, on account of the war, either forced out of the market almost entirely, or sadly handicapped because of war conditions at home. Yet in the face of the greatest opportunity ever presented to us in this market, we find ourselves in the extremely unfortunate conditions of being obliged to depend upon the shipping facilities of a competitor nation whose arbitrary acaons in connection with extending these facilities to other than its own nations Is calculated to reduce to a minimum the advantages which the war has created tor us in China. "It has been indeed unfortunate lor our commercial interests in China that the American flag should have disappeared from the Pacific at a time when it could mean the most for us. Never in the nlstory of our trade with China have we needed Ameri- can ships more than we now do, and never in the history of this trade could Amer'can ships have done more for us than during the present European war. It ia to l)e hoped that the day may not be far distant when our merchants in China may no longer be able to point to the lack of American ships as the main retarding influence in our trade expansion in this part of the world." E. E. Pratt. (Copy.) Tientsin, December 8, 1915. 3. H. Arnold, Esq., Commercial Attache, Amtrican Legation, Peking. Sir: I have been directed to forward you copy of a resolution passed by the exe- cutive committee of this association at a meeting held on the 19th day of November, 1915. It is hardly necessary to mention that the purpose of this association is to foster, consolidate, and promote American interests in China. Never before have there been such broad opportunities for American business in China as at present. Never before has there been such a full realization of the dangers to American business if it is not protected with the support of the American Govern- ment. The resolution deals with affairs as they now §xist and shows clearly to those asso- ciated with American trade in China that our commerce can not expand, can not even hold its present position, unless we are in a measure free and independent of shipping and banking facilities of competing nations. I am instructed to request that you kindly lay this matter before responsible home officials explaining to them present conditions and showing what will be the future state of American trade if it does not obtain the protection and support of the American Government. Yours, faithfully, The American Association of North China, Tientsin Branch, Secretary. (Copy.) Whereas we, the American Association of North China, Tientsin Branch, are vitally concerned in promoting American interests in China, and Whereas we note with growing alarm the absence of ships flying the American fl^g operating between the United States and China and the insufficient space allotted to American concerns by ships of nationalties other than American for the conveyance of cargo to and from the United States, and the absence of banks operated by American interests and the discrimination against American firms practiced by banks of other nationalities, and 234 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. WTiereas this state of affairs is accentuated at the present time by the arbitrary measures adopted by the officials of certain belligerent nations in dictating terms under which American firms may carry on their business between America and China, such as refusal to accei)t cargo offered by American concerns except under arbitrary conditions and the refusal of the finks to negotiate American commercial paper (including American consular invoices) except under arbitrary conditions acting under instructions from their Governments: Tnerefore We, the American Association of North China, Tientsin Branch, do request our home Government to fully and carefully consider the present burden to American trade in CJaina by the lack of American shipping, and to enact such laws as have prove 1 successful in the foremost shipping nations of the world, thereby laying the foundation for a firm and lasting American merchant marine, and to give due con- sideration to the advisability of cooperating in the establishment in China of banks operated by American interests for the promotion of American trade. Also copy of a report of the merchant marine committee of the Louisville Board of Trade. (The report above referred to is as follows:) KEPORT MERCHANT MARLVE COMMITTEE OF THE LOUISVILLE BOARD OF TRADE. The volume of Louisville's foreign trade ranges from eight to ten million dollars per annum. This trade is made up of agricultural implements, machinery, farm wagons, sanitary supplies, tobacco, grain, flour, mahogany and hardwood lumber, hickory handles, boxes and box material, siiddlery and harness, and other manufactured products. Kxporting is also done extensively from other points in the State of Kentucky in marketing tobacco, coal, lumber, etc. A very large import business is also done in coffee, fertilizer material, mahogany logs, and many other commodities of lesser volume. The export business of 1 ouisville is the means of bringing to this market a large \'olume of capital that is of vast importance to our manufacturers, to our financial interests, to the employment of labor, and to the steady operation of factories, and, in fact, to all branches of trade. This large and important part of our commerce is now seriously handicapped by lack of ocean shipping. Ocean rates have been increased to an extent almost pro- hibitive, and it is impo.ssible to make, with any degree of safety, future contracts with foreign markets. Shipping for our commodities under the American flag is almost totally lacking, and shipping under neutral flags is entirely inadequate. Freight for shipment to foreign countries is now congested at practically all Atlantic and Gulf ports and ocean rales have advanced beyond reasonable limits. ICven to South Amer- ican ports, where shipping is not subjected to the dangers of the war zone, ocean rates have more than doubled. The following comparison in dollars and cents per 100 pounds on tobacco in hogs- heads, as of December 20, for three representative years, is illustratiA'^e of the abnormal tax on our commerce to European ports: From New Orleans to— 1915 1913 1910 Liverpool $2.2.S 1 2.75 2.15 2.10 1 SO. 53 .48 .48 .50 SO. 35 Rotterdam ' .34 1 lavre .38 Genoa .31 It has not been uncommon of late for the price of a ship to be made on one cargo, and it is of record where a cargo of coal from the Atlantic seaboard to Sweden paid an ocean rate of $14 per ton. It is, of course, recognized that recent conditions and present ocean rates are ab- normal, due to the European war, which has served to withdraw from foreign trade all of Germany's merchant vessels and to so greatly reduce England's ocean carriage of commercial tonnage. It has also had the further effect of advancing to almost prp- hibitive figures ocean rates of neutral ve.ssels. Notwithstanding these unusual conditions, it is now well recognized that even under normal conditions the number of merchant vessels available for shipping from SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 235 United States ports, and particularly vessels owned by citizens of the United States, is inadequate to insure any expansion in foreign trade on the part of this country. It is also further recognized that if there is to be any substantial expansion in the foreign trade of the United States, after the close of the war, it must be through the means and by the assistance of an American merchant marine. The attention of Congress and, to some extent, the country at large, is apparently centered on prejiaredness for war. Without offering any objection to or adverse criticism of reasonable preparedness against war, we express the belief that prepared- ness for ])eace should, at this time, be the first and paramount con.eideration on the principle that in the present depleted financial and physical condition of the great European naticjne, a war with any of those countries is remote, whereas commercial prepar-^dness is pressing and insi.stent at the present moment. Furthermore, peace- ful and commercial prej)arodness in the nature of a merchant marine is a logical step in the direction of military and na^al preparedness in that it provides an auxilliary naval armament for use in case of war for transporting both military and commercial supplies. Therefore, it is urgently recommended that the present Congress be petitioned by this and other commercial bodies to give first consideration to commercial preparedness in advance of military preparedness. Your coniniittee further recommends that the seriousness of the export and import situation and the importance of our foreign trade be forcibly brought to the attention of our representatives in Congress and in the Senate, and that they be urged to put forth their best efforts at the present session of Congress to insure the restoration of our American uKTchant marine. It is felt that in giving consideration to this momentous question that it be ap- proached, not from a parti.-ards before the termination of hostiliti 'S, all this comp( Is us, if we would be ready in time, to obtain without delay a number of ships from other countries to replace those lost and to sup- plement tho.se in active service. "In its earnest /lesire to improve the conditions under which the country procures its food su])])ly, to stop the waste of the national wealth, and to secure the future of our merchant mavine, the Government has examined various solutions proposed. It is of the oj)inion that the end sought can only be achieved Ity encouraging pri\ ate initiative and giving aid to shipowners in order to induce them to buy siiips in allied or neutral countries. "The granting, under proper guaranties, of loans repayable in annual installments and the determination of a fi.xed sum to be paid as indemnity in case a ship so acquired should be requisitioned by the (iovernment, are the measures which will best meet the present needs of the shipowners. There seems to ])e no doubt of the general utility of these measures, as the siiipowners will be under the double obligation of keeping the sliips so acquired as part of our merchant fleet for five years at least, and of employing them in the French import trade until the crisis now prevailing in maritime transjKirtation sliall have moderated." Some of ilie ])rovi,Nioiis of the ]!ro| o.-^ed law are as follows: "Until the ex]'iration of 12 months after the conclusion of ] eaee the Government may iuAest a sum not exceeding !(W.000,000 franc in loans to French shipowners, to cover a part of the sums necessary for the i)urchiise oi ships v.ith meohar.ical i)ropulsion, from citi.'.ens of allied or neutral countries. The interest to be paid on such loans shall be calculated at the rates charged by the Bank of I- ranee on loans on securities. Navigation companies possessing a fleet of 20,000 tuns or more may receive 70 per cent of the ]nnchasi i)rice; th( se possessing a smaller fleet, 80 per cent. "After making provision for rci)ayment by the shipowners, the bill provides that Government experts shall inspect the ships which must be seaworthy and in good condition, .\rticle o indicates the fonnalities to be complied \vith by the shipowner desiring to olitiin a loan, the shipowner l)eing obliged, among other things, to give the State a first mortgage on the shi]) after it has been registered as French. "Article i^roNides that in the case of a transfer of the ownership of a ship, made during the ]>resent war or within five years after the conclusion of peace, the owner shall pay a sum of money equal to the ]nirchase price, lie is under the additional obligation, until the ex]>iration of six months after a treaty of peace has been signed, to carry im])orts intended for French ports only, though one-fourth of the cargo may be carried to allied ar neutral countries. Similar provisions are made for owners of tugs and fishing vessels. ".\nd finally, the indemnity to be paid lor ships so acquired when requisitioned by the Government shall be determined in accord with the prevailing charter rates, reduced by 15 per cent." Mr. Curry. I have also, Mr, Chairman, a communication here in reference to the Chin a- Java- Japan line, which I would like to have go into the record. 32910— ]G IG 238 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. (The communication referred to is as follows:) [Copy.] [The Robert Dollar Co.. San Frandsco, shijiping and lumber, 230 California Street.) FKimu.\RY ;i, 191(). Mr. Robert Dollar. Care of NfV) WUIind Hotel , WaMtiglon, D. C. Dear Mr. Dollar.- china-java-japan line. This line, as you know, is now running from Java here and we were interested to learn thp other day that they are making preferential rates to and from Java, as against other pDrts of call, their rates to Java being almost one-half what they are between the United States and Manila and Hongkong. This condition would indicate to us that the line is subsidized by the Dutch Govern- ment on similar lines to the Japanese scheme of regulating rates between Japan and the United States, whereas the Japanese vessels are allowed to fill up at outside ports at such rates as they can obtain, thus not only giving Japanese merchants a service, but preferential rates, which enables them to build up their industries. The United States Government can well take a lesson from this condition. Very truly, yours, JItrOO LORBEK. Mr. Hardy. Mr. Chairman, along that same line, I would like to put into the record a communication which I have from Mr. A. B. Hammond, bearing upon the statements alleged to be made by the different chambers of commerce, and showing the manner in which such chamber-of -commerce expressions are obtained. Mr. Hammond was invited to discuss before the San Francisco Chamber of Commerce the needs of our merchant marine. Many of the directors of that body found that he cUft'ered from their views, and although he was a member of the chamber of commerce, his invitation to address them was withdra^^^l, showing that these reso- lutions appear to be cut-and-dried expressions by the directors. The letter speaks for itself and I ask that it be incorporated in the record. (The letter above referred to is as follows:) San Franclsco, Cal., May 26, 1916. Mr. Fred J. Koster, Acting Presideyit San Francisco Chamber of Commerce, ISM Merchants Exchange Building. Dear Sir: Under date of the 24th instant, you extended to me tlie honor of an invitation to speak on the su1)ject of "Needs of our merchant marine " at the luncheon * to be given to-morrow at the chamber to the Senators and Representatives who are ■ returning from their recent trip to Honolulu. * While disinclined to undertake the presentation in the five-minute period alloted, of a question which has been consuming the attention of Congi-ess for the last five years, nevertheless, at the urgent request of Capt. Hibberd, who knew my -views on the subject and was anxious that they should be presentefl to the \'i3iting statesmen, I decided to accept, and filled out the invitation response blank accordingly. Yes- terday, however, I had a telephone call from Capt. Hibberd stating that i\lr. Lynch, vice president and manager of the chamber of commerce, had informed him that inasmuch as the directors of the chamber of commerce had already gone on record as being opposed to permitting foreign built vessels acquiring American registry, to engage in coastwise or intercoastal trade, that they would disapprove of my making any statement in my remarks in conflict therewith. It is because of this that I to-day communicated with you, who had issued the invi- tation, with the result that yoti informed me that the invitation had not better be accepted unless I would confine my remarks to the "seamen's bill." That legisla- tion constituted a national issue for some three years, passed Congress, and became a law last winter. All your guests had participated in the discussion of this legislation I !SHIPPlN(i BOAKD, NAVAT. AL'Xll lAKV, AND MEHCHANT MARINE. 239 when it \vu,s before (Congress, and mauy of them had voted in its favor. It, therefore, seemed to me that a discussion of the "seamen's bill" would not only be boresome, but. perhaps, also in poor taste. If the board of directors does not care to have the members of the chamber express views at varianre witli que.stions whith they seemingly consider they have settled, is it not probable that your guests might feel the same way? Indeed, might not this with much greater propriety be the attitude of your visitors? Their action is final and produces results, but the action of the board of directors settles nothing. Indeed, many of those who apparently siled with the directors in the action taken are now, understanding the facts, opposed to it. As I am not permitted to liscuss the most important l)ranch of the whole question^ and one wliich viUxlly concerns the pro;lucers of the Pacific coast, and as I am limited to a consideration of the "'sj^amen's bill," a dead issue, and further, as in my opinion-, it would be somewhat of a ciscom-tesy to your guests to do so, nothing remains for me but to act upon your suggestion (contained in your letter of invitation), viz, that in the event of my not preferring t_o make an address, you would like me to suggest the name of some gentlemen who, in my opinion, would be best qualified to speak on the subject. I would, therefore, suggest as such speaker, or speakers, any of the representatives or officials of the companies who are now controlling intercoastal trans- porUition through the canal. They, no doubt, can be relied upon to side-step a question, the discussion of which seems to cause the directors so much embarrassment at this time. Very sincerely, yours, A. B. Hammond. Tlio Chair.man. Gentlemen, this is Rear Admiral Benson, of the Navy, who has been invited to appear this morning and will address the committee on the bill under consideration. STATEMENT OF REAR ADMIRAL WILLIAM S. BENSON, CHIEF OF OFFICE OF NAVAL OPERATIONS, UNITED STATES NAVY. Admiral Hexso.v. I did not understand exactly that I would be expected to address tlie committee, but that I would be here to give the committee any information I could in connection with this bill. I miglit, however, give them an idea of what we liave been doing in the Navy Department since I have been holding my present positicm. Of C(mrse, in tune of war or preparation for war, it would be neces- sary for us to very largely increase the tmmber of our auxiliaries in order to carry fuel, supplies, and, under certain conditions, a certain number of men. The principal demand, however, for transports would come from the Army, but sJmuld it be necessary for us to con- duct a campaign across either one of the oceans, and the broader one f>articularly, it would be necessary to have a considerable number of uel ships, not only to accompany the fleet, but many to be going back and forth from the source of supply. Wlien I took charge of the present Office of Naval Operations, I got the Secretaiy of the Navy to add certain members to the Board of Inspection and Survey for Ships to inspect all American merchant vessels so as to see to what extent they would answer the various purposes for which we would need them. The General Board of the Navy then took up the characteristics of each type of vessel needed. For instance, we want some vessels to carry ammunition and, as you know, it is desira])lc that the powder which we use should be kept at a uniform temperature, and we want a special type of vessel in which we could carry ammunition and keep it at practically a uniform temperature. In order to carry meats and fresh food it would be necessary to have refrigerator ships, and, of course, we want vessels that can carry fuel I 240 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. oil and lubricating oil, as well as coal and the many other supplies that a large fleet would need. Therefore, in order tliat we might go about it intelligently, the General Board worked out the necessary characteristics for each one of those ty])es of vessels. Take, for instance, the question of fleet scouts, which is a very important element, because by the use of the fleet scodts in advance of the main fleet to seek out and locate the enemy, with our long seacoast, both on the Atlantic and Pacific, it would be necessary to have quite a large number of these fleet scouts, And I might say in this connection that we hope to increase the radius of action of these scouts by the use of aeroplanes. We have now developed means by which we can send an aeroplane from the deck of a ship and to have it go out, we hope, when we can get the proper motors, for a couple of hundred miles in advance even of the fleet scouts and at a great altitude, which would enable them to give us information over a very large area. But even with this addition we will need a large number of fleet scouts, and necessarily they should be vessels as fast as possible. And so we have worked out the various characteristics of fleet scouts; that is, the speed, the number, the steaming radius, the displacement, the armament, and all the various things that would be desirable; and then as these merchant vessels were inspected by this inspection board they determine from their present characteristics whether or not they would be suitable either as fleet scouts or district scouts, mine planters, harbor patrol boats, fuel ships, or any of the various other types that we would need. And then such vessel is assigned to a particular place in the fleet and to a particular navy yard or shipbuilding plant, in order to fit her out for the particular service for which slie is designed. As fast as we can we will have these necessary supplies and fittings placed at the various yards and ship- building plants for the purpose of fitting them out. At present we have 24 fuel ships, and we are asking for a few more. We are also asking for scouts, and particularly for fleet scouts. The Chairman. You speak of fuel ships: the}' are built for naval purposes, are they not ? Admiral Benson, Yes, sir. We have 12 of the larger ones carry- ing from 7,500 to 12,500 tons, and then we have a number (6 or 8) of the smaller type of colliers that were bought at the outbreak of the Spanish-American War, but which are very small and rapidly reaching the stage where it does not pay to repair them. It is hardly economical to run them, because they carry sa little coal. And then, of course, we hope in the case of war to be able to draw on the Panama Canal colliers and fuel ships. But even with all of those we find that at present we are short a certain amount, some four or five hundred thousand tons, of what we would need in time of war or proper preparation for it. And, of course, any vessel, as I understand the bill that is being considered, that would answer any of these various purposes and, even possibly some of those that we have or which are building, in time of assured peace when there would not be a great need for so many, might be utilized for commercial purposes. As you under- stand, although we built up or should build up, a large battleship fleet, with the usual auxiliaries, we would not expect to keep the whole fleet in full commission, and it would be unnecessary. The SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 241 idea is to keep a fleet sufficiently large, or a sufficiently large number of vessels, in active commission for training purposes of the personnel, with constant traiiiino;, target practice, and maneuvering and working out war games and other strategic features. And then the rest of the fleet — that is, the fighting elements —to be kept in reserve. Under the policy that we have adopted in regard to reserve ships, they should have 40 per cent of their personnel on board, and they should be kept constantly ready for service, the only thing necessar}^ being to fill up the persoimel. The stores and ammunition are kept on board, and it is our intention tliis summer to get all of the reserve battleships to sea and to fill out the necessary complements from the naval militia from the various States. And we are now utilizing and have just inaugU" rated the policy of utilizing some of the older battleships for this pur^ pose. F(^r instance, the lOarmrge is going to the Massachusetts Naval Militia; the Oregon has been assigned to the west coast, to Cal- ifornia particularl}'-; the K'ritvcly will possibly be assigned to NeW York and to the New Jersey Militia later on; and some large vessel will be assigned to Philadelphia. The idea is to keep these ships con- stantly ready and to give the Naval Militia adequate means of exer- cising and developing. We have assigned in the southern waters, on account of the smaller units of the Naval Militia, a number of destroy- ers for that purpose for the present, to get them organized and well started. Of course, it would be extremely expensive for the Government to keep a large number of enlisted men on the pajToll to come to colors immediately on the declaration of war, and yet, if these men can be trained in some other way, and, as I understand, the object would be, if we had this organized merchant marine, the personnel there would be available for being brought into the regular service, as the Coast Guard and other branches of the Government service will come under the Navy Department in time of war. xind these ves- sels, instead of being an expense to the Government, could be util- ized for commercial purposes, and then, in case of war, they could be turned over to the Navy for the uses for which they were fitted, and thus prevent a great amount of capital lying idle during peace times. As I understand the general features of the bill, I think that about covers the situation. Of course, if we can get a sufficient number of these fast vessels, properly built under regular rules governing their construction, design, and general arrangement, it would be unnec- essary for the Navy Department to ask Congress to appropriate money for those vessel^ which would be kept lying idle until they were needed for war purposes. The Chairman, You have had your attention called to section 11 of the bill, I ])elieve ? Admiral Benson. I have read it over; yes. The Chairman, Do the provisions of that section commend themselves to you ? In other words, do you think that if the powers there vested in this board are exercised the result would be to build up a valuable reserve for the Navy ? Admiral Benson. I believe it would, sir. The Chairman, As I understand, your position, of course, deals more with the proper balance of an efficient Navy, to see that suffi- cient colliers, supply ships, ammunition ships, and refrigerator ships 242 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MAHINK. should be provided. If they were to be provided as a part of the naval program and utihzed alone for naval purposes, it would result in a great economic loss, as they would never be utilized except in the event of war. While under this bill, in time of peace, the vessels and their officers and men might be used for commercial purposes ? Admiral Benson. Yes. The Chairman. Of course there is a type of vessel built with primary reference to use m the Navy and which could not be operated economically; those in which, for instance, as I have heard said, ^here would be such large provision made for fuel and solely for cargo space that it would be very expensive to operate that ship for com- aiercial purposes. And for that reason there are very few vessels now in the Navy, as naval auxiliaries, that could be utilized eco- nomically for commercial purposes ? Admiral Benson. Yes. And I might say, in that connection, that w^e are asking for some fast scouts, of about 7,500 tons dis- placement, which we hope will make 30 knots. Of course it w^ould be necessary to have a certain number of vessels of that type and you could not utilize them economically for any other purpose. The Chairman. But take the commercial colliers: In the event of war, they would be a valuable auxiliary to the Navy, would they not? Admiral Benson. Yes, sir. The Chairman. And take a 16, 18, or 20-knot ship built for pas- senger, mail, and package-freight purposes; in time of war they would be valuable naval auxiliaries hi the event we had to carry on operations in some foreign c^mntry, as transport and supply ships, would they not ? Admiral Benson. They oould be used for that. And vessels of 20 knots and over we would utilize for scout purposes also. The Chairman. And we have a large commerce now in refrigerated meats and fruits between the east and the west coasts of our own country and with foreign countries, and between Central and South American countries and our own. That type, of course, would be a Yaluablc naval auxiliary in time of war; and at the same time they are essentially a type of ship of great value to our commerce in time of peace. Admiral Benson. We have them all listed now, sir, just what each one would be able to do. Mr. Edmonds. Are these ships which you have in your list there the same as given in a communication from the Secretary of the Navy to the Secretary of the Treasury on July 27, 1915? Admiral Benson. Of the same general features; yes. Mr. Edmonds. The same general features? Admiral Benson. Yes. Mr. Edmonds. Excepting the very fast scouts, which you have not included in tlie list sent to the Secretary of the Treasury, I suppose ? Admiral Benson. In regard to fleet scouts, I would like to give you one point: We would like to have them make not less than 16 knots speed. Of course, they must be seaworthy and make not less than 16 knots. If I remember correctly, we have about 14 of them now, and we want altogether of those, with these coming from the merchant service, 32. I went over the list about a montli ago and, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 243 if 1 remember it, we luul 10 or 14 either already available or that might be utilizecl. I am simply giving these fiojures from memory; but I remem])er that I was surprised at the number we have that we could utilize. But that would still leave us 16 of these fast vessels that we would want to utilize for fleet scouts. The Chairman. 16-knot ships ? Admiral Benson. Not less than 16 knots. That is the limit we have set for that purpose. The Chairman. And about how many colUers and merchant ships are there that could be utilized ? Admiral Benson. We call for fleet colliers. We do not want very many of those, because we have quite a number. They are built with the idea of following the fleet and not being utilized unless what we call "service colliers'" run short. We have 12 of these fleet col- liers, so that we would oidy need 4 more. They would have to make at huist 14 knots and should have a st(M\ming radius, of course, of 8,000 miles. Those are fleet colliers, and they would have to make that speed. Mr. Hardy. Whnt would be the tonnage of those fast 16-knot vessels ? Admiral Benson. A speed of not less than 16 knots and a tonnage as great as practicable, but not less than 5,000 tons. Mr. IIahdy. For each vessel. That would be 80,000 tons required of those 16-knot vessels? Admiral Benson. Yes; that is the least, sir. Of course we would like to have them larger. Mr. Hardy. And Avliat would be the tonnage of the colliers ? Admiral Benson. We want four of those of not less than from 6,000 to 8,000 tons. Take 7,000 tons, that would be 28,000 tons. W^e have them in the list here at 7,500 tons. Of ccnirse we would have to run them for long distances, and we would Uke them of seven or eight thousand tons. And at 7,500 tons, we want four of those. The Chairman. Tliose are coUiers to accompany the fleet? Admiral Benson. Yes, sir. The Chairman. They would have to have a base of supplies, and if we had a large merchant marine the ordinary type of ship Admiral Benson. I might add here, sir, that we have provided for that by what we term the "service" collier; that is, it would run between the base of supply and the fleet. .tVnd we need, as I say, for one of those long campaigns at least 200 of those, and we would want them to carry about 5,000 tons or more. Mr. Hardy. Two hundred what ? Admiral Benson. Two hundred service colliers to go from the fleet to the base of supply. For instance, if we were getting our coal — if we were operatino; across the Pacific, the n ason we would want such a number would be because there would be a long dis- tance for them to cover,and they would have to be going and com- ing aU of the time. And, as you understand, with ships operating in time of war in the face of the enemy they have to move at high speed, or be ready to move at high speed at a moment's notice. Eveiything has to be tuned up to high speed. Mr. Hardy. I would like to correct an impression I got when you first started. You said something about being short 100,000 tons. 244 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. Admiral Benson. Between four and five hundred thousand tons. Mr. Hardy. Along that line, my memory is that I saw a statement by the Secretary of the Treasury as coming in answer to a letter by him to the Secretary of the Navy which was answered, however, by the Acting Secretary, or perhaps by yourself Admiral Benson. Yes', sir; it was. Mr. Hardy, And in that statement, as I remember, you stated that the needs of the Navy for auxiliary craft amounted to consider- ably over 1,000,000 tons. I woidd like to have you tell us just what your statement was. Admiral Benson. As I remember it then, and as I got it from the data, it was about one million, two or three hundred thousand. Mr. Hardy. A million and a quarter tonnage of large vessels, and it seems to me you said three or four hundred smaller vessels ? Admiral Benson. They were short, if I remember, three or four hundred thousand tons. Mr. Edmonds. I can give you the statement from the Secretary of the Navy's letter. I have it right here. It says: There would be required 400 merchant vessels for auxiliaries, with a total of 1,172,000 gross tonnage. In addition to the above, should our own coast be invested or even occasionallv visited, there would be required a large number of small vessels fitted for mine sweeping, say at least 324 of such vessels of about 150 gross tons each. Mr. LoLT). That would be colliers ? Mr. Edmonds. That covers colhers, scout ships, and everything. Mr. Hardy. That includes what we already have and what we would have to get. How much of that have we already, and how much would we need ? Admiral Benson. The conditions are practically the same now as th?y were at the time this letter was written; that is to say, we need about 500,000 tons. Mr. Edmonds. I think that is probably right, Judge Hardy, because it says here that for fleet colliers the number required is four, and the admiral says we have a certain number and would require four more. And so it is evident this is only made to cover the present requirements of the Navy. Mr. Hardy. That is the total requirement. What I want to get is what they already have and what they have to get. Mr. Edmonds. They would be deducted ? Mr. Hardy. I understood the admiral to say we need about 500,000 more tons than we have. Admhal Benson. Yes, sir; we need 500,000 tons of additional dis- placement to the present auxiliaries to bring the present auxiliaries ' up to what they should be ; I mean when the fleet is brought up to its proper standing. Ml'. Byrnes. As I remember reading that letter which Mr. Edmonds has, in the letter the admiral stated, as I recall distinctly, the number we now have and stated how many we would require after counting those now in the service. Mr. Hardy. Ii that is in the letter that answers the question. Admiral Bensox. The conditions are just the same practically, and that letter was taken from the records of the department. ^Ir. Edmonds. This is only an extract from the letter. I do not have the full letter here. SHIPPING BOAED, NAVAL AUXILIARY^ AND MERCHANT MARINE. 245 Ml-. Hardy. T would suggest that that letter be placed in the record at thi? point. (Copy.) Navy Department, Washington, July 27, 1915. The honorable the Secretary of the Treasury. Sir: Referring to your letter of the 20th in.stant, the following information is fur- nished in reply to your specific questions. If the inforu)ation is not sufficiently complete, or if you should desire further information, I shall be very glad to furnish it. The ansvver to question No. 1 is applicable to both {a) (war in tlie Pacific) and ih) (war in the Atlantic), as in either case it would require the services of our entire fleet and the auxiliaries enumerated are those required for the fleet. 1. Considering our Navy as it is to-day, and ha\-ing reference to its maximum use- fulness and efficiency in time of war, what merchant vessels and of what total tonnage would be required? There would be required 400 merchant vessels for auxiliaries with a total of 1,172.000 gross tonnage. In addition to the above, should our own coast be invested or even occasionally visited, there would be required a large number of small vessels fitted for mine sweeping, say at least H24 of such vessels, of about 150 gross tons each. The above vessels are divided into groups, as follows: (a) Fleet Scouts: Number required: 32. Characierislics: Fast passenger vessels, of high speed, great steaming radius, and good sea-keeping qualities. Speed not less than IG knots. Not less than 3,000 gross tonnage. (6) District Scouts: Number required: 20. Characteristics: Small coastwise steamers, good sea-keeping qualities, fair steaming radius. Speed not less than 13 knots. Gross tonnage 1,500 to 2,000 tons, (c) Mine planters; Number required: 5 large; 10 small. Characteristics: Freight or passenger vessel with clear decks for installing tracks for mines . Speed at least 10 knots. Gross tonnage: Large, 1,500 tons; small, 900 tons. {d) Mine sweepers: Number required: Not less than 324. Characteristics: Fishing vessels, trawlers of 150 gross tonnage. Speed 10 knots. Draft not over 12 feet. («) Fleet colUers: Number required: 4. Characteristics: Well-designed cargo hatches; independent power and separate winches for each hatch; cargo booms suihcient and well placed. Speed at least 12 knots. Steaming radius, 6,000 to 8,000 miles. Gross tonnage not less than 5, 000 tons. (/) Service colliers: Number required: At least 200. Characteristics: Good facilities for discharging coal with booms and winches. Speed at least 8 knots. Gross tonnage not less than 3,000 tons. ig) Depot colliers: Number required: 57. Characteristics: Good qualities for discharging coal with booms and winches. Speed at least 8 knots, iross tonnage not less than 3,000 tons. I 246 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. (h) Fleet oilers (tankers) : Number required: 7. Characteristics: Good appliances for discharging cargo. Speed as near 14 knots as possible. Gross tonnage at least 3,800 tons (t) Service oilers: Number required: 35. Characteristics: Good towing facilities, large ballast tanks, and appliances for discharging cargo. Speed at least 8 knots. Gross tonnage at least 3,000 tons. (f) Depot oilers: Number required: At least 5. Characteristics: Good appliances for discharging cargo. Speed at least 8 knots. Gross tonnage at least 2,000 tons. (k) Supply : Number required: 6. Characteristics: Good facilities for handling stores; refrigerating plant and cold-storage holds for meats and vegetables. Speed at least 12 knots. Gross tonnage at least 3,000 tons. Type of vessel: lowan, passenger aervice, American-Hawaiian Steam- ship Co. {I) Transports: Number required: 4. Characteristics: Passenger vessels capable of carrying at least 1,000 men with their im- pedimenta. Speed at least 14 knots. Gross tonnage at least 4,000 tons, (m) Repair ships: Number required, 2. Characteristics: Freighters, with at least 50-foot beam with plenty of cargo apace between decks. Speed at least 12 knots. Gross tonnage not less than 5,000. {n) Ammimitiou supply: Number required, 8. Characteristics: Good facilities for handling ammunition; refrigerating plant. Speed at least 13 knots. Gross tonnage at 3,000 tons. Type of vessel: "Pastores," United Fruit Co. (o) Hospital ship: Number required, 4. Characteristics: Passenger vcpsels, capable of carrying 30 sick officers and 500 sick men. Speed at least 14 knots. Gross tonnage, 6,000 tons. (p) Mine depot: Number required, 3. Characteristics : Freighter with large cargo space between decks. Speed at least 14 knots. Gross tonnage at least 4,000 tons. iq) Destroyer tenders: Niimber required, 2. Characteristics : Passenger ship with storage capacity for pay store.'?. Speed at least 14 knots. Gross tonnage about 3,500 tons. SHIPPlN(i BOARD, NAVAL AUXllJARY, AND MKKOHANT MARINE. 247 (r) Siibmariue tenders: Number required, 2. ('haracteristi( s: Comhiiiation freij;ht and passenger vessel. Speei at least 12 knots. Gross tonnaiie about 3,5{)0 tons, (s) Fleet tenders (tugs j : Number required, 1. Characteristics: Good towinfi: facilities, seagoing qualities. Speed at least 12 knots. Gross tonnage, 500-1,000 tons. 2. What amount of tonna^re ol merchant vessels could be constru(;ted in our navy yards in 12 months without interfering with the regular naval program? Taking vessels of about 10.00(1 tons displacement and of about 20 knots speed as the type that would be built, it can be stated positivelj that none could be completed within the first 12 months. ApjMoximately .six months would be required to prepare plans and place the orders for the mateiial retjuired for \ essels of a new design. It would therefore require about two years to j^roduce the first shi])e, and six such vessels could be constructed simultaneously during that time. To do this would re- quire that the boilei's lor one ol these shi])s be ])urchased from outside matmfacturers, as the navy yards are not equii)])ed for the construction of more than five such batter- ies of boilers. After t vo years shi[)S could continue to be produced at the rate of about 7 a year. provided they were reproductions of those already built. The above estimates are based upon the assumption that additional skilled men could be obtained without more than the usual delay. If it were intended to supple- ment the facilities of the yjrivate yards by those of the navy yards, the question of obtaining the requisite skilled labor would become the mostserious feature and would materially delay the delivery of the first vessels. The following tabulation shows the conditions at each yard: Boston, Mass.: Hull of first vessel in two years, machinery in two and one-half years, after which one vessel a year can be supplied. New York, N. Y.: Hulls of two vessels in two years and machinery for one in same time. After first vessels completed, two vessels a year can be turned out com- plete at this yard. Philadelphia, Pa.: Hull of first vessel in two years, machinery in two years, except boilers, which would have to be procured elsewhere. After first vessel is com- pleted, one vessel a year can be turned out. Norfolk, Va. : Hulls of two vessels in two years, and machinery for one in two and one- half years. After first vessel is completed one vessel a year can be turned out. Mare Island, Cal. : Hull and machinery of first vessel in two years, after which one ves- sel a year can be turned out. Puget Sound, Wash.: Hull and machinery of first vessel in two years, after which one vessel a year can be turned out. Portsmouth, N. H., and Charleston, S. C, can not, without great expense, be made ready for such construction work, but these yards would be utilized to specialize in furnishing parts to all the other yards for constructional purposes. After the first tv o jears it Mould be possible to materially increase the number of vessels turned out, as v ell as to reduce the time of construction. In certain cases this reduction m ould be as much as six months, but as both the nimiber of ships and the time of construction depend upon largely increasing the facilities of the various yards during the first t ■ o years, it is not practicable to estimate with accuracy vhat the production vould be. Sincerelv, vours, W. S. liENSON, Acting Secretary of the Amii/. ^'tr. Greene. I would like to ask, Admii'al, al)Out what would bo the averfige cost of those vessels that you suggest; al)Out what would be the cost of each vessel, and how many would you need ? Admiral Benson. 1 or these feet colliers, I think we have been paying about .$1,000,000. At the present price — of course they have 248 SHIPPING BOAED, NAVAL AUXILfARV, AND MERCHANT MARINE. gone up a great deal — I suppose they are about $1,770,000; either a million and a half, or a million and three-quarters. ^ir. Loud. Is that the present large type of colliers ? Admiral Benson. I am simpl}" gi^'ii^g it oiihand, sh*. Mr. LoiT). The first ones I do not think cost over SeOO,000, and the next ones cost a million or a little more than that — the later ones. Admiral Benson. I was judging a great deal from the fact that I just happened to remember we are buildmg a 10,000-ton transport at the Philadelphia yard for about SI, 300,000. A collier would practicallv be the same, or would ])robabl5' cost a little more than that. Mr. Greene. It was not with the idea of expecting to faid the cost would be so great that we could not have them. I just wanted to have the information as to what it would be, because we would have to have them anyway. Mr. Goodwin. Did I understand you to say. Admiral, that we now need 200 additional coUiers to supph' the ships from the different bases ? Admiral Benson. Not only coUiers, but aU types of auxiliaries — about 500,000 tons. Mr. Goodwin. About what would be the average cost of the pro- posed auxiliaries when fully equipped and fitted out with guns ? Admiral Benson. I have a list of the figures here. The Kariav:lia was built for $1,140,000. That is the contract price for the huU and the machinery. The contract price for the Mau7nee, which is being built at the Mare Island yard, is 31,140,000; and then the figures run $990,000 for one: $889,000 for another, $990,000 for another, and $951,000 for another. Of course, the guns and other arrangements would be additional — a few thousand dollars more. The Chair:\ian. What type of ship are you speaking of, cruisers? Admiral Benson. Fleet coUiers. I thought the committee was asking for fleet colliers. The Chairman. That is not the type of collier that is used for ordinary commercial purposes, is it? Admiral Benson, That is the kind of coUier of which we would want four, to make 14 knots and to carry from ten to twelve thousand tons of coal. That is the type I had reference to then. Mr. Curry. Should they not be naval ships, built by the Navy and controlled by the Navy, and not a merchant ship to be trans- ferred ? * The Navy needs those ships now, and should it not have entire control of them ? Admiral Benson. We do need a certain number; but we have, just at the present time, for the present needs of the fleet, practically as many of these vessels as we need. Of course as we increase the size of the fleet, in case of calling the whole fleet into active commission, we would need more coUiers. But, as I said just now, the idea is not to keep the whole fleet always in active commission cruishig about, and I believe the present number of colliers that we have would practicaUy keep the fleet going as it is being conducted at present. And if we could have some of the same tvpe of vessels built under Government supervision, and with the understanding that in case of war they would be immediately available for the Government service, I see no reason in the world why it should not be done, and to allow SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 249 these vessels to be used for commercial purposes until they are needed by the Navy for war purposes. Mr. CuKRY. Do you know, Admiral, of any reason why the colliers and the transports of the Government that are not being used at the present time shoidd not be used to relieve the congested conditions ? Admiral Benson. I do not think, sir, that we have any to be util- ized for that purpose. For iiistance, just at present, we are ver}'^ hard put to get fuel. We are maintahiing a ship ni the Mediterranean and one down on the African coast, and I have been very hard put to keep that vessel supplied and the vessels that are operating in the West Indies and out on the west coast in the Pacific. But we have so far and we can, by proper arrangemejit, keep the fleet going with the number that we have. For instance, at the present time we are utilizing some of the colliers to send some coal to Cavite, and we have had to send some colliei-s out there and to the other stations in the Philippines. On ac('ount of the congested conditions of the freights we have been compelled to supply the navy yards along the east coast with coal, and we have used the colliers for this purpose. But under normal conditions, A\ith the raih'oads operating and business being conducted under normal conditions, I believe the colliers we now have would be sufficient to keep the fleet gohig as we are now conducting it. Mr. Curry. Do you know about the transports, as to whether they are all being used — the Army transports? Admiral Benson: That I do not know, sir. In regard to the Army transports, if you remember, there was a line of steamers operating ill the Pacific for a while, and we depended on them to get supplies back and forth to Guam, to our naval station out there; but now that line has been withdrawn, and the needs of the Army for gettmg supplies to the Philippines are so great that we have been compelled to utilize the services, as far as we can, of a line of scliooners running from San Francisco to Guam and out in the East. Of course, in case of necessity the Army is good enough to allow us a certain amount of space on tlie transports. It is very limited, and we can only depend on that where necessity exists; but, of course, where it is a case of necessity the Army always gives us the space that is actually needed. Mr. Curry. If the United States Government went mto the mer- chant marine business and a merchant marine ship owTied by the Government should be picked up by a belligerent and taken into a prize court, either in Great Britam or Germany, what effect do you think that would have on the friendly relations between the two nations ? Admiral Benson. As I understand this biU, sir, that point is cov- ered by saying when they are operating as merchant ships that the United States surrenders that particular feature of sovereignty; that is my understanding of the bill. The Chairman. They are operated through a corporation and the Government controls the corporation through a majority ownership of the stock; but for all other purposes it is the same as a private corporation. Mr. Curry. The Government owns the corporation, and we do not expect anyone to put any money in this except the Government, and they will be Government owned ships, and the Government will 250 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. receive the profits and stand the losses. And now if that Government- owned ship was taken into a prize court, was taken up by a belligerent and taken into a prize court, would that not be looked upon as a more unfriendly act than if the ship were owned by me or by you ( Admiral Benson. In my opinion, sir, there is a veiy delicate point of international law involved in the question, and its ultimate deci- sion would depend entirely upon the way the bill is drawn. My idea in reading over the bill, was that Congress would cover that particular feature of international law, and this point would not be called into consideration. Mr. Edmonds. It can not be covered m this bill, for the reason that the board is to purchase, construct, and charter ships, and also to recharter ships to be operated either by the company as a tool of the Government or outside of the operating company. The third section of this bill provides that the Government board shall pur- chase, construct, and charter ships, and it has also the privilege of rechartermg ships. And, of course, when one of those ships is rechar- tered, while the ownership remams entirely in the Government, it has nothing to do with the operating company. Mr. Curry. But then the operating company is under the control of the Govermnent ? Mr. Saunders. Having in mind. Admiral, that delicate question you present, that would certainly be to the front if at the time the ship was operating the Government owned all the stock in the com- pany. This bill provides for a majority and a minority stock owner- ship, if you can get anybod}^ to take that stock; but in the event that it was not taken and all of the stock was owned by the Government and the operation of the company under those conditions, that delicate question of difficulty which you have in mind would certainly be to the front then, would it not \ Admiral Benson. It certainly would, I think. And I do not see how you could avoid it unless in the passage of the bill the Govern- ment committed itself to the principle that, having gone into this kind of commercial use, if it is a Government-owned vessel, and in case of war the vessel were taken into a prize court, that the Government would allow its vessels to be treated in the same way that the ordinary merchant or privately owned vessels are treated and would waive that feature, as I said, of sovereignty. I do not see how else it could be avoided. Mr. Curry. Even though the Government should be willing to do that, do you not think if a Government-owned ship were picked up by a belligerent under those conditions, that it would set the people on fire and they would get rather more belligerent than they would if the ship belonged to me or to you ? Admiral Benson. That would depend a great deal upon the con- dition of public feeling at the time, I think. The Chairman. Right at that point, I suppose Mr. Curry has a notion that the Government would be more sensitive of its rights because of the fact that the ownership of the ship was in the Govern- ment and the ship was o]3erated through this corporation, than if it belonged to an American citizen. He differentiates between the rights of American citizens and of the Government itself. Admiral Benson. As I understand that feature, it would be this sir, that when you attack anything belonging to the Government SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARIN li, 251 you attack every citizen of the Republic; while if you attack an individual, that is a separate proposition. Mr. Saunders. Under the head oi what you call ' ' naval auxiliaries," they are not fightmg ships, as I understand, are they ? Admiral Benson. No, sir; but they would carry a certam battery in time of war. Some of our vessels which we have now carry a small battery of light, small-caliber guns. Mr. Saunders. As I understand in a general way what you mean by "naval auxiliaries," they would be ships that would carry fuel, whether oil or coal, food of different sorts, and all the material that would be necessary in connection with the operation of a ship — ammunition, etc. 'i Admiral Benson. Yes, sir. Mr. Saunders. Taking the ordinary ship that was purchased under this bill and put into operation as part of a commercial line between here and South America — would that ship be, unless it were specially constructed with reference to the purpose, available for carrying frozen meats? Take the ordmary Imer operatmg in the trade between here and South America, picked up and bought for that purpose, could you, in time of war, use that as a frozen-meat carrier without overhauling 'or reconstructmg the interior? Admiral Benson. There are, for instance, certain shi])& that do carr}' frozen meat. There have been several cargoes of meat l)iought into this country from Argentina. Mr. Saunders. I understtind, but I am taking a shi]) not engaged in that particular business. I want to know if you have in mind that in the pm'chrcse of these shi])s you would have to purchase one or more ships for that very purpose, in time of ])eace, of transporting frozen meats, should you want to avail yourself of it in time of war. Admiral Benson, i xactly, sir; and as if.st as merchant shi]>s are built in this country, we get their characteristics {ind know every- thing about them, arid we have a list of them rnd we know the owners, and we have even gone so far as to draw up the contracts and every- thing of that kind, and we know just exactly for what we can use them, and whether they have proper refrigerator phmts and how many pounds of meat they will caiTy. Mr. Saunders. That is what I have in mind. Admiral Benson. We have all of that data now. Mr. Saunders. In order that any of those ships contemplated by this bill could he utilized in time of war, as frozen meat carriers, they would have to be bought up and constructed under the bill in refer- ence to that particular piu't ose? Admh'al Benson. J xactly. * Mr. Saunders. Take j^our ordinary merchant ships between here and South America, for instance one of those shi])s used in the fruit trade, in which there is now a considerable business; would that ship, if wanted for use in time of war, be available as an oil or coal carrier, or would that, too, have to be constructed in the beginning with relerence to that particular use ? Admiral Benson. You mentioned fruit steamers. We have them listed for a very particular purpose, and they could be immediately used for that purpose practically without any change at all, for cer- tain purposes for which we intend to use them and for which we have them listed. And we would naturally take the vessels that were 252 SHIPPING BOARD, NAVAJ. AUXILIARY, AND MERCHANT MARINE. being utilized for carrying coal or oil, as the case might be, and utilize them for the same purpose in the Navy. The Chairman. You would not use them for carrying frozen meats, would you? Admiral Benson. No. The Chairman. Or fruits ? Admiral Benson. No; we would not. The Chairman. But if there were not any vessels of the particular type you wanted, of course there would have to be others provided? Admiral Benson. They would have to be provided ; and I take it that in the construction of those ships, under this bill, that feature would be looked after. Mr. Saunders. If those ships are to be utilized in war times for those special purposes, in purchasing you would have to purchase with a view to that ? In other words, you would have to purchase ships with a view to use in the frozen-meat business, and between now and war times they would have to be used in the frozen-meat business. And now, with respect to coal, I come back to the question I was asking with respect to the fruit steamers: You could not use that steamer in war times as a collier ? Admiral Benson. Oh, no. * - Mr. Saunders. And then we would have to purchase, under this bill, if you would want to turn them into colliers in war times, ships which could be used in the intermediate time for coal-carrying purposes ? Admiral Benson. Yes. Mr. Saunders. And so on for the purposes under this bill all the way through. Taking the ships we would purchase under this bill that could be used in the ordinary commerce between here and South America, those carrying the products of that country, such as tramp steamers, in regard to their utility in war times, for what particular purpose would they be used ? Admiral Benson. It would depend upon their speed and the general arrangement of their holds, w^hether or not they had a refrigerating plant on board, and so forth. Mr. Saunders. I am just taking the ordinary steamer that is used between here and South America. Admiral Benson. They would probably be utilized for what we call "service colliers;" just simply for dumping coal into the holds. Mr. Saunders. Would the ordinary steamer be available for that purpose without any special construction ? Admiral Benson. A large number of them would, with a very small expenditure. Of course, most any of those ships, in time of war, for instance, if they did not have a proper radio outfit, we would have to supply them with a radio outfit for one thing, and then some system of signaling should be put on board. And as these vessels are inspected all of these features are taken into consideration and they are assigned to the type which they nearest approach; that is, as we get them now, as they are built by the ordinary corporations, a,nd so on. And then some of them would not exactly fill the bill but approach very nearly what we wanted, the changes that would be necessary are all listed, and we know" exactly where any vessel would be sent and just exactly what would be done. And we not SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 253 only know that here in the Navy Department, but the yard to which they would be sent knows just exactly what vessels would come there and what would have to be done on them in order to fit them for the purpose for which they are intended in time of war. Mr. Saunders. I understand about that; but the thought I was trying to get at was in connection with our purpose under this bill, of how we woidd have to purchase ships in order to make them use- ful. This bill has in contemplation an ordinary commercial busi- ness — a merchant-marine business. Suppose we had half a dozen ships to buy under this bill, such as the fruit steamers are, and we undertook to put them into the fruit business and other commercial operations between here and Central America and portions of South America, for what purpose would those ships be available in time of war if they were taken over ? Admiral Benson. In order to comply with the spirit of the bill, as I understand it, it would be necessary to take this list which I have here, which has been very carefully gone over by the General Board, and we have worked out exactly what we want; and if the vessels we were going to purchase would not answer one of those types, we would not buy it, and we could not according to the spirit of the bill. Mr. Saunders. Then, in purchasing vessels under the spirit of this bill, we would primarily have to get ships that would fill the re- quirements that you have in mind there ? Admiral Benson. They would have to fill some requirements that we have in this list; otherwise I do not think the ships could be pur- chased under the spirit of the bill. Mr. Saunders. A great body of ships that would be very effective for ordinary commercial purposes on the high seas in the various lines of intercourse between here and other countries, would not be of any particular utility in time of war ? Admiral Benson. On the contrary, sir, most of them could be util- ized for that purpose. Mr. Saunders. I am trying to brmg out, takmg the ordUiary steamer, the particular utility that that would have. Take the ordi- nary tramp steamer that comes into a port of 4,000, 5,000, or 6,000 tons, or even 10,000 tons, for that matter, wliich loads a miscel- laneous cargo ? Admiral Benson. That could be utilized for carrying thousands of tons of the ordinary provisions. It would be a mixed cargo, just as they are carrying now, sir. We would have a need for a number of those. Mr. Saunders. A steamer of that sort, however, would not be valuable for the scouting piu*poses that you spoke of? Admiral Benson. Not unless of high speed, of over 16 knots, it would not. Mr. Saunders. What is the ordinary speed of the commercir.l line steamers, if there is any such thing? Can you give the average of that for transportation purposes? Admiral Benson. Do you mean at present? Mr. Saunders. Yes. Admiral Benson. I should unagine the ordinary tramp steamer, as you express it, going from here to South America would average probably 12 to 14 knots. 32910—16 17 254 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Saunders. With the Imiited appropriation contemplated under this bill, with all the steamers that would be available as col- liers in time of war, steamers that would be available as oil carriers in time of war, steamers that would be available by reason of their original construction for carrying frozen meat in time of war, and steamers that would be fast enough to be utilized as scouts in time of war, you would have a miscellaneous collection or assortment of ships that could hardly be utilized to build up any established line, for instance, as we have between the United States and Europe or the United States and South America, could they? Admiral Benson. As I understand it, you contemplate establishing several lines and the demands that one Une of vessels would require would be different from another. For instance, in course of time it is easy to imagine that you might want fast passenger steamers running between our coast and South America, that woiud be able to answer the purpose of scouts. And you might want to carry a little higher class of freight, or you might want, for instance, between certain ports; as I understand it and my experience has been, a ship that is constructed and fitted out for a particular purpose. Take the Pa- cific Mail ships that run out across the Pacific; they would answer very well for scouts; and if these are sea-going ships in ordinary weather even vessels that would run, say, from San Francisco to New York, through the canal, would undoubtedly have sufficient speed and carrying capacity to answer almost any purpose for which we wanted them. Mr. Saunders. A ship with respect to space construction that I speak of, for instance, like those meat, oil, or coal carriers; they would not be available for general purposes in commercial transportation, and they would have to be confined to that particular Une of work, I suppose ? Admiral Benson. I do not think so, sir. For instance, I do not see any reason why the big colliers that carry 12,500 tons of coal, and you wanted to use them for general cargo purposes, could not be suited for that purpose. Mr. Saunders. They would be available ? Admiral Benson. Yes, sir. Mr. Saunders. How about frozen-meat ships ? Admiral Benson. A frozen-meat ship is, of course, a specially de- signed vessel. But I do not think we would have any difficulty in that, because from present appearances the trade between this country and Argentina in frozen meats will probably increase. Of course, you would want vessels of fairly good speed, and which would have large spaces that could be kept refrigerated at all times. Mr. Saltnders. An oil tanker, though, I suppose would not be available for anything else except the transportation of fuel oil. Admiral Benson. Not very well. I can not imagine of any other use. Mr. Saunders. But for the ordinary colliers, do I understand, if you wanted to transport such miscellaneous cargoes as go between New York and Europe, for instance, in those fast passenger boats or in the ordinary tramp steamers, that a collier would be suitable for that sort of commercial traffic ? Admiral Benson. I think so, sir; that is, for a cargo steamer. For instance, suppose you take a collier leaving to-day or to-morrow for SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 255 tho Mediterranean, instead of filling up all spaces with coal, they would take some of the hold space and put a miscellaneous cargo in it; and if they wanted to carry more of that character of cargo they would simply take up more of the space. There would be no reason in the world why those colliers should not be utilized for carrying miscellaneous cargoes. The CnAiR:MAN. Judge Saimders seems to have the impression that ships adapted to carrj-ing frozen meat are not adapted to carry any thing else. Mr. Saunders. I am just developing that fact, to find out. The Chairman. Take the American-Hawaiian ships ; they are most modern in construction. Their principal cargo is sugar, but they are adapted not only to carrying sugar, but general cargoes, and they have a certain part of the space for refrigerator purposes, to carry frozen meats, and they also carry coal. Admiral Benson. I do not think they carry coal. The Chairman. They carry a general cargo. Admiral Benson. I think they carry a general cargo, but I do not believe that with those vessels you could economically cany coal, because they are probably divided up in spaces in such a way as not to be suitable for that purpose. And they have various ways of getting at the different hold spaces. For instance, you take the Hawaiian steamers. I am not sufficiently familiar with all of their internal construction; there might be places where they could carry some coal, if the hold was vacant, there is no reason why they could not have coal put in. The Chairman. But they are adapted to a general cargo ? Admiral Benson. Yes, sir. The Chairman. They are also adapted in part, as I understand, to carrying a thousand or more tons of frozen meat. Admiral Benson. Anything that you want to put in them. Mr. Saunders. This 500,000 tons shortage that you spoke of a moment ago — did that have reference to the fleet at its present size, or does it contemplate the fleet under some scheme of development. Admiral Benson. That would be the contemplated development of the fleet in the next five or six years. Mr. Saunders. According to what plan ? Admiral Benson. Of course, we are trying now to establish a building policy, as you know, and that would give us an increase of 10 battleships, 4 battle cruisers, a certain number of destroyers, submarines, and other craft in the next five years. Mr. Saunders. It was in connection with that? Admiral Benson. Yes; in connection with that. That would answer the purpose for the development up to that time — I think about 1921. Mr. Greene. I would like to ask the Admiral if he is familiar with some of the ship subsidy bills that have been offered in Congress previously, which had provision for naval auxiliary ships for certain purposes, and matters of that kind ? Admiral Benson. I am not familiar with them. Mr. Greene. I would suggest that there have been bills presented in which it was proposed to do practically what 's proposed in the shipping bill, in the way of aUowing the Government to use these vessels when necessary in case of war. So that this proposition is 256 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. exactly the same as the subsidy bills were that were not adopted; and this proposition is not yet adopted, but it is proposed along the same line. The Chairman. This is a different method of accomplishing the same purpose, I take it. Mr. Greene. Oh, yes; but at a great deal less expense under the proposition of subsidy than under this proposition, which is a double- dyed subsidy. Mr. Edmonds. Do you know anything about a collier being built at Shanghai by a Chinese shipbuilding concern for the United States Government ? Admiral Benson. No, sir; I do not. Mr. Edmonds. I am not quite sure, but I understood it was for the War Department. I suppose you would not know the contract price of that. Admiral Benson. I did not know such a thing was being done. Mr. Edmonds. It was being finished while I was in Shanghai. It might be for use in the Philippines; I do not know. Mr. Loud. Would the style of the unloading machines now in use on the fleet colliers be suitable for handling grain ? Admiral Benson. I do not think it would, sir. Mr. Loud. You could not discharge grain with that machinery, could you ? Admiral Benson. No, sir. Mr. Edmonds. But you could discharge the ordinary cargo with it, could you not ? Admiral Benson. Oh, yes; for instance, we now use the clam-shell digger very largely to go down in the hold and pick the coal up, and then as it conies out of the hold there is a beam that extends over the deck of the ship, and this clam-shell digger goes right down and digs out about a ton of coal, hoists it out of the hold, and as it comes out is suspended over the deck of the ship and is opened up just as the ordinary mud digger. That is the principle we use now in the ordi- nary fleet coUier, and we have a number of them going in six or eight hatches. Mr. Price. That could not be used for grain? Mr. Loud. You could not take up wheat with it, for instance. Admiral Benson. You might get a different type of scoop that would probably do it. I have never given that any thought. Mr. Price. But it would not be a very large matter to re-equip those colhers? Admiral Benson. It would be very simple to rig up anything you please. With the appliances there, you could rig up anything you wanted to. Mr. Greene. I would hke to ask one other question. How about these colliers that are now used m Boston in the coastwise transpor- tation fleet ? Are you acquainted with their use ? Admiral Benson. Yes. You mean Mr. Greene. The vessels belonging to the Coastwise Transporta- tion Co., of Boston? Admiral Benson. No, sir; I am not. Mr. Greene. Would these coal steamers that carry several thou- sand tons be useful for your purposes ? SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 257 Admiral Benson. Yes, sir. Mr. Greene. That is what those coastwise transportation steamers do carry. There have been a large number of those recently built. Admiral Benson. Yes, sir. Mr. Greene. I did not ask this in criticism; I just wanted to get the information. Admiral Benson. No; but there have been one or two questions asked where I could not give the information. (Thereupon, at 12.10 o'clock p. m., the committee adjourned until to-morrow, Thursday, February 17, 1916, at 10 o'clock a. m.) CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the Merchant Marine and Fisheries, House or R'epresentatives, Thursday^ February i7, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. Gentlemen, we have with us this morning Mr. McAdoo, Secretary of the Treasury, whom I have invited to appear and be heard on this bill, H. R. 10500, known as the shipping biU. You may proceed, Mr. Secretary. STATEMENT OF HON. WILLIAM G. McADOO, SECRETARY OF THE TREASURY OF THE UNITED STATES. Secretary McAdoo. Mr. Chairman and gentlemen of the commit- tee, with your permission I should like to give a little of the ante- cedent history of this measure, arising out of the events immediately preceding and succeeding the outbreak of the European war. On the 26th of March, 1914, Senator AVeeks introduced in the Sen- ate resolution No. 317, as follows : Whereas it is desirable to develop and extend commercial relations between the United States and the countries of South America by the establishment of direct lines of communication for carrying the United States mail and for the transportation of passengers and freight ; and Whereas private capital has not engaged in this service to a sufficient extent to furnish facilities comparable to those enjoyed by the people of other coun- tries having trade relations with South America : Therefore be it Resolved, That the Secretary of the Navy be, and he is hereby, directed to cause to be prepared, in detail, a plan for the establishment of a line of ships to run between the cities of New York and New Orleans and the city of Valparaiso, Chile, and intermediate ports, to consist of the cruisers Columbia and Minne- apolis and the scout cruisers Salem, Chester, and Birmingham, and that the information requested in this resolution shall include the following: First. The time required by these ships to make a round trip between the ports named. Second. The number of passengers which could be carried in each ship as now equipped or with any changes that would not impair their usefulness if required in the naval service. Tliird. The amount of freight that each ship could carry under similar condi- tions ; this estimate to include mail as well as freight. Fourth. The number of naval officers and seamen required to man the ships ■engaged in the service which is proposed. Fifth. The probable cost of the service, including the pay of the officers and men employed in connection with it and all other necessary elements, such as wharfage in the cities where the ships would touch, fuel, repairs, and mainte- nance of every description. Sixth. The cost of such necessary changes as may be required to put the ships named in condition for such service, in removing unnecessary military equip- ment, and any other changes necessary in order to carry passengers and freight safely and to adequately perform the service proposed in this resolution. 259 260 SHIPPING BOARD^ NAVAL AUXILIARY^ AND MERCHANT MARINE. Seventh. An expression of opinion by tlie department as to wlietlier tlie above-named sliips can be used for such purposes vi'ithout impairing their use- fulness for naval purposes should their prompt return to the naval service be required. At this time all the nations of the world were at peace, and private capital had had opportunity for many years to develop lines of steamships between the United States and South America, but, as Senator Weeks so clearly expressed in the preamble of his resolution, '"■ it is desirable to develop and extend commercial relations between the Unites Speyer, of Speyer & Co.; Benjamin Strong, jr., of the Bankers' Trust Co.; August Ulrich, of Ladenburg, Thalmann & Co.; A. J. Hemphill; Pliny Fisk; John A. Donald; and Wilbur C. Fisk. The Boston banking interests were represented by Josiah Quincy. The Southern Cotton Congress was represented by C. W. Priddy, of Norfolk, and J. C. Mayfield, of Barnwell, S. C. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 265 A very interesting discussion ensued and one of the concrete things as the outcome of that conference was the passage of the war-risk insurance bill, which established in the Treasury Department a Bureau of War Risk Insurance, for the purpose of facilitating the foreign trade of the United States and giving war-risk insurance to the commerce and ships of this country. As you will recall, an ap- propriation of $5,000,000 was made for the purpose of enabling the Government to insure war risks, or to go into the war-risk insurance business. Mr. Greene. Are you still operating? Secretary McAdoo. Yes; we are still operating. Mr. Greene. To what extent? Secretary McAdoo. The bureau has insured — I am sorry I have not the statement here before me, but with your permission I will put in the record a statement of the war-risk insurance of the bureau of most recent date. (Exhibit No. 3.) ♦ Mr. Greene. I have no objection to that. Mr. Goodwin. By reason of the operation of this bureau war-risk insurance has increased just a little over normal rates, as I understand it, Mr. Secretary? Secretary McAdoo. Of course I would not know how to answer that question, because in normal times there is not any war-risk in- surance. Mr. Goodwin. I did not mean war-risk insurance, but I mean in- surance on goods in transit. Secretary McAdoo. Do you mean marine insurance? Mr. Goodwin. Marine insurance; yes. Secretary McAdoo. We are not permitted to engage in marine in- sui-tince. The bureau is restricted absolutely to war-risk insurance. Mr. Goodwin. I meant to say that the war-risk insurance has in- creased but little over marine insurance in normal times. Secretary McAdoo. The rate varies so much according to the risk taken that it would be hard to make a comparison. I may say this, however, that the effect of the War-Risk Insurance Bureau operated by the Government has been to exercise a very potential influence upon war-risk insurance rates throughout the world. I think it has undoubtedly brought down the level of war-risk insurance all around. Mr. Goodwin. My purpose in asking that question was to get this statement, if it is a fact, that the war rates for insurance have not in- creased over marine insurance rates in normal times in comparison with the increased ocean freight rates now in existence and the ocean freight rates in normal times. Secretary McAdoo. That is a correct statement. The rates of in- surance made by the Government have been, I think, very reasonable and very moderate, considering the risk assumed. Here is the last report of the War-Risk Insurance Bureau, sub- mitted to Congress on the 7th of December, 1915, and I can give you a very brief summary of its operations, which will tell the whole story ."^ (Exhibit No. 3.) The total amount of risks insured up to date in this report are $93,190,000. I will only give round figures. The total expenses of the bureau up to that date were $22,000. The total premiums received were $2,194,454, and the net losses paid up to that date were $695,984. 266 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Leaving a surplus of premiums on hand at that date of $1,498,000 in round numbers. So that the bureau has not only rendered, I think, very effective service to American commerce, but it also has been operated without any loss and, as a matter of fact, at a net profit up to date. It was generally recognized at this conference of August 14, 1914, that some measures would have to be taken to increase the supply of merchant vessels for the United States; that something would have to be done to improve the situation to meet the emergency which confronted the country as the result of the outbreak of the European war. In fact, Mr. Hill proposed at that time that the Minneapolis be brought into the Atlantic, as the crisis in the Atlantic was far more acute than on the Pacific and the needs were so much greater in the Atlantic. The Minneapolis is one of the big ships owned by the Chicago & Northwestern Railroad Company. Mr. Hill thought very seriously of bringing it into the Atlantic, but for some reason or other that was not done at that time. No definite shipping plans were formulated by that conference; in fact, none could be formu- lated at the moment. We were all alive to the problem, and every man was thinking and trying to devise something that would enable the country to meet the situation which Avas already acute, and which, I think, no man who looked forward at all could fail to realize might become infinitely more acute and exceedingly distressing to American commerce if prompt measures were not taken to protect the interests of this country. And I may say that at this time Mr. Franklin, who is vice presi- dent or general manager of the International Mercantile Marine Co. and who was in the conference, spoke to me about the German ships which were interned in New York. The only time I ever heard the sale of the German ships suggested or proposed was in this con- versation with Mr. Franklin, when he said to me that it would be a very great help to American commerce if those ships could be bought and put into service. He said that his company would like to pur- chase those ships, but that it would be difficult, if not impossible, to secure private capital for that purpose, and he wanted to loiow how I would regard a proposition to have the Government of the United States indorse or guarantee the bonds of his company so that they might make that purchase. I said very frankly to Mr. Franklin that I should not myself approve of the use of the credit of the United States for the guarantee or indorsement of the bonds of any private corporation; that I thought it would be a mistaken policy; and that I could not, therefore, approve the plan he outlined. He subsequently talked, I think, to some Members of the House and Senate about that proposition, but I think met with no encourage- ment. I mention this incident about the German ships, because in the debate which subsequently developed a great deal of discussion was had on that particular subject, and it seemed to be inferred if it was not actually charged that it was the purpose of the Government, if the ship bill subsequently introduced by your chairman had passed, to buy the German ships. Mr. Brtjcknee. Who did he represent? Secretary McAdoo. Mr. Franklin was the vice president of the International Mercantile Marine Co.. of New York, and I, of course, understood that he was speaking for his company. I did not go into SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 267 the details. He simply made the suggestion as a means of getting these ships back into service; and, as I said before, I felt it would be an unwise thing for the Government to enter upon the policy of indorsing the bonds of any private corporation. Subsequently a bill was introduced The Chairman. Right in that connection, if you will pardon me, the bill known as the ship registry act of August 18, 1914, was also favored by those same gentlemen who were in that conference, remov- ing the five-year limit on foreign-built ships and admitting them to American registry in the foreign trade. Secretary McAdoo. Yes; I am glad you called my attention to that, Mr. Chairman, because I was about to overlook it. Another measure growing out of that ship conference was this ship-registry bill. That, as you know, was passed very promptly. Under that bill vessels of foreign registry were admitted to American registry free of restrictions which had previously been imposed by the Panama Canal act. My recollection is that the Panama Canal act provided that ships not over 5 years old could be admitted. This act re- moved those limitations. Mr. Bruckner. Do you Icnow how many vessels took advantage of that act? Secretary McAdoo. The Secretary of Commerce, I think, has put that in the record already or Mr. Chamberlain's testimony covers that point. I am not so lamiliar with it, because it does not come under my department. . I would like, at this juncture, to put into the record as an exhibit to my statement, if there is no objection, the debate on Mr. Weeks's bill, which will be found on pages 5863, 5864, and 5865 of the Con- gressional Record of March 26 1914. (Exhibit No. 4.) That is the debate on the resolution that Senator Weeks offered. I would also like to insert the debate in the Senate of August 3, 1914, on pages 14311 to 14318, inclusive. (Exhibit No. 5.) You will find, upon examining those debates, some very interesting and illuminating facts in connection with the situation. You will find no fear expressed by Mr. Weeks, Mr. Gallinger, Mr. Swanson, Mr. Jones, Mr. Newlands, Mr. Williams, and the other Senators who took part in these debates, that the United States would become involved in war with any of the European powers if the Government operated directly through the Secretary of the Navy, these naval vessels in the merchant trade. There was infinitely more danger of international complications if the Government operated its naval vessels in commerce between the United States and the ports of belligerent countries in Europe, than if the Government became a stockholder merely in a private corporation which operated dis- tinctively merchant vessels having no sort of naval character, between the United States and ports of belligerent nations in Europe, as well as elsewhere. Because of the very inadequacy of the relief proposed by Senator Weeks, through the operation of a few naval vessels in commerce, on account of their limited capacity for passengers and freight (although Senator Weeks' purpose was in the highest degree com- mendable), and because of the crisis confronting the country, it was perfectly clear that the essential thing to do was to buy quickly a large number of merchant vessels which were suitable for carrying 268 SHIPPING BOARD^ NAVAI. AUXILIARY, AND MERCHANT MARINE. passengers, mail, and such large cargoes of general freight that their operation would prove profitable, and at the same time afford the commerce of the United States the protection and transportation so vital to the prosperity of the country. It was for these reasons, therefore, that on the 4th of September, 1914, Mr. Alexander, the chairman of this committee, introduced in the House bill No. 18666, authorizing the United States, acting through a shipping board, to subscribe to the capital stock of a corporation to be organized under the laws of the United States or of a State thereof, or of the Dis- trict of Columbia, to purchase, construct, equip, maintain, and oper- ate merchant vessels in the foreign trade of the United States, and for other purposes. That bill was the outgrowth of the study which had resulted from the conference in the Treasury Department on August 14, 1914. It was not the result of suggestions made in that conference, but it was the result of the mature consideration and discussion from the standpoint of the administration as to what ought immediately to be done for the purpose of meeting the emer- gency that then existed. At that time, as you all know, there were German cruisers on the high seas, as well as British cruisers and French cruisers, and the merchant-marine service of the world was very much disorganized and in a state of panic. A great many merchant ships and vessels were offered for sale. I did not undertake to investigate that field particularly, but many vessels of English registry, French registry, and of neutral registry were offered from time to time to the depart- ment. More of them were, perhaps, offered to the Department of Commerce than to the Treasury Department, because the Treasury Department has no longer jurisdiction of the Bureau of Navigation, which has been transferred to the Department of Commerce. How- ever, it would have been possible at that time, I think, to have bought at extremely low prices — from $40 to $60 per gross ton — many hun- dred thousand tons of excellent merchant vessels. And the purpose of this bill was to enable the Government of the United States to acquire a large fleet of merchant vessels for the purpose of protect- ing the commerce of the United States against emergencies and against the conditions which have subsequently arisen, and which have now become so acute that there has been, in fact, an embargo by the great railroads entering New York since the 14th of De- cember last upon rail shipments into that port. That embargo has been made necessary in large part by the lack of ships to get the foreign commerce of the United States out of the harbor of New York. Some time ago I wrote to the presidents of the various trunk-line railroads terminating at the port of New York City, asking them to tell me about the embargo on shipments into that port for the export trade and the reasons for the embargoes and the congestion of freight in their terminals and along their lines. I received replies from the presidents of the following companies: Baltimore & Ohio Railroad Co. ; Lehigh Valley Railroad Co. ; Delaware, Lackawanna & Western Railroad Co.; Ncav York Central lines; New York, New Haven & Hartford Railroad Co.; Central Railroad of New Jersey; Pennsylvania Railroad Co. ; and Erie Railroad Co. As these replies are quite lengthy, I have had digests made of them, and attach them SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. 269 as Exhibit No. 6. The original letters are in my possession and are at the service of the committee at any time that it may desire them. In this connection attention is also called to Exhibit No. 7, consist- ing of extracts from newspapers regarding freight congestion, due primarily to the lack of ships to handle our export trade. Mr. Goodwin. You mean to say that no tonnage goes out of the port of New York? Secretary McAdoo. There has been an embargo on rail shipmentb into the port of New York since, I think, the 14th of last December. The Chairman. I put that information in the record on yesterday. Mr. Greene, Shipments for the foreign trade? Secretary McAdoo. Very largely on account of the inability to get vessels to move the foreign commerce of the United States, which, of course, is carried into the port and can not be taken out as fast as it goes in. Mr. Goodwin. Does that embargo exist at any other port as well as at New York? Secretary McAdoo. I understand that it does, although I am told that it has been less acute in other- ports, because shippers have been influenced by the representatives of the railroad companies not to make shipments into those ports until thev are assured that vessels would be available to take them out promptly. Of course any con- gestion in the terminals of the great railway systems at New York, or in the great harbors of the country, and any extended congestion of cars on the sidings along the lines of those railroads, whether or not due to the fact that foreign freight in those cars can not be un- loaded, affects very seriously the domestic commerce of the country, which, of course, can not be kept moving if machinery of transporta- tion is clogged and disorganized by congestion on any part of the lines at vital points, Avhich are, of course, more particularly the great terminals of the trunk lines at New York. I may say that Mr. Alexander's bill of September -1. 1914, was the result in part of some suggestions which I had the privilege — with his permission — of submitting; and those suggestions, so far as I am concerned, originated very largely as the result of the con- ference to which I have referred and the experience the Govern- ment has had with the Panama steamship line. As you know, the Government of the United States owns all of the stock of the Panama Railroad Co. which operates a line of steamships between New York and Panama; and the Government of the United States does not, as you know, operate that line of steamships or that railroad directly." But as the chief stockholder, in fact the sole stockholder, in the company, it directs the selection of the directors of this corporation. And while the selection of the directors is under the direct sujiervision of the War Department, nevertheless the directors of the corporation itself are the responsible managers of the corpo- ration, the War Department having supervision of the operation of the lines, working through the directors of the company. At that time it was seriously considered whether or not it would be possible merely to extend the Panama steamship service to South America and those other ports where the need for shipping facilities was most imperative. But the Panama Railroad Co. would have had to be assisted by the Government in order to get the necessary funds with which to buy ships and this would have required action 32910—16 18 270 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. by Congress, and, in addition to that, its charter, a special one from the State of New York, granted many years ago, confers certain powers which it can not exceed. My recollection is that the charter of that company would not give it the power to operate vessels along the east coast of South America, and I think it is doubtful whether the corporation has the right to operate vessels even along the west coast of South America, although it might have that power ; but certainly it has not the power to operate vessels to Europe. Now, this crisis arose in August, 1914, and if the Panama Railroad agency was to have been employed at all, it would have been neces- sary to get the State of New York to grant an amendment to its charter. That amendment could not have been obtained until the fol- lowing January, if it could have been obtained at all, when the New York Legislature was to meet. In the meantime delay was very serious, and the idea of utilizing the Panama Railroad ship corpo- ration for this purpose had to be abandoned. The purpose of Mr. Alexander's bill was simply to create another corporation, to be operated along somewhat similar lines, except it was provided that a shipping board composed of the Secretary of the Treasury, the Secretary of Commerce, and the Postmaster General should be created for the purpose, almost exclusively, of selecting directors of the corporation and having a sort of general oversight over its operations somewhat similar to that exercised by the War Depart- ment over the Panama Railroad & Steamship Co. It is not neces- sary for me to go into the history of this measure, because you are all familiar with it. You are familiar with the debates that subsequently arose and the objections that were raised against it on the ground that it was putting the Government into the shipping business. But I may say that the bill was limited practically to the creation of a corporation in which the Government was to be a ma- jority or sole stockholder, if necessary, and that corporation was to operate the ships which were to be bought or constructed by the shipping board and turned over to it. The measure is very different from the one which is now under consideration. It was formulated at that time purely and solely as an emergency measure. It was designed to meet the situation as it then existed by enabling the Government of the United States through the medium of the proposed corporation to secure six or seven hundred thousand tons of vessels which Avere to be owned and operated by this corporation and used for the protection of the commerce of the United States. I do not exaggerate when I say that if that bill had passed we would now be in possession of a very large fleet of excellent merchant vessels which could be used effec- tively to relieve the congestion in the harbor of New York of freight for foreign shipment, and that we could have supplied some facili- ties to other ports of the country which have been suffering enor- mously for lack of shipping facilities. Take, for instance, the port of Seattle. Seattle, I suppose, has been one of the chief suft'erers since the outbreak of the European war. Not only have they had no ships in which to send grain to Europe (and Seattle is a very large grain port, as you know), but the lumber industry in Washington, which is vital to the prosperity of that State, has suffered very greatly from a lack of ocean transportation. When I was in Seattle SHIPPING BOARD, NAVAL AUXILIAEY, AND MERCHANT MARINE. 271 in October last I was told they were shipping grain from Wash- ington to Liverpool at a rate of 72 cents a bushel. The rate between Seattle and New York over the railroads was, of course, just the same as it was before the outbreak of the European war, because those rates are subject to regulation. They are fixed by the railroads with the approval of the Interstate Commerce Commission. The increase in the rate is, of course, from New York to Liverpool over the steamship lines, which are not regulated by any Government agency. The rate of freights from Seattle to Liverpool by water is, in normal times, 18 cents a bushel. So you can see the difference in the rates by rail and water now as against the water rate before the war between Seattle and Liverpool — 72 cents per bushel now against ] 8 cents per bushel then. Mr. Curry. Has the Panama Canal Co. increased its rates? Secretary McAdoo. No, sir; I think not. Mr. Curry. Do you not know that the Panama Canal Railroad did increase the rates when the slides occurred there and they remained until the Chamber of Commerce of San Francisco and others made an awful holler about it? Secretary McAnoo. I think you will find, if you will ask the War Department about it, that that is a mistake. The Panama Railroad, as I understand (and I state this subject to correction, be- cause I am not altogether familiar with it), pro rated with the steamship lines which went through the canal the through rate, which is lower than the local rate for transportation across the Isthmus. When the slides occurred the railroad charged simply the usual local rate, since the ships blocked by the slides had no traffic arrangements for the through rate; and of course the local rate is higher than the pro rata of the through rate. That, however, the War Department could very easily make clear. Mr. Curry. The}^ did decrease the rate. After it was taken up with the War Department here the Government sent orders to their subordinates to reduce the rate, and it was reduced to a reasonable amount. Secretary McAdoo. That is more than we can get, Mr. Curry, from these steamship companies and concerns not under Government control. Mr. Curry. Absolutely true, but Government control and Govern- ment ownership are entirely different propositions. Mr. Greene. You suggested that six or seven hundred thousand tons of steamships could have been purchased if that bill had passed. \Vhere would those ships have been purchased ? Who had them for sale? Secretary McAdoo. I say I think they could have been purchased. I say that from the fact that there were very copious offerings of steamships at that time. In the report which the Secretary of Com- merce and the Secretary of the Treasury made on the 25th of Janu- ary, 1915. to the Senate of the L'^^nited States in response to a reso- lution, and which, as you will observe, was a long time after the 4th of September, when Judge Alexander introduced his bill, we gave a list of some of the steamships offered — some English, French, and neutral ships. Of course I did not investigate these offerings be- cause I had no authority to enter into negotiations. The bill was 272 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE pending, and we could not do anything. But you will find that as Exhibits 75, A, B, and C, and 76 to the report, Document 673, part 2, Sixty-third Congress, third session. I should like to have the privilege of offering this document as an exhibit to mv statement. (Exhibit No. 8.) Mr. Greene. What page did you say that was? Secretary McAdoo. I will find it in just a moment. Mr. Greene. I am not particular about that now, but if you will put the pamphlet in that will be sufficient. The Chairman. They were not German interned vessels? Secretary McAdoo. No. Mr. Greene. If the Secretary will put that into the record, it will be sufficient for my purposes. Secretary McAdoo. I think a reference to the particular exhibit might save time for anyone who wanted to look the matter up, and with your permission I will supply the exhibit when I get a tran- script of the stenographer's notes. I have it here, but it is difficult to put my hands on at the moment. Mr. Kincheloe. Will you put that in the hearing? Secretary McAdoo. Yes; I offer it as Exhibit No. 8. I believe it would not have been difficult to have purchased six or seven hundred thousand tons of vessels at that time at bargain rates. There were a great many steamship brokers who called at the Treasury after this bill was introduced and talked to me about it. I said, " Of course, I have no povrer to negotiate, and it would be a waste of time until power is conferred by the Government to act." Ships were offered, as I recall it, all the way from $40 to $60 a ton. Many of them, as I said before, were English vessels, some were French vessels, and a great many were neutral vessels — Scandinavian vessels. Mr. Greene. Are those vessels or similar vessels or any number of vessels now in the market, to your knowledge? Secretary McAdoo. I think not. I think very few could be had at this time. Mr. Greene. So that even if this bill should pass there would be no opportunity to buy A^essels? Secretary McAdoo. I doubt if we could buy very many, although vessels can be bought ; there are a few being sold. Mr. Edmonds. Was there anything in this published statement by Mr. B. N. Baker, on November 21, that it was intended to buy the ships of the International Mercantile ISIarine? Secretar}^ McAdoo. There was no intention. Mr. Baker spoke to me about it ; he said it would be possible to buy those ships. Mr. Edmonds. He makes a positive statement in this signed article. Secretar}^ McAdoo. I think Mr. Baker is mistaken about it; but he is here and can speak for himself. Mr. Baker spoke to me in the early days of the discussion, saying that the International Mercantile Marine was in the hands of a receiver and that it was possible to buy that fleet of vessels. Of course, it did not go any further than a mere suggestion on his part. "Mr. Greene. That would not have increased the number of ves- sels, would it ? Secretary McAdoo. It would have increased the number of vessels under the control of the United States. Of course, the great point, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 273 gontliMiien, was this : That while the purchase of six or seven hun- dred thousand tons of vessels at that time would not have added to the world's tonnage, it would have added to the tonnage of the United States, and it would have put us in control of the facilities and instrumentalities for protecting ourselves, which we do not now have. I do not think that it makes so much difference whether you increase the world's tonnage or not, so long as you take care of our own interests. Mr. Loud. It would not have relieved the situation, then, would it? Secretary McAdoo. Why not ? Mr. Loud. The same ships are in the service now, and the same ships would be in the service then. Secretary McAdoo. Yes; but we would have them in our service, and they would not be in the other fellow's service; they would be under our control, and we could provide service at reasonable rates and prevent extortionate rates The Chairman. But is it not true that many of those ships which belonged to the International ^Mercantile Marine were under British registry, and have since been commandeered by that (Jovernment and taken out of the commerce of the world; is not that correct? Secretary McAdoo. That is correct. You see this must be consid- ered, that the International Mercantile Marine Co. is the controlling stockholder in the White Star Line and other foreign steamship lines, and if the International Mercantile Marine Co. had been controlled by some agency which was looking out for the interests of the shippers of this countiy, as the Government would have been, for instance, if it had gotten control of that company, all of the British and other vessels which the International Mercantile Marine Co. controlled through British or foreign corporations could have been transferred to the American flag and would have been available for our service instead of the service of foreign governments. They would be carrying American commerce instead of troops. So that it would have improved our situation distinctly and immeasurably. Mr. Greene. If those vessels could not have been commandeered, other vessels would have been commandeered by the British Govern- ment, would they not? Secretary McAdoo. They could not have commandeered this Gov- ernment's vessels, of course. Mr. Greene. But thej'^ would have taken some vessels; if they lost the opportunity to have those, they would have taken others? Secretary McAdoo. If they could have gotten them, I presume they would. But the situation is like this : Suppose I am operating a competing line of railroad from here to Chicago but have insuffi- cient locomotives. If I can buy locomotives from some other coimtry and put them on my line of railroad which will enable me to take care of my traffic. I might not be adding anything to the number of locomotives in the world, but I certainly would be adding to the number of locomotives available for our commerce and for the pro- tection of our own interests. And that was the purpose of this bill. Mr. Curry. Can you buy foreign ships now? Has not Great Britain, Germany, and most all of the great maritime nations for- bidden the transfer of their ships to a foreign flag? 274 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. Secretary McAdoo. I saw that stated in the papers; I presume it is true. If it is, those Governments are simply exhibiting "human intelligence." I must confess, alas, that I think it would be ex- tremely difficult to buy ships now, and if you do buy them you have got to pay high prices for them. And that is where we made a fatal mistake in not getting in when we could have bought a great number of merchant vessels, and when we could have gotten them cheap. It is like locking the barn door after the horse is gone. At the same time, it is extremely important that we should not con- tinue to drift, and it is infinitely important that we should make a beginning in trying to solve this great problem; because our for- eign commerce to-day, notwithstanding the fact that it is larger in volume than it has ever been before, is still very seriously hampered and very seriously hurt by a lack of shipping facilities. Mr. Curry. Now, Great Britain, Italy, France, Austria-Hungary, Norway, Sweden, Brazil, and some other countries have passed such a law — absolutely prohibiting the transfer of registry of their shipping to a foreign flag. That being true, why should we not refuse to transfer the registry of our ships to a foreign flag? Secretary McAdoo. I do not see any reason why we should not. Does not this bill provide for that ? Mr. Curry. There is a statement here from the Independent, of Stockton, Cal., of February 12, 1916, that a steamship of Mr. Robert Dollar's, for which he paid $250,000, a vessel of 5,356 gross tons, was sold by him to the Japanese lines for $1,000,000. He was offered $1,000,000 for the ship Robert Dollar when she was docked in San Francisco, and he refused it because he had a contract on which he would make $250,000 in taking a cargo from San Francisco to Vladi- vostok. But after he had delivered the cargo at Vladivostok he then sold the ship for $1,000,000, the ship having cost $250,000. I do not know why we should not prohibit the transfer of our ships to a foreign flag when they refuse to sell us their ships. (The newspaper clipping above referred to is as follows :) STEAMER " KOBEKT DOLLAB " IS SOLD TO JAPANESE. San Francisco, February 11. The sale to Japanese owners of the American steamer Robert Dollar was announced here to-day by the Dollar Steamship Co. It was said that the price was in excess of one million. The Robert Dollar, now in Vladivostok, is a vessel of 5,356 jrross tons and was built in 1911 in Glasgow at a cost of $2.50,000. The vessel, with the other British ships of the Dollar fleet, was placed under the American flag at the outbreak of the European war when German cruisers were busy on the Pacific. An offer of $1,000,000 was said to have been made for the Robert Dollar a few months ago, but refused, as the trip on which the vessel was then engaged promised a profit of $250,000, the original cost of the steamer. Secretary McAdoo. I see no reason, either ; although, of course, as an economic question, in large measure, this may be true; and if it is, it is rather essential, because I understood Mr. Dollar had been driven out of the business by the seamen's act. Mr. Curry. ISIr. Dollar never had a ship under the American flag in the over-seas trade until after the outbreak of the European war. The Chairman. He was here the other day and never looked happier in his life to me. Mr. Greene. I understood he was going to transfer all of his ves- sels to Vancouver anyway. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 275 Secretary McAdoo. I do not see why he did it, because certainly they are making money every day on every voyage. Ships have been bought and are being bought to-day which are making more than their entire cost in a single voyage and coming back in ballast ; and if there ever w^as a time when it was not necessary for a shipowner to desert the flag, this is the time ; and if there ever was a time when a man who has ships under the American flag ought to be patriotic enough to keep them under the American flag, especially when they are making fortunes on every trip, this is the time he ought to do it. Mr. Goodwin. Is not this primarily the thought back of this whole legislation, that inasmuch as the European Governments now at war have taken over practically all of the railway and steamship transportation lines, and the same being nationalized — usurping, so to speak, the functions and rights of private and corporate interests that formerly owned them — that when the war is over there will be the greatest commercial rivalry the world has ever seen, and the nations that have lost their trade will seek to regain it and to extend it, and every country will attempt to be in the vanguard of this commercial activity, and inasmuch as European countries have na- tionalized those activities, thus overcoming and outstripping private and even corporate interests, that therefore they are outstripping us in this commercial conquest as long as we permit our commerce to remain exclusively in the hands of private and corporate interests, and therefore we should ourselves nationalize in a measure, or seek so to do, so as to give an impetus to that increased activity which we ourselves expect to take part in? That is rather crudely and inadequately expressed, but the thought is that private interests in the future can not cope with nationalized interests, because once the step is taken forward by a government it will not be retraced either in times of war or in times of peace? Secretary McAdoo. I think that is undoubtedly true and that it is essentially a part of preparedness, both economically and physically, for this Nation to take similar measures for our protection; and I think that, to the extent the foreign governments have extended their powers over the shipping of their respective countries, it is absolutely necessary that we organize and concentrate the powers of this Nation to enable us to protect our own interests. Mr. Goodwin. That is the thought I had in mind, that we have got to keep step w ith that movement. Secretary McAdoo. I may say in connection with the purchase of vessels (and I advert to this, gentlemen, simply because I think it is important that we should learn the lessons of the past in order that we may exercise more intelligent judgment in the future, I think it is obvious to any man who Avill review the events of the last 3'ear and a half that a very grave mistake was made by this Govern- ment in not having bought as great a number of merchant vessels as could have been obtained at that time. Had it done so, the extor- tionate and fabulous rates of freight which now prevail upon the ocean could have been, so far as the vessels under Government super- vision are concerned, cut 50 or 75 per cent, and those vessels could have earned their full cost even at those reduced rates within a sin- gle year — they could have earned more than their full cost. And I think they could have exercised a very potential influence upon the 276 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANl MARINE. general level of freight rates upon the ocean; they could have exer- cised an influence upon it just as the war-risk insurance bureau, with only $5,000,000 of capital, has exercised a very potential influence upon the general war-risk insurance rates of the world. And cer- tainly we could sell those ships to-day, if we had bought them, at twice their original cost — possibly more. Looking at it from a purely commercial standpoint, I think it will be conceded that we would have made a very good bargain in- deed if we had bought those ships at that time. And, in addition to that, with the control of that large tonnage and the operation of it now under the American flag, we certainly could have contributed very greatly to the alleviation of the present difficulties from which our shippers are suft'ering in getting their products into foreign markets. The present bill is designed, however, to be a very much more con- structive and permanent measure than the bill introduced in Sep- tember, 1914. That bill, as I said before, was purely an emergency measure, and was designed to meet a condition which was then acute, and which, I think, could have been met if that bill had been passed. The present bill goes a great deal further than that; it creates a shipping board to be of a permanent character, with very large powers of regulation and supervision. It gives this board the power to purchase or construct ships which will be suitable as naval auxil- iaries, so that they may be made an essential part of the program of preparedness for national defense. I do not think it is necessary for me to advert to the absolute neces- sity of having the Navy supplied with at least a part of the naval auxiliaries, which it will need if war ever comes, to make it an effec- tive fighting unit. I believe Admiral Benson was here yesterday, and he can tell you more about that than I can. The figures I received from the Navy Department some time ago showed that we did not have, in our merchant fleet to-day, enough vessels to give the Navy, as it exists to-day, sufficient naval auxiliary support in time of war ; and that we would require for the Navy, as it exists to-day, some- thing like four or five hundred thousand tons more of naval auxil- iaries than we could possibly commandeer from the present merchant shipping. One of the purposes of this bill is to provide the ship- ping board with enough money to enable it to build or purchase — preferably to build — in our own shipyards a fleet of merchant ves- sels adapted to the needs of the Navy, as auxiliaries, and to have them used in time of peace for the service of the commerce of the country and the creation of a necessary naval-reserve personnel from which the Government can recruit the naval vessels in time of war ; and to provide the necessary trained organization to operate those merchant vessels as naval auxiliaries in time of war. The board is authorized under this bill to lease or charter these vessels, or to sell these vessels to American citizens, with a reservation that they may be taken back in case they are needed by the Government, upon terms to be fixed by the board with the approval of the Presi- dent. That relates, of course, only to vessels which this board may acquire either by purchase or sale. The bill also provides that the board may have the power to or- ganize a corporation and to take a majority or all of the stock of SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 277 that corporation, in behalf of the Government, for tlie purpose of operating some of these vessels, or such number of them as the board may, in its discretion, think desirable in the interests of American commerce. My own view is that these ships should not be operated in the foreign trade by this corporation (it is not a Government opera- tion, it is an operation by a corporation, in which the Government is merel}' a stockholder) in competition with established ship lines owned by our citizens, which are furnishing satisfactory service at reason- able rates; but that this corporation, if it should be organized by the shipping board, should operate ships wherever it would be necessary to extend, or desirable to extend, American commerce and to operate them to those parts of the world where private capital does not pro- vide satisfactory facilities at reasonable rates. The bill does not make it mandatory upon this board to organize such a corporation and to oj^erate any ships through that corporation; it is merely em- powered to do so. And I think on reflection that you will see that this is a very necessary power for this board to have, if the public interest is to be protected ; because if the board has the power merely to lease or to sell these ships, and, as the alternative of that, to tie them up in our harbors and allow them to remain idle (and, as you know, steamships depreciate very rapidly when idle), then the public would be absolutely at the mercy of shipowners, who would know that the Government could not protect itself because it would have to let the ships remain idle unless they were leased or sold to them upon their own terms. And in this connection I would like to call your attention to the Federal reserve act. When that act was under consideration there was a great deal of discussion as to whether or not the national banks of the country would become members of this system. It was, of course, recognized that unless the national banks at least became welded into the Federal reserve system, so that we had one effective and powerful financial agency in the country, a homogeneous agency under national control, it would be impossible to protect our finan- cial situation and give the country that elastic system of currency and expansive system of credit which every student of the question recognized as essential to our present and future prosperity. If the national banks had failed to come into the Federal reserve system by refusing to become stockholders in the Federal reserve banks, the system could not have been established. Mr. Greene. If they had not come in they would have been out of business, would they not, under that act? You would have organ- ized other banks and they would have been shoved aside. They had to come in because they could not help it. Secretary McAdoo. It am coming to that; that is exactly what I want to explain. A provision was inserted in this bill, which I will quote. Section 2 of the Federal reserve act provides as follows : Sliould the subscriptions by banks to the stock of said Federal reserve banlvs or any one or more of them be, in the judgment of the organization committee, insufficient to provide the amount of capital required therefor, tlien and in that event the said organization committee may, under conditions and regula- tions to be prescribed by it, offer to public subscription at par such an amount of stock in said Federal reserve banks, or any one or more of them, as said committee shall determine, subject to the same conditions as to payment and stock liability as provided for member banks. 278 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. No individual, copartnership, or corporation other than a member banli of Us district sliall be permitted to subscribe for or to hold at any time more than $25,000 par value of stock in any Federal reserve bank. Such stock shall be known as public stock and may be transferred on the books of the Federal reserve bank by the chairman of the board of directors of such bank. Should the total subscriptions by banks and the public to the stock of said Federal reserve banks, or any one or more of them, be, in the judgment of the organization committee, insufficient to provide the amount of capital required therefor, then and in that event the said organization committee shall allot to the United States such an amount of said stock as said committee shall deter- mine. Said United States stock shall be paid for at par out of any money in the Treasury not otherwise appropriated, and shall be held by the Secretary of the Treasury and disposed of for the benefit of the United States in such man- aer, at such times, and at such price, not less than par, as the Secretary of the Treasury shall determine. It was not necessary for the organization committee to subscribe for any stock on the part of the United States. The mere fact that the GoA^ernment was prepared to take that stock, so that the establish- ment of those banks was put beyond all question, made it unneces- sary to offer any of the stock for sale. And I have the feeling that if this marine bill should pass, the mere fact that the Government has the power to operate ships in the interests of commerce of the United States, will very likely make it unnecessary that it shall do so. I think, furthermore, that the possession of that power by this board will make the people who wish to buy or lease these ships offer to the Government a reasonable price for them. In other words, the public interest will not be absolutely at the mercy of those who want to buy or charter ships, and they will be compelled to offer a reasonable price for the charter of those vessels, or a reasonable price for the vessels themselves, if they buy them. Mr. Curry. Do you feel assured that private interests will take stock in this company? Secretary McAdoo. No; I do not think it necessary that private interests should take stock; because you have this difference in those two matters. The only alternative of the banks was to take the stock of the Federal reserve banks or the Government would take it ; in this case the alternative is for American citizens or corporations to lease or to buy these vessels or the Government will operate them. So that I think it is perfectly clear that if the bill is passed it is in the public interest that this board shall have a discretionary power which will enable it to protect the public interest against people who otherwise might — I do not say they would, but we have to recognize the avarice of human nature — make their own terms for leases or purchases of these ships if the Government has no power to do any- thing but lease or sell them. Mr. CuRRT. You do think the Government should run the ships after constructing them? Secretary McAdoo. I do not think the Government will have to run the ships, but if conditions arise where, in the judgment of this shipping board, the commerce of this country needs the operation of some of those vessels, then I think the board should have the discre- tionary power of operating such ships through this corporation. There is a very decided difference between the operation of the ships by a corporation in which the Government is merely a stockholder and the operation of ships through the sovereignty of the Govern- ment itself. Let us take the case of the Panama Railroad & Steam- SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 279 ship Co.: Suppose a shipper over the lines of that company, either by rail or steamship, must sue the company to assert a claim ; he deals with it just as he does with any other business corporation, and the sovereignty of the Government is not in any way involved, as it would be in the case of vessels operated directly by the Government — as naval vessels, for instance. The Chairman. Like Senator Weeks proposed in his bill ? Secretary McAdoo. Yes, sir ; like Senator Weeks proposed in his bill. In that case the claimant would have to sue the Government in the Court of Claims and would have to deal with the Government itself instead of dealing with a business corporation whose officers have, of course, greater elasticity in the management of the affairs of the corporation. Mr. Curry. Of course the corporation could sue and be sued. Secretary McAdoo. Yes. Mr. Hardy. If the Government does form this corporation that is spoken of, that corporation may operate some of the vessels ob- tained under this, and at the same time the Government may lease the other vessels, or other of the vessels, to private enterprise, as I understand it. Is that correct? Secretary McAdoo. Exactly. Mr. Hardy. So that some of the vessels that we obtain under this bill might be leased to private enterprise or corporations while the others for which we could find no private enterprise would be oper- ated under a corporation formed under this law ? Secretary McAdoo. Exactly. I think I could illustrate it by a concrete example, Mr. Hardy. Senator Weeks's bill recognized the fact that we did need improved facilities to the west coast of South America, even before the European war broke out, and his bill was an effort, and I think it was a very commendable effort, to provide such facilities. He was alive to the importance of doing what I think we all realize ought to be done, to improve our commerce and relations with South America and other countries. He had in mind the utilization of this great Panama Canal, upon which the Govern- ment has spent already almost $400,000,000, and the improvement of our' commercial relations with the whole western coast of South America over this short line which has been established by the open- ing of that canal. Now let us assume this bill was passed and this board had the ships. Many of those ships might be leased or sold to American citizens or corporations — the bill wisely limits the lease or sale to American citizens or corporations — and they might operate those ships somewhere else. They would naturally operate them where they could make the most profit out of them. They might say, " This line to Chile which Mr. Weeks proposes is a lean line; there may be very little profit in it; there may be none in it for some time." But the interests of the United Stntes might require that such a line should be operated. I think that Mr. Weeks's bill and the debate which followed it clearly shows that everybody, with- out partisan consideration of the question, regarded the establishment of such a line as beneficial to the United States. Now, the shipping board could, in such a case, cause a corporation to be organized as provided in this bill, transfer the necessary vessels to it, and that corporation could operate these vessels to Chile and touch at inter- 280 SHIPPIXG BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE, mediate ports with advantage to the business and commerce of the United States as well as to the benefit of South and Central America. Without such power the shipping board would be helpless to meet such a situation. Mr. Loud. And this Weeks bill was an effort to put into use the siiips of the United States which were then lying dormant and which are now lying dormant? Secretary McAdoo. Those ships were not dormant; those are cruisers which he wanted to use and they are in service all the time. Mr. Loud. The Army transports and naval cruisers which could be spared were dormant as far as commercial work was concerned. Secretary McAdoo. He specified several of the fast cruisers in the original resolution, cruisers which were actively in service which he proposed to put into commercial use. Mr. Loud. But they were dormant so far as commercial purposes were concerned? Secretary McAdoo. Oh, yes. Mr. Loud. And that would increase the tonnage of the world com- mercially, to that extent? Secretary McAdoo. Yes. They could carry, as I recall, 150 tons of express freight each and probably 15 to 20 passengers and the mail. Mr. Loud. Yes ; and something like 500,000 tons in army and naval auxiliaries. Secretary McAdoo. I do not think there is anything like such an amount of tonnage. Mr. Loud. There is 300,000 in the Navy alone, and I think 24r ships, army transports, besides the Panama boats. Secretary McAjdoo. That may be, but it is not all available for commercial uses. Mr. Loud. Not all, but a portion of it is. Secretary McAdoo. A portion of it could be used, I understand, but not a very great portion. However, to such extent as it is avail- able and can be utilized it ought to be utilized. Mr. Loud. That is the point exactly. Mr. Greene. There is also a provision in this bill to purchase vessels as naval auxiliaries. Secretary McAdoo. Will you just allow me to elaborate the point I was making when interrupted, and then I shall be glad to answer any questions. Suppose that no one would lease or buy ships for the purpose of establishing this line to the west coast of Chile. Then this board will have the power to organize a corporation and to sub- scribe to the stock of that corporation for the Government, and it can offer private capital, if it wants to, an opportunity to participate in that stock subscription. Probably private capital would not take it; but if it did not it would make no difference, because the Gov- ernment itself could take it and transfer to this corporation a suffi- cient number of vessels to enable that corporation to operare a line between the ports of the United States and Valparaiso, Chile. They would be merchant vessels constructed with reference to naval needs in time of war and with reference to the particular commercial needs of this particular line. To that extent the Government would then have provided the commerce of this country with instrumentali- ties for commerce which are very sorely needed. bHIPPING BOARD, XAVAL AUXILIARY, AXD MERCHANT MARINE. 281 As I said before, the bill does not make it mandatory upon the shipping board to organize such a corporation and to operate such ships through a corporation. The board will have the power to do that along with the power to lease or sell vessels. I assume that the board in all cases would look conditions squarely in the face and deal with them upon their merits and with due regard to what was for the best interests of the country. Mr. Greene. If those vessels are used as naval auxiliaries and should be carrying ammunition and all such material, and there should be trouble between the nations, would not the use of those vessels by the United States be more dangerous than if private indi- viduals used those vessels? Secretary McAdoo. No, sir. Why should it be? Mr. Greene. Would it not involve the United States in interna- tional trouble? Secretary McAdoo. I do not see how it could any more than if the vessels were owned by private individuals. If the Government was a stockholder in a corporation operating those vessels, you mean? Mr. Greene. Under the provisions of the bill for the use of those vessels, if they should be used as naval auxiliaries, and therefore be United States vessels, backed by the power of the United States, would there not be some international difficulties arise with foreign nations if some foreign nation should seize one of those vessels? Secretary McAdoo. They would not be used as naval auxiliaries, except in time of war, by this Government, of course; so that you would not have that problem to confront 3'ou in time of peace. If the vessels were sold to an individual Mr. Greene. Oh, no; not sold; but used to ship supplies for the Navy. As I understood Admiral Benson to say yesterday, they have vessels now to transport supplies to the Philippine Islands and various places. And if they transport all these materials that are necessary for the keeping up of the Navy and tranport, for instance, meats and flour and anything that is of use to keep the Navy alive (because the Navy could not survive unless it had something to sur- vive on; the men could not live without it) — if they were used for that purpose and were bearing the flag of the United States and the vessels should be seized as a vessel of the United States, would there not be some difficulty to arise that would disturb our international relations ? Secretary McAdoo. I do not see how it could. And then operated by whom? Mr. Greene. Operated by the United States. Secretary McAdoo. Directly? Mr. Greene. Yes; under this bill. Indirection can not alter the fact. The fact that you do it indirectly only says you would do it directly if you dared to or not if you " dared to" but if you wanted to. But you do it indirectly to get rid of trouble. Noav, would you not have just as much trouble as if you were to do it directly? Secretary McAdoo. Are you speaking of the operation of these vessels through a corporation in which the United States is a stock- holder ? Mr. Greene. Yes; in any way under this bill the Government may come into it. 282 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Secretary McAdoo, The only way the Government could have any interest here that could be affected, as I see it, is if a corporation is organized in which the United States is a stockholder Mr. Greene. And owner. Secretary McAdoo. And owner of the stock of the corporation. Mr. Greene. Of all of the stock '^ Secretary McAdoo. Exactly as it operates the Panama Railroad & Steamship Co. It owns all the stock in that company. Mr. Greene. Well, nobody has taken the Panama Canal, and I hope they never will. Secretary McAdoo. All right; I want to illustrate my point. If the ship is operated by a corporation in which the Government is the sole or the majority stockholder — that is your question as I understand it? Mr. Greene. Yes; if I owned a vessel and I got into trouble, I would have to look out for myself; but how about the United States Government ? Secretary McAdoo. You could not look out for yourself; you would have to ask the United States Government to look out for you. That is just the point I want to bring to your attention. Mr. Greene. Exactly. What I did I might be punished for; but when anybody undertook to punish the United States I want to know if that would not involve them in trouble ? The Chairman. Mr. Greene, I would suggest that you allow the Secretary to proceed. I think we can clear you up after a little while. Mr. Greene. I think you have votes enough to clear me up all right. Secretary McAdoo. With your permission I would like to answer the question because it is in the record at this point, and then I will proceed with my statement. Let us assume, gentlemen, that a vessel of the Panama Steamship Co. was seized by Great Britain or any one of the belligerent powers and taken into a prize court for any purpose that the belligerent thought it was justified in seizing the ship. The sovereignty of the United States is no more involved in that seizure, because the United States owns the stock of the Panama company, than if that ship was owned by any man sitting at this table and operating it under the American flag; because the affront is not to the property — if it is an affront at all — it is an affront to the flag. Once you lawfully put the flag of the United States upon a vessel the ownership of the vessel is immaterial because it is the flag of the United States which is affronted by the seizure, whether the vessel carrying that flag laAvfully is the property of an American citizen or corporation in which individuals are stockholders or a corporation in which the Government is a stockholder. Mr. Greene. It is good doctrine, if you will only stick to it. Secretary McAdoo. Your question implies this, Mr. Greene, that the Government of the United States would make a greater contest to protect a piece of property which the Government of the United States owns than it would to protect the rights of citizens of the United States who were lawfully using the flag. Mr. Greene. No; not as to whether they would, but. if they took a Government-owned vessel, whether or not it would not raise a SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 283 question that would be more important than simply the taking of a private vessel? Secretary McAdoo. The stockholder is not the corporate entity at all. Here is a corporation which is a distinct entity. The mere fact that the Government of the United States owns some of the stock in this entity Mr. Greene. Owns it all. Secretary McAdoo. Owns it all — it does not make any difference whether it owns it in part or owns all of it. The Government, as a stockholder, is not the owner, but the corporate entity itself is the owner of the property, whoever may own the stock. It is exactly the same as if you owned stock in a railroad company. If a suit for dam- ages was brought against the railroad, you are not personally in- volved; you could not be involved as a stockholder except in so far as losses or injuries to the corporation affect the value of your stock. And I wish to call your attention particularly to this provision of the bill Mr. (iREENE. Is not there a difference between the operating of a railroad — an electric road or a railroad — and operating a vessel on the high seas? Secretary McAdoo. I think not, sir, except so far as the admiralty laws governing ships differ from the laws relating to railroads. Mr. Greene, i am not a lawyer, and I am asking these questions to get a little information, if you have it. That is what I am after; I want to get information. I wish I was a lawyer, but I am not. Secretary McAdoo. The Panama Railroad Co. operates steamships as well as the railroad on the isthmus, but the ow-nership of stock by the Government does not involve it directly in any questions arising out of the operation of that corporation. The Government does not have to answer because the Government is not directly involved one way or the other — only indirectly — and its sovereignty is no more involved in questions affecting the Panama Steamship Co. than it is in the ship which any man sitting at this table might own and operate lawfully under American registr3\ because it is the duty of the Government of the United States to see that the flag is respected and that the rights of its citizens, whether corporate or individual, are duly regarded when those citizens are lawfully exer- cising the powers and rights to which they are entitled. Mr. KiNCHELOE. And would not that be the same, Mr. Secretary, whether they were owned by private individuals in part and by the Government in part or all by the Government, just so the American flag floats over it? Secretary McAdoo. Absolutely. Mr. Curry. Is that the way Great Britain looks on an attack on the Suez Canal, in which she is a majority stockholder? Secretary McAdoo. That, Mr. Curry, is a very different proposi- tion. The Suez Canal is fixed property, an international highway, affected by treaty obligations and governed by totally different laws and considerations. Mr. Curry. It is only a majority stockholder. Secretary McAdoo. We are not merely a majority stockholder in the Panama Canal. We own it outright, and a different rule applies. The users of the canal are shipowners who operate ships on the 284 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. high seas, and the questions we are considering relate to the ships themselves and not to the canal. The States, for instance, control the highways, and questions relating to them are quite different from those arising out of the operation by private owners of auto- mobiles or vehicles on such highways. Mr. Curry. I think this is very important as to the attitude of the American Government, if a question of this kind should arise. There is a close question of international law involved there and as to whether there would be friendly relations or whether it would be looked upon as an unfriendly act is a matter that ought to be looked into very carefully. If a belligerent should pick up one of my ships and take it into a prize court, the United States Government under international law should protect me to the extent of its ability, that is true. The Chairman. I thought we had agreed unanimously to allow the Secretary to complete his statement. Mr. Curry. The Secretary has asked to have this done now. Secretary McAdoo. I just asked to answer that question since it had been propounded by Mr. Greene and put into the record. The Chairman. I did not understand that. Mr. Goodwin. I think it is an important subject and should be developed, of course. Mr. Curry. I do not wish to interject myself her&, Mr. Chairman, but the Secretary said he wanted to finish this proposition up now, But if he would rather continue I will defer to his wishes. Secretary McAdoo. If you will permit me, gentlemen, to continue this discussion, I should like to call your attention to the fact that this bill specifically provides that " all vessels " — this is section 6 — purcliased, chartered, or leased from the board, as herein provided, shall be registered or enrolled under the laws of the United States as vessels of the United States and entitled to the benefits and privileges appertaining to vessels of the United States, and shall, when and while employed solely as merchant vessels, be in all respects subject to all laws, regulations, and liabilities gov- erning merchant vessels, whether the United States be interested therein, as owner, in whole or in part, or shall have or hold any mortgage, lien, or other interest therein. * * * No^v, the United States Government has, by that provision specifi- cally put foreign nations and everybody else on notice that it has divested itself absolutely of any rights as a sovereign in these vessels and that they shall be treated exactly as privately owned vessels, and shall be subject to all laws, international and otherwise, govern- ing merchant vessels of this character operated upon the high seas. So that there is no possibility under the express provisions of the bill itself for any question to arise, any international question of the kind you have described, and I go so far as to say — I have been a lawyer ; at least I was admitted to the bar and have tried to practice, but don't claim to be a very good one — ^I do not think there can be the slightest question in international law as to the status of a vessel in which the United States or anybody else is a stockholder, whether that provision is in the bill or not. Mr. Greene. Then, the provision is not of any value? Secretary McAdoo. I do not think it is essential, but I think it is a very wise provision to meet the very point you are raising, be- cause it unquestionably sets tliat question at rest. Mr. Greene. It does not quite, in my mind. SHIPPING BOAKD, NAVAL AUXILIARY. AND MERCHANT MARINE. 285 Secretary McAdoo. I feel assured in ni}' own mind that no such question could arise. I should like to refer, for a moment, to the importance of this measure as providing essential naval auxiliaries. Under the powers of this bill the board will have authority to expend $50,000,000 in the construction of ships, Afith reference to their availabilit}^ and use- fulness as naval auxiliaries. It is for that reason that the Secretary of the Navy is put on this board. There is no question about the fact that merchant vessels can be constructed Avith reference to naval uses and not impair their usefulness in any Avay as merchant vessels, and at the same time make them an immensely valuable adjunct as an efficient part of our Navy. One of the troubles with our Navy, as I understand it, is that we have not developed homogeneously and correlatively all of its parts, and we have always been particularly negligent of the necessity for naval auxiliaries. You could not keep a fleet at sea, coaled, provisioned, and ammunitioned in time of war, unless 3'ou have these absolutely essential merchant marine naval auxiliaries. It is true you can improvise out of your merchant fleet, if 3^ou have adequate tonnage, makeshift naval auxiliaries. We had that experience in the Spanish-American AVar. I won't read a list of these vessels now. but I should like to put into the record a list of the vessels that were bought by the Navy in 1898, costing ap- proximately $18,000,000. (Exhibit No. 9.) And, in addition to that, the Navy leased certain vessels for use during the war at an additional cost of $3,000,000. (Exhibit No. 10.) And of the $18,000,000 invested in naval auxiliary vessels a large part of them have been sold for about 20 per cent of their original cost. (Exhibit No. 9.) I think it is perfectly clear, in the light of past events, that we have got to adopt a difl^erent policy for the future with respect to the creation of these essential naval auxiliaries. If the board should provide those vessels we will have in reserve at least a percentage of what the Navy would require in time of the country's need; and, while providing such vessels, Ave will be able, at the same time, as the bill contemplates, to put them in use for the furtherance of the commerce of the country. It is true that with $50,000,000 you can not acquire a very great fleet. As I understand it, you could construct about 500,000 or 600.000 gross tons of vessels, or about 40 per cent of the naval auxiliaries required by the Navy as it now exists. There is, of course, a very definite limitation upon the amount of merchant tonnage that this bill would provide. But primarily the provision of that number of suitable naval auxiliaries of the best type Avould be of immense advantage to the Navy. It would very largely increase its efficiency. If we are going to improve our Navy, if we are going to build a great Navy, if we are going to have an adequate naval force to pro- tect the United States, then it is absolutely essential that these naval auxiliaries should be constructed. My judgment is that they ought to be constructed even if they are kept idle in our ports — foolish as keeping them idle would be — because it is absolutely senseless to con- struct a great Navy Avithout this essential auxiliary arm. AVithout it the Navy can not take care of itself in time of war. The board is giA'en poAver to make investigations into our naviga- tion and shipping laws, and to make recommendations to the Con- gress from time to time as to what may be done to improve them and 32910—16 19 286 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. further encourage our merchant marine. You gentlemen ha\e heard many statements here about our navigation laAvs. The average man who discusses the merchant marine question says glibly as an in- fallible remedy " repeal your antiquated navigation laws." People who have discussed the question with me have said that repeatedly, and when I have asked them, " in what particular Avould you have those laws repealed or altered," they have said, " I don't know." They have just heard that sort of talk and think there must be some- thing Avrong with the navigation laws. Now, if there is anything wrong with those laws, this board can investigate thoroughly and ascertain to what extent modifications or changes should be made; and, to that extent, it will exercise and perform a very valuable function. Also, the provisions for the regulation of steamship companies, as provided in section 9, are, to my mind, of paramount importance. This committee is more familiar with that subject than I am, because you have made heretofore a very exhaustive, useful, and beneficial investigation into the merchant-marine conditions throughout the world. I think it is recognized on every hand, especially in view of the things that have occurred since the JEuropean war broke out and the actions taken by other nations, that it is imperative that this Government should give to some board the power to protect the com- merce of the United States and the shipping interests of the United States. I think that not the least useful function that this board can exercise is the power to prevent or restrain foreign steamship cor- porations from unfair competition with ours. When Mr. Douglas was before your committee the other day he made the statement that notwithstanding our treaties with other nations, our vessels are not given the same treatment in many quarters as are given to British vessels. Whether that statement is true or not I do not know. It was a surprising statement to me, and I do not believe it to be true ; I believe Mr. Douglas is, in other words, honestly mistaken in that statement, because, so far as I can learn, our vessels have had the same treatment in every respect in British waters that British ves- sels have had within the provisions of our treaties with Great Britain. But whether that is the fact or not with respect to Great Britain or any other country, to have a board here empowered to act for this country and see that discriminations are not practiced against our vessels is a very important thing to accomplish. Again, the steamship combinations which have been formed in times past to control transportation upon the high seas, combinations which were exposed very thoroughly by the report of this committee a few years ago, show the necessity for our having some such control or power over foreign steamship companies operating in our waters as will compel respect of our laws and obedience to such rules and regulations as may be promulgated by law^ful authority in this country, covering the operations of foreign steamships in our waters. I think the fact that these steamship corporations, including Ameri- can corporations, had formed a combination and did partition the commerce of the world among themselves prior to the outbreak of the European war, fixed rates arbitrarily, determined the service to be given, did as they pleased without accountability to anybody, and put into operation " fighting ships " to destroy competition wherever SHirPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 287 it iippeaied, was not only a most serious menace to private enter- prise, but actuall}^ prevented the investment of American capital in the foreign shipping field. B}^ the power to license these foreign vessels, we can compel them to respect the laws of this country. It will be a very strong instrumentality through which we may prevent abuses of the character I have described and protect the legitimate interests of our producers and shippers and shipowners. I think the regulatory power provided by the bill over domestic steamship corporations is of very great importance. As it is to-day we have no regulatory power over steamship companies of any kind. This Ijill undertakes to assert through this shipping board a reason- able measure of I'egulation of steamship rates, etc., in order that the interests of the shippers, producers, and business men and the gen- eral interests of the commerce of this country at large may be fully protected. There is another provision in the bill which I regard as of very great importance and one which will be most helpful in encouraging American capital to engage in shipping enterprises, and that is the provision which enables the railroads of the country, in conjunction with steamship companies operating under the American flag, to make special rates to meet competition in foreign markets. I will illustrate it by citing the case of a merchant at Buenos Aires. For instance, he wants to bu}' something of American production in Chicago. He also asks for competitive bids in Great Britain and Germany, If the railroad company in Chicago is asked to make, in conjunction with the steamship line under the American flag operating to Buenos Aires, a special rate that would enable the American merchant or manufacturer to meet the competition of his British or German rival in Buenos Aires, it can not be done under existing law. But under this bill the railroad company and the steamship company could make a special rate on that export business that would enable our merchants, manufacturers, and pro- ducers to compete successfully in those open markets of the world. I read the other da}' in the papers that INIr. Fairfax Harrison, presi- dent of the Southern Railway Co., had called attention to this par- ticular feature as a necessity for increasing our foreign trade in a speech delivered at New Orleans on the 28th of January, 1916. That was before this bill was introduced by Judge Alexander and before he knew^ that it contained any such provision as this. I should like to read a paragraph from that speech for insertion in the record. He says: Cominf!: back again to the question of railway transportation and attempting to formulate some of the things wliich the American railways should be en- abled to do to promote foreign trade, I turn once more to the example of Germany. I do not propose Government subsidies, but the opportunity to follow in private endeavor what German railways have done, without undue or unnecessary governmental restriction. The German railways have given most effective aid in the development of that country's great international traffic. They have applied special rates on export traffic lower than on domestic traffic, and again special rates lower on export traffic to German ports than on that passing into or through other countries by rail. In their rates to German ports for export they make distinctions between traffic destined to different countries. That is to say, they make distinctions in their charges to meet the necessities of competition, differing in degree as to dfferent terri- tories of destination, just as the merchant must vary his profits to meet the varying competition found whenever he attempts to extend his trade beyond 288 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. local boundaries. Our railroads in the United States must do these things if our people are to enter broadly into competition with other countries for a world-wide trade. And they are ready and willing to do so, if they do not thereby endanger the entire fabric of the domestic rates on which they must depend for bread and butter, if not for jam. To state this again, practically and not theoretically, the railroads of the United States must be allowed to do these things without being charged with, and penalized for, discrimination against domestic traffic. Such a proposal requires a broad vision by regulating authority, but it has well-rooted precedents. Even the Declaration of Inde- pendence does not claim more than that all men were created equal, and even Thomas Jeffeuson recognized that domestic commerce and foreign commerce were two separate and distinct functions governed by diiferent laws, even when carried on by the same individual. While not saying that in every particular, in every sentence Mr. Harrison uttered there, I am in accord with him, I do say that in the general principle I am in thorough accord. I believe it is abso- lutely essential to the promotion of our foreign commerce that our railways and our American steamship lines be permitted to make special rates on their export trade which will enable our producers, merchants, and manufacturers to compete successfully with their foreign rivals in the open markets of the world. And I may say, further, that this sort of discrimination in favor of our own steam- ships does not contravene any treaty obligations of this Government. They are perfectly legitimate discriminations which we may extend to our ships and our railroads, discriminations which other Govern- ments have uniformly practiced in favor of their railroads and ships operating under their own flags and their own industrial organi- zations. I think it is also important, as provided in this bill, that this ship- ping board shall have the power, in conjunction with the Interstate Commerce Commission, to permit shipments over railroads to catch specific steamship sailings. These things will greatly encourage American capital to go into steamship enterprises, because to that extent it will put them on a favorably competitive basis with foreign steamships which have similar privileges in their own countries. There are provisions in the bill (section 11) for the creation of a Naval Eeserve out of the sailors who will be engaged on these mer- chant vessels. I think that is a very wise provision. At a very small cost, a cost which the department estimates will be less than the cost of maintaining or operating a single battleship a year, we will be able to provide a very large naval auxiliary personnel which will be of incalculable benefit to the country in time of war. I do not know whether I have (and I think I have not) covered every section of the bill; perhaps, on account of the colloquies we have had; but that may be developed in the course of the questions which you may feel disposed to ask. The Chair:man. Mr. Secretary, you have not made clear just how these vessels may be employed. For instance, the bill provides that the board may cause vessels to be built in American shipvards or may purchase vessels whether built in American shipyards or abroad. T understand the bill gives the board that poAver: In what trade, do you understand under the bill, foreign-built ships purchased by the board may be employed? ►Secretary McAdoo. The bill, as drawn, permits the foreign-built ships to be operated only in the foreign commerce of the United States. As drawn, it also permits ships built in our own shipyards i SH1PPIN(5 BOARD^ NAVAL AUXILIARV, AND MERCHANT MARINE. 289 to be employed in wlintever trade an American ship is entitled to enpige, coastwise or otherwise, of course. The CuAiuArAN. That is, it may be leased or sold to a person, com- pany, or corporation to be used in the coastwise or foreign trade if it is American built? Secretary McAnoo. Yes. The Chairman. But if the vessel is foreign built it can be only utili/.cd in the foreign trade? Secretary McAdoo. That is correct as the bill is now drawn. The Chairman. And the bill, as drawn, does not exclude Porto I Rico and the Hawaiian Isleands from the coastwise trade? Secretary IMcAnoo. No. > The Chairman. Have you any further suggestion with reference to these foreign-built ships, as to how the}' may be utilized? I will say, frankly, that under existing conditions I do not see where we can buy foreign-built ships nor have them built abroad, because my information from our shipbuilders is to the effect that we can build ships in American yards now as cheap or cheaper than they can [ be built abroad. But if these foreign-built ships were admitted to Ameiican registry for the foreign trade, they might trade froui New York to the east or the west coast of South America or to the P^ar East; but if they were going through the Panama Canal, for in- stance, to China, Ja])an, or Australia they would not be permitted to carry cargo from New York to San Francisco or Seattle and then proceed on their journey to the Far East. ^'ou have already mentioned tlie condition of the lumber industry on the Pacific coast, and the canners of California have come in here with a complaint that they need additional facilities for the export of their connnodities. Have you any suggestions to make along that line ? Secretary McAnoo. I think that the bill, Mr. Chairman, is faulty in that respect. My own feeling about it is this: One of the objects of this bill is to encourage the investment of American capital in steamship lines, in the deep-sea lines. The American capitalist, the shipowner, is now permitted to buy a foreign ship, no matter of what age. There are no restrictions upon his right to buy ships; he can buy them in any market of the Avorld wherever he can get them cheapest and register them under the American flag. To that extent that law is an encouragement to private capital to invest in ship- ping. We have got this discrimination, however, against that American-owned but foreign-built ship; it is not permitted to take on and discharge cargo, as a part of its foreign voyage, at ports of the Ignited States that are embraced within the coastwise area or limitation. For instance, let us say that an American owns a ship of foreign construction which he has registered lawfully under the American flag. He starts on a voyage from New York to New Zealand, going by way of Chile through the Panama Canal. If he wants to ]Mck up a cargo after leaving New York at New Orleans and another one at Galveston, and then go on to a foreign country, and to di.scharge a part of his cargo at New Orleans from Ncav York and take on cargo at New Orleans for Galveston and discharge a part of his cargo at Galveston and take on at Galveston other cargo for Chile and New Zealand, he is not permitted to do that. And 290 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. coming buck, for instance, from Xew Zealand and Chile, if he wants to stop at Galveston and discharge a part of his cargo and then to take on other cargo at Galveston, say for New York or New Orleans, and then to proceed on his voyage to New York, he is not permitted to do that. But if he has an American-built ship he can do that, as 1 understand the law. The Chairman. Under this bill ? Secretary McAdoo. I mean under existing law. I think we can well afford to encourage American capital to engage in deep-sea enterprise by permitting American-owned but foreign-built ships engaged in foreign trade to touch at domestic ports, at any number of domestic ports, and to take on and discharge cargo as an incident to its foreign commerce, but not to engage exclusively and wholly in the coastwise trade. To that extent I think this bill, if amended, would offer a ver}^ large and additional inducement to American capital to engage in the deep-sea shipping enterprises. You can take another case: Suppose an American vessel of for- eign construction should sail from Liverpool with a cargo for New York, and then suppose it had an order to carry a cargo of cotton or grain from Galveston to Liverpool on the return voyage. As it stands now it would have to run empty from New York to Galves- ton, pick up its cargo there, and go forward, which, of course, is a great economic loss. If it had the right to take on cargo at New York for Galveston, discharge that cargo at Galveston, and then to take on its cargo at Galveston for Liverpool, that ship would be more profitable in the hands of an American capitalist and he could afford to engage in that business when otherwise he might not be willing to do so. It might mean all the difference in our foreign trade be- tween a profit and a loss. As I understand the laws of Great Britain — -and I take Great Britain because she is the greatest maritime power— a British ship may touch at every domestic port, take on cargo to and from those different ports, and then sail on her foreign voyage. To that extent she has an advantage over an American-owned ship, because the American-owned ship can not touch at British ports as a part of her foreign voyage; but if the American ship, although foreign built, could touch at American ports and take on and discharge cargo as a part of her foreign voyage, then she would have reciprocal or com- pensating advantages, so far as our trade is concerned, with her foreign competitor. The Chairman. Our colleague, Mr. Curry, has a bill pending before the committee to admit foreign-built ships to engage in the coastwise as well as in the foreign trade, providing they are owned by American citizens or by American corporations, in which a ma- jority of the stock is owned by American citizens, which, of course, the committee will have a chance later to consider. Mr. Greene, in his questions about the features in this bill, author- izing the operation of these ships by a corporation organized under the laAvs of the United States, of which the Government owned a majority of the stock, that it might create some acute international situation, and that would not be created if they were operated by some private person, firm, or corporation said, "Suppose these ships were loaded with munitions of war and supplies for the Navy." SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 291 It is not the intent that these vessels shall be so utilized in times of peace, is it, under this bill? • Secretary McAdoo. Not at all. The Chairman. But if there is a war the Navy Department takes them over under orders of the President, and then they become a part of the Navy, and, in that event, would have the same status as any other naval vessel. Secretary McAdoo. Absolutely. The Chairman. But in time of peace they are merchant vessels ;ind tliat condition does not arise. It is not the intent that these vessels shall be used to carry coal for the Navy and meat for the Navy and munitions for the Navy in times of peace ; but when they are being operated in time of peace under the provisions of this bill, it is to carry our commerce aside from meeting any needs of the Navy? Secretary ISIcAdoo. Precisely, except in so far as the Navy, in fime of peace, might absolutely require the use of these vessels perma- nently. The Chairman. Then they become a part of the Naval Establish- ment? Secretary McAdoo. Then they become a part of the Naval Estab- lishment, with an absolute naval status. But otherwise, Mr. Chair- man, section 6 of the bill, as I said before, expressly relegates these vessels to the status of ordinary merchantmen. The Chairman. I think so, if it is possible by language to do so. Now it has been said that $50,000,000 expended to buy ships would not go very far; it would not provide man}'^ ships. I think it is esti- mated that it would furnish from 75 to 100 merchant vessels. Secretary IMcAdoo. That depends on the size and tonnage. The Chairinian. On the size and the cost, of course. Secretary ^IcAdoo. And the type. The CHAiR:srAN. But if we had 50 vessels, and they would involve the cost of a million dollars each, to meet present emergencies it would be a great asset to the foreign commerce of the United States, would it not ? Secretary McAdoo. Unquestionably. The Chairman. In that connection, a gentleman will appear later on before this committee, representing the American Cast Iron Pipa Co., of Birmingham, Ala., to show just what it would mean if w« had ships under the American flag to meet conditions in our foreign trade. I will call attention to that later on, however. If we had a large, flourishing, American mei-chant marine, in the event of war. of course, such vessels as might be needed would become a part oi the Navy and would be commandeered by the Government for use as naval auxiliaries; is that true? Secretary McAdoo. Exactly. The Chairman. Now we do not have those vessels under the American flag, they are not available, and the purpose of this bill f" to meet the conditions of our foreign trade, and while we are doi/x^ that we are necessarily building up a naval auxiliary for use in time of war? Secretary McAdoo. Precisely. 292 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE, The Chairman. It would not be economically sound for the Navy to provide all of those vessels and have them lying useless at the docks in time of peace, would it ? Secretary McAdoo. It would be, I think, an unjustifiable waste except to the extent that w^e had better have them that way than not to have naval auxiliaries at all. The Chairman. But it is not necessary to do that ? Secretary McAdoo. Not at all. No other nation does it. They use such vessels profitably" in commerce in time of peace where they have a naval auxiliary. The Chairman. Referring to the features of this bill, which give to this board regulatory powers over our commerce — domestic and foreign — and over foreign shipping as well as our own, under the powers vested in this board to require all vessels entering our ports, whether foreign or domestic, to operate under licenses issued by the Government, deferred rebates could be effectively prevented; could they not ? Secretary McAdoo. I think so, undoubtedly. The Chairiman. And the investigation made by this committee of the so-called " Shipping Trust " revealed that that was the most ef- fective weapon used by the ships in the different combinations to shut out competition, and under the power vested in this board the use of fighting ships to prevent competition could be prevented, could it not? Secretary McAdoo. I think so. The Chairman. And also foreign vessels entering our ports could be compelled to grant as favorable rates to American shippers in the foreign trade as to shippers from their own countr}^? Secretary McAdoo. I think we could exercise probably as much compulsion as that, because the board, having the power to grant a license and to rescind a license once granted, may, of course, impose certain reasonable terms. You could correct a lot of abuses. The Chairman. We could correct another condition existing right now in Seattle; the city of Seattle, the county and municipality, have spent several millions of dollars in the erection of splendid ter- minals or docks. You, perhaps, saw them when you were there last summer. I doubt if there are as fine terminals anywhere in the United States to-day. And yet the shipping combine will not use those terminals, and they are appealing to this committee and to Congress to correct that condition. If this board were created and vested with the powers given in this bill that condition could be corrected, could it not? Secretary McAdoo. I think that fair treatment for our shippers and producers could certainly be secured if the board thus created were given the powers contemplated by the bill. The Chairman. A gentleman will appear before this committee to-day who w^ants to submit a bid in South America for cast-iron pipe in competition with manufacturers in England. The British manufacturers have the coercive influence of the British Board of Trade and are getting a much lower rate than the present rate. The Lamport & Holt Line, which is a British corporation engaged in trade from this country to South America, will not quote this com- pany a rate at all, so that it practically means we will be shut out SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 293 from competition in that trade. Such a condition as that could be corrected, could it not? Secretary McAdoo. I think so. The Chairman. That gentleman will appear before our commit- tee, and I think tliat presents one of the most intensively aggravating situations which have been called to my attention. Secretary McAdoo. That is very pertinent illustration of the diffi- culties under which our shippers are trjdng to do business in foreign countries, where we have to ship and have been shipping under a foreign flag. The British ship favors the British producer; the German ship favors the German producer; and, as the American producer has to depend on British or German ships to carry his product, they discriminate against the American producer, and he " gets it in tlie neck," metaphorically speaking. We have no control whatever over them. They charge any rate the}^ please and do as they please. But with the establishment of such a board we can deal with such conditions effectively. Mr. IIardy. I want to ask just one or two questions. I will try to make them brief. I undei'stand vou to say, Mr. Secretary, that the statements made by Mr. Douglas the other day to the effect that our vessels were not given the same treatment in foreign ports as others were given, so far as you know, is without foundation? Secretary McAdoo. I said that, so far as I know, it is incorrect. Mr. Hardy. Yes. However, there is a practice, I understand, fol- lowed in general Secretary McAdoo. Pardon me a moment. He spoke, as I recall, particularly with reference to port dues and charges of that char- acter. That is what I mean. In other respects I, of course, do not undertake to say. Mr. Hardy. There is a practice, as I understand it, in Germany of quoting discriminatory railway rates on goods imported in German vessels under the rates chai-ged on goods imported in other vessels- Is that your understanding? Secretary McAdoo. I understand that is true, but I do not know. Mr. Hardy. I understand you to say that if that discrimination, which is an indirect discrimination, is practiced that that would be one of the things this shipping board would investigate and make recommendations to our Government, or propose rules under their authority, to counterbalance it ? Secretary McAdoo. Exactly. Mr. Hardy. It seems to me, and I would like to know whether you agree with me, that those methods of indirect discrimination ought somehow, by treaty or otherwise, be prevented. Secretary McAdoo. I agree with you. I think that this board, hav- ing the power of license, and so forth, can exercise a very potential influence upon those questions; because if they discriminate against our vessels we could, of course, retaliate. Mr. Hardy. I was just going to suggest that question. ■Secretary McAdoo. Eeialiation in such circumstances is very fre- quently productive of the right results. Mr. Hardy. On the other hand, if our only recourse is to retaliate it certainly would be justifiable by making the railroads give prefer- ential rates on goods exported in our ships, would it not? 294 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. Secretary McAdoo. Yes; as far as we could do so. I think that one of the great things we accomplish by this bill is the organization of the powers of our own people with respect to this subject and the putting of those organized powers in the hands of a shipping board which can find out what the particular abuses are and apply all the remedies within the law ; and if the remedies under this bill proA'e to be inadequate, they can make recommendations to Congress for addi- tional legislation. Mr. Hardy. In other words, they can give us the facts? Secretary McAdoo. Yes; and, in the meantime, exercise all of those powers which I think are beneficial. Mr. Hardy. I understand, Mr. Secretary, and you put it strongly and clearly, that you are in favor of the very attitude I have assumed from time to time before this committee, that in your opinion those ships that are owned by the Government under this bill ought to be allowed at least en voyage on any foreign-going trip to touch at and carry from and to any of our coastwise ports passengers and freight? Secretary McAdoo. I think that they have that power anyway so long as they are built in American shipyards. Mr. Hardy. I mean regardless of whether they are built here or not. I believe that these vessels which are built and acquired by the Government under our flag, and owned by the Government, ought to be allowed to touch at ports intermediate along the coast and to take on and discharge cargo at those points. Secretary McAdoo. As an incident to their foreign commerce, yes. But I think there is another advantage, Mr. Hardy; it would greatly stimulate the investment of American capital in deep-sea ships if in addition to saying to the American capitalist that he can buy his ship wherever he pleases and put it under our flag, you will also say that he can buy that ship wherever he pleases and to touch at our domestic ports as a part of his foreign voyage and to take on and discharge cargo at intermediate ports, as an incident to and in con- nection with the operation of the ship in the foreign commerce of the United States. I think it would perhaps be unwise to give a foreign-constructed ship the same access to the coastwise trade that we give to our vessels built in American shipyards. The reason for that distinction, in my opinion, is this, that it is of importance to the country, as an essential part of naval preparedness, to encourage, as far as we reasonably may, the upbuilding of our shipyards. My own judgment is — I am not a shipbuilder or a ship operator, and I confess I know very little about the problem and I certainly know nothing about it practically — but as a result of my studies I am convinced that it would tend very much more to the building up of American shipyards to have these vessels of foreign construc- tion given the privilege of participating in our coastwise trade as an incident to their foreign voyages, than if they are not so priv- ileged; because the more vessels our people own and operate under the American flag the more it will stimulate shipbuilding in this country and, certainly, ship repairing in this country. I believe that once we give the stimulus of the world's market to both our ship- owners and our shipbuilders, we will be able to do in the ship- building field exactly what we have done in many other fields of American endeavor, to build cheaper than any other nation on earth can build. We are making steel and other structural material SHIPPING BOARD, NAVAL AUXILIARY, AxSTD MERCHANT MARINE. 295 cheaper than any other nation in the world. That is one of the most essential elements in the construction of cheap ships. I believe we can do in the shipbuilding business exactly what we have done in the automobile business. In the automobile business we are em- ploying to-day the highest priced labor and are selling automobiles in competition with other countries all over the world. Nobody can touch, in cost of production, the Ford car, and yet Ford pays the highest wages to his employees that are paid any place in the world. And the same thing is true of American locomotives. We ship them all over the world, and in competition with the world. We do the same with steel rails and structural steel. The only reason we have not. in my judgment, developed our shipyard facilities and resources before is because we have ,i)ursued a narrow policy of practically restricting the production of those shipyards to our coastwise trade. Once we enter uj^on world trade and get a groat merchant marine, both foreign and American built, the American shipyards will profit by that broader and wiser policy very much more than they will by the narrow policy of being confined to the construction of sliips used only in our coastwise trade. Mr. Hardy. I agree perfectlv with you, Mr. Secretary, except I go a little further. I believe if these ships were understood to be entitled to enter into our foreign or coastwise trade, without refer- ence to where they were built, and without any distinctions between them, that every ship that we have built under this bill in the com- petitive markets of the world, or built in the United States shipyards, in starting on that course the United States shipyards would build ships for us and for other nations as cheaply as any other country in the world could do. And therefore, while the suggestion you make is eminently desirable. I think you could go further without hurting any of the interests of this country. Secretary McAnoo. I think this. Mr. Hardy: I think that we could afford to continue the advantage to our shipyards they now have with respect to the coastwise trade, for the time being, modified only to the extent I have indicated. And, certainly, we can take the next step later if this produces a beneficial effect. Mr. Hardy. I am more than willing to go carefully. Secretary McAnoo. I think the great thing to-day is to get Ameri- can capital more largely interested in the shipping field. The more American capital we can succeed in getting invested in ships, and in the operation of ships, the greater benefit it is going to be to the American shipyards and the more the American shipyards are going to be able to compete, whether the American shipyards build the original ships or not. Mr. Hardy. I do hope our committee will see the wisdom of going as far as the Secretary suggests, at least. Secretary McAdoo. Of course, I am only submitting this for the consideration of the committee. This is not something in which I am trying to force my view upon you. I am only expressing them for what they may be worth. Mr. Greene. The Spanish war vessels that were bought at the time of the Spanish-American War w^e bought without much care as to what use could be made of them, only we had to have something, did we not, and we paid any price? 296 SHIPPING BOAED^ NAVAL AUXILIARY, AND MEECHANT MAEINE. Secretary McAdoo. Precisely. We were not prepared in any way and had to submit to any extortion, while getting makeshift craft as well. Mr. Greene, No ; we were not prepared in any way, and that was supposed to be a great calamity, and yet proved to be otherwise. But we had not anything at all, and we bought vessels at enormous prices and sold them at very low prices and got rid of them because they absolutely should not have been purchased except of necessity. In this case, in your chance to purchase, you probably would have to pay very exorbitant prices and you testified that you thought you would have to pay pretty exorbitant prices, did you not, if you can buy, and jou do not know that you can buy any ? Secretary McAdoo. Mr. Greene, my view of that is this: This board will have the power to purchase ships. I should think that a board of this character would be intelligent enough not to buy a ship unless it can buy it, whatever the price might be, with advan- tage to the country and to the commerce of the country to be utilized for the time being to meet an emergency. Now, if the compensating advantages were adequate it would be justified in paying a high price for the ship, and if they were not I think the board certainly would not do it. It is most important, however, that some organ- ized poAver should exist here to deal with all these problems as they come along. No one can tell how much longer this European war is going to last. Certainly conditions in the shipping field are be- coming more acute every day. We are absolutely and utterly un- prepared to deal with any of the problems that have arisen since this Avar so far as the American merchant marine is concerned, and we have taken no steps since. Mr. Greene. In many of the subsidy bills introduced in Congress since I have been a Member here there have been a number of pro- visions made for merchant vessels as naval auxiliaries, to be con- structed^ under the direction of the naval authorities, and this propo- sition put into this bill is simply enlarging on that idea that has here- tofore been proposed in various subsidy bills. Secretary McAdoo. I am not so familiar with the bills to which you refer. Of course, here is a concrete proposal for the Government of the United States to spend $50,000,000 in creating naval auxiliaries. Mr. Greene. But they would not spend the $50,000,000 for naval auxiliaries, but the vessels would go into trade and everything else. Secretary McAdoo. I am simply explaining that here is a concrete proposal, so far as this bill goes, to expend that much money to do something toward the creation of a merchant marine that will also be adaptable to naval auxiliary uses in time of need, and to that ex- tent we will provide a small percentage of what the Navy might re- quire in an emergency. We certainly can be sure of that much, Mr. Greene. In our subsidy bills we had a very limited sum, very much less than proposed in this bill, and very much less than the ex- pansion of it will mean in the future, and yet those bills were consid- ered outrageously extravagant and wild, to spend money for the purpose of building up a merchant marine. The Chairman. They would have provided for about 15 or 16 ships, with an expenditure of from three to five millions a year. Mr. Greene. I understand; but it was to aid something else. It was not to build ships entirely, but it was to aid the people in the SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. 297 trade and to enable them to overcome the disadvantages in the American foreign shipping as Ave find now disadvantages; and this is an attempt to put the Government in because of the fact that the Government will have money enough to do this which an individual might not do, to compete with the foreign nations. Secretary McAdoo. My view of that is this, Mr. Greene : We have hugged the hoary-headed delusion or dogma for many years that we can not construct and operate a ship under the American flag profit- ably. This is like a great many other dogmas which get the sanctity of hoariness and in time come to be commonly accepted. I think that one of the greatest things this shipping board can do, if au- thorized and given the means to build a fleet, will be to demonstrate by the actual construction of vessels that we can produce a type of ship — and I am confident that we can do so — which can be built in an American shipyard cheaper than anywhere in the world and can be operated with high-priced American labor cheaper than anywhere in the world. That is due to various causes, not only because we have American genius and skill to do it but because we produce the struc- tural material that goes into the ship cheaper than anybody else can do it. I believe the Government can demonstrate by developing a standard t^'pe of cargo vessel that we can accomplish just that result. Now, that assumption is based upon another great advantage that this country has in the form of the fuel-oil supply. We have more than 50 per cent of the crude oil of the world, and I think that the types of the future, the types that are going to give us dominion over the seas, are just the types which American genius and enterprise and material can construct and operate with the cheap fuel oil so lavishly bestowed upon us by nature. Let me illustrate the necessity for governmental demonstration of such things at times. I was very much interested in a conversation I had a few days ago with Mr. Vrooman, Assistant Secretary of Agriculture. He told me a number of extraordinary facts about the value of governmental agency in demonstrating the usefulness of certain things to the people of this country. Some years ago the Department of Agriculture undertook to demonstrate that the cow tick could be eradicated without injury to the animal. That is a, very serious injury to the farmers of the country — the cow tick. These could be destroyed by the very simple process of immersing the cow in a vat containing a chemical fluid. The farmers had the notion that their cows would be poisoned, or that the flow of the milk from the cow would cease, if subjected to this process. In some cases where vats were established by the Department of Agriculture they were blown up by dynamite, and in other places employees, who at- tempted to demonstrate the process, were mobbed; but that finally, after some time, they succeeded in convincing the farmers by actual demonstrations that the cow tick could be eradicated without injury to the animal, and it has resulted in enormous benefit to the farmers of the country. The same thing is true of hog cholera. He said that the mortality in hog cholera Avas something like 29 per cent in three typical counties, which he mentioned to me. When the hog cholera serum was developed the Government tried to get the farmers to use it, but they would not do it, and finally the Government had to make actual demonstrations itself. In the three counties in question by 298 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. the use of the serum they reduced the mortality from 29 per cent to 1.7 per cent. The growth of the stock has enormously increased in those counties, all of which, of course, is a great contribution to the wealth of the countr3\ Now, if the Government had not exercised its agency of demonstra- tion in these cases we might still be just as backward. I think we have got to demonstrate the same thing in the shipping field, the same as the demonstrations we are making in the Bureau of Stand- ards in many scientific directions and in the Department of Agri- culture which have proven so beneficial to the country. And so I think by the construction of these naval auxiliaries that Ave must have for the American Nav3\ at least for effective prepared- ness, we will make demonstrations to American capital that will result in inducing very much larger investments in shipping enter- prises than we have had before. (Thereupon, at 12.45 o'clock p. m., the committee took a recess until 2 o'clock p. m.) AFTER RECESS. The committee reconvened pursuant to the taking of the recess. The Chairman. You may proceed, Mr. Secretary. STATEMENT OF HON. WILLIAM G. McADOO— Continued. Mr. Greene. You referred to the hoary -headed proposition of the people who advocate subsidy. I want to say to j'ou that in the first session of the Congress that I was here we passed a subsidy bill in the House of Eepresentatives, the first time it had ever been passed. It failed in the Senate, near the close of the session. Since then we have come within one vote of passing it again in the House, after it had passed the Senate. Now, under those propositions of subsidy, I want to make plain to you it was not proposed to build the vessels but to render aid to men who were in the trade and who understood it to open up mail' lines. That is what we subsidized; we subsidized the mail lines. The act of 1891 is still in existence. We have never been able to ex- tend that ; we have tried several times to extend it and could not do it. If we could have extended this mail act of 1891, 1 think the proposi- tion would have been hoary headed. I can see, for instance, why you regard it as hoary headed, because probably you have not given much attention to that line, because you start in in the first place not be- lieving in it, and consequently you would not pay much attention to it. Now, I am trying to get at the meat in this situation, although I do not believe in it, I am trying to get at the meat of it. Secretary McAdoo. Let me correct^you just there. I did not refer to subsidies as being hoary headed, although I think perhaps it would not have been an incorrect charge. Mr. Greene. I thought that was your statement. Secretary McAdoo. I referred to the hoary dogma that American ships could not be operated profitably under our laws; that is what I was driving at. I think it is merely a dogma and a fear. Mr. Greene. I will agree with you in this point: That if our yards could have had the advantage of building vessels to a large SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 299 extent, they could have perfected them and standardized them and therefore they could build them a great deal cheaper. But one great difficulty with that is that vhile we have the talent to do it, while we only build a vessel at a time we do not enlarge; but when we do enlarge, why we will accomplish something. Speaking of Mr. Douglas: Mr. Douglas was formerly a member of this committee and served here with a great deal of abilit}'^; and he has alwaj^s, so far as I know, been actively engaged in the shipping business. As I understood you, you did not know whether he was correct in his statement, but I should assume that a man of his stand- ing in the business world would be pretty near correct on anything he stated in regard to the merchant marine, because he has had inti- mate knowledge of it both here and abroad, having made it his busi- ness and gotten his living out of shipping. Secretary McAdoo. I referred to his one statement only, where I thought he might be incorrect ; but as to that, I said I did not know whether he was or not. The Chairman. He is an exporter, but I do not think he has had any experience in operating ship lines, Mr. Greene. Mr. Greene. Oh, no ; not in operating ship lines. Secretary McAdoo. Let me correct 3^ou again only to the extent of making clear what I said about Mr. Douglas. He made a state- ment, as I understood him, that there was a discrimination in the matter of port charges and in the treatment of American vessels when they entered British ports. At least, he said he thought so. Mr. Greene. I have heard so, myself. Secretary McAdoo. I do not think he made it as an absolute state- ment of fact; but he said there was a violation of our treaties if that was being done. I said if that was so, and I thought perhaps he was incorrect about it, then the powers this board could exercise would enable them to correct such practices. Mr. Greene. You could do that without a shipping board, if there was a violation of a treaty. Secretary McAdoo. Certainh^; but what I mean is that whether treaties are violated or not, if there were unjust discriminations, as a matter of fact, against our shipping in other ports, wherever they may be, then I think the powers this board would have would enable them, through the processes of retaliation and otherwise, to compel fair treatment. We could retaliate against their vessels, if necessary, Mr. Greene. I notice you quoted from a speech of the president of the Southern Railway and you thought his propositions were very good in regard to extending our foreign trade and that running foreign vessels in connection with the railroads you thought would help to build up a foreign trade. It would almost be absolutely necessary to run them in connection with the railroads, would it not, to build up a foreign trade? Secretary McAdoo. I think it would be very helpful. I think this board ought to have the power, as the bill gives it, to meet these problems and deal with them effectively as they are presented. The extent to which the board may exercise these powers will be deter- mined by the conditions and issues in the cases presented to them. My argument, Mr. Greene, is in favor of giving a body of this char- acter adequate power to investigate and deal with these conditions as they arise. 300 SHIPPING BOARD^ NAVAL AUXILIARY^ AND MERCHANT MARINE. Mr. Greene. Might it not also be an advantage to do the same for the domestic trade? The domestic trade is certainly more valuable and more extensive than any foreign trade has been or ever can be. Secretary McAuoo. We do regulate rates now for the domestic trade. Mr. Greene. I know — but not to hamper the domestic trade and to allow vessels and railroads to be interested, T mean — whether or not that was an unwise proposition to separate the steamships from the railroads. Secretary McAdoo. In what respect ? Mr. Greene. I mean to say in the Panama Canal act, lines like the Fall Kiver Line steamers that have been running from my State ever since 1847 and with a great deal of success, which are owned' by some stockholders Avho also own stock in the New York, New Haven t O u o eSja © tn •Q "" t-" rt soooooooooooo joSooocoooooo 00-osoit^t c^icocococot-.r»ooooi>t ooooooooo- ooooc ooooe . i^ r- I- i^ t- I ISS oooooooo ooococccooooco i^ I-- CO CO rt CO CO CO ?ss O OOOOOOOO'^ ■»■»■*•*■» oooooooo odddoiggggSoo i5'Oioioio55ocoooo X X X X X o oo oooo o o »o t- ic o o o'dtc'to'sTdd o o o o o ^ lO *o to o _^q c a a c o CJT o o o c c o COOOOO^H^HCCCO^^Hl-iCCCCO pooooooood D^ 5" It; do -Bu "^asa-s-s-sapp , - V P '"'^P'^c'^-aoMot.'.ii'SP.p 344 SHIPPIXG BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. A BILL To establish one or more United States Navy mail lines between the United States and South America. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Navy is hereby authorized to establisli one or more United States Navy mail lines, by employ- ing such vessels of the Navy as in his discretion are available without impair- ment to the paramount duties of the Navy and as are necessary and appro- priate, for the purpose of establishing and maintaining regular communication between the east or west coast, or both coasts, of the United States and either or both coasts of South America. The vessels so employed shall carry United States mail, passengers, and freight under such regulations and at such rate or rates as the Secretary of the Navy may prescribe. Such civilians, such officers of the naval auxiliary service, and such officers and enlisted men of the Navy, including officers on the retired list, as the Secretary of the Navy may deem necessary shall be employed in the business of the said mail line or lines, and retired officers of the Navy so employed at sea or on shore shall, in all respects, be held and considered to be in an active duty status, and shall receive the pay and allowances of officers of the active list of the same rank and length of service: Provided, That officers placed on the retired list on account of wounds or disability incident to the service, or on account of age, or after thirty years' service, shall not be ordered to such duty without their consent. The enlisted strength of the Navy, as now or hereafter authorized by law, is hereby increased by the number of men required to man the vessels so employed, and the Secretary of the Navy is hereby authorized to enlist such number of men in the Navy for such terms of enlistment, not to exceed four years, as may be desirable, and to distribute the- number of men so enlisted among the various ratings of the Navy. Sec. 2. In addition to and as a part of the line of the Navy there is hereby established an active reserve list. Line officers placed on the active reserve list under the provisions of this act shall be held to be in an active-duty status in all respects, except that officers on the active reserve list shall not be advanced on the active reserve list except for eminent and conspicuous conduct in battle, or extraordinary heroism, when their advancement thereon for these causes shall be governed by the provisions of law governing the advancement of officers on the active list for like causes. All laws now in effect with reference to the retirement of officers from the active list are hereby extended to include officers on the active reserve list. Sec. 3. Sections eight and nine of the act approved March third, eighteen hundred and ninety-nine, entitled "An act to reorganize and increase the effi- ciency of the personnel of the Navy and IMarine Corps of the United States," as amended by the act approved August twenty-second, nineteen hundred and twelve, entitled "An act making appropriations for the naval service for the fiscal year ending June thirtieth, nineteen hundred and thirteen, and for other purposes," are so far amended that officers who hereafter volunteer or are selected for retirement as therein provided shall be held and considered to have volunteered for transfer to the ^ctive reserve list, or shall be selected for transfer to the active reserve list, respectively ; and the transfer of such officers to the active reserve list in lieu of their retirement shall be made subject to the restrictions imposed bj' the provisions of the said sections as ameniled. Sec. 4. In addition to such part of existing appropriations as may be avail- able for the expenses of operating the line or lines herein provided for, the sum of $100,000 is hereby appropriated, to be paid out of any money in the Treasury of the United States not otherwise appropriated, to be expended in the discretion of the Secretary of the Navy for the purpose of organizing, inaugurating, and carrying on the traffic provided for in this act and in defray- ing the operating expenses incident thereto : Provided, That all money received for the transportation of mail, passengers, and freight, as provided in section one of this act, and for such other services as may be incident to the operation of the said line or lines, is hereby made available, in addition to the aforesaid sum of $100,000 herein appropriated, for expenses incident to the proper conduct of the business contemplated in this act: Provided, further. That any sum of money herein appropriated which remains unexpended at the end of the third fiscal year offer the passage of this act, and at the end of each fiscal year thereafter, shall be covered into the Treasury of the United States. SHIPPING BOAED, NAVAL AUXILIAEY, AND MERCHANT MARINE. 345 Exhibit No. 2. [S. 5259, Sixty-tliird Congress, second session.] .\ BILL To establish one or more United States Navy mail lines between the United States and South .\merica. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Navy is hereby authorized to establish one or more United States Navy mail lines, by employing such vessels of the Navy as in his discx'etion are available, without impairment to the paramount duties of the Navy, and as are necessary and appropriate, for the purpose of establishing and maintaining regular communi- cation between the east or west coast, or both coasts, of the United States and either or both coasts of South America. The vessels so employed shall carry United States mail, passengers, and freight under such regulations and at such rate or rates as the Secretary of the Navy may prescribe. Such civilians, such officers of the naval auxiliary service, and such officers and enlisted men of the Navy, including officers on the retired list, as the Secretary of the Navy may deem necessary shall be employed in the business of the said mail line or lines, and retired officers of the Navy so employed at sea or on shore shall, in all respects, be held and considered to be in an active duty status, and shall receive the pay and allowances of officers of the active list of the same rank and length of service : Provided, That officers placed on the retired list on account of wounds or disability incident to the service, or on account of age, or after thirty years' service, shall not be ordered to such duty without their consent. The enlisted strength of the Navy, as now or hereafter authorized by law, is hereby increased by the number of men required to man the vessels so em- ployed, and the Secretary of the Navy is hereby authorized to enlist such num- ber of men in the Navy for such terms of enlistment, not to exceed four years, as may be desirable, and to distribute the number of men so enlisted among the various ratings of the Navy. Sec. 2. That in addition to and as a part of the line of the Navy there is hereby established an active reserve list. Line officers placed on the active re- serve list under the provisions of this act shall be held to be in an active duty status in all rspects, except that officers on the active reserve list shall not be advanced on the active reserve list except for eminent and conspicuous conduct in battle, or extraordinary heroism, when their advancement thereon for these causes shall be governed by the provisions of law governing the advancement of officers on the active list for like causes. All laws now in effect with refer- ence to the retirement of officers from the active list are hereby extended to include officers on the active reserve list. Sec. 3. That sections eight and nine of the act approved March third, eighteen hundred and ninety-nine, entitled •' An act to reorganize and increase the effi- ciency of the personnel of the Navy and ^larine Corps of the United States," as amended by the act api)roved August twenty-.second, nineteen hundred and twelve, entitled " An act making appropriations for the naval service for the fiscal year ending June thirtieth, nineteen hundred and tliirteen, and for other purposes," are so far amended that ofiicers who hereafter volunteer or are selected for retirement as therein provided shall be held and considered to have volunteered for transfer to the active reserve list, or shall be selected for trans- fer to the active reserve list, respectively ; and the transfer of such officers to the active reserve list in lieu of their retirement shall be made subject to the restrictions imposed by the provisions of the said sections as amended. Sec. 4. That in addition to such part of existing appropriations as may be available for the expenses of operating the line or lines herein provided for, the sum of $100,000 is hereby appropriated, to be paid out of any money in the Treasary of the United States not otherwise appropriated, to be expended in the discretion of the Secretary of the Navy for the purpose of organizing, inau- gurating, and carrying on the traffic provided for in this act and in defraying the operating expenses incident thereto : Provided, That all money received for the transportation of mail, passengers, and freight, as provided in section one of this act, and for such other services as may be incident to the operation of the said line or lines, is hereby made available, in addition to the aforesaid sum of $100,000 herein appropriated, for expenses incident to the proper con- duct of the business contemplated in this act : Provided further, That any sum 346 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. of money herein appropriated which remains unexpended at the end of the third fiscal year .after the passage of tliis act, and at the end of each fiscal year thereafter, shall be covered into the Treasury of the United States. Exhibit No. 3. Extract from the annual report of the Director of the Bureau of War Risk Insurance, submitted to Congress December 7, 1915 : [1,297 policies issued from Sept. 2, 1914, to Nov. 30, 1915.] Total amount insured $93, 190, 052. 00 Premiums received on same 2, 194, 454. 22 Salvage received to date 48, 143. 68 Total amount at risk 8, 331, 205. 00 Known losses to date 744, 128. 00 Possible outstanding claims l 250,000.00 Net losses (paid) 695,984.32 Total expenses of bureau, Nov. 30, including salaries of entire force 22, 033. 50 Total premiums received 2,194,454.22 Known losses to date $744,128.00 Less salvage received 48, 143. 68 Net losses paid 695, 984. 32 Surplus premiums on hand 1,498,469.90 Exhibit No. 4. [Debate in Senate Mar. 26, 1914, on Senator Weeks's resolution (S. Res. 317).] TRADE WITH SOUTH AMERICA. Mr. Weeks. I submit a resolution, which I ask to have read and given immediate consideration. The Vice President. The resolution will be read. The Secretary read the resolution (S. Res. 317), as follows: " Whereas it is desirable to develop and extend commercial relations between the United States and the countries of South America by the establishment of direct lines of communication for carrying the United States mail and for the transportation of passengers and freight ; and " Whereas private capital has not engaged in this .service to a sufficient extent to furnish facilities comparable to those enjoyed by the people of other countries having trade relations with South America : Therefore it is " Resolved, That the Secretary of the Navy be, and he is hereby, directed to cause to be prepared in detail a plan for the establishment of a line of ships to run between the cities of New York and New Orleans and the city of Valparaiso, Chile, and intermediate ports, to consist of the cruisers Columbia and Minneapolis and the scout cruisers Salem, Chester, and Birmingham, and that the information requested in this resolution shall include the following : " 1. The time required by these ships to make a round trip between the ports named. " 2. The number of passengers which could be carried in each ship as now equipped or with any changes that would not impair their usefulness if required in the naval service. " 3. The amount of freight that each ship could carry under similar condi- tions ; this estimate to include mail as well as freight. " 4. The number of naval officers and seamen required to man the ships engaged in the service which is proposed. " 5. The probable cost of the service, including the pay of the officers and men employed in connection with it, and all other necessary elements, such as wharfage in the cities where the ships would touch, fuel, repairs, and mainte- nance of every description. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 347 " 6. The cost of such necessary changes as may be required to put the ships named in condition for such service, in removing unnecessary military equip- ment, and any other changes necessary in order to carry passengers and freight safely and to adequately perform the service proposed in this resolution. " 7. An expression of opinion by the department as to whether the above- named ships can be used for such purposes without impairing their usefulness for naval purposes should their prompt return to the naval service be required." Mr. SwANSON. I hope the Senator from Massachusetts will consent to have the resolution go to the Committee on Naval Affairs. Mr. Weeks. Before that is done I should like to make a few comments on the resolution. Perhaps the Senator from Virginia after I have done so will be willing to have the resolution adopted without going to the committee. Mr. President, at the present time South American mails are sent at long and sometimes irregular intervals, and all American mails south of the Equator are carried in vessels sailing under a foreign flag. It is the purpose of this resolution to call for the information which it is believed will justify using fast cruisers of the Navy as a mail line to Valparaiso via the Panama Canal. These ships are of two types, the second-class cruisers Columbia and Minneapolis, carrying light batteries, having a trial speed of about 23 knots, and the scout cruisers BinninghnnK Chester, and Salem, without substantial batteries, having a trial speed ranging from 24* to 26^ knots an hour. These vessels, especially the three scout cruisers, are not built for fighting purposes, but are in the time of war the eyes of the fleet, furnishing information, which their great speed will enable them to do. In time of peace they are not useful ships, because they have not the guns which would make them available for training purposes. At this time our mail service to Brazil, Argentina, and Uruguay is carried by the Lamport & Holt Line, which makes regular sailings from New York, or by other steamers which are temporarily available for that purpose — most of the mail being carried by the Lamport & Holt Line — the other ships used in this service being those of the Prince, Norton, Houston, Barber, and American-Rio Plata Lines. Many of those companies are subsidiary to the English Royal Mail Line, and it is believed that the Lamport & Holt Line is controlled by that company. Our mails to the west coast, after reaching the Isthmus, are forwarded to their destination by a weekly service iinder the terms arranged by the Universal Postal Convention. At present some mails for Argentina and Uruguay are sent by this route, but the service is very slow, and this, it may be easily assumed, militates against the development of our trade with South America. It takes at the present time 7 days to carry the mail to the Isthmus and from 22 to 24 days to deliver it at Valparaiso, the shortest time being at least 22 days, and a proportional time to Guayaquil, Ecuador, which is 900 miles south of Panama, and Callao, Peru, which is 1,400 miles south of Panama, is required. By using the vessels of the Navy which I have mentioned and running them at a 15-knot speed, which is an economical rate for them to make, they would carry substantially coal enough so that by replenishing their supply at Valparaiso and recoaling at Panama they could make the trip from New York, stopping at the Isthmus and Callao, in about 13 days, or mail could be delivered in Valparaiso, Buenos Aires, and Montevideo from 7 to 9 days quicker than ran be done either by the east or west coast routes. It is believed these vessels could without any considerable expense be ar- ranged to carry a considerable number of first-class passengers, and the amount of freight which they could carry would probably be sufflcient to pay the ex- penses of the line from the beginning. I am opposed to Government ownership of transportation lines, and, generally speaking, in my judgment the Govern- ment is the least economical and in many cases the least effective business agency. If later on private capital undertakes the building and running of a line of steamers over this route, I should be inclined to withdraw the Govern- ment line, on the theory that it is unwise to put the Government in competition with private capital in such service ; but that is a matter which may be properly considered when the service is once established and we are assured of our legitimate share in South American trade. We are in the position of having spent $400,000,000 in the building of a canal, one of the reasons for doing so being that it would aid in the extension of our foreign trade; but as far as I know there are no American steamers prepared to undertake this service. From Panama south there is a Chilean, a Peruvian, and an English line, the latter controlled by the Royal Mail. English 348 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. and German shipping interests are alive to the possibilities to be derived from the opening of the canal. They linow that if they once secure lines of trade that it is difficult for others to successfully get into the same field. I am in- formed that the English Government has very recently increased the subsidy to the Royal Mail Line $300,000 a year for the express purpose of extending and developing this particular service ; and as we are not prepared to cover the field in any other way and this Government owns ships which are not useful for any other purpose in time of peace, why not use them in developing such a trade? It seems to me that we might fairly be criticized if we fail to authorize this line and have it ready for operation the day the canal opens. At the present time the foreign trade of Ecuador, Peru, and Chile amounts to $340,000,000. The eastern ports of the United States, by way of the canal, will be several days nearer this trade than are our commercial rivals. We at the present time control about 30 per cent of the trade of Ecuador, less than 25 per cent of the trade of Peru, and less than 15 per cent of the trade of Chile. Great Britain and Germany control the larger part of the balance. The trade of either of these nations with Chile amounts to more in dollars and cents than our total trade with the Pacific coast nations of South America. If this fast mail line were established, it would undoubtedly very greatly de- velop our business in the important ports of Montevideo and Buenos Aires, which are less than two days by railroad from Valparaiso. Argentina and Uruguay have a foreign trade amounting to much more that a billion annu- ally, that of Argentina alone being more than $900,000,000. We obtain an in- significant part of this trade, compared with what we might have if we had better, more frequent, and quicker connections. I should add that the steamers running from New Orleans will make the run to Valparaiso about two days quicker than from New York, which might be important in the delivery of freight, if not so important in the mail service, and it may be desirable to run steamers alternately from New York and New Orleans if this line is established. All this possibility is an attractive picture, and it will be a long step in the development of our trade in South America if we take prompt action to firmly establish this line of steamers. It would be an inspiring thought for the A^merican people that a ship flying the American flag, carrying American mail, passengers, and freight, will be ready and waiting at the Atlantic gates of the canal to continue her trip to the western ports of South America — the first merchant ship to pass through the canal. I hope the Senator from Virginia will not object to the adoption of the resolution. Mr. SwANSoN. Mr. President, first I desire to suggest an amendment to the resolution. I should like to include the cities of New York, Norfolk, and New Orleans. I should want to have Norfolk included in any estimate made. Mr. Weeks. Mr. President, I have not intended in the resolution to refer sijecifically to cities of this country. I should say, generally speaking, that it might be wise to have these ships, if the line is established, run alternately from New York and from New Orleans. I want to state to the Senator from Virginia that it was not my purpose or my thought that this line should start fr(>ra Boston. I am looking at it from the larger national standpoint rather than the local standpoint. Mr. SwANSON. I should like to say, in that connection, that so far as Nor- folk is concerned it is not from any local standpoint that I view it. Great lines of railroad concentrate there from the West and South. There is as large a territory covered by Importations meeting at Norfolk as at almost any city that you could name ; but this shows the necessity and the wisdom of having this resolution referred to the committee to determine to what extent and where the investigation should be directed. This is confined to specific vessels ; it might be found better to get information including others, and I hope the Sena- tor from Massachusetts will consent that the resolution go to the Naval Com- mittee, so that it may be properly prepared so as to suit all sections of the country. I wish to say that I am not opposed to obtaining the information desired. I favor it. I should like to have it obtained and to have the report of the depart- ment upon it, and I wish to have the resolution broad enough to cover the various phases that many Senatoi's would like to have included in the informa- tion furnished. Mr. Gallinger. If the Senator will permit me. I will say that in the efforts heretofore made to secure legislation in reference to the rehabilitation of the merchant mai'ine the bills always provided that the ships shoiild at least touch SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 349 at ciM-taiii Simtli Atlantic and Gulf ports. This resolution could doubtless be so frani(>(l that th(>ro would be no discrimination, as there ought not to be. If a shij) slioidd start from New York, there is no reason why it should not touch at Norfolk, I apprehend. Mr. SwANsoN. That was my object in desiring to have the resolution re- ferred, because I thought that it would save time to have the investigation and report made so as to include the different ports. Mr. Gallinger. I do not object to the reference of the resolution, of course, but I will venture to express the hope that the Conuuittee on Naval Affairs will take it up promptly, because it is important that when we open this great water- way the American flag should he seen on some merchant ships engaged in the foreign trade, and particularly in the trade with South and Central America. Mr. SwANSON. I should be very glad to have this information, and I am satis- fied that the Naval C(munittee would not object to obtaining it ; but the resolu- tion ouglit to be so drawn as to include all sections of the country and all phases of this matter. I hope the Senator will consent to have tlie resolution referred. Mr. Weeks. The resolution as presented is as broad as the country. There is no attempt being made to limit its oj^eration to any particular section of the country. It is simply a resolution asking for information. I have no desire to prevent the resolution being considered by the Naval Affairs Committee, if it seems best that that .should lie done, but if we are going to take the action which I wish — that is, to have this line ready for operation on the day the Panama Canal is open for business — then there should be no considerable delay. The distinguish.ed chairman of the Naval Committee is present, and I will say that I hope, if it be decided to i-c-fer the resolution to his connnittee, that we may have as much expedition sis possible in reporting it out, so that the depart- ment may take up the investigation which will be made. It will be necessary, in order to prf)perly undertake this work, that the resolu- tion be referred to the Department of Commerce and also to the Post Office Department to ascertain the extent of the mail and the trade which may de- velop and may be available at once to assist in making the line profitable. It will take time to do it. I am desirous that there shall be no unreasonable delay. I am not at all solicitous about the port from whicli these ships shall sail or the ports A\here they shall touch. I had much rather leave that to those who are going to operate the line. Mr. Jones. I wish to ask the Senator a question. The Vice Pki-.sident. Does the Senator from Massachusetts yield to the Senator from \\'ashington? Mr. Weeks. I yield. Mr. Jones. I desire to ask the Senator whether the resolution calls for in- formation as to the possibility or the feasibility of having this line touch at a point on the Pacific coast? Mr. Weeks. The Pacific coast of South America? Mr. Jones. Yes. Mr. Weeks. That is exactly what is intended ; that it is to run from the east coast of the United States to Panama, to go through the Panama Canal, and down the west coast of South America, touching, presimiably, at Guayaquil, in Ecuador, and at Callao, in Peru, and certainly having for its terminus Val- paraiso, in Chile. Mr. Jones. What I meant was the Pacific coast of the United States? Mr. Weeks. It would not in anv way affect the Pacific coast of the United States. Mr. Jones. Could we not have information as to a line from some point on the Pacific coast of the United States to the eastern coast of South America, going through the Panama Canal? Mr. Weeks. I have no objection to that information being obtained, Mr. President. Mr. .Tones. But it would not be obtained under this resolution? Mr. Weeks. It would not be. Mr. SwANSON. Mr. President. I am satisfied that the Naval Committee will consider the resolution very promptly We desire this information. I do ; I desire the investigation and information to be broad, but if we are going to do anything of tills kind, it ought to include more than simply what is con- tained in the resolution. I hope, therefore, that the Senator from Massachu- 329K)— 16 2;$ 350 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. setts will consent to the reference of the resolution, and I am satisfied the Naval Committee will promptly report upon it. Mr. Weeks. I desire to call the attention of the Senator from Virginia to the fact that we are limited in wliat we do to the ships which we have avail- able for this purpose. We could not put on steamship lines from every port in the United States to every port in South America or the Orient or Australasia. We must limit ourselves to probably the most profitable route and the route which will enable us to take advantage of the building of the Panama Canal. Mr. SwANsoN. Mr. President, that is true, but it seems to me that all the different routes proposed should be investigated and the various seaport cities ought to liave an opportunity to present their claims to Congress, so that full information may be obtained. That is all I ask. Mr. Bkistow. Mr. President Tlie Vice President. Does the Senator from Massachusetts yield to the Sena- tor from Kansas? Mr. Weeks. I yield. Mr. Beistow. May I ask for the reading of that part of the resolution which Indicates where these ships are to sail from? Mr. NoRRis. I ask that the entire resolution may be read. The Vice President. The Secretary will again read the resolution. The Secretary again read the resolution submitted by Mr. Weeks. Mr. Bristow. Mr. President The Vice President. Does the Senator from Massachusetts yield to the Sena- tor from Kansas? Mr. W^EEKS. I yield to the Senator from Kansas. Mr. Bristow. Mr. President, I would suggest that the Senator modify his reso- tion, so far as naming the cities of New York and New Orleans is concerned, and say " cities or ports on tlie eastern or western coast of the United States and South American ports." That will leave the door open to everybody to make a showing, and then the resolution will not liave to go to the Committee on Naval Affairs. Mr. SwANsox. Mr. President, I have an idea that, if the resolution is referred to the Committee on Naval Affairs, we could ascertain what ports it would be advisable to have these boats sail from, and the committee could prei)are a resolution that would be more specific than the one now before the Senate, and one wliicli would cover every port that might be suggested. There are hundreds of little ports along the Atlantic and Pacific coasts all of which, of course, could not very well be considered in this connection, but if the resolu- tion were referred to the Committee on Naval Affairs, those interested could prepare a resolution that would be broad enough to cover all phases of the question. Mr. Bristow. Mr. President, certainly the Senator from Virginia wouM not make the resolution any broader tlian to include the eastern and western coasts of the United States and tlie western coast of South America. If the Committee on Naval Affairs should undertake to investigate these commercial matters, they would be at it a year. Tlie proposition of the Senator from Mas- sachusetts is to utilize the commercial vessels which the Navy owns and make them of some practical use to the people of the United States; and it seems to me when Senators begin to haggle about whether the ships shall run from New York or Baltimore or Washington or Norfolk or Newport News, or some other port, we are belittling the whole proposition. I 9, offered by Mr. Newlands, Sixty -second Congi'ess, second session, December 7, 1911: 'Resolved, Tiiat it is the sense of the Senate that during the present session the appropriate connnittees shall consider and Congress enact legislation iiii«ju the following subjects: " Twelfth. Providing for the construction of auxiliary ships for our Navy, to be used in time of war in aid of the fighting ships and in times of peace in establishing necessary service througli the Panama Canal and new routes of commerce to foreign countries through lease to shipping companies; such legis- lation to involve the temporary diminution of the construction of tighting sliips and the substitution of auxiliary ships, with a view to the creation of a well- proportioned and etticient Navy." Extract from Senate resolution No. 4, introduced Sixty-tliird Congress, special session of the Senate, by Mr. Newlands, on March 13, 1913: "6. Resolved, That the Committees on Military and Naval Affairs report at as- early a date as possible during the extra session upon the following quastions : "(b) A plan for the construction of auxiliary ships for the Navy, to be used in time of war in aid of the fighting ships and in time of peace in estaltlishing necessary service through the I'anama Canal and new routes of connnerce to foreign countries through lease to shipping companies ; such legislation involv- ing the temporary diminution of the construction of fighting ships and the sub- stitution of auxiliary ships with a view to the organization of a well-propor- tioned and efficient Navy." Mr. Callingek. Will the Senator from Massachusetts yield to me for a moment? Mr. Weeks. I yield. 358 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Gallinger. Mr. President, as I said a moment ago, I am not going to oppose any proposition tliat promises us any reasonable degree of relief. I have no apologies to make for my attitude on this great question of the merchant marine. The Senator from Missouri [Mr. Stone] wisely says this is not the time to discuss the causes which led to the decay of our merchant marine. The Senator and I have crossed swords before on that proposition. When the more comprehensive and, as I think, the more important bill that is promised us, according to the newspapers and in accordance with the suggestion of the Sefiator from Missouri, comes before the Senate I may have something to say on the general proposition. I have no disposition to say it now. Mr. President, I have on my desk four speeches of greater or less importance, and probably of less importance rather than greater, which I have made in this Chamber, and I am gratified to observe that in those speeches, among other things, I called attention to two possible complications which might arise if we did not have an adequate merchant marine. One was that in the event of a great European war we would not have any ships to transport the products of our farms and our factories. Those are the words that I used. That is exactly the situation which confronts us at this very moment. The other suggestion I made was that in the event of a war between a great foreign nation and our Nation we would have no adequate auxiliary ships to supplement our battleship fleet, and that is exactly the situation which exists to-day. This proposition takes some of the few auxiliary ships we have and puts them into commercial work, and if they can be called back to the Navy when they are needed no substantial harm, as I see it, will be done. But, as I said a moment ago, it is a pitiable situation ; it is a pitiable proposition, con- sidering the great emergency which is upon us. The Senator from Missouri properly says that this great war will interrupt trade between South America and the European countries. That is inevitable, and if we only had adequate steamship lines between the United States and South America, there would be a boom in American trade which would astonish not only our own people but the world. I have labored, in season and out of season, to have our country prepared for this very emergency, but I labored in vain. If this makeshift can do some good, if it can accomplish something for American trade and American commerce, of course we ought all to agree to It ; and I certainly shall vote for it. The Vice President. Is there objection to the present consideration of the bill? Mr. Williams. Mr. President The Vice President. Does the Senator from Massachusetts yield to the Senator from Mississippi? Mr. Weeks. I yield. Mr. W^iLLiAMs. I thought the Chair had asked if there was any objection to the passage of the bill, and I thought I had a right to the floor in my own name. The Vice President. The Chair is not always correct. The Senator from Massachusetts had the floor, and he has been yielding. Mr. Williams. I will wait until the Senator from Massachusetts is through. Mr. Stone. Mr. President Mr. Weeks. I will yield to the Senator from Missouri. Mr. Stone. If the Senator from Massachusetts will allow me, I should like to put into the Record without reading an article clipped from a New York paper of yesterday morning, from INIr. Lewis Nixon, in respect to this very situation. The Vice President. Is there objection? The Chair hears none. The matter referred to is as follows : " Outlines Way to Protect Commerce of America — Lewis Nixon, Student of THE Merchant Marine, Says President Can Act Under Amended Panama Canal Act to Provide Necessary Vessels — Emergency Calls fob Imme- diate Action. " Lewis Nixon, for 25 years one of the closest students of the American mer- chant marine and active in promoting its regeneration, presented yesterday a series of arguments to show what can be done in the present emergency to meet the imperative needs of American commerce and to forestall another such pre- dicament as now faces this country through lack of ocean shipping facilities. " He finds in the Panama Canal act full authority for action, and suggests that an amendment suspending during national emergencies the five-year limit SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 359 placed by that law on purchase of foi'eign ships would place in the hands of the national administration the fullest opportunities to protect American for- eign trade in supplying bottoms for its transportation and at the same time keep foreign ships out of the American coastwise trade, which they have sought for a generation to invade. " ' In tliepast, when just such a contingency as now exists was suggested,' Mr. Nixon said, ' the idea was ridiculed. The United States can never be dependent upon her own ships, they said. It is better to have foreigners do our ocean carriage, because they can do it cheaper, was the argument. ^ " ' Naturally the foreign interests so well served by such sophistry keep their grinding hand upon legislation and never permit any legislation favorable to American shipping to slip through. They got free ships in the foreign trade in the Panama Canal act. But they had to be available for governmental pur- poses in time of war, so as yet this has not been availed of. " ' UNDERWOOD BILL EMASCULATED. " ' The Underwood bill as first drawn would have brought into play the suc- cessfully tried policy of discriminating duties, but this being seen, cunningly suggested changes caused the emasculation of its constructive features. " 'A tremendous revival would have followed the earlier draft of the Panama Canal act as it passed the Senate, as this provided free tolls in the foreign trade ; but the inlluence of foreign countries, exerted through those who profit by it here, had this changed in the House, and even free tolls in the coasting trade have now been given up. " ' The pretext of war's reprisals in the Boer War put up freights and insur- ance in such way as to make our people pay largely for that war. " 'A small section on the west coast paid more than $2,000,000 increase in freight and insurance rates on this account. A European Government would have called the influences that levied such tribute of us to sharp account, but we .seem supine and helpless as soon as foreign transportation is mentioned. " ' However, we are now faced with a situation that will destroy even the potentialities of our great harvest of this year. It ^\'ill be wanted at high prices. The productive capacity of European countries, except Russia, will be demoralized for some time, even though the war does not burst into full flame. " ' So we must send forth our freights and our people. In 1910, at Buenos Aires, I started a movement at the Pan American Conference to make tlie West- ern Hemisphere independent. It is to be hoped that the lesson may now be brought home and that the studies of a lifetime may no longer be sneered at as academic. " ' WESTERN HEMISPHERE TO SUFFER. " ' The Western Hemisphere will suffer terribly from the withdrawal of trans- portation facilities from both North and South America. " ' What can be done immediately, and what are the dangers? " ' In the Panama Canal act we have already power to buy foreign ships and run them in the foreign trade under the United States flag. They must not be more than five years old. This was to prevent our becoming the dumping ground or junk heap for old and worn-out vessels which, if sold, would furnish money to our rivals to buy up-to-date vessels with which the old ones could not compete. We can not get enough vessels under existing conditions to do our work. " ' The great tank vessels of the Standard Oil Co. could carry grain in bulk if it be not contraband, but they could take our grain to some neutral port. But these are only a handful. The new vessels of the United Fruit are splendid boats and could take care of a small part of the passenger traffic. As regards our coasting trade, the vessels there could be attracted ol^ at a price, but the people would pay it many times over in railroad rates. " ' We must not relinquish the slight hold on West Indian and Mexican trade, upon which Canada, with common-sense banking and commercial laws, is making such inroads. " ' So we are face to face with the problem of attracting foreign vessels that war conditions limit in profit making to purchase by Americans, for they must be owned outright. " ' POV/ER FOE THE PRESIDENT. " ' The Congress should empower the President, when a condition exists which interferes with free navigation of the oceans to such an extent as to militate against the country's interests, to permit the registry of foreign vessels 360 SHIPPING BOARD^ NAVAL AUXILIARY^ AND MERCHANT MARINE. owned entirely by American citizens or State corporations. Tliis would require only that the limit regarding age should be omitted at the President's discretion. Of course when the alarm of war was ended he would permit no more such entries. " ' No age limit should be stated in such amendment at all, as there are vessels 20 years and older that with the use of modern appliances in machinery could render us needful service under existing conditions.' " Mr. Jones. Mr. President Jklr. Weeks. I yield to the Senator from Washington. Mr. Jones. I wish to ask the Senator from Massachusetts what provision the bill makes with reference to the establishment of these lines; that is, the sailing points of ships. Mr. Weeks. Replying to the Senator from Washington, the bill does not provide anything definite ;ibout the sailing points of the ships or how many lines shall be established ; it leaves it optional with the Secretary of the Navy to use such vessels as are available for the purpose to establish and maintain lines as from the west coast of the United States to the east coast of South America, through the canal, or from the east coast of the United States to the west coast of South America, through the canal. Mr. Jones. Does it confine the Secretary to establishing lines from points on the west coast to the east coast of South America? Would it prevent him from establishing a line from points on the west coast of the United States to points on the west coast of South America also? Mr. Weeks. I will read the wording of the bill, and the Senator can judge fot- himself. In regard to the discretion which I have spoken of the bill says : " That the Secretary of the Navy is hereby authorized to establish one or more united States Navy mail lines, by employing such vessels of the Navy as in his discretion are available, without impairment to the paramount duties of the Navy, and as are necessary and appropriate for the purpose of establishing and maintaining regular communication between the east or west coast, or both coasts, of the United States and either or both coasts of South America." Mr. Jones. Does the bill make any provision with reference to taking care of any trade that may be established if these boats should have to be taken off the trip lines? Mr. Weeks. It can not make provision for that, because under such condi- tions the Government would have no means of carrying on the trade. It must be remembered that these are naval vessels, that their priniary purpose is use in time of war, and that this plan proposes to make some commercial use of them in time of peace. If war should break out, then necessarily they must be with- drawn from the service which they are in. Mr. Jones. So it is simply a makeshift. Mr. Weeks. It is a makeshift. IMr. .Tones. But as a makeshift, if it works out some good, of course, we will be glad to have it; it will be better than nothing. Mr. Thomas. Mr. President Mr. Weeks. I yield to the Senator from Colorado. Mr. Thomas. Mr. President, I will not make any objection to the immediate consideration of this bill, but in view of the conditions which are now prevalent in Europe and which, as the Senator from Missouri [Mr. Stone] well says, are probably going to become worse and interfere with, if not destroy, trade relations between Europe and other countries, I venture to suggest to the Senator from Massachusetts the propriety of removing a restriction in the bill. In the bill as it is drawn, communication may be had between ports of the United States and tho.se of other countries. I think it is a step in the right direction, and while it may be a makeshift, I feel very sure that the experiment is going to l)e so satisfactory that it will lead sooner or later to the establish- ment of lines operated l)y the Government itself, a policy which I have always favored and which I hope to live to see inaugurated. Mr. Wkeks. In view of the suggestion made by the Senator from Missouri [IMr. Stone] that thei-e is under cfsnsideration in the other House, or in a com- mittee of tlip other House, legislation more comprehensive than that which we are now considering, I tliink we may safely, if we do it at all, pass the bill in its present form, with the expectation that it will be extended or changed to con- form to the ccmditions which have arisen since the bill was introduced. Mr. TaoiiAS. Very well, Mr. President ; I will defer to the Senator's superior judgment concerning the su'oject, but I hope the bill will be immediately con- sidered and passed. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 361 Mr. Williams. Mr. President The Vice President. Does the Senator from Massachusetts yield to the Senator from Mississippi? Mr. Weeks. I yield. Mr. Williams. I thought the Senator was through. I wanted to say some- thing upon the bill itself. I did not want to ask a question. Mr. JoxEs. I wish to ask the Senator from Massachusetts another question. I note that the bill provides that the passengers, mail, and freight shall be car- ried " under such regulations and at such rate or rates as the Secretary of the Navy may prescribe," leaving the matter of rates entirely to be fixed by the Secretary regardless of the question whether they are reasonable or nut. Was there any consideration given to tlie question in committee as to whether rates which are reasonable should be provided? Mr. Weeks. I am not a member of the Naval Committee, and I can not tell whether that subject was discussed or not ; but necessarily we can not fix rates unless we know what ships are going to be used, how they are going to be used, from what ports they are going to start, and to what ports they are going to run ; and unless Congress fixes the rates in the law, we must leave the authority to some one to make the rates. Mr. Jones. Does the Senator think we ouglit to leave to the Secretary of the Navy the fixing of the rates without prescribing some rule by which he shall be governed? Mr. Clapp. If the Senator will pardon an interruption, of course this being our own property there would be no tribmial to pass upon the reason aljlenss of the rates charged, and it was thought to be just as well to leave it to the Secre- tary without any limitation, because there could be no limitation that would not be left to the discretion of the Secretary. There being no power above that to review Iiis judgment, it was thought best to put it in that form. That is the reason why it was put in that shape. That applies only to freight, of course. Mr. Weeks. If the Senator from Mississippi wishes to discuss the bill, I will yield the floor to him for that purpose. Mr. Willia5is. Has unanimous consent yet been given for the present con- sideration of the bill? The Vice Pkesident. Unanimous consent has not yet been given. Mr. Williams. Mr. President, reserving the right to ol)ject, I want to make a few remarks and to suggest an amendment or two to the Senator from INIassa- chusetts. It is a time-worn phrase that emergencies give rise to bad law. We are facing now a great emergency ; there is no doubt about that. Our wheat is accumulat- ing and the countries of Europe are wanting it, and it can be sent to them only at immense risk and at immense expense. Insurance rates are almost prohibi- tive. I would have no objection to the passage of this bill if it went through as a temporary measure ; if it recited that it was to be in force during the pendency of the present European war. To make permanently of our sailors a set of stevedores and handlers of freight, when they are enlisted for other purposes, or to enlist men in the Navy with the rank of sailors whose business shall be to handle freight, and to make that a permanent policy of the United States, seems to me to be very objectionable. Mr. Weeks. Mr. President, if the Senator will permit me the suggestion, sailors on seagoing ships never handle freight in this day. Freight is handled by stevedores, who are shore men, at both ends of the line. Sailors run the ship and have nothing whatever to do with handling the freight at either end of the voyage. Mr. Williams. Well, I believe the Senator is right about that; in fact, he must be, because he knows precisely about it, and I think that I, too, knew that, but had temporarily overlooked it. You are proposing, however, to take sailors of the United States, in the uniform of the United States, and put them to work on a freight vessel. If the Senator from Massachusetts is willing, I suggest that on line 5, page 1, right after the last syllable of the word " employing," which occurs at the beginning of that line, to insert the words " during the pendency of the present European war," until Congress can make permanent provision in a more satisfactory way than this. Then, I would suggest to the Senator another amendment, to strike out the period on line 10, page 1, and to add the words " and between the United States and the countries of Europe." The bill at present would enable the naval ships that are temporarily to be engaged in carrying mails and passengers and freight, 362 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. to maintain " regular communication between tlie east or west coast, or botli coasts, of tlie United States, and either or botli coasts of South America." The crying need right now is to get our foodstuffs to Europe in neutral ships. I, myself, think a mut-h more satisfactory way of dealing with this crisis would iiave been to have passed a joint resolution putting into the hands of the United States Government a given sum of money to buy ships of belligerent powers that will be laid up in our ports and be for sale cheap, and during the war, at any rate, granting authority to the Government to lease them to people who would operate them, or otherwise, to satisfy the present emergency ; but I Vlo not want to stand in the way of anything that anybody thinks will help out. It seems to me if the Senator will add, at the point I have indicated, the words " and between the United States and the countries of Europe," he will broaden the scope of his bill and will meet the immediate exigencies nmch more fully. Then, if he accepts the previous amendment, he will make the bill temporary in its character ; it will appear simply as an emergency bill. Mr. Weeks. Mr. President, I do not know that the Senator from Mississippi heard the suggestion made by the Senator from Missouri [Mr. Stone J, that in the other House there is now in contemplntion legislation much broader in its scope than this. Mr. Williams. That is the very reason I want this to be temporary. ]\Ir. Weeks. The reason why this bill was originally suggested to my mind was that we are about to open the Panama Canal. No attempt has been made by American citizens or American capital to provide a line of steamers which can make use of the canal. It seems to me a shameful condition for us to be in, not to liave a line of steamers or lines of steamers from the United States to the east and the west coasts of South America ready for service when the canal is ready for business. Mr. Williams. Mr. President, I heard the remarks made by the Senator from Massachusetts upon a previous occasion when this matter was up. and, frankly, lie and I do not agree about that. I do not agree with any idea of making a part of the United States Navy freight handlers or passenger or mail carriers as a permanent policy of the United States Government. Mr. Weeks. ]\Ir. President, I do not wish the Senator from Mississippi to understand that I approve of that as a general policy either ; I do not ; but I am trying to take advantage of the situation with the only means we have at hand to do it. Mr. Williams. I should like to ask the Senator if he would not agree to both these amendments, the one making this leigslation applicable during the pen- dency of the present European war, and the other amendment making it pos- sible now to use these ships across the Atlantic to European countries as well as to the other coast of North America and the east and west coasts of South America ? Mr. Weeks. I will agree to the second one of the amendments. The Senator will note from a reading of the bill that whether or not these lines are estab- lished or maintained is entirely in the hands of the Secretary of the Navy ; if other means of transportation are furnished by private capital, these ships can be withdrawn at any time; but I think it would be inadvisable to enter upon this enterprise for the comparatively brief time which may ensue between now and the termination of the European war. I hope the Senator will not press the amendment which he has suggested making the application of the bill temporary. Mr. Williams. Mr. President, if the Senator from Massachusetts accepts the second of the two amendments, then I shall not object to the immediate con- sideration of the bill ; but when the bill is read and considered by the Senate, I will move to amend it by offering the first amendment as well as the second amendment. Mr. Gallinger. AVill the Senator state the second amendment? I did not hear it. Mr. Williams. The second amendment is to insert the words "and between the United States and the countries of Europe," so that the vessels proposed to be used shall be available for trans-Atlantic service. The main thing, I think, we ought to have in view now is getting our breadstuffs across the sea at high prices when people are needing them. Jlr. Weeks. I will call the attention of the Senator from Mississippi to the fact that we have something like 225,000 tons of auxiliary craft connected with the Navy that could be used for that purpose. SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 363 Mr. Williams. That is all the greater reason for extending the scope of the bill. Mr. Weeks. I accept the second amendment suggested by the Senator from Mississippi. Mr. Williams. Very well. Then, I shall not object to the immediate con- sideration of the bill ; but I repeat that when the bill is up for consideration I shall move the first amendment. Mr. NoEKis. IMr. President, I should like to know what the second amendment is. I think the Senate ought to know something about this bill. Mr. Gallinger. Let the amendment be stated. The Vice President. The Secretary will state the second amendment proposed by the Senator from Mississippi. The Secretary. The second amendment is, on page 1, line 10, after the words " between the east or west coasts, or both coasts, of the United States and either or both coasts of South America," to insert the words " and between the United States and the countries of Europe." The Vice President. Is there objection to the present consideration of the bill? Mr. Lewis. Mr. President, pending the submission of the request for unani- mous consent, may I be permitted to interrupt the Senator from Massachusetts to make an inquiry? I desire to say that some time ago I introduced a bill in this body having for its object the construction by the Government of 100 ships, to be built by the Government and leased to private operators, for purposes simi- lar to those certainly implied by the pending bill. I desire to ask the Senator If there is any provision in this bill that permits the President to have the dis- cretion as to when these vessels may be impressed into the service of the Gov- ernment should any necessity require, while they are being used for commercial purposes ? Mr. Weeks. Mr. President, that power is left in the hands of the Secretary of the Navy. The vessels may be recalled at any time for their primary purposes, which is the service of the Government. Mr. I^ewis. Such being the provision of the bill introduced by me, that was the information I sought at this time, and I am satisfied with it. The Vice President. Is there objection to the present consideration of the bill? There being no objection, the Senate, as in Committee of the Whole, proceeded to consider the bill. Th Vice President. Is there objection to the amendment proposed by the Senator from Mississippi? In the absence of objection, the amendment is agreed to. The bill is in the Senate as in Committee of the Whole, and open to amend- ment. Mr. Williams. I now move the amendment which I send to the desk. The Vice President. The amendment will be stated. The Secretary. After the word " employing," in line 5, page 1, it is proposed to insert " during the pendency of the present European wars." Mr. Williams. Mr. President and Senators, I have already stated my reasons for that amendment, and I think the reasons are conclusive. I do not think the policy of having the Navy used for the purpose of freight handling and passen- ger transportation and mail carrying is a policy which should recommend itself to the people of the United States, as a permanent thing. A great emergency and a great crisis excuse bad legislation, if it is temporary, when it accom- plishes a purpose which seems essential for the country ; but I think it bad policy to put upon the statute books this sort of legislation, especially when you consider the provision on page 2, which reads : " The enlisted strength of the Is^avy, as now or hereafter authorized by law, is hereby increased by the number of men required to man the vessels so em- ployed, and the Secretary of the Navy is hereby authorized to enlist such number of men in the Navy for such terms of enlistment, not to exceed four years, as may be desirable, and to distribute the number of men so enlisted among the various ratings of the Navy." When you consider that that clause is in the bill giving the Secretary of the Navy a power to increase the Navy to indefinite extent — while it is a power that might be given in the face of a great crisis, to give it to one of the execu- tive departments permanently strikes me as almost as bad policy as the other feature to which I referred, to wit, the converting of a part of the Navy into freight handlers. 364 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. There is a great deal in tlie esprit du corps of a body of men serving in the Army and Navy. Men enlist in the Army or the Navy because they regard that as a noble and patriotic pursuit ; they have not enlisted, and probably would not enlist, if they were to go upon ships that were to be freight handlers and passenger carriers. That pride which the sailor has in his business, which is his country's business and which ought to be a public busines, entirely devoted to the meeting of the enemies of his country, ought not to be torn down ; and this sort of policy does tear it down to a very large extent. It decreases the sailor's self-respect. I might be willing to go into the Navy and serve there or into the Army, but I would not be willing in eitlier capacity to go and do something else that had nothing to do with the profession of arms. So I think it is but right and proper that this measure should be confined to the emergency that is now facing us. I have no doubt of the fact that every sailor in the Navy will be glad to do this service for the country in time of war or in time of the possibility of war as affecting liis own country, or in times of war between other peoples ; but, speaking for myself, if I were one of the enlisted men of the Navy, that would strike me as having taken a very unfair advantage of me. Mr. Hitchcock:. Mr. President, will the Senator yield? Mr. Williams. Yes. Mr. Hitchcock. Does the Senator think that any officers or men in the Army have felt that they were being degraded by being put to a useful purpose? Mr. Williams. Oh, no. Mr. Hitchcock. The officers of the Army of the United States are in charge of the engineering work on our rivers and harbors. Mr. Williams. Yes ; but the enlisted men of tlie Army do not go down and build the levees. Mr. Hitchcock. If the Senator will allow me to finish. They have been in charge of the engineering work on the Panama Canal. ]Mr. Williams. I know that. Mr. Hitchcock. Tliey have been in charge of the engineering work recently on in-igation projects. Mr. Williams. I know that. Blr. Hitchcock. They have built wireless telegraph lines to Alaska. Mr. W^illiams. Yes. Mr. Hitchcock. And cable lines to the Philippine Islands. Mr. Williams. Yes. Mr. Hitchcock. And I can see no reason why the officers and men engaged in an honorable pursuit, carrying on a very worthy enterprise for the people, should feel degraded for being used for that purpose. Mr. Williams. Mr. President, the illustrations which are furnished by the Senator from Nebraska " have nothing to do with the case," any more than " the flowers that bloom in the spring." An Army officer who performs en- gineering work is doing work in the line of his chosen profession, of which he is very proud. When an officer goes upon the IMississippi River Commission or the Panama Canal Commission and takes charge of great engineering under- takings, or when he goes to Alaska, for example, to lay out the line of the railroad which is to be built there and to supervise its construction, it is a part, and the very proudest part, of the profession which he has embraced. He is not only an officer but he is an engineer, and he is doing engineering work for his country. That is a totally different thing from putting soldiers to work building levees. If you should carry it that far, the soldier would feel that he had been taken advantage of. I do not mean that the work degrades. The man who is building a levee is just as good a citizen and doing just as useful work as a soldier wearing the uniform of the United States, but one of them wanted to volunteer to l)uild levees and to get paid for it, while the other wanted to volunteer to wear the uniform of his country in a position where his pay does not' amount to any- thing or is so small that it does not enter into it as a consideration at all. I hope that the amendment making the provisions of the bill* temporarily will be adopted by the Senate. Mr. Weeks. Mv. President, this bill was introduced long before there was any expectation of European trouble. It has been extended by the amendment offered by the Senator from Mississippi, so that the ships may be used to assist in preventing any distress which may arise on account of our people being un- able to get transportation from Europe. But the purpose of the bill is not tem- SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 365 porary ; the purpose of the bill is to establish, until private capital undertakes to do so, a line of steamers to South America. So I hope the amendment offered by the Senator from Mississippi will not prevail. Mr. Smith of Georgia. Mr. President, I think that it is extremely wise to pass this bill, and to pass it at once ; and, in connection with passing it, we may well consider the responsibility which falls upon us even beyond this bill. I think the responsibility falls on this Congress to see that provision is made to insure the transportation of the agi'icultural products and the manufactured products of this country during the war, if it shall last. It is very timely to pass this measure ; and I hope that that committee of the Senate which would naturally have jurisdiction of this subject and that Senators generally will consider the question of enacting legislation that will facilitate the movement of all of our wheat which must go abroad, the movement of all our cotton and tobacco that must go abroad, and the movement of the manufactured products as well. I do not think any subject can be considered by us that is of greater importance, and I believe it is our duty to see that such legislation is passed. Mr. Williams. Mr. President, I wish to modify my amendment, by unanimous consent, by adding to it the words " and for the period of three months there- after," because there might be some question as to just when the European wars did close. I ask unanimous consent to modify it to that extent, so that it shall read " during the pendency of the present European wars and for the period of three months thereafter." Mr. Weeks. My objection would rest in the same way against the amendment as modified. Mr. NoRRis and Mr. Clapp addressed the Chair. The Vice President. Does the Senator from Massachusetts yield to tlie Sena- tor from Nebraska? Mr. Weeks. I yield first to the Senator from Nebraska. Mr. NoKEis. I was not aware that the Senator from Massachusetts had the floor. I thought I was entitled to the floor in my own right. Mr. Clapp. I addressed the Chair. The Vice President. The Chair will recognize the Senator from Minnesota, for a change. Mr. Clapp. What I desired to say was this Mr. Weeks. Have I not the floor, Mr. President? The Vice President. The Senator from Massachusetts yielded to the Senator from Mississippi. The Senator from Mississippi desired to take the floor and speak on the bill, and the Senator from Massachusetts said he would yield to him. Mr. Weeks. I suppose I took the floor again. Mr. Clapp. The Senator can take it again. In response to what the Senator from Georgia said, I desire to make this sug- gestion : Is it not possible that we are drifting away from the real purpose of this bill, and yet in connection with the real purpose of the bill we can serve the purpose of the hour that has so suddenly arisen? By amending the bill so as to use these vessels in trade with other nations we meet this sudden emer- gency. I do not believe we should permit that sudden emergency to draw us away from the real purpose of this bill, which is to take these vessels as they can be utilized from time to time and put them into the channels of trade. This would not at all conflict with the suggestion of the Senator from Georgia that, in addition to this, we ought at this time to take up the question of meet- ing more fully the European situation. So I hope we will pass this bill with the amendment already offered by the Senator from Mississippi, which makes the bill applicable to the new condition, still maintaining the original theory and purpose of the bill, and not interfering at all with the committee taking up at this time the earnest consideration of ibakirg other necessary provision to meet the condition due to the war in Europe. Mr. Nokris. Mr. President, there is very much that I should like to say on this bill were it not so near the close of the morning hour ; but, inasmuch as I do not want to be instrumental in bringing about its defeat by delay, I shall not consume much of the time and shall not be able to say what I should like to say on this occasion. I am delighted to hear so many Senators express themselves in favor of the principle involved in this bill. I remember that for several years I have 82910—16 24 366 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. been trying to get, as an amendment on various bills, something similar to this — to have the ships leased to the Panama Railroad Co., a corporation dlreadj' engaged in commerce, and use them for the identical purposes that are provided for here. I have always met with such terrible opposition, how- ever, from many of the men who now seem to be favorable to this idea that it affords me a great deal of pleasure to recognize the conversion of so many legislators to the idea that we ought to take advantage of the opening of the Panama Canal by providing Government ships for the purpose of engaging in commerce between the ports of North and South America. On the 24th day of January I offered an amendment to the then pending Alaska railroad bill pi-oviding for the building of 10 ships, I think, that should be leased to the Panama Railroad Co., and should be used by them in commerce between the ports of North and South America. The amendment was debated at considerable length, and had only 11 votes in its favor when it finally came to a vote. An examination of the roll call on the amendment on that day will disclose that many who seemed to be opposed to the idea then are favorable to it now. Shortly afterwards, within a very few days after that amendment was de- feated, the junior Senator from Massachusetts [Mr. Weeks] introduced a reso- lution that was the forerunner of the bill that is now before the Senate. It was reported to the Senate a few days later by the senior Senator from Massa- chusetts [Mr. Lodge], and that resolution was passed, calling on the Secretary of the Navy for information. The Secretary of the Navy seemed to be favor- able to it and the result was a favorable report and this bill, which was then introduced and referred to the Committee on Naval Affairs and is now reported back to the Senate with a unanimity both of the committee membership and of the membership of the Senate, that assures its passage within the next few moments. Mr. West. Mr. President The Vice President. Does the Senator from Nebraska yield to the Senator from Georgia? Mr. NoRRis. I yield to the Senator for a question. Mr. West. That is all I wish to ask. If tlie 10 ships referred to were built and run in conjunction with railroads in Alaska, would not that come under the same objection as to the.se trans-Atlantic railroads having vessels to run through the Panama Canal? Mr. NoRRis. The Senator must understand — and I presume the Senator does understand — that the stock of the Panama Railroad Co. is owned entirely by the United States. I think it would have been much better to have provided that these ships should be leased to the Panama Railroad Co. and operated by them. They are Government boats. The Government owns all the property of the Panama Railroad Co., but it is a regular corporation organized under the laws of the State of New York. It would have been much better to have permitted that corporation, already engaged in commerce, already the owner of ships and of a railroad, to have operated these ships in the regular business way between the ports of North and South America. It was said then, however, " Why, that is going into Government ownership ; that is approaching socialism," and some said, " That is almost anarchy." We have advanced so rapidly, however, that now we come to the proposition that we will eliminate this inter- mediary corporation and turn the matter over to the Secretary of the Navy, who is to be supreme in the rates he shall charge, the ports he shall make, and the ships he shall use. He can do anything he pleases. He can commence where he likes and stop where he pleases. That is better than nothing, I think. I have faith in the Secretary of the Navy. I believe he will take up this work in a good, businesslike way, and accomplish something. I think, however, it would have given the project a much better show in the business world and would have developed our commerce very much better if we had turned it over to a corporation controlled by the Gov- ernment already, and for a good many years engaged in commerce, and whose business it is to deal in things of this kind. The proposition to let the Government build ships — and the Government has built the ships, or some of them, and owns all of them — and turn them over to the Panama Railroad Co. was objected to, as I have said, because it looked like Government ownership. That did not appeal to me. If it was a good thing, whether it was Government ownership or not, it seemed to me that it was SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 367 proper. It seemed to me that it was the proper way to develop commerce be- tween North and South America. The provision that I offered then as an amendment to the bill also provided for the shipping of coal from Alaska through this same modus operandi. If, however, we want to take a step further and turn over the matter to the Secretary of the Navy, I for one am delighted that so many of these ultra- conservative Senators have not only been converted to the idea, but have taken a step in advance, and have gone further than had ever been proposed before. Instead of opposing their plan, as they always did mine, I shall to the best of my ability be vei'y glad to support them in their efforts in this connection, which I believe to be commendable. I \v;int to say while I am on my feet that I am opposed to the amendment, now pending, of the Senator from Mississippi. If that amendment prevails, the Secretary of the Navy will have this authority only during the present war in Europe, and for three months thereafter. It seems to me that we ought to make it permanent. If we are going to trust these matters to the Secretary of the Navy during the existence of a foreign war, there is no reason why we should not trust him in the same way in time of peace. It will be just as im- portant, in my judgment at least, as far as the trade between North and South America is concerned, after the European war is over as it is during the ex- istence of the European war. Mr. SwANsoN. ISIr. President, I am very earnestly in favor of the passage of this measure as it has been amended. It was reported from the Naval Affairs Committee, of which I am a member. I think it meets an emergency that is very urgent at this time. It will enable us to make it immediately available for the exportation of our wheat, our tobacco, and our cotton. I am glad the Senator from Massaduisetts accepted the amendment offered by the Senator from Mississippi, and I simply wish to express my cordial sup- port of the measure. Mr. Maktine of New .lersey. Mr. President, I desire to dissent from the thought advanced by my friend the Senator from Mississippi. I feel that it will not hurt a naval olHcer to liandle a bushel of wheat, or a bag of grain, or a bag of potatoes. I do not believe ho will have much occasion to do it ; but at least it will tend to develop muscle in the man. and from the looks of many of them God knows I think they need it. [Laugliter.] I think they would be better men, I tliink they would be more considerate men, if sometimes they had found occasion to put on a pair of overalls. Mr. President, I consider that a Senator is quite as good as a naval officer, but I want to say that there is one Senator in this body who has worn over- alls on many occasions, handling grain, if you clioose, and potatoes. I do not believe the naval oflicer would have much to do in that direction, for the work would be done by stevedores and sailors ; but this nonsense that because a man happens to wear, through the grace of the country, a pair of epaulets he is a little too good to liandle that which makes food for himself and the rest of mankind is absolutely disgusting to me. The Vice President. The question is on agreeing to the amendment. Mr. White. Mr. President, I desire to hear the amendment read. The Vice President. The Secretary will state the amendment. The Secretary. After the word " employing," in line 5, it is proposed to in- sert a comma and tlie words " during the pendency of the present European wars, and for the period of three months thereafter." The ^'ICE President. The question is on agi'eeing to the amendment. The amendment was rejected. The bill was reported to the Senate as amended, and the amendment was con- curred in. Mr. Williams. Mr. President, before the bill passes the title ought to be arhended. Mr. Gallinger. After it passes. Mr. Williams. It ought to be made to read " between the United States, South America, and Europe." The bill was ordered to be engro.ssed for a third reading, read the third time, and passed. The title was amended so as to read : "A bill to establish one or more United States Navy mail lines between the United States, South America, and Europe." 368 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Exhibit No. 6. Congestion of Freight and Embargoes by Railroads Primarily on Account OF Lack of Ships to Move Otm Export Trade. BALTIMORE & OHIO RAILROAD CO. Embargoes on shipments over its lines moving via New York : December 2. Iron and steel for export. December 12. Lumber and staves for export. December 29. Lumber, staves and hay, to include all shipments to New York for export, coastwise, and domestic delivery. January 7. All freights for reshipment. No embargo on freight for local deliveries in New York Harbor, except lum- ber, staves, and hay. Cars loaded with freight at New York terminal, 2,078; standing on side- tracks leading into New York, 4,437. It was stated on February 14, 1916, that conditions had improved on this road. Lack of ocean tonnage has contributed to the accumulation of this freight, but it is impossible to say to what extent. Marine equipment : Lighters, 95 ; steam lighters, 2 ; tugs, 10 ; and floats, 49. Average of cars arriving and released, 445 per day ; maximum capacity of terminals, 3,000 cars ; working capacity, 2,000 to 2,500. LEHIGH VALLEY RAILROAD CO. Embargoes declared: December 1. Hay billed for New York Harbor, or for lighterage delivery. December 5. Lumber and flour for export via New York. December 8. All carload shipments df lumber for New York. December 6. Locomotives and parts, machinery, and all iron and steel arti- cles, carloads for New York. P^xceptions : Munitions and ordnance materials, etc., for export. December 6. Carload shipments of wire, nails, and rails for New York. December 6. Hay and straw, for New York. December 16. Cement to any part east of Newark, N. .1. December 20. All east-bound traffic from all Lehigh Valley stations, except flour, grain products, perishable freight, live stock, less than carload lots of merchandise, lake grain, cement, coal and coke, munitions, etc. December 22. Embargo of December 20 modified to permit barbed wire in carload lots for export. December 20. All eastbound traffic from connecting lines except empty Lehigh Valley cars and freight billed for delivery at Lehigh Valley stations west of Jersey City ; flour, grain products, explosives, live stock, provisions, perishable freight less than carload lots, coke, coal and fuel oil. December 22. Above modified to allow crude borates in carload lots. December 30. Modified to allow carload lots of copper and lead bullion to New York. December 31. Modified to allow all eastbound freight except for New York Harbor, Brooklyn E. D. Terminal, New York Dock Co., and Bush Dock Co. The following only to be accepted to these destinations : Flour and grain products, high explosives, live stock, provisions, dressed beef, perishable freight, coal, coke and fuel oil, borates, copper and lead, and less than carload shipments. Cars on hand, Jersey City On sidings In terminal yards Total Dec. 1, 1915. 2,632 1,191 7,510 11,333 Dec. 20, 1915. 2,304 3,940 5,991 12, 235 Jan. 3, 1916. 3,106 3,516 5,774 12,396 Embargo caused by lack of ships, but impossible to say the exact proportion due to this cause. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 369 DELAWARK, LACKAWANNA & WESTERN RAILROAD CO. November 28. Embargo against export freight. Cars. Export freight at Hobokeu terminal 2,500 Domestic freight at Hobolien terminal 1,600 Export freight on line 2,000 Domestic freight on line 600 Freight for New York, blockaded 6,700 Embargo caused very largely by lack of ships, also by manufacturers who have taken contracts f. o. b., in starting the freight without any knowledge as to whether it could be handled at the ports. Embargo on domestic tratiic aa follows: January 12. Hay. December 19. I'ig iron. January 11. Iron piping for New York piers. December 20. Cyanimide. NEW YORK CENTRAL RAILROAD CO. Dates when embargoes became effective: December 11. Declared. December IG. Extended. December 25. Modified. January 6. Modified. January 11. Modified. January 12. Modified. Reason: Failure of consignees to remove freight, esi)ecially for delivery to vessels, both for export and coastwise. Cars blocked, January 13: Sixtieth Street Terminal 1,011 Thirty-third Street Terminal 719 Hudson and electric divisions 335 Total .L 2,065 Marine equipment: Tugboats. 19; lighters, 6; car floats, 52; hoisting barges, 34; scows and covered barges, 219; grain boats, 133. Cars. Arriving 1, 189 Forwarded 1, 162 Released 416 Capacity of terminals 4,939 NEW YORK, NEW HAVEN & HARTFORD RAILROAD CO. Embargo issued December 24, 1915, against its Poughkeepsie Bridge. December 27, 1915. Against all business via gateways, except coal, coke, print paper, perishable property, and human food, when coming from connecting lines. Reason for embargoes: A greater volume of freight offered than the New Haven could handle over its tracks and through its terminals. Due to the lack of ships in so far as the congestion on other roads may be due to lack of ships. Statistics of total system, January 6, 1916: Miles of track 7, 592 Cars awaiting unloading 13. 183 Cars awaiting loading 3, 545 Cars set out between terminals 2,063 CENTRAL RAILROAD OF NEW JERSEY. Embargoes declared : Late in October, on export freight. Many others de- clared, .some rescinded, others modified. Cause: Shipping for export without securing bottoms for such export. Lack of ships almost entirely the cause of embargo on export freight. Storms, etc., other causes. 370 SHIPPIXG BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. For the moiitli of December, 1915, the cars standing in Jersey City yards varied from 3,616 to 5,007, averaging daily about 4,200 to 4,500; cars with export freight averaging 3,300 to 3,600 per day, as high as 4,010. Local delivery cars averaging about 800 per day. Loaded cars standing along line were as high as 425 for local delivery and 512 for export per day. All have been brought in by December 31. On December 31 cars were being unloaded on the ground at Jersey City for local delivery, and 1,750 cars were then standing for export. Only answer as to when congestion and embargoes will end is when the supply of ships in the carrying trade becomes normal. PENNSYLVANIA BAILBOAD CO, Embargoes declared: December 13, 1915. No. 3457, all freight, with a few exceptions, consigned to New York lighterage, whether for export, coastwise, or domestic. No. 3458, all freight, with exceptions, consigned to Waverly, including Newark and points east thereof. Reason for embargoes : Large accumulation of loaded cars. Conditions December 21, maximum congestion of lighterage freight : Cars. On New Jersey division 2, 650 On other divisions 4, 178 On piers 1, 987 Open-car freight unloaded on ground 4,078 Total 12, 873 Conditions December 19, maximum congestion of freight for delivery to or through New York: Cars. On New Jersey division 5, 340 On other divisions 12, 608 Total 17, 948 Conditions had impi-oved January 5, 1916, embargo No. 3458 is lifted and No. 3457 modified. Cars. Condition of lighterage freight : Cars. On wheels 4, 658 On piers 1, 800 Unloaded on ground 3, 500 Total 9,958 Export tonnage has greatly increased. Some ship brokers claim to have enough ships ; others ai'e very noncommittal. Estimated tonnage of line awaiting foreign shipment: Tons. In cars along line and in terminals 210, 000 Coming on weekly : 84, 000 Outgoing weekly 34, 000 EEIE BAILBOAD CO, February 11, 1916. Conditions have not changed since January 15, Situation as follows : In cars, Jersey City terminal 1, 615 On piers or in warehouses 1, 373 Unloaded on company's property 515 Held on line 1,405 Total 4,908 Exhibit No. 7. The following are extracts from newspapers regarding freight congestion, due primarily to the lack of ships to handle our export trade : [New York World.] Baltimoee, Md., January 3. — The Western Maryland Railroad to-day issued an order, effective at the close of business to-morrow, placing an embargo until SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 371 further notice on all shipments of grain to this port for export. There are nearly 2,000,000 bushels of grain in storage here awaiting ships. (New York Tribune, Dec. 25, 1915.] A coal famine confronts New York. This new serious aspect of the temporary freight embargo that is cutting New York off from everything except foodstuffs was revealed yesterday. Dealers who have contracts to supply public institutions call the situation desperate. The price of soft and anthracite coal is going up rapidly, and is expected to double within two weeks, the dealers say, unless innnediate measures are taken to bring additional supplies into the city. ******* If the embargo continues, the public service commission was informed yes- terday, subway construction will have to stop and 18,000 men will be thrown out of work. It is estimated that full-y 600 cars are required each month to bring in the cement used by contractors building the dual subway system. There is only a small supply on hand, and unless new shipments come in all work with concrete will have to be suspended. Several contractors are running low on structural steel. [Louisville Courier-.Tournal.] New York, December 21. — The committee representing all trunk line rail- roads leading into New York announced to-day that the freight embargoes de- clared by the many roads have failed to ameliorate the traffic congestion, there being approximately 50,000 cars destined for New York on lines or at terminals. Acting on this, the Pennsylvania, New York Central, and Lehigh Valley to-day declared additional stringent embargoes on freight consigned to New York for export or coastwise shipment. > The Pennsylvania extended its recent embargo on virtually all freight for export, coastwise or domestic deliveries, except dressed meats, other perishable freight and food products to include shipments originating on the Pennsylvania, Philadelphia, Baltimore & Washington, and West New Jersey and seashore railroads. The New York Central declared an embargo on all carload freight except livestock, grain, fresh meat, provisions, and munitions. The Lehigh Valley declared an embargo on all eastbound freight from con- necting lines excepting flour and grain products, livestock, dressed meats, perishable freiglit, coal, coke, fuel oil, and provisions. [New York Commercial.] Pittsburgh, December 26. — Freight congestion on eastern railroads and lack of coke at the mills handicapped the steel trade during the past week, and In several instances furnaces had to be banked until more fuel becomes avail- able. * * * [New York World.] The New Haven Railroad gave notice last night that, owing to the storm and freight congestion, it will not ship to New York City for the time being any goods except live stock, perishable food for human consumption, and coal. Te embargo covers all points on the system west of New London and Willi- mantlc and south of the Boston & Albany Railroad. [Herbert T. Wade in the Scientific American, Dec. 25, 1915.] During the months of November and December there has been experienced on the eastern seaboard, and especially at the port of New York and on the rail- ways entering the various terminals about the harbor, a serious condition of freight congestion, to an extent never before realized. At the middle of Decem- ber it was reported that some 4.5,000 cars — over twice the amount of the car- shortage for the entire United States — were tied up in the vicinity of New York City, and that there was ready for export at New York Harbor five times as much freight as the available vessels could take. Grain elevators were filled to 372 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. capacity, piers and docks were piled iiigli with mercliandise, and thousands of cars were used as warehouses at a time when there was a general shortage of cars throughout the United States. [Chicago Tribune, Dec. 17.] Practically every railroad connecting Chicago with the Atlantic seaboard yes- terday placed an embargo on all shipments for export purposes. Only perish- able goods, such as fresh meat and other foodstuffs, are exempt. Lack of ocean-going vessels and an unparalleled congested condition of the freight yards and docks at the principal seaports in the East are given as the reason. Loaded freight cars by the thousands are standing on every available siding for miles outside of New York. Warehouses and elevators at the eastern ports are choked up with grain and freight houses are packed to the roofs with ship- ments of all kinds. The embargo is placed principally against grain, 4,000 cars of which are said to be awaiting sliipment at eastern ports. Lines affected. — The railroads wliich have issued embargoes out of Chicago are: New York Central, Lehigh Valley, Wabash, Norfolk & Western, Pennsyl- vania, Baltimore & Ohio, Erie, and Lackawanna. Ocean equipment short. — "The fault does not lies with the railroads," ex- plained J. S. Browne, head of the traffic department of the board of trade, **but with insufficient ocean shipping facilities. The warehouses and elevators at Philadelphia, New York, Baltimore, Buffalo, and Newport News are over- loaded. The eastern terminals are so choked it will be impossible for the railroads to handle any more shipments from the Central West until things are cleared up. The embargo not only applies to grain but has been extended to steel, flour, and other exports by some of the roads as well." [Newark News, Dec. 20.] With the Pennsylvania Railroad placing an embargo to-day on all freight, except coal and foodstuffs, shipped from the West to Newark and other points In the East, the local freight situation is classed the worst in railroad history by the commercial agents of the railroads entering the city. * * * [New York World, Nov. 30.] Baltimoke, November 29. — On account of large freight accumulation at its St. George, Staten Island, terminal, the Baltimore & Ohio Railroad placed an embargo on iron and steel articles for export through New York. It was said that the embargo was necessitated by congested lighterage conditions. [New York World, Nov. 30.] Philadelphia, November 29. — The Pennsylvania Railroad announced to-day that it had placed embargoes on export flour and lumber at New York and on all export grain at Philadelphia and at Baltimore. [W^ashington Star.] New York, December 27. — A serious congestion of foodstuffs in the cold- storage warehouses of New York and New Jersey is reported by John E. Starr, formerly president of the American Society of Refrigerating Engineers, in a statement to the Chelsea Association of Merchants. Taking his figures from the reports of health departments of the two States. Mr. Starr says that 16,116,173 pounds of fresh meat was in cold storage in New York City last September, an increase of 331 per cent over the amount stored here two years ago. On the same date New Jersey warehouses held 4,107,078 pounds of fresh meat, an increase of 179 per cent. In addition, Mr. Starr reported that thousands of tons of meats are held in refrigerating cars on sidetracks awaiting unloading. He declared that 29,- 377,590 dozens of eggs were in cold storage here, and 19,445,880 dozens in New Jersey, in September. *' The extent of the cold-storage business," said IMr. Starr, " may be indi- cated by the fact that there were 9,000,000 barrels of apples in storage in the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 373 United States December 1. They were awaiting favorable niarliet conditions here and abroad and the possibility of movement over the congested railroacls." [New Yoi'k Commercial, Dee. 21, 1915.] Chicago, December 20. — Business is so heavy for this season of the year that unless there is a speedy change in the conditions of eastern lines, due to congestion at the Atlantic seaboard and Gulf ports, western railroads will soon begin to slow up. Embargo upon embargo have been placed on various classes of freight destined to seaboard that it has kept officials of western rail- roads looking after them. In some instances the railroads have appointed special clerks, with the title of "embargo men," to handle the business. One road had no less than eight notices in one day, and fully as many in another. Most of the restrictions are on export business, and mainly flour and grain. The bad feature of this blockade in the East is the inability of western roads to get their cars back. At the same time eastern roads do not care to pay 40 cents per diem for foreign cars, as they have their yards and sidetracks full of them now, and to stop further congestion they refuse to take freight from western connections. As a result, western roads have stopped loading fi-eight for eastern export, as to do so would tie up their cars, and in a short time congest their terminals, making it almost impossible for them to handle their heavy domestic traffic, which at present is being moved with freedom. [The National Jeffersonian, Dec. 18, 1915.] There exists at the present time a condition in New York's export trade that was never known before. Manufacturers throughout the country are pouring their products into this city's railroad terminals at breakneck speed, only to see them lie useless in freight cars or sheds, waiting weeks and even months for a chance to cross the ocean. The big trunk lines are considering putting an embargo on all export freight, and at least one of tliem has already taken this step. New York and other traffic centers are glutted with the world's commerce that they can not ilisgorge into the proper trade channels. Ocean freight rates have gone up with a rush. The profits of shipowners are indicated in the story of tlie schooner Edward J. Lawrence, which cleared recently from Norfolk with 5,000 tons of coal for Barcelona. Her owners got $52,500 for the freight, or $10.50 a ton. And this was in an old sailing vessel, which, like hundreds of other vessels of the same class now in demand, could not get a cargo a few years ago in competition with modern steam vessels. The growing scarcity of ships is the underlying reason, it seems, both for the congestion of freight in this city, and the high rates charged. The war risk is another factor that has increased the cost of ocean tran.sportation. Congestion of freight on eastern railroads grows more serious daily. On some of the great systems it amounts virtually to an absolute embargo, except upon the most perishable shipments. The railroads, seemingly, are doing the best they can with the intricate, perplexing situation. The trouble lies with the present inadequacy of ocean shipping facilities. (Pasadena Star.) [New York Tribune. Dec. 19, 1915.] Philadelphia, December IS. — The Pennsylvania Railroad to-day issued an embargo on all freight destined for the New l^)rk district, with tlie exception of foodstuffs and coal for " necessary purposes." [Philadelphia Ledger, Dec. 22, 1915.] The Pennsylvania Railroad, realizing that New England, shut off, from direct contact with the food markets of the country, was fast approaching a condition of actual want, yesterday raised its freight embargo to the extent of accepting live stock, foodstuffs, and perishable freight destined for that section. That the railroad officials considered immediate measin*es neces.^sary was borne out in an official statement issued last night opening with the significant words, " Regardless of the congestion of freight which exists in the New I'ork district," The railroad's reports of the number of cars blocked on its lines awaiting ship- ment at New York show the congestion has increased despite an embargo levied last Saturday ,whichc was virtually complete. 374 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Exhibit No. 8. Exhibits Nos. 75 A, B, and C and 76 to Document 673, part 2, Sixty-third CJongress, third session : (Exhibit 75, Doc. 673, pt. 2, 63d Cong., 3d sess.) (Extract from telegram to Secretary of the Treasury from B. N. Baker, Baltimore, Md., Dec. 24, 1914.] Have a cable from London this morning offering 4 new steamers, immediate delivery, one 12,000, two 11,000, and one 8,000 tons, dead-weight capacity, basis of $40 a ton and 4 guaranteed delivery within six months at same basis. All English or French built or building now, so there would be no difficulty in secur- ing any amoimt of tonnage. (Exhibit 75A, Doc. 673, pt. 2, 63d Cong., 3d sess.) [Copy of cable received from B. N. Baker, Baltimore, Md., Dec. 22, 1914.] CLT. Tarheel, London: Can j'ou offer sale several new steamers near delivery 10 to 12 thousand tons D. W. about 10 knots immediate cash Panama no chance. Bernadine. (Exhibit 75B, Doc. 673, pt. 2, 63d Cong., 3d sess.) [Copy of cable sent Dec. 23, 1914.] CLT. Bebnadine, Baltimore: Can offer if unsold steamer completing stnazaire 12,000 tons eleven knots Lloyds class 100 Al sister ship ready 6/8 months 90,000 each Andreas built Dox- ford 10,300 tons ten knots Returning maiden voyage New York Could deliver February 85,000 AVould five 8,000 ton ten knots single deck building interest Might get them 75,000 each First about ready All delivered six months Feild. Bernard N. Baker Baltimore, Md., U. S. A. (Exhibit 75C, Doc. 673, pt. 2, 63d Cong., 3d sess.) London, December 23, lOlJf. B. N. Baker, Esq., Baltimore, Md. Dear Bernard : I confirm cable sent to-night, offering you the three boats, particulars of which I mailed you yesterday. As stated in my letter yesterday, all available tonnage is in great demand here at present, and up to this evening I have been unable to get anything else to offer. At the same time I shall continue my search. I included in my cable an inquiry as to whether five 8,000-ton, 10-knot boats would interest you. I know of five boats of these dimensions, which are being built for one company. The first one is just completing, and they say all five of them will be com- pleted within six months. The builders inform me that they think they could get the owners to sell them for £75,000 each, and it occurred to me that possibly five sister boats, though they were 2,000 tons below the capacity you want, might be attractive to you, and I await your reply before further considering them. Unfortunately, I learn that the steamer Andreas has already left New York, returning from her maiden voyage. She belongs to a Greek, who is simply willing to sell her for cash at something more than he paid for her. She, of course, is a new steamer, completed in November. I was very much in hopes you could see her while she was in New York, but the owner has just informed me that she has left New York. She could be delivered on this side, however, in February, or possibly sooner, if she has fin- ished discharging. If you must have 10,000 tonners, she strikes me as being a suitable boat. She was built by Doxford & Sons, of Sunderland. The two steamers which T offer you built at St. Nazaire ought to be attractive to you. They are not dear at £90,000. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 375 The first one is about ready for delivery, and has been named Ohio. Her sister ship, they say, will be ready in about six or eight months. There were three contracted for before the war. The contractor has failed, and the builder is offering them at a slight profit over the contract price. The builders, Chantiers & Atteliers, are reputable people. I hope in your letter you will give me some definite information as to what the ships are wanted for. If they wanted to run from New York to Frisco, I think the Government here could easily be induced to allow them to go under the American flag. While if they are intended for regular tramp business, and possibly to carry cargo to belligerent countries, they might possibly place some difficulties in the way of the builders exporting them to a neutral country. At the same time I believe this difficulty might be overcome. The possibility of this difficulty, of course, would not arise with either the French or the Greek boats. I believe I can offer you any available boats to be had, and sincerely hope we may be able to do some business. Of course, when it comes to final business, all of these prices might be subject to counter offers. Owing to the condition of the market, however, ownei-s will not mixke firm offers imtil they are satisfied it means business. Yours, sincerely, Thomas L. Feild. (Exhibit 76, Doc. 673, pt. 2, 63d Cong., 3d sess.) STEAMERS FOR SALE BY MERCHANT MARINE AGENCY, 1123 OLD SOUTH BUILDING, BOSTON, MASS., J. V. M'CARTHY, MANAGER. [We can not make the prices or ofifers of the steamers as firm offers ; they are subject only to being still available on receipt of your reply. We will not be responsible for errors in description.] No. 1. — 8,880 tons dead-weight, including bunkersj, on 26^ feet draft. Built 1912 of steel, 100 Al Lloyd's ; dimensions, 412 by 52 by 30i feet ; molded, cubic capacity, 535,000 cubic feet ; 11^ knots on a moderate consumption ; triple en- gines, cylinders 28 inches, 46i inches, 78 inches, by 54-inch stroke; 3 boilers, 200 pounds working pressure ; water ballast in cellular bottom, peaks, and deep tank ; 6 hatches ; 11 winches ; steam steering gear ; 'tween decks, 9 feet high ; bronze propeller ; electric light ; two decks laid, with complete shelter deck above same. Accommodations for a few first-class passengers. Bilge keels 170 feet amidships ; Crompton's ash hoist ; ventilators to each hold. Gross register, 4,863; net register, 3,109. Price, $420,000. No. 2. — 7,800 tons dead-weight, including bunkers, on 23^ feet draft. Built 1913 of steel, 100 Al Lloyd's; dimensions, 390 by 50.6 by 30.4 feet; molded, large cubic capacity ; lOi knots on 31 tons' consumption ; triple engines, cylin- ders 26 inches, 43 inches, 71 inches, by 48-incli stroke; 3 boilers, 180 pounds' working pressure ; water ballast in cellular bottom and peaks ; 6 hatches ; 10 winches ; steam steering gear ; 'tween decks, 8J feet high ; powerful derricks ; very complete specifications ; 4 ventilators to each hold ; telescopic topmasts, and special ventilators for perishable cargoes ; two decks laid, with poop, bridge, and forecastle. Accommodations for a few first-class passengers. Gross regis- ter, 4,814 ; net register, 3,021. Price, $390,000. No. 3. — 7,300 tons dead-weight, including bunkers, on 23 feet draft. Built 1913 of steel, British corporation ; dimensions 376 by 52 by 28 feet ; molded, large cubic capacity ; lOJ knots on 26 tons' consumption ; triple engines, cylin- ders 25 inches, 41 inches, 68 inches, by 48-inch stroke; 3 boilers, 180 pounds' working pressure ; water ballast in cellular bottom, peaks, and deep tank ; 6 hatches ; 10 winches ; steam steering gear ; shafting in excess of Lloyd's ; excep- tionally full specifications, 'tween decks, 8 feet high ; powerful derricks ; bronze propeller, electric lights, clear holds, deep bulb angle frames ; two decks laid, with poop, bridge, and topgallant forecastle. Gross register, 4,411 ; net reg- ister, 2,834. Price, $350,000. Above boats are under British registry. No. 4 (withdrawn). — 8,200 tons dead-weight, including bunkers, on 24.6 feet draft. Built, 1914, of steel ; 100 Al Lloyds ; dimensions, 400 by 52 by 30 feet ; molded ; cubic capacity, 440,839 cubic feet ; lO^- knots on a moderate consump- tion ; triple engines ; cylinders, 26 inches, 42 inches, 70 inches by 48-inch stroke ; 3 boilers, 180 pounds working presure ; water ballast ; 1,222 t. ; 5 hatches ; 10 376 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. winches ; 2 decks ; steam heating ainidship ; ice room ; steam ash hoist ; wincli condenser. Gross register, 4,985; net register, 3,144. Price, $342,500. No. 5. — 8,700 tons dead-weight, including bunliers, on 2G.8 feet draft. Built, 1912, of steel; 100 Al Lloyd's; dimensions, 423.6 by' 52 by 30.G feet; molded; cubic capacity, 535,090 cubic feet; 12^ knots on a moderate consumption; triple engines; cylinders, 28 inches, 46i^ inches, 78 inches by 54-inch stroke; 3 boilers, 200 pounds working pressure; water ballast in cellular bottom, peaks, and deep tank ; G hatches ; 10 winches : steam steering gear ; 'tween decks, 10.1 feet high ; bronze propeller ; electric light ; three decks laid ; shelter deck. Telescopic topmast. Net register, 3,095. Price, $350,000. No. G (two steamers, duplicates). — 9,000 tons dead-weight, .including bunkers, on 24.11 feet draft. Built, 1912, of steel; 100 Al Lloyd's dimensions, 420.2 by 54 by 28.5 feet; molded; 531,630 cubic feet capacity; grain; lOi knots on a moderate consumption; triple engines; cylinders, 2G inches, 43 inches, 70 inches by 48-inch stroke; 2 double-end boilers, ISO pounds working pressure; water ballast 2,397 t. in cellular bottom, peaks, and deep tank; 5 hatches; 10 steam winches ; 'tween decks, 8 feet beam ; bronze propeller ; wireless ; 1 derrick for 3 t. ; 10 derricks ; 7-inch gun-metal liner on shaft ; nautical draft-plate keel ; 3 decks laid ; shelter deck 8 feet high ; steam steering gear. Two staterooms for 4 or 6 passengers. Net register, 3,173. Price, $375,000. No. 7. — 11,780 tons dead-weight, including bunkers, on 28.3 feet draft. Built, 1918, of steel ; 100 Al Lloyd's ; dimensions, 470.4 by 58 by 34.10 feet ; molded ; cubic capacity, 645,000 cubic-feet bales; 12 knots on a moderate con.sumption ; triple engines, amidship ; cylinders, 26^ inches, 45 inches, 75 inches by 48-inch stroke; 2 boilers, D. E. tubular, 200 pounds working pre.ssure; water ballast in cellular bottom 2,939 t., also in peaks and tanlcs ; 6 hatches ; 12 steam winches ; steam steering gear; two decks laid; coeflicient '75 nautical draft; side lights on poop, bridge, forecastle, and 'tweens ; 14 derricks, those on main deck for 10 t., on bridge for 7 t. ; electric light ; wireless. Net register, 4,625 t. Price, $625,000. Above steamers are under British registry. No. 8. — 10,570 tons dead-weight, including bunkers, on 26.9 feet draft. Built, 1903, of steel ; 100 Al Lloyd's special survey No. 2, 1911 ; dimensions, 455.8 by 55.2 by 33.10 feet; molded, cubic capacity,'605,045 feet; 10* knots on 38/40 tons con.'^umption ; triple engines amidship; cylinders, 27 inches, 46 inche.s, 76 inches by 51-inch stroke ; three boilers, S. E. tubular, 200 pounds working pressure, water ballast, 3,896 t. in cellular bottom; peaks and deep tank; 6 hatches; 11 steam winches ; and 16 derricks ; steam steering gear ; electric light and wire- less; two decks laid. Net register, 4,286. Price, $4.50,000. No. 9. — 8,200 tons dead-weight, including bunkers ; 25.4i feet draft. Built, 1913, of steel ; dimensions, 380 by 53 by 28.6 feet ; molded, cubic capacity 490.927 grain, 453,791 cubic feet bale ; lOi knots on 30 tons consumption ; triple engines amidship ; cylinders, 26 inches, 42 inches, 70 inches by 48-inch strike ; two S. E. and one auxiliary S. E. boilers, 180 pounds working pressure ; water ballast ; 1,297 t. in C. D. B. and peaks; 6 hatches; 10 steam winches; and steam steering gear; two decks laid, one of which is steel; shelter deck, part steel and part iron; plate keel; electric light; two main boilers; forced draft; side lights in poop; built propeller, with mangane.«!e-bronze blades; spare blades; 25 t. evapo- rator. Net register, 2,778. Price, $380,000. No. 10. — 8,000 tons dead-weight, including bunkers, on 24.6 feet draft. Now building; will be ready for delivery in February or March, 1915; of steel; di- mensions, 401 by 52.1 by 30 feet ; moldetl ; triple engines ; cylinders, 27 inches. 44 inches, 75 inches by 48-inch stroke ; surface condenser ; 10 to 11 knots. Price. $370,000. No. 11 (withdrawn). — 8,575 tons dead-weight, including bunkers, on 24,10 feet draft. Built, 1914, of steel ; 100 Al Lloyd's ; dimensions, 385.0 by 53.6 by 36 feet to shelter ; cubic capacity, 503,520 cubic feet ; 9* knots, loaded, on 25 tons con- sumption ; triple engines amidship ; cylinders, 25 inches, 42 inches, 68 inches by 48-inch stroke; three boilers, S. E. tubular, 180 pounds working pressure; 5 hatches; 10 steam winches; steam steering gear; steam windlass; two decks lai'T one of steel, one of iron ; shelter deck. Net register, 2.895. Price, $320,0(X). No. 12. — 10.320 tons dead-weight, including bunkers ,on 26 feet draft. Built, 1914, of steel; class, British corporation; dimensions, 425 by .55.5 by 30 feet; molded ; two decks laid ; shelter deck ; cubic capacity, 597,710 ciibic feet ; 10* knots laden, about 40 tons consumption; triple engines amidships: cylin- ders, 28 inches, 45 inches, 75 inches by 51-inch stroke; three tubular boilers, 180 pounds working pre.ssure; 10 steam winches; 10 derricks; also 2 small ones on poop ; coefficient, '79. Most up-to-date steamer, with desking, telegraph, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 377 shifting boards, cargo battens, telescopic topmast, witli crosstrees at top and tables at bottom. All holes inside coated with bitumastic enameled composite, etc. Net register, 3,500. Price, $400,000. Above steamers are under British registry. No. 13. — 8,800 tons dead-weight, including bunkers, on 24.6 feet draft. Built 1913 of steel, class B. S., British corporation ; dimensions, 402 by 54 by 27.6 feet; molded, cubic capacity, 540,442 cubic feet; 10 knots on 28 tons consump- tion ; triple engines ; cylinders, 26 inches, 42 inches, 70 inches by 48-inch stroke ; surface condenser, 3 boilers, S. E. tubular, 180 pounds working pressure, water ballast, C. D. B., F. and A., P. T. ; 7 steam winches, 1 deck, and shelter laid. Net register, 2,930. Price, $325,000. No. 14. — 8,036 tons dead-weight, including bunkers, on 24.5 feet draft. Built 1914 of steel, 100 Al Lloyds' ; dimensions, 385 by 52 by 29.6 feet ; molded, cubic capacity 432,979 cubic feet; 10 knots on 28 tons consumption; triple engines, amidship ; cylinders, 25 inches, 40 inches, 68 inches by 48-inch stroke; surface condenser, 3 boilers, S. E. tubular, 180 pounds working pressure ; water ballast, 1,183 t. in C. D. B., F. and A., P. T. ; 5 hatches, 10 steam winches, steam wind- lass, steam-steering gear ; 1 deck laid, steel, 'tween deck, 7.6 feet ; 12 derricks, 4 derrick posts ; wood-grain divisions, coefficient, '783 ; steam heating, bilge keels ; four 18-inch vents each hold ; ice room ; steam-ash hoist ; Morrison 25 t evaporator ; F. water condenser, 1,500 gallons, etc. Net register, 2,955. Price, $315,000. No. 15. — 8,150 tons dead-weight, including bunkers, on 24.3 feet draft. Built 1913 of steel, highest British corporation ; dimensions, 385 by 52.1 by 29.6 feet ; molded, cubic capacity, 430,208 cubic feet grain, or 409,047 cubic feet bales; 9.5 to 10 knots on 27 tons ordinary consumption ; triple engines, amidship ; cyl- inders, 25 inches, 40 inches, 68 inches by 48-inch stroke; surface condenser, 3 S. E. tubular boilers, 180 pounds working presure; water ballast, 1,430 t., C. D. B. and peaks ; 6 hatches ; 10 steam winches ; steam windlass ; steam- steering gear ; 1 deck laid, steel ; 1 spare room for passenger accommodation ; 12 derricks and tables; 4 derrick posts; grain divisions; spare propeller; shafts ; evaporator and heater ; also winch condenser. Net register, 2,954. Price, $340,000. Above steamers are under British registry. No. 16. — Steamship built of steel, to carry passengers and cargo ; twin screw ; built, 1894; engines, triple; indicated horsepower, 2,500; length, 383.4 feet; breadth, 46 feet ; depth, 27.2 feet ; i-egistered gross tonnage, 4,761 ; electric light ; sub. sig. ; 12 knots ; arranged to carry 16 first and second class passen- gers, 1,000 steerage. Price, $375,000. No. 17. — Passenger and cargo steamer arranged to carry 137 first and second class, 1,260 steerage; built of steel, 1894; twin screw; engines, triple; in- dicated horsepower, 2,500 ; length, 383.4 feet ; breadth, 46 feet ; depth, 27.2 feet ; registered gross tonnage, 5,640 ; electric light ; sub. sig. ; 12 knots. Price $625,000. No. 18.- — Passenger and cargo steamer arranged to carry 120 first and second class, 1,344 steerage; built of steel, 1899; twin screw; engines, triple; speed, 13 knots; indicated horsepower, 3,200; length, 428.9 feet; breadth, 54.3 feet; depth, 39.4 feet, registered gross tonnage, 7,414 ; electric light ; sub. sig. Price, $625,000. No. 19. — ^Passenger and cargo steamer arranged to carry 35 first and second <*lass, 206 third class, 2,144 steerage; built of steel, 1899; twin screw; engines, quadruple ; 12^ knots ; indicated horsepower, 5,500 ; length, 501 feet ; breadth, 58.1 feet ; depth, 36.7 feet ; registered gross tonnage, 10,058 ; electric light ; wireless telegraphy ; sub. sig. Price, $1,125,000. No. 20. — Passenger and cargo steamer arranged to carry 210 first class, 224 second class, 1,343 steerage; built of steel, 1896; twin screw; engines, quadruple ; speed, 16 knots ; indicated horsepower, 7,000 ; length, 523 feet ; breadth, 60.1 feet ; depth, 34.8 feet ; registered gross tonnage, 10,695 ; electric light; Stone Lloyd bulkhead doors; sub. sig. Price, $1,250,000. No. 21. — Passenger and cargo steamer arranged to carry 110 first class, 175 second class, 252 third class, 1,660 steerage; built of steel, 1896; twin screw; engines, quadruple; speed 16 knots; indicated horsepower, 7,000; length, 526.4 feet ; breadth, GO feet ; depth, 34.6 feet ; registered gross tonnage, 10,915 ; electric light ; Stone Lloyd bulkhead doors ; sub. sig. ; wireless telegraphy. Price, $1,250,000. No. 22. — Passenger and cargo steamer arranged to carry 133 first and second class, 1,450 steerage ; built of steel, 1901 ; twin screw ; engines, quadruple ; speed, 13 knots; indicated horsepower, 3,400; length, 429.3 feet; breadth, 54.3 378 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. feet ; depth, 39.6 feet ; registered gross tonnage, 7,524 ; electric light ; sub. sig. Price, $812,500. Above steamers are under German registry. Exhibit No. 9. Statement showing vessels purchased by the Navy during the Spanish- American War, the price paid for each, and the disposition made of those not now the property of the Navy. Name. Purchase price. Sold or transferred to- Selling price. Abarenda . . . Accomac Active Aileen Aiax Albany Alexander... Alice Apache Arethusa Badger Brutus Buffalo Caesar Cassius Celtic Cheyenne Chickasaw. . . Choctaw Culgoa Dixie Dorothea Eagle East Boston. Elfrida Enquirer Frolic Glacier Gloucester... Gov. Russell. Hannibal Hawk Hector Hercules Hist Hornet Huntress Inca Iris Iroquois Justin Kanawha Lebanon Leonidas Manly Marcellus Massasoit Mayflower. . . Merrimac Modoc Mohawk Nanshan Nero New Orleans Nezinscot Niagara Oneida Osceola Panther Pawnee Peoria Pjscataqua.. Pompey Pontiac Potomac Powhatan . . . Prairie Rainbow Resolute S175, 40. 75. 55, 267, 1,207, 206. 19, 54, 218. 367, 215, 550. 175, 160, 340, 19, 15. 82, 247, 575, 187, 110, 57, 000.00 i 000. 00 000. 00 I 000.00 I 657.50 I 644.13 I 825.25 000. 00 1 510.00 1 992.50 I 000. 00 1 000. 00 000. 00 194. 00 594. 50 900. 00 639. 05 000. 00 500. 00 704. 85 000.00 500. 00 000. 00 500. 00 50,000.00 80,000.00 115,000.00 340, 550. 00 225. 000. 00 71,000.00 147,941.60 .50,000.00 200. 000. 00 40 000. 00 65, 000. 00 117,500.00 275, 000. 00 35,000.00 145, 000. 00 150, aX). 00 145,000.00 50, 000. 00 225,000.00 147,941.60 24, 2.50. 00 90,000.00 30,000.00 430, 000. 00 342, 000. 00 30, 000. 00 44, 000. 00 1.5.5, 728. 00 215,000.00 1,4.30, 091. .59 30, 000. 00 200,000.00 60, 000. 00 100, 000. 00 375, 000. 00 25, 000. 00 100, 000. 00 130,000.00 111,929.50 30,000.00 125,300.00 42, 500. 00 575, 000. 00 176, 250. 00 47.5,000.00 Madrigal & Co., Cavite, P. 1. $17,400.00 Transferred to War Department . 115,350.00 Transferred to War Department . 160,594.50 G. D. Kuper & Bros., New York. Reichert Towing Line 1,690.00 2,550.00 Andrew J. Phillips, H. L. Maj-nard, T. J. Wool, J. L. Watson, Portsmouth, Va. Transferred to War Department Transferred to War Department without reim- bursement. 38, 091. 00 '26,066.' 00 City of Boston, Mass. 25, 000. 00 Metropolitan Coal Co. 65, 150. 00 H.M. Olsen Nathan S. Stern, New Orleans. 2, 421. 00 5, 100. 00 E. F. Lucenbach, BrookljTi, N. Y. 1,800.00 Transferred to War Department. 50,000.00 H. P. Booth, New York. 75,563.00 Transferred to War Department. 311,400.00 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 379 Statement showing vessels purchased by the Navy during the Spanish-American War, the price paid for each, etc. — Continued, Name. Purchase price. Sold or transferred to — Selling price. $29,000.00 200,000.00 85,769.71 300,000.00 2S,000.00 25,000.00 24,000.00 25,553.51 40,000.00 600,000.00 72,997.50 100,000.00 190,000.00 75,000.00 325,000.00 50,000.00 25,000.00 45,000.00 170, .327. 50 75, (XK). 00 60,000.00 30, 000. 00 150,000.00 350,000.00 20,000.00 24,000.00 66,000.00 95,000.00 65,000.00 575,000.00 12.5,000.00 575, 000. 00 87, 597. 00 $1,008.00 Ludwig Rubelli, Philadelphia, Pa 41, 550. 00 Sehago . . Seminole Transferred to War Department 6, 500. 00 Shearwater. Samuel B. Wilson, Philadelphia, Pa 1, 536. 00 Sioux... Siren .... New Orleans Foundry & Iron Co 2,352.50 Soiithery Sterling Stranger SuddIv. sylJh ... :......; Sylvia Tec-iimseh Topeka Transferred to War Department 30,000.00 Vixen Viiloan Mii'hael Jenkins, Baltimore, Md 175, 750. 00 Walian Water Harge 1 Water Barge 75 Wasp Wompatuck Yankee Wm. W. Wotherspoon 2,010.00 lioston Iron & Metal Works 11,522.04 Zftfiro Chirago Junk Co. , Seattle 3,300.00 Total 18,243,389.29 1,167,638.04 Exhibit No. 9A. List of vessels purchased by United States Navy during the Spanish-American War, shelving names before purchase, dates of purchase, and names of pre- vious owners. Name before purchase. 1 Columbia 2 .\licia 3 Almy 4 Hermione 5 D.C.Ivans P.H. Wise Winthrop ElToro Wilmot Edward Luckenback... Walter A. Luckenback, Atlas Josephine Mayflower Sovereign , 16 I Crsole , 17 Diogenes , 18 (Not named) 19 do Renamed. 20 Saturn 21 i Lebanon 22 I El Norte 23 I El Rio 24 I El Sol 25 ' ElSud 26 ! Nichteroy-El Cid. Wasp Hornet Eagle Hawk Ne/.inscot Sioux Osceola Accomac Potomac Tecumseh Uncas Wampatuck.. Vixen Mayflower Scorpion Solace .". .do. Topeka .\pr. 2,1898 ' Manly Apr. 13,1898 Somers Mar. 26,1898 I Satiu-n Apr. 2,1898 I Lebanon Apr. 6,1898 I Yan kee do ; Dixie ■ Apr. 15,1898 [ Prairie Apr. 6,1898 : Yosemite do | Buffalo July 11,1898 Date of purchase. Previous owners. Mar. 26,1898 Apr. 6,1898 Apr. 2, 1898 do -Mar. 2.5,1898 Mar. 26,1898 Mar. 31,1898 Mar. 26,1898 Apr. 14,1898 Apr. 2, 1898 do Apr. 4,1898 .\pr. 9, 1898 Mar. 19,1898 Apr. 7, 1898 J. H. Ladew. Henry M. Flagler. Frederick Gallitin. H. L. Pierce estate. Moran & Co. Do. Staples Coal Co. Southern Pacific Line. Ocean Towing & Wrecking Co. Luckenback & Co. Do. Standard Oil Co. T. A. B. Widener. Ogden Goelet estate. M.C. D. Borden. Cromwell Steamship Line. Thames Iron Works (London). Chas. R. Flint. Schichau Iron Works, Elbing, Gef- many. Boston Towboat Co. Philadelphia & Reading R. R. Co. Southern Pacific Co. Do. Do. Do. Brazilian Government. 380 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. List of vessels purchased by United States Navy during the Spanish-American War, showing names before purchase, etc. — Continued. Name before purchase. Renamed. Date of purchase. Previous owners. 92 93 94 95 96 97 99 00 101 102 Amazonas Almirante Abru... Merrimac Niagara Sterling Enterprise No. 18 Nanshan Zafiro Alice C. G.Coyle Pen wood Fearless Vigilant Active Hercula? Southery Venezuela Yumuri Yorktown T. P. Fowler Thespia Restless Illawara Viking Chatham Penelope Right Arm Philadelphia Corsair Menemsha John D wight Justin Hortense , Aileen Scindia , Comanche Illinois , Kingstor , Dorothea Gov. Russell East Boston W. H. Brown J. D. Jones , Celtic King Rhaetia A. W. Booth Joseph Holland . . Atala Eliz. Holland Harlech Abarenda (Not known) Peter Jebsen No. 55 Whitgift Norse King Enquirer Inca Huntress Stranger Kate Jones Bristol Eugenia Elfrida No. 295 Shearwater Sylvia Hercules Confidence Kanawha Pedro Port Chalmers. .. Titania Refrigerating ship Lucilene New Orleans. Albany Merrimac Niagara Sterling Modoc No. 18 Nanshan Zafiro Alice Choctaw Powhatan Iroquois Vigilant Active Hercules Southery Panther Badger Resolute Mohawk Hist Restless Oneida Viking Vulcan Yankton Pontiac Peoria Gloucester Iris Pawnee Justin Sebago Aileen Ajax Frolic Supply Caesar Dorothea Gov. Russell. East Boston. Piscataqua. . . Apache Celtic Cassius Massasoit Hannibal Alexander . . . Leonidas Pompey Abarenda Scipio Brutus Water Barge No.l Nero Rainbow Enquirer Inca Huntress Stranger Seminole Cheyenne Siren Elfrida Sylph Shearwater Sylvia Chickasaw , Waban Kanawha , Pedro , Glacier , Marcellus Culgoa Arethusa Mar. 16,1898 do Apr. 12,1898 Apr. 11,1898 Apr. 16,1898 Apr. 29,1898 Apr. 18,1898 Apr. 6, 1898 Apr. 9,1898 Mar. 26,1898 Apr. 19,1898 Apr. 8, 1898 Apr. 18,1898 Apr. 19,1898 Apr. 18,1898 Apr. 26,1898 Apr. 16,1898 Apr. 19,1898 do Apr. 21,1898 Apr. 23,1898 Apr. 22,1898 do May 31,1898 Apr. 22,1898 Mav 2, 1898 May 20,1898 Apr. 23,1898 May 23,1898 Apr. 23,1898 May 25,1898 May 6, 1898 Apr. 23,1898 Apr. 30,1898 May 2, 1898 Mav 12,1898 May 28,1898 Apr. 30,1898 Apr. 21,1898 Mav 21,1898 Mav 11,1898 June 2, 1898 May 11,1898 May 24,1898 May 14,1898 Mav 24,1898 Apr. 25,1898 Apr. 16,1898 Apr. 25,1898 Apr. 16,1898 Apr. 19,1898 May 5, 1898 do June 3, 1898 May 25,1898 June 30,1898 June 29,1898 do June 13.1898 June 7, 1898 June June July June 9, 1898 6, 1898 8, 1898 9. 1898 June 15,1898 June —.1898 Mav 9, 1898 June 13,1898 June 25,1898 do June 7, 1898 June — 1898 July —,1898 June 13,1898 Brazilian Government. Do. Hogan Line. Ward Line Steamship Co. Black Diamond Transportation Co. American Towing Co. Philadelphia Transportation & Light- ering Co. Frank Smythe & Co. China & Manila Steamship Co. John M. Worth. W. G. Coyle. Walsh & Doran. J. D. Spreckels Bros. Co. Do. Do. Standard Oil Co. Edw. Luckenbach. Red D Line Steamship Co. Ward Line Steamship Co. Old Dominion Steamship Co. Cornell Steamboat Co. David Dows, Jr. Hiram W. Sidley. Eugene Tompkins. Horace A. Hutchins. Merchants & Miners' Line. H. E. Converse. Merritt & Chapman. Philadelphia Pilot Association. Pierpont Morgan. Miami Steamship Co. George T. Moon. Bowring & Archibald. O'Connor & Smoot. Richard Stevens. Henderson Bros. H. N. Hanna. International Navigation Co. J. Holman & Sons. Thos. McKean estate. Citv of Boston. "Do. W. H. Brown. Merritt & Chapman Wrecking Co. Federal Line (London). William Lamb. Moran Towing Co. Francis Stanley Holland (London). New Blue Star Line Steamers (Lon- don). Francis Stanley Holland (London). Jas. & Chas. Harrison (London). J. Graham. Geo. P. Walford. L. F. Chapman & Co. Standard Oil Co. McCondray & Co. Thomas Ronaldson. W. J. Conners. Frank B. McQuesten. F. C. Fowler. Mrs. Mary Lewis. Boston Towboat Co. J. J. Cummings. J. G. Cassatt. Dr. Seward Webb. John Roach & Co. Henrv R. Wolcott. Edward M. Brown. M. Revel. Do. John P. Duncan. (Prize.) Federal Line (London.) Wm. Lamb. Aug. 12, 1898 Thos. S. Hopkins. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 881 Exhibit No. 10. Navt Department, WasJiington, November 15, 1915. Hon. William G. McAdoo, Secretary of the Treasury. My Dear Mr. Secretary : 1. In reply to your letter of the llth instant re- questing information regarding vessels chartered by the Navy during the Spani.sh-Anierican War, I have the honor to advise you that there was paid to the International Navigation Co. for charter and running expenses of vessels belonging to that company as follows : Steamship St. Paul $377, 552. 55 Steam.ship St. Louis 475, 778. 46 Steamship New York 377,891.44 Steamship Paris 334, 911. 05 $1, 566, 133. 50 In addition to above there was allowed the International Navi- gation Co. for restoration of the vessels to their original con- dition as fir.st-class transatlantic passenger ships 647, 000. 00 Sixty days' charter while undergoing repairs 540, 000. 00 Underwater repairs to steamship St. Paul and steamship St. Louis 21, 369. 90 Total paid to International Navigation Co 2, 774, .503. 40 2. There was also chartered from the Pacific Mail Steamship Co.— The steamship City of Peking, for 31 days 31,000.00 And from the city of Philadelphia — Ice boat No. 3, at the nominal price of 1.00 Total — 2, 805, 504. 40 Sincerely, yours, JosEPHUs Daniels, Secretary. Exhibit No. 11. Specimen actual sales of ships in March, 1915, and February, 1916, as taken from Shipping Illustrated, a monthly publication. Name. Nation. Gross tons. Dead- weight. BuUt. SoldfoiV- March, 1915: British 4,662 4,904 3,774 4,217 4,962 2,084 4,777 4,267 7,700 8,000 6,200 6,900 8,300 3, 500 7,850 7,360 1906 1907 1905 1912 1S96 1911 1906 $345,000 Falls of Orchy 1 Apollo • . do 360,000 do 205, 000 German 212,500 February. 1916: British 900,000 Gesto' Bra-Kar' Norwegian do 2.50.000 500,000 Earl of Douglas * British 585,000 32910—16- ' The average price of these 4 ships was $64 per gross ton. 2 The average price of these 4 ships was $138 per gross ton. — 25 382 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Exhibit No. 12. Comparative statement of ocean freight rates on grain and cotton, as of July 1, 1914 (before the outbreak of the European war), and Feb. 10, 1016. Rotterdam. Name of port. Baltimore: Cotton, per bale Wheat, per bushel Boston: Cotton . per bale AMieat, per bushel Charleston, cotton, per bale Galveston: CoTton, per bale Wheat, per bushel New Orleans: Cotton, per bale ^\^leat, per bushel New York: Cotton, per bale \M3eat, per bushel Norfolk: Cotton, per bale ■\\lLeat, per bushel Philadelphia: Cotton, per bale Wheat, per bushel Savannah, cotton, per bale Full cargo. 2 Other. - Not quoted. * Plus 5 percent. Exhibit No. 13. Citizens arriving and departing, shown by months, during the seven months ended February, 1914, 1915, and 1916, respectively. August September. October November. Pereraber. . January February . . Total Arriving. 1913-14 1914-15 1915-16 29,771 42,001 23, 020 10. 8.58 8, 890 0,428 7,174 31,850 44, 55(; 19,897 8,080 4,725 3,710 4,209 128,748 I 117,039 4,982 4,720 3,800 3,453 3,078 3,050 3,222 Departing. 1913-14 1914-15 20, 278 12,033 20,055 14,. 309 10,304 17,208 12,851 23,3.38 4,981 4,900 4,790 5,148 0.703 4,529 20,377 I 113,158 54,389 1915-16 6,723 4,523 4,413 4,4.tO 4,073 4,015 4,&33 33,435 Exhibit 14. P. H. W. Ross, president of the National Marine Lea^e of the United States of America, says : " * * * The subject of a national merchant marine is most vital to the indi- vidual business man for the reason that even if his own particular business is fairly well taken care of by the existing shipping facilities of to-day, it is by no means true that the business of his (home market or American) customers is adequately accommodated, and certainly no one needs telling that the surest way of doing good business is to have a prosperous line of customers ; and we SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 383 can not have universal prosperity in normal times unless the country as a whole and tiie entire ran^e of average manufacturers has at least the same oppor- tunity for the conduct of f a monopoly by law (no foreign vessels being allowed to enter the coastwise trade, although there is no such restrictions as to the nationality of the men employed on such vessels) are opposed to the upbuild- ing of American merchant marine in tlie over-sea trade because more Ameri- can vessels means more competition in the coastwise trade ; and 396 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Whereas the shipping interests, both American and foreign, continue to insist upon the repeal of the law and the reestablishment of the slave system under which seamen can be and are forced to endure involuntary servitude, the ship- ping interest claiming that such slave system is necessary to their business; and Whereas there is now before the country, introduced in the last Congress and will be reintroduced in the next Congress, a bill known as the ship-purchase bill providing for the purchase and operation of merchant ships by the United States Government ; and Whereas private shipowners, by their insistent demand for the repeal of the seamen's act and the continuation of the slave system on board ship, have again furnished proof that they are unfit to control the sea commerce of the United States: Therefore, be it Resolved, That the Illinois State Federation of Labor in convention assembled protest any and every attempt to repeal or emasculate the seamen's act: And further Resolved, That this convention also hereby urges upon Congress the necessity for the enactment of the ship-purchase bill, providing for the operation by the Government of properly constructed, equipped, and manned vessels in the mer- chant trade, as a safeguard to the Nation, to the traveling public, and to the seamen, against the greed of private shipowners : And further Resolved, That copies of this resolution be sent to the President of the United States, to the members of the President's Cabinet, and to the Senators and Con- gressmen from the State of Illinois. (Thereupon, at 5.15 p. m. the committee adjourned to 10 o'clock a. m. Friday, February 18, 1916.) I CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the Merchant Marine and Fisheries, House of Representatives, Friday^ February 18, 1916. The committee met at 10 o'clock a. m., Joshua W. Alexander (chairman) presiding. The Chairman. We have with us this morning Mr. Devereux Lake, manager of the export sales office of the American Cast Iron Pipe Co., of Birmingham, Ala., whose address is No. 41 Broadway, New York City. He will call our attention to a very exasperating condi- tion in the matter of the transportation facilities in the foreign trade. STATEMENT OF MR. DEVERETJX LAKE, 41 BROADWAY, NEW YORK, MANAGER OF THE EXPORT AND EASTERN SALES OFFICE OF THE AMERICAN CAST IRON PIPE CO., OF BIR- MINGHAM, ALA. Mr. Lake. Mr. Chairman and gentlemen, I am here as the repre- sentative of the American Cast Iron Pipe Co., of Birmingham, Ala. The Chairman. I will say at this point that a letter was written to the Secretary of Commerce by the representative of this firm. That letter was placed in the record February 10 (p. 126), and this gentleman refers to the same matter. Mr. Lake. I want to say at the outset that I did not come to Wash- ington to advocate nor to oppose the shipping bill. Through the courtesy of Secretary Redfield, of the Department of Commerce, I was introduced to your chairman, Avho invited me to place our trouble before you gentlemen. We had already appealed to the Department of Commerce for assistance and relief in the face of a business dilemma with which we are confronted at the present time. In order to get the facts before you in a salient form, I am going to ask the privilege of referring to some notes which I have made, inasmuch as I am not accustomed to appearing in public meetings. And I must confess that my knees are a little weak and my mind does not work as well at first. I am here as a last resort asking you, if possible, to help us solve the problem which we are powerless to solve ourselves. As we say down in Alabama " there ain't no nigger in this woodpile." We are laying our cards on the table before you. And I would like to say, in the beginning, that we have no quarrel Avith any steamship owner or steamship company of this countiy. We are good friends of the ship companies, as we are also of the railroads, and it is to our in- terest to work harmoniously with them. As the largest individual 32910—16 26 397 398 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. pipe foundry in the United States, with a daily ca[)acity of 400 tons of pipe, we turn over to the transportation lines a good many thousand tons per month and per year. If our steamship companies could give us relief or handle the business we have to offer them to-day on anything like reasonable terms, we would not be here now. In order to introduce this situation, I am going to refer to the letter Avhich the chairman has mentioned. Some 10 days ago I wrote to Dr. Pratt, Chief of the Bureau of Foreign and Domestic Com- merce, Avho has rendered us invaluable assistance in getting us in touch with the export field. The letter to Dr. Pratt was prompted by a cable which I received from our agents in Buenos Aires, advis- ing us that the Argentine Kepublic would receive proposals on the 14th day of March, next, for approximately 28,000 tons of cast- iron water pipe. In view of the abnormal freight situation, I Avrote to Dr. Pratt, putting this matter before him and advising him of the situation. I told him that within a short time the president of our company, Mr. G. R. McWane, would arrive in Buenos Aires, find that I expected a cable from Mr. McWane on his arrivel which I felt sure he Avould send in order to find out what we might do in the way of getting freight rates. I told Dr. Pratt that we had in- vestigated the situation and there seemed to be absolutely no chance for us to get any regular steamship line to make us a definite freight rate on this movement. In view of that situation I asked Dr. Pratt to bring the matter before the Department of Commerce and the Congress of the United States, in order to ascertain if any help could be given us from these sources. Now this we consider a unique opportunity could Ave take ad- vantage of it. Practically all of the water pipe for the Argentine Pepublic has been furnished by European foundries; but on ac- count of the war in Europe the French, Belgian, and Germans are now out of that field. Our only competition to-day in this business w^ill be with the British. Last spring I had the pleasure of making a six months' visit to South America, visiting all the capitals of the various countries. The principal obstacle that I found in the way of our being able to introduce our water pipe Avas due to the fact that heretofore our American specifications have been unknoAvn. It is specifically pre- scribed in the official publications of those countries in AA'hich they advertise for bids that pipe shall come from well-knoAvn European foundries. They have not even recognized the fact that Ave have foundries in this country, and are in a position to furnish pipe as they want it. Furthermore, European foundries have furnished pipe according to European standards, that is, French, German, and Belgian standards, to Avhich the British, in recent years, have also conformed. Their measures are all in the metric system, and our chief difficulty Avas in getting them to see that our American specifi- cations Avere as good as the standards that they had adopted. I may say that it was Avith great difficulty and only Avith the assist- ance of the commercial attaches in Chile and Argentina that we were able to get the public Avorks officials to let down the bars for us and for our specifications; and now that the bars are doAvn this is the first opportunity, in the Argentine Republic at least, for us to make good. SHIPPING BOARD, NAVAL AUXlLlAKi ,, AND MERCHANT MARINE. 399 Mr. Curry. Right there, if you have no objection: It has been my opinion and my experience that on^ of the great reasons that the United States has not more commerce with South America is that we will not and do not, and the business men of the United States w411 not and do not comply with the plans and specifications that are desired by the South American people. It would be just as easy for you to make that pipe according to the metric system as it is in feet and inches, but you will not do it. xVnd why do you wish to force the South American people to take our standard when they want the metric system? You go down there and want them to dress as you dress, and they don't want to dress that way. You go down there and want them to take your system of feet and inches and yards, and they want the metric system. It would cost you possibly a little more to start manufacturing according to the metric system, but Great Britain, Germany, and France do it. But we have the double system here, and why do you want to force them to take ^-our system when you could sell by the metric system? That is the reason they do not buy from 3^ou. Mr. Lake. I agree with you perfectly, sir. The metric system is undoubtedly superior to the one we have adopted, and I wish the Congress of the United States or some other authority would make the metric system the legal system of this country. Mr. Curry. The metric system is the legal system; so is the other. If you want to deal according to the metric system with the people who use it, you can do so. Mr. Lake. I will say further, however, that we have agreed, as far as we are able, to conform to the demands of those South Americans. We have agreed to make pipe in metric diameters, which we have never done before. We can not, however, make the pipe in metric lengths without really building our foundries over. It would in- volve the expenditure of a great amount of money, many millions of dollars — as many millions of dollars as are invested at the present time in these foundries. I hope, however, that the time will come when the business that w^e can build up in this country will justify those dianges. Mr. Curry. You would not have to build the foundries over, would you? In Great Britain they do not build them over, and why build them over here? To conform to the metric system you do not have to have any other foundries as far as the length is concerned. ]\Ir. Lake. We would have to build entire new equipment; we have to have new flasks and new pits, and we can not do that without practically rebuilding our foundries. Mr. Curry. It has only been recently that you have not had all the ships you want to take everything you could sell to South Amer- ica. The trouble with the trade to South America is that you people have not given those ships enough commerce to make it profitable. Mr. Lake. Very true. Mr. Curry. And the reason 3'ou have not been able to sell to South America is because you won't manufacture according to the metric system; and then you come to Congress to get Congress to do some- thing. You have the South American Republics up here talking about the great opportunities between the United States and South America, and vet the business men will not, do not, and have not. 400 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. and under the present conditions, when the trade is open, will not, manufacture according to fhe way those people want, and you won't pack the goods the way the people want them packed. And then you wonder why it is that they go over to Great Britain and to France and Germany to buy those goods. Now, it is not the ships to South America; you have had those. You do not have the ships now, at this minute, because of the war. But the reason why South America wants to buy over there is be- cause they can not buy anywhere else ; and the moment they can buy the goods tlie way they want them, even if you had a thousand ships running between here and South America, if you do not build the goods right they will not buy them, and you know it. Mr. Lake. Speaking for the American Cast Iron Pipe Co., I will say that we have already spent a good many thousands of dollars, and we propose to go further, in order to do those things that you say we have not done. Mr. Curry. I do not mean your compan}'^ alone; what I mean is the American business men and manufacturers. Mr. Lake. I think that is true. We are infants in the game; we have not been in the business long, and now that we have the oppor- tunity to get in the business we ai'e not able, on account of lack of tonnage and bottoms, to do ttiose very things that you say we have not up to the present time done. The business of the Argentine Republic is very large in this particular. In 1914 Mr. Hardy. Will you let me ask you a question along there? The Chairman. I suggest that j^ou allow the gentleman to get through with his statement first. Mr. Lake. I would prefer, if it is the same to you gentlemen, that I should conclude first. Mr. Hardy. It was with reference to Mr. Curry's question that I wanted to ask, but I will reserve it. Mr. Lake. In 1914 the Argentine Republic bought 200,000 tons of pipe and in 1913, 100,000 tons. The British furnished 53,000 tons in 1914, delivering those pipe on a freight rate of about $6.50 per ton from British ports to the Argentine ports. The Chairman. What year was that? Mr. Lake. 1914. As we anticipate, our president has cabled us to find out wdiat can be done in the way of freights, so that he can make quotations. In order to know what we have to do to meet compe- tition Secretary Redfield, at our request, cabled to Mr. Baldwin, our commercial attache in London, to ascertain what the freight rates are on cast-iron pipe from British ports to Argentina at the present time. Mr. Bakhvin cabled, in reply, that the basic rates prevailing are from $14 to $15 a ton. Since this cable was received our Mr. McWayne has cabled that the British foundries were working with British steamship lines and would keep us out if they could. Since this situation has come up we have canvassed the field with a fine-tooth comb. We have been to several of the steamship lines that travel from our country to South American countries, and yet none of them are willing to name us freight rates on any future movements. We have gone further; we have taken this matter up with all of the private companies, like the United States Steel Products Co., the du Pont Powder Co., Wessel, Duval & Co., and SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 401 others, and none of them offer us any encouragement. They have more tonnage of their own to move than they can possibly accommo- date. Thus, being unable to get accommodations through the regular channels, the next question before us was to find out what rates we could get for time charter. The Chairman. At that point, did you investigate the Lamport & Holt Line? Mr. Lake. Yes, sir. Mr. Greene. From what ports do you ship? Mr. Lake. We ship from New Orleans or Mobile from our foundry. The following cable was received from Mr. McWane while we were working Avith the regular steamship lines : Charter or buy steamer. Control imperative. Frame up on pai't of opposition. I interpret that to mean " frame up," what we have known all along, that the British foundries are working on a cooperative basis with the British steamship lines to prevent us from entering this field. In view of those explicit instructions from our president, you would naturally ask, then, " Why do you not buy or charter vessels ; there are plenty of vessels on the market to-day? " We have gone into this question thoroughly, and also this question of chartering, and to reduce our conclusions to a concrete basis I w'ill say that the best rate obtainable for charter is approximately $10 per dead-weight ton per month, on a 12-months' time-charter basis, or $100 per dead- weight ton if we buy a vessel. In other words, a 5,000-ton vessel would cost us, to charter, $50,000 per month ; and if we bought that same vessel it would cost us around $500,000. On the time-charter basis $50,000 per month for three months, which would be necessary in order to make a voyage for this movement, would be $150,000 for 5,000 tons of pipe, v>'hich this vessel would carry, amounting in round figures to $30 per ton. Before the war the charter rates on this same vessel, as far as we can learn, were from $2 to $3 per ton per month. And bj this same vessel before the war it would have been from $20 to $30 per dead- weight ton. Now, as manufacturers and not as steamship operators, to go into this charter business at the abnormal prices and rates would be a gamble pure and simple. If the war lasted for 12 months, maybe we would come out even ; if it ended tomorrow the chances are we would be stuck for more money than we could make in the pipe business in a mighty long time. Now, we can not blame the ship- owners for getting all they can out of their ships. Most of us would do the same thing, and are sorry we can not do it. It is human nature, and human nature turned loose runs riot ; and it is obvious that while the shipowners may not need some sort of checkrein, conditions which make it possible to cripple business do need some sort of gov- ernmental supervision. I am not suggesting the manner of it. I will give you some concrete examples of the increase in rates on cast-iron pipe during the last 18 months. The freight rate published before the war and during the early months of the war to Habana, Cuba, was 17.5 cents per 100 pounds, or $3.50 per ton. In the spring of 1915 the rate was raised $1 per ton. The rates effective under the latest notice sent out are 224 cents plus 5 cents handling charge, or $5.50 per ton. I am speaking of the rates from Gulf ports to Habana. 402 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MAEINE. The Chile rate from Gulf ports to Valparaiso has jumped from a rate of $8 or $9 to $12.50 and $15 per ton— from $12.50 on 4-inch pipe to $15 on larger sizes. To San Juan, Porto Rico, for instance, the rates have advanced from $3.25 to $6. The only foreign port to which rates have not been raised, so far as I know, is Colon, Panama. The Chairman. And that is where we have a Government-owned steamship line? Mr. Lane. That is where the Government owns the steamship line and is operating it. And I have been told — I would prefer that this should not go into the record — by one of the important officials of the United Fruit Co. that this is the reason, and the only reason, that the rates have not been raised to Colon, Panama. The Chairman. That is a very valuable fact to go into the record. Mr. CuERY. I think it ought to go into the record, Mr. Chairman. Mr. Lake. I merely requested that it be not put in because I did not want to use anything that might possibly — while it was not stated confidentially^ — be considered of a confidential nature. However, I am perfectly willing it should go into the record. I have brought to your attention this situation, as far as the Ar- gentine proposition goes. I mentioned that first, because it was the largest and most important from a commercial standpoint. We have another proposition in Chile. We already have orders upon our books for furnishing water pipe for three cities in Chile, the first American water pipe that was ever booked for Chile, and those are Arauco, Tocopilla, and Antofagasta. I had the honor to secure this business myself last summer. AVe have nine months in which to make delivery of this pipe. There were quite a number of details to be closed up, and while w^e have done everything we could to arrange for the freight end of it, and while we have had the matter up for several months with the LTnited Fruit Co. and with other steamship companies in order to find out what we could definitely figure on this movement, we have really only been in a position dur- ing the last few weeks to say just how soon we could furnish or ship this pipe, and we have not, therefore, been in a position to close the business. The United Fruit Co., I will say, has made every effort to accommodate us and it has nothing, therefore, to do with the fact that we are up against an apparently hopeless situation with respect to this matter. A few days ago, as a matter of fact, Mr. Rodney, the traffic manager of the United Fruit Co., told us definitely that he would book this business for us based on rates effective on the 19th of March — I believe it was approximately the 19th of March — and would hold those rates for us for the next 90 days. That is, $12.50 per ton. Mr. Rodney said, however, that he could not speak for the steam- ship lines operating on the Pacific on the other side of tlie canal, and I requested that he cable the agent of the Chilean line in Valpairaiso, in order to get the Chilean line to agree to work with the United Fruit Co. on this basis of $12.50, and to protect us on that end of it. From my New York office I have just had repeated by Mr. Sweeney a cable which was addressed to us by Mr. Rodney, which says: 111 the present situation of affairs on tlie Istlimus prospects for the near future not favorable for inducing to make engagements to the extent proposed. You must not book for Tocopilla. Time is limited to Antofagasta. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 403 That means that the Chilean line, 1 take it, absolutely declines to handle the Tocopilla part of our tonnage, and declines to commit itself to protect the rates which the United P^'ruit Co. have made us. I can not say as yet what the effect of it will be. My private opinion is that the Chilean line is part of the British steamship combination and that the parent company is the Pacific Steam Navigation Co. or the Eoyal Mail. I believe the Pacific Steam Navigation Co. is wdiat they call it. The Royal Mail is a well-known subsidiary and the Chilean line is controlled, as I understand it, by the same British interests. Therefore I do not hope for very much from this source. Upon my return from Chile — and our competition, by the way, in Chile was with the British— the first thing that I learned on my arrival in this country after securing this business in Chile was that the freight rates had been advanced. I will not go so far as to say that the fact that we did secure this business was behind that ad- vance, because in the light of recent events all rates have been advanced. Another proposition that is before us is the city of San Juan, P. R., has voted to issue $1,700,000 of bonds for the purpose of extending and improving their waterworks system. This involves the pur- chase of 11,000 tons of pipe — between 11,000 and 12,000 tons of pipe. I do not mean to say that we will not be able to ship this pipe to Porto Rico, because. this is a future matter; but I simply call your attention to the fact that here is 11,000 tons of pipe to be moved and the capacity for bottoms with the present shortage seems to leave a doubt as to our being able to move this pipe at a reasonable rate. It would be quite mortifying, and I hope that we shall not see it come to pass, to have the British foundries furnish pipe for San Juan, P. R. Such a thing, however, is not improbable. They have fur- nished a great deal of pipe in Mexico. Costa Rica, and other coun- tries right at our door. Another proposition is Salto, Uruguay, for 5,000 tons of pipe. This pipe will be bought through a contracting firm in Chicago. We have reasonable assurance of securing a part of this business. And I might say right here, in this connection, that only a few of the pipe foundries in this countvy are in a position to enter the ex- port field. While I am speaking entirely for the American Cast Iron Pipe Co. and have no authority to speak for these other gentle- men, I will say that we have discussed among ourselves, those of us who are in a position to go after this export business, the feasibility of whether or not it would not be proper for us within legal bounds to Avork together on this South American business. And we have already discussed it. I won't say that the other foundries would be with us in our appeal to you to-day, but I believe they would, and I hope they would. Mr. Lazaro. Is it your opinion that if you can get your goods in there during the war that you can hold this business after the war? Mr. Lake. Yes, sir ; we hope so. But we certainly feel that if we do not get our goods in now we will never have an opportunity to do so again. Mr. Curry. Do you not know that if you do get your goods in now and have a monopoly of the South American trade, without you manufactured according to their system you could not hold it? 404 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr, Lake. Not at all ; no, sir. We have already gotten the Chilean Government to accept our water-works specifications, and instead of excluding us they are receiving alternate bids for the American water-works specifications. We have also done the same thing in Brazil. The fact that European specifications have been so far ac- cepted is because British capital is largely interested in South Amer- ica and we are not. We have simply been in the field alone. Mr. Hardy. Can not your people convert your measurements into the others and offer them in parallel columns by the English measure- ment and the metric system ? Mr. Lake. I did not get that. Mr. Hardy. Is it not possible for you, in making your contracts, simply to convert the English measurements into the metric measure- ments? Mr. Lake. Yes, sir; it is very easy to convert them, but it is a question of manufacture. It is not easy to manufacture. Mr. Hardy. I mean for you to manufacture just as you are now, but in making your contracts to make them in terms which are in use in that country — into metric terms? Mr. Lake. It is very simple. Mr. Hardy. That is very simple? Mr. Lake. It is a very simple matter; yes. Along that line we have gotten up a Spanish edition of our little pipe catologue, con- verting those measurements for convenience along those lines. Mr. Hardy. I thought surely you must have that. Mr. Lake. Now, gentlemen, we are pipe manufacturers, and we do not want to go into the ship business. But if we have got to do it, if we can snuggle ujd under the protecting arm of Uncle Sam while we are learning the rudiments of the game, you can believe me that we want to do it. Mr. Greene. I can not carry out all the realty operations in my mind which I should if the Government would say, " Here is the money ; you go and speculate with it." The Chairman. I hope the gentleman from Massachusetts heard the statement that the only route on which freight rates have not been increased has been in the trade where the Panama steamships operate. JNIr. Greene. Oh, yes; my hearing is good so far. Mr. Byrnes. Let me ask j^ou this question: What did you mean by the last statement of yours that j^ou would like to snuggle up under the protecting arm of the Government ? That might be mis- construed in some way. and I wish you would give us clearly what you do mean by that, whatever it is ? Mr. Lake. I mean that if this ship bill passes, or if any other similar measure passes, by which the Government of the United States builds and operates these ships, or will build them and turn them over to us at a reasonable price, that we would take advantage of that price and that we would take advantage of the facilities and of the other advantages which we believe we would get by hav- ing the Government supervise or act as a guardian over these ships. Mr. Edmonds. You represent, I believe, a pipe company? Mr. Lake. Yes. sir. Mr. Edimonds. Do all the pipe companies want to snuggle under Uncle Sam's shoulders, too? SHIPPING BOARD^ NAVAL AUXILIAEY, AND MERCHANT MARINE. 405 Mr. Lake. I could not speak for the others. Mr. Hardy. Mr. Lake, a question arose which I wished to ask you while you were speaking about snuggling up to Uncle Sam. In the testimony here yesterday as to these vessels being built by the Gov- ernment and offered for private charter or sold to a private corpora- tion tliere were a good many questions propounded to find out why private companies would charter these vessels in preference to the vessels of private owners. And let me ask you if this would not probably be the situation: If the Government built these vessels, it Avould only be desired by the Government to make at the most a reasonable profit, and if the Government had these vessels to offer for charter would they not now and apparently within the next two or three years have bidders coming to them in competitive lots to get these* vessels, and is it not altogether probable that if the Gov- ernment had 50 or GO vessels instead of having difficulty in leasing them on favorable terms they would be run after? Mr. Lake. As far as we can say, as I have stated, we are in the market to-day for a vessel, and we would prefer and we would imme- diately enter into a contract with the Government to buy such a vessel as they might have for sale. Mr. Hardy. I just wanted your opinion. Is it not probable that they would have competitive bidders for all the vessels they could furnish ? Mr. Lake. Yes; without a doubt, in my opinion. Mr. Hardy. At any reasonable figures? Mr. Lake. Without a doubt. Mr. Edmonds. You mean, of course, only at the present time? You do not mean that that condition would exist after this war is over and things returned to a normal state? Mr. Lake. I can not speak for the future, of course. I would say, though, that in my judgment there will be an increased demand on the part of manufacturers for such vessels as can be furnished. Mr. Edmonds. In ordinary normal times, though. Of course, you mean that the manufacturer is going to get the cheapest charter in which he can carry his freight, is he not? Mr, Lake, Certainly. Mr. RowE. And if j^ou could buy cheaper in Scotland, you would buy there, would you not? Mr. Lake. Of course; any business man would buy to the best advantage. Mr, EowE. Certainly. I am not criticising you at all ; I am just saying what would happen. Mr. Lake, Certainly, Mr. Hardy. That is the reason I wish the Government to have the same privilege. Mr. Lake. Now, gentlemen, I have given you these ■•facts as to the relief which you gentlemen can give us from this situation. I talked to Secretary Eedfield. to Dr. Pratt, and others, and it has been sug- gested to me by no less an official than Secretary Eedfield that it might be possible to have a joint resolution introduced in Congress and that there seems to be no other way possible by which relief could be afforded us. As to this joint resolution, I will not undertake to say what it might be or how it might be drawn. Mr. Greene. You might let Mr. Eedfield draw it. 406 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Lake. Yes; I would be glad to have anyone do so who is pre- pared. It has been suggested that the Government might have some Army transports not in actual use, or in such use that they could be converted to this purpose. This proposition is more than the ordi- nary mercantile proposition. I almost feel like going so far as to say that the commercial integrity of our United States is at stake in this matter. We have an emergency that faces us, and I am confi- dent that you gentlemen can help us in some way to solve it. The Chairman. As I understand you, the suggestion made by the Secretary of Commerce was that if there were any Army or Navy transports or naval cruisers that might be used for this purpose, they might be made available by a joint resolution authorizing the War Department and the Navy Department to turn them over to the Department of Commerce temporarily to meet this emergency? Mr. Lake. Yes, sir. The Chairman. I will say, in that connection, that that subject is being investigated at this time. The suggestion was made the other day, I think by Mr. Edmonds and also by Mr. Byrnes and other members of the committee, and we are investigating the question right now, with a view to seeing if it is practicable to do anything along that line. Mr. Lake. I anticipate that it might be said at once that the Gov- ernment has no Army or Navy transports that could be available immediately. But this tonnage of ours is not to be booked immedi- ately, and if such a resolution could be passed I would much prefer to take a chance, if it comes down to a gambling proposition, on the good will of you gentlemen here, who have the situation in hand, and to take a chance of getting the assistance of the Army and Navy officers who might have these vessels in hand, rather than to gamble on paying the tremendous prices that we would have to pay for ships now and possibly have them on our hands at sacrifice values in a short time. I do not know that it is proper to say what we would be willing to pay. I am, of course, running a little ahead, but I imagined that question would be asked me. The Chairman. That would be a matter of negotiation. Mr. Lake. Then I will not go into that. That, gentlemen, gives you a pretty good idea of the problem that we have to solve, and that we are powerless to solve. Here is the matter in the Argentine Republic, which I think offers us, as I have stated, a unique oppor- tunity, if we could take advantage of it. We are put to the test, and the question is: How are we going to measure up; can some way be devised to back up our manufacturers who have gone down into those countries and are blazing the way, or have we got to back down and to admit that we are not big enough and ingenious enough to surmont our difficulties? Mr. RowE. rf you got that contract in Argentina how soon would you want to move the pipe? Mr. Lake. The general conditions under which proposals are re- ceived usually give from six to nine months for delivery. We would probably be in a position to commence the shipments in 30 days and make them at the rate of 5,000 tons a month, I should say, ap- proximatel}^ Mr. Edmonds. The only real relief that you could get now would be an arrangement giving you the use of the naval auxiliaries or SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MARINE. 407 the Army auxiliaries. That is the only way we could give yon re- lief now. This bill will not be passed in time to help yon out on this contract at all. Mr. Lake. No. As I have already stated, I do not come here to advocate this shipping bill. As a matter of fact, although I am ashamed to confess it, I had never read this bill myself until wdthin the last few Aveeks, although we are, as manufacturers, vitally inter- ested in this question. And I will go further and say that I have shared personally the innate prejudice or antipathy to the idea of Government ownership of steamships; but I have never had occa- sion to have this question brought before me in just this concrete way. We are now here as business men asking you gentlemen for help and not advocating the ship-purchase bill or any other bill. If it will help us we want it ; but we want help of some sort. Mr. Greene. May I ask you a few questions? Mr. Lake. Certainly. Mr. Greene. Your statement seems to bear something on the line of protection to American industries. How would you feel about that? This is a sort of protection of American industries that you are asking us for. You are asking us to furnish you w-ith conven- iences that were furnished under the policy of protection. How do you feel toward that? The Chairman. I beg your pardon ; we do not furnish any protec- tion to American shipping. Mr. Greene. All right. I am asking the question. Anybody can criticize anything I do at any time they please, but I haA^e asked him that question and would like to have him say. Mr. Lake. If you will pardon me, I do not feel competent to answer the question. Mr. Greene. All right. Now, you went down in the Argentina and Chile and around through that section. You never had been there before, had you? Mr. Lake. Never. Mr. Greene. Why did you want to enter that traffic when freight rates were high, when conditions Avere not pleasant. Why were you so anxious to get in the traffic as to go down there now and study up the trade? Mr. Lake. At the time I went down there the freights were not high; and w^e were impelled by the same spirit of ambition and de- sire for expansion of our business as liaA^e been most Americans, I take it, wdio haA'e gone into these fields — a trade ambition. Mr. Greene. You never had undertaken to exploit this business previous to the unsettled conditions of freights and the impossibility of getting freights? Mr. Lake. The American Cast Iron Pipe Co. is only 10 years old, sir. We have never been in a position until the last two years to undertake a program so ambitious. Mr. Greene. I know, but the conditions here at the time you went out to exploit this trade were very fair, and previously you had not gone out to exploit it and tried to get vessels to go there or tried to get accommodations. Now, you say you ship from New Orleans and Mobile when you ship? Mr. Lake. Yes. 408 SH1PPJN(J BOARD, NAVAT. AUXILIARY, AND MERCHANT MARINE. Mr. Greene. I was going to ask you this question, which has been brought out before: You realize it aa^ouIcI be some time before these steamers authorized under the proposed bill would be completed and before you could be furnished with these accommodations which you want. Mr. Lake. If you will allow me to say right there, if we wait nntil the passage of this bill, sir, it would be too late for our immediate necessities. Mr. Greene. There was another point that you raised. You are very much stirred up about the commercial integrity of the United States now, but the commercial integrity of the United States was in the same position even before the outbreak of the war, was it not? We ought to have had this southern trade, but we did not get it ; no effort was made to get it and no attempt made to meet the conditions that existed there in the way of shipping material or manufacturing material'^ I want to say that this is not a new subject. Nearly 40 years ago some of the manufacturers of my own city went down into the South American countries for the purpose of building up trade and selling cotton goods. Their attempt to go there then was because of the dullness of trade at home, and they were seeking an outlet for their goods in the South American countries. The report came back as to the method in which they would have to pack their goods and to ship their goods in order to meet the trade demands and to make their goods acceptable, and they would have to make them in a certain way. And under the business conditions at home the profits were so large that they said, " Well, it is hardly worth while to go into anything of that kind." Was there not something of that condition with you, that your profits were so large in your own business, and the demand so great, that you did not think of ex- ploiting this trade before? Mr. Lake. No. As I have already stated, my company has never been big enough or strong enough until Avithin the last two years to venture into this trade. The opening of the Panama Canal afforded a stimulus to many of our manufacturers. The fact that the com- mercial bodies all over the United States have been very much interested in this export question and the opening of the Panama Canal stimulated our efforts to establish trade relations in the Latin- American fields. Many of the railroads of the country have estab- lished publicity bureaus. The Southern Railway, I might mention, has a man in charge of a department who has been all over this coun- try to try to arouse the interest of manufacturers. Public schools all over the country have employed Spanish teachers for the purpose of teaching Spanish as a part of their curiculum. The impetus which was startecl about the time and before the opening of the Canal was, of course, emphasized by the outbreak of the European war. We have all realized that it gave us an opportunity that we neA'er had before and possibly may never haA^e again, and we haA^e simpl;^ en- deavored, as prooressive business men, to put ourselves in a position to take advantage of this opportunity. Mr. Greene. And proA^ided you would be more disposed to do it if the Government would help you ? The Chairman. "Wliitout caring where the help comes from, just so you get the ships? Mr. Lake. Yes. N SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 409 Mr. Greenf. Yes; that comes from the policy of protection in an- other way. Any kind of a plan that would give you the help you are willing to take? Mr. Edmonds. I think the gentleman from Massachusetts realizes we are all glad they did go down and try to build up this business Mr. Greene. Yes ; I am not finding any fault. Mr. Edmonds (continuing). And they deserve all the help this committee can give them. Mr. Greene. I am not finding fault. I want to get the idea. Mr. Lake. I will say this, that this company, the youngest com- pany in this country, is the first company in this line of business to send a representative to that country ; and it is, of course, costing us quite a large sum of money to blaze the way. Mr. Edmonds. The opportunity was there, and you took advan- tage of the opportunity? Mr. Lake. The opportunity was offered and we tried to take ad- vantage of it. Mr. Edmonds. And you have been unfortunate enough to run up against bad conditions? Mr. Lake. Yes, sir. Mr. Hardy. Mr. Lake, along this line, if I may be permitted to ask some questions, is it not a fact that until recent years the iron and steel industry confined its efforts largely to our domestic trade, not much seeking to compete abroad with England and the other European countries; but that recently, in the last few' years, the supply has increased beyond the demands of this countr}^ and they have to go out into foreign fields; that before they went into the foreign fields they neither had nor needed means of transportation; but that since they have started into foreign fields they have begun to need transportation? And just as you were getting started, this war came on and our want of an American merchant marine be- came more apparent than ever before. Is not that true? Mr. Lake. I think that is true. Mr. Hardy. Now you are in a situation where you can more than supply the domestic trade and you are able to compete with the foreigner in the foreign trade, but you have no merchant marine? That is substantially the situation, is it not? Mr. Lake. We certainly have no ships available right now. Mr. Hardy. And now our shipbuilders are busy to the extent of their present capacity, with contracts ahead ? Mr. Lake. Yes; I have appealed to the shipbuilders and three of them have told me they could not entertain any proposition. Mr. Hardy. And is it not a fact, also, that capital is timid, not liking to venture beyond its depth or into the unknown future; but if the Government of the United States, in one proposition, builds 40 or 50 ships, that that amount would likely stimulate or cause the shipbuilders, with renewed confidence, to expand and enlarge their shipbuilding capacity — that one act of the Government, would it not, in your opinion, have that effect ? Mr. Lake. Yes; possibly. Mr. Hardy. So that if this bill should be passed and it accom- plished nothing else, it would be likely to accomplish a substantial enlargement of our shipbuilding facilities, would it not? 410 SHIPPING BOARD, NAVAL AUXILIARY, AND MKKCHANT MARINE. / Mr. Lake. Apparently. The Chairman. There is one feature of your statement I think should be emphasized, and it is this, the British manufacturers of pipe cooperating with the British steamship interests are able to get what might be regarded now, with war conditions existing, a very reasonable rate; and while there is an English steamship line, a regular line, between New York and Buenos Aires (the Lamport & Holt Line), their ships are under the British flag and we can not obtain the same advantage; is not that true? Mr. Lake, Yes. The Chairman. But if you had the same rate that the British manufacturers can get to-day from the British steamship com- panies or if the British steamship lines trading from our ports to South America would quote the same rates to you, you could com- pete with the British manufacturers in Buenos Aires for this twenty- odd thousand tons of pipe? Mr. Lake. Absolutely. The Chairman. And hence under the provisions of this bill, which provide that foreign steamship lines trading from our ports should treat our commerce with the same care and give us the same treatment that they do the foreign commerce, it might be worked out if we had some law under which these various interests could be brought under Governmental control. Is not that true? Mr. Lake. Apparently ; yes. The Chairman. And that is the purpose of section 9 of this bill, I think, on which we are all practically agreed, as far as that fact is concerned. Mr. Edmonds. Did you look into the reason why they made lower freights from England to Argentina? Is it not because they are bringing quite a large quantity of meats and grain from Agentina, and they are looking for return freights? Mr. Lake. Yes; I think that has a large bearing on the fact that they do make cheaper freight rates than we do. They carr}'' coal, for instance, from Britain down there and take grain back. And they take other products, too. Mr. Edmonds. There is far more tonnage going from Argentina to-day than they can get return tonnage, and that is one reason that they are very glad to get return tonnage? Mr. Lake. Yes. Mr. Edmonds. I understood that was the case and thought that perhaps you had investigated to find out. Mr. Curry. And there is another reason, and that is because every manufacturer, exporter, and importer of Great Britain has a direct investment in the British merchant marine according to the volume of his business and his trade. The manufacturer and the exporter and importer in Great Britain who has not money invested in the merchant marine does not have any consideration at all. Those men who have their money invested, of course, can get prefer- ential rates ; but if the man has not any money invested in the mer- chant marine he can not ship goods or import in the ships, because the ships are always filled. The Chairman. I think there is very much in that suggestion. STTTPPING B(>ARD, NAVAL AUXILIARY^ AND MERCHANT MABINE. 411 STATEMENT OF MR. WESTERN STARR, OF MARYLAND. Mr. Starr. I am here in the capacity of a farmer to express the views of the farming community with reference to this bill. The Chairman. Do you hold any official relation to any farmers' organization ? Mr. Starr. Yes, sir. While it would be unfair to say that I have a special license to represent the grange ; still, I am a member of the grange, and know the sentiment of the grange, and think I can state safely as to its views. I would say, further, that the master of the Pennsylvania State Grange is here in the room, and he is also a member of the State Grange legislative committee of the State of Pennsylvania, and he will be able to tell you the official feeling with regard to the grange. This bill has come up so recently that it has never had an opportunity to be officially passed upon b}^ the organized granges of the country. There are a few local granges who have considered it. The previous bill of two years ago was considered b}" the grange. The Chairman. Just at this point, did 3^ou say those other gen- tlemen are here? Mr. Starr. Mr. McSparran, the master of the Pennsylvania State Grange, is here, and he is also a member of the legislative committee, and he will speak for them if you care to hear him. It is merely a question of fundamental principles, Mr, Chairman and gentlemen. There seems to be a situation under which there is a lack of commercial tonnage— a lack of naval auxiliaries and mat- ters of that kind — which makes this an opportune time to secure advances and increases in both of those directions. The fundamental principle lying at the bottom of it, to the ordinary granger, the ordinary farmer, is an attempt to make competition with the Ship- ping Trust, if such a thing exists. There seems to be an impression in the mind of the average farmer that there is a shipping trust and that he is the principal victim of its operations. Now, the question of how to build up an American merchant ma- rine, to the average farmer, seems to be a very simple one, and that is to simply wi])e off of oin' statute books all of those laws v/hich have imposed a penalty upon the American shipmasters in favor of Amer- ican shipbuilders, so there will be no trouble about securing all the ships we wash. As the gentleman at the other end of the table sug- gested a little while ago, if the American Government had the right to buj' ships in the cheapest markets it could buy all of the ships that it wanted, and if the American manufacturer who desired ships to help in his business could buy ships wherever he could buy them the cheapest, he would have all of the ships that he needs. But it would be impossible to predicate general conditions upon the conditions as they exist at this time. It is an extremely abnor- mal situation. A deluge of uncertainties have flooded the whole commercial world so that there is no one in private pursuits of any mind to venture beyond the shoal waters. It is scarcely possible that a man would buy ahead enough to make up a cargo of shoes until he had the shoes already sold and knows what he is going to get from them. We are living from hand to 412 SHIPPING BOARD, NAVAI. AUXILIARY, AND MERCHANT MARINE. mouth during this period of uncertainty, and I want to call your at- tention to this fact, of how it affects the farmer. I am speaking to you of a condition which existed seme very few^ years ago and I do not presume to say that present conditions would bear it out, except in principle. About 5 per cent of the total commerce of our Republic is international; 95 per cent of the commerce of our Republic is pureh^ domestic. Fifty per cent of the international commerce of our Republic consists in the handling of agricultural products; that is to say, 2^ per cent of our total commerce is international commerce based on agricultural products. The grinding feature of the matter is that the 24 per cent of our commerce which is international, fixes the values for the whole of the balance of our commerce, and one of the large elements in fixing these values is the cost of transportation. The Dakota farmer gets the Liverpool price for his wheat less the cost of transportation, and anything which adds to that cost of trans- portation simply comes out of the Dakota farmers' pocket. And if the American shipmasters have got to support a capital of 40 per cent of which is dead capital, being the excess prices which they have had to pay for ships, there is a constant drain on the American producers to keep that capital afloat. And it is utterly impossible to expect that American merchants and American producers Avill go into the field and buy ships at 40 per cent excess price — dead capital — to compete with ships that do not have that dead capital to meet. In other words, aside from special privilege, 5 and 6 per cent money <'an not compete with 3 per cent money. That is one of the reasons. The farmers, as a rule, are committed to the support of this bill, with two exceptions. One of those exceptions is with reference to the coastwise trade. The other exception is with reference to the granting or the possibility of granting preferences in railroad rates to ports of export. There is not a line of road in the country that would not be a part of the haul to export ports ; not one. That would simply mean that we are granting special privileges to railroads in order to sell to foreign consumers at lower prices than we are selling to our domestic consumers and our own families. That is the prin- cipal growl that the farmer has had in this country for 20 years^ that lie has had to pay for his rails $25 to $28 when Australia and South America could get their rails from $18 to $22, made in pre- cisely the same mill. Mr. Curry. Do you know that to be true? Mr. Starr. I have never heard it denied. Mr. Curry. If you know anything of that kind I would like to have it put in the record. Mr. Starr. Let me make this statement, that I have never heard it denied by responsible authorities that lower prices were made on many of our manufactured products. Mr. Curry. This is not a captious statement. If you know of any- thing of that kind I would like to have you put it in the record. If it is a bare reckless statement I do not think it ought to go in. Mr. Starr. It may not be in this record, but it is in other official records. Mr. Curry. I would like to know where they are. I have never seen it. Mr. Starr. I have not the papers here. SHIPPING BOAED^ NAVAL AUXILIARY^ AND MERCHANT MARINE. 413 Mr. CuRRT. You may have all the time you want to put it in the record. Mr. Starr. I will endeavor to satisfy the gentleman of those facts. The Chairman. The gentleman might not be able to vindicate the exact prices, but I think there is an abundance of authority as to the facts. Mr. Starr. Here [exhibiting] is a watch that was made only 40 miles from my old home— Chicago. That watch was bought in Liv- erpool for $7.50 at retail and reshipped to America and sold at a big profit ; and yet you could not go to the place where it was made, to Elgin, 111., and bu}^ a carload of them for less than $10,50. Mr. Curry. That is governed by patents. Mr. Starr. Patents have not anything to do with it ; it is governed by the tariff. Mr. Curry. It is governed by patents. Mr. Starr. In answer to the question there, a gentleman from Connecticut two years ago, in the Committee on Ways and Means, asked whether the watchmakers were making unusual profits. If the committee had simply called for the books of the Elgin Watch Co. it would have seen that the stocks representing the original invest- ment, which cost $100, were paying more than $100 dividends a year. Mr. Curry. I do not think that has anything to do with this ques- tion. The watches are governed by patents, and it is a different ques- tion entirely. Mr. Starr. They are governed by two things; they are governed by patents and they are governed by a trust. Mr. Hardy. I think if you will get Mr. Rainey's speech you will find the record referred to about steel rails. Mr. Edmonds. Was the Liverpool watch made here or in England? Mr. Starr. There is no Liverpool watch about it; it is an Elgin watch. Mr. Edmonds. Was it manufactured in England? Mr. Starr. No, sir; it was made in Elgin, 111., and shipped to Enffland and then shipped back. It is made in America. Mr. Loud. Did you buy the case at the same time as the movement? Mr. Starr. Sure. Mr. Loud. At the same discount? Mr. Starr. I suppose so; I do not know about that. I am not a watchmaker. I only know that I had to tell them that I could not take a locomotive with me in my vest pocket, but I could bring a little watch, which would illustrate the principle. The farmers are thinking about these things, and they are trying to get at the fundamentals. They are opposed to special privileges. If we are going to have preferences, let us all have preferences, and that makes no preference, and let us buy ships just as we buy shoes. Mr. Curry. You can do that now. You can buy a ship or you can manufacture a ship and build it anywhere on the face of the earth. Mr. Starr. That is all right; but how long has that been possible? Mr. Curry. You are talking about it now. Mr. Starr. This bill extends that principle. The Chairman. We can buy foreign-built ships and put them under American registry, but they are limited to the foreign trade. Mr. Starr. I understand that ; they are not free. 32910—16 27 414 SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Curry. They are free in the oYer-seas trade. That is what you are talking about. Mr. Starr. That is not free. If a man is free to change his boss only he is not free; if a man is free to walk south and in no other direction, he is not free. Mr. Curry. But you are talking about the export trade. Mr. Starr. I am talking about ships, and we want free ships to be used in the export trade and in all trade where traffic monopoly exists, or to be used in any other trade. If I buy a horse and want to go to town, I want to be able to use him to go to town, or if I want to put him to a plow I want to be able to do it. Mr. Hardy. And you would not buy a horse if you could not use it in any place you w'anted to? Mr. Starr. I would not buy a horse unless I could use it any place I wanted to. Mr. 1\0WE. Then, in this bill you would give the Government a right to go out and buy a ship either here or abroad? Mr. Starr. Precisely. I am w^illing to take a chance on this Gov- ernment aiding us in a disastrous situation. Mr. Edimonds. You made a statement a minute ago that the price of grain was fixed by the Liverpool board. Is it not a fact that the price of grain is fixed by the Chicago board? Mr. Starr. Pardon me; I do not think you have quoted me ex- actly. I said the price is fixed in Liverpool; is fixed in the market of consumption. I did not use the word " board," although I am perfectly willing to accept it. The price is fixed at the point of consumption and not at the point of production. The price of the whent crop is fixed by the export price of the surplus. If a farmer's wife has only half a dozen eggs to send into town and she wants to set another dozen under a hen, she knows what those she sets under the hen are worth by Avhat she gets for the eggs she sends to town. Mr. Edmonds. Does not the grain farmer of the West sell his grain by the price quoted on the Chicago board ? Mr. Starr. The Chicago board is the halfway station between Dakota and Liverpool and the Minneapolis board is the quarter-way station. Mr. Edinfonds. The difference between the Liverpool price and the Chicago price is the cost of transportation? Mr. Starr, The difference between the Liverpool price and the Chicago price is the cost of transportation; yes. Mr. Edmonds. Who pays the freight? Mr. Starr. The farmer pays the freight. Mr. Ed:monds. The farmer pays the freight? Mr. Starr. The farmer pays the freight and he pays for every- thing. The farming industry pays for all. Mr. ED:\roNDs. In other words, do you mean to tell me on the grain that is shipped to England that the farmer pays the freight? Mr. Starr. Absolutely. He does not draw a check for it, but he takes that much less for what he sells. Mr. Greene. He gets the price at the seaboard and the man who buys the grain on the other side pays the freight. The Chairman. When you say at the seaboard, does it cost any- thing to get his wheat to the seaboard? It used to cost twice as SHIPPING BOARD, NAVAL AUXILIABY, AND MERCHANT MARINE. 415 much to get it to the seaboard as it did to transport it across the water. Mr. Greene. Oh, yes; but the freight is paid by the man on the other side. Mr. Starr. I haAe noticed frequently in recent magazines the statement in certain centers that the American dollar now had climbed to the top; that it was now the chief monetary unit of the world? Why? Because heretofore when we sent goods over we had to send a check over there or the money to pay the freight after it got there. Now they are coming over here and buying at our own doors. That is the condition now; and this condition is absolutely artificial; it is not normal. But you can not measure the level of the sea by measuring the waves at the top in a storm ; you have got to take the level to do it. Mr. Edmonds. As to the Liverpool price, I would like to get a little more information on that. Is that Liverpool price in such shaps that the farmer gets less for grain he ships to Liverpool than he does for grain he ships to Chicago, Philadelphia, or New York? Mr. Starr. If I can make myself clear, he gets exactly the same price at Fargo, in Wisconsin, or Dakota that it brings at Liverpool less the cost of transportation. Mr. Edmonds. In other words, if wheat is a dollar a bushel in Fargo Mr. Starr. That would be a very unusual condition. Mr. Edmonds. I know ; but if it is and he sends his wheat to Liver- pool, and the freight is 55 cents, then he only gets 45 cents for it? Mr. Starr. I did not quite catch that. Mr. Edmonds. If grain is a dollar a bushel at Fargo and the farmer ships his grain to Liverpool, and the freight is 55 cents, then he only gets 45 cents for that grain; whereas for the grain he sells at Fargo he gets a dollar? Mr. Starr. I think 3^ou have the process absolutely inverted. If wheat brings $1 at Fargo, on your example, it will bring $1.55 at Liverpool. Mr. Edmonds. That is your suggestion, as I understood it. Mr. Starr. No, sir. The Chairman. Of course, the matter under consideration now is this bill, and that is the matter to which we desire your atten- tion addressed. If you have given your statement as to the gen- eral principles, and have nothing further to submit, there is another gentleman here who wishes to be heard. Mr. Starr. I am reminded that the gentleman asked the ques- tion. Why it was that the farmer wanted Government-owned ships? For preciselv the same reason that the farmer wants a gun behind his door loaded with a cartridge with a ball on the end of it. Poten- tial competition is the equal of actual competition. If they know the Government of the United States has the ships and that it will use them, it will put an end to monopoly and extortion in ocean traffic. Mr. Hardy. Did you hear the testimony a little while ago of the gentleman who said the Panama freights were the only ones that had not been increased? 416 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Starr. Yes ; and I think that is the best point that has been brought out in this hearing. I stand absokitely committed to that principle of Government ownership. ISIr. Greene. Why not have the Government take hold of the farm products and dispose of them? Mr. Starr. My dear sir, let me make this suggestion: There are two types of mind and two phases of philosophy on that question and there is just one little line that distinguishes the two. One set claims that every enterprise and every business in which there is a profit to be made, the Government can not touch; but if there are services to be performed at an actual loss^ expenditures without return, why naturally that is the business the Government has to do. Let me give you one illustration: The city of New York has «pent hundreds of millions of dollars cleaning its streets during the last two generations. Today private contractors are paying the city of New York enormous sums of money for the privilege of cleaning the streets and keeping the sweepings. Now that is the line of distinction. If it is a question of profit to be made, why, then, the Government has got to keep its hands off. The GoA'ernment is the biggest business corporation in the world; but you are only permitted to do the sewage work, the scavenger work and the expen- sive work, and you see that it would not make a profit. We don't want it to make profits; but we do want it to stand ready to strike a blow at monopoly. The real trouble with the whole situation is that we made a blunder in the beginning, and we have been making other blunders ever since trying to wipe out the original blunder and waiting for it to adjust itself. Mr. McSparran, of Pennsylvania, is here. He is master of the State Grange of Pennsylvania and chairman of the legislative com- mittee. If the committee wishes, I think he would be glad to be heard. STATEMENT OF MR. JOHN A. McSPARRAN", SECRETARY OF THE LEGISLATIVE COMMITTEE OF THE NATIONAL GRANGE AND MASTER OF THE STATE GRANGE OF PENNSYLVANIA. Mr. McSparran. I want to say that I was not informed when I came to Washington that this hearing was on in this shape, and there- fore I am not prepared to offer the testimony in the completeness that I w^ould have liked to offer it at this time. The resolution of the National Grange upon this question I do not have with me, but I would like to haA^e the privilege of putting that resolution into the record, if I may be allowed that privilege. Mebchant Mabine. resolution adopted by the national grange annual meeting, wilmington, DEL. Resolved, That if Government funds are to be used to aid in building up an American merchant marine that it should be for ships to be owned and operated by the Government. SHIPPING BOAKD_, NAVAL AUXILIARY, AND MERCHANT MARINE. 417 KESOLUTIONS PASSED BY PENNSYLVANIA STATE GRANGE AT ANNUAI. MEETING, STATE COLLEGE, DECEMBEB 22, 1915. Whereas our ports are so crowded with exports that millions of d(jllars' worth of farmers' products are held in storage for the want of proper shipping facili- ties, that it is not a question any more of high freight rates hut what will you pay the shipowner to transport your products, and since the prices of some of our agricultural products are fixed in the markets of the world, it follows that exorbitant freight rates not only reduce the price to the farmer of his products which he sends abroad but those which are consumed in this country ; or, in other words, to illustrate this point, an increase in ocean freight rates of 10 cents a bushel on wheat not only means that much less for the wheat shipped abroad but on all the wheat in the country : Therefore be it Resolved, That in order to stabilize such rates we favor the building up of a Government owned and operated merchant marine, with free ports of entry to all ships of such merchant marine. Resolved, That we I'eiterate our opposition against ship subsidies. Adopted. Had I known a few hours sooner that you were having this hear- ing at this time and in this shape I would have been here with the resolutions; but I was just in town and stumbled upon it and came around to the hearing. I simply want to emphasize what Mr. Starr, of Maryland, has testified to here as a general proposition. The farmers have been complaining for a great many years, and I think justly, that we are abused by the fact that there is not a liberty of operation in regard to the shipping facilities that we have a right to expect. And the prices of those shipping facilities are increased by regulations all the way down the line. The original cost is enlarged by the fact that they can not buy the ships wherever they please, and it is enlarged by the fact that our registry regulations are not as liberal as they ought to be. And, in addition to this, the big shipping combine has practically driven the tramp steamer out of business by having so- called fighting ships that follow the tramp into port and underbid it for its cargo. All these things, in connection with the juggling of rates from day to day, make a situation that is very unjust to food producers. We feel and we have so acted, and our resolution will indicate it, that Government ownership of some merchant ships will act on the principle of a regulation; that it will have a tendency to Avork out everywhei-e, as has been admitted here this morning it has worked out in Colon, in conjunction with shipping to other southern points. And for that reason we believe that the Government of the United States can very well enter this field to a sufficient extent to provide that regulation, especially when a large number of such vessels are needed as an auxiliary to the Navy. Some do not seem to under- stand that we have to pay those freights. There is not any doubt about that. Every cent that you add to the cost of transportation, either in added cost of a ship or in regulations that infringe upon its liberty of action on the seas or in monopoly of the shipping busi- ness, creates a bill that the farmers have to pay. Mr. Byrnes. You do not believe, then, that the consumer pays the freight? Mr. McSparran. No ; not in this case, for this reason : The prices of the food products of the world are fixed by what we call the world 418 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. prices; that is, the average consumer's price, of course. Now, the farmers of the United States have throughout all the years created or raised a surplus that was a perishable commodity, and there- fore we have always been compelled to put that surplus on the mar- kets of the world at the world's prices. And it can be taken for granted that the millers in this country are not fools, so they natu- rally offer us exactly the same price as we can get for our surplus on the markets of the world, less the cost of transportation and insurance. Mr. Byrnes. You believe that the charges of all the middlemen, then, are borne by the producers, too? Mr. McSparran. No; it depends. As a general principle the con- sumer pays the charges. But I think you must realize (and that is the point I want you to get) that when you place on the market a perishable product, as is the case with practically all the farmer's products, that therefore any surplus which is created must go im- mediately on the market. We can not hold this year's wheat back indefinitely and sell it here in this country at a future time. And this surplus year after year we are compelled to put on the markets of the world, and the moment you get outside of the tariff wall it goes on the market on the basis of the world's prices. ]\Ir. Hardy. You never have been able to go in a trust and demand fixed prices? ]\Ir. McSparran. No; and we hope we never will. Mr. Byrnes. You limit that, though, to perishable products, you say? Mr. McSparran. Yes; though the same principle holds with any commodity that must be sold at once. Mr. Byrnes. For instance, with cotton, which comes from Texas, the State of my good friend. Judge Hardy, you do not think it applies to that ? Mr. McSparran. I have not worked it out in regard to that. I won't answer simply because I do not know. Mr. Hardy. I might suggest to you that, even if it is not perish- able, if you are forced to sell it the same conditions apply ? Mr. McSparran. If you were forced to sell it, the same conditions would hold true. The Chair]\[an. Have you read this bill, and has your grange, or the organization which you represent, considered this legislation? Mr. McSparran. No; we have not had any meeting since this bill was whipped into its present shape. The general principle has been indorsed for years. The Chairman. The bill which was pending in the last Congress, did you consider that bill? ]\Ir. McSparran. No; not as a bill. Mr. Greene. Do you know anything about the lake commerce? Mr. McSparran. No. Mr. Greene. For instance, all of those vessels are built in Ameri- can shipyards by American labor. Do you know anything about the freight on wheat, for instance, from Diiluth to Buffalo? Mr. McSparran. From Duluth to where? Mr. Greene. From Duluth to Buffalo, N. Y., on the Lakes. ISIr. McSparran. No ; I do not. Mr. Greene. I am informed by credible authority that the rate of freight on those American-built steamers, the finest to be found any- SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 419 where, while there is practically no foreign competition there, is about half a cent to a cent a bushel from Duluth, Minn., to Buffalo, N. y. You would not want it much cheaper than that? Mr. McSparkan. What is your point? Mr. Greene. From Duluth to Buffalo? Mr. McSpaaran. I say, what is your point? I do not see it. Mr. Greene, The point you want to make. You are talking about the shipping opportunities and about the lack of opportunity to ship the grain that you raise, or whatever you raise — the lack of opportunity to ship it. Is not that a pretty good opportunity to ship ? That is the point I want to make. Mr. Burke. But that lake traffic does not reach Liverpool. Mr. Greene. Oh, no; and you can not, with this shipping bill, reach Liverpool Avithout having something to pay for it. The Chairman. Fifty or sixty years ago it cost from 25 to 30 cents a bushel to ship a bushel of wheat from Duluth to Liverpool. I do not know whether you accept the theory that the farmer should be indifferent to the cost of transportation. Mr. Greene. Oh, no. I think he should not be indifferent. The Chairman. That is the only principle that the gentleman is contending for. When it cost 30 cents a bushel, of course, to ship a bushel of wheat from Duluth to Liverpool, I suppose it affected ma- terially the price of Minnesota wheat. But now, as you say, the price on the Great Lakes has been reduced to a very low rate. Mr. Greene. And without Government interference or Govern- ment construction. The Chairman. Before the war in Europe, I think the rates from Boston, on our Atlantic seaboard,' to European points was about 2^ pence or 5 cents a bushel, and now it is 65 and 70 cents a bushel. Mr. Greeke. Yes: and the parties who buy the grain across the water have to pay the freight. They get their price cash in hand here before the stuff is delivered on board the steamer. The Chairman. But the man in Europe, who has to buy that wheat knows that he must pay that 60 or 65 cents a bushel, and I expect he will have that in mind in determining what he will pay for it on the Atlantic seaboard. Mr. Greene. Yes; ])ut he has to pay it or else starve. Mr. Byrnes. But when a man has to pay more for a commodity he will buy less. If you have to pay more to buy a suit of clothes, in- stead of buying two suits you will buy one. Mr. Greene. According to your theory. But the })rice of suits has been going down all the time, and I can buy clothes cheaper now than I ever could before; and I can buy shoes cheaper, and I can buy BA^erything that is made to-day cheaper than I could when I was a boy. iVIr. Edmonds. I would like to correct Mr. Greene. He says that he can buy everything cheaper than he could when he was a boy. That is not so, because for the farmers' products we are paying a great deal more than we ever had to pay before. Mr. McSparran. The gentleman from Massachusetts speaks of the foreign shipper paying the freight from New York. Why, of course, he does. That is an incident in his shipping. Mr. Greene. No ; he does not pay the freight. The man who buys the grain on the other side pays the freight. 420 SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MAEINE. Mr. McSparran. Is not that the shipper? That is the foreign man, it is not, Mr. Greene. The foreign shipper; yes. Mr. McSparrax. Why, of course he does, and that is an incident of commerce. But that is not the principle we are talking about. The moment he pays that, he adds it as a charge on the goods and he has to meet the world's price when he takes the goods home, and every one of those things is reflected in the price that is quoted the next day in Chicago, and that is the way the farmer pa^^s it. Of course, he takes into account what he pays when you ship the goods across the ocean and that reflects itself the next day in the price of wheat in Chicago. Mr. Greene. Do you sell your farm products that go abroad at less than 3^ou sell them at home? Mr. McSparran. Of course not. But that is not the point at all. Mr. Greene. Certainly it is. Mr. ISIcSparran. Certainly it is not. Mr. Hardy. Let me suggest that neither one of you gentleman can convince the other. Mr. Greene. No; I understand that. Mr. Edmonds. The gentleman here from Pennsylvania, represent- ing the grange, is making the best argument for protection I have heard for some time, and I am very glad to hear it. Mr. Hardy. I understand you now to say that the consumer pays the cost, but when you argue for protection you say the producer pays the cost? Mr. Greene. That argument was the objection of the farmer to building up a merchant marine. The farmer objected to having a merchant marine built up because it would raise the price of freight on the products of the American farmer, and we have always had opposition from the farmer to building up a merchant marine. ^Ir. Hardy. The point, I suggest, is you are now contending the consumer on the other side pays all the freight. When you argue for protection, you say the consumer does not pay any of the freight. The truth between the two is that sometimes the consumer and some- times the producer pavs it : but generallv both of them pav some of it. Mr. Greene. And when you get free trade, ships, and everything else, who pays it ? Mr. Hardy. When you cut down the cost, nobody pays it. Mr. McSparran. You are talking about the consumer. The world's price, the proposition I am talking about, is a different pro]jOsition than the consumer back of the tariff wall. That is the vital point. The Chairman. This gentleman is not from the West, Mr. Greene, he is from Pennsylvania. Mr. Greene. I understand, and I bet he votes for protection, too. Mr. McSparran. I bet I don't. Mr. Greene. All right, you are one of the few, then, who do not in Pennsylvania. Mr. McSparran. You are at liberty to inquire into that, if you wish to. Mr. Edmonds. No; because the law of Pennsylvania preserA^es the secrecy of the ballot. SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 421 Mr. Curry. I do not think that anyone will controvert the fact that the farmer is getting more for his products now than he ever got before. But that is not the question; the proposition is how they are going to get these products across the Atlantic to the European markets, and the cost of transportation. The low freight rates on the Lakes prove that the high freight rates on the Atlantic are not on account of a shipping trust; but that the excessive rate that we have to pay at the present time on all products shipped abroad is on account of the war risk. Of course any man who is in business crossing the Atlantic with merchant ships will have to have a larger amount of money paid to him for taking that stuff across to-day than he would before the war. It is a question of the Government now helping to meet this situation. That is the way you look at it? Mr. McSparrax. Yes. Mr. Curry. Until recently the farmers absolutely did not care any- thing about the merchant marine. Anything that was tried to be done for the merchant marine they stopped. All they cared about was to ship their goods as cheap as possible in any ship; the cheaper the ship the better pleased they were. But a condition comes now where you can not get the ships. If this bill was enacted it would not relieve the situation or condition at all now. The only way I can see for the Government, if it is to help at all, is to put the transports and the colliers that are not in use into this overseas trade. It is possible that a joint resolution might be passed through Congress to give temporary relief, not putting those ships into the overseas trade entirely, but to relieve the temporary condition. If this situa- tion did not confront the American people, if there was peace throughout the world at the present time, would the farmers — I am not talking about you, but those you represent — take an interest in a merchant marine, and would they be willing for the United States Government to go into this business at a loss and to appropriate $50,000,000 in the first instance and to increase that as time advanced and more money was needed? Mr. McSparrax. I think the start of this was before the war. I think you are mistaken entirely in saying the farmers have never taken any interest in this. Mr. Curry. All the farmers wanted, particularly from the Middle West, was to ship their goods just as cheap as they could possibly ship them on any ship — whether Japanese, German, British, Ameri- can, or anything else. They were not even in favor of the United States Government giving preferential rates on mail matter. Mr. McSparrax. Why should they? Mr. Curry. That is all I want; I am through. I hope you do not represent the opinion of the American farmer on this subject. Mr. Burke. Mr. Chairman, I do not understand whether the gen- tleman was granted his request to include in his remarks a copy of the resolutions passed by the National Grange. I would like to ask that he be granted that permission. Mr. Greexe. There is no objection on this side of the table. The Chairmax. I understand there is no objection. Mr. Edmoxds. Did the farmers, in their grange action, describe any particular way that they wanted this merchant marine to be built up ? 422 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. McSparran. Yes; they suggested Government ownership or Government building of ships would furnish that regulative idea. Mr. Edmonds. How do they feel on the subsidy question? Mr. ]\IcSparran. They are opposed to it, and always have been. Mr. Edmonds. They are opposed to the subsidy question? Mr. McSparran. They have been for 15 years. I do not know when the first action was taken, but it was a good many years ago. Mr. Ed^ionds. In your personal opinion, what is the difference between a Government-owned line, run at a considerable loss that the taxpayers have to pay, and a subsidy ? Mr. McSparran. Do you know of any such line? Mr. Edmonds. That is what will be done when we run this line. Mr. McSparran. You are supposing; but I do not understand how you can- prove that to be the fact until you try it. Mr. Curry. Suppose you admit it as a fact, for the sake of argu- ment, how would you stand on that proposition if it should be run at a loss? Mr. McSparran. If it was a regulating proposition and would do the work I do not see why that would enter into it. We pay big money for other regulating commissions. It costs the Government a big bunch of money every year to do that character of work. Now, if you can do something of that kind that will provide that important essential, I can not see why there should be any necessity of making it pay. Mr. Edmonds. Suppose the Government would start Government- owned steamship lines and they would run at a loss in ordinary times, we will say, because it seems that American shippers can not run steamship lines at a profit in competition with the foreign lines (I am speaking about ordinary times), they would have to stand the loss continuously; but if they were to subsidize the lines they could either make the subsidy larger or smaller, could they not, as the time went along and the lines became more profitable ? Mr. McSparran. Oh, yes; they could make it larger or smaller, of course. Mr. EdjMonds. Would not that be a better w^ay of regulating it? Mr. McSparran. No. Mr. Hardy. Mr. Chairman, if we are going to argue the question of subsidy we will never get through, because I do not care for these questions and statements to go in unless the other side of the question goes in, too. STATEMENT OF MR. JAMES I. EWELL, OF NEW YORK, SECRE- TARY OF THE NATIONAL MERCHANT MARINE ASSOCIATION. Mr, EwELL. Mr. Chairman and members of the committee, I deem it both an honor and a privilege to appear before you to discuss this great international issue. I had the pleasure of appearing before the Merchant Marine Committee in 1911, when Mr. Greene, of Mas- sachusetts, was chairman. Mr. Greene. I recognize you. Mr. EwELL. I am not going into any academic discussion of this question before this honorable body, who understand the subject so well; but there are some phases of the present situation to which I desire to invite your kind consideration. SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MAEINE. 423 We have been accused of not being a maritime Nation. I will go back a little, if you will allow me. We liaA'e not been a maritime Nation for more than two generations, but we were, up to 1858, the greatest maritime Nation in the world. We know how to build ships ; we know how to sail sliips ; we know how to operate ships if the con- ditions are right. We are confronted to-day with a situation which has never before existed in this Eepublic, and this extraordinary con- dition is due to the great European war. As far back as 1909 I have said, before chambers of commerce and boards of trade in many of the States, that our foreign commerce is now and has been for 20 years absolutely at the mercy of the exigen- cies of international politics. And why? Because 60 per cent of it is carried by Britain and 20 per cent by Germany. I have said that we would be menaced by a frightful calamity if these two powers should fall afoul of each other; and we see it to-day, gentlemen. And now, as I understand it, the Government has come forward with the propo- sition to meet this great emergency caused by the terrible European war, with which we have never before been confronted. I am going into this subject because I have been brought into close contact with it, and I know of some things from personal experience that I would like to speak of briefly, if you will allow me. I have been willing to fall into line w^ith anj^ proposition promising relief not only from a commercial viewpoint but also with reference to national defense. We have no naval auxiliary merchant marine, which is a perilous situation. Admiral Sperry told me just a few months before he died, at Providence, R. L, when attending the deeper-waterways convention, that the Navy of which we are so proud and upon which we have spent so many millions of dollars would not have 10 per cent of its efficiency on a sudden call, for a lack of naval auxiliary cruisers to carry coal for its bunkers, scout ships, hospital ships, and transports to be used in time of war. Now, gentlemen, I have main- tained all along that if we had such vessels they could be used in times of peace to carry the commerce of our country to the great South American ports, such as Buenos Aires, a city of nearly a million and a half inhabitants, where not a vessel has carried the Stars and Stripes for many years; and our mails and our passengers have to go bj^ slow freight boats or across the ocean twice, as you all know. This situation has changed in the last 25 years. American manu- facturers have increased their output enormously and we have become such an important export nation that we have got to furnish ade- quate transportation facilities and not depend upon the ships of for- eign nations; otherwise, our manufacturers will have to reduce their output and the laboring man will have to go on the street. There is no such thing as America standing still. We must go forward or lose our prestige. Realizing the importance of this situation from both angles — and I usually treat the subject from both its commercial aspect and its patriotic viewpoint — 1 say that I have been willing to give and take. When Mr. Humphrey proposed his ocean-mail contract measure, offering us relief on those long trade routes, I worked for that. When Senator Gallinger offered his ocean-mail contract measure as a means of relief to offset the disadvantages and handicap with which we are 424 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. confronted, I supported that. But, gentlemen, it was a great sur- prise to me when the Government came forward and, with its great financial ability and its success in managing the ships now under its control, offered to take hold of this situation in such a way that private capital has never been willing or able to do. I accepted it at once as the best solution of our mechant-marine problems. As I told the gentleman who appeared before the international trade convention at the Hotel Astor, Mr. W. H, Douglas, avIio always has something to say about the merchant marine on ever}' occasion that offers, and always advocating subsidies. I told him that what the shippers wanted was low rates; and he insisted that the Govern- ment was going to lose money by embarking in the shipping business. Did anybody ever before hear of the shipper objecting to the Govern- ment's losing money if they profited by it? If it carried the products for nothing, would they not grab it? You know they would, and I told Mr. Douglas that, as a business man, that he knew perfectly well that no subsidy short of $25,000,000 would meet the present situation. I reminded him that France subsidizes her merchant marine to the extent of $13,428,000; that Great Britain subsidizes her merchant marine to the extent of $9,689,000, or thereabouts, and Japan $6,580,000. And so on down the line. And all of those nations are able to man and operate their ships from 20 to 40 per cent less than the United States can under normal conditions. And with such a handicap as that, I asked him what is the use of talking about a subsidy of less than $25,000,000. I said, " You talk about that vast sum, but you know you are not going to get it. In other words, you know perfectly well j^ou are not going to get a subsidy of any kind through this Congress." And right here let me say that I have always been opposed to the principle of subsidy. I have been Avilling to accept the ocean mail contract as a compromise; but I did not con- sider it a subsidy. I see m}' friend on the left, from Massachusetts, is shaking his head, and I know he is going to come back at me Mr. Greene. Oh, no; I am not. You are talking fine. Mr. EwELL. Thank you ; I am glad to hear you say so. I stood for the ocean mail contract proposed by Representative Humphrey, as I mentioned a while ago ; I also stood for the ocean mail contract sug- gested by Senator Gallinger; but I claimed then, and I contend now, that the ocean mail contract is not a subsidy, because we are paying for actual value received. We are paying enormous sums to trans- port our mails from Boston to San Francisco and other distant cities in the United States by rail; and are we not entitled to some assist- ance in transporting our mails to such great national centers as Buenos Aires and Rio de Janiero? When our mails are now being carried by slow freight boats and under foreign flags, a most humili- ating condition. Mr. Hardy. Let me suggest to you there that if you make that qualification as to what a subsidy is, then you ought not to charge that England is subsidizing her lines, for in every case where she pays anything she has demanded value in return — substantially, at any rate. iVIr. EwELL. I understand that England also gives admiralty sub- ventions for building ships. The builders can not buy except from those merchants on the admiralty list when they receive mail pay. SHIPPING BOAKD^ NAVAL AUXILIARY, AND MEECHANT MARINE. 425 Mr. Hardy. No; England does not. She pays a few special ves- sels built under specifications made by the admiralty, a certain sum for the privilege of having those vessels specially constructed and thereby diminishing their freight-earning capacities, and at the same time with the privilege of taking them over in case of war, they being held ready for the English Government. Now, that is not paying a subsidy in any ordinary sense of the word, any more than, as you say, our mail contract is a subsidy. If we pay no more than the service is worth, it is not a subsidy. Mr. EwELL. That is the way I look at it. That has been my point of view. But England has been fostering her marine by special mail pay for 70 years, and has spent $800,000,000 in that direction during that period. I would like to say here, however. Congressman, if you will allow me, that I understand England does not permit the pur- chase of any material entering into the construction of those ships that received financial aid except from such houses as the admiralty laATs designate. Mr. Hardy. I do not know about that ; but there is no subsidy paid by England. Mr. EwELL. Now, gentlemen, this much I have said in favor of ocean mail contracts, but if anything else is offered better than that, I am glad to accept it. Mr. Green. We will offer that to you. Mr. Ewell. Yes; but, Mr. Congressman, allow me to say I have considered that what the Government is offering us is infinitely better, and so much greater, that I think our people should jump at the opportunity. One of the reasons why we should accept the proposition of the Government is because of the handicap by which we are hampered. Of course, when the shippers are getting from 300 to 900 per cent more for carrying freight under such conditions as now confront us, it is not difficult to get private capital to embark in the business. But what we want is a permanent American merchant marine. And 1 want to say that you can not have such an American merchant marine unless the ships are built in this country, in American ship- yards, by American labor, manned by Americans, and officered by Americans, because otherwise what will happen? Just exactly what happened in the Spanish-American War, where the St. Louis and the St. Paul both did valiant service. When they were ordered into the service of the Navy, the foreign sailors on those vessels walked down the gangplank and told us to ■'fight your own battles"; they said, "we are not Americans; this is your war and not our fight." And therefore it must of necessity be a costly proposition for America until we can standardize the building of ships. But we must have American ships. It will probably take 15 years; it may be done in 10 years with the present enormous demand. I firmly believe that this abnormal demand for ships will last for a period of six or eight years, and probably longer, because when this war is over — and none of us can tell when it will cease; it may be two years and it may be longer — there will have been so many ships sunk, and there will be such a demand for the reconstruction of the nations now at war, that no matter how many ships we could build to-day, we could not supply the demand for the ships in the across-seas traffic for years to come. 426 SHIPPING BOAKD^ NAVAL AUXILIARY, AND MERCHANT MARINE. But now, by the GoA'ernment taking hold of this proposition, the Government can send ships on long trade routes to such countries as Argentina, Australia, and the Orient, even at a loss. The Gov- ernment can do that. Private capital will not do it, and for that reason I claim that the Government should undertake this great national problem. If we lose a little money in building up thi; great export trade of this young Nation, it can not be counted as a loss, because it builds for the future of the Nation. And there- fore I say that the Government is the one to undertake this proposi- tion, because private capital would only venture where it paid them to go. The shipping business is a business proposition and, like every- thing else, must stand or fall on its ability to make money, and that is all you can make of it. You can not get private capital to embark in it unless it sees a chance to make money ; but the American Government does not w^ant private capital to embark in the business on the basis that the purchasers of the Dashia did, when they purchased that ship for $125,000 and charged $150,000 for the first cargo that they carried abroad. That sort of enterprise stifles and strangles our export business, and that is not what the people want. If Congress passes this bill and the Government holds 51 per cent of the stock of the corporations formed, and if private capital will take 49 per cent, and the Govern- ment controls its operations, so that it will be an equitable proposi- tion for the shippers to all parts of the world. I claim that that will act as a great adjuster of rates in the acrcss-seas traffic. Certainly we have negelected one of the greatest sources of national wealth in the world for over 50 years by allowing our flag to dis- appear from the high seas. I claim that it is worth the price, no mat- ter what it costs, for us to reestablish ourselves as a powerful mari- time Nation. No nation has ever grown great that did not carry at least 40 per cent of its foreign commerce. It has been more than 27 years, gentlemen, since we carried 20 per cent of our foreign com- merce, and, you know, that just before the war we were carrying only a little over 8 per cent. That sort of thing operates in more than one way. Aside from the fact that it is costing us $300,000,000 in gold to transport our freight and our passengers, which money is absolutely lost to the commerce and trade of America and goes into the pockets of the foreign shipowners. Thus we are continually con- fronted with a worse and worse condition by using the delivery wagons of our foreign competitors. There has been quite a let said about using the delivery wagons of other nations, because it is a comparison that we can all appreciate. You can not depend upon the delivery system of your competitors very long before they will have your business. We have already seen that. Especially am I familiar with the way the Germans handled that situation before the war. They had such a splendid organization in New York, where they took an accurate account of every bill of lading, every manifest, the weight of the article, the price of the article the consumer to whom it was shipped abroad (generally in South America) and they sent that information to their chambers of commerce in Germany, and there it was sent out to their various representatives in the foreign countries, and those SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 427 representatives vould take that information and would go to the foreign buyers and offer to lay down the same article for less money than we could. And I understand that invariably they used the argument, " Your goods, if bought from Germany, will not have to cross the ocean twice, as they frequently do if bought in America, and they will not be delayed until they are absolutely out of season; but, if you buy them from us we will deliver them on time, and can be sure of getting the right article and getting the lowest freight rates." The Chairman. We will take our usual recess at this point. (Thereupon, at 12.45 o'clock p. m., the committee took a recess until 2 o'clock p. m.) AFTER RECESS. The committee reconvened pursuant to the taking of the recess, Hon. Michael E. Burke presiding. Mr. Burke. Judge Alexander is occupying the chair in the House of Representatives and he can not be here this afternoon, but we will proceed with the hearing. Mr. Ewell. I will not detain you but a few minutes longer. Mr. Burke. We would like to have you finish your statement, as you contemplated, notwithstanding most of the members are absent. But I expect that they will be dropping in every minute or two. Mr. Ewell. I appreciate the privilege. Mr. Burke. I hope you will not cut short any of your remarks because of the absence of a quorum. Mr. Eavell. 1 thank you, sir. At your solicitation, I will proceed. With 58,000 carloads of freight on the sidetracks near the ter- minals of New York Harbor, the metropolis of the world, the situa- tion is growing more and more desperate daily, and it seems that there is no relief at all in sight. And it does not seem to me that this is a time for hairsplitting. The reason why we have not had a merchant marine in all this long period of 50 years is because there could be no harmony between the two parties. There have always been some differences that could not be harmonized. But the situa- tion is now so desperate that it seems to me that we ought to give and take, and to grasp this opportunity offered by the Government in the form of a shipping bill, Avith a board to be appointed by the President, to regulate rates, so that the people will feel that we have some definite shipping prospect for the future. Mr. Burke. Eight in that connection, Mr. Ewell, You are aware that the bill, as it now reads, calls for the appointment of a board of five, consisting of the Secretary of the Navy, the Secretary of Commei'ce, and three other competent men? There has been some question here as to whether or not further qualifications should be prescribed in the bill with reference to the class of men from which the other three should be appointed. Some have thought that they should be men experienced in the shipping business. I would like to have your views on that. Do you think it w^ould be better to amend the bill, so as to require that they be taken from that class, or to leave that to the judgment of the President, who does the appointing? 428 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. EwELL. I think it entirely safe to leave that to the judgment of the President. He will undoubtedly select men having technical knowledge as assistants, who will do the active work. One reason why it has been difficult for our people to get together on the subject is because the shipping question is one in which the general public have not interested themselves. It is not because we can not grasp a commercial proposition, because we are quick to take advantage of any business opportunity to which our attention has been drawn; but it has been my experience in talking before cham- bers of commerce, boards of trade, and commercial bodies in various large centers (and I mention this because those men are considered to be leading active men engaged in business) and to have them come forward after the meeting and express their absolute ignorance on the subject" of the merchant marine, and say "that they had no idea that such a condition prevailed." They could not understand how it was possible for Congress to permit us to continue in that desperate situation so long. I have frequently told them that " it is because of their constituents at home; it is because you have not studied the question; it is because you have not expressed yourself one way or the other largely." In appearing before Chautauquas, for example a very large Chau- tauqua at Georgetown, Ohio, where I talked to more than 3,500 people, and at a large chautauqua meeting at Patterson Springs, 111. — I regret that our Granger friends who spoke this morning are not here to hear this reference — at the conclusion of those meetings the farmers came around in large numbers and begged me to come back the following week, in both places. They said they had no idea that such a situation existed at all, and that if I would come back the following week they would have a different audience of other men to hear about this great merchant marine that we ought to have and had not been able to get. And one of the things I pointed out to those farmers was this, that during the Boer War between that little African Eepublic and Great Britan, Britain withdrew so much of her large tonnage from the carrying trade that it caused such a marking up of freights that the farmers lost in the value of their products, by the time they got returns, $48,000,000 the first year of the Boer War (although the little Republic referred to did not have a single privateer engaged) and $67,000,000 the second year: so that the American farmer was touched in pocket to the tune of $115,000,000 to pay for the Boer War, because our export trade is at the mercy of the foreign shipowners. And now this fact is being brought home to us in such a way that we can appreciate it. I am calling atten- tion to these facts to show you how little regard our people have paid to the subject. I do not wish to be disrespectful to the intelligence of any American citizen, whether he be a farmer or a banker. I am now going to call attention to a situation that has been made much of by the subsidy hunters, the tremendous amount of capital that was niade out of the action of the National Chamber of Com- merce, when they passed a resolution in February, 1915, opposing the shipping bill. It is necessary for us to know, in order to under- stand, who composed the committee that drafted that resolution on the American merchant marine. I was present and heard Secretary McAdoo's speech and Senator Burton's reply. SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 429 Mr, Hadley. Do you refer to the resolution passed last year or the one passed this year ? Mr. EwELL. The resolution passed last year. I am referring now to the resolution on the old shipping bill of 1915. You can very readily see, gentlemen, that the committee appointed to draft that resolution were men whose views were known by the chairman or executive committee of that body, and a report made by them would dominate the chamber on a subject so technical. Although a splendid body of men, they were not in a position to argue the merits of the merchant marine. I know that from the personal experience, I have before referred to here. Our business men have not studied the question. Let us look at the personnel of that committee. One member of that committee was very active in the Merchant Marine League of Cleveland, Ohio, as secretary — Mr. John A, Penton. He was put on the resolution committee because that chamber knew exactly where he stood; they knew that he would fight anything that did not have subsidy pork in it. I overheard him say, ' What they want to try to do is to get this shipping bill through so as to take away from us our coastwise shipping. We must fight it." That gentlemen was brought down here before the Olcott committee, I think that was the committee, and prosecuted for some weeks, for the insulting refer- ences made in his American Flag against Congressmen Kustermann and Steenerson, and he had a hard time to keep out of serious trouble. I also heard him say at the merchant marine congress held at New Orleans in 1910, that he would have to keep in the back- ground. Now, why was that? And in 1911 he said to me at the Waldorf Astoria his merchant marine league would have to go out of business, and it did. That is one member of the committee. Another member of that committee was Mr. Ludwig Nissen, of New York City, Mr. Ludwig Nissen, I am reliably informed, although this is not at all to his discredit, learned the English language after he came to his adopted country. Mr, Ludwig Nissen is a director in one of the most power- ful organizations in the United States — the National Association of Manufacturers. The National Association of Manufacturers, I have noticed since the Mulhall investigation, or the big men of the Na- tional Association of Manufacturers, have been very conspicuous for their absence from all of these big meetings noAv being held at Washington. I noticed that none of those "big guns" who head that institution were present at the national chamber of commerce meeting, except a little man from the office, who represented the domestic bureau of the American industries. I asked him where the big men were, and he said he was the only big man down there from their organization. The other member of that committee was Mr. William H. Douglas. Mr. Burke. He appeared before the committee a couple of weeks ago. Mr. EwELL. Yes; Mr. Douglas was extremely bitter against the Government ship-purchase bill. Why are these men so violent in their denunciation of the Secre- tary in this matter? Because all of the big interests that are so closely allied are opposed to the Government going into the shipping 32910— IG 28 430 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. business. They want "hands off" on a plum so large as this busi- ness with an enormous pork barrel turned into subsidy — their plan; they can Avax fat at the Government expense. And, again, because the coastwise trade and the great pig-iron industries and the large steel industries with all the corelated sj'stems underlying that trade are opposed to it. Why? Because they are afraid that if the Gov- ernment goes into this business and gets into the coastwise trade it is going to injure the present coastwise shipping. I do not consider that the purpose of this bill at all. I believe there is going to be so much business that there will be plenty for all. I do not under- stand that this bill contemplates that these ships shall engage in the coastwise trade at all, except perhaps in our outlying possessions. Therefore it seems to me that they are unduly aroused. Mr. Burke. I beg your pardon. Mr. EA\el], but going back to the referendum vote that was taken in the different chambers of com- merce through the country upon the previous shipping hill, have you any idea as to the methods pursued in any or many of the chambers of commerce in taking that vote? Mr. EwELL. I think it was by a postal-card vote, in Avhich the executive committee or a few directors participated. I understand that was the system employed and is the custom usually adopted. I think it is safe to say that when the National Chamber of Com- merce, composed of the various chambers of commerce all over the United States, passed on this subject and sent out their message through their executive committee, " as I said before, the education of the American people on the subject of an American merchant marine has been so neglected," that they were willing to follow the resolution passed by the National Chamber of Commerce. I am sure the rank and file expressed no opinion in the matter. I remember full well when the notices were sent out to organize the National Chamber of Commerce I was invited to come into it as a charter member as secretary of the National Merchant Marine Association, by Mr. Davidson, of the Worcester Board of Trade. His idea was that they should bring together all of the chambers in one great national body, so that they might act through one main center. Therefore I think it is safe to say any matter so technical as the merchant marine passed upon by the National Chamber of Commerce would naturally be accepted by the subsidiary bodies over the country. Mr. Burke. I will say that that was the testimony of a Mr. Rosen- thal, of Chicago, who appeared here and testified that he was inter- ested in this subject, and connected with the chamber of commerpe and the Business Men's Association, of Chicago. He also gave us some information about the method that was used in the Chicago Chamber of Commerce and some others as to the taking of the sense of the respective chambers of commerce in the different States, showing that the rank and file did not have a chance to express themselves upon the question, much less to understand it, and that usually it was a few directors who gave expression for the entire bodv. Mr. EwELL. Exactly. Mr. CuRRr. Right here I would like to give my understanding of that. I am not familiar with the method of taking a referendum vote SHIPPING BOAKD, NAVAL AUXILIAKY, AND MERCHANT MARINE. 431 on these propositions by any chambers of commerce outside of those in California, but I do know how the referendum vote is taken there, and I know hoAv the referendum vote was taken on this proposition. The proposition was, first of all, received by the chamber of com- merce, and was referred to the executive committee, and the executive committee either sent a postal card to each member of the chamber of commerce in town, or they call a meeting and in the call state what the meeting is for. When it is at a called meeting, it is discussed by the full member- ship and is voted upon. But upon this proposition it was voted upon by a postal-card vote, and each member of the chamber of commerce in San Francisco, Oakland, Los Angeles, and Sacramento — those I know of personally and the others I only know of by hearsay — voted a postal-card vote on the proposition and the chambers of commerce in those cities sent in the opinions of the members of the chambers of commerce in that matter. What they do in the East I do not know anything about. Mr. Greene. I think the same course was pursued in my chamber of commerce. Mr. Burke. I do not know that Mr. Rosenthal undertook to speak of the three cases you mentioned, Mr. Curry. Mr. Curry. I do not think that Mr. Rosenthal designated any par- ticular chamber of commerce; be simply generalized; that he was connected with a great many business interests, but he did not defi- nitely state what they were. He said he was interested in a chain of drug stores and other propositions of that kind, without designat- ing in what toAvns they were or what their names were, or anything of that kind. He did state that he was connected with one depart- ment store, a mail-order house in Chicago, but whether as owner or employee he did not say. Mr. Burke. All of that is true, Mr. Curry; but he also stated that he was a member of the Chicago Chamber of Commerce, and he went on to tell us how a few members did the whole thing for that chamber. Mr. Curry. I do not remember that. Mr. Burke. You may proceed, Mr. Ewell. Mr. Eavell. I would like to ask if I am correct in assuming that the shipping board also intends to control rates of foreign ships that touch our ports under this bill ? Mr. Greene. I think they are going to try to. Mr. Burke. I do not know that that is one of the express powers, but they have power under this bill to prescribe rules and regulations whereby discriminations and rebates and matters of that kind will be prevented. Mr. Eavell. I think that that would be most important, for this reason : I have discovered in my investigations that there has been a powerful Shipping Trust organized, with enormous powers, operating at the port of New York. When I was secretary of the Merchant Ma- rine Committee of One Hundred in 1910 a letter was sent out purport- ing to come from six large representative import houses, stating that Ave "did not need any more shipping to South American countries, and that we had ample shipping facilities." In other Avords, they stated " that there was more shipping than Avas needed." That letter was 432 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. sent out to the various papers that were in sympathy with the for- eign shipoAvners — they also carried their advertisements — and this letter was given considerable publicity. As secretary of the Mer- chant Marine Committee of One Hundred, I ran down that letter and discovered that it had been written by Mr. Daniels, of Busk & Daniels, representative of the Lamport & Holt Line. Those facts I stated before the Olcott Committee when I appeared before them in 1910, and Mr. Daniels was brought down here before the com- mittee, and I understand he was asked why he did that — to send out a letter over their signature of which he w^as the author — and he ad- mitted that there was a conference formed in New York that met every week regularly to regulate the shipping rates. He said he thought it would sound better to send the letter out over the names of these merchants than to send it over his name. That was a sig- nificant admission. You can see how that trust got a strangle hold on the commerce of this country. I consider that one of the things that this board should do. Get a strangle hold on this Shipping Trust and put it out of business. We have ample precedent for the Government investing money in the stock of quasi public corporations, and the opposition that has been offered to the Government doing this is from a familiar source, but the selfsame opposition put the Government in the express busi- ness, aided by the Democrats. When you started the campaign for the establishment of the postal savings banks, that was also opposed by the same interests, on the ground that the Government was going into the banking business. And that also applied to the proposed organization of the Federal reserve banks that were established through the insistence of the present administration. The Govern- ment reserved the right to take stock in these banks not" taken by national banks. Perhaps that is the main reason why this was a successful proposition from the start, and immediately taken over by the national banks of this country. As we all know, the National Bankers' Association fought it. When they found that the Govern- ment could subscribe to any stock they did not subscribe to, the banks saw to it that there was no stock left for the Government. I have not been able to reconcile the fact that while Senator Weeks introduced a resolution in the Senate, and afterwards a bill, authoriz- ing the Secretary of the Navy to withdraw certain cruisers and war- ships from the Navy for the purpose of taking care of our shipping, our mails, and our passengers in the overseas route, where we had practically no accommodations, and when these boats could only carry from 17 to 19 passengers and could only carry about 150 tons of express freight, which meant from the start a big loss and ex- pense, and totally unsuited for the work. Why did he suggest such a proposition as that, and fight for it in the Senate, and then, when the bill came back from the House so amended as to furnish ships of sufficient tonnage to carry thousands of tons of freight and hun- dreds of passengers, he turned squarely around and fought it bit- terly ? The latter had a splendid equipment, suited to the service, and his scheme was totally unsuited and assuring a great waste of money. Why Senator Gallinger and Senator Lodge opposed so bitterly a bill which was really a splendid proposition, looking to the upbuilding of our shipping, is irreconcilable when they suggested first the idea SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 433 of putting the Government in the shipping business. They fought the thing that was a practical solution of the problem because the Government would exercise control. I think, Mr. Chairman, it is putting this whole proposition on too low a plane when we discuss the matter from a standpoint of profit only, and especially when we are confronted with such a serious crisis as this world war. If we had only done the things that we have accomplished for the sake of profit only, would we have built the Panama Canal, where we have spent $400,000,000? Would we have carried forward and accomplished the many things that I will not detain you to enumerate if the question of profit had always entered into them? When a certain amount of money was set aside for the destruction of the gypsy moth, was it done because there was profit in it? And w^hen, on the other hand, $40,000,000 was given for the purpose of destroying the boll weevil, was that done because we were going to get immediate profit out of it? No. It was done for the general benefit of all the people, although it espe- cially benefited those people that were directly interested; still, you could not affect one section and have the result confined solely to that; its influence is certain to extend to many sections. I consider this question of shipping one of the most important problems that has come before the American people since the Civil War, especially when you view it from the angle of preparedness and national defense. Our Navy would not have 10 per cent of its efficiency on a sudden call to war without a naval auxiliary marine. And look what a teriible spectacle we were confronted w^ith when we had to send some of our soldier boys down to Cuba to quiet the Palma administration some years ago ? You remember full Avell that we marched our boys in blue down the gangplank to the tune of the Star Spangled Banner and embarked them on ships flying the royal cross of St. George of England, because W'C had no transports or merchant vessels available. And although we bought about 100 old hulks for use in the Spanish- American War, for which we paid $87 per ton of cargo space, right after the war they w^ere sold at a heavy loss. They did not bring 40 per cent, in many instances, of what we paid for them. Mr. Greene. That was simply an emergency, and we could not help it, could we ? Mr. EwELL. I admit it was an emergency, Mr. Greene, but we could have helped it had we had a naval auxiliary merchant marine; and that is why I am supporting now this proposition to build one. And the shipping bill now proposed is the best guaranty of its com- pletion we have ever had. Mr. Greene. If everyone had thought as I did, we would have one. Mr. Ewell. I might say right here that one reason why we have not had a naval auxiliary merchant marine, if you so please to call it, or an American merchant marine, is because the Republicans of the House and the Senate have contended for 40 years for subsidies, and the Democrats, on the other hand, have contended principally for discriminating duties; and between the opposing parties we have never been able to get together. As a consequence, the American people are exposed to the terrible crisis with which we are now met. 434 SHIPPING BOARD, ISTA-VAL AUXILIARY, AND MERCHANT MARINE. Mr. Greene. They have not divided on party lines strictly. A good many of the western Eepublicans voted against the mail lines and afterwards Avith the mail lines with the naval provision for naval auxiliaries — we have tried to have that. The Democrats voted solidly against it and a number of western Republicans that lived where they never smelled salt water or saw any. But they voted against it because they thought it w^ould raise the price of their freight. Mr. E WELL. I was always glad to recognize that there were- many Republicans ready to vote for each measure that came up; but in the main it was generally a party division in some ratio that defeated the main issue, was it not? Mr. Greene. No ; it was lost since I have been in the House by 1 TOte. Mr. EwELL. That was the Gallinger bill. Mr. Greene. They have come very near it in the Senate, but we lost out after a hard struggle by 1 vote. We could not line up all of our own people because of that very feature that has always been a prob- lem, that the people who live in the interior States thought that the people on the coast would get an advantage; whereas it would have been an advantage to the whole country, as I believe now and believed then. Mr. EwELL. I will conclude with just this remark, that in view of the exigencies of the present serious situation, I sincerely hope the present shipping bill will be passed by both Houses. I subscribe to it in all of its features. I thank you. Mr. Curry. I may have been mistaken, but I understood you to say that you favored the unrestricted admission to the coastwise trade of foreign ships? Mr. EwELL. No ; I did not say that I favored the unrestricted ad- mission. Mr. Curry. Then I have no questions to ask. I understood you to say that. Mr. EwELL. No, sir. I said I did not understand it to be the ex- pectation of the author of the bill that these ships should touch the coastwise trade except at such points as our outlying possessions; and those, I believe, are enumerated in the bill. Mr. Curry. Even those ships would be different from foreign ships. Those would be American ships, under the American flag and built in the American shipyards. That would be a whole lot differ- ent than if foreign ships under a foreign flag and built in a foreign shipyard. Mr. EwELL. I appreciate that. But I assume the Government was willing not to encroach too heavily upon our coastwise trade, as that has been so successful and largely because of the fact of its having an absolute monopoly. We have over 7,000,000 tons of coastwise shipping. Mr. Curry. All governments protect their coastwise trade; even Great Britain. Tliey protect their coastwise trade by charging higher tonnage and port dues on foreign ships engaged in the coast- wise trade than they do on the domestic ships. Mr. EwELL. Yes. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 435 Mr. Curry. All maritime nations, either directly or indiretly, pro- tect their coastwise trade. The United States protects its coastwise trade directly, while Great Britain protects her coastwise trade indi- rectly. Mr. Greene. I want to say this, that at the time the ship-registry bill was under consideration in the conference committee there was a proposition advanced as a matter of necessity that these vessels be admitted to the coastwise trade, even though they had foreign officers on them and foreign crews, and were built abroad. The proposition was made that they should have all the privileges of the coastwise trade. What would be your view of that proposition ? Mr. EwELL. I would be opposed to that, Mr. Congressman, for the reason, first, that I do not believe it would be necessary, and, sec- onl}^, I think it Avould stimulate such tremendous opposition that it would probably defeat the passage of the bill in any form. Mr. Greene. I do not mean in this case. I mean when the ship- registry bill was on. When we had it in conference the proposition cam.e up to admit these vessels that were registered under the Ameri- can flag, foreign-built vessels that we had allowed to come in as a matter of emergency to relieve the situation, the privilege of the coastwise trade. And there are members on the committee who have stuck to that idea to-day. Now, I was a member of that conference committee, and I gave notice immediately that if that proposition was adopted in the conference I Avould not sign the conference report, and I did not. Senator Perkins, of California, who was then suffer- ing from a severe shock which he had had, got up with trembling hands and voice, and said he would not sign it, and he did not sign it. The conference reported the bill to the Senate, and the Senate, after a full, frank, and clear discussion, voted it out by a vote of 2 to 1. In the argument there it was shown very clearly that if the foreign- built vessels, with foreign officers and foreign ciews, w^ere admitted to the coastwise trade, it would have prevented the benefits that this country has received from the coastwise trade, even though it is a monopoly, as you say — the benefits received by the United States since that coastwise trade was established in 1789, I think it was, which has been a coast guard on both the Atlantic and Pacific coasts with men with American hearts and American spirits, of American birth, and American ownership of the vessels, men who had the spirit of true Americanism in their hearts and who would have been ready to have protected the United States against any foe. But there was a weakness in that registry bill, to which I wish to call the attention of the committee, and that is this : That it gave to the President authority to grant to those vessels admitted under the American flag permission to have foreign officers and foreign crews on those ships, and the result was that for several years they granted the right to foreign crews and foreign masters of vessels to be admitted to the rights of our flag, under that ship-registry bill. It seemed to me then a mistake and I think so now. Mr. EwELL. I think that is going further than I want to go, and I am willing to go on record as saying that. But I would like to say in addition, Mr. Greene, I believe now that while before the war it was difficult for us to compete in the across seas trade, under the present conditions and under the conditions that we are liable 436 SHIPPIXG BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. to live under for, perhaps, the next 10 years, I believe that no matter what these ships cost the Government to build now, or to buy, where- ever they can buy them, that they can be sold two years hence, if you please, at a profit over what they have to pay for them. But no matter what they cost, I believe they will make a profit for the Government. And referring again to the question of putting it on the low plane of profits solely, I do not believe that thought, that it should be limited or confined to the question of profit, I do believe, however, it is going to be a money-maker for the Govern- ment, to have a Government-owned and operated merchant marine. Mr. Greene. If there had been no talk about a shipping bill at all by the Government, do you not believe under the circumstances as they stand to-day, with an unlimited demand for ships that private capital would have built those ships? Mr. EwELL. I do not, sir. Mr. Greene. I think they would. Mr. EwELL. We must judge the future by the past, and for 60 years they have not done it. Mr. Greene. There never was such a condition as there is now. Mr. EwELL. But for 50 years we have placed ourselves in jeopardy, until we have reached the crucial point, waiting for private capital, and they have not undertaken the business. Mr. Greene. I know; bat this situation arose by reason of the war which has been blamed very recently for the disturbance of all conditions, the tariff conditions, and everything else. And, by reason of the war, conditions were ripe for American capital to enter the trade; but with a proposition for Government owned ves- sels and Government operated vessels, without regard to profit, the inducements for private capital were very slight. Mr. EwELL. I heard, only about a year ago, since the war was on, men in the shipping business say that they would not undertake to go into the business with the possibility of the Seamen's Law being passed, with that to contend with and the high price of labor, the higher cost of construction and operation, " That they would not undertake it." Mr. Greene. But that has changed this past year, has it not? Mr. EwELL. Yes; but I heard that sort of talk after the war had been going on many months and the shipping men said they would not risk it, they would not go into the business and take the chance of investing in ships, but now that they see the large sums of money to be made actually in sight, they are anxious to keep the Gov- ernment out of it so that they can charge all the traffic will bear and thereby cripple the farmers and merchants in their efforts to extend their trade and so injure the opportunity of the Nation to develop our export trade at the most opportune time offered in the history of America. (Thereupon, at 3 o'clock p. m., the committee adjourned to Mon- day, February 21, 1916, at 10.30 o'clock a. m.) CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the Merchant Marine and Fisheries, House of Representatives, Thursday, February ^4, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. Mr. Edmonds. Mr. Chairman, I would like to present a petition from the Philadelphia Bourse regarding H. R. 10500. The Philadelphia Bourse is an organization composed of 2,500 business men in the city of Philadelphia, and they have gone through the bill very carefully and have noted which portions they think are good and which are not good. I would like to have it go in the record. (The petition referred to is as follows:) EE BILL H. E. 10500 — A STATEMENT AND PROTEST BY THE PHILADELPHIA BOUBSTT. AGAINvST THE SAMK. Philadelphia Bouks!5, Philadelphia, February 23, 1916. To the honorable the members of the Committee of the House of Representa- tives on the Merchant Marine and Fisheries. Gentlemen : The Philadelphia Bourse is an organization composed of over 2,500 business men, firms, and corporations of the city of Philadelphia, having as one of its objects the improvement of the commercial interests of the city, State, and Nation. Since its organization in 1891 it has consistently endeavored to further the enactment of laws having for their object the upbuilding of an American mer- chant marine to meet the requirements of the connnerce of the United States with foreign countries and with its Territories and possessions, and through its board of directors and its committee on commercial affairs has devoted much time to the study and consideration of this most important question. It has carefully studied the provisions of the bill (H. R. 10500) now under consideration by your honorable committee, and it is convinced that plans and methods pi-oposed in said bill will fail to achieve the purpose as stated in the title of the bill, and therefore asks that the bill be returned to the House of Representatives with a negative reconmiendation, and begs to submit the follow- ing as some of its reasons, both general as against the principles underlying the whole bill and specifically against certain sections as named. Under section 4132 of the Revised Statutes of the United States, as amended by the Panama Canal act, and under the provisions of the bill H. R. 1S202, Sixty-third Congress, approved August 18, 1914, American citizens desiring to engage in the operation of vessels in the foreign trade were free to purchase ships in the cheapest markets of the world, and obtain American registry for such ships, but the failure of American citizens to take advantage of the op- portunities afforded by the legislation above referred to is, we feel, conclusive proof that ships registered under the American flag can not be profitably op- erated in the foreign trade under normal conditions. The Philadelphia Bourse is of the opinion and believes that before a merchant marine can be created under the American flag to compete with foreign ships in 437 438 SHIPPIISG BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. the overseas trade under nomal conditions a complete revision of the navigation laws of the United States must be made, so that the cost of operating ships under the American flag may be reduced to the level of the cost of operating foreign ships competing for the same business; and, further, that the vessels which might he procured by the sliipping board under the bill H. R. 10500 and by said board chartered, leased, or sold to private persons, firms, or corporations or to the corporation as proposed by section S will operate under the same dis- advantages that apply to privately owned vessels. The Philadelphia Bourse opposes the creation of a shipping board (as pro- vided in sections 1, 2, 9, and 10) with plenary powers of regulation and control of American and foreign shipping, including the right to prescribe preferential rates, believing that subject to the regulation of such a board private capital could not be induced to enter the shipping business, that existing lines would be withdrawn from business, and that foreign shipowners would seek other trade for their vessels rather than submit to such outside control of their business. As to the provision in sections 3, 4, and 8 for government ownership and operation (through a "dummy" corporation), the bourse is unalterably op- posed to our Government trying a needless and costly experiment to attain an end which can be attained without risk or cost by the repeal of all of our navi- gation laws which enhance the cost of operation of American ships above the cost of operating competitive shipping, and by a suitable subsidy given to ves- sels constructed in American shipyards to offset the higher cost of construction, thus encouraging the growth of the shipbuilding industry, an essential element in national security. The provisions of section 5 the bourse considers as unobjectionable in prin- ciple, believing that Government-owned vessels suitable for commercial use could be usefully and profitably employed (if not otherwise required) in times of peace under charter to private parties, but their use should be restricted to the coastwise trade or between Atlantic. Gulf, and Pacific ports, so as to have them close at hand in case of need. They should not be permitted to engage in foreign trade, as they might be at the antipodes when wanted and would be liable to capture or internment in event of war. Vessels rust out more quickly when laid up in reserve or out of commission than when in use, hence naval and military auxiliary ships under charter to responsible parties for use in near-by services and well maintained would be more quickly and readily avail- able for use than if laid up out of commission. The bourse believes that the provisions of section 6, lines 11 to 22, constitute an absolutely unfair and unwarranted interference with the right of private parties to dispose of a losing investment in vessel property, and if enacted into law should be amended so as to be applicable only in time of war. The bourse believes that the general principle of section 7 is right and might well be made the basis of a separate act should the bill as a whole be (as we hope) negatively reported; but the scope should be eulai-ged so as to give to the President the right and power in time of war or any national emergency to commandeer any vessel flying the American flag upon just terms, rather than upon terms " based upon normal condition.s." The provisions of section 11 the bourse considers as commendable in principle and should Ije made to apply to all vessels under the American flag. For the above reasons the Philadelphia Bourse again requests and expresses the hope the bill H. II. 10500 may be reported back to the House of Representa- tives with the recommendation tht it do not pass, and with the further hope that such other legislation will be promptly enacted that will provide for an imme- diate and complete revision of those sections of our navigation laws which by their restrictions on Aiuerican ships and shipowners enhance the cost of opera- tion of vessels under the American flag, believing that when this is done that there will be ample private capital ready to build up an American merchant marine such as is the desire of every good citizen of this Union. Respectfully submitted for the Philadelphia Bourse. Geoege E. Baetol, President. Attest : [SEAL.] Emil p. Albrecht, Secretary. The Chairman, We have quite a delegation here this morning, some representing the Chamber of Commerce of Nev^ York and SHIPPING BOARD^ jSTAVAL AUXILIARY^ AND MERCHANT MARINE. 439 others from the New York Board of Trade and Transportation. We want to give everybody a fair chance to be heard. We also have with us Mr. Stuart G. Gibboney, of Barber, Watson & Gibboney, hiwyers, of that city. Mr. Gibboney, I think, at least two weeks ago informed me he wanted to be heard and was to have been here last week, but could not be present and so wired me. Later, I told him to be here this morning, and I feel we should hear him first. I think it is at least three weeks ago that I notified Mr. Fahey, then president of the Chamber of Commerce of the United States, to be present at these hearings when they occurred — invited him in person and then later by letter notified him that it would be aggreeable for him to appear this morning. So, if there is no objection, we will hear him second. Mr. Khett, who is president elect of the Chamber of Commerce of the United States, is here, and I understand he only cares to make a very brief statement. When we have heard these gentlemen, I would ask Mr. Bush, of the delegation from New York, to arrange the order in which the members of the New York delegation are to be heard. STATEMENT OF STUART G. GIBBONEY, ESQ., OF BARBER, WATSON & GIBBONEY, 165 BROADWAY, NEW YORK, N. Y. Mr. Gibboney. I am a member of the firm of Barber, Watson & Gibboney, counselors at law, 165 Broadway, New York. I am gen- eral counsel for the Hudson Navigation Co., and I am also general counsel for the United States Steamship Co., a company wiiich is now in process of organization, organized under the laws of the State of Maine. The Chairman. T\Tio are the officers of that company ? Mr. Gibboney. The president of that company is Mr. George E. Macomber, of Augusta, Me., who happens to be president of the Augusta Trust Co., a well-known Maine man. Mr. N. H. Campbell is treasurer of that company, and Mr. White is the secretary. The Chairman. Are they New York men? Mr. Gibboney. Mr. White and Mr. Campbell are; Mr. Macomber is a Maine man. I will be very brief, gentlemen, in what I have to say. I have not read any of the reported hearings of this committee and do not know what has been said here. I am sorry that some of the officers and those interested in our company are not here to speak, instead of myself. Last week we had all arranged to come down together, but I was detained by the trial of a case in the United States court before Judge Ray, in Albany, and could not get away. The chairman, how- ever, kincily invited me to come here this morning. What I say, however, I can say is said with the authority of the companies which I represent, and after consultation with them. The Chairman. What is the Hudson Navigation Co. ? Mr. Gibboney. The Hudson Navigation Co. is a company that navigates boats on the Hudson River between Troy, Albany, and NewYork City. That is a company which has not, up to this time, been engaged at all in foreign shipping, although we are subject to the Interstate Commerce Commission and our rates are supervised by it. 440 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. I will take up the bill, as I suppose that is the best way of stating our views. The Chairman. This is a continuation of the hearings on H. E,. 10500, known as the shipping bill. Mr. GiBBONEY. Yes, sir; I have that bill before me. We have no suggestion to make in regard to the first section there, with regard to the establishment of a board, except it seems to us that it should provide that at least one of the lay members of the board should be a man experienced in shipping or transportation matters. Mr. Edmonds. Do you not think all of them ought to be experi- enced in shipping and transportation matters? Mr. GiBBONEY. I doubt if you will be able to get them at the price you fix for the salary. Coming, now, to section 2, it seems to me that the salaries fixed there are too small. I doubt if you will be able to get such men as will perform satisfactory service on this board for $10,000. The Hudson Navigation Co. operates for only eight months in the year, and we pay our president $18,000 a year, and tfiat is a fair sample of the salaries paid to shipping men in New York. The Chairman. Ten thousand dollars is the salary of an Inter- state Commerce Commissioner, and I expect there are as good men on that commission as your $18,000 man. Mr. GiBBONEY. That is very true, but if you are going to put men experienced in shipping on this board that is a very different matter. You can always find a great many self-sacrificing lawyers to give up a good salary for the honor they get. The Chairman. I think we ought to get some people representing the people at large, the commercial interests, the manufacturing in- terests, and the agricultural interests. Mr. GiBBONEY. I think so. I do not think there should be more than one real shipping man on here. I think the exporters should have a man on there, and probably the shipbuilders. I think, how- ever, that could be left to the discretion of the President in selecting them, but I think one man should be a practical shipping man. The Chairman. I agree with you there entirely, and perhaps more. Mr. GiBBONEY. There is nothing else in that section on which we have any suggestions to make. Coming now to the third section, we are in favor of that section. We think we are the only people who have been making an honest effort to develop the American merchant marine under these times, and we are not afraid of any competition by the Government under this act at all. We have bought since last November 14 ships, for which we have paid over $2,000,000, and which we are sending out. Mr. Hardy. Where did you get them? Mr. GiBBONEY. We bought them all around; we bought them wherever we could get them. We bought four of them from the Lakes, when the railroads had to sell them on the Lakes. Mr. Hardy. In November? Mr. GiBBONEY. While the purchase was not completed until Janu- ary, we were dickering for them in November and December. Mr. Loud. They are coming down in the spring? Mr. GiBBONEY. Yes, sir. Four of those boats we bought there, and then we bought three from the Erie Railroad Co. a week ago — the J . J. McCuUough, the Shamonk, and the Oswego. SHIPPING BOAED, NAVAL AUXILIARY, AND MEKCHANT MAEINE. 441 Mr. Hardy. How large boats were the}^? Mr. GiBBONEY. The three boats we bought from the Erie Railroad were of 5,000 tons dead-weight capacity. Mr. Haedy. Ocean going? Mr. GiBBoxEY. Two are ocean going and one coastwise. These were bought just 10 days ago. We bought two English ships in Halifax, and we picked them up here and there. I may say in this connection that we have associated with us Mr. C. W. Morse, who is well known in shipping circles. He probably knows more about the boats on the American seaboard than any other man, and Mr. Morse is the man who has found these boats and bought them for us largely. In this connection I might say that it is my opinion that if the ship-purchase bill of last 3^ear had gone through and the Government had bought $50,000,000 worth of boats the Government by this time would have made $50,000,000. Mr. Hardy. Are there any boats lying around for sale now — do you know? Mr. GiBBoxEY. Yes. I am not going to tell you where they are, because we are going to try to buy them; but I think that close on to 20 or 25 could be bought to-day if you knew where to get them. ]\Ir. Hardy. What size boats? Mr. GiBBOXEY. They average between 4,000 and 5,000 tons dead- weight capacity. Mr. Ed:moxds. Would they be available for use on the ocean? Mr. GiBBOXEY. Yes, sir. Some of the vessels that we bought from the Erie Railroad Co. we had to fix up. Mr. Edmoxds. You are going to bring them down and load them on the ocean? Mr. GiBBOXEY. We are bringing two of them down now, and the other is in dry dock — the *Shamonk. Just to show you what a won- derful advance there has been in the price of these boats, when we contracted to purchase these boats from the Erie Railroad there were three boats — the -/. /. McCidlovr/h^ which is a coastwise boat, the Osiaefjfo, and the ShamonJc. The president of the Erie Railroad Co., who carried on the negotiations with our company for the boats raised his price as we went along, and we thought we had better take them as quickly as we could get them, and we did. But during the time we were drawing up the contract for the Oswego., for which we paid $325,000 (during the three days that we were agreeing on the contract or the negotiations), we had an offer of $450,000 for the Oswego, an advance of $125,000 in three days. ]\Ir. Hardy. High finance. INlr. GiBBox^EY. Pligh finance. And to-dav. if we would sell her, I believe we would get $500,000 for her, and we only paid $325,000 for her 10 days ago. What strikes our approval in the matter of this section is that if this bill goes through we will want to come in and offer to the ship- ping board to take 100,000 tons of the shipping authorized by this bill and guarantee to pay to the Govrenment 6 per cent on it net, and we would like to get 100,000 tons at that rate and operate them, and we can operate them at a profit. Mr. Edmoxds. Do you mean you can do that two years from now or three years from now after the war is over? 442 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. GiBBONEY. After the war is over. I am not figuring on war prices at all; because to show you the enormous profits being made out of shipping at the present time and the abnormal conditions that prevail, we sent out three boats January 18, February 7, and February 8, and the freight that we received from the cargoes on those three boats yielded us an average of 170 per cent profit on the purchase price of the boats. Mr. Bruckner. Where did they go ? Mr. GiBBONEY. One of them went to Archangel and one of them to Genoa, and they were loaded with timbers, barbed wire, pig iron, steel rails, etc. Mr. Edmonds. How many trips have they made? Mr. GiBBONEY. This is their first trip. Mr. Loud. They have not arrived at Archangel yet ? Mr. GiBBONEY. No ; they will get in there next month. It is a re- markable statement to make, gentlemen, but we paid for those boats on the first trip out and have paid 100 per cent dividends to the stockholders who went in on them and we have earned 170 per cent net. Mr. Byrnes. Those freights are being charged simply because you can charge them? Mr. GiBBONEY. Yes, sir. Mr. RowE. These are tramp steamers. Mr. GiBBONEY. Yes, sir. Mr. Byrnes. If we can get through this bill which we are seeking to pass, of course you would not be allowed to charge any such high rates as that? Mr. GiBBONEY. Certainly not, but of course the shipping board would have to take into consideration the supply and demand when it fixes the rates. Mr. Byrnes. Oh, no ; take into consideration what would be reason- able. Mr. GiBBONEY. That is perfectly reasonable, I think. We are will- ing to submit to that. Mr. Edmonds. Can you get insurance to Archangel? Mr. GiBBONEY. Yes, sir. Mr. Edmonds. It is pretty heavy ? Mr. GiBBONEY. Yes, sir ; it is pretty heavy. I forget the exact rate. Mr. Edmonds. And you are forced to charge high rates then in order to cover heavy insurance charges ? Mr. GiBBONEY. But even after paying insurance, we have netted 125 per cent profit on this one trip. Now, there is a prevailing im- pression that no ships can be built in this country at the present time. That is not true. I was told by Mr. Bruckner this morning that the Secretary of the Treasury made that statement the other day. But I am up against this shipping proposition every day, and my company has bought a shipyard within the last two months at Noank, Conn., within 135 miles of New York City. We are building there six boats at the present time, and if this bill goes through we will be in a position to contract with the Government for nine boats, which we will agree to complete within 18 months, of 5,000 tons each. Mr. Bruckner. I have been told that no shipyard will accept an order for delivery in less than three years. SHIPPING BOAKD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 443 Mr. GiBBONEY. We will take an order to-morrow morning if we can get one for nine of these boats. Mr. Greene. What company is that you are referring to ? Mr. GiBBONEY. Robert Palmer & Sons, Noank, Conn., which is about 135 miles from New York City, and 10 miles from New London. Mr. Bruckner. A new concern? Mr. GiBBONEY. No ; an old concern. Mr. Greene. Have they been actively engaged in business all the time? Mv. GiBBONEY. They have not been actively in business for the last 10 years. There have been a great many shipyards that have not been active. But they are at the present time, and we are build- ing six boats there. We took over those boats and agreed to com- plete the contract, and we have a capacity for nine more boats, which we can and will build if we can get the orders for them. I will say also that we have under option a shipyard not farther than 100 miles from Washington, where we will be able to undertake a contract for the completion of 10 boats, which we can build in two years' time. We intend to exercise our option on that yard if this bill goes through, because we think there wall be a demand created for the building of ships by this bill, and we would like to get in and build some of the ships for the Government under these cir- cumstances. Mr. Burke. In corroboration of your statement as to the activities in shipping, I w^ould say that about three weeks ago the Norwegian Government or a Norwegian firm let a contract for the building of two 5,000-ton merchant ships at Manitow^oc, on the w^est shore of Lake Michigan, in my State. I merely cite that as showing there are chances still existing to let shipping contracts. Mr. GiBDONEY. I think there is no doubt about it, sir. But I think there is so little real information about this whole shipping business from practical men who are up against the shipping proposition. The real reason we have not a merchant marine, gentlemen, is just one Mr. Saunders. That is what I have been trying to get at for a long time. What is that one reason? [Laughter.] Mr. GiBBONEY. My opinion may not be worth much, but it is this, because of the difficulty in financing in this country any proposition of this kind. Mr. Saunders. Just one purely of financing? Mr. GiBBONEY. Purely one of financing, in my opinion. Mr. Saunders. The field is there? Mr. GiBBONEY. The field is there. Mr. Saunders. The opportunity for profit is there ? Mr. GiBBONEY. The opportunity for profit is there. Ml. Saunders. And there are no difficulties of legislation in the way? Mr. GiBBONEY. No. sir. Mr. Saunders. It is just one of financing? Mr. GiBBONEY. Yes, sir. All this poppycock talk about the La Follette bill has not prevented us from earning 170 per cent profits. Mr. Greene. But conditions are now are abnormal. 444 SHIPPIISG BOARD, NAVAL AUXILIARA', AND MERCHANT MARINE. Mr. Gibbon EY. Of course, in normal conditions such tremendous profits Avould not be there. Mr. Saunders. Then I gather, Mr. Gibboney, from what you say, really what we needed at the beginning of this war, more than any- thing else, more than shipping, is that portion of the bill which would have allowed us to curb and control these outrageous rates which have been charged by shipowners? Mr. Gibboney. I do not get that. Mr. Saunders. I say, what we needed more than anything else at the beginning of this war was that portion of the bill Avhich would have allowed us to control these outrageous rates which the shipping people have been charging. If we had had that we would not have been sufi'ering from imposition in the way of these destructive rates you have been telling us about. Mr. Gibboney. There would not have been the demand for ships if there had not been the high prices for freight; there would not have been as much export freight carried at a lower rate, of course, as there has been at the higher rate. Mr. Saunders. Do j'ou mean to say if the rates had been curbed, then we would not have had the export? Mr. Gibboney. I think there would not have been as much capital gone into the shipping business. I should like to point out, in this connection, that I wrote an article for the Engineering Magazine, in January, the title of which was " The pressing need for a merchant marine." I made the charge in that paper — and a great many newspapers in New York threw conniption fits — I made the charge in that article that one is driven to the conclusion that if Wall Street could not get well-watered stock in that corporation or else a plan for a ship subsidy it would not play the game. A lot of newspapers in Xew York threw connip- tion fits about that statement, but since I read the bill which has been introduced on behalf of the chamber of commerce as T was coming doAvn on the train last night I see that what they were doing Avas playing for a ship subsidy. Of course we are in the shipping business, and if there are going to be any subsidies paid we will take whatever comes our way. The Chairman. You want your share, of course. Mr. Gibboney. AYe want our share. At the same time we realize such a bill has no chance in this Congress, and we are anxious to see any bill go through which will tend to stimulate the development of our merchant marine and the building of more ships ; and as it was necessary for the Government to finance, so to speak, the first trans- continental railway we are right back in that situation to-day. We need the Government to help us finance and put on its feet this tot- tering industry. In that connection, I should like to see this bill contain a provision for a shipping board- to take the minority stock in a corporation — preferred stock, if you will — under the supervision of the shipping board, and I should like further to see the shipping board loan money on mortgage on vessels and to have a clause in there that in such cases the Government had a right to take over the boat in time of war for a naval auxiliary. Mr. Bruckner. Do you think private capital will take stock in this corporation? Mr. Gibboney. In which corporation — in my corporation? SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 445 Mr. Bruckner. No; in this corporation. Mr. Edmonds. The Government owning a majority of the stock, you mean? Mr. GiBBONEr. Yes; but it will have to be popular subscription. You never could get it from the ordinary banking channels in New York. Those fellows won't bu}^; you will have to get it through popular subscription. Mr. Bruckner. How is it, Mr. Gibboney, that the American capi- tal, which is so anxious to invest in money-making enterprises, does not want to invest in the shipping enterprise? Mr. GiBBONET. It is a new business. Mr. Bruckner. Shipping is new ? Mr. Gibbon EY. The American banker is about the most conserva- tive man I know of. Mr. Bruckner. It is the bank; not necessarily the banker? Mr. Gibboney. It is purely a question, it seems to me, of getting money. If you can get the ships, and if you can get the freight to carry at a profit, and you can show you cai\ make money, then it becomes purely a question of finance. Mr. Bruckner. That has been shown? Mr. Gibboney. Yes. Mr. Greene. Will 3^011 please tell me what the capital stock of your corporation is? Mr. Gibboney. $25,000,000. Mr. Greene. $25,000,000? Mr. Gibboney. Yes. Mr. Greene. You incorporated under the laws of the State of Maine? Mr. Gibboney. Yes, sir. Mr. Greene. Why do you incorporate under the laws of the State of Maine? Mr. Gibboney. The president of the company is a Maine man. Mr. Greene. Oh, I know; but that is always so of those jNIaine corporations. Some officer has to be. You incorporate in the State of Maine — why do you not incorporate in the State of New York? Mr. Gibboney. I may say, in that connection, that our company is in process of formation. And we are also incorporating a company (so as to preserve the name) under the name of New York. You see, the scheme we are working is prefect]}^ simple; we buy a boat for $325,000, and we organize a company under the name of that boat and we issue a share of stock for $100 for every $100 put in that boat. Mr. Greene. And there is no personal liability in those Maine corporations. The Chairman. That seems to be the way they incorporate those companies now. i\Ir. Gibboney. We have a number of ships, and as the same stock- holders have gone in practically all of these boats, we ai'e g^ing to suggest a scheme of consolidating all of those companies into one line for the purpose of economv. Mr. EoAVE. You mean a holding company? Mr. Gibboney. No; not by a holding company at all, but to take over the boats. 32910—16 29 446 SHIPPING BOAKD^ NAVAL AUXILIARY, AND MEKCHANT MARINE. Mr. Edmonds. Do you mean to say that if you buy a boat for $325,000, you capitalize that for $325,000? Mr. Gibbon EY. Yes, sir. Mr. Edmonds. And then you sell stock for $325,000? Mr. Gibbon ET. Absolutely. Mr. Bruckner. Each boat is separate? Mr. Gibbon EY. Each boat has been separately incorporated. We have bought altogether 14 boats. Mr. Bruckner. And you have 14 different corporations? Mr. Gibboney. Fourteen different JState corporations with practi- cally the same stockholders. Mr. Bruckner. Are any of those corporations formed in New York? Mr. Gibboney. They are all formed in New York. Mr. Edmonds. Each company is going to take stock in the consoli- dated company and to pay 100 per cent for the stock which it sub- scribes ? Mr. Gibboney. Our company is the United States Steamship Co. Our scheme is perfectly simple; it does not contravene any trust laws ; we have carefully looked into that, and it does not contravene the Clayton Act. Our plan is to propose to the stockholders in these various boats that they turn in their stock and take slock in the United States Steamship Co. for their boat. Mr. Edmonds. There will not be any water in the United States Steamship Co.? Mr. Gibboney. No, sir ; we do not propose to have any water in the United States Steamship Co. Mr. Edmonds. Mr. Morse is at the head of it? Mr. Gibboney. Mr. Morse is one of a number of men in it. Mr. Edmonds. That same Mr. Morse was in steamship companies along the coast some time ago? Mr. Gibboney. He was. Mr. Edmonds. There was plenty of watered stock then, was there not? Mr. Gibboney. I was not familiar with those operations. I know there is no water now. In this connection, gentlemen, in regard to section 4, we think it is a very salutary provision here to provide for the leasing of vessels. The minute the Government has 500,000 tons of boats it would have no difficulty in leasing them at all; and it could get, I think, a net rental of 6 per cent on those boats without any question. Mr. Curry. Do you think the Government ought to go into that business for the purpose of keeping freight rates up? Mr. Gibboney. No, not for the purpose of keeping freight rates up. The shipping board is for the purpose of keeping rates down, as I understand it. Mr. Curry. If they are going to lease those ships for as much as they can get for them, is it not going to keep the freight rates up? Mr. Gibboney. No ; I think if the Government leases the boats at 6 per cent, and woulcl increase the tonnage, the freight rates would automatically go down. If the Government could put out to-morrow 500,000 tons of ships and lease them to individuals you would see the freight rates go doAvn pretty fast. SHIPPING BOARD, NAVAL AUXILIARV, AND MERCHANT MARINE. 447 Mr. CuuRT. Who would lease them — the people running the ships now ? Mr. GiBBONEY. The people running the ships now ; or people might go into the business. Mr. Curry. And you think they are going to reduce the freight rates because they lease from the Government? Mr. GiBBONEY. No; not because they lease from the Government^ but because I think there would be more ships to carry the export, trade. Mr. Curry. If you had double the number of ships, you could not carry it? Mr. GiBBONEY. If we had 500,000 tons Ave could not carry all the? freight — is that your statement? Mr. Curry. Yes ; that is my statement. Mr. GiBBONEY. I think that statement is correct. But if you had 500,000 tons of boats you would have that many more boats and consequently that much less export per boat. Mr. Curry. Those same people would lease those ships, those people who are. without rhyme or reason, keeping the rates up, if we had some ships to lease from the Government. Because they lease from the Government, they would reduce the freight rates? Mr. GiBBONEY. Oh, no; they would not do that at all. Mr. Curry. Certainly they would not. Mr. GiBBONEY. But you would increase the number of ships and automatically decrease the rate per ship. The Chairman. The provisions I want you to keep in mind are the provisions of section 8 of this bill, that such a situation as that could not exist in the event the Government operated those boats; that is. a Government-controlled corporation. Mr. GiBBONEY. Exactly. Mr. Curry. Mr. Chairman, that is what I wanted him to admit, but he would not. The commission could also control the freight rates on privately owned ships. Mr. GiBBONEY. I had that in mind. The Chairman. Some people want that section out of the bill. If it was out of the bill they would have the Government at their mercy. As long as that stays in the Government could compel decent treatment for the people. Mr. GiBBONEY. You can not blame those people, who are not in business for their health in New York, for getting all they can out of these boats. The Chairman. I think their appetite is always keen for profit. Mr. GiBBONEY. Their appetite is always keen for profit. I have- never seen a New Yorker yet who was opposed to making money. Mr. Loud. You could not get any relief from the boats you Avould buy. You could only get relief from the boats you would build. Mr. GiBBONEY. If this bill passed to-morrow you could get some- boats. Mr. Loud. How Avculd that relieve the situation when they are- already in the traffic? Mr. GiBBONEY. Those boats are not in the traffic now. Mr. Bruckner. Where are thev now ? 448 SHIPPING BOARD^ XAVAL AUXILIARY^ AND MERCHANT MARINE. Mr. GiBBONEY. I am not going to tell where those boats are, be- cause we want to get them ourselves, and, in fact, we are negotiating for them at the present time. Mr. RoDENBURG. An owner of a boat who would not put the boat in the traffic now, when we are making these enormous profits, ought to have his head examined. Mr. GiBBONEY. I think so. too. Mr. Bruckner. You are sincere in your statement that there are those boats to be had ? Mr. GiBBONEY. Yes; there is a limited number. According to my figures, there are about $2,500,000 worth of boats. Mr. Saunders. Will you just tell us in that connection why, with the opportunities you have described here this morning, $2,500,000 worth of boats are idle? Mr. GiBBONEY. That is because people do not know where they are, or else it is difficult to finance. Mr. Saunders. But the people who own the ships know. Are they not aware of the enormous profits that are present just now? Mr. GiBBONEY. Yes; and they are, of course, trying to sell them. Take the Erie Railroad boats; why did not somebody else get in there 10 days ago and buy those boats? We bought them only 10 days ago. You see, a large number of those boats are on the market by reason of the Panama Canal act, and the railroads have to divorce their connection with the steamship lines, and a great many boats are on the market for that reason. All of those Lake boats are' on the market for that reason, of course. The Chairman. I noticed a statement the other day that a $20,- 000,000 corporation had been formed to take over those boats that the railroads on the Lakes were compelled to give up. Mr. GiBBONEY. That is all true. We know all about that, sir; and we are bidding for those very boats and bought four of them. The Chairman. That is a distinct corporation from yours? Mr. GiBBONEY. That is a distinct corporation from ours; that is Mr. Connor's corpoi-ation in Buffalo. Mr. Saunders. It seems to me an arrangement would have been made to take those boats up as soon ns they got a chance. Mr. GiBBONEY. They have been on the market since the 1st of December. Mr. RowE. They are actually wanted in commerce on the Lakes? Mr. GiBBONEY. Yes, sir. Mr. RowE. And they are simply taking them out of the commerce on the Lakes and putting them on the ocean? Mr. GiBBONEY. Mr. Connor contemplates keepins: them there. Mr. RowE. I mean yourself; you have taken them off the Great Lakes? Mr. GiBBONEY. No, sir ; we have got three that are going to operate there. We bought four from the same company that Mr. Connor did. Mr. Bruckner. But, Mr. Gibboney, that does not relieve the situa- tion. Those same boats are engaged in that traffic. Mr. GiBBONEY. No; that does not relieve the situation; there is probabl}^ a greater demand on the Lakes to-day than ever before. SHIPPING BOARD, KAVAL AUXILIAKV, AND MERCHANT MARINE. 449 Mr. Saunders. The only way to relieve the situation is to get those boats that are idle from the owners who do not seem to have scnsQ enough to know a good thing when they see it. Mr. GiBBONEY. We bought 14 boats since the middle of November, showing you that we can buy boats. Mr. Edmonds. Were all of those boats in operation when yon bought them? Mr. GiBBONEY. Practically none of them. Mr. Edmonds. They were bought on the Great Lakes? Mr. GiBBONEY. No; they were not all on the Great Lakes. Mr. Edmonds. Where were they; on the ocean? JMr. GiBBONEY, Sticking in shipyards here and there, all the way from Halifax to Baltimore. Mr. Edmonds Had they been in operation at all since the war started? Mr. GiBBONEY. Some of them had and some of them had not. Two of them were English boats, which we got in Halifax, Nova Scotia; we got one boat from the Merchants' and Miners' Transportation Co. here in Baltimore. We just picked them up wherever we could find them. Mr. Edmonds. The reason they were not in operation was because they Avere physically unable to operate them on account of repairs or something like that? Mr. GiBBONEY. No. In the first place, you have to have a place in New York where you can assemble your freight; you have to have a dock: you have to be able to connect with the man who wants to ship stuff. And just any fellow down in Norfolk or up in Baltimore can not pick up a boat and run into a fellow^ on the street, you know, and get cargo for his ship. We own our own dock in New York City.^ Mr. Edmonds. Your statements do not connect at all, because you made the statement here that the demand for ocean tonnage was enormous. Mr. GiBBONEY. It is. Mr. Edmonds. And yet here are these ships that could make 100 per cent profit on a single voyage lying around, and the men do not know what to do with them. If you are making that amount, I think you could almost run into a man on the street and get cargo, Mr. GiBBONEY. We bought 14 of them. Mr. Edmonds. I understand perfectly well that you did. Mr. GiBBONEY. And they had been on the market for three months, And we will buy the rest of them. We will take every boat available for ocean transportation that can be bought to-day. Mr. Edmonds. And so will a great many people. Mr. GiBBONEY. Certainly. The Chairman. We are not making any headway talking about that. Mr. GiBBONEY. I will be very brief. Of course, it is not for me to say what the advantages might be to the Government for having navai auxiliaries. That, it seems to me, is self-evident ; and that these boats could be profitably handled there is not any doubt, in time of peace, in the merchant marine. 450 SHIPPING BOAKD. XAVAf, AUXILIARY, AND MERCHANT MARINE. Mr. Loud. The Navy Depai-tment insists they have no auxiliaries to spare. Mr. Gibbon EY. I say these very boats could be taken from the marine transportation and turned into naval auxiliaries under the terms of this bill. Mr. Loud. You are not speaking of the ones we already have. ]Mr. GiBBONEY. No, sir. Mr. Bruckner. Did I understand you to say you bought two English boats? Mr. GiBBONEY. Yes, sir. Mr. Bruckner. How did they get American registry? Mr. Gibbon EY. We did not put them under x\merican registry; Ave left them in the English registry. Mr- Bruckner. Then they are not flying the American flag? Mr. GiBBONEY. No, sir. We have 12 beats now under the Amer- ican flag and two under the English flag. In that connection, I might say you can buy an 'English boat at about 80 per cent of wdiat you have to pay for an American boat to-day. In other Avords, the. additional risk and other things are figured by the shipowners to be about -20 per cent in favor of tha American registered boat. As to the prices paid for these boats, we paid all the way from $25 a ton up to $100 a ton. I think probably $100 a ton is about the market price to-day on the ocean-going boat in New York. Mr. Saunders. What was the price per ton before the war broke out, approximately ? Mr. GiBBONEY. it would depend a great deal on the boat, of course. Mr. Saunders. I understand. Mr. GiBBONEY. I should say that a boat to-day selling for $100 a ton could be bought before the w^ar at $60, as an average; maybe $50. Mr. Saunders. And that is all the advance that has occurred in spite of the enormous possibilities of profit that has been going on and are still going on? Mr. GiBBONEY. They are going up every day. Only recently they have been jumping by leaps and bounds, which I illustrated in the purchase of those Erie Railroad Co. boats. Just to give you an idea of the tonnage, I have made this memorandum of boats, and cargoes, and freights we are getting. Where ordinarily $8 per ton was paid before the war to Genoa, to-day we are getting $50 a ton, and where ordinarily $12 was paid for freight to Archangel, to-day we are get- ting $100 a ten, and it is going up at the rate of 100 per cent a week. Mr. Greene. Who pays the freight? Mr. GiBBONEY. The shipper of the goods, and he pays it before "the boat leaves the harbor. Mr. Greene. So that the freight is added to the cost of the goods and the buyer pays it? Mr. GiBBONEY. Of course ; at the other end. As I said before, the necessity for this bill is purely a question of finance. You have to educate the American banker and make him realize that there is a great field here. And the Government has to do it because w^e waited for 70 years for them to get into the field and they have not done it and never will. We should like to see put into this bill, as I said before, a pro- vision that the Government might take the minority stock in the SHIPPIX:; IICAKD, NAVAI. AUX1!.1AK V, AND MERCHANT MARINE, 451 corporation — preferred stock, if you will — so that they would be sure of getting their dividends. Mr. Saunders. Let me ask you a business question. You take a ship wdiich the Government buys for a million, which it leases to you, we will say, under the proposition that you say you are willing to make — that you are willing to give the Government 6 per cent on that. Mr. Gibbon ET. Yes, sir. Mr. Saunders. Would that interest of 6 per cent on a million- dollar ship provide the Government not only with a profit on its money, but take care of the gradual decline in value of the ship from year to year to replace it? Mr. Gibboney. You mean a sinking fund? Mr. Saunders. Yes; to take care of its decline in value. Mr. Gibboney. I think, probably, the shipping board would have to work out some scheme for laying aside a sinking fund, and either have the lessee of the ship pay that or have some fair adjustment between the Government and the lessee. Mr. Saunders. As a business proposition. G per cent would not do it? Mr. Gibboney. No, sir; I do not think it would. Mr. Saunders. You have to have in mind, if you go into the busi- ness as a capitalist — if you go into the shipping business — such earn- ings on that ship as will not only give you a dividend, but will replace it; in other words, will provide a sinking fund. Mr. Gibboney. Yes. Mr. Rodenberg. What percentage do the shipowners provide for that? Mr. Gibboney. That depends on the boats. Most of those boats we bought have been very old boats; but if j^ou started out with a new boat it would be an entirely different proposition, of course. Then you would have to figure on what the life of the boat would be under ordinary circumstances. Mr. Saunders. I will renew my question. If you put your money in a vessel you have to have in mind those considerations. Mr. Gibboney. Certainly. Mr. Saunders. Then, having in mind a new ship, if the Govern- ment buys a new ship at a million dollars which it proposes to lease to you, you say you are willing to take that from the Government at 6 per cent? Mr. Gibboney. Yes, sir. Mr. Saunders. But that does not save the Government harmless in its investment in that ship. According to the accepted rates of the business world, what ought the Government charge in order to pro- vide a sinking fund? Mr. Gibboney. You would have to figure it out, to figure the price of the ship and figure the amount of capital invested in the ship, and then you could very easily figure the amount to be set aside each year. Mr. Saunders. I know we have to do all that, but what I am try- ing to get at, Mr. Gibboney, is for you to tell me as nearly as j^ou can, approximately, what that will be. That is what I am trying to get in the record. 452 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. GiBBONEY. Taking a 5,000-ton boat, which is the most sensible boat for the Government to build under the bill, because that is the most easily chartered ship, I should say, with a new boat, the life of it ought to be certainly 40 or 50 years. Mr. Saunders. Say 40 years, Mr. GiBBONEY. Yes; take it at 40 years. You can figure out the cost of that boat, which will be in ordinary times probably $75 per ton. And then it is a pure question of mathematical calculation. Mr. Saunders. I am figuring that the Government has bought it in normal times and paid a million dollars for it. The Chairman. A million dollars for a 5,000-ton vessel? Mr. Saunders. Say $500,000; that does not alter the question at all. I took a million dollars as the original cost of the vessel. I do not care; say, $500,000; it is immaterial. Mr. GiBBONEY. It ought to be the life of the vessel figured out on a conservative basis divided into the amount the vessel cost. That is all. Mr. Saunders. Can you not put that in now — some concrete state- ment of the figures? Mr. GiBBONEY. Being a lawyer, I am not a very good mathema- tician. Mr. Saunders. I do not want you to go into any exact calcula- tion; I just want to know this: Here is a $500,000 ship that the Government has bought in normal times. What I want to know is what the Government ought to get from that ship in the way of returns, to provide for insurance, profit, and depreciation, as nearly as you can give it. Mr. GiBBONEY, Of course, my proposition was 6 per cent net ; that is, we would pay the Government 6 per cent net, Mr, Saunders, You would take care of the insurance? Mr, GiBBONEY. We would take care of the insurance, Mr, Saunders. Over the 6 per cent? Mr, GiBBONEY. Over the 6 per cent, Mr, Saunders, And give the Government 6 per cent? Mr, GiBBONEr, Yes, sir; and give the Government 6 per cent, Mr, Saunders, That presents a concrete proposition, Mr. GiBBONEY. Six per cent net, Mr, Curry, Do you not figure off as depreciation 3 per cent for the first 10 j^ears, and 5 per cent thereafter, on a new ship? Mr, GiBBONEY, I think that is customary, for the shipowner, Mr, Curry. I think that is just what the judge is trying to get. Mr, Saunders, If you are going to take care of depreciation, you would have to pay that to the Government ? Mr, GiBBONEY, Certainly, Mr, Saunders. How much would that be? Mr. GiBBONEY, From 3 to 5 per cent, Mr, Saunders, Say, 4. Mr, GiBBONEY, They usually figure the first 10 years at very much less than that, Mr, Saunders. Then you would have to pay the Government 10 per cent, Mr. GiBBONEr. Yes. Our proposition is to give the Government 6 per cent net on the amount of the investment. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 453 Mr. Saunders. And then you to take care of the insurance? Mr. Gibbon EY. We would take care of the insurance and take care of the depreciation. Mr. Saunders. That is what I am trying to bring out. Mr. Gibbon EY. I have nothing further to say, gentlemen, except I read last night, coming down on the train, a letter which was said to have been written by the chamber of commerce to the committee here, and I just wanted to make a few comments on it. In the first place: The chamber further submits that American shipbuilding yards are unable to accept orders for the construction of vessels of sufficient size. That is not true at all. The Chairman. They just have in mind these big yards. If you Avill turn to page 41 of the hearings, you will find a list of 40 or 50 yards in the United States that are building ships. Mr. GiBBONEY. I have no doubt about it, that a great many of the largest shipbuilding yards are filled, but there are a great many ship- building yards — I do not say there are a great many, but there are some, which can take orders for ships to-day. I know I represented the Seattle Dry Dock and Construction Co. in the matter of closing a contract in New York in December for eight boats. That is a com- pany that has built boats for the Government. Now, I want to comment on this statement,' and that is all I have to say : The chamber does not believe that a subsidy assuring a profit to owners of American vessels in foreign trade is necessary. I do not think these gentlemen had their sense of humor — that it was not working — when the}" wrote that, because I read in the same l>aper, the Journal of Commerce, the text of a bill which is said to be a bill by the chamber, introduced by Congressman Rowe, and if that does net provide for subsidies, I do not know what a subsidy is. The Chairman. I am having figured out just what that would cost the Government annually. Mr. GiBBONEY. What is that, sir? The Chairman. I am having that figured out. On its face it ap- propriates $100,000, but I expect it would take $10,000,000 to carry it into effect. JSIr. GiBBONEY. It is just a pure subsidy figured, in the first place, on the difference in cost here and abroad. I do not think it would be possible to determine that to any degree of accuracy. As to the cost of operation of the boats now in existence, that would be very difficult to figure out. That is a pure subsidy on operation and con- struction, and nothing else. And yet they say the chamber does not favor subsidy. Mr. Loud. You think a loan provision in the law would be de- sirable ? Mr. GiBBONEY. I do. Mr. Loud. What proportion of the value of the boat ? Mr. GiBBONEY. I would think, as a safe business proposition, the Government ought not to lend over a third or a half. Mr. Loud. At what per cent? Mr. GiBBONEY. That could be left to the discretion of the shipping board, as the shifting price of the money changed, or it could be 454 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. fixed at the regular amounts men would be willing to pay, between 5 and per cent. Mr TjOttp, That would have to be determined then? Mr. GiBBONEY. I venture to say, if you put it in here at 6 per cent, 3-ou would find the money gobbled up. ]Mr. Loud. Would that be secured by insurance upon the boat? Mr. GiBBONET. Yes, sir: secured by full insurance on the boat, just as you would in the ordinary loan or mortgage on a house — you have the mortgagor protect you in every way. And then I think most shipbuilders would be willing to have a provision added that the Government could take over that boat as a naval auxiliary. Mr. Loud. The boat to continue, of course, under American reg- istry ? ]\Ir. GiBBONEY. And just one more point, and that is the bill ought to be changed as to the price at which the boat is taken over after a loan b}^ the Government. The private individual ought to be safe- guarded. It seems to me that a better provision than the provision in the bill would be for the L'nited States district court to determine in any particular case, what was the fair value of the line which the Government took over for a naval auxiliary, rather than to leave it to the shipping board. Mr. Loud. If you had a shipping board of five, would not that be competent and ample? ]Mr. GiBBONEY. I do not think five would be any better than three. The Chair:man. You would be better off as lawj^ers to have it go into the courts, but I do not think it would be of advantage to the people. Mr. GiBBONEY. You might let the shippers agree upon it. or let the Government and the lessee agree, and if they could not, then there should be some separate tribunal to pass upon it. From the stand- point of the people putting their money into these corporations, they would like to feel they are going to get their money back, and they would feel safer if the United States district court would pass on this question, rather than the board itself. I know in the public land bill before the Senate that there is such a provision, that those leases may be taken over and the recapture of those leases is b}?^ the district court of the United Stats. And I think most people would feel safer in putting their money in. I have no doubt the shipping board would treat the lessees fairly; but if they could not agree, it seems to me that the L^nited States district court can more safely proceed. Mr. Greene. Did you refer to the steamer Lansing in one of your boats? Mr. GiBBONEY. Yes, sir : the steamer Lansing. Mr. Greene. ^^Hiat is that, a wooden vessel or an iron vessel? Mr. GiBBONEY. I do not recall for the moment. I know we bought a boat by the name of Lansing, but I do not know what the boat was. Mr. Greene. Do you know what her age is? Mr. GiBBONEY. No : I do not know anything about that. Mr. Greene. Can you furnish that information and have it put in the record? Mr. GiBBONEY. I will be glad to furnish to this committee a list of all of these boats and give their records — 14 of them. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 455 Mr. Greene. I would like to have the information whether it is a wooden vessel, a steel vessel, or an iron vessel, and how old u vessel it is. Mr. GiBBONEY. Yes, sir. Mr. Greene. And how it rates. Mr. GiBBONEY. I will furnish you a list of the whole 14. The Chairman. I do not know^ why it would be of interest, but if you want it we will have it. Mr. Greene. I would like to have it. I want the light shown. Mr. GiBBONEY. I will give a list of the wdiole 1-1. Mr. Greene. This gentleman has talked pretty fast, but he has not talked directly, and I would like to have the facts. Mr. GiBBONEY. If there is an}^ question you w^ant to ask me I will try and answer it. Mr. Greene. I have asked you that question and you say you can not answer it. INIr. GiBBONEY. I can not. Mr. Greene. I ask you to furnish it for the record. Mr. GiBBONEY. I will do so gladly. Mr. Greene. And you said you would also do so in regard to the others. Mr. GiBBONEY, Yes, sir. Mr. Greene. I would like to have it. STATEMENT OF MR. JOHN H. FAHEY, OF BOSTON. Mr. Fahey. I am engaged also in business in Worcester, Mass., and am a newspaper publisher. The Chairman. And until recently Mr. Fahey. President of the Chamber of Commerce of the United States. My term has just expired and I have been succeeded by Mr. R. G. Ehett, of Charleston. In the first place, I would like to make a statement concerning the referendum of the Chamber of Commerce of the United States on the so-called ship purchase bill, as it was before Congress last year. At a previous hearing Mr. W. H. Douglas, of New York, a member of our committee on merchant marine, appeared and made a statement with reference to that action of the national chamber. Unfortunately I received no notice of that hearing and it was not possible for me to be present. I observe in going through the record of the hearing that a few questions were raised by members of the committee as to how the vote of the Chamber of Commerce of the United States is polled on the various questions submitted; and I would like to make an explanation of that for the benefit of the members of the committee. In the first place, I observe that ques- tions were raised as to how the constituent organizations in the membership of the national chamber reach their conclusions on these referenda. As to that I would like to say that the method of action is determined by the by-laws or the constitution of each or- ganization. They act on the referenda in various ways. Some under their laws act in meetings of their membership; others by mail referenda on the various propositions submitted by the national chamlier; others through a committee: and others through boards 456 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. of directors, where the board has the power of acting for the mem- bership. And so action was taken on this particular referendum by different methods. We have prepared here a summary of the action for all the organizations in the country which voted on the subject ; and we would be very glad to leave it with members of the committee to look into in any way they see fit. I think it is unnecessary to take much of your time by going into the details, but, in a few^ words, the summary shows, in connection with this referendum, that of the organizations voting 15 determined their attitude by a ballot in open meetings of the membership with- out a previous committee report, 24 had a report from a committee and then passed upon it in open meetings of the membership, 24 submitted it to a mail ballot, 71 acted through their directors or governing boards, 62 acted through a governing board after a report from a standing committee, 8 acted by the governing board alone, and 7 acted through the officers who were empowered to act. There is, as I say, a complete summarj^, which shows also the number of members in the organizations in each case. As to this system of referenda, I would like to say, gentlemen, that this particular one is the ninth submitted by the Chamber of Commerce of the United States. This system has been adopted in our country Mr. Greene. Mr. Chairman, I would like to have the statement that Mr. Fahey has referred to incorporated in the record. The Chairman. Suppose we Avait until he gets through with his verbal statement, and I presume that is what he is going to ask to have done. Mr. Fahey. That is for the determination of you gentlemen; it is here for such use as you desire to make of it. The Chairman. I think we would like to have that go into the record, unquestionably, as Mr. Eosenthal made such criticisms of the acts of the chamber of commerce. Mr. Fahey. The only charge is this, that Mr. Douglas said that they were speaking for the people of the United States The Chairman. I was not speaking of Mr. Douglas ; I was speak- ing of Mr. Rosenthal. Mr. Douglas was asked how the sentiment of the various chambers of commerce was obtained, and he did not know, and now we are getting the concrete information as to how that was done. I agree with Mr. Greene that the statement should be inserted in the record. Mr. Fahey. I do not w^ish to go into detail too much, and I hope you will stop me at any point if you think I am, because I realize you have many gentlemen here to be heard. The Chairman. You are giving the information now that we could not get from Mr. Douglas because he did not have it. It was no fault of his. Mr. Fahey. The plan of getting the sentiments of the business men of the country by this method on business questions is something that has been developed more largely in our country in the last two years than ever before. Similar methods have been employed in European countries, notably Germany, France, and Switzerland, but theirs are more informal. The chambers' plan has been this: First, to submit a given ques- tion to a committee chosen as carefully as possible to represent the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 457 different points of view of various sections of the country ; men hav- ing information concerning the subject. That committee makes its study and presents its report to the board of directors. The board of directors may accept the report or suggest changes or suggest further consideration of different phases of it. When the report is com- pleted, then it is, under the direction of the board, sent out as a referendum in printed form. In the referendum, no matter what the report of the committee may be concerning the question under discussion, it is the rule of the chamber to undertake to present to its membership both sides of the question as thoroughly as possible. In this particular instance, the merchant marine bill of last year was presented at the membership meeting in the chamber in February, 1015. A large part of one day was given to its discussion in open debate. The explanation of the Government bill was made by Secretary McAdoo at length, and critic'sms of its features were made by Senator Burton, folloAving which the whole question was thrown open to debate by members of the chamber. There were some 600 authorized delegates in at- tendance at that time from all parts of the country. The determina- tion of the meeting was, however, that there should not be hasty action, and that all the organizations of the country should have full opportunity to pass upon the question, and it was ordered sent to a referendum. It was sent in the form in which you see it. In addition, however, the complete argument of Secretary McAdoo and the complete argument of Senator Burton accompanied this docu- ment. When a referendum goes out to the organizations, each chamber has 45 days to pass upon it. In a great many instances the organizations request additional cop'es of the referenda which we furnish, and they are circulated to the extent of some thousands among these organizations. In many instances the referendum will go to a com- mittee, to the merchant marine committee or a special committee of the organization, which submits a report to the directors, and as I have pointed out in some of the organizations the directors are em- powered by the by-laws to pass upon these reports. In other cases the report will go to the membership. The record here shows how this particular referendum was disposed of. When these votes are polled and brought together at the end of the 45-day period, a chart is made showing every organization of the country voting on each of these projects. These charts are printed and copies of them are available for the members of the committee, in addition to recording its ballots in this form, any organization which W'ishes to present any point at variance with the ballot has a full opportunitv of incorporating its suggestions in returning its vote. So you will find on the last pno'es of th's chart independent opinions concerning phases of the bill exjjressed by many of the organizations. I would direct vour attention to the details of this referendum. You will see that it presents the report of our merchant marine com- mittee and a minor' ty report, a summary of the arguments for and against the principles involved, a summary of the history of the American registry and American shipping, also the ship-purchass bill itself in full, as well as the bill presented and worked out lasfc 458 SHIPPING BOAED^ NAVAL AUXILIARY, AND MERCHANT MARJNE. year concerning possible regulation, merely as an example of the scheme of regulation. The chamber voted on certain very definite things here, aside from the ship-purchase bill itself. First. Do you favor the Government undertaking the purchase, construction, and charter of vessels for mercantile purposes, together with the operation of such vessels? The vote was 89 in favor and 690 opposed. Second. Do you favor ownership of merchant vessels by the Gov- ernment, but with operation by private parties under leases, the vote being 51 in favor and 713 opposed. Third. Do you favor subsidies from the Government sufficient to offset the difference in cost between operation of vessels under the American flag and operation in the same deep-sea trades under for- eign flags, the vote being 554 in favor of and 189 opposed. Fourth. Do you favor a subvention to establish regular mail and freight lines under the American flag to countries in which the com- mercial interests of the United States are important, and to American dependencies, the vote being 713 in favor and 52 votes opposed. Concerning the creation of the Federal shipping board, the ballot was G39 votes in favor and 116 opposed. _ . On the question of Government subscription to stock in a marine- development company the vote was 416 in favor and 314 opposed. That particular one failed to pass, for under the by-laws action must be taken by a two-thirds vote to be binding on the chamber. As to the ocean-mail law of 1891, that it should be amended, re- ducing the speed of ships from 16 to 12 knots and by making the com- pensation adequate to permit the establishment of steamship lines carrying both mail and freight, the ballot was 692 votes in favor and 78 votes opposed. On the question of legislation abolishing rebates and providing for supervision of rates by the Federal shipping board the vote was 601 in favor and 130 opposed. That Federal licenses should be taken out by lines, domestic and foreign, engaged in shipping between ports of the United States and other countries the vote was 610 in favor and 120 opposed. That referendum, gentlemen, in the detail of its submission and in the form of its presentation was as complete as it was possible for our board of directors to devise. That there may be defects in it we realize. Almost anything can be criticized. But the endeavor of this organization has been, as thoroughly and as democratically as pos- sible, to get a free expression of the opinion of the business men of the country in every one of our States. The Chairman. Right at that point, Mr. Fahe}'. how many sub- sidiary organizations — that is, constituent bodies — of the Chamber of Commerce of the United States voted on the question? Mr. Fahet. Two hundred and eighty-two organizations voted on this question. The CHAiR:\rAN. And how many organizations are there of con- stituent bodies in the Chamber of Commerce of the United States? Mr. Fahey. At that time there were 575 qualified to vrte: 282 took action upon it at that time. At the present time the membership is. something over 700. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 459 The Chairman. On the fourth question: "The committee recom- mends that there should be legislation abolishing deferred rebates and providing for supervision of rates by the Federal shipping board, with requirements for filing with the board schedules of rates and all agreements among over-sea lines," I believe you said the vote Avas 601 in favor of the recommendation, and 130 opposed. In this referendum you submitted the text of a bill I introduced in the last Congress to regulate rates. It refers to that legislation, does it? Mr. Fahey. In general terms, yes; not specifically. The Chairman. I understand. Mr. Fahey. The committee did not set that forth as a matter for the membership to pass upon. The Chairman. But just the general proposition? Mr. Fahey. That bill was an illustration of the principle. It was the general principle on Avhich the chamber voted, and not on the details of the bill, because the bill was not up for consideration at that time. If there are any questions which members of the committee would like to ask concerning the method of the submission of this refer- endum, or polling the vote on it, I would be very glad to answer, so far as I can. The Chairman. Mr. Greene suggested that you make your refer- endum a part of the record. Mr. Fahey. Yes. (The referendum and summary offered by Mr. Fahey will be found at the conclusion of his remarks.) Referring to the chairman's question of a moment ago, he spoke of a statement by Mr. Douglas concerning this referendum, when he was before the committee, saying that it represented the views of the peoijle of the United States. I take it that must have been a slip of the tongue on the part of Mr. Douglas, for we are not pretending, nor have we any right to claim, that this action by referenda in the Chamber of Commerce of the United States goes quite that far. It represents, we claim, the views of the business men of the United States, and so far as they may be consistent with those of the people as a whole, the referendum reflects popular senti- nient, but that it represents the views of the entire population of the United States we do not assert. The CHAiR:\rAN. That was a good-natured challenge on my part that Mr. Douglas's idea \vas rather extravagant. Mr. EoDENBERG. What is the membership of the chamber at present ? Mr. Fahey. At the time of submitting this referendum there were 582 organizations, representing something like 200.000 business men, firms, and corporations, if my memory serves me right. Mr. Redpath. A little over that; about 250,000. Of course, so far as the individual business men are concerned, that would be in- creased several times, because this membership represents firms and corporations, while the individual membership would be very much larger in most instances. Mr. RoDENBERG. How do you apportion the vote of the member- ship of each individual organization? According to the number of members ? 460 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Fahey. Yes. Mr. RoDENBERG. I See some are given 2 and some 3. Mr. Fahey. Yes; a minimum of 1 and a maximum of 10. The largest organizations of the country have no more than 10 votes, while the smallest organization may have 1 vote. For example, the Boston Chamber of Commerce, with 5,000 members, and the Chicago Association of Commerce, with much the same, and the New York Merchants' Association, the Philadelphia Chamber, etc., they content themselves with a maximum of 10 votes, while, as a matter of fact, the smaller organizations exercise the larger influence in proportion. The significant things, I believe, about this particular referendum are in two or three directions. If you have the time to look at it in the detail, you will observe that the consensus of opinion expressed is quite irrespective of the different sections of the United States. For example, on the matter of subsidies and subventions, you will find the interior of the country and the Southwest, as well as the Pacific coast and the East, voting with practical unanimity on that particular thing. I am quite frank to say that I was somewhat surprised at the overwhelming character of the vote in that direction throughout the country. Mr. Hadlet. Can you state what proportion of the organizations in the country are constituent members of your association ? Mr. Fahey. Yes. Our present membership is a little more than TOO. In the entire country there are about 2,000 organizations of this type. Our analysis of the last couple of years shows that there are not more than 900 to 1,000 of them that are really effective organiza- tions. Mr. BfRNES. Have you any information as to the manner in which these questions were considered by the constituent organizations? Mr. Fahey'. Yes; that is presented in this summary here to which I referred. Mr. Byrnes. What I mean is this. Do you have any information in your reports as to the number of members of the constituent organi- zations present at the time that it was passed upon? Mr. Fahey. In some cases, yes; but in the case of the membership meetings I am not sure that the record includes a statement of the membership present. Does it, Mr. Eedpath'? Mr. Redpath. Not in all cases: it does in a few cases. Mr. By'rnes. The reason I ask is I think it is the experience of every Member of Congress that he has received resolutions from chambers of commerce on various subjects, and our inquiry shows that it is true, of these smaller towns especially, that the matter has not been given the careful consideration that it ought to receive by them. Of course, I know there are some very live organizations, and then there are some dead ones, where one or tAVo members can control and express the opinion of that organization. What I want to know is, How accurate is this as a basis of the sentiment of these organiza- tions ? Mr. Fahey^ As to that question, in the first place let me say I think you are perfectly right as to conditions that have existed in many instances in the past. As a matter of fact, in my judgment, until within the last 10 years, when a very considerable reform in conditions began in this country our business organizations, as a SHIPPING BOARD, NAVAL AUXU.IAKV, AND MERCHANT MARINE. 461 whole, were woefully inefficient and tlieir methods were extremely unbusinesslike, and, to a very large extent, their consideration of questions was just what you describe. In the last 10 years, how- ever, there has been a tremendous and very significant reform in these organizations all over the country. They are better organized to-day; they are giving more careful consideration; they are able to employ men as secretaries wdio have some intelligence and ability; and they are dealing with these things in a very much different way than they ever have. Moreover, this system of referenda emanating from the national chamber has had a most interesting reaction in bringing about more careful consideration than previously. I be- lieve it is absolutely fair to say that these referenda of the chamber are getting really careful and cautious consideration. This summary shows the organizations Avhich passed upon this matter in meeting; those which previously referred it to a com- mittee, and then to the board of directors, and then to the meeting, and the steps that were taken in each case. You will find on investi- gation that a very large proportion of them went about the thing very carefully. Mr. Byrnes. Where is that information you refer to? Mr. Fahey. We have just a few copies, which I will leave with the committee, summarizing that whole matter. Moreover, it also takes each one of the cities and explains how each voted upon the matter, giving a statement of all the cities voting and of all the organizations voting, and showing how the action was taken in each case. Mr. Saunders. Are you, or have you been, in the shipping busi- ness? Mr. Fahey. No, sir; not in any respect. I have no business interest in shippina: business, and my knowledge of this subject is simply that of an ordinary citizen interested in public affairs, who has heard it discussed for a great many years by men in different sections of the country, as well as some on the other side of the Atlantic. As to the bill at present before the committee, concerning which it has been suggested that I might express an opinion, I w^ould like to have it very clearly understood that in anything I may say about this bill I am in no sense expressing the views or the opinions of the Chamber of Commerce of the United States, for I have no authority to do that, nor has anybody else. The new features of this particu- lar bill are now^ before the Chamber of Commerce of the United States, and until they have been submitted to referenda and voted upon no official of this chamber has any right or authority to say what the attitude of the Chamber of Commerce of the United States is. How^ever, there are certain principles incorporated in this bill which were likewise passed upon in the referenda of the chamber, and concerning those the view of the chamber is reasonably clear. As to some of the new principles, the annual meeting and the last meeting of the board of directors reached the conclusion that when the bill itself was a little further advanced and it was reasonably clear just what its provisions would be the chamber would be pre- pared to submit it to a referendum if it seemed advisable. As to any personal views I hope you will clearly understand that I am not expressing them as an expert in the shipping business, or as an expert on the subject as a whole, but merely one somewhat familiar 32910—16 30 462 SHIPPING BOARD, NAVAL AUXILfAKY, AND MERCHANT MARINP:. with the discussion of this thing for years, and who has heard a good many views expressed on it in the course of the last two years. Referring to the present bill as a whole, it is my opinion that umcng business men generally there can be no sound or substantial objection to a bill providing for the building of naval auxiliaries or a naval reserve intended for the service of the United States Navy. Indeed, business men can see readily that the Navy, without sufficient supplemental transportation to take care of coal and other supplies, is net an efficient Navy, and they would hardly expect it to be main- tained at sea for any length of time unless it was enabled to get the proper supplies. Therefore, as a broad matter of efficiency in opera- tion, I am sure the -business men would see the necessity for ample raval provision. As to the second principle involved here, if the Government is going to build all these ships for that purpose, it is common sense to utilize them under conditions of peace, by employing them in any other practical way. That is a sound business proposition. In general, the expressions of opinion that I have heard among busi- ness men are those of apprehension as to the effect of some features of this bill; the fear that they may be detrimental to the present movement for a general upbuilding of the American merchant marine. I believe, as a result of the thought on many subjects which has been animated by this war, not only the business men of the country but the people as a whole, have been thinking more seriously of a merchant marine and been giving more attention to it in the past 18 months than they had in the previous 18 years, and their views are undergoing some change. I believe that whereas years ago we were interested in the operation of a merchant marine for many years, perhaps the last 40 or 50 we have been so absorbed in domestic de- velopments and have found such substantial returns on investments of money in enterprises here at home that we have not thought much {•bout the development abroad; we could make more money at home. Aside from that, our whole foreign trade averaged less than 5 per cent of the domestic trade, and, according to some authorities, less than 2 per cent; and under those circumstances we were not think- ing very much of foreign trade. Nevertheless, I am one of those who believe we have needed to push foreign trade for nearly 30 years now, and need it to-day more than we ever have, and need it even more for the future. If we are going to have it and going to maintain it we must have a sufficient merchant marine to carry a iaro'e part of it at least. If that be so, the fundamental question involved in this legislation, it seems to me, is whether the limited number of ships which may be provided on the basis of this appropriation is going to advance sub- stantially the evolution of a merchant marine important enough to serve our needs. According to experienced shipping men, not more than 50 to 75 vessels of substantial size would be provided by an ap- propriation of $50,000,000. And, if advantage were taken of the terms of the bill to organize corporations, and those corporations entered into the operation, let us say, for example, of lines to South America, it is more than likely — indeed, it is extremely probable — that such corporations would have to incur substantial losses for a consider- able time before those lines would be on a paying basis. If that is a SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. 463 fair contention, then the number of ships avaiLible for the $50,000,000 would be still further reduced, because a part of that $50,000,000 would go to make up losses in operation. As against that argument, however, the question is whether the extraordinary conditions, with the opportunity for the United States to go into the shipping business as it has never had before, and prob- ably never will ha^ e again in tlie history of the world — let us hope we will never have the opportunity again under similar conditions — is it not sound statesmanship and good business to do everything we may reasonably expect to do in an emergency to encourage the building, not of 50 or 75 ships alone, but of the 2,000 or 3,000 ships that we need for our trade? And, if so, how may we do that? Under present conditions, private enterprise, stimulated by extra- ordinary profits, is going into the shipping business pretty rapidly in this country. It is likewise going further into it in some other countries. It is paying high prices for vessels, the wages are high, and everything in connection with the investment has gone up tre- mendously in price. But all wise business men know that is a tem- porary condition, and the question is what is going to happen after the war is over. If we turned loose to-morrow and built day and night, with all the shipyards that we have at our disposal, great and small, in the United States, I believe it is a fair statement to make that the next two or three years could not begin to produce the num- ber of ships needed here and that we ought to have for a long time in the future. Therefore, one question involved is how^ to stimulate a larger building program than that, even, and on what basis can we encourage the shipbuilding industry to extend its facilities so as to turn out more ships — what encouragement may we offer to private enterprise, at the same time the Government is going forward on this program, to provide us the ships that we need. That is the question I find being raised by business men generally as to this particular bill. The building of a certain number of ships to act as a reserve, which will develop the standardization of types and promote effi- ciency in building and in operation may prove a valuable contribu- tion as a result of this bill. Moreover, it is a beginning, and we need to start our plans for a real merchant marine soon. But what of the larger field of the hundreds of ships that are needed if we are going to be able to transport our goods, in our own bottoms, as we should be able to do. So far as the National chamber is concerned, to a very surprising extent, irrespective of section and political affiliations, the business men who voted on this subject have expressed the opinion that, in the last analysis, only some system of subvention or subsidy fairly devised, will finally meet the difference in cost of operation between ships of our country and those of other countries. We know per- fectly well under present conditions, that the cost of building on the other side is probably as high as it is in this country, and, in some instances higher. And not only that, but in a great many for- eign ships, the wage cost to-day is as high as on our ships, and pos- siibly higher to aome extent. I won't pretend to say how far that is true, because I am not informed. There are other gentlemen here who can give you information on that point. But it is undoubtedly true, to a certain extent. That it is a normal condition, however, few would contend: or. that it will continue long after this war is over, 464 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARSNE. we can hardly anticipate. The question is, therefore, what qt the future — not the temporary care of conditions, or throwing into the sea of a limited number of ships that will help to stabilize rates. Upon that point, in my judgment, it is extremely questionable how far 40 or 50 ships may affect the rates of thousands of ships, par- ticularly with tremendous demands on their resources. In a few words, therefore, the question is not what we may do for the time being in stimulating greater efficiency, in providing resources for our Navy, but beyond that what may we do now, under present conditions, to lead to the upbuilding of a real American merchant marine, such as the country needs. As bearing upon that point, I believe that the feature in this bill providing for the creation of a shipping board, which will go into this subject and undertake to look ahead, reporting to Presidents and Congresses the effect of changing conditions, is a real contribu- tion to the situation. As matters stand at present, it may be very difficult indeed, if the country were read to act to-morrow, to devise a system of subsidies that would be equitable and that could be fairly adjusted: but that such a board can look ahead, and in the near future, be able to make suggestions, is quite probable. Now, as to some other details of the bill. The provision for mem- bership on the board of the Secretary of the Navy and the Secre- tary of Commerce is criticized by business men as being unsound. I think there are reasons which have not been advanced generally why the Secretary of the Navy and the Secretary of Commerce should not be on that board. My opinion is that our Cabinet officers are being constantly called upon to act on just such things as this, when they have not the time to attend to the regular business of their offices. As I have come in contact, as a business man, with Government de- partments, down here, I am particularly struck with the fact that Cabinet members are called upon to administer big business enter- prises in each one of these departments without anything like the facilities provided in private business to take care of such enterprises. In the first place. I. for one, do not think you pay your Cabinet officers enough, and you do not give them secretarial assistance enough to sufficiently handle the -enormous volume of business that has to pass over their desks every day. To put further burdens on them, Dy placing them on educational boards and particularly on operating boards of this sort, prevents their giving the time and thought that is necessary to important problems of this character. Aside from that, no matter what restrictions there may be, the action of the Secretary of the Navy and the Secretary of Commerce on this board, although as w^e well know they are in constant touch with marine affairs, because they come within their scope, nevertheless there will alwa^^s be a certain atmosphere of suspicion about the board and the fear that politics will appear. For myself, I think it would be much better to leave the board at three or even to increase it to five, and not have both these officials serve on it. The Chairman. Do you mean to say a board of three or five men, eliminating the Secretary of the Navy and the Secretary of Com- merce Mr. Fahet. Eliminating them ; yes. If some means might be provided for securing their advice and cooperation. I do not think SHIPPING BOAKD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 465 there would be any objection. But that is wholly unnecessary, of course, as a provision of law. The Chairman. You speak of nonpartisan boards; I never saw one exactly. This ought to be bipartisan, you think '^ Mr. Fahet. I think the bipartisan board better if the question of partisanship can not be eliminated from it entirely. The Chairman. So far as possible? Mr. P\\HEY. So far as humanly possible. These boards should be made up of men who can approach this subject from a business standpoint and with some experience in the business. Mr. Bruckner. Broad-minded men. Mr. Fahey. Broad minded; certainly. The Chairman. How about the salaries? Mr. Fahey. I quite agree with Mr. Gibboney. While I recognize the principle on which men are given in the public service lower salaries than the same men would command in private life, never- theless I think with the constantly rising salaries in business in recent years and higher cost of living of men in public office, par- ticularly^ in Washington, that it is time for the Government to be a litttle more liberal in respect to salaries. I do not think we have a right to ask men to come down here and sacrifice life opportunities at low salaries when they can command rery much more under private conditions. Men are expected to make saci-ifices to serve the State, and it is a fine thing to encourage, but the (iovernment nowadays is often asking too much sacrifice. I think we would do much better if more liberal salaries were paid for work of this sort. Mr. Byrnes. Do you think the presence of the Secretary of the Treasury on the Federal Reserve Board has made it a political board ? Mr. Fahey. Oh, no ; I would not say that at all. Mr. Byrnes. Do you think Cabinet officers would be any more partisan than the average business man? Mr. RoDENBERG. He is objecting to the fact that they could not give attention to it. Mr. Byrnes. I understood him also to say it would give a political aspect to it. Mr. Fahey. I think, irrespective of what the facts may be, that the public is almost sure to hold that impression. The Cabinet officer after all is a leader of the administration in power and is interested in the success or failure of that administration. He is looked upon as a party leader, and it is very difficult for anybody to differentiatq in matters of this sort. Mr. Byrnes. Do you think that the public holds that idea as to the presence of members of the Cabinet on the Federal Reserve Board? Mr. Fahey. There is only one member of the Cabinet on the Fed- eral Reserve Board, and that is a board very much larger than this, Mr. Byrnes. But they do hold that idea as to that one member, do you think? Mr. Fahey. I would not say that ; no. Mr. Byrmes. If they do not hold it as to that one member, what reason do you think there would be for holding it as to members on this board? 466 SHIPPING EOARD^ XAVAL AUXILIARY^ AND MliP.CilAXT MARINE. Mr. Faiifa'. In this case, on a board of five, two at tlie outset would be membei'S of the administration of definite political affilia- tions, and one more man of the same party affiliation gives political control to that board at once. Now, I am not pretending Mr. Loud. The Interstate Commerce Board has none. Mr. Faiiey. They do not have what? Mr. Loi D. They have no Cabinet officer on it. This would be similar to it, would it not? Mr. Fahey. I should judge so. Let me say as to that phase of the matter I am only reflecting views I have heard frequently ex- pressed in the country in the last year and a half. There are many who contend that, if the Government goes into this business through the organization of corporations to operate ships, it is going to be almost impossible to prevent pressure on that board from the various ports which have very highly developed local prejudices and jeal- ousies, (Galveston, New Orleans, Jacksonville, Seattle, Norfolk, Newport News,Baltimore,Philadelphia.Providence,and Boston, and most of the rest of them think they have the finest harbors in the United States, and are entitled to all kinds of opportunities which they are not getting to-day. As a matter of fact, under the present conditions in re]:>orting the statistics of these ports, the Department of Commerce is in hot water frequently because of port rivalries. There are many who claim that it is likely to be very much more violent when the Government must say from what ]iorts its ships shall sail. In the minds of many the idea of eliminating any possibility of charging political influences in the composition of this board is very im- portant. The Chairman. Eight on that point, Mr. Fahey: If the Secretary of the Navy were eliminated, there is to my mind a reason why I thought the Secretary of Commerce might logically remain on the board, and that is, that the Department of Commerce has the super- vision of our Steamboat-Insi:)ection Service and the Bureau of Navigation is now under the jurisdiction of that department. Formerly they were under the jurisdiction of the Treasury Depart- ment, if he should be eliminated from the board, of course those two bureaus, the Bureau of Navigation and the Steamboat-Inspec- tion Service, should also be transferred to this board and under their jurisdiction. Mr. Fahey. I would say, Mr. Chairman, I believe if this board is created and goes ahead that ultimately it will be found logical and consistent to transfer those services to the jurisdiction of this bonrd. The Chairman. Should it not be done directly? Mr. Fahey. Possibly not The Chairman. I say it should not be done directly if you com- pose this board of five meml^ers, eliminating the Secretary of the Navy and the Secretary of Commerce from the board? Should you not provide then that they should take over these two bureaus? Mr. Fahey. I think it is a much better organization as a matter of efficiency in business. The Chairman. I think that that would be the proper thing to do if the Secretary of Commerce is eliminated from the board. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 467 Mr. Faiiey. Yes. In section 4 the board is authorized to charter, lease, or sell, purchase, etc., to any corporation, firm or individual. I Avonder of the committee has in mind making some provision which would insure American control of such corporations, that the majority stock of such corporations should be owned by x\merican citizens if such a provision is to remain in the bill? Without that it would be possible f^r foreign corporations, I take it, domiciled in the United States — I mean foreign-owned corporations that are here domiciled — to come under the provisions of this section. Mr. Loud. Would it be possible to enlarge the scope of the Panama Steamship Co. to take over that part of the design of the bill? Mr. Fahey. I could not say ; I am not familiar with that. Mr. Loud. They are organized and have the machinery for carry- ing on the business. Mr. Fahey. Yes. At the end of section 4, to return to the Gov- ernment control of a ship leased or sold, as it stands, it is to be taken over at such fair market values to be determined by the board and approved by the President. I assume generally that would be regarded as a fair provision; but the weakness of it is that there is no power of appeal upon any hand. In practice the board would really settle the price and will be quite human and anxious to make as good a record as it can in its operations. This opens the door to injustice to those who are obliged to turn back the ships at a valua- tion to be determined by the board alone. It is a detail that it seems to me might be strengthened by some power of appeal or by provid- ing for a board of appraisers or a board of arbitration. There is another sentence, at the end of that, that when ships are sold at public auction the money received therefrom shall be covered back into the Treasury of the United States. I assume that that would definitely reduce the sum of money at the disposal of this ship- ping board and that that is the intention of this committee. JNIr. Edmonds. No; the chairman notified us the other day that a committee amendment would be offered that this money would be turned back to the shipping board for it to be used over again. Mr. Fahey. I see. Mr. Hadley. It w^ould be a sort of a revolving fund. Mr. Fahey. Under section 6, near the bottom, it says — and hereafter no vessel registered or enrolled under tlie laws of the United States shall be sold to any person, firm, or corporation other than a citizen of the United States. Is that intended to mean vessels which come into the registry hereafter, or from the time of the passage of this bill, and not that ships now under American registry shall be sold? It would seem a little doubtful as to its languao'e. Mr. Edmonds. I understand from that section, Mr. Fahey, it means that any ship that is hereafter registered. Mr. Fahey. That comes into registry hereafter. Mr. Edmonds. Any ship that comes into registry hereafter could not be sold to foreign parties without the consent of the board. It does not make any difference whether it comes in as a sliip purchased by this board, constructed by this board, or anything like that, that does not enter into it, but any ship which comes under the United States registry. 468 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Fahey. It does not operate as to ships at present under American registry? Mr. Edmonds. Yes; they can not get a change of registry after- wards. Mr. Fahey. Is that not a little bit ambiguous? The Chairman. It is not as clear as it might be, but the intention was to make it apph" to those under registrf as well as to those which might hereafter come under American registry. Mr. Fahey. As to that. I have heard some debate on it to the effect that if it is meant to apply to ships now under American registry it is unjust. If it applies to ships which may come under American registry later it might be considered as fair, as those ships hereafter coming under American registry would do so under notice that they must incur that possible penalty. But as to ships which have been placed under American registr}^ and are now under that registry, after the war if there should be a tremendous slump in the shipping situation and they would be operating at a loss, that they might not have an opportunity to dispose of their property would certainly be argued by many as a very serious injustice. The Chairman. I will say that that provision was inserted in the bill in view of the action of the foreign Governments. I think all of the principal maritime nations of the allies and the central powers of Europe are providing some form of degree that their ships can not be transferred to foreign registry. But that whole question, of course, when the bill comes up for consideration in the committee, will be thoroughly considered in view of the suggestions you make. Mr. Fahey. I do believe, in justice to the owners and operators and as a matter of fact as bearing upon the thing most needed at present, an incentive for others to go into the shipping business, that it is a matter which should be seriously considered by the committee. The Chairman. That is a feature, however, that was suggested at that time. You take those ships under foreign flags that applied for registry under the American flag and were admitted under the reg- istry act of August, 1914, they have been such large gainers by doing so it would look unfair for them, just as soon as the danger passes, to go back under the foreign flag; in other words, to seek the protection of the flag of their own country when threatened and to enjoy the magnificent profits, and then, just as soon as the danger passes, to go back under the foreign flag. That has been urged as a reason Avhy they ought not to do it, whether there is any provision of law for it or not. Mr. Fahey. I appreciate the force of that. Of course, however, as business men, the thing that stimulated the transfer to the American flag was the safety and profits under the present conditions. They would have been under the American flag years ago if there was the same opportunity for profit, in addition to safety, and they will stay hereafter if those conditions exist. The Chairman. If the German cruisers had not been active on the Atlantic and Pacific I imagine they would not have come under the American flag anyway. Mr. Fahey. Yes. Mr. Curry. That provision is not prohibitive, is it ? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 469 The Chairman. I suppose the shipping board would not require a corporation to keep vessels under the American flag where it would not be profitable to do so. Mr. Curry. The shipping board may grant permission to do so. Mr. Fahey. Yes ; that is true. Mr. Curry. I hope they would not, but they might. Mr. Fahey. They might. But the thing that is of some impor- tance at this stage of the game is its effect upon those who are encouraged to build and operate now, as to where they are going to be afterwards; because nobody can put money into the shipping business to-day without realizing what a speculation it is, and with- out considering what the results are going to be. I would like to point out, too, in reference to the action of other countries, that it was animated largely by two things: One, by the condition of war and a desire to retain control of all of their own vessels; and, two, the consideration of taxation and the attempt to remove vessels from levy. We would do the same thing under simi- lar conditions, of course. As to section 8, its certain operation is, of course, one of the par- ticular phases of this bill concerning which business men are critical ; and if the committee is able to devise any way by which the possi- bility of continued competition of Government-owned ships with privately-owned vessels can be removed, and still make the act work- able, I am sure it would be regarded with much greater approval by business men. Section 9, as to the determination of rates which are just and rea- sonalile, I think that is a little at variance with the method of opera- tion of the interstate commerce act, in that railroad rates are filed by the carrier and are then passed upon by the commission. I under- stand that here it is contended in order to secure the quick action necessary, it would not be pi-acticable to go through the steps of filing a rate, providing for a hearing, etc. That is not likely to be necessary. Nevertheless, there is apprehension concerning the pro- visions here, and the question is whether it is not possible to modify the plan if this feature of the bill is retained. In the last part of section 9, concerning the report of the board to the President and to Congress, toward the end it says " to gather and report." I would like to suggest that the committee consider inserting there the words "from time to time" to convey the idea of continuous action in that direction. Again, as to the various details of the interstate commerce act, it is, of course, frequently urged, as you gentlemen know, that it is undesirable to incorporate in any law blanket legislation including another act in its entirety, because it is rather confusing. I believe the committee should seriously consider whether the phases of the interstate commerce act which are intended to applv ought not to be specifically set forth. I am not sure, for example, whether the bill providing for the valuation of railroads is an amendment to the interstate commerce act or a special act. My impression is that it is an amendment. If that be so, I assume it would also be included in its entirety in this bill. I do not know whether that is intended or not. 470 SHIPPIXG BOAED^ NAVAL AUXILIARY, AXD MERCHANT MARINE. There are other features .worthy of incidental discussion, but I haAe ah'eady taken so much of the time of the committee that I think it is unfair for me to impose longer. In general I belieA'e we should not permit further delay in taking some step toward solving the merchant marine problem, and that this bill has many promis- ing features. I see no reason why defects brought out in these hear- ings can not be cured and a workable measure agreed on. It is at least a beginning, and we need to begin. Mr. Greene. Is that included in your statement — what you re- ferred to as the other matters? Mr. Fahey. They are not of any great importance. Mr. Greene. There are two things I would like to say, however, while I have the attention of the committee, if I may be permitted, in view of the testimony of Mr. Gibboney. One is, the suggestion of ]Mr. Morse's companv paying the Government 6 per cent on ships. I should think if Mr. Morse's company is making the extraordinary profits reported, and there is an}?- assurance of their continuance, that the public might be interested to advance the money. But if the public is unwilling to advance the money to Mr. Morse on a 6 per cent basis, I should think it extremely doubtful if the United States would want to put its property in his control on a 6 per cent bas's. Moreover, it is stated that Mr. Morse's company is prepared to construct nine vessels now. If the company is really prepared to build those vessels now, in view of the 170 per cent profits. I should think they would be building them without waiting for any action by the Government or anybcdv else. Mr. RowE. Mr. Chairman, I have just learned that one of the gen- tlemen from New York is leaving to go South on the 2 o'clock train, and I wonder if we could not hear his statement now. Mr. Curry. I would like to ask Mr. Fahey one or two questions, if there is no objectic n. You stated. Mr. Fahe}-, you believe that this shipping board should be a board of experts. Mr. Fahey. Yes; should be a board of practical business men and experts. Mr. Curry. Practical business men ? Mr. Fahey. I would not undertake to say by that, Mr. Congress- man, that every member of the board should be a man of practical experience in shipping, for I believe that business judgment in the new problems to be dealt with here is quite as valuable as the other. Mr. Bruckne*. A good commercial man. you mean? Mr. Fahey. I do; men of bus'ness experience. IMr. Loud. And three out of five. Mr. Curry. And this board should take over the duties and powers of the Department of Commerce? Mr. Fattey. Of the Bureau of Navigation and the Steamboat-In- spection Service. ISfr. Curry. Those are now under the Department of Commerce. , The Chairman. Under the laAv the onlv qualification for member- ship on the Interstate Commerce Commission is that they shall not be interested or stockholders in anv transportation company under their control. It is assumed that the President in naming men for SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 47 1 the commission selects them with reference to their fitness, and I assume he would do so in this instance. But if we could prescribe their peculiar qualifications in the bill we would have no objection to doing thatj although he might select men of very different caliber notwithstandmg. Mr. Curry. I have introduced a merchant-marine bill, including those two features, that the commission should be composed of five experts, one of whom is to have practical experience at sea; two having had practical experience in shipping, as importers or ex- porters, along that line; one to be a naval architect and engineer, and one to be learned in maritime law. I also provide for the trans- ferring of the duties and powers of the Bureau of Navigation and the Steamboat-Inspection Service to this board, and instead of the Government-ownership feature of the bill I have a Government loan. I do not know whether you have seen the bill or not. But do you think that so far as this bill is concerned it would be improved by a board of experts, and that board to have the absolute control trans- ferred to them from those boards of their jurisdiction, so far as ship- ping is concerned ? Mr. Fahey. As to the latter feature, yes. As to the board of experts, I think it would depend upon what you set forth as specifi- cations for the experts. I believe that in these Government boards it is very easy to carry too far the qualifications of the type of men who must go on the board. I believe it is desirable to leave that somewhat elastic. As to this whole question of shipping here, I believe there is one phase of it that must not be lost sight of, and that is that the ship- ping business is itself a business calling for considerable skill and we do not know too much about the shipping business in the United States to-day. Moreover, even in those countries enjoying a great merchant marine, particularly England, with low rates of wages and all other advantages, there have been a great many failures in the shipping business because of lack of sufficient business knowledge and experience. Mr. Greene. It is a business of its own? Mr. Fahey. Certainly it is. Mr. Greene. Not ever}- man could be picked up off of the streets or even in Congress here, who would be fitted for that work ? Mr. Fahey. It is one of our great businesses of which knowledge in this country is comparatively limited as compared with our other enterprises. Mr. Curry. If Ave could not get that knowledge from people who have had practical experience at sea, practical experience in ship- ping, practical experience as naval architects and engineers, practical experience in the maritime law, where would we get them? Mr. Fahey. Of course men of the type of which you speak pre- sumably would have knowledge of the business. But my point, how- ever, is that I think it is unwise to make too strict limitations that there shall be one man of one type and another man of another ; that you thereby tie up your commissions pretty hard and do not always get the best results. 472 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. (The referendum and summary offered by Mr. Fahey are as fol- lows:) THE UPBUILDING OF THE MERCHANT MARINE. Referendum No. 9, Chamber of Commerce of the United States. Number of organizations qualified to vote- Number of organizations voting Summary 0/ organisation vote on referendum No. 9. 575 282 Organi- zations. Mem- bers. Organizations acting at meeting of membership: U 4 1,804 206 Total 15 2,010 Organizations acting at meeting of membership after having a committee malce a report: Local 19 5 11,668 National . 1,072 Total 24 12, 730 Organizations acting by submitting questions to members for mail ballot: Local 11 16 8,706 3,330 Total 27 12, 036 Organizations for which directors, or a similar governing board, undertook to act: 48 23 26,240 National 29, 648 Total 71 55, 888 Organizations for which directors, or similar governing board, undertook to act, but only after receiving report of a committee: Local . 58 4 60, 363 National 900 Total 62 61,263 Organizations for which committee undertook to act, whether committee of the gov- mittee: liOcal 5 3 1,478 National 799 Total 8 2,277 Organizations for which the executive officers undertook to act: 5 1,182 National 3,955 Total 11 5,137 Organizations which sent out to membership referendum pamphlets or statements of their own based upon the national chamber's referendum pamphlet: Local .' 7 5 4,765 National 1.561 Total . 12 6,32& [Chamber of Commprce of the United States of America, Riggs Building, Washington, D. C.) .JULY 9, 101.5. SPECIAL BULLETIN. Referendum No. 9. — The Upbuilding of the Merchant Marine. During the autumn of 1914 a special committee of the chamber canvassed pro- posals made iii recent years for increasing the merchant marine under the SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 473 American flag. A report of this committee was before tlie tliird annual meeting of tlie cliamber, whicli was lield in February and wliich devoted more attention to the metliods of promoting the American merchant marine than to any other subject. At the annual meeting it was voted that a referendum sljould be taken among the organizations in the membership of the cliamber. Accordingly on May 8 nine questions were placed before the membership of the chamber, separated on two ballots accordingly as the questions were based primarily upon issues raised by the report of the special committee or were added by the board of directors of the chamber. Under the by-laws of the cham- ber the voting closed at midnight on June 22, when 282 organizations had filed ballots. These organizations are situated in 39 States, the District of Columbia, Alaska, Hawaii, the Philippines, Porto Rico, and Paris, France. In the balloting each organization casts as many votes as it may have dele- gates at au annual meeting of the chamber. The number of delegates depends upon the number of members in an organization, but in no case falls below 1 or exceeds 10. The results of the balloting in referendum No. 9 were as follows : Ballot No. I. I. Do you favor tTie Government vndertaV-in? the purchase, construction, or charter of vessels for mercantile purposes, together with the operation of such vessels? II. Do you favor ownership of merchant vessels by the Government but with operation by pvivete parties under leases? III. Do yon favor subsidies from the Government sufRcient to offset the difference in cost between operation of vessels under the American flag and opention in the S'>me deep-sei trades under foreisrn flaps? IV. Do yon favor subventions from the Government ti establish regular mail and frei Yt lines under t'e American flap to countries in wlich tbe com- mercial interests of the United St tes are important, and to American dependencies? 89 votes in favor. 690 votes opposed. 51 votes in favor. 713 votes opposed. 554 votes in favor. 189 votes opposed. 713 votes in favor. 52 votes opposed. Ballot No. 2. I. The committee recommends the creation of a Federal shipping board to investigate and report to Conaress regarding the navigation laws and to have full jurisdiction, under tlie law, in all matters pertaining to over-sea transportation. II. The committee recommrnds that ths GovernmTt subscribe to the entire stock of a marins development company with a capital of thirty mil- lion dollars, this company to have authority for seven years to" lend, under supervision of the t'ederal shipping brard, upcn the sfcurity of first mortpases on m?rchant vessels, tai in? as e vid'^nee of this indebted- ness bonds which bear a fair rate of int-^rest and contain provisions for amorti ation, the dovelopmi^nt '-■ompany to ruarantee the bonds as to prtnr'ipal and interest and sell them to the public. III. The committee recommends that the ocran-mail law of 1891 be amended by lowerini the speed for first-class steamers from twenty to sixteen knots and for second-class steamers from sixteen to twelve knots, and by making the compensation adec uat»^ to p"rmit the establishment of lines of steamships carrytns both mail and freight. rv. The committee recomnirnds that there should be lecislation abolishing deferred rebates and providing for supervision of rates by the Federal shipping board, with reciuirements for filinp with the board schedules of rates and all agreements among over-s^a lines. v. The committee recommends that Federal licenses should be taken out by lines, domestic and foreien, en?a?ed in shipping between ports of the United States and other countries. 639 votes in favor of the rec- ommendation. 116 votes opposed. 416 votes in favor of the rec- ommendation. 314 votes opposed. 692 votes in favor of the recommendation. 58 votes opposed. 601 votes in favor of the recommendation. 130 votes opposed. 610 votes in favor of the recommendation. 120 votes opposed. The attitude of the chamber, under the provisions of the by-laws, can be determined only if two-thirds of the votes on a proposition are cast one way or the other. Consequently referendum No. 9 has defined the attitude of the chamber with respect to all of the propositions stated on ballot No. 1 and all of the recommendations on ballot No. 2 except the second, concerning the organization of a marine development company. Details of the votes are tabulated on the next page. Notes are added to indicate such definite action as members took in connection with their votes. 474 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Ballot No. 1. Ballot No. 11. Name of organization. I II III IV I II III IV V o a < o < a o B '5 < 1 'S < o & a C o 1 1 3 1 I 10 6 5 a a < 6 10 1 1 1 3 1 1 10 6 5 2 4 1 3 1 4 8 1 1 1 6 1 1" < Alabama: Mobile- Cotton Exchange 1 1 1 1 3 1 1 1 1 3 1 1 10 6 5 2 4 1 1 3 1 4 8 1 1 1 6 1 Alaska: Cordova — 1 !... 1 ... 3 1 '... 10 L.. 6 .. 6 10 1 3 1 10 5 2 1 4 6 6 10 1 1 I 3 1 1 lo 6 5 2 4 10 1 1 3 4 8 1 1 1 6 1 6 ... Arizona: Phoenix- Chamber of Commerce 3 1 Arkansas: Blytheville— C hamber of Commerce 10 6 5 2 10 2 4 1 6 5 6 10 California: Fresno- 1 ... 10 ... 6 ... 1 ... Fi Los Anaeles— Chamber of Commerce Oakland— (b) Chamber of Commerce and Commeri^ial Club Pasadena — Bo ird of Trade 5 ... 2 -- Riverside- Chamber of Commerce 2 4 10 1 8 6 Sacramento^ 4 San Die?o— Chamber of Commerce 6 6 10 fi San Francisco — 10 -- in Dried Fruit Association of Cali- fornia 1 1 1 Shipowners' Association of the Pa- cific Coast 1 ... 3 ... 1 ... 1 4 1 San Jose- Chamber of Commerce . 3 1... 4 ... 8 ... 1 ... '!■- 1 ... 1 1 --^ Turlock— Board of Trade 1 Co'oTdr. Cobrado Springs- Den er — Chamber of Commerce. .. 8 1 1 1 1 6 Greele.'— Commercial Club Connecticut: Derl).v— Chamber of Commerce Meriden— Chamber of Commerce New Ha en— Chaml)er of Commerce i Lumber Dealers' Association of 2 6 3 New London- Norwich — Board of Trade 2 2 2 1 6 3 2 6 3 2 2 1 6 3 2 6 3 2 2 1 6 3 South Manchester- Chamber of Commerce 2 6 2 6 3 6 3 2 2 District of Columbia: Washington- Board of Trade National Association of Piano 3 5 Florida: Jacksonville — Georgia: Atlanta — 5 ? 5 '=, 5 2 1 5 2 1 5 2 1 5 2 1 5 2 1 5 2 Brunswick- 2 2 ll 1 Savannah — (d) Board of Trade 1 1 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 475 Name of organization. Ballot No. 1. Ill IV Ballot No. 11. II III IV Hawaii: Honolulu- Chamber of Commerce Illinois: Alton- Board of trade Aurora — Fox River Valley Manufacturers' Association Bloomington — Commercial club Champaign- Chamber of Commerce Chicago- American Association of Refriger- ation Association of Commerce Bureau of Barley and Malt Sta- tistics Central Bureau of Extension Table Manufacturers Central Supply Association Coal Merchants' Association Chicago Typothetae Electrical Supply Jobbers' Associ- ation " nimois Ice Dealers' Association. . . Illinois Manufacturers' Association Illinois State Brewers' Association. (e) Industrial Club Lumbermen's Association of Chi- cago National Association of Master Bakers National Association of Retail Druggists (f) National Association of Tanners National Builders' Supply Associ- ation National Bureau of Metal and Spring Bed Manufacturers National Confectioners' Associa- tion National Hardwood Lumber As- sociation National Implement and Vehicle Association National Shoe Wholesalers' Asso- ciation National Slack Cooperage Manu- facturers' Association Tight Barrel Stave Manufacturers' Association United Typothetae and Franklin Clubs of America Western Cigar Box Manufacturers. Wholesale Saddlery Association . . . Danville- Industrial Club Decatur— Association of Commerce East St. Louis- Commercial Club Freeport— (g) Chamber of Commerce Joliet— Association of Commerce Peoria— Association of Commerce (h) Illmois Commercial Federation Peru — Business Men's Association Rockford— Chamber of Commerce 476 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCUANT MARINE. Name of organization. Ballot No. 1. Indiana: Argos — National Retail Hardware Asso- ciation Columbus^ Chamber of Commerce Indianapolis — Board of Trade Chamber of Commerce National Veneer and Panel Manu- facturers Western Paper Box Manufacturers Lafayette- Chamber of Commerce M unci 2— Commercial Club Richmond — Chamber of Commerce Shelbyville— Manufacturers' Club Iowa: Clinton — Commercial Club Des Moines Barliers Supply Dealers' Associa- tion of America Greater De^ Moines Committee Kentucky: Louisville — Board of Trade Louisiana: New Orleans — (i) Association of Commerce (j) Board of Trade Southern Pine Association Maine: Bansor— Maine State Board of Trade Lewiston— Chamber of Commerce Portland — Chamber of Commerce '.... Maryland: j Baltimore- Board of Trade Canned Goods Exchange (k) Merchants and Manufacturers' | Association '... liitional Lumber Exporters' Asso- j tion 1... Frederick- I Board of Trade ! 1 Massachusetts: I Boston— (1 ) Chamber of Commerce ' . . . Massachusetts State Board of j ' Trade '... New England Hardware Dealers' j Association New England Shoe and Leather j Ji ssociation Brocton — 1 Chamber of Commefrce ' 3 Fall River— I Chamber of Commerce ' . . . Framingham— I Board of Trade ' . . . Greenfield— I Board of Trade Haverhill— I Board of Trade Holvoke— I "Chamber of Commerce North Attleboro— i Board of Trade HI 3 3 1 I 1 t 2l2 4 I 4 IV (^ < 1 I. 2 !. Ballot No. 11. Ill f^ H 10 !-. 1 I 10 1 5 2 .. 1 i.. IV 3 S SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 477 Name of organization. Ballot No. 1. Ill IV Ballot No. 11. Ill IV Massachusetts— Continued . Salem— Chamber of Commerce Essex Comity Associated Boards of Trade Springfield- Board of Trade Ware— Board of Trade Worcester — Chamber of Commerce Michigan: Detroit- Board of Commerce Flint- Board of Commerce Fremont — Board of Trade Grand Rapids — Association of Commerce National Commercial Fixture Manufacturers' Association Miimesota: Duluth— Board of Trade Commercial Club Minneapolis- Cm) Chamber of Commerce C ivic and Commerce A.ssociation Moorhead — Commercial Club St. Paul- Association of Commerce Stillwater — Civic Club Winona — Association of Commerce Missisippi: Greenwood — Business League Missoiu'i: Kansas City — Board of Trade Commercial Club Southwestern Interstate Coal Operators' Association St. Joseph- Commerce Club St. Louis- Business Men's League Merchants' Exchange National Leather and Shoe Finders' Association Springfield- Jobbers and Manufacturers' Asso- ciation Montana: Columbus- Stillwater Club Nebraska: Lincoln — Commercial Club Omp.ha — Commercial Club New Jersey: Bayonne — Chamber of Commerce Elizabeth- Board of Trade Jersey City- Co) New Jersey State Chamber of Commerce Newark- Board of Trade New Brunswick — Board of Trade 2 2 . 32910—16- -31 478 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Ballot No. L Ballot No. 11. Name of organization. I II III IV I II Ill IV V i fe < 3 1 Troy- 1 North Carolina: Asheville — Board of Trade 2 1 2 2 1 2 1 1 2 2 1 2 2 2 Marion- Board of Trade 1 2 1 Raleigh— C'hamber of Commerce 1 1 2 1 2 1 10 6 2 1 1 2 3 'i' 1 1 2 2 1 1 2 3 1 8 Rocky Mount- Chamber of Commerce North Dakota: Bismarck— 1 8 10 1 2 3 1 8 i' 10 Fargo— Grand Forks- Jamestown— Commercial Club 1 8 10 1 1 6 5 10 e 3 3 2 1 8 10 1 1 1 6 5 10 2 3 3 1 1 1 6 5 10 2 2 3 8 10 1 3 1 8 10 1 1 1 6 5 10 2 2 3 3 Ohio: Akron- Cincinnati— Chamber of Commerce and Mer- chants' Exchange 1ft Refrigerating Machinery Club . Cleveland- National Cloak, Suit, Skirt, and Dress Manufacturers'Association 'i' 1 1 National Petroleum Association. . . Columbus- Chamber of Commerce 6 5 3 1 6 5 10 2 2 3 3 6 Ohio State Board of Commerce 5 to 2 2 3 3 ... 5 10 2 2 3 3 Dayton- Greater Dayton Association 10 2 2 3 Lima- Chamber of Commerce 2 Portsmouth- Board of Trade Youngstown— ( hamber of Commerce Zanesville- I hamber of Commerce 480 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Name of organization. Oregon: Marsh field — Chamber of Commerce Portland — (x) Chamber of Commerce Pennsylvania: Altoona— (y) Chamber of Commerce Beaver Falls — Manufacturers' Association of Bea- ver County Tile Manufacturers' Credit Asso- ciation Chester — Board of Trade Erie- Board of Commerce McKeesport— Chamber of Commerce Meadville — Chamber of Commerce Philadelphia — (z) Board of Trade (g!j) Bourse Chamber of Commerce Commercial Museum Lumbermen's Exchange Morocco Manufacturers' National Association National Association of Hosiery and Underwear Manufacturers.. National Manufacturers of Soda Water Flavois National Wholesale Dry Goods Association ". Pittsburgh- American Face Brick Association. . American Warehousemen's Asso- ciation Chamber of Commerce National Paint, Oil, and Varnish Association , National Pipe and Supplies Asso- ciation Oakland Board of Trade - Reading- Chamber of Commerce ■ Sharon — Civic Association WOkes-Barre — (aa) Chamber of Commerce York- Chamber of Commerce Manufactui'ers' Association Philippine Islands: Manila — Merchants' Association Porto Rico: San Juan — Camara Insular de Comercio South Carolina: Charleston — (bb) Chamber of Commerce Yorkville — Hard Yarn Spinners' Association. South Dakota: Aberdeen- Commercial Club Yankton— Commercial Association Tennessee: Chattanooga- Chamber of Commerce Manufacturers' Association Ballot No. 1. II III IV Ballot No. 11. Ill IV SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 481 Ballot No. 1. Ballot No. 11. Name of organization. 1 II III IV I II III IV V i a < o (in a ^ f^ a '3 < o 1 < .B S f^ 4J a i 1 1 Tennessee— Continued. Memphis — 8 1 2 2 1 6 1 8 1 2 2 1 2 2 1 2 6 6 1 1 1 3 5 2 2 2 8 1 2 2 2 2 1 1 2 ... 2 1 6 1 6 1 5 2 2 .8 1 2 2 2 2 1 1 2 6 6 1 1 6 3 5 2 1 2 2 8 I 2 8 1 2 2 1 1 8 1 2 2 2 2 1 1 2 6 6 1 1 1 8 1 2 2 1 2 2 1 1 2 6 6 1 1 8 1 2 2 1 2 2 1 1 2 6 6 1 Southern Hardwood Traffic Asso- ciation Nashville- Tennessee Manufacturers' Associa- Texas: Texarkana— Board of Trade 1 2 1 2 2 1 1 2 6 6 1 1 Utah: Salt Lake City— 1 Vermont: Brattleboro— Board of Trade 2 1 1 2 2 1 2 Virginia: Newport News — Chamber of Commerce Norfolk— North Carolina Pine Association . . . Richmond- Southern Supply and Macliinery Dealers' Association Roanoke— (cc) Chamber of Commerce 2 Washington: Seattle- (dd) New Seattle Chamber of Com- merce Spokane- Chamber of Commerce 6 1 ...' 6 ... 1 ...1 1 Tocoma— West Coast Lumber Manufacturers Association 1 West \ irginia: Fairmont — Chamber of Commerce 1 1 3 Wisconsin: Madison- Board of Commerce 6 Manitowoc— Citizens' Association 1 1 3 5 2 1 2 2 5 2 1 5 2 1 2 1 3 5 2 1 2 2 1 3 5 2 1 2 2 Milwaukee- Chamber of Commerce Merchants and Manufacturers' Association Wisconsin Manufacturers' Associa- tion 2 2 2 2 2 Port Washington- Merchants and Manufacturers' Association 1 Wyoming: Sheridan- Commercial Club France: Paris— (ee) American Chamber of Com- merce (a) The Fresno Chamber of Coniiiierce states that it will favor the first two l«ropositions of ballot number one if no other methods of overcoming existing conditions can be found. (b) The Oakland Clianil^er of Commerce indicates that its board of directors unanimously voted in favor of the first proposition on ballot number one on condition that Government ownership should be temporary and that provision should be made to dispose of the vessels when the present emergency has passed. 482 SHIPPIXG BOARD, XAVAL AUXILIAKV, AND MERCHANT MARINE. (c) The San Francisco Chamber of Commerce would like to divide the first recommendation on the second ballot, voting in favor of the creation of a shipping board to investigate and report to Congress, but against such a board having full jurisdiction over matters pertaining to oversea transportation. It would also prefer to divide the fourth question of the second ballot, and vote in favor of abolition of deferred rebates, but against supervision of rates by the shipping board. ((I) The Savannah Board of Trade, in voting on the fourth and fifth recom- mendations of the second ballot, expresses a belief that it is not feasible to regulate ocean freight rates, especially in connection with steamers of foreign countries. (e) The Chicago Industrial Club qualifies its vote upon the third recom- mendation of the second ballot by saying that it believes steamers in passenger and mail service between the United States and Brazil, Uruguay, and Ar- gentina should malie more than sixteen knots and should receive unusual compensation for the increased cost attendant upon high speed. (/) The National Association of Tanners found that its members were divided regarding the second recommendation of the second ballot, with refer- ence to a marine development company, and suggests that on this proposal the Federal Shipping Board, if created, be asked to make recommendations to Congress. (g) The Freeport Chamber of Commerce qualifies its vote on the first rec- ommendation of the second ballot by saying that it would prefer to see the duties which can be assigned to a shipping board performed by some existing agency of the Government. (/() The Illinois Commercial Federation indicates that it might be in favor of the first proposition on the first ballot in case private capital fails to provide shipping, (i) The New Orleans Association of Commerce qualifies its. vote on the third proposition of the first ballot with a statement that it favors subsidies only if the navigation laws of the United States can not be changed, or some other way be found to accomplish the same purpose. {)) The New Orleans Board of Trade qualifies its vote on the third proposi- tion of the first ballot in the same way as the New Orleans Association of Commerce. (k) Tlie Baltimore ^lerchants and Manufacturers" Association, witli reference to the fourth proposition in the first ballot, says that it favors subsidies if the amount paid is proportioned to the service rendered, since it thinks a mail service whicli is not fast is useless. With reference to the fourth question of the second ballot, it favors abolition of deferred rebates, but says that because of other provisions incorporated it cannot act upon the recommendation as a whole. (I) The Boston Chamber of Commerce votes in favor of the third proposition on the first ballot on condition that any ^system of subsidies adopted is made subject to such reasonable regulation, supervision, and limitation on the part of the Government as will prevent its abuse. In voting on the first recommen- dation of the second ballot, the Boston chamber records its belief that the jurisdiction of the shipping board should be cai-efuUy defined and that the navi- gation laws and regulati(jns, so far as they unnecessarily increase the cost of operating American vessels as against foreign vessels, shoxild be promptly revised and modernized. ()n) The Minneapolis Chamber of Commerce, in voting in favor of the third and fourth propositions of the first ballot, says that these votes are conditioned upon an investigation such as is proposed in the first recommendation of the second ballot, disclosing that it is impracticable so to modify the navigation laws as to place American ships on a competing basis with foreign vessels. (o) The New Jersey State Chamber of Commerce voted against Government ownership and operation even though the political parties oppose subsidies. .{p) The Auburn Chamber of Commerce, in voting against the third recom- mendation on the second ballot, states that it does not oppose any necessary increase in the amount of the subvention to vessels of the second, third, and fourth classes. (q) The American Exporters and Importers' Association, in voting upon the first recommendation on the second ballot, indicates that it believes the shipping board should have jurisdiction only to investigate and report to Congress re- garding the navigation laws, and that it has not come to a conclusion whether or not the board should have full jurisdiction in all matters pertaining to over- SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 483 sea transportation. With respect to the fourth recommendation on the second haHot the association believes there should be abolition of deferred rebates, but is divided regarding supervision of ocean freight rates. (r) The Merchants' Association of New York qualifies its votes upon six different questions. Its vote upon the third and fourth propositions on the first ballot it conditions upon provision being made for a Federal board of super- vision, as proposed in the first recommendation on the second ballot. The asso- ciation votes in favor of the second recommendation on the second ballot upon the condition that the creation of a marine development company does not delay or obscure action in tlie form of a subsidy aid as advocated by its votes upon the first ballot, in favor of the third recommendation on the second ballot with a reservation to the elfect that the speed of mail steamers on routes to P^urope should not be reduced, and in opposition to the foiu'th and fifth recommenda- tions on the second ballot for the reason that they involve matters of detail which should be lefi to tiie direction of tlie shipping board. (s) The National Association of (Jliie and (Jciatin ^Manufacturers is in favor of a shipiting board to investigate and report to Congress regarding the naviga- tion laws, as proposed in the first part of the first recommendation on the second ballot, but is not in favor of having this board exercise full jurisdiction in all matters pertaining to over-sea transportation. it) The National Association of Manufacturers explains, in connection with its votes on the fourth and fifth reconnnendations on the second ballot, that it believes no special board is needed to carry out properly the provisions involved, as they are questions coming under the jurisdiction of the Department of Com- merce or other governmental departments. ill) The New York Produce Kxdiange is in favor of ri'duction of speed, as outlined in the third reconmiendation on the .second ballot, but makes no recom- mendation as to conqjensation. \Vith respect to the fourth reconnnendation on the same ballot, it is in favor of having all agreements among over-sea lines filed with a shipping board, if created, advocates authority for such a board to investigate complaints of shippers, and is in favor of legi.slation abolishing deferred rebates. (r) The Rubber Club of America is in favor of the third question on the first ballot only if a system of subventions for mail and freight lines fails. (ir) The Swedish Chamber of Connuerce states, with regard to the third recommendation on the second ballot, that it favors reduction of speed as out- lined but makes no reconnnendation as to compensation. In regard to the fourth reconnnendation on the same ballot, the Swedish chamber favors the filing of all agreements among over-sea lines with a shipi)ing board, if created, advocates authority for such a board to investigate complaints of shippers, and favoi's legislation abolishing deferred rebates, (x) The Portland Chamber of Conunerce casts its vote upon the third question on the first ballot with a qualification that the rate on the movement of a foreign product to an American port through the operation of this subsidy should not be niiide less than the rate on a competitive American product from one Ameri- can port to the one reached by such foreign rate. By way of illustration, the Portland chamber says that no subsidy should be paid on a line operating be- tween British Columbia and Atlantic seaboard ports which would have the effect of further increasing the advantage of British Columbia millmen in taking the American market for liunber. In voting upon the first recommendation on the second ballot the Portland chamber says the shipping board should be com- posed of a shipowner, a licensed shipmaster, a licensed marine engineer, an imlicensed practical seaman, a marine underwriter, an exporting merchant, a merchant who ships coastwise or on interior waters, a former American consular official, a shipbuilder, an attorney with admiralty practice, an official of the Bureau of Navigation, and a ]\Iember of Congress, (.(/) The Altoona Chamber of Commerce votes in favor of the first question on the second ballot, with the distinct understanding that the shipping board is to be composed of persons of recognized ability and experience in marine transportation, (z) The Philadelphia Board of Trade indicates that it would vote in favor of the creation of a shipping board with duties only to investigate and report to Congress regarding the navigation laws. (aa) The Wilkes-Barre Chamber of Commerce expresses approval of owner- ship of merchant vessels by the Government, but with operation by private parties under leases, if the second reconnnendation on the second ballot should not be adopted. 484 SHIPPING BOARD^ NAVAL AUXILIARY, AND MEKCHANT MARINE. (bb) Tlie Charleston Chamber of Commerce exphiins that in voting on the second question of the first ballot it advocates Government ownership, with private operation, only to the extent of the need of the Navy for auxiliaries. (cc) The Chamber of Commerce of Roanoke votes in favor of the third question on the first ballot if the purchase and operation of vessels by Ameri- cans should be placed on the same basis as are purchase and operation in for- eign countries. {del) The Seattle Chamber of Connnerce votes in favor of the third ques- tion on the first ballot, with the proviso that it votes in this way only if no better means can be put into effect for building up the merchant marine. The Seattle cliamber believes that American shipping would be rehabilitated with- out other material assistance if the navigation laws were revised so as to per- mit American ve.ssels to operate under the same general regulations as A'essels of other countries. Although voting in favor of the first recommendation on the second ballot, the Seattle chamber indicates reluctance to have an addi- tional conmiission created, and casts its vote with the understanding that the shipping board is to be composed of men of recognized ability. In voting upon the second recommendation on the second liallot this organization wishes its preference stated for direct Government aid rather than indirect aid through a development company. (ec) The American Chamber of Commerce in Paris, in connection with its vote on the second question on the first ballot, states that in view of the urgent need of merchant ships it would favor Government ownership, with private operation, in case private enterprise can not be sufficiently interested to acquire vessels promptly. With regard to the second recomendation on the second ballot the Paris chamber urges that members of the shipping board should all be men of large business experience and that several of the members should have expert knowledge of the shipping trade. The capital of the Marine Develop- ment Co., in the opinion of this organization, should be larger than $30,000,000, that the purposes in view might be better accomplished. The speed of mail steamers in service on routes to Europe the Paris chamber believes should not be reduced from 20 knots ; it thinks that under the ocean-mail law of 1891 there should be three classes instead of four — a class with speed of 20 knots or more, to meet the requirements on routes to Europe ; a second class with minimum speed of 16 knots ; and a third class with a minimum of 12 knots. With particular emphasis the Paris chamber expresses its belief that competi- tion with ships of other countries can not be successful until the American navigation laws are revised and until American ships conform to the inter- national standards of tonnage and measurement. itf) The Wholesale Shoe League votes in favor of the first part of the first recommendation on the second ballot, believing there is a question whether or not the shipping board could have control of over-sea transportation. (gg) The Philadelphia Bourse, in voting upon the second question on the first ballot, says it sees no objection to the lease of Government-owned ships for use in merchant service, provided such ships are especially built and adapted for use as Government auxiliaries, to wit, colliers, transports, and vessels of such type. It is the opinion of the bourse that the Government should own a large nmnber of such vessels and that ships are better cared for and in better shape for innnediate use if kept in operation and good condition than if laid up in ordinary. Regarding the third question on the first ballot this organiza- tion says subsidies should cover not only difference in cost of operation but dilference in prime cost of construction and consequent increased cost of annual depreciation and insurance. In opposing the creation of a shipping board the bourse says that the handicaps against vessels operated under the American fiag are well known and have been reported by several commissions. Conse- quently, it believes a shipping board is unnecessary for purposes of investiga- tion, and that such a board could not, without extreme danger, have full juris- diction in all matters pertaining to over-sea transportation. ORGANIZATIONS NOT FILING BALLOTS BUT RECORDING OPINIONS. The Baltimore Chamber of Commerce acted upon the referendum by express- ing its disapproval of the ship-purchase bill which was before the last Congress and by urging that the Government at once remove all restrictions at present imposed upon persons who would invest capital in shipping, giving to Americans the same freedom as citizens of other countries receive from their Governments. SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. 485 The Charleston Cotton Exchange, by its board of directors, adopted a resolu- tion to the effect that conditions make this an inopportune time at which to express an opinion regarding the questions submitted in the referendum. The Washington Chamber of Commerce adopted resolutions in which it decliped to vote on this referendum for the reason that it believes the method by which the Government should assist in promoting an efficient commercial marine is relatively of little consequence in view of the urgent necessity for sufficient vessels to carry American commerce. It urges everyone to subordi- nate individual views regarding methods in order that all may unite upon a common plan. BALLOTS RECEIVED TOO LATE. The ballots of 10 organizations were received too late to be counted. The organizations represented by these ballots are as follows : The Association of American Cement Manufacturers, entitled to one vote, indicates that it is opposed to the first and second propositions on the first ballot and in favor of all the other questions on both ballots. The Port Wayne Commercial Club, Indiana, entitled to four votes, indicated that it would vote in favor of the first proposition of the first ballot and all the questions on the second ballot, not expressing an opinion on the other questions. The Great Falls Commercial Club, Montana, entitled to one vote, indicated that it opposes the first two propositions on the first ballot and would vote in favor of all the other questions on both ballots. The Jacksonville Chamber of Commerce, Florida, which is entitled to five votes, forwarded its vote upon the second ballot too late for official record. It indicated that with reference to the second ballot it would express an opinion only upon the first recommendation, voting in favor of it. The Longmont Commercial Association, Colorado, entitled to one vote, indi- cated it would vote against tlie first and second propositins on the first ballot and the second question on the second ballot, and in favor of the other ques- tions on both ballots. The National Association of Box Manufacturers, entitled to one vote, indi- cated it would vote against the first two propositions of the first ballot and in favor of all the other questions on both ballots. The New Albany Chamber of Commerce. Indiana, entitled to one vote, indi- cated that it opposes the first two propositions on the first ballot and would vote in favor of all the other questions on both ballots. The United States Potters' Association, entitled to one vote, indicated it would vote against the first three propositions on the first ballot and in favor of all the other propositions on both ballots. The Utica Chamber of Commerce, New York, entitled to four votes, indicated it would vote in favor of all five recommendations on the second ballot. The Yakima Commercial Club, Washington, entitled to three votes, indicated that it opposes the third proposition on the first ballot and the second recom- mendation on the second ballot, being in favor of all of the other questions on both ballots. Elliot H. Goodwin, General Secretary. STATEMENT OF MR. IRVING T. BUSH, OF NEW YORK, PRESIDENT OF THE BUSH TERMINAL CO. Mr. Bush. I would merely like to say, in introducing Mr. Strauss, that in presenting the views of the New York Chamber of Com- merce we have divided oin- presentation into four parts. Mr. Frank- lin is to speak from the general steamship standpoint, and we have several shippers here to speak from the shipping standpoint. Then we have one gentleman who is to speak from the standpoint of our coastwise laws. Mr. Strauss is to speak from the standpoint of the bankers of New York, who would be interested in distributing the securities and selling the securities of the steamship companies. It has been stated here, and it has been in the minds of many, that one of the most difficult problems in reestablishing the American 486 SHIPPING BOARD, XAVAL AUXILIAEY, AND MERCHANT MARINE. merchant marine is tlie financial problem, the attitude of the invest- ing public, and the attitude of the bankers who distribute these securities to the investing public. And that is very important. Mr. Strauss is, unfortunately, leaving for Cuba a few minutes after 2 o'clock. He has booked his reservations through, and I ask that he might have an opportunit}' to make a brief statement before he goes. STATEMENT OF MR. ALBERT STRAUSS, OF NEW YORK, MEMBER OF THE FIRM OF JOHN W. SELIGMAN & CO., BANKERS, NO. 1 WILLIAM STREET, NEW YORK CITY, N. Y. Mr. Strauss. I will be very brief, Mr. Chairman. There is only one point I want to refer to. Mr. Gibboney referred to the profits that the New York bankers insisted on making. He did not dwell very much on the profits the shipping people were making at the present time. I only make that observation in passing. So far as the bankers who distribute the securities are concerned, they are willing to distribute at a moderate profit any security their judgment approves as sound. They have to do that with deference to the safety of the public to whom they appeal and to protect their own reputations, and under those circumstances they make mistakes. But they are willing to distribute any securities that appeal to them as sound, providing they can find the people to buy them. A security, no matter how sound, if they can not find the people to buy it, does not interest them, because they can not afford to tie up any capital in dead securities. Their activities would be very limited if their operations were limited to securities of that character. AVe have had almost no experience in this country in shipping securities, except perhaps on the Great Lakes. Certainly in New York we have not had any experience. England, I believe, has had considerable experience with shipping securities. So that shipping securities here, even if the bankers become convinced of their safety, must still be a subject of gamble and education of the investor. The only point I want to emphasize is that I believe competition with Government operation is going to be fatal to any distribution of securities. I do not believe the investor will buy a securit}^ which will be in competition with Government operation of vessels, having behind them the taxing power. And there is one other point in your bill, at least one other — the question of the provision requiring the approval of the shipping board to permit the transfer of a vessel now under the American flag to a foreign flag. That might conceivably so limit the market that the person who loaned money on the ship could not sell it. If Amer- ican operation should become unprofitable in the future, and if the mortgagee of a vessel is to be limited to the American operation to look to those people for his market in case he has to sell out his security, it would very seriously impair the value of the security that underlies his loan. And I believe that provision would be absolutely fatal to the development of any market for shipping securities here. On the other hand, if a condition of affairs would be brought about where the investor would be convinced that shipping under the Amerigan flag can be made permanently profitably, I believe those same motives that Mr. Gibbone}^ refereed to; that is. the desire to make a profit on the investment will make it possible to find all the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 487 money that is needed. The essence there is that the public and the bankers must be convinced that ship operating can be made perma- nently profitable. And I believe that ship operating can be made permanently profitable and that the difference in the cost of con- struction will be only a temporary matter. I believe the reason that our construction cost here has been higher than abroad has been that we have not had the volume and the yards have not been able to spe- cialize; and if legislation can be devised and put through which will make the operation profitable, affording for a time assistance in con- struction. I believe the necessity for permanent assistance in con- ' struction will vanish. That is the only point I wanted to make, Mr. Chairman. The Chairman. Is there any demand now on the part of the in- vesting public for securities of this kind? Mr. Strauss. We do not hear it or see it. If we undertook to sell that kind of security we would be met in the first place with the absolute ignorance of most people in regard to it. We would meet their apprehension as to the outcome. And if there were any active discussion, as there is now, on the question of Government ownership and Government operation, I think it would be a hopeless task to try to convince people they would be safe in putting their money into securities where the Government itself as an operator, with the tax- ing power behind it, was to be a competitor. The Chairman. If it is to be distinctly understood that under this bill it was not the purpose of the Government to operate ships in com- petition with privately owned ships in any trade where our foreign commerce is served, would that still operate to intimidate the in- vestors ? Mr. Strauss. I think so. I think the menace of that competition would always be present. The Chairman. Is it your view, then, that we should do nothing, but should wait for the salvation of the Lord for what may happen in the future? ]\Ir. Strauss. No; I think not. I think the bill that the chamber of commerce has had prepared and that they are presenting here would meet the situation. I do not think that anything we can do now. immediately, will relieve the present situation. But there are other men here more competent to speak on that feature than I am. All of the shipyards are apparently busy, and the commercial motive, the motive to uiake a profit, is present for any man who can get anything at all that will float and may be moved on the water; but in the long run I think we will have to do something to make the operation under the American flag possible. So long as we have a protective tariff with protection of wages — and" the wages paid at sea will have to compare with the wages paid on shore — I believe that we have got to do something in the way of annual payments to equalize the cost of profitable operation. The Chairman. Have you made any estimate of the cost of operat- ing, say. 75 vessels, each of 10,000 tons burden, such as might be done under this bill, under the subsidy scheme proposed by the New York Chamber of Commerce? Mr. Strauss. I have not; and, if I had, my figures would not be of any value. A man like Mr. Franklin could say something on that that would be of value ; I could not. 488 SHIPPING BOAED^ NAVAL AUXILIAKY, AND MERCHANT MARINE. Mr. Bruckner. Mr. Strauss, do yon voice the sentiments of the bankers of New York? Mr. Strauss. I voice my own sentiments. I am not here speaking for any bankers' association. Mr. Bruckner. You are speaking as a practical banker? Mr. Strauss. A practical banker. That is my own judgment, but I think you would find it to be the judgment of almost all bankers. Mr. Bruckner. You think the public would fight shy of buying those bonds? Mr. Strauss. No; not Government bonds, if that is what you mean? Mr. Bruckner. The public would fight shy? Mr. Strauss. Do you mean buying Government bonds based on shipping ? Mr. Bruckner. Yes. Mr. Strauss. Any obligation of the Government is good and can be sold at any time. My point is that the limited amount of money placed in the Government operation of shipping would discourage a very much larger amount that might, under suitable conditions, be looked for from private enterprise. Mr. Bruckner. You think so? Mr. Strauss. I think so. The Chairman. But ^^et there is no present demand for securities of that kind? Mr. Strauss. No present demand for a security of that class. People are suspicious of it; they do not understand it themselves and there are other fields that they can go into. It is not in our control; and even if we wanted to control it, we can not; we have to meet the conditions. The Chairman. This system of Government ownership and con- trol is a new one. It grew out of a number of conditions in the foreign trade following the war in Europe. Mr. Strauss. Undoubtedly. The Chairman. It is more than 50 years since the Civil War. We have been waiting long, and some of us impatiently, for private enterprise to enter into this business, but up to this date without any substantial evidence of interest on their part. Various subsidy schemes have been proposed in Congress in years past. None of them have ever been enacted into law, and I do not think I hazard anything when I say that the bill proposed by the New York Cham- ber of Commerce has not a ghost of a show of being enacted into law. Now, under those circumstances do you think there is enough interest in this bill to try it? Mr. Strauss. I do not see that this bill would do anything to relieve the present situation. It would not create vessels. The Chairman. It would make a start, would it not? Mr. Strauss. We do not see even how this bill could do that. The Chairman. Admiral Benson, of the Navy Department, said that the Navy Department would need at least 500,000 tons of merchant shipping for naval auxiliaries. That much tonnage could be provided for under this bill, and if we do not go any further than to supply that need of the Navy, of its present strength, do you not think it would be a wise thing to do ? SKIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 489 Mr. Strauss. You could not supply it so as to relieve the present situation. The Chairman. Oh, you could not do it to-morrow; but then you could in a year or two, or possibly three years, if we make a start. Mr. Strauss. Three years, I think, would be the minimum time. The Chairman. While it is just exjDressing an opinion, I think if we had enacted the ship-purchase bill into law in 1914 that we could have purchased, for the $50,000,000, ships that to-day would have been worth at least $100,000,000, and we would not have been in this situation. But it was defeated just because the people do not believe in Government ownership. In other words, they really stood still in the face of what appeared to be a great emergency. Mr. Strauss. These ships are all in operation now, that you re- ferred to. The Chairman. No; a great many of them are at the bottom of the sea. About a million and a quarter tons are now at the bottom of the sea, and maybe a million more have been commandeered by their governments. Now, I do not suppose that any of us, as a general proposition, want the Government to go into a business where private enterprise will take it up and conduct it. I do not. But I confess I have been impatient because private enterprise has been so slow to take this matter up when there was no suggestion of the Government entering the field. I would like to see an American merchant marine. I think it is as essential to the national defense as a navy. Mr. Strauss. I agree with you. The Chairman. There has been great commercial prosperity, and especially now, but we must seek out new avenues of trade and ex- tend our foreign commerce if we are going to keep our great manu- facturing and industrial concerns active and profitable. Mr. Strauss. I agree with you, Mr. Chairman, but I do not think this bill will do it, because I think it will discourage more private enterprise than the limited amount of direct Government assistance will give. Mr. Burke. How can private enterprise be any more discouraged than it has been ? Mr. Strauss. I agree with you on that. Mr. Burke. This is an experiment. Is it not at least worth trying when all other means have failed ? Mr. Strauss. I believe the limited assistance of the equalization payments that are provided in the bill that the chamber of com- merce has brought down here would give better results. I do not think there is any question here at all that we are all aiming at the same thing; but there is a difference of opinion as to what is going to be effective. Mr. Saunders. Mr. Burke suggests that this is an experiment and that other means have failed. What other experiment has been tried heretofore? Has any other method been presented to private capital ? Mr. Strauss. I do not think so. Mr. Saunders. So then there has been no failure on their part to take advantage of an opportunity when no opportunity has been presented ? 490 SHIPPING BOARD, XAVAT. AUXILIAEY, AND MEECHANT MARINE. Mr. Strauss. Of private capital; no, I think not. Mr. Saunders. I think it was agreed that until our legislation of a year or two ago it was utterly impossible for American capital to go into the deep-sea trade under our ancient legislation. Mr. Strauss. I quite agree with you. I think that the remark of Mr. Gibboney as to the willingness of bankers to make a profit is a sufficient answer to that. I do not think he saw the application of the remark on the other side. Mr. Saunders. With respect to the movement of goods from this country, if rates were reasonable — having reference to the present condition of affairs — if rates were lower than they are now, no more goods would move now, w^ould they? In other words, the carrying capacities of the ships were already full before the present ex- travagant rates? Mr. Strauss. So I understand, but I think the steamship men would understand more about that than I do. I think there is no question about that, but what it is true. I think I saw an evidence of that in New York the other day, a side-wheel steamer with walk- ing beams on the East River. Mr. Saunders. It is a fact, so far as you know, that even with the present robber rates we have everything moving now that we can possibly move; and if the rates were reduced no more traffic could be carried, because there are no carriers to take it? Mr. Strauss. I think so. Mr. Saunders. These rates we have heard of are not being paid by our people, are they; they are paid at the other end? Mr. Strauss. They are paid by the purchaser, I imagine. I am sure our people are not paying them. Mr. Saunders. So that they are not a burden on our people if our people are not paying them? Mr. Strauss. I think that is correct. Mr. Saunders. The shipper don't pay it at this end and take it out at the other end? Mr. Strauss. I think not under the present conditions, because competition from other countries has practically been cut off, even in neutral steamers. Mr. Byrnes. Are you satisfied the price which the producer re- ceives is not affected at all bj^ the price of the shipping rates? Mr. Strauss. I think that is true now ; but I do not think it is true in normal conditions. jNIr. Saunders. I am not limiting my inquiry now to normal con- ditions. Mr. Strauss. Under normal conditions they have their difficulties in common, Mr. Byrnes. But do you think there is no effect at all? Mr. Strauss. Broadly speaking, I should say not. There may be cases. Mr. Byrnes. You do not think the increased rates that the con- sumer pays, which has the effect of reducing his purchasing power, would in any way affect the price received by the producer for his commodity ? Mr. Strauss. I do not think it does under present conditions. But men like Mr. Childs here, who are practical exporters, would know about that. I SHIPPING BOARD, NAVAL AUXILIAEY, AND MERCHANT MARINE. 491 Mr. Byrnes. I only asked the question because of the testimony of "witnesses who have come before us during the last two weeks, who have different views, and I wanted your view. Mr. Strauss. That does not come within ni}' experience, and I as- sume the gentleman does not want me to express an opinion. Mr. Saunders. I want you to understand that I am limiting my inquiry to abnormal conditions. I understand in normal conditions, if the rates are prohibitive, that he would take a lesser volume of goods. Mr. Strauss. I understood your question. Mr. Saunders. I wanted to bring out that we are now moving everything from this country that we could possibly move even if rates were reduced at the present time. The Chairman. Is it your idea that private capital has been de- terred from going into the shipping business in the last couple of years on account of the persistent talk of Government ownership? Mr. Strauss. You mean since the beginning of the war? Mr. Edmonds. Yes. Mr. Strauss. I think since the beginning of the war private capi- tal has gone into the shipping business, but I think it has generally been under the stimulus of concerns like petroleum companies, which have bought tank ships and paid high prices. The cost of construc- tion here, I imagine, has been no higher, and perhaps in some cases lower, than abroad. And it is from that motive that the shipyards are all filled up for at least two years. Mr. Edmonds. In the building up of a permanent merchant ma- rine, do you not think private and ordinary shippers have been dis- couraged in starting lines, and all that sort of thing, on account of the Government-ownership agitation? Mr. Strauss. I do not think, supposing that the abnormal condi- tions last for two years, that plans have been made looking that far ahead: but I can not say as to that. I think everyone has tried to provide for the needs of the minute, and that they see ample profit in doing that. The Chairman. With this proposed legislation hanging over their heads like Damocles's sword, we have nearly a million tons of ships now being constructed. I wish they would get real scared and con- tract for a million tons more. Mr. Greene. The chairman has said there has been no effort made to build up an American merchant marine in the past. There has been an effort, and it came very much nearer being consummated than even the shipping bill last year, in the form of subsidy bills that have been presented ; that is, they were mail subsidies, with a condi- tion in them that the vessels were likely to be taken by the Govern- ment for the use of the Navy in case of trouble or for transports for the United States. There have been efforts made — I suppose to your knowledge — to procure that kind of legislation which came very near consummation. In one case the bill passed the House, and in another case it passed the Senate once and came over to the House and lacked confirmation by 1 vote only. That is nearer than any shipping bill has come yet. Mr. Strauss. I believe that the equalizing payments that are pro- vided for in the bill of the chamber of commerce, so far as construc- tion is concerned, would graduallj^ taper off. Probably no payments 492 SHIPPTNG BOAED^ NAVAL AUXILIARY, AND MEECHANT MAEINE. would be required now, and I think they would taper off, provided operation is made possible. Of course, the word " subsidy " has always had a more or less invidious meaning. Mr. Greene. I understand that it has scared some people. Mr. Strauss. If you call it an equalizing payment — I mean a pay- ment mereW to equalize the cost of operation — perhaps that word would be robbed of some of its terrors. I believe what we have to have in this country is a campaign of education as to equalizing sub- sidies, just as we had on gold and silver. It may take time, but per- sonall}^ I do not believe we will ever get anywhere until we educate the public on that point and they come to realize the necessity. Mr. Greene. I think so myself. Mr. Strauss. That is just a personal view. STATEMENT OF MR. R. G. RHETT, OF CHARLESTON, S. C, PRESIDENT OF THE CHAMBER OF COMMERCE OF THE UNITED STATES. Mr. Rhett, I am at present the president of the Chamber of Com- merce of the United States, succeeding Mr. Fahey who just spoke. I only want to sayj Mr. Chairman, to supplement what Mr. Fahey has said, that the mission of this chamber is to endeavor to inform the business people of this country regarding great national questions, such as you are considering — to give them accurate and concise in- formation on both sides — and to endeavor to have them consider these questions carefulh^ and deliberately, sending to us their definite con- clusions on these business subjects. We have been trying, and each time v\e issue a referendum we try harder, to make these statements fair and concise — documents that will really educate. We also endeavor to get the commercial organi- zations in the membership to consider these questions deliberately and to discuss them, finding among themselves the best method of informing their members on these subjects in order that their deci- sions may be really intelligent. It is a process of education. Our first referendum was not very carefully considered, but each succeed- ing referendum has excited greater and greater interest. Each cham- ber is studying how it can get a fair opinion from the majority of the business men of its community. Now, I noticed in the testimony of Mr. Douglas that Mr. Byrnes, from mj^ own State, gave an example of what possibly the action of a chamber might mean, referring to the Charleston Chamber of Commerce. I want first to explain why that particular action was taken by the Charleston chamber, and, in the second place, to explain to you exactly the manner in which the Charleston chamber reached its' decision, in the national chamber's referendum, regarding the merchant marine situation. Mr. Byrnes said : With reference to the value of your referendum. I want to ask, inasmuch as this committee has already before it a bill regulating compulsory pilotage, and the Charleston Chamber of Commerce have presented here last week a resolu- tion requesting this committee to report that bill, and this week the committee has before it a resolution from the same chamber asking us to vote against the bill which "it favored the week before, do you not think that there is some pos- sibility, if the framer of this bill should appear before the Charleston Chamber of Commerce and some other organizations of that character, they might behave in like manner and send resolutions up here asking us to vote for the bill? SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 493 Now, gentlemen, I would like to explain personally what took place in that matter. Our merchants and shippers in Charleston had been for years complaining that they were unable to get pilotage rates in the port of Charleston on a parity in several respects with neighbor- ing ports. They came to me and asked me if I would appear before this committee on the subject of the pilotage bill, in an endeavor to get the Government to regulate the rates of pilotage on barges, about which there was most complaint and which in my opinion were rather outrageous. I asked the merchants and shippers to allow me to finish the organization of the Charleston chamber, and then bring the mat- ter before that body. I completed our organization, with a thousand members, and I then called a public meeting, at which I asked the shippers to appear, and I asked the pilots' association to appear. Our harbor is gov- erned by a harbor commission of 13 men, and a subcommittee of 5 governs the pilots and fixes their rates. Two pilots are on that sub- committee and three business men. They appeared before the mem- bers of the board of directors of the chamber, of whom 18 out of 25 were present, and the shippers presented their case. There then appeared three men on behalf of the pilots — three out of the five members of the subcommittee of the harbor commission, the sub- committee that fixes the pilotage rates. These three men, in speaking for the pilots, did not suggest that the rates were to any extent out of the way. On the other hand, they contended that they were very proper charges. When they got through the hearing we asked each other, " What chance have the shippers of Charleston to get these pilotage rates reduced ? " and there was a unanimous vote that we should come up here and ask 3^ou gentlemen to relieve us from the situation, inasmuch as three out of the five on the subcommittee of the harbor commission did not see the impropriety of changing rates on barges. I did not think that was a fair test on which to come up here before your committee. I went before the mayor next morning and asked that the harbor commissioners be summoned. I appeared be- fore the harbor commissioners and demanded that they put in rates at once which would relieve this barge situation and also other dis- criminations. The result was that the pilots offered to turn over to me their books for 5 or 6 or 10 years, to show what they received un- der the current charges, including pilotage on barges. A motion was made that I take those books and examine them and come back again before the commission and make a statement as to what I thought was fair and just under all the circumstances. An exami- nation of those books convinced me that if the Government took away the whole of the coastwise pilotage pilots in the number then serving the port could not exist. I went to the foreign shippers, and they saicl, "We could not have a less number; we are just build- ing a new coal terminal, and it would be very dangerous to reduce the number." However, I satisfied myself that these things that I asked ought to be done. I prepared a report reducing the charges for pilot- age barges, called the shippers before me, and asked them whether these reductions were satisfactory to them. They said, " Yes." I called the pilots up to meet them, and they agreed on the rates. I went down to the harbor commissioners and offered that amendment 32910—16 32 494 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. to their j^ilotage rates, to be put into effect immediately. The resohi- tion was carried and the rates became elfective that day. Under these conditions, gentlemen, there was no reason for the Chamber of Commerce to come ii]3 here and ask 3'ou gentlemen to fix rates, when we had already arranged them to the entire satis- faction of the shippers, and fixed them by reason of the action of the chamber. We therefore made a full explanation in our resolu- tion, stating that inasmuch as our harbor commissioners had given us entirely satisfactory rates, we asked you gentlemen to confine your regulation of tolls to the inland waterways. I think it is due to you, gentlemen, that I should make this explanation with respect to the situation to which iSIr. Byrnes referred. So far as the matter of the merchant marine is concerned. I want to explain to you how our chamber proceeded. The president of the chamber, who was in office at the time, was in favor of your last shipping bill, and in favor of the principle of the United States purchasing and owning and operating ships. He himself selected a committee of 12. That committee came together with the national chamber's referendum before it and discussed it all evening. When they came to a vote, it Avas 11 to 1 against the Government acquir- ing and operating merchant vessels. The . president's was the sole vote favoring that proposition. Now, on the next proposition — Government ownership of vessels. coupled with private operation — they said, "Yes; if it Avas confined to naval auxiliaries." So far as subsidy as a means of permanent upbuilding of the merchant marine of tramp ships, thev voted "Yes." The CiiAiKJLAX. Are you sure they voted " Yes?" Mr. IviiETT. For subsid3^ The Chairman. On tramp ships? Mr. Rhett. Yes ; on tramp ships. The Chairman. There is no nation in the world that does that. Mr. Rhett. On ships of that class, you will see on the third ques- tion (that is the subsidy question), and on the fourth, for subA'en- tions, they voted j^es. I must say to you gentlemen that I was ex- ceedingly surprised to see that Charleston. Savannah, all of Georgia, all of Tennessee, and all of Virginia voted on that as the permanent means of upbuilding this merchant marine. NoAv, that report of the committee was taken back to the Cham- ber of Commerce. It was not adopted in any ])erfunctory way. It was taken back to the board of directors and there discussed an entire eA'ening. I was present and sat down and listened to the discussion. In that discussion they unanimously confirmed the report of the committee so far as the first question Avas concerned. I only Avant to tell you hoAv carefully these things are now being done in these chambers. On the present seamen's bill we have in the Charleston chamber a committee of 21. A pilot is in the mem- bership: the president of the labor union is on the committee; and Ave have farmers on the committee. We have endeavored to collect the whole community, because the purpose of these chambers is to draw out what the people think Avhen they hear both sides of the question. That is all our purpose. If Ave do not succeed it is not because we are not trying. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 495 The Chairman. What was your action on the seamen's bill? Mr. Khett. They have not had it yet, sir. The Chairman. Several chambers of commerce have passed reso- lutions and sent them to us recommending its repeal, notwithstand- ing that section 14 of that act includes in terms the International Convention on Safety of Life at Sea, to which all the maritime nations of the world have agreed. Mr. Rhett. No; I want to differ with you on that. In the first place, it contains provisions which the international conference de- clined to incorporate and it omits provisions that the international conference did incorporate. The Chairman. I beg your pardon: you are not correct in that. Mr. Rhett. It contains an entire provision requiring these life- boats to be manned by able seamen or officers; and the international conference declined to insert that. The Chairman. There is only one feature: the international con- vention says that each lifeboat shall be in charge of a licensed officer or seaman. The seaman's law says " a licensed officer or able sea- man." That is the only difference. Mr. Rhett. The committee thought there Avere a good many con- diti(ms. In the first place, it applies not only to passenger ships, but it applies to all ships: in the second place, it made no provision whatever about safety in construction. All of that was omitted in this bill. Therefore, only parts of that convention are included. The Chairman. I say it included in terms, with that one excep- tion, the provisions of the international convention on safety of life at sea. as applied to vessels in the foreign trade. Mr. Rhett. They felt that one thing was a serious matter on the score of expense: but it is out at referendum now and we can not ansAver until the ballots are received. The Chairman. It just struck me that they had never read the bill, and I am inclined to think that is so. They certainly did not understand it. (Thereupon, at 1.07 o'clock p. m.. a recess was taken until '2 o'clock p. m.) after recess. The committee reconvened pursuant to the taking of the recess. STATEMENT OF MR. IRVING T. BTJSH, OF NEW YORK, PRESIDENT OF THE BUSH TERMINAL CO. Mr. Bush. I speak today for the Chamber of Commerce of New York, as the chairman of their special committee on merchant marine in foreign trade. I speak in the absence of Mr. Seth Low, president of the chamber, who had expected to be here. The Chairman. I have a letter from him in which he under- takes to set forth the position of the chamber of commerce on the bill. Is it your wish that that go into the record ? Mr. Bush. A printed letter? The Chairman. It is a typewritten letter addressed to me by Mr. Low as president of the chamber of commerce. Mr. B.usH. Yes; I would like to have that inserted in the record. 496 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. (The letter referred to is as follows:) Chamber of Commerce, New York, February 19, 1916. Hon. Joshua AV. Alexander, Chairman Committee on Merchant Murine and Fisheries, Washington, D. C. Sir : The Chamber of Commerce of the State of New York regrets that it can not agree with the principles underlying the Alexander bill, H. R. 10500. While the chamber is in accord with the desire of the authors of the bill to promote American shipping and to relieve the immediate and pressing need for additional cargo capacity in the foreign trade of the United States, it is con- vinced that the establishment of the principle of Government ownership and operation of merchant vessels will prevent the construction by private capital of a greater number of vessels than will be constructed by the Government under the proposed bill and thus decrease and not increase the number of vessels available for foreign trade under the American flag. The chamber further submits that American shipbuilding yards are unable to accept order for the construction of vessels of sufficient size to engage profit- ably in foreign commerce for delivery within a period of two years, and that the only tonnage which can be brought to the relief of the present situation by Government ownership is the limited number of merchant vessels which can be built in Government naval yards. The shipbuilding industry of the United States, after a long period of de- pression, is beginning to feel the stimulus of the increased demands for vessels and the capacity of existing yards is being increased and new shipbuilding enterprises are projected. It is the opinion of the chamber that the number of vessels which it may be possible to build immediately in Government yards will be so limited that the advantage gained will not offset the discouragement to American initiative to develop and extend private owned shipbuilding industries of the country. The chamber is in accord with the principle of creating a Government board to study and control the maritime laws and policies of the United States, providing the authority vested in such a board looks to the development of American shipping by the encouragement of American enterprise. The chamber deprecates as unwise an attempt to regulate the rates for carrying freight through the medium of such a board. It believes that \inder normal conditions the competition of the ocean-carrying tonnage of the world is a sufficient safeguard against unduly higher rates, and is convinced that an attempt on the part of such a board to regulate the rates will prove to be an additional disadvantage to American conmierce in meeting the competition of foreign nations. The chamber believes that the provision to require a license for all vessels sailing from ports in the United States should not be enacted without more careful stiidy, and a moi'e complete estimate of the probable consequences to the trade of this country. Any provision which may make it more costly or difficult to operate vessels from and to the ports of this country burdens its entire commerce and industry. The farmers of the West, for instance, must sell their grain in competition with the growers of Argentine. Any burden upon shipping from American ports \\hich can not be equally imposed upon shipping from the Argentine will, in the end, be borne by those who produce in this country the commodities which must be sold abroad in compe- tition with those of other countries. The discussion of the effect of rates or other regulations, even such as might be applied to foreign ships plying from our ports equally with American ships, should not lose sight of the fact that we have not only to consider the effects upon shipping as such, but we have also to consider the effect upon our export trade in products and commodities, which is a vastly larger and more important question. Even if all ships under foreign flags plying from our ports could, by license or other means, be brought under the same regulations as it is intended to apply to ships under the American flag, it will still be true that all foreign ships plying from their own ports carrying products and commodities to foreign ports with which our products and commodities must be in competition at those ports, will be free of all such regulations. The foregoing objections to the Alexander bill, H. R. 10500. are fuHdamental and while the chamber of commerce would be glad to believe that there is some SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 497 basis upon which this bill can be amended and made satisfactory, it can see no way by which the vital objections can be overcome, and therefore respect- fully urges that it be disapproved. ^^'hile disagreeing with the principles underlying the Alexander bill, H. R. 10500, the cliauiber recognizes that if an American merchant marine is to be reestablished, some measure of Government aid must be extended. The in- creased cost of operating vessels under the American flag is largely due to conditions which have been created by the American people through legislative action, and the increased cost of constructing vessels in this country is largely due to the fact that the shipbuilding industry has not been sufficiently developed and the character of ves.sel and method of construction not standardized. It is the belief of the chamber that when a demand has been created for American-built vessels, the capacity of American yards increased and the type standardized, the cost of constructing vessels in this country will be no greater than in Europe. The supply of ore and coal is unlimited and American in- genuity has shown in countless instances its ability to compete with foreign nations, through the medium of machine tools, in the production of standardized articles, even though the labor cost be higher in the United States. Until con- struction cost is equalized by natural conditions, some artificial basis of equaliza- tion must be established, if vessels are to be constructed under normal condi- tions in this country for foreign trade. Under present war conditions no equalization of constriiction costs is necessary. While it is the opinion of the chamber that the difference in the cost of op- erating vessels under the American flag and under flags of European nations is less than is sometimes stated to be the case, it is still sufliiciently large to pre- vent under normal conditions the creation of a substantial merchant marine under the American flag. The chamber does not believe that a subsidy assuring a profit to owners of American vessels in foreign trade is neccessary, or in accord with the desires of the American people, but it believes that the spirit of the people of this country will agree with the principles of Government aid to equalize construc- tion and operating conditions to a point which will merely place the American vessel owner upon an ecpial basis with his foreign competitors. Experience has shown that the mail act of 1891 has not been a suflicient in- ducement to establish mail-carrying steamship lines. It is the opinion, however, of the chamber that if the speed requirements for vessels engaged in trades where it is not necessary to maintain high speed be reduced to reasonable levels, advantage will be taken of the provisions of the mail act of 1891, and lines under the American flag established. The chamber has therefore prepared a bill which has been introduced into Congress, providing for encouragement to private enterprise to develop and in- crease an American merchant marine. The chief principles underlying this bill may be divided into four parts : First. The creation of a shipping board of such character to command the services of men experienced in shipping matters, whose judgment will inspire the confidence of the people of the United States. Under this board should be placed the direction and control of the laws and regulations of all matters pertaining to Aauerican shipping, and it should be charged with the responsi- bility of suggesting to Congress legislation which will foster and encourage our merchant marine. Second. It gives to the Postmaster General the discretionary power to make certain reductions in the speed requirements of vessels operating under the mail act of 1891, in trades where in his judgment the pulDlic welfare of this country will be served by a speed for mail vessels less than that called for under said act. Third. It provides that, when the shipping board has approved plans for the construction of vessels under the American flag for foreign trade and has agreed that it is in the interest of the public welfare to establish the service in which the vessels are to be used, the Government pay to those who construct such vessels in American shipyards the difference between their actual cost and the cost of constructing vessels similar in all respects in the yards of nations having a maritime tonnage equal to or greater than that of the United States. These payments should decrease as the shipbuilding industry is devel- oped, and ultimately cease. Fourth. It provides that the Government shall pay for a limited period to the owners or operators of vessels under the American flag, when the con- struction of their vessels and character of their service has been approved by 498 SHIPPING BOAED, NAVAL AL'XILIAKV, AND MERCHANT MARINE. the shipping board, the difference between the cost of operating the vessels under the American flag, and the highest cost of operating them under a foreign flag. Attention is called to the fact that nothing can be done under this act without the approval of the shipping board acting in the interest of public welfare, and that it provides for Government aid for a definitely limited period. Con- tracts under the provision of this act may only be entered into for a period of 10 years, and each contract will last only for a period of 20 years. The period of 10 years has been established because it is the opinion of the chamber that it should be possible to arrange for a substantial merchant marine within that time, and a period of development reached where the cost of constructing vessels in American yards be equalized. The period of 20 years has been established because it is the belief of the chamber that any vessels constructed under the act should be entitled to equal operating conditions during the ordinary life of vessel property, which is estimated to be 20 years. The right to requisition for naval or military purposes all vessels built under this act is reserved to the Government. The chamber respectfully submits that legislation based upon the foregoing l»rincipU'S will stimulate and encourage American enterprise to do far more to develop an American merchant marine than the limited Government program proposed in H. R. 10500. It will substitute Government coopera- tion for Government competition, and bring vastly greater benefit to the commerce and industry of all parts of the United States, without creating subsidies unduly profitable to the owners of American vessels. It will merely place the American shipowner upon an equality with his foreign competit(»r ; and if this is done, it is the opinion of the chamber that the enterprise and courage of the American people will create a merchant marine second to none. Respectfully, Seth Low, l^rcsidcnt. Mr. Bush. I want first to say just a word about the character of the committee of the chamber who have been considering this mer- chant-marine problem. The first consideration was before a small committee of which I was chairman. We made a report last year to the full chamber, at w-hich time the large meeting room of the chamber, holding over 300 people, was filled : not a seat Avas vacant. That report was turned doAvn and a second report was adopted by the chamber with, I think, only one dissenting vote. The Chairman. I believe the first report was in favor of free ships, was it not ? Mr. Bush. No ; that was after the free-ship bill had been passed. The Chairman. I say your first report was in favor of free ships. Mr. Bush. That is not the report to which I refer. That was before my appointment as a member of our committee, and I am not familiar with the action which was taken. The first report we made was made after the free-ship bill had been passed by Congress and was enacted into law. The chamber was most anxious that the body who considered the merchant-marine matter from their standpoint should be representa- tive, so that three committees of the chamber, totaling about 25 men. were consolidated into one large group, and practically all of the considerations and discussions of the committee have been by a combined committee of this character. From the standpoint of New York, the membership of that com- mittee is as representative of shipping experience and intelligence, from the position of the steamship men on the committee, from the position of shippers, and from the position of men identified with banking and with marine insurance, as it could be made. I will be very glad to furnish, should the committee so desire, a list of the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 499 committee; but I will not burden the record with it at the present time. I will say, however, that the steamship men on that committee are men who have been for a great many years identified with the foreign trade of this country, and wdien they speak to-daj' they will not speak from the standpoint of an experience in sailing their first vessel. The chamber is exceedinglv sorry it can not agree with the pro- visions of House bill 10500. When the Alexander bill was intro- duced we were most anxious to see if there was not some possible basis on which we could support that measure, because we recognize that the present time is the first great opportunity we have had for something really constructive in the way of building up our merchant marine. But our differences with that bill are so fundamental that we see no way in which it can be amended to meet what we consider absolute essentials for the sound upbuilding of our merchant marine. Our basic objection to the Alexander bill is our profound belief that the entrance of the Government of tlie United States into the owner- ship and operation of merchant vessels will prevent the construction of a greater tonnage than the United States will bring to the relief of the present situation. As has been pointed out, $50,000,000 will only construct about 50 ships of 10.000 tons each, at an average cost of $100 per ton: and we are convinced that the mere introduction of Government competition is going to deprive the American shipper and American commerce of a much greater tonnage than this limited tonnage constructed by the Government. We feel that the only ton- nage which can be brought immediately to our relief by the Govern- ment is tonnage which may be constructed in the Government navy yards, but that limited tonnage is not a sufficient advantage to offset the discouragement which we feel will come to the owners of Ameri- can ships and the owners of American shipyards. The American ship-building industry, after a long period of depression, is just be- ginning to feel its first stimulus from the increased demand for ton- iiage constructed in this country. These objections are fundamental and we see no way in which the bill can be amended to overcome them. We therefore, with a gi'eat deal of regret, have expressed our disapproval of the bill. We also think it unAvise to attempt to regulate rates for carrying freight through the medium of such a board as is proposed to be es- tablished. We believe that in normal times the competitive ocean- carrying conditions of the world will sufficiently safeguard the country against unduly high rates; and are convinced that an at- tempt to regulate rates through such a board will be an additional dis- advantage to American commerce in meeting the competition of foreign nations. And the chamber further believes that the provision to require a license The CHAimiAX. On that first point, this committee investigated what was popularly called the " shipping trust " and we found that all the regular lines, commonly speaking, in all the trade areas of the world, were in some form of combination ; and that in the three years preceding 1918 the ocean-freight rates had increased from 50 to 200 per cent without any appreciable reason, because there had not been any increased cost of operating ships, except that the combinations 500 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. had been made more perfect. We were confronted with this ])ropo- sition : Either to provide that these combinations might be broken up and the Sherman antitrust law invoked against them, if they were pernicious, or else provide some rational Government supervision. And if you had taken the pains to read the report of my committee on that subject, and the recommendations of the committee and the bill that is now pending, my notion is that you could not urge any rational objection to reasonable Government supervision in the fixing of rates and to prevent abuses in the interests of the great body of American shippers, discriminations, deferred rebates, fight- ing ships, and things of that character. Mr. Bush. Mr. Chairman, I would much prefer to have the gentle- men who have come down with me and who are very much more familiar with the actual operation of ships, discuss those details; because I feel I would perhaps unnecessarily encumber the record and take up your time. I am perfectly willing to answer any ques- tion of which I am capable. I, of course, have opinions upon those matters, but there are gentlemen here who have spent a lifetime in operating ships and are perfectlj^ familiar with all of those con- ditions and can give you a very much better statement, probably, than I can, and if it is agreeable to the members of the committee, I will prefer to leave the discussion of details to them. We have realized, however, that some measure of Government aid must be extended, if anything is to be accomplished, and partly as a result of statements which have been made frequently in Washing- ton (and to which we take no exception, for we believe they are correct) that Ave have not heretofore brought down any constructive suggestions as to what might be done to relieve the situation and help in the upbuilding of our merchant marine, we have, after a great deal of study b}' this committee, composed of men who have had long experience, both as steamship operators and shippers, prepared a bill which has been introduced. And I would like to say a word or two upon that bill before introducing the speakers who are to discuss the matter more definitely from the standpoint of the shippers and the steamship operators. The Chair3ian. You refer to H. R. 11865, introduced by Mr. Rowe? Mr. Bush. Yes, sir; that is the bill. We recognize that the cost of operating American ships under normal conditions is higher than the operation of ships under foreign flags. We believe that these operating costs have been increased through legislative action resulting from the wishes of the people that the American seaman and the officers of xA.merican ships be paid better wages ; that there be a greater number in the crew, and that food and provisions for their comfort be greater. These differences in operating cost seem to us to be permanent, and we do not believe with the standards of living that the American people have established for their seamen we can, with aiw reasonable foresight, see a time when the operating condi- tions of an American ship can be brought down to an equal basis with foreign tonnage. Our bill rests upon four main points. The first is the creation of a shipping board, which is a feature of almost every bill Avhich has been introduced. The onlj^ difference between the board which we SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 501 suggest and that which is provided in the Alexander bill is that we suggest a board of seven, five of whom shall be appointed by the President, and the other two to be the Secretary of the Navy and the Secretary of Commerce. I quite agree, and I think the members of the committee quite agree, with the objections of Mr. Fahey to-day that the Secretary of Commerce and the Secretary of the Navy, being administrative officers, are burdened with other duties, and it will be impossible, over a long period of years, for them to devote the nec- essary time to conduct the details of the shipping board. We believe, therefore, the result will probably be that the two secretaries will be able to give perhaps less and less time to the duties of that board, and that you should have a larger body than three to have charge of the actual conduct of the work which the board will have to perform, and we suggest, therefore, a board of seven instead of five, which will give five members appointed by the President. Our second recommendation is that discretionary powers shall be given to the Postmaster General to reduce the speed requirements called for in the mail act of 1891 in trades, where, in his judgment, the public welfare of the country does not call for a high rate of speed. We believe that there are many trades in South America, or South Africa, or eastern countries, where the speed requirements called for in the mail act of 1891 are entirely in excess of the actual needs for mail service. We suggest, therefore, that discretionary power be given to the Postmaster General to reduce the speed re- quirements to certain limits where, in his judgment, the public w^el- fare is served by a slower rate of speed. These lines can not be established without the approval or without the suggestion from the Postmaster General. It is left entirely in his hands. The third and the fourth main principles of our bill are the prin- ciples which have been alluded to here to-day as equalization princi- ples. The third is that the difference between the cost of construct- ing vessels in European countries and the cost of constructing vessels in American yards, under normal times and normal conditions, be paid for by the Government. For instance, if a vessel is to be con- structed in a yard on this side of the water, the man who proposes to construct it must first go to the shipping board and submit his plans, and they must be approved by the shipping board; he must state the service in which the vessel is to be used, and the character of the service must be approved by the board, from the standpoint of the public welfare, whether it is a line of service, which from the standpoint of the good of the entire country, it is desirable to have developed. When these points have been passed upon by the board, then the construction is undertaken and the man or the cor- poration who has the ship to build must show the reasonable differ- ence in the cost of constructing in an American yard the vessel or vessels which he is building and of an exactly similar ship or vessel constructed in a European yard. If, for instance, it cost $500,000 here and it cost $100,000 to build a ship in England, the Govern- ment is, under our bill, to make good that difference of $100,000. That is a difference in construction cost only, and we believe with the standardization of types of vessels, and the grow'th in the de- mand for vessel property and the increased development of our ship- building industry, that that difference will be wiped out. 502 SHIPPING BOARD, NAVAL AUXILIARY^ AND MERCHANT MARINE The Chairman. Will you pardon me just at that point. Under the ship-registry act of August 18, 1914, American citizens can purchase loreign-built ships for the foreign trade. Mr. Bush. If the vessels are bought abroad, of course there is no equalization necessary. It is only necessary where, in the judgment of the shipping board, it is wise and desirable to have those vessels built on this side. The whole matter is discretionary and practically left to the shipping board. If the vessel is bought abroad, of course it would come in under the act you have just mentioned. The Chairman. Is it your intention that a subsidy should be paid by the Grovernment on vessels in the coastwise trade ? Mr. Bush. No ; only the foreign trade. Mr. EowE. On shij^s used in the foreign trade ? Mr. Busii. Only on ships used in the foreign trade. Mr. KowE. I mean in the matter of construction. Mr. Bush. Yes. The Chairman. If the laws remain unamended would the ship- ping board in any event be justified in paying the difference in the cost of construction here and abroad when the American citizen has the privilege of purchasing his ship abroad if he can buy it at a less price ? Mr. Bush. Only if in the judgment of the board it is to the inter- ests of this country to have ships built in our shipyards. The Chairman. On what basis would you think we would be justi- fied in paying the difference in the cost of construction of a ship built here and abroad, as a subsidy, because in the fancy of some men he might want to build a ship here? INIr. Bush. I do not believe, Mr. Chairman, you will ever perma- nently reconstruct the American merchant marine by having all of your ships built abroad. I believe we not only need ships, but we need them built in American shipyards so as to develop the Ameri- can shipbuilding industry, and they should be manned with Ameri- can crews and with American officers. I think you will have to have those four elements created in this country before we can reestablish our merchant marine. If our ships are all to be built abroad, in times of national danger our yards will not be developed except as ship repair yards. I think we must take some steps, if you are going at this on a broad and comprehensive basis, not only to reestablish our ships on the high seas but to reestablish the shipbuilding in- dustry. Our thought was not to make it mandatory that those ships be built in American yards, but to give the board sufficiently broad powers so that when they are built on this side the difference in cost might be made up until that difference is eliminated. We believe with the growth of American shipyards, with the great supplies of ore and coal in this country, and the ability which Americans have shown in countless other instances to meet the competition of for- eign nations when an article has been standardized, that the differ- ence in cost will gradually disappear. The trouble to-day w4th American shipyards is that you see on one set of stocks a merchant steamer, on the next a ferryboat, on the next a towboat, and on the next perhaps an excursion boat. They have, on the other side, a standard type of vessel which is turned out by one yard, one after the other, on the same patterns and where the cost of construction is reduced to the minimum. SHIPPING BOAED^ NAVAL AUXILIARY, AND MEECHANT MARINE, 503 AYe have done a great many interesting things in this country. AVe have taken the automobile, which was invented and used abroad, find have brought it over here and standardized it, and we are now exporting to ccnmtries where the automobile first made its appear- ance. This is made possible through the use of American ma- chinery. It is perhaps difficult to liken ship construction to auto- mobile construction, because ships are a very much larger article, but with our supply of coal and ore and the ability and ingenuit}^ of the American people, which has been shown in countless instances to be able, even with labor cost higher in this country, to meet for- eign competition, we believe, with a standardized article and a developed shipbuilding industry, that foreign competition can be met and we can create an industry which will not only build ships for ourselves, but which will build ships for other nations of the world who have not their own shipbuilding facilities. We think that this inequality is temporary, but if we are to reestablish our merchant marine and are to have a shipbuilding industry which will go with it. and which must go with it. the temporary inequality must be met by some measure of Government aid. The fourth provision in our bill is the equalization in the cost of operating. Now, we belieA'e that the difference in cost of operating these ships under such normal conditions as existed before the be- ginning of the war is not nearly so great as has been sometimes supposed. It has been frequently stated that the cost of operating American ships is 40 per cent greater than the cost of operating foreign ships. If you figure the cost on a percentage basis that may be true, but a percentage basis is a very dangerous basis to follow, because the cost varies with the type of ship, it varies with the trade, and it varies with a great many other things. An English vessel, for instance, engaged in the trade between New York and South America, like the Lamport & Holt service, must buy coal in the same markets as the American vessel, must purchase the same engine-room supplies and deck STipplies. and must buy food in the same markets; and practically every element in the cost of oper- ating an American vessel and an English vessel between New Y^ork and South America, or New Y^ork and any other countries, except wages and food, is identically the same as the cost of operation of an American vessel. On the basis of estimates we have been able to secure (and we have taken some pains to consult with a great many steamship people) the average difference in cost of o])erating an American vessel, which will cost, we will say, $500,000 under normal conditions, such as existed before the beginning of the war, and an English vessel of the same type, will be from $10,000 to $12,000 a year. That is a high type of merchant vessel, and the difference in cost of $10,000 or $12,000 a year is not a very large amount. Some people may say the American shipowner, from patriotism, should pay that difference. But if you consider that vessels are usually not operated as single units, but are operated in fleets, and if you take a fleet of 20 or 30 vessels you will find that the difference per vear in the operation of such a fleet will amount to from $200,000 to $300,000. And that is a very considerable sum. Unless there is some distinct advantage to be gained by operating those ships under the American flag, such as there is at the present 504 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. time, there is no sufficient reason why the owner of a steamship should place his vessel under the American flag when he can obtain equal advantages under the English flag and make an annual sav- ing of from $10,000 to $12,000 a year on each vessel which he operates. These four main principles are the foundation of our suggestion-: First, the board; second, the power of the Postmaster General to reduce speed where, in his judgment, the public welfare is served by a lesser speed: third, a temporary equalization of the cost of con- struction; and, fourth, the equalization of the operating costs. We do not suggest that this thing go on for all time, but for a limited period. We suggest that during 10 years' time contracts may be made to cover a period of 20 years. The reason we suggest the 10 years is because Ave believe within that time a very substantial start will be made, or more than a start can be made, in the recon- struction of the American merchant marine. AVe suggest that the contracts run for 20 years because that is usually considered to be the average life of a vessel. And we think that anyone who con- structs a vessel under this act should be entitled to equalization of the operating differences for the life of that vessel — 20 years. Under this act the last contract will expire within 30 years from the enact- ment of the law. I also call your attention to the fact that nothing can be done under the bill without the approval of the Federal Shipping Board acting in the public interests. It is not possible for a man to come forward and say, "This is my plan: I want to build these ships and to place them in a certain trade." Unless he first goes to the shipping board and submits his plans and obtains approval of the character of the service in which the ships are to be placed, he would not be entitled to the benefits of the act. The public interests are safeguarded by this board appointed to protect the public Avelfare. We submit that a bill along these lines does not afford a subsidy which will guarantee a profit to the American steamship owners. The gentleman who spoke here this morning picked out that clause m our bill and said that it was contradictory to our plan to provide an equalization subvention. Our statement is. It does not provide a subsidy which will guarantee a profit. We do not believe the Ameri- can people wish to have steamship men giiaranteed a profit. We do not believe he is entitled to be guaranteed a profit. What we do be- lieve is that the spirit of the American people is in accord with plac- ing the American steamship oAvner upon an equalit}^, simply an equality, with the foreign steamship owner; and the plan Avhich Ave outline does not offer him any profit; it merely places him. as we believe he is entitled to be placed, on an equality with his for- eign competitor. It substitutes Government cooperation for Gov- ernment competition. We believe that is the true function of Gov- ernment, to cooperate and aid and encourage private enterprise, and it merely places the oAvner. as I haA'e stated, upon an equality with the foreign competitor. And. if this be done, we think the courage and enterprise of the American people Avill be aroused and a sub- stantial American merchant marine Avill be created. We submit the bill as the result of a great deal of labor and a great deal of thought by men in New York Avho have given most of SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 505 their lives to business matters connected with shippino- and the export of merchandise. AVe have also provided in the bill that the vessels may be taken over by the Government in time of need. I want to say one word about the construction of (Tovernment sup- ply ships, or colliers. I do not believe the sentiment of the business community of New York or any other part of the country is against the theory of the Government constructing all the vessels which are needed by the Government as colliers or supply ships for naval pur- poses or for military purposes. We recognize that as a definite need of the Government, and I think it will be very strange and very foolish if business men object to that proposition. If the present bill can be so changed that the money to be appropriated, the $50,000,000, be expended merely in the construction of auxiliary vessels for the Navy or supply vessels, and those vessels be XDut up and leased to the highest bidder, we believe they can be leased readily two or three at a time. There will be sufficient competition in this country of 100.000,000 people to entirely prevent any possi- bility of any combination of steamship owners controlling the rates which will be paid. The competition will be sufficient to secure an adequate return. I do not think the sentiment of the country is at all against the theory of building such vessels as the Government needs, pro\iding they are built to be reasonably useful for commer- cial purposes, and to allow the Government to own them and lease them to the highest bidders. We believe such a plan will take awav the fear in the minds of those interested in the private ownership and private operation of vessels, and in the construction of American yards and of the American investor, that he is going to buy into an enterprise or purchase American securities upon steamship property, that ultimately will get into greater and greater competition with the Government's ownership through the taxing power. It is that fundamental thought which we can not iiet away from, considering it as we have from all angles, that with all the good will and all the good intentions that this committee have in framing the present Alexander shipping bill, the result of the passage of that bill will be that it will do more harm than good, and that it will prevent the construction of more ships than it will bring into use, and that the net result will be a decrease and not an increase of ships available for the American commerce. I have finished, Mr. Chairman, the statement which I desire to make. And, as I stated very briefly before luncheon, we have divided our presentation into four sections. Mr. Franklin is to speak from the standpoint of the steamship situation generally. Mr. Strauss has already spoken from the standpoint of the banker's experience in dis- tributing American securities. Mr. Luckenbach will speak from the viewpoint of the coastwise lines. And we have other gentlemen here who will speak from the standpoint of the shippers themselves, in- terested in the shipping of our goods abroad. If there are no ques- tions which the gentlemen of the committee care to ask, I would like to have Mr, Franklin follow me with his statement. May I say just this one thing more: The delegations which have sometimes come down here from New York to speak upon merchant- marine matters have sometimes been criticized because they were composed of representatives of foreign steamship companies. I was 506 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. conscious of that and suggested when this delegation was composed that we limit our delegation to men who were identified wdth lines under the American flag and to American shippers; and we have made this delegation as nearly American as possible. You recognize, of course, that it is extremely difficult to find men in New York, San Francisco, or any seaport who are identified exclusively with the American trade, unless it be the coastwise trade. Some of the gentle- men who have come with us to-day are identified partially with the American trade and partially with foreign vessels. Mr. Franklin is vice president of the International Merchant Ma- rine, which is the largest American steamship company, and while he has a great number of foreign vessels under the ownership of that company he has also some of our very best American vessels. Are there any questions? The Chairman. Yes : I would like to ask you a few questions. You say you are opposed to the principle of Government ownership. Am I correct in that? Mr. Bush. We are; yes. The Chairman, Were you a member of the committee that came over from New York in 1914 and wanted the Government to go into the insurance business? Mr. Bush. No; I was not. The Chairman. I remember Mr. Seth Low was, and representa- tives of the New York Chamber of Commerce and other organizations represented here to-day were here reflecting their sentiment in the matter of organizing a war-risk bureau in the Treasury Department. I assume you will agree with me that that would be a departure from youv objection to the Government going into business? It would be, in other words, just as proper for the Government to go into the steamship business as into the insurance business. Mr. Bush. No; the insiu-ance proposition was an emergency propo- sition. The war had been started. The Chairman. But, then, the principle does not change, does it? Mr. Bush. There is a principle wdiich may be applicable to an emergency measure Avhich is entirely improper for the permanent reconstruction of an industry in this country. We believe that very little, practically nothing, can be done to bring shipping relief in the emergency situation. We believe that the American yards are full. There are 1,000,000 tons, as you stated this morning, under con- struction, and everything is being done that is possible to be done. We believe the important consideration is that some step should be taken by the Government to encourage the development of a mer- chant mai'ine under private ownership, so that the American owner can look ahead to a period of years where he can see encouragement and cooperation and not competition; that, as a permanent proposi- tion along those lines, we are absolutely opposed to the principle of Government ownership. To the principle of the Government helping out in an emergency we are not opposed. The Chairman. This is the way it has occurred to me — I may be wrong about it — that in that emergency you were willing to waive the question of the Government going into the insurance business because there were no American companies ready to write war-risk insurance ; but when the Government undertakes here an initial step SHIPPING BOARD, NAVAL AUXILIARY, AND MEECHANT MARIxVE. 507 to deA'elop the American merchant marine, in the interests of all of the people, imfortiinately it comes into competition with private in- terests and with established lines that are afraid of competition by the Government. And it appears to me that it is not the principle that is in back of this opposition, but it is the conflict of views. That is the way it looks to me. Mr. Bush. That is not my point of view, Mr. Chairman. The Chairman. I may be entirely wrong myself, but that is the way it seems to me. Mr. Bush. My point of view is, and it is our profound belief that the introduction of the principle of Government ownership, instead of increasing the number of ships which will be brought to the service of the American commerce and industry will decrease the number of ships, and for that reason we are against it. In the insur- ance proposition there was practically no available insurance at that time, and it was an emergency which it was quite proper for the Gov- ernment to meet. The Governments of other nations had done the same thing, under the same conditions and at the same time. I think the principles are absolutely different. The Chairman. I think the principle is the same, but the occasion of invoking it may be different. Of course, in response to that same demand we passed the ship-registry act. I was the author of the pro- vision in the Panama Canal act providing for the admission of for- eign-built ships to American registry if not more than five years old, and Avhen the ship-registry act removed that provision and also gave the President power to suspend the provisions of existing law with reference to the watch officers on those ships, that was also in response to the demand on the part of business interests of Xew York, showing that there has been quite a desire on our part to respond to every reasonable suggestion made by the Chamber of Commerce of New York and other business interests of New^ York. And we were con- scious, at the same time, that Avhen we were projecting a measure in the interests of all of the people we would run up against certain private interests. Would your organization be willing to support this bill if there is a limitation placed in section 8, under which the Government might operate ships? I want to get your viewpoint. I Avant to know if you are so opposed to this proposition that you would rather all legisla- tion should fail unless you can get your bill enacted into law? Sup- pose 3^ou fix it at 10 years, a reasonable time. I do not want Govern- ment-owned shipping and control — that is. the management of ships — any more than you do. Mr. Bush. I think, as I attempted to say before, that the sentiment of the business community of New York and of all parts of the country will agree to the construction of any number of ships, whether it is oO or whether it is 150, that the Government may require for its own naval or military service; and I think that is an entirely sen- sible and sound proposition. When these ships have been con- structed we do not think that even the threat or power to bring them into competition with private effort should be permitted. Our thought is that the mere threat of a possibility of Government com- petition will so impress the investor of this country that it will make it impossible for the steamship men of New York or anv other citv to 508 SHIPPING BOARD. NAVAL AUXILIARY, AND MERCHANT MARINE. get the necessary funds to go into the steamship business, and the ultimate result will be that the shipper of the country instead of being supplied with additional tonnage will be prevented from get- ting tonnage which would ordinarily come to their service. The Chairman. Mr. Bush, suppose section 8 were stricken out of, this bill and the shipping board would build or purchase ships and offer them for charter, what power Avould there be in this board to compel a rate that would be reasonable and avoid loss to the Gov- ernment unless in some form the power is reserved, as in section 8 or in some other way ? Mr. Bush. The power, I think, which would come to the service of the Government is the ordinary powder of business competition. Under an appro]:)riation of $50,000,000 you can not build more than 50 serviceable ships. It is inconceivable to me, and it is inconceivable to our organization, that if 50 ships be constructed, all American ships, and are offered under charter to the highest bidder— not 50 at one time, but two or three at a time, as the case may be — that in a country with 100,000,000 people, with 6,800,000 tons of tonnage in the coastwise trade and with the constant demand for tonnage in the coastwise trade, there will not be many competitors for those ships, and that the (lovernment will receive not a low return, but even in normal conditions a very fair returii upon their ships, pro- viding they are built in such Avay as to be commercially useful. If the}'^ are built as colliers with all the ornamental machinery for handling coal, they would not be a business proposition, but it is perfectly possible to have ships constructed in such a way that they can be converted into merchant ships or auxiliary vessels I am in- formed by competent people; and if that is so, I believe the Govern- ment would be amply protected by the ordinary competitive con- ditions in their use. The Chairman. Then, as I understand, you say if this $50,000,000 w^as invested in the construction of ships by the shipping board that there Avould be no trouble to charter them to private persons, firms, or corporations at a rate that would protect the Government, provide for insurance, depreciation, etc. Mr. Bush. I think even under normal conditions, considering the lovv- rate of interest for which the Government can get its money, that there will be no difficulty in getting a return for the use of those ships which will protect the Government. The Chairman, You think there will be a healthy demand. Then, if that is true, do you not think it desirable to enact this bill into laAv if section 8 is stricken out? Mr. Bush, No; I believe the mere inclusion The Chairman, I say if it is stricken out. Mr. Bush, I have read the bill with a great deal of care more than once, but I would not like to say without further careful con- sideration. The Chairman. That is the section which provides for the crea- tion of a corporation, and, in a certain contingency, the operation of the ships by the Government. Mr. Bush. From my recollection of the bill— I do not like to be put on record as approving the bill as a whole — ^with that section out and without going through it again more carefully, it would provide merely for the Government to build the ships for auxiliary SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 509 purposes and to offer them for charter, to which there will be no objection. The Chairman. Those provisions are incorporated in section 8? Mr. Bush. Yes; that is my remembrance, although I am speak- ing entirely from recollection. The Chairman. I will read it, so that there will be no mistake about it : Skc. 8. That the board hereby created, if in its judgment siich action is neces- sary to carry out the purposes of this act, may form under the hiws of the United States, or of tlie District of Columl)ia, a corporation or corporations witli capital stoclv in sucli amount as the board may prescribe, sucli capital stoclv, liowever, to be within the limits of the appropriations made by this act, whose object shall be the purchase, construction, equipment, maintenance, and operation of merchant vessels in the commerce of the United States and with foreign countries and with Alaska, the Panama Canal Zone, the Philippine Islands, the Hawaiian Islands, or the islands of Porto Rico, Guam, and Tutuila, and the chartering or leasing of vessels for such purposes and for and on behalf of the United States, may subscribe to and purchase not less than a majority of the capital stock of such corporation or corporations. Mr. Bush. In principle, with the elimination of that section, and with the elimination of the sections controlling the rates and the licensing of ships, as I recollect the bill, I think we would agree. Mr. Byrnes. You do not think that the Government ought, through this board, in any way to control the rates or regulate them ? Mr. Bush. We believe that it would be desirable if the Govern- ment could regulate rates in the interests of the shipper and, at the same time, assure the shippers that they will be placed at no disad- vantage with the shippers of foreign nations. We believe that it is an exceedingly dangerous principle. Mr. Byrnes. Some witness here the other day testified that the rates on every line had been increased from 100 to as high as about 1,000 per cent, I think, with the exception of the Panama Steamship Line, upon which line the rates had not been increased. The Chairman. Not only on that line, but the rates have not been increased from New York to Panama by any line. Mr. Byrnes. From New York to Colon ? The Chairman. I mean to Colon. Mr. Byrnes. To which port the Panama Steamship Line goes. Do you not think that the regulation by the Government in that instance, merely by having this line in operation, has contributed to the welfare of the shippers of the country? Mr. Bush. I do not think that was the controlling influence; I think the controlling influence was the overland rail lines. I do not think that the comparatively insignificant operations of the Panama Steamship Line, when we consider the vast tonnage between the east and west coasts, was the controlling influence. I think the lines operating between the east and w^est coasts compelled them to keep the rates down, because if they did not keep them down the goods could be moved overland by rail. I think that was the controlling influence. I think it was competition that did that. Mr. Byrnes. The rates from here to Colon, then, were not increased because of the fact of the influence of railroad rates and not because of the existence of the Panama Steamship Line ? Mr. Bush. The rates between here and Colon ; yes. Mr. Byrnes. That is all I stated. 32910—16 33 510 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Bush. The question. I think, raised by the chairman was the rates between the east and the west coasts. Mr. Byrnes. The statement that he made was to Colon. Do you think that the fact that the Panama Line was in operation had nothing to do with that? Mr. Bush. No; I do not say that. I say the shipments to Colon are insignificant, and that the Government's operations there were a sufficient regulating force. I think the Government program of $50,000,000 for the construction of vessels to regulate the rates of the world when Great Britain alone has between 4,000 and 5,000 ships engaged in foreign trade under normal conditions — I think the program of $50,000,000 entirely inadequate to do the same thing which the Panama Canal Line operating between Xew York and a comparative!}^ insignificant port like Colon did do. Mr. Byrnes. Do you believe there should be no regulation by any board or commission? Mr. Bush. I believe it is a very dangerous program. Mr. Byrnes. Do you think it is dangerous for the railroads to be regulated by the Interstate Commerce Commission ? Mr. Bush. I think that is an entirely different proposition, be- cause there 3'ou have the entire control of the railroads under the American Government. In the operation of ships you can not bring the world's shipping under the control of the American Government. And if you create conditions here which make it more costly to operate ships to and from American ports, the shipowner is quite different from the railroad. The Pennsylvania Railroad, for in- stance, can not tear up its tracks and move its operations to some other sphere of influence; it must haul freight between New York and Chicago whether the rates are profitable or not. The steamship owner, if you create conditions which make it unprofitable for the ships to operate in the American trade, can go into any trade in the world, and the result will be the ships may go to other trades an'd the shippers of this country will pay the price. Mr. Byrnes. That is based on the assumption that a shipping board, having at heart the development of an American merchant marine, would create conditions that would be burdensome? Mr. Bush. If you put into the mind of the marine investor that if he invests in privately-owned ship securities he is going ultimately to meet with the competition of the Government, you are going to prevent the American investors from coming to the relief of the shippers and providing ships. As an illustration I would like to cite my own experience in a case which I think is parallel. The Bush Terminal Co. is interested, among other things, in a series of piers. We started to build quite a series of piers, and our plan was to go on and construct a great many more. At that time the city of New York was building piers on Manhattan Island for the ac- commodation of passenger lines. Just about the time we finished our present construction the city of New York went down and bought quite an amount of territory near us and commenced the policy of building piers for the accommodation of freight vessels. At that time I had under contract quite a large amount of other property in New York where I intended to build other piers, and I had paid money down on the purchase of the property. I can- celled my contract and stopped pier construction. That may have SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 511 been my own individual action, but all over the harbor there have been practically no piers constructed by private pier owners since the time when the government of the city of New York commenced the policy to build piers to take care of freight commerce. The city of Xew York has not been able to meet the need successfully. It has spent vast sums of money for the building of subways, and it has not been in a financial position, and other things have come up to divert the interest of the officials of New York from the construction city of JSew lork is now building three piers lyn, with that exception their entire construction program has been the reconstruction of old piers in New York and the turning of three or four old piers into one larger pier. But that has not added anything to the accommodations for shipping. The result has been that private pier construction has stopped; I have stopped and every other i)ier owner in Xew York has stopped building, while the commerce in New York has grown, and, very much to my surprise, I find I have benefited, because the money which can be derived from piers has been increasing by leaps and bounds for the reason that no one can provide enough capacity. The result is that the com- merce of New York and the commerce of this country is bearing the burden of paying the increased price of piers. Pier rents would not have increased so greatly if a normal construction program under private ownership had gon on. I think that is a reasonably parallel case wiiere the same principle is involved. The city of New York has done very little, and the construction of vessels under the administration bill would do very little; but the mere fear put into the minds of the private pier owners that they can not compete with the taxing power has paralyzed pier con- struction in New York, and the commerce of New York has suffered because of that fact. And I believe the same thing would result if you put into the minds of the American investors that they must meet competition with Government money if they buy securities of privately owned steamship companies. Mr. Byrnes. You say the mere threat would do it, and I there- fore conclude in your opinion that the investors wdio are now build- ing this unusual number of ships in this country do not even con- sider the introduction of this bill, with the backing of the adminis- tration, as a threat that it will be passed. Is that it? Mr. Bush. No. sir; I did not consider that. I consider that the construction program which is now going on is, as Mr. Fahey has stated, in most cases the building of tonnage absolutely required by established services. There have been very few new services estab- lished, except such as stated here to-day by Mr. Gibboney, which were purely a speculative development because of war conditions and the unusual profits which are offering. Certain lines which have established services, which need additional vessels, are building those vessels, but I do not know of any large construction program or of any plant which is in process of being enlarged. _Mr. Bruckner. Do you think if New York City had built those piers which you state that your rates would have been cheapened ? Mr. Bush. If New York City had built the piers? 512 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Bruckner. Yes; the piers that they contemplated building. In other words, do you think private capital could not compete with New York City? Mr. Bush. I do not think for a moment that private capital would attempt to compete with New York City. Mr. Bruckner. How about municipal ferry of New York City? Mr. Bush. The operation of the municipal ferry in New York is a perfect illustration. It was started for Staten Island and South Brooklyn — those territories which could not be served by subAvays — but the result has been that the several lines of the Union Ferry Co. have been taken off because they feared the competition of public money. And the communities and water fronts which were formerly served by those ferries are now without a service. That is another exact illustration of the point which I make. The Chairman, In my judgment the people of New York will never come into their own until they can own the terminals there. Mr. Bruckner. And then they will not get half of what they are entitled to, Mr. Chairman. Mr. Bush. But you have here an entirely diiferent proposition. I am not standing here as a shipper, for I think the only reason I was appointed chairman of this committee is that I have no financial interest in vessel property ; I have not a dollar invested in steamship lines, but I am immediately brought in contact with them. If I were standing here as a shipper, and you said the United States Government might supply all the ships necessary, running up to several billions of dollars, I might say, without any regard to my interests as a citizen and a taxpayer, that such an investment might meet the requirements. The fundamental objection, it seems to me, is that you start out to do a big thing and you do a little thing. You start out to revive the American merchant marine and 3"ou build $50,000,000 worth of ships, which would be a fly spot on the map. The Chairman. Would you favor this bill if it were increased to a billion dollars? Is it the amount to which 3'ou object which we propose to invest at the start ? Mr. Bush. I am personally opposed to the principle of bringing the Government into competition with private effort. I do not believe that that is the function of the Government. I think the function of the Government is cooperation with private effort. But, as I have stated, if I w^ere speaking from the standpoint of a shipper without any regard to my interest as a citizen and a taxpayer, I would say my interests would be fully served whether by a Government-owned ship or a private-owned ship; but I would not want the Government to go into a competition which would deprive me of the services of privately owned ships and then not fully supply my needs. The Chairman. In the ballot No. 2 in the referendum, the number of votes given on the establishment of a merchant marine Mr. Bush. I am not speaking for that chamber; I am speaking for the Chamber of Commerce of New York. The Chairman. I know, but I am wondering how jour chamber of commerce would stand on this proposition : The committee recommends the creation of a Federal shipping board to investigate and report to Congress concerning the naviga- tion laws, and to have full jurisdiction, under the law, in all matters pertaining to overseas transportation. SHIPPING BOAED, NAVAL AUXILIARY^ AND MERCHANT MARINE. 513 The vote was 639 in favor of the recommendation and 116 votes opposed. Mr. Bush. I do not Imow how our chamber voted upon that refer- endum ; but I do know the chamber has voted in favor of a shipping board. And it is a part of our bill. I do not think that we are even a member of that association, are we? Mr. Franklin. No. Mr. Bush. But our own bill contains a provision in favor of a ship- ping board. The Chairman. A great deal like our Interstate Commerce Com- mission when it was first organized, which did not have any power. But we have been giving it power during the last 10 or 15 years. We just thought we would avoid this hiatus by starting this board off with power to exercise control ; and it must be exercised wisely, be- cause I agree with you that it is not practicable for that board to make rates in the foreign trade, or anything of that sort. But are you opposed to this proposition which was put up to the constituent members of the Chamber of Commerce of the United States : The committee recommends tliat there should be legislation abolishing de- ferred rebates and providing for supervision of rates by the Federal shipping board, with requirements for filing with the board schedules of rates and all agreements with oversea lines? Mr. Bush. We are opposed to a regulation of rates. We believe 5'ou are nursing a very delicate child here; and we do not want to see it put on corsets until it has grown up. The Chairman. The vote seems to have been 601 in favor of the recommendation and 130 opposed. Mr. Bush. We are not a member of that body at all. The Chairman. I just wanted to emphasize at this point that your position is at variance with the great commercial organizations of the United States on that question. Mr. Bush. We are on that point; 3'es. The Chairman. Then on this proposition : The committee recommends that Federal licenses should be taken out by lines, domestic and foreign, engaged in shipping between ports of the United States and other countries. I understand you are opposed to that, and that you reflect the sentiment of the Chamber of Commerce of New York. The vote on that proposition was 610 votes in favor of the proposition and 120 votes opposed. Mr. Bush. I call you attention, Mr. Chairman, to the fact that we have not expressed an opinion contrary to that. We have stated that the chamber believes that the provision requiring the licensing of all vessels trading from all ports of the United States should not be enacted without more careful study and a more complete estimate of the probable consequences to the trade of this country. Any pro- vision which may make it more costly or difficult to operate vessels from and to the ports of this country burdens the entire commerce of the country. And then we go on and point out : The farmers of the West, for instance, must sell their grain in competition with the growers of Argentina. Any burden upon shipping from American ports which can not be equally imposed upon shipping from Argentina will, in the end, be borne by those who produce in this country the commodities which must be sold abroad in competition with those of other countries. 514 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Our statement is not that we are against that; but we are against this enactment without more careful study and more complete esti- mates of what it will probably do, not so much to the steamship men but to the shippers and producers of the country. The Chairman. You understand, of course, that this provision applies to foreign vessels trading at our ports the same as to Ameri- can vessels. Mr. Bush. Yes; but it does not provide for foreign vessels trading from competitive ports like Argentine or India to England. The Chairman. You know a few years ago we rejjorted from this committee a bill which provided that any vessels operating in viola- tion of the Sherman antitrust law might be excluded from our ports under penalties. It was said if that bill were enacted into law that those foreign ships would not trade from American ports unless we permitted them to do so on their own terms and in violation of law. I imagine there would be a gi'eat diminution of the tonnage of the world if it were not that they had the privilege of trading to our American ports. I think we all agree that these foreign lines are supported largely by their profits in trading to American ports. Mr. Bush. The commerce of this country is, of course, an im- portant item. The Chairman. Yes; and I think they would rather obey the law than to let the ships rot. Mr. Bush. Yes. The Chairman. I think so. Mr. Bush. They may obey the laws, Mr. Chairman; but if any burdens are placed there which will increase their cost, that burden is going to be borne by the man who produces things in this country M'hich must be sold in competition with other countries. The CiiAiRiNiAN. If this board is composed of men such as you and I think should compose the board. I imagine they would have due regard for the interests of all the American people in this matter; and, while they are vested with large powers under the bill, that they would exercise those powers only to correct abuses and not to impose hardships upon anybody. That would be my conception of their duties. Mr. Bush. Might I point out one possibility ? It has been repeat- edly shown that the pressure of public opinion in this country is always against any advance in rates, Avhether it be legitimate or not. The pressure of public opinion was against any increase of the rates of the railroads until after years of trial it was brought home to the Interstate Commerce Commission and to the people that they, the people themselves, were suffering because the railroads were not operating on a more profitable basis. Now, if you will conceive what Avould very frequently happen to be the case, an advancing rate market and the board had established a rate, we will say, of $1. through a shortage of vessels, perhaps due to war, or some other temporary condition, the world's rates ad- vanced to a point where tonnage could be more profitably employed in some other trade besides the American trade, say at a rate of $1.25 or $1.50. The question would then be with the steamship owner: Shall I use my vessel in the more profitable trade or can I persuade the shipping board to agree to advance the rate where it Avill put me SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 515 on an equality with other trades? The pressure of public opinion is always against an advance of that kind and it is very slow to take effect. The result, in all probability, would be that a substantial amount of tonnage would be diverted from the American trade, just as it has been diverted from our coastwise trade. Many of our vessels which were formerly engaged in trade between the east and west coasts have gone into the foreign trade because they can now make more money there; and if that operation brought about a condition where it was more profitable to operate ships in the foreign trade than in the American trade, the result would be that this country w^ould pay the cost. That is one of the fears we have of a license. I am willing to admit that the time will come when a certain amount of Government regulation can be judiciously and wisely put in force, but to start regulating an industry which you have not created and with very little experience here in this country as to what is a wise regulation, seems to us to be an unsound proposition, looking at it strictly as a business propo- sition. You should first get your merchant marine and establish it on the high seas, and then when inequalities dcA'elop regulate them, but do not regulate it off of the high seas before you get it. The Chairman. That is where we made the blunder with reference to the railroads. If we had enacted the law 30 years ago vesting in the Interstate Commerce Commission the power to supervise the issu- ance of stocks and bonds by the railroad companies, there w^ould be no occasion to-day for an increase of rates. Mr. Bush. Possibly that is so, Mr. Chairman. The Chairman. We do not want to lock the stable door after the horse is stolen; we w^ant the regulation to go along with the up- building of the industry. INIr. I3usH. I might also call your attention, along the same line, to the fact that the practical result of the various regulations which have been established by the Interstate Commerce Commission has been that no new mileage has been built. The Chairman. Xo; I do not think that is correct. There has not been the demand for new mileage that there was formerly. Mr. Bush. I think our great western country is suffering because new mileage is not constructed. New mileage has only been created, or largely created, by established lines which had an established earn- ing power and which could sell their securities. That has been the result of the situation, though I prefer not to be drawn into a dis- cussion of it, because I think much of the regulation by the Inter- state Commerce Commission has been eminently wise and successful, still at the same time it Avas established after we had created our transportation system. The Chairman. The difficulties of the West — and I am more fa- miliar with the conditions there than I am in the East — with the Rock Island, the Frisco, and these other lines have not grown out of the fact that they did not have reasonable rates, but on account of the manipulation of the roads by stockjobbing concerns. Mr. Bush. That is quite a different proposition; that has nothing to do with the proposition under consideration. Mr. Hadley. You say you estimate 50 ships can be built for $50,000,000, serviceable and merchantable ships? 516 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Bush. I am estimating roughly that 10,000-ton ships would cost $100 a ton. Mr. Hadley. Taking that as a basis, are jou able to state, referring to the third provision in this bill, 11865 — I have not had an oppor- tunity to read it— in the matter of construction the difference in the cost of construction here and abroad of a type of ship that you have in mind— for 50 ships? Mr. Bush. I do not believe that that bill, if passed, would be oper- ative, or would need to be operative at the present time. I do not believe there is an}^ difference in the cost of construction at the pres- ent time. Mr. Hadley. I mean under normal conditions. Mr. Bush. Under normal conditions, I think, after the war it would be a bold man who would attempt to prophesy what it will be. I think one person's opinion would be as good as the opinion of anybody else; but, I say, after our shipbuilding industry de- velops it is going to decrease the cost very much, and if we can build up our shipbuilding industry it will not only create something for building ships for ourselves, but we will build ships for other nations of the world. There are many countries who do not have ship- building yards who would come to us for the construction of their ships, if the opportunity offered, at proper prices. STATEMENT OF MR. P. A. S. FRANKLIN, OF NEW YORK, RECEIVER OF THE INTERNATIONAL MERCANTILE MARINE CO. AND PRESIDENT OF THE ATLANTIC TRANSPORT CO., OF WEST VIRGINIA. Mr. Franklin. Mr. Chairman and gentlemen, we are the owners and operators of American-flag steamers as well as foreign-flag steamers, and as practical men in the shipping business we would most heartily welcome the United States taking any action which would tend to reestablish the American flag on the high seas in the foreign trade and commerce. The importance of the import and ex- port business of the United States is such that they certainly should liave an important merchant marine of their own to carry their own products. We, hoAvever, feel that this bill does not deal either with the pres- ent emergency nor does it create a practical policy for the upbuild- ing of the American merchant marine in the foreign trade. We also fear that anything bordering on Government ownership or Government operation will destroy the incentive of the individual and the corporation to enter the shipping Inisiness. We further feel that the building up of an efficient American mer- chant marine can not be done by the construction of any specific number of ships. It should be some general policy, which would be creative of ships for general purposes built in the United States, in order to gradually reduce the cost of construction in the United States versus foreign countries. As far as the board proposed by the bill is concerned, we are heartily in favor of such a board. We feel that this board should have certain definite instructions and that it should be in charge of and given jurisdiction over the administration of all the laws of SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 517 the United States pertaining to shipping. We feel that this board shoiikl investigate thoroughly the present conditions, laws, rules, and regulations and then make their recommendations as to the best course for the United States to adopt for the upbuilding of the American merchant marine. We consider that the bill, No. 450, providing for a board, which your committee introduced after a very careful investigation of all the shipping conditions, is a very fair bill. We feel that there might be some slight modifications as to the control over rates that the board would have immeditely before they had had an opportun- ity of thoroughly studying the situTition and becoming conversant Avith it. The Chairman. You mean the bill H. K. 450? Mr. Franklin. Bill 450. The Chairman. The bill which I introduced in this Congress? Mr. Franklin. That you introduced. This problem is a very dif- ferent one from that of the railroads. It is a question of a local prob- lem versus this, which is an international trade problem. It would be a very difficult thing, we feel, for any board to undertake to dic- tate the rates of freight for foreign commerce when you have not sufficient ships to carry all of your own commerce. When you make a law or a rule or a regulation for railroads, it falls equally upon them all, it falls equally upon all the carriers interested in that par- ticular branch of business. But if you make a law, a rule, or a regulation in the international trade that does not apply to other countries that are in competition with this country in the com- merce of the world and thereby place any burden upon the com- merce of the United States that is not at the same time placed on the commerce of other countries with which you are competing, you are putting a handicap on your own trade and commerce. Personally, I feel that if the rates were regulated or dictated that the shippers would suffer a great deal more than the steamers. The tramp steamer is the great regulator of rates on the bulk traffic and the bulk traffic brings a large number of steamers to the ports. The merchants of this country depend largely upon the regular line steamers for their regular trades. If you are going to regulate the rates of freight on regular line steamers and not on the tramp steamers, you will gradually drive out the regular line steamers, and I think all of the merchants of the country will tell you that what they particularly need are the regular services upon which they can rely and with w-hich they can make contracts covering a period, so that they can sell their goods for six months or a year ahead of time pnd make a contract accordingly. The Chairman. If you had read the recommendations of this com- mittee following the investigation of the shipping combine under House resolution 587, out of which this bill H. R. 450 grew, you would see that we do not make any such recommendations as that to regu- late the rate Mr. Franklin. You misunderstood me. I am heartily in favor of the report of the committee and also bill 450. The Chairman (continuing). And if the shipping board would undertake to do that I agree with you it would be a very unwise thing to do. 518 SHIPPING BOAED, NAVAL AUXILIAEY^ AND MERCHANT MARINE. Mr. Franklin. Yes; and I think it would be more detrimental to the business of the country and the merchants of the country than it •would be to the steamers, which can go into other trades. The Chairman. I agree with you it would be unwise. Mr. Franklin. I think so far as we are concerned, as we stated before your committee previously, that we are heartily in favor of a board sitting here in Washington to which all agreements will have to be submitted and which can make any investigations they wish regarding the rates of freight or other conditions wherever they think something is being done that is unfair or unreasonable from a commercial point of view. The $50,000,000 for the purchase of tonnage would probably buy only about 50 steamers, which would not begin to supply the tonnage requirements and would certainly not be in keeping with the size and dignity of the United States, and particularly in connection with this very large and important international and commercial sub- ject. If those steamers should be constructed as auxiliaries for the Army and the Navy and this board would take up the question with the commercial interests and the steamship people and endeavor to purchase steamers that would be useful commercial steamers and, at the same time, answer the purposes of the Army and the Navy, and then let those steamers to the highest bidder, it would put those steamers in exactly the same position as other steamers constructed by private individuals or owned abroad or otherwise; because then the people interested in shipping would bid on those steamers for time charters just as they do to-day. We quite appreciate the impor- tance in the direction of preparedness that the present position is a serious one and that the United States should have a great tonnage under its control: and we feel it could be done in that way and would not be detrimental to the trade and commerce of the country. If the United States should construct 50 steamers to be put into trade, it would be a most difficult matter to divide those steamers among the coasts of the United States, the ports of the United States, the shippers, and the steamship agents in each port. It would be a very serious and difficult problem. I have covered before the question of auxiliaries and colliers for the Navy and the Army. The only further suggestion I have to make upon that point is that if there are any colliers or auxiliaries of the Navy to-day that are not in service they could be loaned to the Belgian relief fund, which is a neutral body. It is feeding the Belgians through Rotterdam, and they are chartering steamers and paying very high prices for them and are using steamers that could be used for commercial purposes, and if the United States now has any of those steamers that are idle it would be a very excellent way to employ them. Mr. Loud. We have an adverse recommendation on that very proposition from the department that just came over yesterday. Mr. RowE. From the Army or the Navy? Mr. Loud. From the Secretary of the Navv and the Secretary of State. Mr. Franklin. Whatever the reasons are that the Navy might have, that is an entirely different proposition: but if they are idle to-day, from a practical point of view, it seems to me that it would be a very useful way to employ them. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 519 Mr. Loud. I saw a copy of the report which was just submitted to-day. Mr. Franklin. They have some reason? Mr. Loud. They have given all of the reasons. Mr. Franklin. Then it can not be done? INIr. Loud. Yes. It was in response to a resolution introduced by me. Mr. Franklin. As regards the selling restrictions of the bill, that is an exceedingly important matter when nations are at war, but under normal circumstances and conditions it does not seem to me that it is a desirable regulation or law. If it had existed at the time of the Spanish-American War the United States would not have been able to have accomplished in such a short time what they did. If this country were a large owner of tonnage, and therefore probably not entering the market for tonnage, this would be a different matter. My suggestion with regard to that is that the board should be in- structed that, so long as the present abnomal conditions exist, this regulation should remain in force: but if it is found by the board that other nations are willing to have their steamers sold, if the English ships can be purchased, then we should open our regulations so that our steamers could be purchased. That would add to the value of the shipping property from an investment point of view. Mr. RowE. You mean as to the regulation against the selling of vessels without the consent of this board? Mr. Franklin. I mean that if you had somebody willing to loan you money with which to build a ship, and you must admit that in case yon tint! the business you are constructing it for has disappeared — the business is a liuctu.ating business, it is a question of supply and demand — and you ha\e constructed a steamer, but there are other branches of trade where the ship could be used advantageously and you have not the right to sell it, naturally the men from whom you are anxious to borrow money become nervous about their collateral. It may be on your hands, with no business for it. and yet you would not be able to sell it. And should the Government enter in a specific trade it would be practically impossible for private individuals to increase their interests in that trade, as the}' would not be able to get the money to build the ships for the trade. One of the most unfortunate features of the bill is that the present interstate commerce laws should be applied to ships. All steamers are not alike. The}^ are just as different — even sister ships differ — as the children of a family, and more so. And, in addition to that, cer- tain steamers are constructed to carry passengers; others freight; certain steamers can be loaded with a cargo measuring so much a ton, and others at a lower or higher average measurement per ton. And it is impossible for steamship lines to be in a position where they have to take everything that is offered them or that they must continue to do so at a certain rate. They have their capacity, and their capacity is booked for that particular line of traffic and that particular nature of traffic; and they must go out of the market for that and go into the market for other things; they must take so much grain and so much cotton; so much lead and so much cotton and so much hay; they must counteract the dense cargo with the light cargo. It is a complicated, intricate business, and the international features make 520 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. it very difFerent from the railroads; laws perfectl}^ proper and appli- cable to the railroads would be most unfair and unreasonable and detrimental to the commerce of the United States if applied to shipping. In regard to the question of licenses, I am not quite clear as to the intention in regard to that. From the bill it appears that not only the steamship agents and operating companies but the individual ships would require a license. Now, would that license be for that trade or all over the world ? The Chairman. The trade from American ports. Mr. Franklin. And of course it would have no bearing elsewhere. The Chairman. No. We would have no jurisdiction. I imagine, except over vessels trading from American ports; but if this com- pany operating ships in other ports were to operate them prejudi- ciously to American commerce that might give this shipping board the occasion and the power by this bill to revoke their license to trade from American ports. Mr. Franklin. Then, again, instead of the American investing his money in the American-flag ships, he would invest in a ship owned in Belgium, France, or some other place where he could op- erate it. without those handicaps and onerous regulations. Now, if the United States is going to pass a shipping bill it should be some- thing that is going to assist shipping and to tend to build up the shipping in a general way and not in a specific manner. If we have licenses and other regulations that are not imposed by other nations, then your rates of freight, for the sake of argument, from the United States to South America are going to be higher than from England and Germany to South America. Steamers are free: the commerce of the world, generally speaking, is free. It is international. It can not be regulated simply by the United States and not by other countries, except to the disadvantage of the United States. There- fore, as I have stated before. I do not quite grasp how broad the license feature would be. But it is dangerous from my point of view. The Chairman. You do not think that the commerce of the United States is sufficiently inviting to a foreign ship line to induce that line to conform to the reasonable regulations or rates that might be imposed by this shipping board? Mr. Franklin. That line will conform to all of the laws and regulations of the United States so long as it can make more money by coming to the United States than it can make by going to India, China, Japan, Australia. New Zealand, South Africa, or other places in the world. There are a great many lines of steamers, and very important lines of steamers, that do not come to the United States. The United States has not and never will have enough steamers under its own flag to carry its own commerce, and it should draw at the lowest possible rates from the tonnage of the world. If you inaugurate a shipping board, and that shi])ping board investigates the situation, it will find that during the last 10 years the commerce of the United States has been carried across the North Atlantic at a lower rate per mile than commerce has ever been carried in the history of the world. That is carried by foreign steamers. If you SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 521 are going to impose burdens on those foreign steamers, they will go elsewhere; but those steamers that come here for purposes of their own, which have been constructed particularly for this trade and can not go elsewhere, will continue to come here, and they will con- tinue to comply with your laws. But you will be increasing the cost of delivering your goods to the consumer. The CiiAiiorAX. You are assuming this board will be so blind or stupid as to invoke regulations that would accomplish that end? Mr. Franklin. No; I am not assuming that. I am in favor of the l)oard. I believe that the board will be reasonable. The Chairman. Would it be worth while to have a board and just pay salaries to them and not give them any powers of supervision? Mr. Franklin. No; I think the board should have absolute power of supervision. I feel the board, after they investigate the matter thoroughly, if they feel a steamship company is doing anything unreasonable, should have the power to correct it. The Chairman. That is what the provision is intended to do. Mr. Franklin. I think H. R. 450 covers that. The Chairman. We have tried to avoid the difficulties you have in mind in this bill. Mr. Franklin. As I told 3'ou before, in testifying l)efore the com- mittee at that time. I was never opposed to that. I feel that the United States, with its tremendous connnerce, must have somebody here in Washington before whom the shippers can make a plea; that they can put before them anything that they think, in their opinion, has been an unreasonable act on the part of the steamship company or steamship operators. But I feel that it would be a very serious mistake to pass any bill which includes a reference to the interstate commerce act. The conditions are absolutely different. One is a local and the otlier an international question and can not be dealt with as are the railroads. The Chairman. If the provisions of section 9 were stricken out of this bill and the provisions of H. R. 450 inserted in lieu of them, you think that would make a better bill as far as regulation is concerned? Mr. Franklin. I say that that would make a decidedly better bill, to be coupled with the elimination of the license feature. The Chairman. I hardly think there would be any reason for the license feature in that event: that is, if the provision of the House bill No. 450 were incorporated in this bill and section 9 stricken out. Mr. Franklin. My position has always been it is foolish to argue against a board. The United States should have some board of this kind. That board should study the whole shipping problem. It should make its recommendations; it should be a board similar to the British Board of Trade. It should have control over all rules and regulations, measurements, inspections, and everything else now covered by the Department of Commerce. It should he the United States authority regarding shipping and the authority in control. I do not know whether I have made it sufficiently clear about the damage that I fear might be done to the commerce if the rates should be too severely regulated; but if there are any questions on chat, I shall be glad to answer them. I thank you. 522 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINIU STATEMENT OF MR. WILLIAM H. KNOX, OF NEW YORK, PRESIDENT OF THE WILLIAM H. KNOX CO. Mr. Knox. The William H. Knox Co. is a New York corporation engaged in the export and import business and dealing in most of the large markets of the world for the last 25 years. The Chairman. In what class of merchandise? Mr. Knox. All kinds of American manufactured goods and raw materials; everything from clothespins to locomotives — wheat, cotton, lumber, pig iron, steel rails, or any other commodity for which we can find a market abroad. It occurs to me that I am occupying rather an embarrassing position, for the reason that, I dare say, I represent the very large class of business men in this country whom the Govern- ment is endeavoring to help. For many years we have fondly hoped that something would happen whereby we would have » restoration of American shipping on the high seas. We have heard a great deal about proposals here to-day, but very little about effective measures that would bring about the result so much desired. As a general proposition, I dare say, the shippers of this country would welcome any efficient relief that would be afforded, provided there was some clear understanding as to the methods by which that relief would be exercised and its operation in the general business interests of the country. We have heard quite a bit to-day about what I would be pleased to call " individual interests " ; but I have yet to hear any broad discussion of some of the most important points that to my mind would affect the shipper and, particularly, the men who have to deal with foreign markets. The remarks of Mr. Gib- boney this morning would not be accepted by any shipper as any sound reasoning, or, in fact, offering any relief for what is confront- ing us. In fact, everything he had to say, to my mind, seemed to be predicated on the continuing of present conditions. It may be true that he has money to buy all of the ships that can be found, at any old prices. If it be true that he is willing to build any number of ships at any price he can get for them, if it be true that he is pre- pared to take 100,000 tons of steamships from the United States Government on a guaranty of 6 per cent net and pay for the use of such vessels, depreciation, insurance, and all of those charges in a fluctuating market in which he has to compete with this commerce, I should say that the very point for which he was striving was to try to maintain the conditions that exist to-day. But there is absolutely no relief in what he suggests ; it does not contribute 1 ton of tonnage to the commerce of the world. He offers a most beautifully painted rainbow which could not last unless he proposed or assured or guar- anteed to the Government that it should have a fair return on its money. As I view the proposition in a broader sense, we want some effective relief, workable methods that would make the American manufacturer and producer escape from the throttling methods to which he is being subjected to-day. A word as to methods. Under this proposed legislation in theory we seem to have something that offers tangible relief. We are. how- ever, very largely concerned, as shippers, as to what effect the opera- tion of this proposed bill would have upon the merchandising of our American products. I fail to see where Government ownership could, bj' anj^ possibility, bring about an effective and permanent SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 523 relief. What we all recognize to be the crux of the question is the scarcity of tonnage. I fear that such Government-owned ships would very severely counteract upon the investment of private capital in the several lines of business. To put it briefly, I fail to see how the Government can compete with the business men of this country, but I am not perhaps quite as clear in my mind that it is the intention of the Government so to compete. On that point we -would like information. The Chairman. We have tried to make it as clear as we could, but there is a persistent disposition to misunderstand. I think I am war- ranted in making that statement. I do not think certain interests want to understand our position in this matter. If there is anything emphasized in this bill, it is that only in those instances where pri- vate enterprise will not come in and furnish you with accommoda- tions, as a shipper, an importer, and an exporter, that then the Gov- ernment might help you. Mr. Knox. Quite true. The Chairman. Do 3'ou object to that? Mr. Knox. I only asked for information. It is not clear in my mind as to whether the Government does intend to compete with private capital. The Chairaian. On the contrary, the Oovernment does not intend to compete. Mr. Knox. Very well. sir. The Chairman. But if you are indifferent to help, of course, that is another matter. I admit the Government is trying to do something for you in the way of a working measure. Mr. Knox. We are, however, I think, opposed and object emphati- cally to the operation by the Government of steamers engaged in for- eign commerce, for the reason that I fail to see how any Government control or attempted control of such a situation would do otherwise than to affect detrimentally the shipping interests of the country. I do not mean by that the steamship men : I mean the shippere who are providing cargoes for the vessels which you, I hope, will be able to give us. The Chairman. If by any sort of magic the Government could create a tonnage of 100 ships of 5,000 gross tons, which would be about 7,500 tons dead weight capacity, to engage in the foreign trade, you would not oppose that, would you ? Mr. Knox. Not at all, sir, if I were sure that the tonnage would be distributed pro]:)erly to meet the exigencies of that trade. The ramifications of this foreign business are so many and so great that while Ave gladl}'' accept the regulations as to rates, we would equally be most desirous of being assured that together w'ith the regulated rates we would have the requisite tonnage. The Chairman. That you would get your share of the tonnage for your business? Mr. Knox. Of course we will assume that our legislators will en- deavor to give us that tonnage; but I am now trying to point out in some practical way how possible conditions confronting us in the future may affect the shippers' in that respect. I do not think it would be at all profitable to attempt any discussion — certainly not on my part — as to the conditions that exist being abnormal conditions to-day. We are between the upper and the nether millstones. We 524 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. could very largely increase our business to-day with the tonnage to carry the freight; but unfortunately that tonnage is most largely used to-day in the transport of freights which do not perhaps come within the province of my particular line of business. If the 50 per cent of the enormous amount of tonnage now doing a trans- Atlantic business in the carriage of government supplies, etc., could be diverted to the ordinary channels, we would have very speedy relief from the congested and impossible conditions at present. The matter of the regulation of rates is something that would ap- peal to us greatly; but as a shipper I would like to know how the Government, by any possibility, could fix rates under which I could operate. For instance, in the ordinary course of business we w^ill be asked to name a price and on all large commodities such prices are quoted abroad on what we call a c. i. f . basis ; that is, cost, insurance, and freight. Suppose we have to quote on such a commodity, and we have been told by the Government that the rate, say, will be $10 per ton. Now, I want to make a contract for the shipment of my stuff. Say it is the month of March and I want to make a contract for the shipment of my stuff next September. I go to the shipping people and am told the rate will be $10. I want to make a contract. They refuse on the plea that they may have more profitable freight offered them before September, and that they may be full to their carrying capacity at present of the commodity which I have to offer; so they do not find it convenient to trade with me. I would then be in a position of being unable to go elsewhere to seek freight space. You would very likely be attempting to establish a fixed value on what must always be a purchasable commodity, just the same as wheat, corn, or any other line of merchandise. In the case of a declining market the shipper would be in the posi- tion of having to contract for freight which two or three months later would have been carried at a lower rate; and the fellow who comes in afterwards — I am still dealing, if you please, with Govern- ment rates or regulative rates — would be taking the business. In the case of a rising market, I am afraid our good brethren in the steam- ship business Avould find it convenient to shut out our freights be- cause they could get higher rates later on. At present, under normal conditions, when we have all the shipping facilities at our com- mand, of the world (it is simply a question of price), we are able to make trading arrangements and individual contracts and the trade is sealed and closed. To-da}', of course, we can not do that, we are living from hand to mouth, and there are 29 different rates for 29 different ships that go to the same ports, and everything is in a state of chaos and the only relief would be increased tonnage. The Chairman. You are talking about conditions that I do not think anybody imagines would exist if this bill becomes a law, un- less we assume the shipping board would not be men of average com- mon sense. Mr. Knox. We are in favor of a shipping board, Mr. Chairman, and that they should exercise control over any and all questions per- taining to foreign commerce and thereby prevent an}^ unreasonable restraint of trade, etc. We would be in favor of the construction by the Government of auxiliary vessels that would be useful for com- mercial purposes; but it occurs to me to suggest that perhaps these SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 525 vessels could be constructed primarily for commercial purposes and secondaril}'^ for military purposes. The Chairman. That is just what this bill provides for. It says that they shall be leased, sold, or chartered to private purchasers, firms, or corporations of American citizens. Mr. Knox. I understood the bill to say that they should be con- structed for military and naval purposes first. The Chairman. Oh, no: it does not. It says that they are for com- mercial purposes but they shall be, of course, available as naval auxiliaries in the event of war, when the Government may take them over. Mr. ;^^ox. On the matter of licenses, there are several very impor- tant trades that, to my mind, would probably suffer. In the case of bulk-cargo freights where we would be chartering foreign-owned ton- nage it might suit the interests of this country to refuse to license such a boat, in order that such cargo would go into American bot- toms. The probable consequence of that would be that our foreign competitors, manufacturers, and shippers would have an increased volume of tonnage at their command Avhich would in turn permit of their shipping their commodities abroad at a lower freight rate than we could in American bottoms. Great Britain alone has over 4,000 steamers available for their commercial purposes. If it be true that we have in this country to-day some two hundred and odd under con- struction, no immediate relief in the way of increased tonnage would, of course, be available for several years to come. On the other hand, if it were possible for the Government to accomplish the same pur- pose by devising means whereby these individual builders and those who would like to go into the construction of ships, shipyards, etc. — if it were possible for the Government to devise means whereby such interests could obtain the use of capital and have such capital em- ployed in those industries, such money could be properly safe- guarded by the issuance of mortgages, as we have heard ; and in the case of this $50,000,000 that you propose to appropriate, that may serve as a nucleus for three times the amount that would be avail- able if you go into the business of operating ships. Mr. Byrnes. You do not mean by that to lend the money to the shipbuilders for the purpose of building ships ? Mr. Knox. Yes; just as in the case of the railroads many years ago. In the matter of the equalization of the construction cost, I firmly believe that world-wide conditions are such to-day that there would be very little or in fact none at all. And later on when we meet the competition of foreign shipbuilding, I also have it pretty clearly fixed in my mind that we would be building foreign ships before many years. We certainly have the material and we only need the necessary impetus to get started in the business in a large way to permit of our competing with the foreign shipbuilders. In the matter of the equalization of operating costs, I should think it ought to be possible to devise some scheme whereby a very small tax imposed on the freight moneys earned by those boats could be utilized for the purpose of amortizing the funds that might be ad- vanced by the Government for the purpose of equalizing the costs of operation. I. also believe that the cost of operation will grow ma- terially nearer to the foreign cost. One of the very things you 32910—16 34 526 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARl NK. perhaps are advocating in this measure would be to bring about just such a condition as that. And I would be in favor of a shipping board, but it looks to me that the perplexities of many of the ques- tions they will be called upon to handle, are perhaps too little recog- nized by the majority of people. We are treating of international commerce to all of the many foreign deep-water ports of the world. The rates of freight vary, the conditions under which vessels are op- erated vary, the matters of insurance, the regulations affecting trans- portation of the freight, and all make it a most complex proposition. Whereas to-day I can call an expert on admiralty law on the tele- phone, or can call an expert in insurance on the telephone, and I can get hold of my steamship man and get a rate of freight in one minute, and close up my transaction, I am afraid that I would be all at sea if I were to attempt to do my business by having in mind that I must work on a rate that was fixed by a board in Washington and which I could not reach perhaps without coming down here. I could not do very much business if I had to wait upon my friends in Washington, because in these days of stress and strain we do a vast volume of business by cable. It is touch and go, and the man who has the goods and who has the freight, and who can make a quick trade is the one that gets the business. The Chairman. Right at that point, Mr. Knox, I do not suppose any man who would serve on the board and has studied this question would for a moment think of fixing a rate in the foreign trade that it would be necessary to have changed by authority from Washington. Mr. Knox. Would not that be the idea ? The Chairman. These difficulties you speak of do not grow out of this legislation. They are good, sound, economic principles ap- plied to the foreign trade and I thoroughly agree with you. But I do not see where, if this bill were enacted into law, it would be an obstacle in carrying out those very sound principles you are speaking of now. Mr. Knox. I have attempted to show these regulatory provisions, sir. We have to start on some basis. We will take a concrete in- stance : The shipping board says the rate shall be $10 The Chairman. I say that while they have general powers under this bill with reference to commerce I do not suppose they would insist that there should be a certain schedule of rates in the foreign trade filed with this board, and then they could only be changed on notice, and all that. If they did, I think it would be unwise for the very reason that you state. Mr. Knox. The board would, of course, take into consideration in the fixing of the rate that it was, and would be, made having in mind the world-wide competition that would be brought against such a rate. The Chairman. But if this line were to discriminate against you in favor of another, would you object to that? Mr. Knox. I would naturally oppose any discrimination. The Chairman. Then you would want the board to correct that? Mr. Knox. Oh, this board should have the power to control such matters. Mr. Byrnes. You would not object to the provision that the board should regulate through rates, as is provided in section 9 here? I SHIPPING BOABD, NAVAL AUXILIARY, AND MERCHANT MARINE. 527 Mr. Knox. Not at all, sir. Mr. Byrkes. You think they are a good thing? Mr. Knox. There is one provision in this same function of the board that has not yet been touched upon and which is of very great importance. You make a reference there to the power of the board to establish preferential rates. That, of course, in its last analysis, is the exercise of a protective principle. In some lines of industry in this country, noticeably iron, steel, and cement, the occasion would iirise, Avhen conditions reached normal, when we would be unable to compete with the foreign manufacturers on account of the difference of our freight rates; and it might suit the Government and cer- tainly might suit the manufacturer and producer to have a freight rate made on a preferential basis that would assist us in marketing such products in competition Avith the world. The foreigner does that very thing to-day. Mr. Byrnes. Your idea is that a board appointed and constituted for the development of a merchant marine would injure it, and that is why you oppose it? Mr. Knox. No, sir. Mr. Byrnes. Do you not think that a board constituted as that board Avould be would not do the things that you say noAv it is possi- ble that they would do, but that their purpose would be to build up a merchant marine instead of to destroy, and, if animated by that purpose, it would be a very good body instead of an injurious one? Mr. Knox. That is perfectly proper, sir; if you say that board as constituted and proposed would have for its purpose, as we recog- nize it would, the honest endeavor to build up an American mer- chant marine and to facilitate the sale abroad of American manufac- tured stuff and American products. Mr. Byrnes. That is all it is; that is the sole purpose of the bill. Mr. Knox. All we are anxious to know would be, in the proposed operation of the methods to be employed, whether or not our inter- ests would be affected adversely thereby. I say there are some things there that do not appeal to us, and we fear them. Mr. Byrnes. Is not this true, that that is the purpose of the board, and your idea is that the board in the exercise of its power might do something to injure you? Is not that true of all boards, that if a board constituted for the purpose of developing an indus- try should thereafter take it into its head to destroy the industry or to injure it, do you not think it is far-fetched to imagine any board appointed under this bill would set to work to injure an industry instead of to build it up, when the purpose of the bill is to have it developed? Mr. Knox. I agree with you there. Mr. Byrnes. Then why indulge in the realm of fancy as to what injuries they might possibly inflict upon you? Mr. Knox. Because I have no assurance now Mr. Byrnes. The railroads have no assurance that the Interstate Commerce Commission might not promptly promulgate a rate that would be absolutely confiscatory ; but they do not do it. Mr. Knox. That would be an entirely different proposition, sir. You are dealing with local matters as compared with international. Mr. Byrxes. Is it not true that the railroads did believe that the 528 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Interstate Commerce Commission would destroy them? But in- stead of that we find them now looking to the Interstate Comnierce Commission to protect them against the State railroad commissions. 'Mr. Knox. Their objections to the work of the Interstate Com- merce Commission were not founded on the same reasons I have been trying to express. Mr. Brynes. They were founded on the principle they were just afraid of regulation: that at heart they were afraid of any regu- lation. Mr. Knox. I do not protest against regulation. I protest against what I consider to be sound reasons wliy such regulations would adversely affect my interests as a shipper of merchandise. Mr. Byrnes. What is the particular regulations that you insist would naturallv folloAv the passage of this bill? Mr. Knox. You mean my first one? Mr. Byrnes. Yes; that would necessarily follow the passage of this bill. What regulation? Mr. Knox. What regulation that would immediately follow the passage of the bill ? Mr. Byrnes. Yes; would necessarily follow — that you think the board would necessarily put into effect? Mr. Knox. I am not competent to say what the board might do. I have a fair understanding of what the bill might provide for. Mr. Byrnes. You believe it would injure you? Mr. Knox. No; I have not said I thought it would injure me. The Chairman. In section 9 it sa^^s: The board herebj^ created sliall have the power and authority to rejiuhite the operation of all corporations, firms, or individuals enjra.Ered as common car- riers in the transportation of passengers and property by water between the ports of the United States and not entirely within the limits of a single State and between the United States and foreign countries. Are you opposed to having such power as that vested in the board? Mr. Knox. The regulation of rates? The Chairman (reading) : Regulating the operation of all corporations to determine and prescribe just •and reasonable rates or charges to be demanded or collected for the transpor- tation of passengers and property is such trade ; just, fair, and reasonable classifications, regulations, or practices to be followed with regard thereto. Mr. Knox. I would be in favor of the board exercising any rea- sonable provision that Avould protect the shipper in the matter of rates and shipping regulations. The Chairjman. They are simply given that power. Mr. Knox. Yes. The Chairman (reading) : Provided, hoicever. That the board may prescril)e preferential rates covering the transportation aforesaid if in its judgment such rates are necessary in order effectually to carry out the purposes of this act. Mr. Knox. I would be in favor of that, sir. The Chairman (reading) : And when property may be and is transported by common carriers from a point within the United States to foreign countries or to and from the Terri- tories or possessions of the United States, the carriage being l)y railroad or railroads ,or other means of transportation, within the United States, and a vessel or vessels operating under American registry or enrollment, the board SHIPPING BOAKD, NAVAL AUXILIARY, AND MEECHANT MAEINE. 529 is hereby autliorized to determine and prescribe through routes between and over sucli rail-aiid-water lines, and just and reasonable joint rates or charges to be demanded and collected for the transportation of property over such routes, and to determine and presci'ibe just, fair, and reasonable classifications, regulations, or practices to be adopted and followed in regard to such traflic, including the issuance and form of through bills of lading and permits for ship^, ments for specific sailings, which shipments are hereby expressly authorized. Do you object to that provision? Mr. Knox. Xot at all, sir. The Chairjian (reading) : Provided, hoircver, That the board may prescribe preferential rates covering the transportation aforesaid if in its judgment such rates are necessary iu order effectually to carry out the purposes of this act. In other words, just a case where you instance of competing on some particular product with a foreign competitor, and the differ- ence really is the rail rate from, say, Pittsburgh to the seaboard. Under that provision the railroad company could quote 3^011 a rate that would enable you to meet that foreign competition and not violate the laAv. Are you opposed to that ? Mr. Knox. No. The Chairman. What I am curious to know is just where you object to this: Provided, however, That the board may prescribe preferential rates covering the transportation aforesaid if in its judgment such rates are necessary in order effectually to carry out the purposes of this act. And whenever the carriers between and over whose lines joint routes have been established as prescribed aforesaid shall fail to agree among themselves as to the apportion- ment or division of the joint rate prescribed by the board as aforesaid the board may, after a hearing, prescribe the just and reasonable proportion. That is, just simply how much interest it should have. Now, that is the whole of it; that is the very provision in this bill. Mr. Knox. But we have yet to learn. Mr. Chairman, how the shipper is going to get his tonnage under the proposed workings of this bill. The Chairman. I am talking about the regulatory features now, and you have assented to every one of them. Mr. Byrnes. That is what I am asking about — the regulation; that is the object of those features in the act. It is another question of how you are going to get the tonnage. As to the regulation, then, you have no objection to this bill? Mr. Knox. None whatever on that point. Mr. Byrnes. I am sorry if I caused you to lose the thread of your remarks. When I interrupted you you were going to say as to w^here he would get his tonnage, which is another question. Mr. Knox. Mind you, I am not discussing the question on the basis of present conditions. The mildest term I can apply to that is that it would be impossible; our commerce is suffering from a lack of ships. We, as a Nation, are primarily responsible for that condi- tion. We should perhaps confine our attention to normal conditions which we will assume will exist at the close of the war. Every indi- cation points to the fact that this country, as it undoubtedly is to- day, will for a number of years after the cessation of hostilities in Europe, be the largest producer of raw material in the world. The greatest bulk of the ocean-borne commerce is going to be moved 530 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. eastward and westward from our Pacific and Atlantic coasts. The demands for what this country can produce in the way of raw ma- terial it is simply impossible perhaps to predicate. We recognize now the tremendous volume of trade that is coming to this country without any preparation of any kind for its ocean-borne carriage. Mr. Byrnes. Let me ask you this: That being so, if it is impos- sible to pass a bill through this Congress granting a subsidy, are you opposed to us taking the step provided for in this bill ? Mr. Knox. Except that I do not see how it affords any relief. Mr. Byrnes. The idea is that you would rather have nothing done than to have this bill passed? Mr. Knox, No ; my idea would be that the Government would find the means to provide the business men of this country with reason- ably cheap money, under proper safeguarded securities, and let busi- ness men go into the business of building ships, and constructing shipyards and going into the steamship business, just as we go into a manufacturing proposition. I contend that the results to be obtained by individual enterprise using such funds would be vastly more productive in the way of increased tonnage facilities than Oovernment navigation, operation, or ownership could ever produce. When I have the backing of this country and as a shipper know that a combination of business men in the same line as myself can put up 50 per cent of the cost of a vessel or of a fleet of vessels and obtain the necessary extra capital from the Government at a reasonable rate, I then say that is a principle which will increase the tonnage of this country, because I am providing the cargo. Mr. Byrnes. That is all right. Mr. Knox. I have my markets now, but I am dependent upon get- ting steamships and freights, Avhether they be German, French, Ital- ian, English, or any other nationality^ of the world. And before the outbreak of this war, permit me to say, we were being very well served; there was no great scarcitj^ of tonnage then, and we assume there will be no great scarcity of tonnage after this war is over — not to such an extent as we are suffering to-day. But if we attempt in this country to put any restrictions upon the coming to our shores of foreign-owned tonnage, if we make our rates on such a basis and surround the operation of foreign-owned tonnage with restric- tions that would be onerous, we are going to drive that great volume of foreign-owned tonnage into traffic between their own countries and foreign markets of the world, and they will be doing it at lower rates of freight than we could ever touch. Mr. Byrnes What do you pay for capital to-day? What interest are you paying, or shipbuilding men investing in the building of ships — what would they have to pay, approximately ? Mr. Knox. I dare say 5 per cent. Mr. Byrnes. Do 3^ou not know that the farmers of the West and the farmers in Texas are paying 10 and 12 per cent interest, and they want Congress to make an arrangement to lend them money at a cheaper rate; and if we were to lend money to build ships, cheap money, we have got to lend it to the farmers and to most of the cotton growers in the South? Mr. Knox. What is the difference between that and spending $50,000,000? SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 531 Mr. Byrnes. We do not propose to go out and raise all of the cot- ton and grain in the country. Mr. Knox. The point I make is if this $50,000,000 can be used as a nucleus for a fund to develop the American merchant marine which will have three times the tonnage available for that purpose, and instead of having 500,000 tons we would have a million and a half tons Mr. Byrnes. Your idea is to lend this $50,000,000 ? Mr. Knox. To lend that money to the men who know how to use it. I do not ask you to give it to them, but I ask you to lend it to them, safeguarded in any manner that a mortgager would demand. Mr, Loud. And it would provide auxiliaries for the Army and Navy? Mr. Knox. I am in favor of that. Mr. Loud. If it did that, that would be an answer to the question about the farmers? Mr. Knox. When we talked about the construction of a conti- nental line of railroad in this country the Government loaned the money to build that road, and the farmers were the beneficiaries thereby. But I do not know of any farmer in this country, Mr. Byrnes, paying 10 or 12 per cent for his money. Mr. Byrnes. Oh, Lord, yes. We know of them. I know in my country it is not as bad. And not only the farmers, but did you not read the report of the Comptroller of the Currency showing that the national banks of the country — I am glad to say not in my State — are charging 30 per cent? Down in Texas and in the West they are paying 10 and 12, and it is common in my State, although we are a little bit better off, to pay 8, and you can loan $500,000 down there on gilt-edge securities. Mr. Knox. All right, then; apply the same principle to the use of that money you applied to the use of the money in the railroad construction. The Chairman. I do not think we are getting anywhere with that discussion. Of course, if we are going to loan to the ship- owners at 3 per cent everybody will want money at 3 per cent, and we will have to play the game fair. Mr. Loud. I just want to ask one question. As part answer to the inquiry of Mr. Byrnes, if the money were loaned for the build- ing of the ships, it would be loaned upon such ships to be used as auxiliaries for the Army and Navy, would it not, ships that were suitable for that purpose? Mr. Knox. That would necessarily come within the proviso. Mr. Loud. They would have to do so, necessarily, to get the loan? Mr. Knox. Yes. Mr. Loud. Then there is an answer to the question. You get the auxiliaries for that loan, but in the case of the farmer you wol^ld not get anything. Mr. Byrnes. You would get something to eat. The Chairman. Let us not discuss that question any moi-e. It may be desirable, but it is a very dangerous precedent. 532 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. STATEMENT OF MR. HARRIS CHILDS, OF NEW YORK, EXPORT AND IMPORT MERCHANT. Mr. Childs. All I have to say is that it seems terribly hard to start in the business. And there is no doubt about it that we want some relief in our particular business of selling American products and American manufactures abroad. I have sold cotton goods and bought products from the negroes of Africa for the last 20 j^ears; and all I have ever asked in m}' business was an even break. I never was afraid of any foreign competition. The only thing that ever worried me in my business was when some Yankee got into my par- ticular bailiwick. While we need relief, and we need it very badly, I think that up to the present time we have had a fair break. But my friends in the shipping business here have jacked up the price of freights in this last year from $5 a ton to $50 because they could get it. I was free to go anywhere and find some philanthropist to take my freight and to save me a few dollars, and I squirmed and wiggled, but I could not get away from it. It strikes me that we have two propositions of relief on the table. I think any man who would prophesy that either one of them was perfect would come into the position of a prophet. All I can say is that wdiile I Avas glad to hear of the reincarnation of a great shipping man this morning and in his reincarnation he took the guise of a patriot, I would not feel like offering to take any part of his 100,000 tons off his hands, and I do not believe he would get many business men, bankers, or shippers to go in with him. I think the desire and aim and hope of every merchant and ex- porter of goods from this or any other country is to own a little ship. I would like to own a ship. And I think if the second bill were put through and the Government could put me in a position to have an even break with the foreigners that I could get some of my friends that I have, not only in this room but in other places, to go into that business with me. I have only one comment to make upon your bill, sir, and that is the one point that has not been taken up. That is the important part that annoys, the red tape or anything placed on business. Hitherto when we have had to charter ships coming to American ports they have charged us a certain percentage over the European rates for the distance and for the particular kind of tonnage, and they have charged us a little more for the annoyance that they get from our port dues and from the general red tape and apparent antagonism to foreign bottoms. I think it is a very important thing; and I think, perhaps, the functions of a shipping board might very well enter into a study of making things easier for the shipping people. And w^hen I say that we want an even break, the whole thing comes on the shipper after all. If the freights are going in competition with Argentina and the manufacturers of our cotton goods are going in competition with Lancashire or India, we want to get our freights in the cheapest market, and I believe that the patriot to whom I referred before did not deny that he had a couple of ships now under the British flag. I think he still has them under that registry. He is not altogether so patriotic that he wants to forego that privilege. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 533 I do not know that I can say anything more. Mr. Byrnes. Do you have any trouble now in getting bottoms to transport your cotton goods that you have been exporting ? Mr. Childs. Oh, yes; the difference between $5 and $50. Mr. Byrnes. Can you get bottoms at $50? Mr. Guilds. Yes; we can get bottoms at $50, but we do not want them. Mr. Byrnes. You do not ? Why ? Mr. Guilds. Because we can not get rid of our stuff. Mr. Byrnes. Because you can not compete? Mr. Ghilds. The people simply won't buy the stuff if they have to pay too much for it. Mr. Byrnes. Which is the trouble; j^ou can not compete or the people won't buy by reason of the increased charges? Mr. Guilds. Both. We can not compete with other sources of supply and the people will not pay the prices. Mr. By'rnes. What countries would you compete with now with whom you can not compete ? Mr. Ghilds. We compete with India. India manufactures a lot of cotton, and we compete with Lancashire, and Lancashire manu- factures a lot of cotton goods. Mr. Byrnes. Is not the difficulty in competing the high charges? Mr. Guilds. I beg your pardon, Mr. By'rnes. They are not bound to pay these increased charges and they can undersell you, and therefore you are out of the business? Mr. Ghilds. Yes, sir. STATEMENT OF MR. WILLIAM E. PECK, 104 PEARL STREET, NEW YORK, PRESIDENT OF WILLIAM E. PECK & CO., IMPORTERS AND EXPORTERS. Mr. Peck. Mr. Ghairman and gentlemen, so much has already been said on this question that there is little or nothing more that I can say at the present time. Last year the export houses in New York had probably the most prosperous year in their history. And although the outlook in January was extremely hazy, conditions are changing so rapidly in the last few weeks that the outlook to-day is very dark and dreary. The recent destruction of more vessels has emphasized more than ever the trouble we are up against for tonnage. We realize that men w^ho charter ships at high prices must charge correspondingly high prices; but at the same time these high rates of freight are practically killing the export business in many of the staple lines. Where we paid $3 a ton, for instance, before the war, for steel from New York to Buenos Aires, we are paying now $20 to $30 — ten times the amount. And, of course, the only result of these high freights is to discourage the importation of American goods and gradually the orders cease to come in by cable, first from one line and then from another line. And although we are not going to feel this very much until after July 1, because nearly all staples are sold through advance sales, we are going to feel it very seriously after that date. And as I have already remarked, the shortage of tonnage is a very serious factor and therefore we would welcome any bill — that is, I 534 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. speak for the shippers — that would rectify in any quick way the trouble that we are up against. Mr. Gibboney this morning spoke of the tremendous profits that the American ship owners are making. If that is so it would seem that it was not necessary to discuss the Alexander bill at all, because it would seem that the quick-get-rich capital of this country would have already seized all of the vessels available and placed orders in the shipyards for new ships. But that is not the trouble. The trouble is the awful shortage of tonnage, and, therefore, I say we favor any bill that will rectify and remedy the conditions which exist. We favor certain parts of the Alexander bill; also parts of the chamber of commerce bill. Especially do we favor a shipping board. I personally appeared two or three times before the British Board of Trade. I had them rectify an abuse which I encountered in New York in connection with shipping in our English vesels. I found the British Board of Trade very fair-minded, and I am quite positive a shipping board, that would be organized in this country under the Alexander bill, or any other bill, would be equally fair, and all of the shippers are desirous of having such a shipping board. The Chairman. The shipping board would be a useless arrange- ment just now unless we had the ships, would it not? Mr. Peck. Yes. I do not see how any particular bill could rectify the conditions that exist very quickly. It looks as though we have to suffer and to get along as best w^e can for the next three or four years. The Chairman. Would you advise a beginning? Mr. Peck. I do. I advise a beginning of some kind. It can not come too quickly. Gentlemen, I thank you. The Chairman. That was my notion, that any rational man would think it advisable. STATEMENT OF MR. EDGAR F- LTJCKENBACH, 44 WHITEHALL STREET, NEW YORK, SHIP OWNER AND OPERATOR. Mr. Luckenbach. To-day I own about 100,000 tons of American bhips and I am building 78,000. After reading over this bill I am sorry I own so much. From Avhat I read in the bill, anyone can come in if you pass the bill, and get Government aid and assistance i\nd run me out of business. I am in a tramp business and I also run a regular line, and if I understand the bill correctly, in the regular line they would give him the same privilege as I have; that is, of running in the coastwise trade. The Chairman. Where is your regular line running? IVIr. Luckenbach. From "New York to San Francisco. The Chairman. For how long? Mr. Luckenback. About how long have we been operating? The Chairman. Yes. Mr. Luckenbach. We have been operating a direct service through the canal ever since it opened. Previous to that we were cocarriers with the United States Government-owned Panama Steamship Co., carrying on the Pacific while they carried on the Atlantic. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 535 According to the terms and conditions of this bill anyone can come in if they will satisfy the Government or the board and operate to Hawaii, Alaska, and other coastwise ports. The Chairman. That is the American-built ships? Mr. LucKENBACH. Ycs. I do not know why we should get a spanking. Have we raised the rates, or what is the object of doing this? The Chairman. Are you opposed to American-built ships being used in the coastwise trade in competition with your foreign-built ships? Mr. LuCKENBACH. Foreign built? The Chairman. Yes. You have some that were admitted to American registry under special act, have you not? Mr. LuCKENBACH. Ycs ; but I just told you I am now building 78,000 tons in American shipyards. The Chairman. I think you have been before this committee more often than anybody else to get foreign-built ships admitted to American registry, have you not? Mr. LuCKENBACH. I liave not. The Chairman. You have been before the committee, have you not? Mr. LuCKENBACH. Yes ; once. The Chairman. Are j^ou opposed to an American-built ship being used in the coastwise trade ? Mr. LuCKENBACH. Docs this bill say that? The Chairman. I do not care whether you build them or somebody else builds them, because the other fellow has just as much right to build those ships and to run them. But you want it all. Mr. LuCKENBACH. No. If I unders^iind the bill correctly, it says here that you can charter vessels. It does not say that you are going to charter American vessels. You say this, that you can charter ves- sels or you can purchase vessels. Mr. Byrnes. Where are 3^011 reading now? Mr. LuCKENBACH. It does not say you are going to charter Ameri- can vessels to run in this trade, but you are going to charter foreign vessels and put them in the coastwise trade. Mr. Byrnes. From what section of the bill are you reading, so as to direct our attention to it? Mr. LuCKENBACH. Scctiou 3. This is what you say in section 3. If I am wrong, just correct me, please: That the United States, through the hoard and with the approval of the President, is authorized to construct in American shipyards and navy yards, as their capacity will permit, or elsewhere, or to purchase or charter vessels — Is that right? The Chairman. You are reading from section 3? Mr. LuCKENBACH. Ycs. The Chairman. Just as long as you stick to the text you are all right. Mr. LuCKENBACH. Docs not that mean you can charter foreign vessels ? The Chairman. No, sir. Mr. LuCKENBACH. Then I am on the wrong track. Does it not mean you can build foreign vessels? 536 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARI>iE, The Chairman. They can have vessels built abroad or they can have them built in American shipyards. If foreign built, they can only be used in the foreign trade. Mr. LucKENBACH. Where does it say that? The Chairman. In sections 3 and 4. Mr. LuGKENBACH. Tliis is the privilege you give them. The Chairman. There is a proviso here. Mr. Byrnes. In section 4 — — Mr. LucKENBACH. Wait a moment; wait until we finish section 3, line 12. Is not that a privilege you give them in line 12 ? On line 10 you say The Chairman. Let us get that straight, because I do not want tO' mislead you. These foreign-built ships may be utilized in the foreign trade and in the trade with Alaska, the Panama Canal Zone, the Philippine Islands, the Hawaiian Islands, and the islands of Porto Rico, Guam, and Tutuila. Mr. LucKENBACH. Is iiot that the coastwise trade? The Chairman. That is true to that extent. Mr. LucKENBACH. I tliought that was right. Then my contention was right. The Chairman. That far ; yes. Mr. Byrnes. Part of it is right and part of it is wrong. The Chairman. You trade through the canal to the Pacific coast, and in that trade you said they would come in competition with you. Mr. LucKENBACH. Dou't I run to Porto Rico sometimes? I run to Porto Rico. The Chairman. You have not said so yet. Mr. LucKENBACH. I do. I have a tramp service. I run every- where. And then these foreign boats could come in and compete with me with the boats I am building in American shipyards at $100 a ton. The Chairman. We are building foreign tonnage in the American shipyards just now because we can build it cheaper here than they can abroad; so that I do not see where you are prejudiced here if conditions continue. Mr. LucKENBACH. That is for the present. The Chairman. Yes. Mr. LucKENBACH. But these ships, I think, will last for some years to come, and so will your bill. The Chairman. Some one expressed the opinion that ships in years to come can be built more cheaply here than abroad. Mr. LucKENBACH. That is their idea. I do not think so. Vessels under the American flag that come in under the Panama Canal act, are you going to give them this coastwise privilege? The Chairman. Which vessels? Mr. LucKENBACH. Vcsscls that come under the American flag under the Panama Canal act. The Chairman. No. Mr. LucKENBACH. All right; that will straighten that out. The Chairman. I will give you my personal view of the bill, if you want me to : I have never yet favored the admission of foreign- built ships to American registry for the coastwise trade. As far as I would be willing to admit them to participate would be, for instance, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 537 in going from New York through the Pananica Canal to the Far East, trading to the Pacific coast or to Hawaii, and then on making that a leg of their journey. I have not given my consent to that, but that is as far as I would care to go at any rate. And in the same way, if a vessel traded from New York to South America, carrying pas- sengers and freight to and from Porto Eico as an incident to that voyage. Mr. LucKENBACH. Yes ; and you would give the foreign vessel the privilege to Porto Rico ? The Chairman. Foreign built. Mr. LucKENBACH. Yes ; you would give him that. The Chairman. Owned by American citizens. I think that is as far as I would be willing to go. Mr. LucKENBACH. Yes ; but the rates have not been raised to Porto Rico. Why punish the Porto Rico Steamship Co. that have built boats here? There is no scarcity of tonnage. The Chairman. I had better have a talk with Mr. Bull about that ; I have not heard from him for some time. Mr. Byrnes. You say that your boats run to Porto Rico; is that a regular service? Mr. LucKENBACH. No ; we do not run a regular service to Porto Rico: it is a tramp service. Only recently, only this year, have we had the San Francisco service, and that is the reason we are building the boats, to put them in this service. And I want to find out if my foreign friends can come in with the boats they have at the present time and be extended the privilege of Porto Rico, the Philippine Islands, Hawaii, and Alaska. I want to object to anj'^ cabinet officers becoming members of this shipping board, because they are overworked at present. I tried to get an audience with Secretary Garrison and was refused, and also another man. Avhen the Panama Canal Co., or when the Govern- ment raised the rates from $3 to $8 a ton, and it cost us $1 50 and jiut me out of business. So I have had some experience with Gov- ernment men. The Chair:man. I expect the experience was mutual. Mr. LucKENBACH. It certainly is: there were two of us there. The Chairman. Of course, I do not mean this offensively; you understand that. Mr. LucKENBACH. Now, as to Government operation. I want to talk about that for a few moments. I had the experience of operat- ing with the Panama Steamship Cof, which claims that last year they made $305,000, and it points with pride to the fact that they made $305,000. And in this year's report they say that they made $500,000. I want to show you how they made it; how impossible it would be for you to make it, or for any other man to make it. I will show you about the way a good many Government institutions are run and, possibly, how this shipping board might run the ships that they purchased in the same manner. They own two ships. According to their book value they are worth $764,000. The Government loaned to them four ships which cost just about $3,100,000. They loaned those. The Panama Steam- ship Co. operates them free of charter hire. AVe will be fair and say 538 SHIPPING BOARD, NAVAL AUXILIAEY, AND MERCHANT MARINE. the rate for charter hire last year was $5 per dead-weight ton per month. If 3^ou were operating the line that is about what you would have to pay for those vessels this past year. And they would have cost you $1,832,000. This the Government gives to the Panama Steamship Co. It won't give it to you, and it won't give it to me, but they give it to the Panama Steamship Co. On the two vessels that they own they figure depreciation at 6 per cent, but on the $3,100,000 worth of ships they do not pay one cent of depreciation. They do not pay any interest charges; they do not pay any insurance charges. It would cost you or I, or anyone else who wanted to run one of those vessels, for insurance, depreciation, and interest about 17 per cent, which is given to the Government- owned institution. With this gift last year they made $305,000. Wonderful work ! The Chairman. How were those charges met? Who insured the ships, and who paid for that? Mr. LucKENBACH. No one except the United States Government. The Chairman. Did not the Government insure them? Mr. LuCKENBACH. No. The Chairman. They were not insured at all? Mr. Luckenbach. No. The Chairman. What ships are those? Mr. Luckenbach. The Colon^ the Panama^ the Cristobal^ and the Ancon. The Chairman. You say they were not insured at all? Mr. Luckenbach. No insurance whatsoever. The interest on these vessels, at 6 per cent, together with the insurance, rental of termi- nals, and depreciation, amounted to about $2,974,000. Their total revenues were $2,642,457.10. The deficit is $332,363. The Chairman. These ships carried Government freight in con- hection with the building of the Panama Railroad, did they not ? Mr. Luckenbach. They did, until the opening of the canal; yes. The Chairman. And supplies for the Canal Zone? Mr. Luckenbach. The amount of supplies for the canal has been very small since the opening of the canal. The Chairman. And the tonnage they carried for the Govern- ment — for the Panama Canal — was carried at nominal rates, was it not? Mr. Luckenbach. Yes. The Chairman. If they had charged the rates in effect before those ships were put on, they could very well have paid all of these charges that you have in mind and made a handsome profit, could they not? Mr. Luckenbach. Yes. The Chairman. Then the Government is ahead on that transac- tion even if it has not made any profit on those ships. That is true, is it not? Mr. Luckenbach. Yes; that is true. I do not know of any objection, gentlemen, that I want to put in, except to this coastwise trade and the operation of the steamers by the Government. I thank you for your attention. SIEIPPING BOABD, NAVAL AUXILIARY, AND MERCHANT MARINE. 539 STATEMENT OF MR. JAMES BARBER, OF NEW YORK, N. Y., PRESI- DENT OF THE BARBER STEAMSHIP CO. Mr. Barber. Mr. Chairman, I do not wish to say very much. T did not expect to be called upon, for one thing, so that I am liable to be brief. I am very much in sympathy with the objects sought to be ob- tained by this bill — the increase of the American merchant marine. At the same time I have some doubts about the possibility of some of its provisions. I think all that I could say on those points has already been covered by the previous speakers, so that I need hardly repeat that. My own personal idea has been for years that the American mer- chant marine would have developed much more than it has if it had been free from the onerous restrictions and some of the provisions in the navigation laws which it has to contend with. I think there is sufficient enterprise in the American business man to invest in Ameri- can shipping if he thought he had an equal chance with the foreign- controlled vessels that come here. In my own business we have necessity to charter quite a number of foreign vessels, and since the passage of this bill last year, which allowed foreign-built vessels to come under American registry, we have availed ourselves of that privilege and placed five of our steamers under the American flag. We are also buying other American steamers and are building one. At the same time we are very much in hopes that this board, when it is appointed, will give serious consideration to the points in the existing laws that work to the disadvantage of the American ship- owner. My own feeling is, and I think you apparently agree with the idea, that all such points should be toned down and made to work so that the American shipowner would not be under any great' disadvantage compared with the foreign shipowners. Mr. Byrnes. Mr. Barber, what have you in mind in saying that? Mr. Barber. It has been referred to as the extra cost of operation caused by the necessity of complying with the American regulations, Mr. Byrnes. What regulations? Mr. Barber. As contained in the navigation laws, with regard to the officers and seamen. Mr. Byrnes. As to what ? Mr. Barber. The nationality of the officers, the seamen and engi- neers, the accommodations and the food scale. I do not begrudge them the food scale. I would be very glad to have it as it is. Mr. Byrnes. Do you favor foreign officers? Mr. Barber. If necessary. The point is you have not enough American officers and engineers now to man your ships. Mr. Byrnes. Do you think it would contribute to the building up of an American merchant marine which would be of any service in time of war if you had foreign officers? Mr. Barber. I should certainly favor having schools of navigation and the encouragement of apprenticeship and the training of men to become officers. Mr. Byrnes. Do you know that is provided for in this bill: that this bill seeks to encourage that? 540 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Barber. I believe there is some attempt at it. Mr. Byrnes. You favor that feature of this bill, then ? Mr. Barber. I do. Mr. Bruckner. WHiere does your line operate, Mr. Barber? Mr. Barber. I think the largest present operation is to the River Plata in Argentina. We also run to China and Japan. We are agents for South African lines, and we have a line running to French ports, and then we have quite a number of steamers engaged in gen- eral trades which go wherever the best market demands them. As far as the bill is concerned, I have the same objection as the previous speakers to the Government operation of Government- owned steamers. If they are built to be of service to the Army and the Navy as auxiliaries. I think that would be a very desirable thing; and if they could be so constructed as to be available for commercial purposes and leased to the general shipping interests which might be able to use them. I think that would obviate the possibility of their coming into competition directly with privately owned steamers. Mr. Byrnes. That is in the bill, and you are in favor of that part of this l)ill, then ? Mr. Barber. Yes, sir. Mr. Byrnes. You know that is in the bill ? Mr. Barber. I do; yes, sir. I do not think I have anything further to say. STATEMENT OF J. PARKER KIRLIN, LAWYER, OF NEW YORK CITY, ENGAGED IN THE PRACTICE OF ADMIRALTY AND MARI- TIME LAW. Mr. KiRLiN. Mr. Chairman, as you are aware, I am a lawyer by j)rofession, and, for more than 25 years, my practice has been largely in the reahn of admiralty and martime law. Although not a member of the chamber, I have sat as an honorary member of the committee of the Chamber of Commerce of New York by invitation of the president, to assist the committee in relation to matters in connection with the shipping which have arisen in the course of their delibera- tions. The views of the Chamber of Commerce of New York with refer- once to the Alexander bill, H. R. 10500, are embodied in its formal action, which has already been summarized to you by Mr. Bush and the other members of the committee. The views of the chamber in regard to the ste])s which it deems necessary to be taken in order to jtchieve the result of upbuilding a great national mercantile marine have been put in concrete form in the shape of a proposed bill which has been introduced by ]Mr. Rowe. IT. R. 118G5, and is now before the committee. I understand the discussion of both measures is in order, and I purpose referring as shortly as I may to both. I do not intend to go all over the ground that has been covered by the mem- bers of the committee of the Chamber of Commerce of New York who have preceded me, but shall confine my remarks to certain mat- ters which my own knowledge and experience in practice lead me to think are of the deepest importance in working out some serviceable plan to create, develop, and encourage a substantial American mer- cnntile marine. SHIPP1N(! BOARD, NAVAL AUXII.IAKY; A ND MERCHANT MARINE. 541 Duiiiiff tlie course of the present war I have had occasion in tho course of practice to deal with purchase and sales of many vessels, with proposals for building of vessels, for the establishment of a shipyard, and with suggestions and inquiries of bankers and capital- ists who have desired to interest themselves in the development of a mercantile marine by investing money in ships. Prior to the begin- ning of the present war I have ne^er had occasion to deal with any such matters. These circumstances, as well as public discussion of the subject, convince me that there is a real growth of interest in the creation of an American mercantile marine bj' private enterprise. The development of this interest has no doubt to some extent been fostered by rumors of the large profits which have been made during war time, and by the restrictions due to the exigencies of war which have been placed on foreign tonnage. But whatever the cause, there is no doubt that there has been a great awakening of public interest in this question, and in the inquiry as to what, if anything, can be done, after the emergency due to the war shall have passed, to estab- lish a mercantile marine sufficiently large to handle a substantial portion of our connnerce. It is useless to discuss at the moment the possibility of doing anything to relieve the present emergency, for all the tonnage available is now in service, and no new tonnage which could appreciably relieve present conditions can possibly be created during the period over which the war is likely to continue. It is impossible, in the short time at my disposal, to attempt any textual criticism of the different sections of II. R. 10500. I shall con- fine myself to certain matters of principle which, in my judgment as a citizen and experience in dealing with the general subject, are objectionable, and will have a deterrent rather than a beneficial effect in the development of an American merchant marine. I am not speaking here in behalf of any client interested in this matter, but solely as an individual and as a member of the committee. The features of the bill (H. R. 10500) to which I desire to refer are: (1) That which provides in a certain contingency for the operation of Government-owned steamships in private trade; (2) that which provides in very great detail for the regulation of the instrumentalities of our foreign commerce, including restriction upon the sale of ships; and (3) the provisions with reference to licenses. I am sure that no member of our committee feels the slightest ob- jection to the Government spending $50,000,000, or any other sum that it may deem proper, for the purchase of naval auxiliaries. On the contrary, I think they all feel that this is a necessary and valuable thing to do; nor do I think there is any objection on their part, or in- deed any sound objection in principle to the Government putting such vessels, when not needed for its own purposes, in the hands of a shipping board, with authority to charter them for operation by pri- vate enterprise. Ships are articles of commerce. They haAe their prices and values. Sometimes these are high, while at other times they are low; but ships are commodities which the Government, if it should buy or build them, would not own exclusively. They would be commodities which it would own in common with all other per- sons or companies that own shipping property which at times is available for chartering. 3291()~16 85 542 SHlPPlNi; BOARD, iXAVAL Ai; Xli.lAK V, AND MERCHANT MARINli, I am perfectly satisfied that any \essel built or piirchase>l by the Government after careful inquiry as to its suital)ility for commercial purposes, as well as for naval purposes in cases of emergency, would be an attractive proposition for charter, and that any such vessel, when not in use by the United States, if offered as other like vessels are offered by people who own them, in the open market, singly and without undue restriction, would be in great demand for chartering; and that at all times when such vessels could be operated with profit by anybody, they Avould be readily chartered and operated by private enterprise. I am sure that all the shipping men here present will confirm my views in this respect. The feature of your bill which renders capital timid and w^ill de- ter investment in private shipping, so long as it remains in the meas- ure, is that which reserves the right, in case the shipping board does not find a ready or suitable charter for any one of these vessels, to put it in trade and operate it by means of a company organized for that purpose. This provision embodies an authority to the Govern- ment, though a governmental instrumentality, to engage in the pri- vate business of operating steamships. It may be that the contin- gency in which the Government would operate ships is remote, but nevertheless the authority to do so is there, and the public has come to believe, whether rightly or wrongly, that an authority of this nature, if once vested in a board, would be exercised. The natural fear is that, if exercised at all, it would be exercised in competition with private enterprise. There is no limitation in the bill as to the trades in which the board should authorize the operation of Government ships, nor has there ever been an answer to the inquiry. In what trades is it proposed to operate them ? Everj'body of experience in the shipping trade knows that private enterprise has already established shipping lines to prac- tically every port in the universe where a line can profitably be main- tained in times of peace. It would be impossible, therefore, to oper- ate the Government vessels, which would be of substantial size, to any point or points where the}" would not come in competition with private operation. It has been suggested that the Government would place these ves- sels in certain trades not now developed and keep them there until the business should be established and then turn over the trade to private enterprise. But no names of ports lia^e been given in this connection. All trades have been tried hj private enterprise, lines have been established to all points where they can be operated profit- ably, and occasional sailings are made to all other ports where profit- able business is to be found. The only trades for which established direct lines are not in operation are those whose physical character- istics are such as not to admit of the operation of any vessels which would be suitable as naval auxiliaries. They are trades to ports to which deep-draft vessels can not proceed and which have hitherto been served by coastal A^essels carrying cargoes transshipped from larger central points of import. The natural result of these con- ditions would be that, if a Government ship was put up for charter and was not taken by private persons or companies engaged in the steamship business, the reason for it would be that private enterprise could not at that moment operate the ship profitably. The failure of Slili'PIXc; BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 543 the ship to obtain a charter would be clear proof to the business com- munity that, at that particular time, no gain could be made from the operation of it. It would be understood in the business community, in those circumstances, that, if the (jrovernment then proceeded to operate the vessel in private trade, it was going to operate the vessel at a loss, if the expenses of operation should be figured as the ex- penses of private companies have to be figured. The fear that the Government, in any conceivable contingencj^ W'Ould enter into com- petition with private enterprise, at a time and in circumstances when it could only operate at a loss in competition with private enterprise, will necessarily deter private capital from entering into a business which may be subject to such a risk. The business view of this matter undoubtedly is that the Govern- ment ought not to enter into competition with private enterprise under circumstances which may involve a loss to the Government, because a loss to the Government means not only a loss to the tax- payers but also to private companies engaged in the same business. If the ships can not be chartered for prices that will jaeld a fair return to the Government on its investment, they ought to be laid up and reserved for their primary use as Government ships. The very fact that they could not be chartered would show that there was no urgent need for them in commerce. To put them in commerce at a time when there was no such need for them as would lead to their being chartered could only injure private enterprise, and ever}^ pos- sible injury to private enterprise will check the inclination of private individuals to inA'est in the shipping business. I submit this matter as a question of broad public policy rather than as a criticism in detail of the bill, for I am convinced from what I have heard here to-day (and I had not intended to speak on the subject, but have been led to do so by the very earnest character of the discussion) that the weakest feature of the bill is that it con- tains no suggestion, no ray or hope or promise for the development of an American merchant marine by private enterprise, and no en- couragement or incentive for the investment of private capital in that business. The Chairman. Your view, then, is that if section 8 were stricken out there would be that incentive? Mr. KiRLiN. I believe myself that No. 8 should be stricken out. The Chairman. If that w^ere stricken out, then the ray of hope would appear ? Mr. KiRLix. The ray of hope would not appear; that is, the ray of hope of private enterprise building up a merchant marine will not appear; but neither does it appear from your project of building $50,000,000 worth of ships. The quantity of tonnage which that investment would buy would be almost negligible in comparison with the total amount of tonnage necessary to move the commerce of the United States. What is desired is the adoption of some plan which will ultimately lead to the creation and operation under the Ameri- can flag of a sufficient number of ships to carry our commerce. I do not assume for a moment that the project contained in H. R. 10500 is the first step intended to be taken in the direction of the creation of a governmental mercantile marine sufficient to do the whole busi- ness of the Nation; yet. if it is not such a step, the bill should not 544 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. retain any feature likely to deter private capital from supplying the needs of the Nation. On the contrary, it should contain some affirma- tive provision which will encourage private capital to supply that great need. The practical difficulty to be overcome is that vessels built in American shipyards in times of peace cost more than similar ships built in foreign yards; and that the cost of operating American ships, whether built in American yards or purchased abroad, is greater than the cost of operating British, German, French, or Scandinavian ships. Whether the enhanced cost of building in America and of operation under the American flag be due to the higher standards of living of American workmen, to the larger num- ber of officers, engineers, and men required by our laws^ and regula- tions to be employed on American vessels, or to a combination of these causes, it is a fact, proved by experience, that the cost of American building and operation is larger than the foreign cost to an extent which has deterred American capital from investing in shipping em- ployed in the foreign trade. Leaving out of view for the moment the extra cost of building in the United States, what is the position with regard to the operation of American ships in the foreign trade ? Experience has shown that the extra cost of operating American ships in the general foreign trade is such that it has not been profitable to operate them. There is a difference between the cost of operation under the Ameri- can flag and under a foreign flag, varying with respect to different ships and different trades, which in any particular trade may be approximately computed: and such difference in the cost of opera- tion constitutes a fixed charge on the operation of American ships in such trade. Such difference in cost is a charge which must be borne by every ship that operates in the foreign trade in competition with a foreign ship. It has to be borne by ships operating under private enterprises. It would have to be borne equally by governmental ships operated under the supervision of a governmental board. There can be no possible difference, therefore, in the expenditures to be made by the Treasury of the United States between the Govern- ment bearing that burden as an incident to the cost of governmental operation of ships and paying the amount of it to private enterprise in order to equalize the opportunities of American shipowners in the foreign trade with those of foreign owners who may compete with them in the same or similar trades. There can therefore be no development of an American mercantile marine sufficient to handle the commerce of the United States, unless the Government is prepared to provide the entire tonnage necessary, and to bear, itself, the extra cost of operating under the American flag, or to adopt some plan by which allowances can be made to pri- vate individuals and companies to cover this difference of operation, so that they can compete upon equal terms with ships operated under a foreign flag. Such a plan is outlined in the measure suggested by the Chamber of Commerce of New York, and introduced by Mr. Rowe as H. R. 11865. An objection is made to this plan on the theory that it would in- volve the payment of a subsidy, and that subsidies are impolitic. I SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 545 do not enter on the controversial subject as to whether subsidies in the popular sense would or would not reestablish our mercantile marine, or whether they are expedient, beyond suggesting that the mercantile marine of countries with which our citizens must compete have at times received and now receive subsidies. Discussion of that matter is unnecessary, for the reason that the plan of equalizing expenses of building and operation under American auspices is not in any proper sense a subsidy or open to the objections commonly made to subsidies. It would not be an appropriation out of which those receiving it could possibly receive any profit. The provision by which the board would fix the amount of it would make it impos- sible that any profit should result from the equalization allowance. There is no more propriety in describing an equalization allowance as a subsidy than there would be in saying that the $50,000,000 pro- posed to be appropriated by the pending bill is a subsidy. If the vessels purchased by means of that appropriation should be operated under governmental auspices, the exact number of dollars that would be paid to private enterprise for the operation of a similar number of ships would have to be paid out of the Treasury for the operation of the Government ships, because the difference between American and foreign cost of operation is a fixed charge on the business of operation. Both the Alexander bill and the Rowe bill contain plans intended to aid the development of our merchant marine. The Alexander bill, as well as the other, is based on a realization of the necessity of a governmental appropriation of money to aid the development of a mercantile marine. If it was not realized that something must be done by the Government in this direction, an appropriation of $50,000,000 for vessels the primary purpose of which is to carry our commerce would not be thought of. The point I wish to make is that whether the Government operates ships or encourages private enterprise to operate them, it is going to cost a certain number of dollars per annum more to operate ships under the American flag than it will cost the owners of similar ships operating in competition with them under foreign flags ; and that in either event the Government must bear that difference in the cost of operation if it really desires to reestablish our flag in the foreign trade. I am as much opposed as any of the members of this com- mittee to the granting of a subsidy in the ordinary sense. I do not think that shipowners generally want a subsidy. AH that they wish, and certainly all that they need, is an allowance to equalize the extra cost of building and operation, due to no conditions that they can control, but which arises from our conditions of life and from our maritime laws and regulations. Such an allowance is not open to the objection that may be made against a subsidy, that the recipient can make a profit from it; I mean a profit out of the subsidy as distingushed from a profit from the business. If you can point out any particular in which the plan contained in H. R. 11865 would enable the shipowners to make a profit out of the equalization allow- ances made to them by the board, which is left full discretion to deter- mine the amount of them, then it will be proper to describe the plan as a " subsidy " ; otherwise it can not justly be called a subsidy in the ordinary sense. 546 SHIPPING BOARD, XAVAL AUXILIAR V, AND MERCHANT MARINE It is quite idle to expect that American caj^ital will be irnefeted permanently in American merchant marine, unless the operation of ships under the American flag enables their owners to make money, or indeed unless they can make the same amount of money that would arise from the operation of the same ships under a foreign flag. Those investing in American shipping can not make money unless the ships can be operated at the same relative profit as foreign ships which operate in competition with them. It is absolutely futile to expect the development of an American mercantile marine until these conditions can be equalized. Congress must -do something for our citizens w^hom it wishes to have engage in the building and operation of American ships in order to equalize their operations with those of foreign citizens. The adoption of a plan of equaliza- tion as a national policy should be o])en to no objection, since the necessity for it arises from our conditions of life and labor and the laws and regulations which the wisdom of Congress has ordained for the regulation of American ships. If it is thought proper to re- quire that our ships should have a greater number of officers and engineers, the engineers should have a greater number of helpers, and there should be a greater number of certificated seamen on board, using a common language, and the conditions of life are such that the employees of the vessel must receive higher rates of wages than those similarly employed on foreign ships, upon what theory can it be expected that private enterprise will continue to operate ships in a foreign trade unless the Government equalizes to him in some manner from the Public Treasury the additional burdens which our laws and conditions impose upon him ? It is not just, as is sometimes done, to say that American ship- owners who operate ships under foreign flags are unpatriotic; they have to deal with matters of business, and, like any other class of merchants, they operate where their costs are the least and profits the most. If Congress would set an example in patriotism by making it possible for our citizens to build ships in their own country and to operate them under their own flag at the same cost and W'ith the same amount of profit, I have no doubt the example would be followed, and that feelings of patriotism would prompt all shipowners to build in America whenever the shipping board approved of that course, and to operate their ships, whether built in America or purchased abroad, under the American flag, and that a mercantile marine adequate to the needs of the country would be created as rapidly as conditions would permit. The plan of equalization of costs of building and operation recom- mended in the Chamber of Commerce measure is not open to any of the objections to which a subsidy, so called, is subject. It is pro- vided that the equalization allowances to be made are wholly within the control of the shipping board. If the board does not approve of the plan for building any specific ship and the contract and specifications for building, no equalization allowance for the cost of building can be obtained. Similarly, if the board does not approve of the trade in which the vessel is intended to be employed, an equalization of the cost of operation can not be secured. In other words, the shipowner, in order to obtain equalization allowances, can only do the things which a shipping board wants him to do, and SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 547 the ship can only serve the purposes that the board may wish to have served. The Chairman. I have not read the bill with care; but is this subsidy or subvention only to apply to ships hereafter to be con- structed ? Mr. KiRLiN. Yes; and, so far as the operation of ships is con- cerned, the equalization allowance can only apply to ships in services which the shipping board may approve. The Chairman. Whether heretofore constructed or not? Mr. Kirlin. Yes; but in this connection I should point out that it will cost an American citizen just as much to operate a ship in the next 20 years, that he bought during the war or before the war, as it will cost to operate one that he has built during the war; so that the reason for equalization allowances applies just the same to one class of ships as to the other. The Chairman. If he had bought a ship during the war, at the present rate — say $100 a ton — and normal conditions ensue, after a while, when ships can be built for, say, $40 to $50 a ton, should the board equalize that cost now in the way of a subsidy to him? Mr. Kirlin. You mean the cost of building? The Chairman. No; the cost of his ships to him. Mr. Kirlin. No; there is no suggestion of that kind in the bill. There is no suggestion of any allowance to be made on account of ships that are purchased. It is only for building in American yards that the building equalization is to be given. If the board does not approve of building in American yards, there will be no equalization allowances for the extra cost of building here. The only object of creating building allowances is for the purpose of stimulating the establishment and improvement of the building yards in this coun- try, with the twofold purpose of improving the yards for general building purposes and of developing in the yards the business of the construction of standardized vessels. The only further object of building in American yards would be the acquisition of vessels which, in the judgment of the board, would be peculiarly available for the kinds of trade which the board may think ought to be fos- tered and encouraged and the construction of ships especially adapt- able for governmental purposes, which could be secured by the requisition of the ships at any time for the use of any of the depart- ments of the Government. The objectionable feature of the bill, H. R. 10500, is that it con- tains no provisions tending to encourage private initiative in the business of operating ships in the foreign trade, which private ini- tiative would gladly enter if equality of opportunity should be afforded, in which, if such opportunity should be afforded, private enterprise would enter to such an extent that in years to come our merchant marine, instead of that of other nations, would dominate the seas. I do not believe that any man of the slightest experience in the steamship business, w'hether as a shipper or shipowner, would deny for one moment that if H. R. 11865, introduced by Mr. Rowe, could be put upon the statute books, you could possibly fail to create, de- velop, and maintain an American merchant marine of whatever size the board was willing to foster. 548 SHIPPING BOARD, NAVAL AUXILIAKV, AND MERCHANT MARINE. The Chairman. That is, that the (joveriunent was willing to pay for in the way of subsidies? Mr. KiRLiN. That the Government was willing to pay for in the way of equalization — not in subsidies. I must dissent from the use of that term as applied to equalization. It is no more a subsidy than the amount of money which the Government will put into the enter- prise under H. 11. 10500. The money which the Government would lose in the operation of a vessel in the merchant marine is just as much a subsidy as the money which it w^ould give to a private citizen to enable him to equalize his cost of operation. The Chairman. Except in the one case the benefit would be to all the people in the United States and in the other instance it would benefit the few\ Mr. KiRLiN. The object of the creation of an American merchant marine, as I understand it, is to benefit the whole people of the United States. It is not to benefit the shipowners. It is to benefit our commerce. And if you know and see, as practical men, that you can not accomplish that object Avithout doin^ something affirmative and helpful by providing the necessary equalization allowances, con- siderations of broad public policy should not lead to a refusal to do that thing because some people may apply to it a name which has an unpleasant sound to the public ear. The Chairman. Mr. Bush said you had somebody here who was going to give an estimate of what it would cost per annum to build such a merchant marine as he thinks we ought to have, of 200 or 300 ships, under the provisions of the Eowe bill. Mr. KiRLiN. I do not think there is anybody here who can give such an estimate. Unfortunately, our delegation did not include any shipbuilder, and as I remember Mr. Bush's final remark to one of the members of the committee, he said that no man could prophesy with accuracy 'what that cost would amount to. The Chairman. If based on the estimates before the war in Europe, it w^ould be an interesting proposition. I am going to have it figured out on the basis of a statement that will be made here about the difference in cost. Mr. KiRLiN. I suppose the difference between the cost of building in this country and abroad before the war and the difference in the cost of operation before the war can be figured out fairly accurately. But it would be quite illusory to take these figures as the basis of estimating the cost of entering upon a great national undertaking, the result of which would be the development of standardization in shipyards that would result in a diminished cost of building and of operation. The adoption of a broad national policy w^ould result in a tendency toward maritime investments, and would lead many people to adopt a maritime calling, as a result of which there w^ould probably be a reduction in the cost of operation under the American flag. It must be expected that the development of a great national mercantile marine will require long and patient effort and a con- siderable period of time. Men must be educated to the value of maritime investments and to the opportunities incident to following the life of the sea. Our mercantile marine has developed so rapidly during the war that there is the greatest difficulty in finding sufficient SHIPPING BOAKI), NAVAL AUXllJAKY, AND MERCHANT MARINE. 549 number of officers, engineers, and seamen to man and operate the vessels that are now running. It must be a subject of grave concern to those who are constructing the large amount of tonnage now build- ing in our shipyards as to where they are to find the men to operate these ships. I have heard those engaged in these operations express their anxiety in this regard very freely. When normal times return the building up of the American mer- chant marine must be a slow process. To accomplish it we must not only have the ships, but must develop a love of the seafaring life on the part of the large numbers of men who will be required to officer, man, and operate the ships. Congress will have to adopt a great national policy which the public can see is likely to endure in order to lead men in large numbers to follow the life of the sea as a calling. It can not be expected that this can be accomplished in a short time. Officers and men may be found and developed in sufficient numbers to take care of the moderate needs of the ships that may be purchased and built in the next few years; but to develop officers and seamen in sufficient numbers to man the great quantity of ships which will be necessary to handle the commerce of the United States will, in my judgment, require, if n!)t a lifetime, at least the period of one generation. Now, when everybody is anxious to do something constructive, and when, for the first time in my recol- lection, the subject of an American merchant marine has engrossed the minds and thoughts of the people, I am anxious to see something done which may inaugurate such a national policy as will interest our people, as it has interested the people of other countries, in the sea as a calling, and that may attract the investments which may be necessary to carry forward that policy with the same measure of success that American investments have achieved in other vocations. I come now to the subject of the ]:)rovisions of the bill relating to the regulation of foreign commerce. These provisions, in my opin- ion, are unnecessarily drastic, definite, and comj)rehensive as applied to a new business. Too much regulation is a clog on business, and has a natural effect of deterring capital from investing in it. It should be borne in mind that the object to be attained is to attract capital to the shipping business. Individual firms and corporations have a natural dislike to engage in anj^ business that their necessities do not require them to follow where regulations of an inquisitorial nature are provided to govern it. If two aAenues of investment are open to capital, one of which involves the conduct of the business subject to governmental regulation, not only of the business itself, but of those who engage in it, and the other does not involve such supervision, regulation, and control, it is only natural that the avenue which is untrammeled will be chosen. The provisions of H. R. 10500 go a A'ery long way and are very minute in providing for regu- lation, and on top of the specific provisions in that regard there is the general provision that the interstate commerce laws, so far as they fit, are also to be applicable : and the first sentence of section 9 provides for regulating " the operation of all corporations, firms, or indi- viduals engaged as common carriers," etc. These provisions, taken together, provide a larger authority to regulate the business than is really necessary, and indeed than the committee would expect to see exercised. I concur with Mr. Franklin in the opinion that a certain 550 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. amount of regulation may be necessary, but I do not think it is either necessar}' or expedient to provide such minute regulation or t<^ adopt the tone of the bill which expresses the idea of regulation in such a deterrent manner. The Chairman. I would be very glad if you would suggest some amendment which would meet your objections and submit it to the committee. Mr. KiRLiK. You gentlemen who are connected with the Govern- ment are more or less accustomed to the ways of the various depart- ments and do not stand in the same state of mind toward it as citi- zens who are engaged in business. They feel a certain degree of fear of the Government. They dread the hour when the supervising Government official comes to look into their business. They fear that he is going to do something unfair, or to encumber it with restric- tions which interfere with its successful operation. Possibly this may in some instances result from a guilty conscience, and, for that reason, I freely admit that some method of regulation may be neces- sary. But if you want to encourage the development of the American merchant marine as a new business my advice, based on my ex- perience, would be not to surround it at the start with any more regulations than the business really requires for its fair conduct. These observations apply with peculiar iome to the provision which would prohibit the sale of American-owned vessels without the per- mission of the shipping board. Unless Congress decides to do some- thing in the way of equalizing the expenses of operation of Ameri- can tonnage in the foreign trade after the war, such operation will necessarily be to a considerable extent unprofitable. If experience teaches that it has been unprofitable in time of peace in the past, capi- tal will naturally apprehend that without governmental aid. it will be un])rofitable in the future. It will therefore be doubly difficult to induce private capital to enter into that business if it is fettered with a provision that the operating property can not either be op- erated at a profit or sold to those who, under another flag, can operate it at a profit, and would hence presumably pay fair prices for it. It would no doubt be proper to retain a provision that the vessels built with the $50,000,000 appropriated by this act, if sold to private individuals, should not be resold, since such resale would deprive the Government of the right of requisitioning the vessels in case of need; but it would be quite unprecedented, and I think fatal to the main purpose of increasing the development of the mer- chart marine, to provide that vessels built or purchased by private enterprise should not be capable of sale without governmental per- mission. No competing national has ever had such a provision in times of peace, and it is not to be doubted that the limitations upon sale which have been imposed by the various carrying nations for the period of the war will be rescinded upon the restoration of peace. To retain such a fetter upon the instrumentalities of our own commerce in time of peace could therefore only place it at an unnecessary dis- advantage. I think the provision in the bill regarding licensing is also highly objectionable for the same reason. The very vagueness of the pro- vision itself would have an unfortunate effect upon investments in SllU'l'iXG BOAED, NAVAL AL^XlLlAItV, A.N D MEKCHANT MARINE. 551 American tonnage. It does not say what kind of a license is intended ; ^Yhethel■ it is a license to do business generally, snch as a corporation in one State must take out in another; whether it is a license that lines must obtain or that every ship must secure; or whether it is for a term of years or months or days or for a specific trip. It says nothing at all except that no corporation, firm, or individual shall engage in the business of transporting passengers or property by water to or from the United States without first obtaining a license so to do from the shipping board, and that if a ship shall, for any reason, load a cargo wdthout obtaining such a license it can not be cleared from our customhouses. The necessity of securing a license implies the power to revoke it. How can it be expected that new capital will go into a business which requires a license for its conduct, when the investor might think that, owing to some fault in the management of the property, of which he would have no personal knowledge, the conduct of the business might be stopped by the revocation of the license, and yet the instruments by which the business was conducted could not be sold without the leave of the Government? Whether rightly or wrongly, the public will naturally believe that the requirement for such a license is in the nature of a club to compel those wdio are engaged in it to conduct it to the satisfaction of the Government, rather than in such manner as will yield the largest returns upon the investment. The require- ment for the proper conduct of the business should be provided for by more moderate provisions for regulations, so that it can be car- ried on to the mutual satisfaction of the Government and the in- vestor, without the fear of a revocation of license or possible restric- tions upon the sale of the property. I would therefore respectfully suggest, for the consideration of the committee, that the sections of the bill as they now stand, providing for regulation of the business and for licenses, be eliminated, and that there be substituted in place of them a section in short form, easily comprehended by the ordinary business man, limiting the regidatory power of the board to matters of fair dealing, and providing that the board should merel}' have authority to prohibit unfair practices. Such a provision would be generally understood. If the investor knew beforehand that only unfair practices, such as discriminatory rates or practices, or improper combinations and agreements, were prohibited and were subject to regulations, he would know what was intended to be prohibited, and could readily appreciate the advan- tages or disadvantages in investing in a business subject to that meas- ure of supervision. I do not suggest that the bill intends to be harmful in tone. On the contrary, I know it is not intended to be so, and I fnlly appreci- ate the honorable intentions of its framers. Yet it seems to me, in reading it over, the framers of the bill have expressed their intentions in terms of undue harshness. If it is not intended to have all the wide provisions for regulation exercised, they should not be in the bill. A board created with such very ample powers will naturally assume that the authority for regulation conferred upon them consti- tutes their mandate, and there will be an inevitable tendency on the part of the board to exercise the powers which are conferred upon it. 652 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. At least, such would be the view of the man in the street. It is de- sirable, therefore, to avoid provisions for restrictions that are unnec- essary for the fair conduct of the business; it is desirable even to avoid the appearance of a desire to regulate the business to an extent beyond that which the committee may consider to be necessary. The reason for this is that the public will ascribe to the bill whatever intention ma}^ legitimately be inferred from the powers of regulation which stand out on the face of it, and, as those powers are now ex- pressed, there is no doulit in my mind that they wdll operate as a most powerful deterrent upon the entry of private capital in shipping to De operated under this act. I would therefore very humbly and with the greatest respect sug- gest that the committee leave out of this bill that part of it which provides for the contingent operation of ships by the Government in competition w^ith private enterprise and the provisions which look to an undue regulation of the business, an unnecessary restriction upon the sale of property employed in it, and all the provisions wath regard to licensing. In place of those, I would suggest the substitution of a shorter regulatory provision of the tenor of that w^hich I have pre- viously referred to, and the incorporation in the bill in some form of the basic ideas which underlie the measure H. R. 11865, which has been introduced by Mr. Rowe, without which, in my opinion, no considerable development of the mercantile marine of the United States can be expected unless the United States intends to build and own the whole of the tonnage necessary to handle the commerce of this country in the foreign trade. I desire also to call attention to two further provisions of the chamber of commerce bill. The first of these provides that the Gov- ernment may at any time requisition for its own use any vessels which receive equalization allowances upon terms to be determined by an impartial board of three surveyors. The other is that which provides that every vessel receiving such allowances shall carry at feast two apprentices, one of whom shall be in the deck department and one in the engineering department, who shall receive instruc- tion, respectively, in the science of navigation and of marine engi- neering. There would be no objection, I am sure, to increasing the number of such apprentices. This provision is of the kind adopted by foreign nations for the instruction and development of officers and engineers. An apprentice who has served on board ship for a number of years is generally qualified for examination for officer and for engineer and, upon examination, secures a certificate which enables him at once to step up from the position of apprentice to the position of an officer or engineer. Under such a provision the Nation would develop its own officers and engineers automatically with the increase and development of its tonnage. The officers and engineers thus secured w^ould be qualified by the experience and in- struction that they would receive while serving in vessels employed in the foreign trades for the proper and intelligent discharge of all the duties which would fall upon them thereafter in serving as offi- cers in such trades. The Chairman. I would be very glad if you would suggest that amended provision in reference to regulation, and we will consider it. Mr. KiRLiN. I do not know that I am competent to do that, but lam quite willing to put my hand to it. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINK. 553 The Chairman, I wish to incorporate in the record a letter from Mr. George S. Dearborn, president of the American-Hawaiian Steamship Co. : Nkw Yokk, F< iDKarii 10, I!>I6. Dear Sir: With an iippreciatlon of the great interest you liave had in the de- velopment of an American mercliant marine in the foreign trade, and long be- fore that question was of the importance that it is to-day, I am taking the liberty of submitting herewith some views that I have upon the subject of the bill now being considered by your connnittee and also the original ship-purchase bill, and what would have resulted if the latter had become a law : (1) Not an additional ship would have been added to the ocean-carrying trade, barring, of course, the interned C4erman and Austrian ships. (2) Such ships as would have been purchased and operated by the Govern- ment would, by the limits of the appropriation proposed, have been greatly in the minority of the privately o\vned ships in the foreign carrying trade. Thus the latter ships, talcing the bulli of the business, would have fixed the rates and, assuming that tlie comparatively small number of ships opei'ated by the Government would have taken freight at lower rates, only a small proportion of all the cargo carried could have received the benefits. Therefore it would liave been impossible to apportion these benefits to shippers equitably — those who were fortunate would have reaped the benefits and would thus have re- ceived a bounty from the Government, a subsidy in substance, which would have resulted in discrimination as between shippers. The favored shippers, who would be exporters, being middle men, would have pocketed the bounty, in which the manufacturers in this country or the importers in the foreign country would not have participated. I know of exiforters to-day who have l<*i)g-time freighting contracts at nor- mal rates who are making this difference between those rates and the present abnormally high rates. Furthermore, had tliis bill b(Tome a law no ships would have been built in this country by private capital, in the belief that the Government, once in the ocean-carrying trade, would gradually extend it operations, and that private capital could never compete. Tiierefore the un])recedented nuinl^er of ships now building in this country by private capital would not have been built. The bill now under consideration differs from the original bill in that it gives the shipping board, to be created, the power to sell or lease ships (to be built or purchased) to private owners, or to operate them thi'ough a Government- controlled corporation ; so that, as it reads, the Government can go into the ocean-carrying trade, and in view of the fact that it was the declared purpose of the framers of the original bill that this should be, there would be every rea- son for the public to believe that the members of the board, appointees of the administration, would .so order. In the event of leasing to private owners no method is provided as to whether the lease or sale shall be awarded to the highest bidder. Otherwise, if they are to be leased on the terms that have been suggested— rates of interest and de- preciation far below commercial rates — who are to have the benefits of these bounties— and subsidies they would be — in such an event? Such inducements would attract irresponsible adventurers, and, in the event of their failure, the ships would fall back into the hands of the Government. THE FUTILITY OF ATTEMPTING, THROUGH LEGISLATION, A SOLUTION OF THE PRESENT OCEAN TRANSPORTATION PROBLEMS. If ships were purchased, a price based upon present fabulous earning power would have to be paid, and to build the number of ships that the appropriation contamplates would require a period of years, at a cost of over $100 per ton, and before the end of which period it is fair to assume that war conditions will have ended and a sufficient supply of ships of all nationalities will be available to meet the demands of our exporters. WHAT SHALL BE DONE TO DEVELOP A MERCHANT MARINE? First, remove the present menace of Government ownership and operation, i. e., the ship-purchase bill, and let nature take its course. In the belief that the ship-purchase bill of a year ago would not be revived an unprecedented 554 shippijStg board, naval auxiliary, and merchant marine. jiumbor of ships were contracted for in tliis country for tlie foreign trade, and about 200 foreign-built ships have been transferred to the American flag. Therefore, why arrest this development by injecting the menace of Government participation in any form, except to equalize the cost and operation of ships when necessary ? Owners of American ships engaged in the foreign trade are now accuundating large surplus earnings, which, in the absence of menace, would naturally be applied to further development. Capital in this country is more interested in shipping than ever before, and, with tinancnig facilities, the present large nucleus of American ships should develop into a fleet of importance, and once that capital is in the business it is 1 lively to remain through good and bad times. REGULATING WATER RATES. This would 1)6 impracticable and unworkable. Ships receive nothing from the State and can not be forced to operate. To apply interstate-connuerce- regulations would eliminate the tramp steamer and hamper the regular lines. There is no more resison to fix ocean freights than to fix the prices of the products of the mill. A ship is a factory producing transportation, and the price of this commodity must be governed by conditions of supply and demand, as are the prices of all other commodities. Every steamship man and every important shipper in the country would confirm this. Controlling practices in steamship l)usiness is another matter and could be dealt with. An American merchant marine half Government owned and half privately owned can not exist together. It must be one or the other. If the Government goes into the business on the small scale contemplated, it will be the opening wedge, which will be driven home to the limit, and privately owned ships will eventually entirely disappear. Yours, very truly, Geo. S. Dearborn. Hon. J. W. Alexander, Chairman Comviittce on Merchant Marine and Fisheries, House of Representatives, Washington. D. C. xllso a letter from Mr. George L. Duval, chairman of maritime committee of the Merchants' Association of New York : New^ York, February 2Jf, 1916. Hon. J. W. Alexander, Chairman House Committee on Merchant Marine and Fisheries, Washington, D. C. Dear Sir: This association desires to express its opposition to the bill (H. R. 10500) "for the purpose of encouraging, developing, and creating a naval auxiliary, a naval reserve, and a merchant marine," because in its judg- ment the provisions of the bill will not accomplish the purpose stated. This bill contemplates — (a) The construction or purchase of merchant vessels by the Government. (b) The operation of such vessels through a Government-controlled cor- poration. Neither of these purposes is desirable, nor is it likely that they will be effective in operation. It is furthermore practically inevitable that the provisions noted above, so far from encouraging private enterprise to provide additional shipping facili- tes, will on the contrary effectually prevent private capital from being thus employed by reason of the invariably destructive effect of governmental com- petition with private undertakings. This association has hitherto carefully studied the results of Government operation of public utilities and other economic undertakings, and it is con- vinced that in an economic sense such governmental undertakings are extremely harmful. It may be stated as a general proposition which can be sustained by abundant proof that Government undertakings in the economic field are never as efficient and never as economical as private undertakings; that such Gov- ernment undertakings, not being dependent upon their earnings, but being sup- ported from the Treasury, tend to exclude private undertakings from similar fields for the reason that private capital will not be risked against Government SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 555 competition not based upon their true cost ; and, further, that the harmful effect of creatine: great armies of pul)lic employees in connection with business under- takings is extremely serious. We believe, therefore, that the main and probably the sole result of this bill would be to prevent the entrance of private capital into the building of merchant ships and to put the Government squarely into the business of build- ing and operating merchant ships in competition with those now existing, with great detriment to the latter. This association has hitherto during a series of years consistently contended that the practical nonexistence of an American merchant marine is due mainly — (a) To the economic disabilities arising from the lesser cost of constniction and operation of foreign-built sliii)s as compared with American ships. (b) To the disabilities imposed upon American shipping as the result of the navigation laws. The association has further contended that in order to counterbalance these disabilities and to produce an economic parity between American and foreign built ships, some form of subvention or subsidy should be provided for American shii^ping under such conditions that its benefits should, with certainty, accrue to American citizens and not to the builders of foreign ships. Such subvention might properly take the form either of a direct bonus to American shipowners for the construction of vessels suitable to be used as naval auxiliaries in the case of necessity, or mail contracts of sufficient liberality to make it profitable to operate American ships upon routes from which no profit can be derived under existing conditions. The justification for the outlay necessary under such proposed subvention is foiuid in the fact that it is to be applied to supply the necessary element required by the Navy in the national defense, namely, a national merchant marine with all the facilities necessary to repair, overhaul, and replace. There- fore such expense should properly be met by the Nation as a whole. Its result would be the stimulation of private enterprise in shipbuilding as contra- distinguished from the discouragement to such private enterprise which would result from the form of expenditures proposed by the Alexander bill, namely, direct investment of capital by the Government in tonnage to be used in com- petition with private enterprise. The association has further advocated the creation of a shipping commission composed of practical men of large experience, not dominated by ex officio members, which shipping board should concern itself with the investigation of economic conditions affecting the operation of shipping, the devising of reme- dies for conditions found to be adverse, and the development of such modifi- cations of the navigation laws as will tend to make them a help instead of a hindrance to the profitable operation of an American merchant marine. We do not think that any of the fundamental propositions which we have indicated will be promoted by the terms of the Alexander bill. Hence our opposition to it. As a further expression of our views upon this subject we have pleasure in inclosing herewith copy of resolutions adopted by this association following a report of the association's maritime committee, appended to those resolutions, which, together with this letter we respectfully request you to present to the committee and to include as a part of the record. Yours, very truly. Merchants' Association of New York. By G. L. Duval, Chairman Maritime Commit1('r. [Greater New York, Nov. 22, 1915.] Advocates a Commission for Merchant Marine. merchants' association believes that men experienced in maritime affairs SHOULD be asked TO INVESTIGATE CONDITIONS AND PROPOSE REMEDIES, THAT HARMFUL NAVIGATION LAWS SHOULD BE REPEALED, AND THAT THE LA FOLLETTE LAW SHOULD BE ABROGATED. Upon the basis of a report made by its maritime committee and in accordance with action previously taken, the merchants' association has defined its attitude upon measures designed to rehabilitate the American merchant marine. 556 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. The members of the merchants' association's maritime committee are : Mr. George L. Duval, chairman ; Mr. Cliarles D. Barry, Mr. Guy Van Amringe, Mr. Silas D. Webb, and Mr. James G. White. In view of the agitation of the subject and of the possibility of some action upon it during the approaching session of Congress, President William Fellowes Morgan asked the committee to make a special report upon the present situa- tion. This the committee did, and with its report it submitted a form of pre- ambles and resolutions defining the position of tho association. RESOLUTIONS ADOPTED. These preambles and resolutions, after being carefully considered and dis- cussed, with the report by the board of directors, were adopted as follows : " Whereas the United States Navy requires for elliciency in the hour of emer- gency a fleet of auxiliary tonnage, which a merchant marine alone can provide ; and " Whereas the creation of such merchant marine has hither to been prevented by the more profitable employment offered to capital in the internal devel- opment of the country, and by the restrictions which our navigation laws have placed on the operation of the United States tonnage coming in com- petition for the world's commerce, with foreign tonnage ; and " Whereas to meet the conditions arising from the existing war and to induce citizens of the United States to acquire foreign tonnage and bring it under United States registry, the Congress authorized the President to suspend for a term some of the provisions of the navigation laws ; and " Whereas the expectations of the Government from the suspension of the mos burdensome requirements of the navigation laws were disappointed, for the reasons that the purchase of foreign tonnage for American registry was impracticable because of prohibitive prices and because capital was unwill- ing to enter into business operations depending for their success on the tolerance of Government in respect to the suspension of such requirements ; and " Whereas this failure of the Government's expectations gave rise to a project of Government purchase and operation of tonnage in commercial pursuits, which proposition this association has hitherto opposed for the reason, among others, that the investment of private capital iii shipping would be practically debarred by reason of the adverse conditions resulting from Government competition ; and " Whereas the provisions of the seamen's act — commonly known as the La Follette Act — add new burdens to the operations of United States tonnage and create conditions of further heavy discrimination to the advantage of foreign tonnage, and therefore still further discourage the investment of capital in United States tonnage : Be it " Resolved, That the Merchants' Association of New York reaffirms Its advo- cacy of Government aid to a merchant marine to the extent and for the time necessary to offset the conditions that now impede its development ; and " Resolved, That it is opposed to the purchase or operation by the Govern- ment of ships for commercial purposes ; and " Resolved, That it is in accord with the adverse opinion held in shipping circles generally concerning the La Follette seamen's act, and therefore urges Its repeal ; and " Resolved, That inasmuch as temporary suspension of portions of the navi- gation laws has proven of no avail, in the opinion of this board those portions of the navigation laws which unduly impede the building and operation of American ships should be permanently repealed ; and " Resolved, That it favors the creation of a merchant marine commission, composed of citizens experienced in maritime affairs, for the purpose of fully investigating the conditions which now operate against American shipping, and of reconuuending such revision of the laws as may be desirable and necessary." REPORT OF THE COMMITTEE. The report of the committee, which was adopted as a memorandum to Presi- dent Morgan, was as follows : " Tour committee deems it opportune, in view of the approaching session of Congress, to reaffirm its views concerning a national merchant marine and the collateral subjects now engaging public attention. SHIPPING BOARD, NAVAi AUXILIAHY, AND MEKCHANT MARINE. 557 " The merchants' association has for the past 15 years earnestly advocated necessary assistance from the Government for the development of a merchant marine of national construction as an essential adjunct to the Navy in the national defense. It has been obliged to oppose the various subsidy measures considered by the Congress during that period because none of them would serve that purpose effectively. The Navy, which is the just pride of the entire country, requires for its efficiency in the hour of emergency a fleet of auxiliary tonnage, which a merchant marine would provide. An integral part of such requirement is the facility to repair, overhaul, and replace such tonnage, for which purpose more shipyards are necessary, and for this reason and on be- linlf of shipbuilding In the United States the association has opposed any grant of pulilic money, directly or indirectly, to foreign tonnage, even when acquired by citizens of the United States and transferred to our flag." DECLINE OF SHIPBUILDING. •' From an important industry, as it was prior to the Civil War, shipbuilding in the United States languished until it became practically confined to tonnage for coastwise purposes. The two principal causes for the lapse were the more profitable employment offered to capital in the internal development of the country and the restrictions which our navigation laws have placed on the operation of United States tonnage coming in competition witli foreign tonnage for the world's commerce, including our own. " The association has sedulously avoided making any claim upon Government in the name of commerce on behalf of a merchant marine because commerce has not required transportation under the national flag but has progressed l)y inviting free competition for its service of the world's tonnage, of which there has been an abundant supply. Whatever satisfaction would accure from carrying our products to foreign markets in vessels flying our flag and bringing back foreign pro(lHcts under the same auspices, it is not to be expected that a greater demand abroad or at home would ensue, or that consumers would be willing to pay a higher price because of the carrying flag." EFFECT OF THE WAR IN EUROPE. " Freight rates on ocean routes generally at the outbreak of the war in Europe were at a low level and, without Government aid, would not permit tonnage flying the United States flag to operate. Had there been at that time, or previously, a considerable merchant marine of the United States it would either have replaced to a measurable extent the foreign tonnage in operation or have been redundant. It would have been a national asset through the ad- vantage gained by the higher freight rates that supervened, but its advantage to commerce would be limited to the premium of insurance attaching to war risk on belligerent tonnage, because it is not to be expected that the owners of such tonnage would forego the higher fi-eights obtainable. " To meet the conditions caused by the war and to induce citizens of the United States to acquire foreign tonnage and bring it under United States registry the Congress authorized the President to suspend for a term some of the conditions of the navigation laws that made it impracticable to operate tonnage of the United States in competition with foreign tonnage, and a limited amount of foreign tonnage previously owned or controlled by citizens of the United States was transferred to United States registry. As far as your com- mittee is informed, however, no foreign tonnage was acquired for that purpose under the indulgence granted by the suspension of the onerous requirements of the navigation laws ; indeed, the purchase of tonnage at the price it was held liecame practically prohibitive, and capital was unwilling to undertake an operation depending for its success on the tolerance of Government in respect to the suspension of such requirements. Among the provisions of the navigation laws, that which requires the watch officers to be citizens of the United States is the most burdensome by reason of the higher wages commanded by a limited class ; yet without such provision the value of a merchant marine as a reliance of the Navy is greatly impaired, and your committee is of the opinion that the provision as a permanence is a wise and necessary one, without prejudice to the justification for a temporary suspension under the conditions which prevailed." 32910—16 36 558 SHIPPING liOARD, NAVAL AUXILIARY, AND MERCHANT MARINK. thp: ship-pukohask bii.i.. " The expectations of the Govermnent fr<»in the susiyeusion of the most bur- densome reqiiirements of the navigations laws were disappointed and gave rise to a project of (Government purchase and operation of tonnage in commercial pursTiits. The association, at the request of the Chamber of Commerce of the United States, expressed its opinion on that project and stated its reasons for an adverse view, which may be paraphrased and amplified as follows: " It would he a i)ernicious departure from the functions of Government for the relief of a department of commerce from the effect of natural causes, and would establish a precedent that every other department of commerce would in its turn be entitled to invoke. Your committee, in stating these views, is not unmindful of the right of Government to control and suppress oppression, but it is not oppression that confronts us. The phenomenal advance in freight rates does not bear upon the commerce of the United States alone ; it is world- wide, affecting all commerce, and obeys the law of supply and demand. The enforced withdrawal from the service of commerce of a large volimie of the world's merchant marine, the requisition by belligerent Governments of a large proportion of tonnage remaining in operation, and the destruction of a considerable proportion of that which w^as in service before the war are each contributing causes to the present scarcity. It is evident that the total of tonnage thus diverted from its ordinary pursuits is greater than the curtail- ment of commerce caused by the war, so that which continues to be available is in position to command its own price, just as the scarcity of any commodity woidd augment its value in proportion to the needs of the comnninity." I'KOVISION INADEQUATE. " "Even if jiistitication could be shown for the project of Government, the ap- propriation proposed woidd be totally inadequate to acquire the tonnage re- quired by the commerce of the United States. The motive being to maintain a lower level of freight rates than is otherwise accessible to commerce, it is evident that, however unwittingly, favoritism would ensue either in selecting the routes to be served or in the bookings secured by shippers should the ton- nage be fairly distributed over all the roiites of commerce. There is, more- over, no appreciable volume of existing tonnage open to Government purchase — unless it could come to terms with the owners of interned tonnage without violating the laws of neutrality. The ownership and operation of tonnage by Government would be harmful to the cause of the merchant marine in placing an embargo upon private enterprise in that department of commerce, while in an adequate sense and in its continuance a merchant marine relies upon pri- vate enterprise. The extraordinary measures proposed by Government are de- signed to meet the emergency of an era of high freights. Should Government resolve to acquire a merchant marine through the medium of our shipyards, it w^ould give a happy impetus to shipbuilding, but the tonnage would not, it is to be hoped, be available until after the war and the resumption of normal conditions. In this case, or in any case, upon the return to normal. Govern- ment would have an enterprise on hand that could not compete with private enterprise more economically conducted, free of the ' red tape ' inseparable from public business and managed by experience and judgment that it would be difficult, if possible, for a department of Government to acquire." I'ARTNEKSHIP IMPOSSIBLE. "A partnership between Government and private interests, as was suggested in the ship-purchase bill, is manifestly impracticable. The control in such a partnership would necessarily be with the Government, while the management would depend on the efficiency of the junior partners, hampered by conditions attaching to all governmental functions and repugnant in the conduct of com- merce. Finally, it is obvious that even the greater economy in the administra- tion of a private enterprise would not be an inducement to enter into competi- tion with Government, because the advantage in periods of high freights would be neglected by Government while essential to private interests, which during periods of unremunerative freight would have its own losses to foot, whereas Government has the power of distribution." SHIPPING BOARD. NAVAL AUXILIARY^ AND MERCHANT MARINE. 559 THE seamen's act. " Under these cireumstauces and in face of the amelioration granted by the (Jovernment from the conditions of the navigation laws which impBded devel- opment of a merchant marine, the seamen's act, commonly known as the La Follette bill, was enacted by Congress, to take effect at an early date, de- signed ' To promote the welfare of the American seamen in the merchant marine of the United States,' etc. Its provisions add new burdens to the operation of United States tonnage. So far as the burdens bear on all alike it is not a hardship upon the operation of tonnage because it will be covered in the freight rates and made a charge upon commerce, ultimately upon the consumer. In ihe coastwise trade such an effect is inevitable, but in the foreign service the act discriminates against United States tonnage, upon which some of its re- quirements impose exclusivelj', while the requirements that equally affect for- eign tonnage apply only to commerce with the United States. Thus, the act in denying to United States tonnage a competitive status on foreign routes im- pairs its value and still further discourages the investment of capital therein. The act has also a harmful effect upon the foreign connnerce of the United States in competing with other foreign countries for the markets of the world, inasmuch as the rates of freight outward and homeward from and to the United States must necessarily be higher than the rates of freight outward and homeward from foreign countries to the same markets. " It is evident, therefore, that the law is a gi'ievance to a national merchant marine which can not make headway against discriminating charges. Your committee respectfully suggests that if the seafaring class is a natural and ex- clusive ward of tlie Government, then provision should be made, at the public cliarge. for the required care and protection, so that the expense is not visited Mil an industry already so handicapped as to put it out of competition, par- ticularly when that industry is one upon which the nationnl defense is in no minor degree dependent." SHIPPING COMMISSION FAVORED. " Your committee strongly favors the appointment of a shipping commission, composed of practical men, to take cognizance of all matters pertaining to a merchant marine, the commission to be required to investigate the conditions that make again.st a national merchant marine and to report to the Congress upon such aid as is necessary to offset the impediments imposed by law or otherwise. " Your committee believes, notwithstanding the scandals associated with the name of subsidy in the past and the effort made in recent years to appro- priate such a public grant to private advantage, that a campaign -of ed\tcation throughout the country on behalf of a subvention — by whatever name it is called — to a merchant marine of national construction, as an adjunct to the Navy in the national defense, will meet with the response that the citizens of the United States are accustomed to give to a call upon their patriotism. It believes, moreover, that there has not hitherto been a more propitious time for such a call than the present when the transcendent need of measures on behalf of the national defense is so apparent to all open-minded citizens. " Your committee is confirmed, accordingly, in its advocacy of legislative aid to a national merchant marine to the extent and for the time necessary to offset the conditions that now impede its development ; it is opposed to the ship-pur- ("liase project of the Government ; it is in accord with the adverse opinion held in shipping circles generally concerning the La Follette bill, and is in favor of the creation of a merchant marine commi.ssion composed of citizens of experience in maritime affairs." (Thereupon at 5.40 o'clock the hearings were adjourned until Saturday, February 26. 1916. at 10.30 o'clock a. m.) CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the Merchant Marine and Fisheries, House of Eepresentatives, Washington, D. C, Felruary W, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. Mr. Penton, of Cleveland, is here and he has asked to be heard on this bill. If there is no objection, we will proceed. Mr. Curry. Mr. Chairman, you will remember that Gov. Gillett wanted to speak to us for just about five minutes. That is all he wants, unless we care to ask some questions. The Chairman. Very well. Governor. STATEMENT OF HON. J. N. GILLETT, OF SAN FRANCISCO, CAL. Mr. Gillett. I appear here at the request of the Matson Naviga- tion Co., of San Francisco, one of the largest steam-shipping com- panies on the Pacific coast, and one that runs a regular line of steamers from San Francisco to the Hawaiian Islands. The Chairman. What is your official position now, Governor f You are the ex-governor of the State of California ? Mr. Gillett. Yes. I hold no official position now. Formerly, I was a member of this honorable body; then I became governor of California. I now have no position at all in an official way- Mr. CuRRT. You did not lose it? Mr. Gillett. I did not lose it because I was beaten, but because I wanted to quit. The Chairman. What is your business now? Mr. Gillett. Attorney at law. The Chairman. And you are appearing here as attorney for the Matson Navigation Co.? Mr. Gillett. I am appearing for the Matson Navigation Co., but not as its attorney. There are only one or two words that I wish to say with reference to a few amendments which I want to offer. As I understand, the purpose of this bill is to encourage our foreign shipping and is not to interfere with the coastwise trade. That, I undertake to be the prime purpose of the bill, from reading its pro- visions. In section 4, which is the section to which I wish to call the com- mittee's particular attention, appears the following language : The board is hereby authorized to charter, lease, or sell the vessels purchased, chartered, or constructed by the United States, as herein provided, to any 561 662 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. corporation, firm, or individual, a citizen or citizens of tlie United States, de- siring to use tliem in tlie transportation of tiie commerce of tlie United States witli foreign countries, or witli Alasl^a, tlie Panama Canal Zone, the Philippine Islands, the Hawaiian Islands, or the islands of Porto Rico, etc. Alaska and the Hawaiian Islands are within the coastwise trade and they form a very important part of the coastwise trade of the Pacific coast. Mr. Edmonds. And Porto Rico also. Mr. GiLLETT. And Porto Rico on the eastern coast. We have had for a number of years on the Pacific coast men who have been busily engaged in building up commerce between the Hawaiian Islands and the mainland and Alaska and the West Coast States. They feel that this bill, if it permits a corporation formed by the United States and controlled by the United States to take part in this coastwise trade, will seriously injure the business which they have established and which they have built uj), and they see no reason why the coast- wise trade of the Pacific coast should not be protected the same as the coastwise trade of any other part of the country. In other words, they feel that the coastAvise trade between San Francisco and Hono- lulu should be as carefully protected and cared for as the coastwise trade between New York City and Galveston. But I might say that the Matson Navigation Co. is running a splendid service between the Hawaiian Islands and San Francisco. Capt. Matson started a number of years ago in a small way, with a small sailing ship, and he has been building up the business until now there are seven or eight large vessels engaged in the business, and the company has under construction at the Union Iron Works, at San Francisco, a magnificent ship that will cost o\ev a million and a half. They have built up this trade, and they are giving a splendid service at reasonable rates. They want to be protected the same as the coastwise trade in any other section of the country is protected, and they are fearful that this bill , unless it is properly amended, will interfere with this trade. Not only is Capt. Matson fearful, but so are other San Francisco people who are doing a business with Alaska. Therefore, I want to ask that this section 4 be amended by inserting the following after the word " President," in line 20 : Provided, lioivever, That no vessel built without the United States or owned, chartered, or leased by any firm, corporation, or association in which the United States has any interest shall be used in the coastwise trade with Alaska, Hawaiian Islands, or Porto Rico if such trade is being adequately served by a regular line of vessels operating between the United States and such places. Of course, if there is no regular service, or if it is not being ade- quately cared for, that is different; but as long as a regular service exists there, and regular steamers are going to those places, and the people are getting adequate service (and, of coitrse, the question of rates will be fixed by the board which this bill provides for), then I can see no reason why, and the Matson Navigation Co. can see no reason why, there should be this discrimination. Mr. Bruckner. You said that this line gives satisfaction at present ? Mr. GiLLETT. Yes ; it is a splendid line. It has fine steamers and regular sailing days. Mr. Bruckner. It sails on scheduled days? Mr. GiLLETT. Yes; it sails on scheduled days. It has as fine steamers as you will find here on the Atlantic, with music on some SJlll'lMNG JJOAKD, NAVAI. AIJX 1 1.! Ai{N ^ A XI) Al l-^ltC H ANJ MARINE. 563 of the ships, and everything on board to make it a splendid and en- joyable trip. And they are building another fine ship at the Union Iron Works to take part in this trade. This trade has been built up through years of industry and through hardship until now it is one of the best-served trades in the country. It is within our coastwise trade, and they feel that they ought not to be placed in a position where a corporation that the Government controls will throw into this trade a lot of ships that have been bought in foreign countries at a cheap price. We have no trouble with the coastwise trade; we have abundant for that trade. The Chairman. I beg your pardon, Governor, but the testimony before the conmiittee is overAvhelming to the contrary. Mr. GiLLETT. We ought not to have. The Chairman. No; because American shipping has a monopoly m this trade. If we do ha^■e foreign ships coming in the coastwise trade, it will be just because American ships do not give the people of the United States proper facilities. Mr. GiLLETT. If you have a board, Mr. Chairman, that has the power to regulate rates and control rates, then you control the situa- tion, and you can control it better that way than you can control It by permitting foreign companies and foreign vessels to engage in our coastwise trade, it seems to me. Mr. Hardt. You do not consider these foreign vessels — vessels which belong to the United States and are under its flag and its rules and regulations ? Mr. GiLLETT. No ; but I say there is no reason why the United States should engage in the coastwise trade, as long as it can control it by your shipping board and its power to regulate rates. I under- stand that the purpose of this bill is to further our commerce with foreign nations, in order that our flag may be put on the ocean again in the foreign trade, not that we want to tear down or interfere with or make difficult the way of those who have for years been en- gaged in our coastwise trade. There is no reason wdiy the Govern- ment should engage in the coastwise trade, when you have a board that can regulate the rates as well as the railroads to-day are regu- lated, and I think we ought to keep up in this country a great many shipyards and have them well equipped to build ships; and if we have a coastwise trade they are building ships for that coastwise trade. That is a vei\y important industry in this country. Of course, if the bars are to be taken down and the coastwise trade is to be thrown open to foreign-purchased ships, or if the Government of the United States is going to form a corporation, in which it has a majority interest, and go into the coastwise trade, then it should throw it all open. We feel on the Pacific coast, where that is part of our trade, that we should have as full protection as you have here on the eastern coast, and when you interfere with the Alaskan trade and the Hawaiian trade — that is, coastwise trade; where it is being regularly served and adequately served with splendid ships — that you are interfering with business that has been built up by American enterprise and American industry and American money. The Chairman. I was told in Honolulu last May that the chamber of commerce and commercial organizations of that city, with the ex- ception of 1 vote, had voted in favor of excluding the Ha^^aiinn 664 SHIPPJJS^G BOAKD, NAVAL AUXILIARY, AND MEECHANT MARINE. Islands from the coastwise trade, and of permitting foreign ships trading to and from the Pacific coast to call at Honolulu and trans- port passengers and freight. Now, I take that to be the attitude of those people. I agree with you that the facilities are being constantly improved, and that fact ought to be taken into consideration — not only by Matson, but by others. Mr. Burke. I would like to ask the governor a question. Suppose the pending bill becomes a law without that amendment Mr. GiLLETT. Yes. Mr. Burke. Do you suppose for one instant that any shipping board is going to be so foolish as to establish a Government line in competition with any other lines affording adequate transportation between the Pacific coast and the Hawaiian Islands? Mr. GiLLETT. I should hardly think so; I should hope they would not. Mr. Burke. Is it not the very purpose of this bill to develop new lines where there are no adequate commercial or shipping facilities now? Mr. Gilleti . Yes. Mr. Burke. Then, do you think there is any danger of a shipping board being so foolish as to establish a line between the Pacific coast and the Hawaiian Islands if there are adequate transportation facili- ties now? Mr. GiLLETT. When you get a lot of business men tied up with the Government in shipping, and trade may be pretty hotly pressed in some of the places where you have tried to establish it, and they find themselves w^ith a great many ships on their hands and operating at a loss, then they might turn to the coastwise trade and go into it to save themselves. It might be possible to do it; I don't know. But if the provision of the bill is that they can not do it, then they won't do it. Mr. Burke. The very essence of your amendment is that they shall not establish any line between the United States and the Hawaiian Islands if there are already sufficient transportation facilities? Mr. GiLLETT. Yes. And also that there shall not be used in that trade foreign-built ships. In other words, that foreign-built ships shall not be used in the coastwise trade of this country. This bill now permits foreign-built ships to engage in that trade, as far as the Hawaiian Islands, Alaska, and Porto Rico are concerned. Mr. Burke. That would be true if the board would be so foolish as to put a competing line there when there are already sufficient transportation facilities. Mr. GiLLETT. Yes; but suppose some other company in which the- Government is not interested should establish a line there, with the cheaply constructed ships of Europe, in competition Avith the ships that the people here have built in our own shipyards; that is what this bill as it now stands makes possible. Mr. Edmonds. That is, outside of Government ownership by this GoA^ernment corporation? Mr. GiLLETT. Yes; outside of Government ownership. This amendment which I have offered does not go to a line operated by the Government alone, but it is intended to protect that trade, that coastwise trade, from vessels that are constructed outside of the United States, outside of American shipyards, purchased cheaply SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 565 wherever they can be purchased anywhere in the world, and thrown into a trade which is not a very large trade, and compete in a trade which these gentlemen have spent their lives and money building up, and in w^hich they are using American-built sliips. There is no more reason for destroying and tearing down the trade they have built up w^ith the Hawaiian Islands than there is to destroy the coastwise trade from New York to Galveston or betw^een any other coast ports. The Chair.aian. Governor, what do you think about this proposi- tion : Suppose a line were established from New York to the Far East — Japan or China — going from New York to San Francisco or Seattle, and thence on to Japan, and back by way of Seattle or San Francisco to New York, and calling at the Hawaiian Islands going and coming? Would you say that that line should not be permitted to carry freight and passengers from New York to San Francisco, or take part of its cargo from New" York and discharge it at San Fran- cisco, and take on passengers at San Francisco to go to Haw^aii, and thence proceed on her journey? Mr. GiLLETT. Well, that would then be bringing these vessels right in competition with the coastwise trade of this country. Such a ship in such a voyage might also stop at Charleston, Savannah, and all other way ports. Of course, if that is what the Government wants to do, it can do it, but as I understand it, that is not the policy, but the policy is to build up a merchant marine to engage in the foreign trade and not in the coastAvise trade. The Chairman, That has been suggested, and I am simply trying to get your opinion on this point. Mr. GiLLETT. I think if there is a regular line of steamers operat- ing betAveen New York and San Francisco, handling American com- merce from port to port, that trade ought not to be interfered Avith by a trade that is established for an over-sea trade, because your ships could go through the canal and direct to any place in the Pacific Ocean, any place they wanted to go, Avithout going up to San Fran- cisco or Seattle for a cargo, because that Avould be interfering Avith cargoes that are necessary to maintain our coastAvise trade. That is the reason I said I think it Avould interfere Avith the coastwise trade. Mr. Hardy. You would rather the commerce of the United States should suffer than to interfere in the least w^ith the coastAvise trade? Mr. GiLLETT. No: I think the commerce of the United States can be protected, and Avill not suffer. Mr. Hardy. That seems to have been the idea all these years, until now our flag has gone from the sea. Mr. GiLLETT. Yes; but if you are going to maintain your flag on the sea by doing both the foreign commerce and the coastAvise, you may destroy the coastAvise trade and then fail to build up the foreign trade, and we Avon't have either. Mr. Hardy. Hoav is it possible to destroA' the coastwise trade when by law it is limited to ships under our flag? Mr. GiLLETT. If you are going to put ships in there in competition Avith ships built in American shipyards — ships built foreign that are cheaper— then you are competing Avith men who have gone to great expense to build up this trade and who can not compete. Mr. Hardy. Have you anv objection to our shipbuilders being able to and in fact they are building cheaper ships than exer before? 566 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. GiLLETT. I think they out to. and I think the days are fast arriving when the}' will do so. Mr. Hardy. Is it because you ha\e paid your price and seriously object to ships getting any cheaper, because somebody can buy those cheap ships and compete with you? The Chairman. Or else the Government make up the diflference. Mr. Hardy. Or else the Government give you a subsidy ? The Chairman. Governor, let us get your viewpoint on this propo- sition. Suppose the Government should build ships in Government navy yards or privately owned shipyards and charter those ships or sell them to American citizens to engage primarily in the foreign trade, what objection would there be to those ships carrying passen- gers and freight from, for instance, New York to San Francisco and then proceed from San Francisco on to China or Japan? Now, those ships were built in American shipyards and were manned by American sailors. Mr. GiLLETT. I would have no objection to that at all. The Chairman. It might interfere with Mr. Matson. but it would be a great convenience to the people of the Pacific coast. Mr. GiLLETT. I do not think Mr. Matson has any objection to any ship built in American shipj^ards and operated by an American com- pany engaging in this trade to Honolulu if it wants to. The Chairman. They could engage in the coastwise trade as a part of the extended journey. Mr. GiLLETT. He has no objection to any ship that is built in this country going into the trade that he is engaged in, and which is operated by an American company and under our flag, but he has objection to ships engaging in the trade that are not built in this country — ships engaging in the coastwise trade in competition with him that are built in some foreign country under the foreign-wage scale. As long as the ships are built in this country and built by the United States Government and sold to our citizens they should have a right to engage in the coastwise trade or foreign trade and have all the opportunities they can get. I am sure Capt. Matson has no ob- jection to that; but he does object to competition by foreign-built ships with his American-built ships. Mr. Greene. Is it not also the fact that these foreign-built ships could be foreign officered and foreign manned? Mr. GiLLETT. Yes; and operated under foreign conditions. Mr. Greene. By authority of the registry bill already created, if within the wisdom or belief of the President it was wise to do so ; it is left to his discretion. Would not that create an additional compe- tion that would be unjust to the coastwise trade? Mr. GiLLETT. It would be unjust not only to Capt. Matson but to every other company engaged in the coastwise trade to-day. They should all be protected. The Chairman. Yes; and yet that legislation was promoted here by the very people who are opposing this legislation now. Mr. Greene. I did not promote any such legislation. The Chairman. You did not have anything to do with it. The New York people did it — the very people who appeared here last Thursday in regard to this bill. Mr. Edmonds. Have you read the regulations in regard to the freight rates in this bill? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 567 Mr. GiLLETT. I have not. Mr. Edmonds. You do not know what they are, then? Mr. GiLLETT. No. Mr. Edmonds. You would not want to say whether Capt. Matson approved those regulations or not? Mr. GiLLETT. I can say I am satisfied Capt. Matson has no objection to rates being regulated at all. I think now the rates from San Francisco to Honolulu are very cheap over his lines, and he can have no objection, and I know he has none, to rates being fairly fixed and established by the board, because that would put everybody then on the same basis. The Chairman. I do not think there was any complaint of the rates when I w^as in Honolulu last spring. It is just a lack of facilities. Mr. GiLLETT. There are a couple more amendments that I will leave with the committee here. In the same section, section 4, after the word "corporation," in line 23, page 5, in that part which reads: That vessels constructed in American shipyards and navy yards, under the provisions of this act. may be chartered, leased, or sold to any such corporation, firm, or individual, a citizen or citizens of the United States, for use in the coastwise trade of the United States, particularly the trade between the At- lantic, Gulf, and Pacific coasts. Of course, if it is intended that the corporation formed under this law is to engage in the coastwise trade, the bill is all right as it reads. But if it is intended that that corporation shall not engage in the coastwise trade, then I think an amendment ought to be made by putting after the word " corporation " the following : " excepting one in which the United States is a stockholder or has any interest." Otherwise the corporation formed by this act could engage in the coastwise trade anywhere or any place. I do not know whether that is the intention of the bill or not. If it is the intention of the bill that this corporation shall engage in the coastwise trade, why, then, the bill is all right, as it stands, but if it is not the intention that it should engage in the coastwise trade, then, I think that amendment ought to be made. Then, in section 8, page 10 : That the board hereby created, if in its judgment such action is necessary to carry out the purposes of this act, may form, under the laws of the United States or of the District of Columbia, a corporation or corporations, with capital stock in such amount as the board may prescribe, such capital stock, however, to be within the limits of the appropriations made by this act, whose object shall be the purchase, construction, equipment, maintenance, and opera- tion of merchant vessels in tlie commerce of the United States and with foreign countries and with Alaska — If it is intended, as I said before, that they are going into the coastwise trade, then that is all right. But if it is not intended that they shall go into the coastwise trade, then the word " and," after "United States," should be stricken out, so that it should read: "In the commerce of the United States with foreign countries and with Alaska." As it now reads, it is for the United States, anywhere, on the Great Lakes, or on the rivers, or in our coastwise trade. That is broad enough to permit this corporation that is to be formed to do business anywhere on this continent. I do not know, as I say, whether that was the purpose of the draftsman of the bill or not, but if it is in- tended that this corporation shall not engage in the coastwise trade, 568 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. and shall be formed for the purpose of trying to build up our foreign trade, then that word " and " ought to come out. I think I have said all I have to say, and I thank you very much for this opportunity for saying so much, STATEMENT OF MR. JOHN A. PENTON, OF CLEVELAND, OHIO, EDITOR OF THE IRON TRADE REVIEW, AND THE DAILY IRON TRADE AND METAL MARKET REPORT. Mr. Penton. I want to say, Mr. Chairman, that perhaps I am at a disadvantage, or perhaps at an advantage in not having any direct or indirect interest of any kind whatever with anybody engaged in the ship-owning, shipbuilding or ship-operating industry, and I have never had. Some years ago I attended one evening a little dinner function in Cleveland, where the question of a new merchant marine was under consideration, and somebody suggested an organization of some sort, a little sentimental, patriotic matter in Cleveland, to see if something could not be done to carr^- on a little educational campaign in that city on that subject. Somebody turned over and on the back of a little menu wrote out a set of suggested by-laws, and then officers were suggested. I happened to be an unfortunate newspaper man and they made me secretary. And I knew as little about the subject as anybody in the world. A few days after that the newspapers carried the story of an association being formed, and the first thing I knew we woke up one morning and found ourselves famous. I think we had 16 members at the start, and we were going to charge $10 a year dues. I did not know what we were going to do with so much money as $160. But we had to have a few letter heads printed and a little stationery. We gradually began to study the question, and our little association, which was entirely a nonpartisan patriotic affair, grew in size until it had members in every State of the Union, and a vice president in every State ; and, while we did not take any part as for or against any specific character of legis- lation, w^e did finally indorse the ocean mail act of 1891 simply because it was recommended by two different Presidents of the United States, a number of Government officials, and about 100 business men's associations and committees of both House and Senate. But when the campaign for free ships was on and being advocated by certain Senators and Congressmen we never raised our voice, feeling that that method Avould accomplish nothing. And when Congress- man Underwood, and others in the House, and Senator Newlands, and others in the Senate, by speeches indicated that they were in favor of preferential duties the league officers felt that if Congressman Under- wood and Senator Newlands said it would accomplish the purpose they were in a position to know. So that without having any great feeling for or against any method we were interested only in some- thing which would do the business. I speak of that as perhaps giving a little excuse for my being here. This is a subject in which we have been very much interestd, and our little association through speeches and debates, magazine articles, newspaper articles, etc., has carried on quite an effective educational campaign for a good many years. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 569 Later I was a member of the committee of the Chamber of Com- merce of the United States which prepared the report presented last year. A referendum was taken on that, with which you are familiar, and I think that it is fairly representative of the thought of the people of America. A referendum was taken of all of the members of the Chamber of Commerce of Cleveland, a voting paper being sent to all of the members, and a copy of the result of that I have in my pocket, showing how the individual members voted on all of the propositions submitted by the Chamber of Commerce of the United States if your committee would desire to see it. The Chairman. We have the method of taking the vote, I believe, of all the constituent bodies of the Chamber of Commerce of the United States already in the record, given by Mr. Fahey, who was until recently president of the Chamber of Commerce of the United States. Mr. Penton. Perhaps that did not give the vote taken by ballot of any individual chamber. I think most of them voted by directors. The Chairman. He gave the method of how each vote was taken, I understand. I have not read his statement, but I understand in each case, where it was taken by a referendum vote. He indicated that and made a very full report. Mr. Penton. I did not know that. I do not want to take your time, but I have this vote if you want to see it. I was here two or three weeks ago, accidentally, when you had a gentleman before you, and I secured some ideas at that time, and I asked you if I might not have an opportunitj'^ to come before your committee. T|iere seems to be quite a little bit of oj^position to the word " subsidy," and upon that I wish to say a few words, if I may. The Chairman. We are having hearings now on House bill 10500. Mr. Penton. Yes; I do not think there is any opposition to the use of the word "subsidy" in this country. I think we had 100 resolutions at one time, adopted by the different chambers of com- merce and the different business men's associations in America, ad- vocating what was called a subsidy bill; although, as 1 understand it, there has not been a subsidy proposition before Congress for the last 15 or 16 years. The ocean-mail act was a measure authorizing the Postmaster General, if he saAv fit, to advertise for bids for vessels to carry the mails, and to render the (Government certain services there- for, such vessels to be built in American shipyards, and officered by Americans, and to be built subject to Government regulations and in- spection. The bill passed the Senate unanimously, as I remember. It carried with it a proviso that the gross expense under that bill, in any one calendar year, should not exceed the net revenue derived, and, under those circumstances, the bill passed the Senate unani- mously and was defeated in the House by only three votes. Now, I think we do give many subsidies — practical subsidies. I think the appropriations for the river and harbor improvements are very much a subsidy, and they are indorsed by the beneficiaries from various parts of the country. And I think that the money appropriated for irrigation purposes, the boll weevil in the South, and matters of that kind, are all very desirable and proper subsidies. I am a newspaper publisher, and I want to say that I believe the newspaper fraternity of the United States receives one of the 570 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. greatest subsidies in the whole knoAvn Avorld. I saw by some recent reports that 1,100,000,000 pounds of mail was carried as second-class mail matter at 1 cent a pound last ^-ear. I know we sent out a good many thousand pounds in the mail ourselves for 1 cent a pound postage. That is less than the Government can carry that mail for, but we believe that money is used for a good purpose. The Chairman. I belieAe that last year it cost the Government 4 cents a pound. Mr. RoDENBERG. I have seen it estimated at 9.2 cents a pound. Mr. Penton. If the cost is 4 cents a pound, it would be a subsidy of $33,000,000 if 3'ou are correct. Some publishers declare it is about 2 cents, and other authorities say it is 8 cents, but I am glad to accept the statement of the chairman. I am only giving that as an illustration. But what we are trying to do, and what we know you gentlemen are trying to do, is to accomplish something here in a patriotic way in this country. I am willing to accept the statement that the chairman makes that it is perhaps 4 cents. I do not know. The Chairman. 1 would not want to say that on my own author- ity. But I think that would be a conservative estimate. The com- mission appointed by Congress, of which Justice Hughes of the Supreme Court was chairman, investigated the whole matter and recommended an increase to 2 cents. Mr. Penton. Even that would be $22,000,000 a year as a subsidy. However, I only want to mention this — that this is a subsidy in my judgment, although I think it is quite a worthy subsidy; and being engaged in the newspaper business myself, I am foi- it. and every- body else in the business is in favor of it, and, as I say to you, I think it is quite a worthy subsidy, and is very largely passed on to the people who receive the publications. l)ecause there are scores of magazine publications in this country, wholly worthy ones, that w^ould have to go out of business without that subsidy. So I do not think there is the antagonistic feeling toward the word " subsidy " that some people might think. But I wish to say in reference to this particular bill, that a few weeks ago I had an opportunity^ of taking lunch one day with the [president of a very large shipbuilding company, I know that you w^ill ask me his name, but I do not believe, without his consent, I can give it to you, although I will be glad to try to get his consent if you so desire. You remember a few weeks ago the newspapers had a story about a large corporation being formed to build a ship- yard on the Delaware River which would be the biggest in America, and that the promoters went before a certain New York trust com- pany for the purpose of arranging the financing of a $20,000,000 corporation for that purpose and were told that " in view of the general unfriendly feeling of the Government toward merchant marine enterprises or the feeling the people have that the Govern- ment is unfriendly to private enterprise (we will put it that way — we won't sa.y that the Government is) we do not feel that we can undertake to float your corporation or finance it for you. If it w-as a steel business or an automobile business or any other kind of business, we would finance it." The result is that to-day there is no money whatever being spent — at least, not very much, except for necessary enlargements by the shipbuilding concerns already in existence— in buying and building SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 571 new shipyards, in spite of the fact that all of the shipyards on the Great Lakes and on salt water have nearly three years' work ahead. They have now contracts on hand with which they won't catch up until 1918, with the ships that they have not contracted to build, and it is not possible for the Government, if this bill were passed, to place a contract for a ship before that time. And yet there is one hundred and fifty-odd million appropriation now to enlarge the steel plants in different parts of America, while little or nothing is being invested in the shipbuilding business. Yet everybody knows that just now the shipbuilding business is unusually profitable. So I think there is a feeling about the attitude of the Government which perhaps this committee might allay. I am not going to state, as I heard one gentleman say the ether day, that it was all on account of unfair navigation laws, although that is a familiar statement which everybody hears ; but one statement struck me as showing one particular unfairness. Col. Goethals said the other day that of two ships exactly the same size, going through the Panama Canal, one paid $500 more than the other; the American ship paid $500 more than the foreign ship, its sister ship. That is one of the things we hear about, and I mention that, because, if it is a fact. I am sure it is only a question of coming here and getting relief. T believe that there are tens of millions and hundreds of millions of dollars willing to go into this enter]3rise in the United States if the people couldfeel that thev were going to have any safe, certain measure of security. And, if I might l)e permitted, ISIr. Chairman — because I know how patriotically inclined you gentlemen are and how anxious to aid you are, if .vou can— if you will just give a little thought to the people you really mean to help I believe that, while yon have this Government-ownership proposition in mind, you are not trying to discourage the shipbuilding plants and discourage the individual from building new shipbuilding plants, which you intend to aid. but think of (lovei-nment ownership only because you can see no other way out as yet; but I believe a very different idea is exist- ing in the minds of the American investors. The Chairman. I will say, as the chairman of this committee, that it has been my desire for years to do something for our merchant marine, and I haAe no other ambition now. I agree with you in this respect, that it would be well for all of us to drop overboard some of our preconceived notions about things and approach this propo- sition without them in mind. This bill, of course, is only in a ten- tative form now, and I hope when the committee comes to consider it they will have in mind all of the valuable suggestions that have been made in reference to the proposed legislation, and, whether it is this exact bill or some other, that we can agree at least in the committee to give it our united support; because I think we are all promnted by the same wish, and that is to do something construc- tively for our American merchant marine. Mr. Penton. May I take the liberty, before taking my seat, of reading this little vote of the Cleveland Chamber of Commerce, of its members, on these six questions submitted by the Chamber of Com- merce of the United States. On the question. Do you favoi- the (lovernment undertaking the purchase, construction, or charter of vessels for mercantile purposes, 572 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. together with the operation of such vessels? there were 7 votes in favor and 466 opposed. On the question, Do you favor ownership of merchant vessels by the Government, but with operation by private parties under leases ? the vote was 49 in favor and 470 opposed. On the question. Do you favor subsidies from the Government sufficient to offset the difference in cost between operation of vessels under the American flag and operation of same in deep-sea trades under foreign flags? there were 439 votes in favor and 89 opposed. On the next question, Do you favor subventions from the Govern- ment to establish regular mail-and-freight lines under the American flag to countries in which the commercial interests of the United States are important and to American dependencies? the vote was 495 for and 34 against. That was the vote taken on the first ballot. On the second ballot, on the recommendation of the committee of the creation of a Federal shipping board to investigate and report to Congress regarding the navigation laws and to have full jurisdic- tion under the law in all matters pertaining to over-sea transporta- tion the vote was 480 for and 30 against. The balance of the questions and the balance of the answers I have here on this little slip, but I just thought I would give you the results on those few. The Chairman. Suppose you state the result on the question of regulation, as long as you are on that subject. Mr. Penton. On the recommendation that the Government sub- scribe to the entire stock of the Marine Development Co., etc., the vote was 255 for and 228 against. The Chairman. On the first proposition, on the question of a Fed- eral shipping board, can you give the vote on that? Mr. Penton. Yes. In favor, 488; opposed, 30. The Chairman. Then take the next proposition, the third one. Mr. Penton, On the recommendation of the committee that the ocean mail law of 1891 be amended by lowering the speed for first- class steamers, etc. In favor, 434; opposed, 38. That there should be legislation abolishing preferred rebates and providing for supervision of rates by the Federal shipping board, with requirements for filing with the board schedules of rates and all agreements among over-sea lines, there were 450 in favor and 37 opposed. That Federal licenses should be taken out by lines, etc., the vote was — in favor, 476; opposed, 20. The Chairman. Now, that makes the record complete. Mr. Loud. May I suggest that we might get some illuminating and instructive testimony from the gentleman on the rapidity with which boats are built upon the Great Lakes in the yards there, where the boats are standardized more than they are upon the ocean? The Chairman. Yes; it is a well-known fact that ships can be built on the Great Lakes cheaper than anywhere in the world ; is not that a fact? Mr. Loud. And there they are building boats of 10,000 tons — he might give you some information on that point. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 573 Mr. Pektox. I have often heard it said that they could build a 10,000-ton ship, from the date of laying the keel to the date when she starts out under her own steam, in 10 weeks. Mr. RoDENBERG. What? Mr. Penton. In 10 weeks. It sounds incomprehensible. I remem- ber telling the story down at Cramp's yard, and there was a Gov- ernment inspector there, and the Cramp's people asked me how they accounted for it, and I said, " They do not have Government inspec- tion up there." The fact is, I think it has been done frequently in 10 weeks. Mr. Loud. These 10,000-ton boats are all of the same type and are standardized so that they are built one just like another. Mr. Penton. They are building boats (all of the big steel com- panies) of the same type. They put three or four through at one time, and they do not have to stop to make new patterns, but they send them down to the shop, and as soon as they get the material it is only a question of assembling. Mr. Saunders. Where are the yards that build that expeditiously? Mr. Penton. The American Shipbuilding Co., the Great Lakes Engineering Works, and the Toledo Shipbuilding Co. They do it very fast. The Chairman. What size vessels can now be brought out of the Lakes? Mr. Penton. Two hundred and thirty-four feet, through the Wel- land Canal. Mr. Loud. Those that he speaks of are the 600-foot freighters, which are built so quickly. Mr. Penton. They are building 14 boats now under contract for Norway, Italy, and Sweden, on the Great Lakes, for the foreign commerce, and they are going ahead with the contract that they have. A gentleman connected with the American Shipbuilding Co. told me that they had a proposition to build six for Norway right now. There is a little idea that German money is paying for them; I do not know whether that is true or not. Mr. Hardy. Is it not your opinion that the American shipyards, when they get right down to it, can outbuild the foreign shipyards, taking the lake building as an example ? Mr. Penton. The president of the Newport News Shipbuilding Co. said that they build a slightly different boat, but if they could get the ships to build in this country as they build them in foreign countries, although the cost of labor here is still more, if they were built in the same quantity, we can come pretty near to building them as cheaply as they do over there. Mr. Hardy. They do not cost any more now. Mr. Penton. No; but the conditions are abnormal now. Mr. Hardy. They did come close, and it is much closer now. Mr. Penton. But the conditions are abnormal now. He was talk- ing of conditions about four years ago. Mr. Hardy. If the Government adopts this bill and should offer to public competition the building of all of the ships they authorized under it. is it not more than reasonable to suppose that the United States shipbuilding yards would secure the contract in open competi- tion to-day? 32910—16 37 574 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Pen TON. You can get twice the price of a ship under the abnormal conditions to-day if you can make delivery at any time in 1918, because the demand is so acute and they sometimes make one- half their cost in one round trip. Mr. Hardy. You have not answered my question, which possibly you did not catch : Would not the American shipyards, in open com- petition with the world to-day, build every one of these ships if the Government w^ere to offer them to public bid ? Mr. Penton. Build them as cheap as the foreign countries to-day? Mr. Hardy. Yes. Mr. Penton. Yes; you can get the ships built here to-day as cheap as you can anywhere in the world, for the government or anybody else. Mr. PIardy. And if we should let a contract at any time in two years, that would be almost sure to be the case, would it not? Mr. Penton. Yes; I imagine the war will last for two years; but when it comes to a period after the war is over, it will be another situation. Mr. Hardy. After the war is over, if the shipbuilding industry does anything to try to get in the field, won't they standardize the types of vessels and build, as you say, in 10 weeks? Mr. Penton. On salt water they can not build in 10 weeks. I have been talking about building ships on fresh water. Mr. Hardy. A 10,000-ton vessel can be built and transported to the sea in sections, can it not ? Mr. Penton. Oh, no; that would cost immeasurably. Mr. Hardy. How^ is that ? Mr. Penton. That would add terribly to the cost. But then the salt-w^ater people build pretty fast themselves to-day; there is a pretty good business down there. Mr. Edmonds. I think I can answer your question, Mr. Hardy. In the hearing before the Committee on Naval Affairs in regard to this b-ill for enlarging the number of steamers on the Panama steamship line, held about two years ago in September, it was testified, I think, by the president of the Sparrow Point Shipbuilding Co. that they can build just as cheap; and if we ordered 10 ships from them they would build the first ship in six months and they would follow at the rate of one every two months afterwards. Mr. Hardy. I was only drawing attention to one fact : The univer- sal claim as to the reason why we have not been able to build ships in competition with the world, is because of the fact that we have not standardized; and if we start into the business under this bill, having $50,000,000 of capital to invest at once, is it not possible that our builders would standardize and equal the world in the building of ships as they do now in the production of steel and iron? Mr. Penton. I think so ; yes, sir. But I would like to make this explanation, and I hope you will appreciate the fact that I am trying to say something which won't seem out of touch with anybody's feel- ing here. Before the war was declared we were making tin plate almost as cheap — not quite, but almost as cheap — and we were mak- ing it practically as a result of the encouragement given to the build- ing up of American plants. And in the same way the encouragement of the building up of these shipbuilding plants now, I believe, would result in an affirmative answer to Judge Hardy's question. 11 SHIPPING BOAKD^ NAVAL AUXILIARY, AND MERCHANT MARINE. 575 Mr. Hardy. Right along that line, you seem to be very much de- voted to subsidy. Mr. Penton. I am very much in earnest. Mr. Hardy. I would like to ask how it would look for us to speak out to the American people and say that ships to-day which are re- ceiving from 500 to 800 per cent higher rates on their freight than they ever did before, and that frequently pay for themselves in two or three trips— how would it look to the common American citizen to- offer to pay that ship, in addition, a subsidy from the Government? ]\Ir. Penton. Under the present circumstances there is no neces- sity to do it. Mr. Hardy. You want a law to give a subsidy? ..: . Mr. Penton. No ; not in the present circumstances. Mr. Hardy. Would you not just be ashr.med to take the money? ]SIr. Penton. I am getting a subsidy now and I am not ashamed. INlr. Hardy. I believe I will withdraw the question; I never saw a man who was ashamed to take the money. Mr. Penton. May I say the freight on pig iron to Italy is costing from $18 to $20 now instead of $1 to $2, and on steel billets also. JSIr. Hardy. And yet you want to give that vessel a subsidy? Mr. Penton. No; I am not speaking of that vessel at all. Mr. Hardy. For what vessel are you speaking? INIr. Penton. I am not speaking of to-day under the war conditions. Mr. Hardy. Do 3^011 not know that after this war is over, with the scarcity of tonnage, that every vessel on the sea is going to be the big- gest money-making thing you can find? Mr. Penton. Perhaps that is true. Mr. Hardy. When do you want your subsidy to begin? Mr. Penton. I am not here speaking for subsidy. Mr. Curry. Great Britain does not subsidize her merchant marine, and there is no intention now, either in the past or in the future, to pay the American merchant marine a subsidy here. INIr. Penton. The cost of operation under the foreign flag is so cheap as compared with the cost of operation under the American flag that that is a great big subsidy in itself. Mr. Curry. That is not one of the difficulties now. Right now there is no necessity of subsidizing anything Mr. Penton. No, indeed. Mr. Curry (continuing). And it would be foolish to pass a subsidy bill under the conditions at the present time. Mr. Penton. My thought about a Government-ownership bill is that one of its many effects will be the discouraging of American capital from going into the building of American ships. Mr. Curry. I think you have made that clear. INIr. Penton. I wish to offer that suggestion with all due deference to everybody. ISIr. Hardy. I thought the idea as that the cost of operation has driven us from the sea and not the difference in the cost of the ves- sels. You are aware that the Pacific Mail used Chinese and Japanese crews ? JSIr. Penton. I believe so ; yes, sir. Mr. PIardy. And Chinese and Japanese labor? Mr. Penton. Yes, sir. 576 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Hardy. And you are aware that every vessel under our flag has a right to get the seamen where it pleases. Mr. Pejston. I think myself that those regulations recently enacted under the seamen's act are more burdensome. Mr. Hardy. What are those regulations? Mr. Penton. I do not want to go into the details about it. Mr. Hardy. I want to tell you that Mr. Schwerin testified that of the Chinese seamen more than 40 to 60 per cent were competent to qualify under the seamen's act. Mr. Penton. Was that recently? Mr. Hardy. When we were holding the hearings on the seamen's bill. He testified that those Chinamen had been with him for years and knew the language of the officers and made the best seamen on the ocean, and he did not think it would interfere with him. JNIr. Penton. A man makes a very poor witness, if he undertakes to answer a question on which he is not thoroughly informed. Mr. Hardy. And then the seamen's act was only passed last year, so that that had nothing to do with it. Mr. Penton. So many people have written so much upon thai subject, Mr. Schwerin among the number, in which they said it had so much to do with it, that I would not like to hazard a statement. Mr. Hardy. I want to get clown to that statement of the excessive cost of the American operation. You know that the American owner could employ any seaman he wanted prior to the seamen's act? Mr. Penton. In a publication called Nation's Business, issued by the Chamber of Commerce of the United States, a copy of whi'-h is in my pocket here, which I secured since I came, so as to refresh my memory, it gives the cost of the operation under the different flags of the clifTerent countries: and the cost under the American flag is about twice what it is anywhere else. Mr. Hardy. I understand all those publications. But why is it that the American pays more for seamen when he engages the men just the same as anybody else. Is not that true? Mr. Penton. Judge, I want to say that I heard at one time the testimony given before a joint commission of the House and Senate in New York. I sat there for two or three days and heard people come before that commission and give testimony as follows: That they would have a foreign boat on one side of the pier at certain times, and an American boat belonging to the same firm on the other side, and the sailor would leave the American boat and cross the pier to the foreign boat and be willing to accept half the Avages he got from the American ship; whereas if he would cross over from the foreign boat to the American boat, he would insist on getting double the wages there. Mr. Hardy. I ha^e heard that statement, but do you believe it? Mr. Penton. Yes; I do. Mr. Hardy. I can not believe that the ordinary American, looking for a job, is going to refuse a job on an American ship here, under the American flag, or to leave a job at $20 a month and go over to a Japanese ship at $10 a month — at $10 a month difference in the wages. Mr. Penton. Shortly after the war started this Government passed a bill making it possible for ships to be placed under the SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 577 American flag, and to be operated under the American flag — foreign ships — and it exempted a certain class of officers in that legishition so that they could operate these ships without taking the oath of allegiance to this country, and could operate those boats with cer- tain foreign seamen and officers; and the moment those boats came under the American flag those men demanded very greatly increased wages. The Chairman. The fact is this, I think, Mr. Penton, that the ship-registry act to which you refer, authorized the President to suspend our navigation laws so far as requiring the watch officers on foreign-built ships brought under American registry to be Ameri- can citizens. Mr. Penton. Yes. The CHAiR:\rAN. And the United Fruit Co. and the Standard Oil and the United States Steel Cos.' ships came in, and, as I understand, as soon as they did come in, their officers demanded the regular American standard of wages, and got it. Mr. Penton. That is true. I was down at the foreign trade council meeting in New Orleans a few weeks ago, and Mr. Farrell was presiding, and one of the speakers spoke on the subject, and a great many citizens spoke on the subject. One speaker said, " Yes, and when the war is over you will find that all these ships will be put back under the foreign flag again, and be operating them at much less than under our American flag." Mr. Hardy. I also heard a gentleman who claimed to be posted like yourself on this subject, make the statement that a vessel oper- ated under the English flag cost $994 a month, and the same vessel operated by Italians cost $500. Now, will you tell me why the Italian vessel has not driven the English vessel from the commerce of the seas? Mr. Penton. I could not tell you. It is so easy to ask questions sometimes. Mr. Hardy. You know those facts are substantially true. If any of the statements we have are correct, you know that the English wages are the highest wages except ours of any of the great nations. Mr. Penton. I do believe the wages paid for operating an English ship under the American flag are greatly in excess of what the}^ are under the British flag. Mr. Hardy. Do you not believe also that if the shipowner has to pay a vastly increased amount of insurance, repairs, and deprecia- tion ; that is, especially if it amounts to the whole wage cost in a year ; that is even a greater cost of upkeep, that he can afford to compete? Mr. Penton. I have heard them say this very often: That they would be very glad to do this, to pay for the ship and pay more for it under the American flag — for the American-built ship — but that while it would cost more over a period of years to absorb the extra cost, yet the everlasting overhead outlay of the extra cost of the wages of the men made it impossible. And I want to say further that I have read somewhere, not recently, but in the testimony given before congressional committees, that while this country can do things cheaper because, for instance, it can build locomotives by the hundreds which are purchased by the score for foreign countries, yet the answer is that when they are taken to the foreign countries they 578 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. are operated by foreigners who are paid the foreign wage scale; and if that same locomotive went to a foreign country and carried with it American workmen, demanding the American wage rate in that country, they would never go. Mr. Hardy. I will not pursue the question, it takes too long. Mr. Curry. You spoke early in this discussion about Col. Goethal's statement that it would cost $500 more for tolls for a certain Ameri- can ship going through the Panama Canal than its sister British ship. Mr. Penton. Yes. Mr. Curry. Col. Goethals, I think, ought to know that the laws governing the measurement of American ships and of British ships are identical, and that the reason for the difference of cost is that under the rules of the British Board of Trade everything that is possible to be measured out of the net tonnage of the ship is measured out. Mr. Penton. I understand that. Mr. Curry. And under the rules of the Department of Commerce of the United States, everything possible to be measured in, is meas- ured in. Mr. Penton. Yes, sir. Mr. Curry. So that the law is not responsible for that condition, but simply the policy of the department. Mi\ Penton. But in the meantime the shipowner pays the money. Mr. Curry. In the meantime the shipowner should see that the department changes that rule. AVe had Mr. Chamberlain before us a few days ago, and I asked him why it Avas they could not change that rule, and he said he was changing it. Mr. Penton. It shows, then, that Mr. Chamberlain is making the law. Mr. Curry. No ; it is a rule under the law. He was authorized and empowered to make that rule under the law. The British Board of Trade is authorized and empowered to make the same rule, or figure it the same way. Mr. Chamberlain could figure it just the same now, and if he wants an American merchant marine — being at the head of this vessel department of our Government, so far as measurement is concerned, to meet the British ships on an equality — he ought to do that without any pressure or influence or force and measure our ships according to the British Board of Trade rules, which he has the authority to do. Mr. Pexton. May I thank you, Mr. Chairman, again, very much, indeed, for this opportunity. The Chairman. As I understood ISIr. Penton, he said he saw a neAvspaper report the accuracy of which he would not vouch for, referring to that discrepancy. Mr. Penton. Yes. The Chairman. So that it may or may not be accurate. Mr. Penton. It may or may not be accurate, but I saw the state- ment. The Chairman. We are much obliged to you. (Whereupon, at 12 o'clock noon, the hearing was adjourned until Tuesday, February 29, 1916, at 10.30 o'clock a. m.) CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the Merchant Marine and Fisheries, House of IIepresentati\t:s, Washington, D. C, February 29, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. We have two or three present this morning who desire to be heard. Mr. Ivy desires to be heard very briefly, and also a gentleman from Seattle. Then we will hear from Mr. Baker. Mr. Edmonds. Mr. Chairman, before we start, might I ask to have this memorial from the Philadelphia Board of Trade put into the record ? The Chairman. Yes, without objection. (The memorial referred to above is as follows:) PlirLADELPIIIA BOAKD OF TrADE, Pliiladclphlo, February 2i, 1916. To the honorable the Senate and House of Representatires in Congress assem- bled: This iiiemoriiil respectfully represents — That the Philadelphia Board of Trade, through its committee on foreign and coastwise commerce, has ^-arefully examined the provisions of H. R. hill 10500 and feels ohliged to oppose its passage, not upon tlie question of its form but on the question of intent, it being based upon the fallacy that the operation of economic tendencies can be shaped l)y (iovcrnnieiit hat : That the board believes that the verdict of the country, as shown by the refer- endum upon the subject issued by the Chamlier of Connnerce of the United States, was almost mitminious against the Goverinnent ownership, or what was still worse, the Government operation of a merchant marine, in which opinion this board is in perfect harmony ; That the provision giving to the shipping board control over rates on American ships can not he looked upon with favor, as such interference would inevitably bring disastrous results ; That the provision regarding the licensing of foreign vessels and an attempt to force regulation upon same would doubtless provoke dangerous controversies with maritime nations who would resent the impairment of any rights contrary to treaty or custom ; That the board recognizes in the section of the bill under consideration which provides for the payment by the United States of a monthly sum to the officers and crews of American vessels, listed in the United States Naval Auxiliai'y Reserve, a move in the right direction, which meets with its approval ; That the board, as in the past, is convinced that the reestablishment of the American merchant marine can only be accomplished by carefully guarded sub- sidies being granted by the Government to offset the differences in cost of oper- ation between American and foreign vessels: Therefore, Your memorialist, the Philadelphia Board of Trade, earnestly petitions your honorable bodies not to favorably consider H. R. bill 10500, being "A bill to establish a United States shipping board for the purpose of encouraging, de- veloping, and creating a naval auxiliary and Naval Reserve and a merchant marine to meet the requirements of the commerce of the United States with its Territories and possessions, and with foreign countries, and for other purposes." And your memorialist will ever pray. [seal.] Wm. M. Coates, President. Attest : W. R. Tucker, Secretary. 579 680 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. STATEMENT OF MR. THOMAS P. IVY, OF NEW HAMPSHIRE, FOREST ENGINEER. The Chairman. Give the committee your business and your place of residence. Mr. Ivy. Forest engineer ; New Hampshire. The Chairman. You are just temporarily in Washington? Mr. Ivy. Just temporarily in Washington. The Chairman. You wrote me a letter expressing a wish to be heard on this measure, and we will be very glad to hear from you. Mr. Ivy. Mr. Chairman and gentlemen, I hope in this statement that I wish to make, if I shall seem to be attacking an3^body, you will get that misapprehension out of your mind, because there is nothing further from my purpose. I trust I have the decency to recognize that any two men may look at the same state of facts and come to conclusions that are very different. Besides, I look upon your committee here as a board of directors in the interests of the American people, seeking to find out the best means by which we can establish an American merchant marine for the expansion of our commerce and for our protection in time of danger. This whole question of the shipping business came across my path in this way. Before the Panama Canal was completed I had been thinking and making some plans, because if it is not the business of a forest engineer to know anything about shipping, it certainly is a part of his business to know something about timber lands and the lumber business in the United States — and I had been thinking about forming a company for the purpose of bringing lumber from the Pacific coast through the canal and distributing it from Atlantic ports into the Middle West especially. Therefore this question of shipping had immediately to be investigated. There was not any question in my mind that we could compete with lumber on the Atlantic slope, because as any lumber man here knows, speaking generally, the lumber on the Atlantic slope is of low grade as com- pared with the lumber on the Pacific slope. But in the investigation of this matter, I found it a very serious question, a very serious prob- lem, whether we were going to be able to compete with European demands for the lumber of the Pacific slope, and so I thought I had better go to Europe and look around over there and see Avliat in- formation I could get on the subject over there, and I did. And that was just in the year before the commencement of the war. I found there a great deal of interest in the prospective opening of the canal. In fact, in Liverpool, they told me that in anticipation of the opening of the Panama Canal they Avere building new cotton mills in Manchester; in Germany I found they were enlarging their plants with an idea of putting on a special line of steamers; In Italy I found the Italian Government had a scheme of immigration by which they proposed to have a colony in California, as the climate is somewhat adapted to the Italians. So that question became a very serious one as to whether we could compete with the demand for lumber from Europe, especially when European vessels would have a cargo going and coming. I had a lot of facts and statistics relating to this subject which, unfortunately, got burned up when my dwell- ing was burned, so I am just speaking now from memory and giving SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 581 the conclusions that I came to rather than trying to give you any of those facts, which I do not want to give unless I can give them accurately. As the law then stood, we met with the difficulty that we should have to use American ships, under American registry. All of that question has been gone through here with you — the difference in cost and the difference in operation between American and foreign-built ships. It was an extremely doubtful proposition in my mind after I had investigated the conditions in Europe whether we could do that thing successfully or not. But now immediately the war broke out, and that for the moment set aside the whole thing. But the general conclusion that I came to in my investigation of that whole subject was that the difficulties to be met were so great and so many that they could not be overcome at this day and time unless the strong arm of the United States (iovernment would get behind that propo- sition in some way. And I am free to say tha^ the principles in this bill appeal more to me as a means of meeting those difficulties than direct subsidies. Of course, you all know the history of subsidies under our form of Government; I think it is extremel}' difficult to make an equitable distribution of a subsidy. I do not see how it can.be done. In the next place, a subsidy is inflexible; you have to contract for a number of years with the steamship company. Suppose now that you had had a contract heretofore with a company running to South America, and there comes up this war and Ave want most of our business with Europe. How are you going to get around that? And, as a third objection to it, it is unstable ; that is, with a government by parties, one party gives a subsidy and the next party comes in and takes it away. That has been the history of this country, which everybody knows, and it is liable to be the history again. Another objection to a subsidy is that it is inefficient; it won't accomplish the thing to be done. Now I believe in the principles of this bill because its aim is to help business — the shipper instead of the shipowner. Now, what do we mean by business? I believe business, primarily and funda- mentally considered, is the production of the commodities necessary for the maintenance of the human race. On the other hand, trans- portation is a mere facility of business. For instance, take the great city of New York; take Broadway: Would anyone urge that Broad- way ought to be let out to a private corporation to run instead of being run by the city of New York? They would not argue it for a moment. Broadway is a facilit}^ of business, and for that reason provided free to business by the cit3^ And up in our State, a few years ago, we voted to tax ourselves a million dollars to build two trunk lines of dirt road, one running up on the Avest side around through the White jSIountains, and one down on the east side. Why did we do that? We did it because we considered transportatin a facility of business and we believed it would be a good investment, and it has proved a good investment. Now what does a ship do? A ship simply provides dry transporta- tion from one port to another. Suppose we had enough ships jammed together to make a bridge over the ocean, or suppose it were possible to build a pontoon bridge over the ocean, and suppose England had a bridge from Southampton to New York and Germany had one 582 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. from Bremen to South America, and suppose, further, that our busi- ness men of this country — the man who grows wheat, the man who grows cotton, the man who manufactures pig iron, and the man who makes cloth — suppose they all came to you and told you conditions were such they could not get their goods over those roads, those pon- toon bridges, in competition with England and Germany, and the question was up as to the Avay to do, and we decided to build bridges of our own, would you say a private corporation should build that system of pontoon bridges and control it rather than that the Gov- ernment shuld build and control it? We did not do so when we built the Panama Canal. You would say the Government ought to do it simply because on the ocean we meet the competition of foreign countries and we do not on land. Mr. Chairman, you said I should be brief, and those are, briefly, my remarks. If anybody wishes to ask me a question, of course, I am perfectly willing to answer; but I want it distinctly understood that I have none of the ambitions of a certain Irishman who was found standing undressed, with his eyes tightly closed, before a mirror, and he was asked what he was doing, and he said he was standing there because he wanted to see how he would look after he was dead. [Laugliter.] Mr. Edmonds. Mr. Chiirman, I want to ask the gentleman to ex- plain a little further why he said subsidies wevQ inflexible; what his reason is for saying that subsidies are inflexible. I think we might as well have that explained a little more fully. ]\Ir. Ivy. Yes. Because you can not apply it directly to the busi- ness to which you wish to apply it. Mr. Edmoxds. That is just what they do with a subsidy; if you wanted to start a steamship line to Brazil, you would give a subsidy to that line to Brazil, and therefore you would be giving it to the line you wanted to reach. Mr. Ivy. Yes; but suppose you had a port over here Avith which you were not doing nuich business, yet the possibilities are such that you wanted to develop business between that port and the United States; do you think a private owner is going there if it is going to cost a great deal? Mr. Edmonds. If you pay him a subsidy for hiui to run to that port, he will. Mr. Ivy. Yes; he is going there if you pay him enough, but it is so inelastic. Mr. Edimonds. You can make it as elastic as you please; it just depends on the contract that you draw with the company. jMr. Ivy. I do not believe a company is going to make a contract with you to ])ay them a certain amount to go into a certain port and then change and go to another port Avhich will cost a great deal more. Mr. Ed:>ionds. You mean, then, this bill, which is an indirect way of paying a subsidy, it is a better Avay than paying a direct subsidy? Mr! Ivy. Yes; I do; I think it is. But I am not afraid of the word " subsidy," if it would do the work; I do not object to the word, but the policy is bad. Mr. Edmonds, How about the suggestion made by the New York parties that we would equalize the difference in cost of running .steamers between other countries and this? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 583 Mr. Ivy. What is that but a subsidy ? ]\fr. En.MONDS. Well, what is this bill but a subsidy? Mr. Ivy. This bill provides a relief to the shipper; a subsidy is a bonus to the shipowner. Mr. Edmonds. Very well, but you are disguising it in this bill. Mr. Loud. This is a sugar-coated pill, that is all. Mr. Ed:monds. You say what is the use of disguising it; wiiat is the difference between disguising it in one way and in another; it does not make any difference, does it? Mr. Ivy. Yes; there is a difference. I think this is the most effective Ava.y. ]\fr. Saunders. You just regard this as a more effective subsidy than the other? i\Ir. Ivy. Yes; if you want to state it that way. That is a more effective aid to the shipper. INfr. ED^roNDS. Now, you stated that a subsidy was not elastic. A subsidy can he made just as elastic as you please, in the contract. Mr. Ivy. That is true. Mr. ED^ro^■DS. As a matter of fact, you can make an agreement with the man to whom you pay the subsidy, running a line of steamers, that his books should be oj^en to the Government and that the amount could be reduced from time to time if he was making a profit with his company. Is not that true? ]\rr. Ivy. You might ]xissibly find somebody who would do that. INIr. Edmonds. I do not think there would be any difficulty to find somebody to do it. I moan a man who would do that kind of thing if his company was subsidized, say. for $25,000 provided he would run a line and after he began to make money on that line would be perfectly willing to withdraw or reduce the subsidy — of course, in order to get the subsidy in the first place. Mr. Ivy. Yes; but then the Government would have to manage all of those things, and who is going to manage all of those changes; what machinery of the Government have you to do it? Mr. Edmonds. We can have a shipping board on that end of the line. Everybody agrees as to that: I do not think there is any ques- tion about that. The shipping board is given instructions, but how are you going to have elasticity in the operations conducted by the shipping board; that is the question. You believe in Government ownershi]:) of the transportation? ^Fr. Ivy. On the water. Mr. Edmonds. Not by rail? Mr. Ivy. No, sir : but on the water where we have to compete with foreign Governments. ISfr. Saunders. You suggested there would be no steamship line going to ports where it would not be profitable to go ; would not that be determined by the amount of subsidy, that the steamship line would go anywhere where it paid them to go? Mr. Ivy. Yes ; I had in mind myself that you can direct, you can turn to this board, the Government can turn to this board; and sup- pose you have an order for Valparaiso and you want to send 10.000 tons of steel rails and there is no ship; you can look after that, you have your own line without a royalt3^ Mr. Saunders. I say all those arguments for a subsidy are very acute, and I know all the arguments made against and every argu- 584 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. merit advanced in its defense. But I want to take those South American ports, which are generally taken as the subject of illus- tration, where it would not be possible for private capital to run lines under the present conditions, but by the use of a subsidy you can make it possible to go to those ports. Why does that not meet the very situation you presented? Mr. Ivy. Suppose it did. I simply say this is a more direct method of meeting that question, and a better one. Mr. Saunders. But that other does not fail to meet it. It is not that it lacks the flexibility you speak of, if you pay for what you get ; subsidy does not lack of flexibility. Mr. Ivy. I certainly can not agree with you. Mr. Saunders. Woidd it not provide the service in the ports at which you desired to touch? Mr. Ivy. Yes; but you fix it to those ports for a definite number of years. Mr. Saunders. Would it establish any lines? You do hot contem- plate the Government is going there and going to leave out ports on those lines? For instance, if a line running to ports in South America, because some particular man has a lot of freight that he wants to send to some port, we will say, in Peru. It would not take a vessel off of that line and to load it up with that particular cargo and send it to Peru. Is that a part of what you have in mind ? Mr. Ivy. I certainly do think it would be a part of Avhat I have in mind, if there were a possibility of building up a permanent business to Peru. Mr. Saunders. You have in mind some permanent service there: you are not sailing with a tramp ship, and 3'^ou would not turn to Peru and take a ship off of a local line to a port already served. You do not contemplate that would be good business? Mr. Ivy. I am certainly not going to desert one business for the sake of building up another ; but if we feel there is a business look- ing for us we should get more ships. Mr. Saunders. Very well; but could not that all be arranged for a company, with a subsidy, to put a few prospective ships on this line? Mr. Ivy. I say it could not be as expeditiously and effectively done as it would where you have one central board here looking after the whole matter and controlling the ships themselves, and not somebody else controlling the ships. Mr. Edmonds. Let me ask you a question right at that point. The Government owns a freight ship and it gets a cargo for Brazil, we will say, and in running on that voyage it has competition for the freights and makes a loss of $5,000. Wewill assume a cargo of grain or wheat or something else, whatever it may happen to be, and it makes a loss of $5,000. The taxpayers of this country pay that $5,000, do they not? Mr. Ivy. Yes. Mr. Edmonds. For the benefit of Avhom? Mr. Ivy. For the benefit of the business men in this country. Mr. Edmonds. For the benefit of the business men of the country? Mr. Ivy. Yes, sir. Mr. Edmonds. In other words, for the benefit of the individual man who makes that shipment? SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 585 Mr. Ivy. And the rest of the people who have allied industries connected with those people. It spreads out; it goes out. They are the more direct beneficiaries, but the entire business of the United States spreads out and benefits a great many people who are not connected with it directly. Mr. Saunders. That is what the high-tariff people used to argue. Mr. Ivy. We won't get off on the tariff. Mr. Saunders. But you are presenting a protective-tariff propo- sition. The Chairman. Yes; nobody ever contended a tariff was a direct benefit to the farmers, but the argument was that it established in- dustries and created a cargo and a larger demand for the farm products. So I would not think any protectionist would object to any argument along that line. Mr. Edmonds. I wanted to bring that out, because I notice that the Democratic Party while reducing the tariff are now trying to put a tariff on ships for the protection of the business man. I do not know whether it works out just in that way or not, but it is something along that line. Mr. Ivy. No ; there is no protection on ships, but we are undertak- ing to benefit a facility of commerce. Mr. Byrnes. You are trying to subsidize the commerce of the country instead of the steamships of the country? INIr. Ivy. There is a very great difference, and that is where the point of attack comes. There is no trouble to get patriotic American citizens who would absorb every dollar the Government would ap- propriate in the way of profits to them for operating ships. Let us not get off on the tariff question. I think we are all sincere in our efforts to do something to create better facilities for the extension of our commerce. Mr. Rodexberg. That will be troublesome enough this fall. Mr. Hardy. I would like to ask a few- questions along the line of subsidy. The gentleman testifying says this would be a subsidy, which is a very different idea from my idea of what a subsidy is. My idea of the definition of a subsidy is that it is a bonus given to a private individual to enable him to conduct a certain business with profit to himself. I do not understand that a public road built by the Government for the benefit of a community is a subsidy to the wagon driver who uses that road. Do you so understand it? Mr. Ivy. Referring to that definition of subsidy, the purpose of the subsidy is to benefit the shipowner. This bill is designed to benefit the shipper. Mr. Hardy. That is the purpose of the protectionist, but in prac- tice it is found when you give a subsidy to a private individual that it does not prevent him from fixing burdensome rates whenever he sees proper. Mr. Ivy. I agree with you entirely on that point. Mr. Hardy. Do you not think there is a growing fundamental business of the people to provide for public conveniences for the use of the public and not to give a certain individual or corporation a special bonus? Mr. Ivy. Certainly. Mr. Hardy. In purpose and in effect ? Mr. Ivy. Yes. 586 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Hardy. Now, then, if this is a subsidy, will you briefly try to give some reason why every advocate of a real subsidy is opposed to it? Mr. Ivy. Why the advocate of a real subsidy is opposed to it ? Mr. Hardy. Every man I ever saw who advocates real subsidy bitterly opposes this bill, and yet they claim this is a subsidy. Mr. Ivy. You have heard their arguments, have you not? Mr. Hardy. I think their arguments have been right across each other. One says this is a subsidy and we are in favor of a subsidy, and the other says this is a subsidy but we are opposed to it. Mr. Edmonds. I think I can answer it. Mr. Hardy. Wait one minute. All of us will get a chance to answer it when it comes to the argument. The Chairman. Let us get the view of this witness, and then we can get our fingers into it later. Mr. Hardy. Then I want to Imow another thing; if the Govern- ment, instead of owning the Panama Steamship Line had let that to a private individual, with the understanding "we will subsidize you," do 3'ou think it would have been true, as it is true, that that is the only line in America that has not raised its freight rates from 400 to 1,000 per cent during this war? Mr. Ivy. No, I do not. Mr. Hardy. That testimony was giveji here by a witness who has no interest in this bill, that that is the only line he found where the rates were still the same. Mr. Ivy. Yes. Mr. Hardy. Another thing. The American-Hawaiian Line, as I understand, from such representatiA'es who have spoken for it here, seem to be apparently very antagonistic to this line. If we had a line like the Panama Steamship Line to Hawaii is it not only pos- sible, but absolutely true, that freight rates there would have re- mained somewhat reasonable from America — if there had been a Government line such as is contemplated by this bill ? Mr. Ivy. I think that would have been the effect of it, sir. Mr. Hardy. Is it not true that a line established under this bill here and under the control of the Government board will be a stabilizer of rates? Mr. Ivy. That is my contention about it. Mr. Hardy. And is not that one of the great functions so essen- tially needed by our people here to keep down the amount of the rates that are robbing the people unnecessarily? Mr. Ivy. Absolutely. And the business man wants to know as a certainty what he can depend on. Mr. Hardy. Has any opponent of subsidy ever opposed, so far as you know, the Government going on to provide the necessary public conveniences for the general public use, such as deepening our harbors and digging the canal — have any advocates of subsidy ever opposed those things? Mr. Ivy. You will have to address that remark to them, sir. Mr. Hardy. It was a contention sharply maintained when we tried to establish the Interstate Commerce Commission that when the Government dictated the rates that was not far from taking over the property. In principle it was contended that to fix the rates of a transportation company was to confiscate and to take charge of SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 587 their property. Now, that is all agreed to, that the Government should do it. " And if the Government has to support the losses of a private institution, is it not in all reason better for the Govern- ment to take the private institution and get the profits, if there are any? Is it not a one-sided thing to ask the Government to stand all of the losses, but not to get any profits ? Mr. Ivy. Yes: it is. Mr. Hardy. Is not the subsidist's idea that the Government must stand for all the loss? JNIr. Ivy. Yes. Mr. Hardy. And have no opportunity to get a profit ? Mr. Ivy. Yes. Mr. Hardy. That is another distinction between this and a sub- sidy. Then I want to ask another question: With the rates soaring now from 400 to 1.000 per cent over normal, what man would have the cheek to ask this (Government to supplement those high rates with a subsidy to an individual? Do you think anybody would come before this committee and Congress and ask for a subsidy now. when a ship pays for itself in two vovages, frequently? Mr. Ivy. I should not think he could do it with a straight face. Mr. Hardy. With those things patent to us. a man advocating a subsidv is flying in the face of the evidence under existing business conditions, and which we see are likely to be existing for two or three yoai'S after this war. ISIr. Ivy. That is my opinion of it, sir. Mr. Hardy. Will not tonnage, in your opinion, be scarcer during this wfa- and after this war for a long time? ISIr. Ivy. I think if this submarine war continues it will. Mr. Hardy. Won't it continue to be very scarce to us with the other Governments forbidding their ships to take any other registry than their own? Mr. Ivy. Yes, sir. Mr. Saunders. The question of Judge Hardy suggests to me one or two questions. If this war continues and tonnage gets scarcer and profits continue very high, all the conditions will be created under which private capital without Government ownership or any- thing else will seek this field, will it not? Mr. Ivy. Well, we have been a long time waiting for it. Mr. Saunders. I understand: but heretofore they never have had these great opportunities of profit they have now; and having in mind the conditions that he has suggested in some of his questions, and if they are to continue, as you say, the destruction of tonnage by submarines, when the war is over we will have only a limited amount of tonnage in the world and an opportunity for very great profit and an opportunity of diversification for private capital to go into the world trade. Won't that present a condition under which pri- vate capital will have an attractive and inviting field, which it will enter without Government help, subsidy, or anything else? Mr. Ivy. It would if private capital in this country were free; but private capital is so tied up — you can ask any man who has gone about it for the purpose of starting a steamship line if capital is not all tied up in certain directions — and if there is a suspicion the line that is going to be built will compete with some other line they will say good-by quickly. 588 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. The Chairman. I think you have hit the nail on the head there. Mr. Saunders. Let me see if I understand that proposition. You tell this committee, in this condition we have been talking about, of the continuance of those opportunities, existing prices, which I gather from the newspapers, that capital is taking advantage of all over the country to-day, and I see that the private yards are being choked by orders for new vessels — you tell us that we have not got in this countrj?^ capital that will take advantage of such opportuni- ties as that; and if they will take advantage of it now, why won't they take advantage of it when the war is over? Mr. Ivy. It has been the experience of men who have tried to go out for this purpose, and they have found that to be the case. Mr. Saunders. Why is it, just at this particular time, they are going into it ? Because we have had witnesses before the committee tell about the building of ship after ship, going into these yards, to go into the deep-sea trade? Mr. Ivy. Yes. Of course, the primary reason is because of the abnormal profits in shipping now. You have no guaranty that those profits are going to continue. Mr. Saunders. Very well; you are eliminating a bright future, which is a matter of conclusion. Then, if you eliminate from the future those enormous profits we are speaking of now, then we must legislate with respect to those conditions at the present time. Mr. Ivy. We want to legislate only for normal conditions. Mr. Saunders. Very well; we will get back to normal conditions, leaving out at this time the great profits. It would be robbery, or worse than robbery, for anybody to expect a subsidy while we are getting back to normal conditions; and under the normal conditions which you have in mind with respect to the future business, will you tell me where there is anything here in this bill of profits for the Government, as suggested by one of the questions of my friend, Judge Hardy, under the very idea that we are going to operate a line in quarters where it is not profitable for private capital to oper- ate, and when the Government begins to find it profitable the Gov- ernment is going to withdraw? Mr. Ivy. State your question again. Mr. Saunders. I say. has it not been suggested in connection with this whole project — in fact, it was suggested in the message of Presi- dent Wilson — that we operate those lines to quarters where they are not profitable for private capital to operate them? Mr. Ivy. Yes. Mr. Saunders. And when the operation became profitable that the Government was to withdraw and turn over the lines to private capital ? Mr. Ivy. You say that was the suggestion? Mr. Saunders. Yes. Has not that been all along the idea in con- nection with the operation of this measure? Mr. Ivy. I can not say that it has been the complete idea. Mr. Saunders. Was not that suggested by the President? Mr. Ivy. I think, as I recall it^ that it was, that that idea was suggested. Mr. Saunders. Has there been any suggestion that the Govern- ment should go into this enterprise for the purpose of reaping profits SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 589 that would come in a direct v^ay from the conduct of the business? On the contrary, has it not always been the idea that the Government should go into this enterprise for the purpose of establishing a busi- ness out of which the whole public can derive a profit, and not with the vieAv of the (irovernment deriving a profit from the operation of a special enterprise? Mr, Ivy. I think that is the general idea. Mr. Saunders. Then the Government will not go into this for the purpose of reaping a profit in connection with the immediate opera- tion of the vessel, but that this advantage, generally, will operate ultimately as a benefit for the whole public, f Mr. Ivy. Exactly as we built the roads in New Hampshire. Mr. Saunders. That is a very different sort of situation from the * contemplated operation by the Government in which they are to reap profits from a single line or single ship. I can agree to that propo- sition. Mr. Ivy. I go further, sir. I should say it would be entirely proper for the Government to operate a line at a loss that was going to '^ benefit any large number of American business men. ' Mr. Saunders. Yes; that was the thought I was pressing. But then they are not catering to profits in the operation of that line. The Chairman, The Government might operate a line without profit, and if the rates were reasonable and afforded means of ex- tending our commerce, it would be a desirable thing to do, would it not? Mr. Ivy. I think so, sir. The Chairman. Private enterprise goes into shipping just like it goes into the manufacturing business, for profit. That is the only incentive, is it not? Mr. Ivy. Yes, sir. The Chairman. If these lines in any trade could be operated without loss and at the same time afford American industries, agri- culture and mining, facilities for the extension of our commerce and the carrying of our over-seas trade, that would be a good investment for the people, would it not? Mr. Ivy. I think it would, sir. The Chairman. But it would leave out the element of profit. Mr. Ivy. Yes, sir. Mr. Saunders. That is all I have been pressing; but there is not any chance of the Government operating this business to get the profits that somebody else would get. The Chairman. I would not want the Government to do that. Mr. Hardy. That line would not be profitable for the moment, maybe, but it might make the profit in some places and suffer a loss in others, as the post office is operated. As I understand, on the first-class mail they make a profit, and on the other classes they do not. Mr. Ivy. I do not see that it would not be proper for the Govern- ment to make a profit. Mr. Hardy. One line may make a profit and the other a loss ; but on the wdiole the Government does not care to make a profit, just so it serves the public interests. Mr. Ivy. Yes. 32910—16 38 590 SHIPPIIS'G BOAED, NAVAL AUXILIAEY, AND MEECHAXT MAEINE. Mr. Edmonds. In your investigation of shipping interests in the country, did you look into the coastwise traffic? Mr. Ivy. To a certain extent I had to look into it, because I knew at that time we could only utilize coastwise vessels. Mr. Edmonds. Do you think the present provisions of our laws were made to preserve the coastwise traffic to our American ships ? Mr. Ivy. If you wall limit your definition, I will say yes — if you limit it to coastwise ; but if you apply it to interocean, I will say no. Mr. Edmonds. What do you mean by interocean? Mr. Ivy. I say from the Pacific Ocean to the Atlantic Avhen they come through the canal. I say we should be free to i^se any ships from Pacific ports to Atlantic ports through the canal. Mr. Edmonds. The same way with Haw-aii? Mr. Ivy. Yes, sir. Mr. Edmonds. And the same way with Porto Rico? Mr. Ivy. Yes, sir. Mr. Edmonds. You believe that ought to be open, then, to all nations? Mr. Ivy. To use any ships. Mr. Edmonds. All nations ? Mr. Ivy. Yes. INIr. Edmonds. Any nation; any foreign ship? Mr. Ivy. I do; because that is not the definition of coastwise. Coastwise is along one coast — along the Atlantic coast and along the Pacific coast. Mr. Hardy. You used the expression that a subsidy was inflexible. It is a leading question, but Mr. Saunders said we wanted to get back to normal conditions and make no movement applicable to these present abnormal conditions. Can the legislature fail to take cognizance of the fact that we have those abnormal conditions, and, as a subsidy is inflexible, the very fact that if you pass a law giving a subsidy of so much a mile it would apply in abnormal conditions like the present, when it was not needed, as well as in normal condi- tions, when it is claimed to be needed? Mr. Ivy. I do not think there is any doubt about that. Mr. Hardy. To-day if we had a subsidy by law passed some years ago every one of those vessels would be drawing a subsidy while they are charging such high rates as they are to-day. Mr. Ivy. I think that is a fact. Mr. Saunders. Have you not lost sight of the fact that this scheme would provide for the regulation of rates which would pre- vent that? The Chairman. We are paying to-day about $735,000 as a subsidy for American Line ships, the Neiv York, the St. Paid, the Philadet- phia, and the St. Louis, at just the same rates paid in normal times, and at the same time they are making these enormous profits by vir- tue of the increase in the ocean freights. That is simply an illustra- tion of the fact. Mr. Edinionds. You might add, Mr. Chairman, that they are the only American ships in which you can go to Europe to-day. The Chairman. Oh, yes; that is some sort of satisfaction — that we have some American ships. But that illustrates the point. That is all I wished to draw out. SHIPPING BOAED, NAVAL AUXILIARY, AND MEECHANT MAEINE. 591 Mr. Sau^sders. Yes; but if you had a Government subsidy, with- out the provisions of this bill to control the rates, you have decidedly the same situation. The Chairman. I am in favor of the provisions of this bill look- ing to the regulation of rates. I think one of the fundamental ob- jections heretofore to any form of subsidy has been that along with it there has been no suggestion of the regulation and supervision of rates. Mr. Ivy. I just want to make one other statement here. It does not bear directly on this bill, but it does show what is coming. I have a friend who is very intimately connected in England, and he told me two days ago that he had information from there that all of the German prisoners and all of the camps in England had been ordered through Germany to studv the Spanish language, and they were conducting schools in Spanish in all of those camps in Eng- land ; and that seems to me to be a pretty good index that the Ger- mans are looking toward South America. The Chairman. If Ave were smart we would be qualifying our consular agents to go into the different countries of the world and study those conditions, and, as a necessary adjunct to their equip- ment, they ought to understand their language. STATEMENT OF CAPT. J. F. BLAINE, OF SEATTLE, WASH., ASSISTANT MANAGER, IN CHARGE OF THE OPERATIONS OF THE PACIFIC COAST STEAMSHIP CO. The Chairman. What is your business? Capt. Blaine. I am assistant manager in charge of operations of the Pacific Coast Steamshii) Co. The Chairman. Between what ports does it operate? Capt. Blaine. "We are operating IT ships, covering the Pacific coast at practically every port, and to Alaska, and we have one ship under charter from the east coast to South America; and we have had two, but have one now, under charter running from the west coast to South America. But, Mr. Chairman. I have no author- ity whatever to speak here as the representative of the Pacific Coast Steamship Co., although I am an official. I am here on other busi- ness, and happened to be in Washington. I am the accredited repre- sentative of the Merchants' Exchange of Seattle, and on the matter I wish to speak The Chairman. It is entirely proper to understand your business affiliations. Now, this Pacific Coast Steamship Co. — who are the officers of it ; who is its president ? Capt. Blaine. Mr. J. C. Ford, of No. 10 Wall Street, New York. The Chairman. ^Vhere is the company organized ? Capt. Blaine. That is the Pacific Coast Co. The Pacific Coast Co. is the holding company of the Pacific Coast Steamship Co., which is a California corporation. The Chairman. Proceed. Capt. Blaine. I have not anything to say for or against the bill in question, but, together with some others who are familiar with the shipping business — ^I might say I have spent a period in the steamboat -inspection service besides being a shipmaster — we have 592 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. gotten together and compiled what I might call a bill that, we think, will be a great benefit — I am safe in saying that — to the mer- chant marine of the United States. A bread statement, and one often used but seldom explained, is that our laws are antiquated. It is not so much the antiquated law^s as it is the interpretation of some of those laws. We believe in a shipping board. We believe in that shipping board having the authority to make laws consistent wdth safety to meet the conditions of competitive traffic with a foreign flag. The Chairman. You understand that Congress can not delegate the power to the shipping board to make laws, do you not? Capt. Blaine. Not to make the laws; I mean to make the rules. Congress has delegated, by section 4405, to the board of supervising inspectors the powder to make rules which, when signed by the Secre- tary, have the force of law. The Chairman. Yes; under the law the}^ are authorized to make regulations. Capt. Blaine. Yes; and many of those regulations are a menace and expense to American shipping. I can prove that, sir, in two in- stances. We had a ship from South America to Tacoma, operating in opposition to a Norwegian steamer, and we got into San Francisco on an expired certificate, and the inspectors demanded that we should discharge the cargo in order that it conld be inspected; and the Nor- wegian steamer came along, discharged its part of the cargo at San Francisco, and proceeded on the voyage. In the case of our steamer, she w^as held up there for some time. The rules as constituted now discriminate against American ship- ping, and that is a broad statement that I can prove. Mr. Hardy. I wish you would make that very clear. We want to find what discriminations are practiced against our ships in our ports in favor of foreign ships. Capt. Blaine. I am willing to answer any question on that, sir. Mr. Hardy. That is wdiat I wanted to get ; that is, if there is any rule of our inspection service practiced by our officials or required by our laws that discriminates in favor of the foreign vessel against the American vessel. If so, I want to change it. It has never been shown us heretofore nor has anybody complained before this. Mr. Curry. When we are compelled to discharge cargo for in- spection purposes, that is a rule of the department, is it not? Capt. Blaine. That is administrative rule. Mr. Curry. That is an administrative rule? Capt. Blaine. Yes, sir; a narrow interpretation of the law. Mr. Curry. That is simply a rule that was put in operation by the department, and the American ship is compelled to discharge its cargo for inspection purposes? Capt. Blaine. Yes, sir. Mr. Curry. And that costs the American ships how much, in per- centage, more than the foreign ships to be inspected? Capt. Blaine. Why, the foreign cargo ship in a very great degree, if accepted by the classification societies, is practically free from inspection. Mr. Curry. They are inspected in the home port anywav, are they not? Capt. Blaine. All vessels are inspected in the home ports. SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 593 Mr. Curry. And when the time comes for you to be inspected they will send an inspector down where you happen to be — they will send an inspector there and he would make you discharge your cargo and reload? Capt. Blaine. Yes, sir; even if it was a cargo in transit. Mr. Curry. That is one rule that is more expensive to American ships than to foreign ships? Capt. Blaine. Yes. Mr. Curry. Now, on the proposition of measurement; under the rules they measure as net tonnage everything they can possibly meas- ure as net tonnage, do they not? Capt. Blaine. Yes ; I know that to be true. Mr. Curry. The same law governs the measurement of American shipping and British shipping, but under the British rules they meas- ure out everything they can, giving the ship that much advantage in port dues, in canal dues, and matters of that kind ? Capt. Blaine. That is not so much the law as it is the interpre- tation. Mr. Curry. I did not say it was the law; there is no law^ at all. The proposition of law is identical, but because of the rules under the law that the American ship is placed at a disadvantage in the measurement? Capt. Blaine. Yes, sir; decidedly *so. Mr. Curry. That simply is something that the supervising inspec- tor or the department should change. They could change the rule if they wanted to ? e found beginning on page 375 of hear- ings.) Mr. Edmonds, That Avas a couple of years ago, was it not, Mr. Chairman. The Chairman. Yes; that is true. Mr. Baker. T found among these lists some that were German interned ships. I did not think it was wise even to consider the suggestion of buying them. You know that matter was fully investi- gated by Senator Walsh's committee innnediately after the German cruisers came in. SUJPPING BOAIU), NAVAL AUXILIARY, AND MERCHANT MARINE. 635 The CjiAiitMAN. Those ships were all for sale before Mr. Morse's company sequestrated the balance of the ships. Mr. Baker. They were all sold long ago. Mr. Curry. Even though (Termany would sell her interned ships, which she would not, we would not be authorized and justified under international law in buying them, and the transfer would not be recognized as legal. Mr. Baker. I beg your pardon? Mr. Curry. I sa}' even if Germany would sell her interned ships, which she will not Mr. Baker. Yes. Mr. Curry. We would not, under international law, be justified in buying them, and Great Britain, France, and other countries would not recognize the transfer as legal in time of war. Mr. Baker. Certainly not. You could not expect them to do it, and I am surprised that any man should think such a thing was considered for a moment. Mr. Curry. A transfer of that kind must occur at least 30 days before the declaration of war to be recognized. Mr. Baker. Certainly. That was accepted, I think, by all the nations except England. They did not sign that, did they? Mr. Curry. And it must be a bona fide transfer. Mr. Baker. But England did not sign it. The Chairman. The French law is much more rigid than the English law in that regard. (Thereupon, at 4 o'clock p. m., the hearing was adjourned until Thursday, March 2. 1916, at 10 o'clock a. m.) CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on the JVIerchant Marine and Fisheries, House of Representatives, Thursday, March 2, 1916. The committee met at 10 o'clock a. m., Hon. Joshua W. Alexander (chairman) presiding. Mr. Edmonds. Mr. Chairman, I have here a protest by the Phila- delphia Maritime Exchange against the passage of H. R. 10500. which I would like to have incorporated in the record. (The paper above referred to is as follows:) The Philadelphia Maritime IiIxchange. PROTEST against THE PASSAGE OF RILL H. R. lOr.OO, PROVIDING FOR GOVERNMENT OWNERSHIP AND OPERATION OF MERCHANT VESSELS. To the lionorahJe the Senate and House of RrpreKentatives of the United StatcH in Congress assernhled: This memorial of tlie Pliiladelphia Maritime Exchange respectfully repre- sents: That a bill (H. R. 10.5001 having for its object the encouragement, de- velopment, and creation of a naval auxiliary aiifl naval reserve and a merchant marine to meet the re(|uirements of the commerce of the United States with its territories and possessions and with foreign countries, and for other purposes, is at the present time being considered in the Congress of the United States. This bill propo.ses the creation and establishment of a national shipping board to consist of the Secretary of the Navy, the Secretary of Commerce, and three civilians, one of whom shall be chairman of the board, to be appointed by the President for terms of two, four, and six years, respectively. The shipping^ board so con.stituted is to have authority to build or charter vessels suitable for naval auxiliaries or Army transports, with a view to chartering, leasing, or selling such vessels to citizens of the United States de- siring to use them in the transportation of the commerce of the United States with foreign countries or with the territories and possessions of the United States, and for this purpose the Secretary of the Treasury is authorized to sell available bonds of an issue previously authorized by Congress in connection with the construction of the Panama Canal, in an amount not exceeding .$50,000,000. The bill carries authority for the President to transfer to the board of naval auxiliaries for charter, lease, or sale to private parties, to be used either in the coastwise or over-sea trade. Authority is conveyed to the board to regulate the operation of all corpora- tions, firms, and individuals engaged as common carriers in the transportation of passengers and property by water between ports of the United States, and not entirely within the limits of a single State, and between the United States and foreign countries, as well as between the United States and its Terri- tories and possessions, and to determine and prescribe rates and charges for the transportation of said passengers and property ; and it further gives to the board authority to prescribe preferential rates, if in its judgment such rates are desirable to carry out the purpose of the act. 637 32910—16 41 638 SHTPriNG BOARD, NAVAL AUXII.IARV, AND MERCHANT MAHINE. Section 10 of the bill prohibits the transportation of passengers and property by water between ports of the United States not entirely within the limits of a" single State, or between the United States and foreign countries or between the United States and its territories and possessions, without tirst obtaining a license from the board. The Philadelphia Maritime Exchange urgently i)rotests against the proposed measure being enacted into law for the following reasons : First. The proposed legislation would place the Government in direct and unfair competition with a large number of American citizens who, with invest- ments of many millions of dollars, are engaged in a business essentially private in character and readily controllable both by competition and governmental regulation. No private enterprise however capably and economically admin- istered, where the management is accountable to its stockholders, can possibly compete with the Government in the same industry where there is no such accountability. Second. It is a well established fact that the principal foreign nations have prohibited the sale of vessels operating under their flags, and it is a m;itter of general knowledge that American shipyards have already made contracts which will tax their capacity to the utmost for the next two or three years. These conditions alone would render abortive for an indefinite period the advantages which are sought to be accomplished by the proposed legislation. Third. The effect of the regulation of rates governing ocean-borne traffic by the proposed shipping board would not only be the elimination of 'American vessels from compc^tition with those of foreign registry in the movement of merchandise to and from American ports, but by the certain refusal of foreign owners to take out the prescribed license would leave the products of our own country without the means of transportation to the markets of the world. The creation of a shipping board with such plenary powers, without acceptance of the same regulation by foreign vessels, would sound the death knell of American shipping. Fourth. Even if the Government were now able to acquire vessels in the building, selling, or cliartering markets the competition with private enterprise thus created, plus the serious handicap with which the American vessel owner already has to contend, would mean the early extinction of the American ship- owner, with the consequent unwarranted sacrifice of individual effort and capital. Fifth. It must be clear to your honorable bodies that there exists no lack of enterprise or willingness on the part of the American people to invest their capital in almost unlimited volume where there is reasonal)le promise of a fair return on the investment. With regard to the upbuilding of our merchant marine, tljerefore, Congress should encourage, not discourage, the first-named trait in our national character, and support the second by enacting legislation which will not only remove the serious obstacles caused by existing laws but create cojiditions Mhich will place American vessels in a position of reasonable competition with those of other nations. Sixth. When this relief is given private enterprise and capital may be de- pended upon to promptly and liberally lend themselves to the creation of a merchant marine capable of amply supplying the demands of connnerce, as well as the requirements of the Government for military and naval purposes. Seventli. Tlie Philadelphia Maritime p]xchange, while strongly advocating the upbuilding of the merchant marine of the United States, regards the pro- visions of bill H. R. 10500 as dangerous in the extreme, and is of the opinion that the ownership and operation by the Government of merchant vessels is a backward rather than a forward step, and will not only discourage but destroy all private initiative in the direction so earnestly desired. The Philadelphia Maritime Exchange, By J. S. W. HoLTON, President. Attest : [seal.] S. R. Shearwood, President. Philadelphia, March 1, 1916. The Chairman. Mr. Slechta, of New York, is here this morning and has expressed a wish to be heard. Give the stenographer your name, address, and business connections, Mr. Slechta. SHIPPING BOAED, NAVAL AUXILIARY^ AND MERCHANT MARINE. 639 STATEMENT OF MR. JOSEPH J. SLECHTA, OF NEW YORK, NEW YORK AGENT FOR THE BRAZILIAN STEAMSHIP CO. Mr. Slechta, Joseph J. Slechta. My steamship connection is the Brazilian Steamship Co. of New York, of the Lloyd-Brazileiro. 1 also was connected a short time ago with Holt & Co., exporters of flour. Mr. Greece. Is this Lloyd-Brazileiro owned by Brazil? Mr. Slechta. It is owned by the Federal Government of Brazil «nd operated directly by the Federal Government. Mr. Greene. Between New York and Mr. Sleclita. No, sir; the principal business service of the com- pany is in the coastwise trade of Brazil, between the various ports of Brazil. They operate approximately 50 to 55 vessels in the coastwise service. But for the past eight years they have operated this special service to New York and New Orleans. The Chairman. How many vessels have you? Mr. Slechta. The number in the service varies. Previous to the war we had five fruit vessels in the New York trade and we were supplementing that with a considerable number of chartered vessels, chartered by the month or the year, as the case might be. Mr. Edmonds. Has this always been a Government-owned line? Mr. Slechta. No, sir. Mr. Edmonds. How long has it been a Government-owned line? Mr. Slechta. It has been heavil}'- subsidized for— well, every since it was organized. Mr. Bruckner. How long ago was that, Mr. Slechta? When was it organized? Mr. Slechta. It dates back in one form or another for pretty nearh' 40 years. Mr. Edmonds. It was originally a private line, subsidized? Mr. Slechta. Yes, sir. Mr. Edmonds. How long since the Government took it over? Mr. Slechta. It took it over all together in 1912. Mr. Edmonds. In 1912; just three or four years ago? Mr. Slechta. Yes, sir. Mr. Edmonds. Why did they take it over? Mr. Slechta. Because they found they had gotten so much money in it that they owned it. Mr. RowE. They had loaned it money? Mr. Slechta, Yes, sir. Mr. Greene. You mean it was subsidized so heavily? Mr. Slechta. Yes, sir; it was subsidized so heavily; and then in order to continue its operation the Government was forced to loan so much money that eventually it found the assets of the company were only sufficient to pay what they had loaned. Mr. Edmonds. As a matter of fact, in 1912 the privately-owned line found itself up against it and were willing to sell — they had 56 ships. I believe, at that time ? Mr. Slechta. Yes, sir. Mr, Edmonds. And they were willing to sell to anybody; is that true ? It was for sale ? Mr. Slechta, It was for sale. 640 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Edmonds. And the Government found it could not do without this line and they did not want the service discontinued and took it over ? Mr. Slechta. As a matter of fact the Government was perfectly willing to sell it under their own conditions and terms. Mr. Edmonds. You don't mean at the present time. Mr. Slechta. At any time — not at that time, but shortly after and on another occasion. The Chairman. What were the conditions to which you have re- ferred ? Mr. Slechta. In the first place, the navigation laws of Brazil and the conditions as to management, seamen, and so forth, are so onerous that it is difficult to operate a line at a profit. And it is very doubt- ful whether any foreign capital would take the line and operate it under those conditions, especially on the coast of Brazil. And, of course, that was one of the conditions, that the line must be operated under the existing laws on the coast of Brazil. The Chairman. In the coastwise trade? Mr. Slechta. Yes, sir. • The Chairman. These burdens were imposed by the Government itself on its own line ? Mr. Slechta. Practically so. That is what it amounts to. The Chair3Ian. How many vessels were there, did you say, that were owned by this private company — what is the name of the com- pany? Mr. Slechta. The name of the company was the same as it is now. The style of the company is Lloyd-Brazileiro. The Chairman. How long had it lieen operated liy the private company ? Mr. Slechta. Up to 1912. I do not know just exactly how^ long the company has been operated. As I sa.y. it dates l;ack between 30 and 40 years. The Chair:man. Did they pay subsidies on their shipping in the coastwise trade? Mr. Slechta. Yes, sir. The Chairman. In what way and to what extent? Mr. Slechta. They gave them an annual credit, amounting, as I recall it, to something like $200,000 a year. I would not be at all certain about the amount. I was never concerned with it particu- larly. The Chairman. $200,000 a year — and how many vessels? Mr. Slechta. Large and small, there were, as I say. between 50 and 60. Mr. Greene. As I understood 3'ou, they started with a smaller number. Mr. Slechta. Well, a long ways back. The Chairman. Were those mail ships or mail and cargo vessels? Mr. Slechta. Vessels of every description; river steamers, coast- wise steamers for cargo purposes only, others that were very largely for passenger accommodations and others part cargo and part pas- senger. The Chairman. What is the length of the coast line of Brazil? Mr. Slechta. The coast line of Brazil is considerably over 5,000 miles — nearly 6,000 miles. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 641 The Chairman. And these vessels cover what ports? Mr. Slechta. All of them. The Chairman. They operate on a coast line of about 5,000 miles. Mr. Slechta. Yes, sir; in addition to which The Chairman. And entered and cleared from about how many ports in the coastwise trade? Mr. Slechta. Coast and river ports, very close to 100. The Chairman. What rivers do they navigate? Mr, Slechta. The Amazon and the Paraguay, largely. That is about all. The Chairman. And the subsidies amounted to about $200,000 a year? Mr. Slechta. Yes. I would not be sure about the amount of that subsidy. The Chairman. Did that include mail pay to those vessels? Mr. Slechta. The Government of Brazil does not pay any mail subsidy at all. They pay nothing for the mail service of Brazil. The Chairman. Do they cany the mails free? Mr. Slechta. Yes, sir. They consider that certain privileges which mail vessels get in the various ports are in compensation for carrying the mails. The Chairman. What are they? Mr. Slechta. The vessels carrying the Brazilian mail get what they call tlie packet rights. I do nf)t know that thev can be valued in dollars and cents exactly. They are shipping privileges that they do not get unless they carry the nail; in other words, a reduction of some charges. The Chairman. Do you know what those are? Mr. Slechta. No ; I do not. As I say, I have nothing to do with these services; my business is entirely the New York end of it. The Chairman. Then you are not familiar with the conditions of the service in the coastwise trade you spoke of? Mr. Slechta. Only so far as it concerns our own New York Line. The Chairman. Of course you can make any statement to the committee you desire. I do not know just what you want to say, but you have requested to be heard. Mr. Slechta. I just returned from a visit through Brazil, having spent the better part of two months in various parts of Brazil and, being interested in an export business as well as in the steamship business. I thought possibly the committee might care to ask me questions and possibly have any information I may be able to give them concerning Brazilian business in particular and South Ameri- can business in general. Personally I have always had the feeling that not only in connection with this movement now being agitated with reference to a merchant marine, but the foreign trade and in general South American matters have been very much overem- phasized. The Chairman. In what respect? Do you mean to say there is no trade to South America worth anything? Mr. Slechta. No; I do not mean there is none; but I mean the possibilities of increasing the trade are very much overestimated. The Chairman. By whom? Mr. Slechta. Bv the United States. 642 SHlPriNG EOAKD, NAVAL AUXILIARY^ AND MERCHANT MAltlNE. Mr. RoDENBERG. What is the total foreign trade of South America, approximately? It is about $2,000,000,000, is it not? Mr. Slechta. The total foreign trade, exports and imports, from all countries in South America? Mr. RoDENBERG. Yes. Mr. Slechta. Yes; approximately $2,000,000,000. Mr. RoDENBERG. What per cent of that do we get now ? Mr. Slecpita. We get about 30 per cent. Br. Bruckner. How much? Mr. Slechta. Thirty per cent. Mr. Rodenberg. No; I thought we were getting less than 10 per cent. Mr. Edmonds. You mean, we buy from them? Mr. Rodenberg. Yes. Mr. Slechta. Yes; if you figure it that way. Of course, our exports to South America amount to about 10 per cent of the exports and imports, but amount to a whole lot more than 10 per cent of their imports. Mr. Edmonds. You want to talk of the Brazilian trade. We buy about 250,000 tons of coffee a year from Brazil, do we not, in this country ? Mr. Slechta. I can give the Brazilian figures, approximately. Our imports from Brazil amount prettv closely to $100,000,000. They vary from $80,000,000 to $100,000,000.' Mr. Edmonds. We buy $100,000,000 worth of coffee? Mr. Slechta. Coffee and rubber. Mi'. Edmonds. The rubber was twenty-five to thirty. Mr. Slechta. More than twenty-five; from "$80,000,000 to $120,000,000. INIr. Edmonds. And that 200,000 tons of coffee and 15.000 to 20,000 tons of rubber is carried in what kinds of ships? Mr. Slechta. All kinds of ships. Mr. Edmonds. Mostly English? Mr. Slechta. I would not say that at the present time. It is largely carried in our ships. Mr. Edmonds. You mean in your Lloyd-Brazilian ships? Mr. Slechta. Yes. Mr. Greene. What competition do you meet with there? Mr. Slechta. In the steamship business? Mr. Greene. Yes; you sa}^ the Government owns this line. What competition do you have? Mr. Slechta. In normal times we have competition with the regu- larly established lines — they are all British lines — and formerly with the Hamburg-American Line. Mr. Rodenberg. Following up the chairman's suggestion there, I would like to have you explain what you mean by saying that the importance of the trade to South America is overemphasized? Mr. Slechta. I will repeat, in a brief way, exactly what I said. In the early stages of the present war the papers and magazines and organizations were going wild over the possibilities of capturing, as they called it, the trade of South America. And I had a series of articles — a very small series — in the Journal of Commerce of New York, in which I said, as early as the latter part of August of the year that the war began, that the war would bring us practically no SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. 643 advantages in trade whatever with South America. And the facts have borne out the correctness of my prediction. The trade with Brazil for 1915, except for the fact that their imports from Europe were very much reduced, necessarily, was smaller than our trade in 1912 or 1913, I am not sure which. But immediately before the war Mr. Edmonds. What were the imports from Brazil in 1915? Mr. Slechta. It is difficult for me to give you these figures accu- rately from memory, but in 1915 our im])orts from Brazil were larger because we took a larger share of their hides and cocoa than formerly. Mr. Edmonds. Our imports in 1911 Avere $100,867,184, according to a chart I have here and which was prepared about that time. ?*Ir. Slechta. Yes. Mr. Edmonds. What were the exports from the United States in 1915? Mr. Slechta. The exports from the United States in 1915 have been figured at $84,000,000. Mr. Edmonds. They were $27,150,672 in 1911. Mr. Slechta. Yes ; but they were more in 1912 and 1913. Mr. RoDENBEKG. More in 1912 than in 1915? Mr. Slechta. Yes; they were more. In one of those years our exports to Brazil were larger than in the vear immediately closed — 1915. Mr. Rodenbekg. That is rather surprising. And you say the ex- ports from European countries to Brazil had fallen off naturally on account of the war, and it has not increased our exports to Brazil. Mr. Slechta. No, sir. Mr. Rodexberg. The imports to the United States from Brazil were larger in 1915, and the exports were less in 1915 than they were in 1912? Mr. Slechta. Yes, sir. Mr. Rowe. That is surprising. Mr. Greene. Where do you get your material that you used to get from here? You say the business was shut off across the water on account of the war. Mr. Slechta. The importation in Brazil of a great many things has been curtailed; in the first place, by the financial stringency caused by the war and the inability of the consumer to buy Avhat he wanted. Mr. Greene. That is, you have had financial trouble there? Mr. Slechta. I would not say we have had financial trouble, but simply a reduced capacity to purchase. The Chairman. That is true in Brazil? Mr. Slechta. It is true in almost all parts of South America. The Chairman. Yes; they have not the same ability to purchase. Mr. Slechta. It was inevitable as a result of the war, because their financial arrangements have always been with European countries. The financial investments of European countries are very, very great. The Chairman. Verj'^ well; we are projecting branch banks to South America ourselves now with a view to meeting the conditions, are we not? Mr. Slechta. Yes; but it takes more than the establishment of banks. 644 SHIPPING BOAED, NAVAI. AUXILIARY, AND MERCHANT MARINE, The Chairman. That is just one moans. Mr. Slechta. It means the intending investor can get a better line of investments in South America than he can efse where, of which the investor in the United States to-day is not convinced. The Chairman. How about the facilities of transportation then as compared with now ; that is, the facilities before the war compared with 1915? Mr. Slechta. The facilities have been very largely disarranged and disrupted there, the same as they have in all parts of the world. The Chairman. That is another element. Then what is the dif- ference in the freight rates? Mr. Slechta. The freight rates are very much higher. The Chairman. Would that affect the commerce between this country and South America ? In the first instance, you have their limited ability to buy on account of the general financial stringency and then the lack of tonnage and the enormously increased freight rates — that would all more or less demoralize commerce, would it not? Mr. Slechta. There is no question about it. Mr. Greene. Does this company that is owned by the Government get very largely increased rates? Mr. Slechta. I was just coming to that. I wanted to give you some figures which will show you with reference to that very com- pany. In 1915 — I took these figures from a certified accountant's report on our books for 1915 — we had 37 sailings of cargo steamers which had been berthed in Xew York. They received general cargo and the sailings were for Brazilian ports. The gross receipts for general cargo amounted to $1,513,000. The Chairman. For freight? Mr. Slechta. Yes. The total tonnage of general cargo carried was approximately 150,000 tons, Mr. Ed:sionds. Exports from New York? Mr. Slechta. Exports from New Yoi-k. During that same period we chartered outside vessels Mr. Hardy. What year was that? Mr. Slechta. 1915. During that same period. 1915, we dispatched to Brazil, to the several Brazilian ports, a total of 57 cargoes of coal for our own uses in Brazil. In other Avords. that was merchan- dizing business which our New York office did for the Lloyd- Brazileiro. The Chairman. While you are agent for the Lloyd-Brazileiro you also Mr. Slechta (interposing). Act as purchasing agent for that coal and other things that we buy for them. Mr. En?.ioJsDs. Wliere had vou purchased this coal before — Eng- land? ISIr. Slechta. From England. There were 57 cargoes of coal largely on American vessels, aggregating a total of 155,000 tons. The Chairman. What did that coal cost you here at tidewater? Mr. Slechta. That coal cost us in the neighborhood of $2.80 a ton. The Chairman. And what did it cost delivered in Brazil? Mr. Slechta. Approximately $10. . SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 645 The Chairman. What did that coal cost yon in normal times, before the war? Mr. Slechta. In normal times they bought English coal, Cardif coal, at an average price of probably $7.50 a ton. The Chairman. You mean delivered? Mr. Slechta. Delivered. That represents a price of about $3.50 to $4 a ton, f. o. b. in the Welch port and of course a relatively much reduced freight rate. The Chairman. What did that cost delivered on board ship in England? Mr. Slechta. That is what I say— $3.50 to $4 a ton. The Chairman. A difference of $1. Mr. Slechta. At least 50 cents. The Chairman. In the cost. Mr. Slechta. The Cardif coal costs at least 50 cents more; it usu- ally costs a dollar a ton more. The Chairman. And what is the difference in the distance? Mr. Slechta. The distance is approximately the same. But if you will pardon me. the point I was making is this, if we deduct from the total of the freight we collect in forwarding cargo from New York, which I said w^as about a million and a half, the expense of handling that cargo, stevedoring in Brazilian ports, our dock expenses and expenses of administration and other port charges, incidental ex- penses, it left us approximately $1,200,000. Mr. Greene. In profit? Mr. Slechta. No; gross receipts, not in profit — not counting the cost of operating the steamers at all, but simply less the cost of hand- ling the cargo and additional expenses incident upon handling gen- eral cargo as compared with handling coal. Furthermore, those 37 sailings The Chairman. You are figuring the coal delivered in Brazil for the steamers engaged in the coastwise service? Mr. Slechta. Yes, sir. The point I want to make is this The Chairman. I want you to take the vessels operating from New York to Brazil. Mr. Slechta. That is what I am doing. But please excuse me a moment. I Avant to make a point that by operating our vessels from New York for the benefit of the American exporter, we have really lost money, although Me have taken advantage of every possible op- portunity to increase rates. The Chairman. Give us the figures on that. Mr. Slechta. That is just what I am doing. Mr. Edmonds. Do you mean in 1915? Mr. Slechta. In 1915. Mr. Edmonds. You lost money ? Mr. Slechta. On the face of it. Mr. Edmonds. The ships made money? Mr. Slechta. The ships made money ; but by using the same ves- sels for carrying our own coal w^e would have made more money. The Chairman. That is, when you had to pay $10 a ton for coal? Mr. Slechta. Exactly. Mr. RowE. That is because the freight rates are very high ? Mr. Slechta. Exactly. Mr. RowE. You had to charter ships? 646 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Slechta. Yes, sir. Mr. Greene. You owned the vessels? Mr. Slechta. Yes, sir. Mr. Greene. Why couldn't you run the vessels at cheap rates and reduce the rates? That is the argument for this bill, that they will reduce the rates. Mr. Slechta. But wouldn't it look silly for 10 or a dozen vessels for general cargo reducing rates on that cargo and reducing their earnings and then to charter the other fellow's vessels and pay high rates on coal? That is exactly what would happen. It would pay us better to use those vessels for carrying coal and to tell the Ameri- can exporter to go ahead and get tonnage where he pleased. The Chairman. Why didn't you? Mr. Slechta. Simply because we wanted to continue the operation of the steamship line. As a matter of fact, as I pointed out, the steamship officials in Brazil have very forcibly pointed out to me it would pay us better to carry our own coal and to take off the vessels engaged in the export service. In fact, we have two steamers up here now with coffee which I am instructed to load out with coal and not general cargo. The Chairman. Because you have no coal in Brazil and you are compelled to import coal to operate your line there ? Mr. Slechta. Yes, sir. Mr. Edmonds. When this line was running in normal timt;s, in 1912 and 1913, could you get plenty of cargoes out of New York for Brazil ? Mr. Slechta. Yes; at very low rates of freight, and considering the high cost of operating the steamers it was not a paying propo- sition. Mr. Edmonds. Did you ever take any lower rate than you were compelled to, to carry them? Mr. Slechta. No. Mr. Edmonds. You had to take the same as other people? Mr. Slechta. We had to take the same as other people, and that is what we are doing now. Mr. Edmonds. And that is why the steamship line got into diffi- culty, because the freight rates were so low they couldn't make any money ? Mr. Slechta. Oh, no: the New York service wns always a pay- ing proposition ; it was coastAvise. Mr. Edmonds. Then why abandon your New York service? Mr, Slechta. We did not abandon it. Mr. Edmonds. You intended to. Mr. Slechta. No. Mr. Edmonds. " The line to New York, instituted in 1907, has been discontinued." Here is the British report for 1913. Mr. Slechta. That British report is not correct, then. I do not know anvthing about it; but the line has not been discontinued since .it was founded in 190G or 1907. Mr. Greene. You talk about the high cost of running a vessel? Mr. Slechta. Yes, sir. Mr. Greene. Was it a higher cost to run them under Government control than private control ? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 647 Mr. Slechta. No. Mr. Greene. What was the great cost of running the vessel? Mr. Slechta. I do not understand what you mean. Mr. Greene. You said that the cost of running the vessel w^as so great and yet you say it was not a greater cost than it was under private enterprise. What I want to find out is what advantage was the fact that the Government owned it. The Government took it be- cause they could not help it, because it had loaned so much money on it they were compelled to take it. Mr. Slechta. Exactly. Mr. Greene. Now, what advantage has the Government operation been over that of the private people? Mr. Slechta. Principally in the matter of administration in Brazil in the coastwise business, where they have been able to make economical changes in the administration of the line and to save money in different ways. The cost of operating the steamers so far as the size of the crew is concerned has not changed. You are handicapped in that way very much the same in the American mer- chant marine. They carry more crew and a more expensive crew than any other country in the world. Mr. Grp:ene. And you are giving low freights then at a low expense to the coastwise trade to encourage that and to keep it up, and in running those lines losing money, on your line? Mr. Slechta. The Brazilian Government is compelled to main- tain, in some form or other, a coastwise service, because of the fact that the transportation is so dependent upon the ocean carrying. Railroads are comparatively few and the development of Brazil, thus far, has been largely along the coast for the carrying of pas- sengers and cargo dependent very largely upon its coastwise and ocean carriers. Mr. Hardy. Gentlemen, I do not know liow the rest of this com- mittee feels, but the present witness to my mind has muddled the thing so that I can not see the point he is driving at, and 1 would like to have him state clearly what it is, and to give us some idea of the point he is trying to make. And maybe if we will let him proceed he can make it clear. Mr. Rowe. Go ahead with your statement. Mr. Edmonds. Pie has just been to Brazil and came here to gi^ e us some idea of South American commerce. INIr. Hardy. I understand he wants to give us some idea of South American trade, but what is the point? Mr. Slechta. The point I wanted to make is, was to explain in the first place that we are maintaining a line of vessels in the in- terests of the American exporters and importers, particularly the exporters, when as a matter of fact it would pay us better to devote those vessels entirely to the carrying of coal for our own use in Brazil. And in view of the emphasis which has been placed upon the importance of putting additional carriers under the manage- ment and control of the Government, or otherwise, into the Bra- zilian service, I wanted to point out that no matter how it is done, in the face of the fact that the transportation of coal costs us so much, because of conditions that exist all over the world in the matter of the demand for tonnage, we would necessarily be com- 648 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. pelled to withdraw those vessels which we now operate in the carry- ing of general cargo frcm New York and use them for the carrying of our own coal from Norfolk. The Chairman. Suppose you did. Mr. Slechta. That is the point I wanted to make in that respect. Well, suppose we did The Chairman. You have to have coal or else you have to suspend vour coastwise service, and if somebody else does not render the service, then you have to render it yourself? Mr. kSlechta. Surely. But if we cany it in our own vessels, that means the facilities amounting in 1915 to 150,000 tons of general cargo from New York Avould be withdrawn. The Chairman. Unless somebody else supplied the service. ]\Ir. Slechta. Exactly. We are perfectly willing they should do so. Mr. Greene. As I understand it, they have been taken care of m your generosity out of the treasury of the Brazilian Government? Mr. Slechta. No; I do not claim that much. The Chairman. He does not claim any such thing as that. Mr. Slechta. I claim, in the interest of the American trade and the Brazilian trade as well, we have maintained this line because we wanted to see the trade developed, and we have continued to go on and develop it in the face of the fact that it would pay us equally well to operate those boats simph^ as our own carriers^for carrying our own cargo. The Chairman. You do not mean to say you are engaged now in a work of benevolence for American commerce? Mr. vSlechta. Not at all. A proposition loolring to development is certainly a desirable thing: at the same time it means we are maintaining those vessels in that trade from which later Ave hope to benefit. The Chairman. What you mean to say is this, that you could operate those ships at this particular time in carrying coal from Norfolk to Brazil at a greater profit than in the carrying of gen- eral merchandise from New York? Mr. Slechta. Yes. sir. Mr. Hadley. I understood you to say you are able to do this by reason of Brazilian administration? Mr. Slechta. No; not at all. Mr. Hadley. You spoke of Brazilian administration. I do not understand what you mean by Brazilian operation in the connection you used it. Mr. Slechta. I simpl}^ referred to the fact that the administration of our enterprise in Brazil has frequently insisted that it would be advantageous if our New York office would use tlie carriers which they send up here loaded with coffee and other products from Bra- zil to carry their own coal back to Brazil, coal that we buy here for them, instead of using them for loading general cargo for exporters back of our line. INIr. Edmonds. To get the matter straight, this line was gotten together "by the Brazilian Government and subsidized heavily for vears. and in 1912 it found it was being subsidized to the tune of $908,000 a year SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 649 The Chairman. $200,000 he said. Mr. Edmonds. Two hundred thousand for the New York line alone. $908,220 (p. 27, report of the Commissioner of Navigation, 1909) is what the line got annually. Mr. Hardy. We are going after another angle ; I w ant to get this business proposition. Mr. Rodenberg. That is here; he is going to give that right here, Mr. Hardy. Mr. Edmojjds. The company was built for the benefit of Brazilian shippers entirely for coastwise traffic along the coast of Brazil, where they have no railroad communication and it is absolutely necessary to have communication by water. After the line got in difficulty in 1912 the Government took it over, because it was absolutely necessary for this line to run in their coastwise traffic. It was discussed in the newspapers. If I remember right, the New York Line was bringing 250,000 tons of coffee and rubber to this country every year — fifty vessels of 5,000 tons each. They found they could not bring their coffee here, that being in the hands of English shippers. They con- tinued to run the new line, and at one time, in 1913, the entire line, composed of 53 steamers, was for sale under certain restrictions, and the sale was published in the New York and Philadelphia news- papers — not as an advertisement, but as a news item. Mr. Sleciita. As a matter of fact, there were advertisements pub- lished also. Mr. Edmonds. T do not remember them, but I remember it being spoken of in the newspapers. . Now. that puts the matter so we know exactly what the line was. The Chairman. Why not let Mr. Slechta make his statement? Mr. RoDENBERG. I think that will clarify the situation. Mr. Slechta. I am very glad to have my memory refreshed on that point. I have not concerned myself particularly with it, because it has not been my business to do so. The thing I particularly wanted to emphasize in this connection, and the reason I brought up this comparison of the two businesses in which we are engaged — the taking of freight and the collecting, of course, of all the freight we can get for export to Brazil, and the carrying of our own coal, illustrates very well the fact that we, as well as a great many other people, are confronted with the tremen- dous demands for tonnage, not so much in the South American busi- ness as in the ammunition trade to Europe. It is in the trans- Atlantic service where the rates are being made, and the owner who has a vessel available which he might conceivably charter for busi- ness to South America says : I can get so much for her in the trans-Atlantic business; you can have her, if you want her, for Brazilian or Argentine trade, and we will figure off a reasonable amount less, conditioned upon the amount of insurance which I must pay on sending that vessel to Europe. Very well. Now, here is a line like the Lamport & Holt, a British line, for instance, which owns their own vessels. They are not obliged, you say, to increase their rates to Brazil. Nor are we, be- cause we own our vessels also. But the British Government takes a large part of the Lamport & Holt tonnage, and they do not pay the Lamport & Holt Steamship Co. the current rates on that tonnage; 650 SHIPPJXG BOAKD^ NAVAL AUXILIARY, AND MERCHANT MARINE. they pay them a certain proportion above normal rates, with the result that the Lamport & Holt, in view of the insurance expense and gen- erally increased cost of operation due to the war, feel comperied, naturally, to get all they can in the way of freights. In other words, they take advantage of the law of supply and demand to get what is the market rate on the ^'essels which remain in their service. The Chairman. In other words, they reap whatever diminution there may be in their profits on vessels commandeered by the Gov- ernment by increasing rates in the trade to South America. Mr. Slechta. Wherever they operate them, whether South Amer- ica or China. Mr. Hardy. If I understand you, your proposition is that the trans- Atlantic trade, particularly the munitions trade, has so absorbed all the tonnage that it has resulted in a rise of rates all over the world. Mr. Slechta. It has absolutely been the factor which determines the rate upon tonnage to-day. Mr. Hardy. As a matter of fact, you do not think any shipping line, regardless of the question of whether their vessels are comman- deered by their Government, would fail to take advantage of the law of supply and demand to charge all the traffic will bear? Mr. Slechta. No, sir: I know they will. Mr. Hardy. They will do that anyhow? Mr. Slechta. Yes, sir ; they will. Mr. Hardy. But it is a fact that the trans- Atlantic trade, espe- cially the munitions trade, has so absorbed the cargo capacity of the shipping lines of the world that everywhere rates have been raised on account of the law of supply and demand? Mr. Slechta. Yes, sir. Let me give you an illustration : We had a steamer which we were fortunate enough to have chartered in the early stages of the war, which cost us $18,000 a month. She just went off of her charter with us yesterday. Unfortunateh^ we did not have her for a longer period. We paid $18,000 a month. To-day she starts to load for a port in France, under all sorts of restrictions made by the owners in the charter, and they will get for one voyage .vhich takes less than a month, including loading and unloading (because it only takes 10 days to load and discharge the vessel and the voyage is less than 20 days), $145,000. We had the same vessel for $18,000 a month up to yesterday. Mr. Hardy. In other words, the cargo man raises, the freight man raises, and everybody raises as soon as they can. Mr. Slechta. There is nothing in the world, gentlemen, in the way of business facilities for transportation or anything else, which is so absolutely subservient to the laws of supply and demand as ocean transportation facilities. Mr. Hardy, And therefore the question is until we get a larger supply of tonnage we may expect balloon rates. Mr. Slechta. Absolutely; and it does not make any difference whether they are under the American flag, the flag of China, or any other flag, until we get the tonnage the rates will be high. Mr. Hardy. I understand you to say you operate a Government- controlled line? Mr. Slechta. Yes. sir. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 651 Mr. Hardy. And you see no reason why it can not be as cheaply operated and why it is not as cheaply operated as it would l)e if operated by a private concern? Mr. Slechta. Please don't draw any inference — I am an Ameri- can before I am anj'thing else. Mr. Hardv. I understood you to make that answer just now. Mr. Slechta. Not quite. Please do not draw any inference as to the possibility of operating a steamship line under the laws of the Government, from what anything else does, as far as my experience is concerned. Mr. Hardy. I am not drawing an inference; I want tlie facts. Mr. Slechta. I will give you the facts, if you want the facts. It is perfectly true that the Brazilian Government is to-day operating the Lloyd-Brazileiro much better than it was ever operated before; but private business c(»nditions — conditions under the domination of private interests, and especially considering the subsidy, which was paid by Brazil to a private corporation or joint stock company, under which the Lloyd-Brazileiro was operated — were so utterly bad that the Government could not very well help but improve it. Mr. Hardy. In other words, the Government tried subsidy, and finally took the ships? Mr. Slechta. Absolutel3^ Mr. Greene. You do not figure at all on these vessels which you own for a percentage of profit, do you? You just take your ordinary running expenses and do not figure any profit on your capital in- vested or an3^thing else, do you ? Mr. Slechta. I could not say about it. I have nothing to do with the administration. Mr. Greene. You ought to know about it, oughtn't you ? Mr. Slechta. I do not know because I am agent of the line in New York, and it is my business to load steamers, get the best cargo I can, the best freights, and to run the New York end of it as eco- nomically as possible. Mr. Eodenberg. You do not know how much the Government lost in its operation prior to this increased demand? Mr. Slechta. No ; I do not. Mr. Eodenberg. Do you know whether it lost more than the sub- sidy that they had been giving or not ? Mr. Slechta. I know they still owe a very, very large amount, which is included in the funded debt of Brazil to English capitalists. Mr. Hardy. That involves their whole valorization scheme, what it made and what it lost on that, and this line run in connection with it. Mr. Slechta. No; the valorization scheme never had anything to do with our company. The Chairman. Tell us, if you are familiar with that, about their valorization scheme. Mr. Slechta. I am familiar with it, but that is rather a far call. I would be very glad to do so if it would be of interest to you, but it has no relation to this question. The Chairman. You say it does not have any direct connection with this subject? Mr. Slechta. No, sir. 652 SHIPPING BOARD, NAVAF. AUXTLIARV, AND MERCHANT MARINE, The Chairman. The other clay somebody suggested that it might. Mr. Slechta. I do not see how. Reference was made liere by Judge Hardy to the fact that the Lloyd-Brazileiro insisted on re- taining ships in the service because of the coffee exports. As a matter of fact, up to the time of the w ar, because of the combination of British and other ships engaged in the service in competition with us, we were unable to carry coffee at all. The Chairman. On account of their deferred rebate system? Mr, Slechta. Absolutely. Mr. RowE. Do you get a complete load each way? jVIr. Slechta. We do now ; yes. Mr. Rowe. In normal times? Mr. Slechta. In normal times. Our boats were always able to go down to Brazil loaded, but they came back very largely einpt}'. Mr. Hardy. Largely because you were not allowed to haul coffee? Mr. Slechta. Xot because w^e were not allowed to, but because the shippers were tied up with other contracts. Mr. Hardy. That is what I meant by " not allowed to." Mr. Slechta. Yes; and although we offered to carry the coffee at half the rates of the so-called " foreign '' lines w^e could not get the cargo. NoW', the shoe is on the other foot. The Chairman. Our investigation showed that very fact and that IS the reason w'e barred rebates in bill 450, and I hope we will in this bill. Mr. Slechta. As a matter of fact you know. Judge Alexander, that the United States District Court practically turned down that proposition of prohibiting rebates in a hearing that extended some- thing over a year in Xew York. It w-as a suit against the Prince Line et al., in which they practically supported the contention of those lines that they had a right to pay those rebates. Mr. Rowe. Why don't you tie them up now in a rebate agreement the same as the other companies did? They have to ship by you to- day everything they ha^ e for the LTnited States. Mr. Slechta. We are satisfied to take the advantage we have, and the fact that we have neutral steamers that pay very much lower rates of insurance than the English steamers, and consequently get a preference. The fact of the matter is we are not in a position to do that because we have no service to Europe, and all of our competitors have an interest at least in lines that have a service to Europe as well as to the United States. And as I explained in this committee room once before, and also in the hearings in New York before the district court in the suit referred to, most of the large coffee shippers, with the exception of Arbuckle & Co., ship to Europe as well as to the United States, and if they are not willing to enter into a rebate agreement with the steamship company, owner, or operator, he says : Very well, we will carry your coffee at a low rate or you cau ship it by any- body else you want to, and we will give you the benefit of the minimum rate to the United States ; but we won't give you any room at all to Europe. Mr. Hardy, That decision you spoke of was a decision made by the court largely because there is no law governing or attempting to affect the question? Mr. Slechta. I should assume so : yes, sir. SHIPPING BOAED, NAVAL AUXILIARY, AND MEBCHANT MARINE. 653 Mr. Edmonds. That is rather a peculiar situation, is it not, for the Government to finance the coffee crop and then it can not turn it over to its own steamship line? Mr. Slechta. Yes; a very peculiar situation. I have repeatedly done everything I possibl}' could to make the Government see the importance of giving its OAvn line certain benefits which will give it cargo. Mr. Edmoisds. And besides financing the crop they let the steamers come up here and lose money on the trip rather than give them the cargo. Mr. Slechta, It is a peculiar situation; I agree with you. Mr. Curry. Do the other lines carr}^ cheaper than you do? Mr. Slechta. No; that is just the point. The rates on coffee iniiaediately preceding the war were 50 cents a bag. We had offered for more than a year to carry it far 25 cents and we could not get it. Mr. Curry. That is a peculiar situation where the government controls the coffee crop, oAvns the steamship line, and the steamship line will carry the coffee cheaper than private corporations. Mr. Slechta. There are very good reasons. Mr. Curry, There must be very good reasons. Mr. Slechta. There are good reasons. In the first place, the Brazilian Government is very much, I would not say afraid, but they are dependent upon the facilities of the larger steamship com- panies running from Europe for a good many things — passenger accommodations and good connections with Portugal and Spain, and all that sort of thing. And they are afraid really of reprisals. Mr. Curry, Those ships from Spain and Portugal are not going to run from Brazil empty? Mr. Slechta, No; but they threaten, at least, to withdraw the facilities, that they won't call at Brazil, but will go to Argentina and China. Mr. Curry. It seems to me a government that has the energy to go ahead and have a valorization S3'stem on the coffee crop and that says to an outsider you can not come in and plant coffee, that says to the man who wants to plant coffee he shall not increase his crop, that he can only plant a coffee plantation of a certain limited size, that takes care of the surplus, and that owns its own steamship line which will practically carry the coffee cheaper, will permit a bluff of that kind to be run on it by a steamship company. That does not look hardly reasonable; there must be something else. Mr. Hardy, It does not look reasonable, but, notwithstanding, it is the fact. Mr. Slechta. It does not look reasonable, but it is the fact. Mr. Edmonds. Does not the Brazilian Government have contracts with these ether lines by which it pays some subsidy? Mr. Slechta, No, sir. Mr. Edmonds. How about the Italian line? Mr. Slechta. With the Italian line there is a contract of very recent date with reference to some immigration service, I believe. It has nothing to do with cargo. Mr. Edmonds. " A contract signed in September, 1912, between the Brazilian Federal Government and certain Italian steamship lines for a freight and passenger service between Italy and a number of 32910—16 42 654 SHIPPING BOARD, XAVAI. AUXILIARY, AND MERCHANT MARINE. Brazilian ports; the subsidy for the service being fixed at approxi- mately $20,000 per round voyage, two-thirds to be paid by the Federal Government and one-third by the Government of San Paulo." Mr. Sleciita. Yes; I recall that. Mr. Hadley. From what are .you reading? Mr. Edmonds. From a British Government report on bounties and subsidies published in 1913. Mr. Slechta. As a matter of fact, the Italian lines had nothing to do with the case in point, because they do not carry coffee; they do not go to the ports where the}^ have coffee. Mr. Edmonds. Why was the Government of San Paulo to pay one- third? Mr. Slechta. Simply because they wanted the immigrants. Mr. CuRRY'. Could you explain this valorization scheme in regard to coffee in relation to shipping I Mr. Slechta. I do not think it has any relation to shipping. Mr. Curry. It seems to me to have with its own Government- owned line. Mr. Slechta. No, sir. As far as I know — I was in Brazil at that time; I was American consular officer in Kio and followed that ques- tion very closel3% indeed so closely that 1 nearly lost my job on account of the article I wrote on coffee valorization. Mr. Curry. Is it not a fact that most of the money in the valoriza- tion scheme is English money and some United States money? Mr. Slechta. Yes; about one-fifth of it is Government money, I believe, or was, and it is four-fifths European. And that is purely a matter of financing; it has nothing to do with the general policy of the Government in undertaking the valorization scheme. Mr. CuRRY\ I do not suppose that the valorization scheme has any relation to shipping put down on a piece of paper, but it seems to ha^e some influence. Mr. Slechta. I do not know of any way in which it can be con- nected with the matter of shipping. The Brazilian Government; that is, the Government principally of the State of San Paulo, and the Federal Government, said " We will buy this coffee," and they did. Thev bought up to nearly 9,000,000 bags of coffee of the crop year of 1908. The Chairman. Hoav many pounds would that be; how^ many pounds in a bag? Mr. Slechta. One hundred and thirtv-two. It was approximately 9,000.000 bags of coffee. When it started it accepted only 3.000,000 and it found it had no effect in any way so far as controlling the price and they had to buy up to 9,000,000 pounds. That made so gigantic a proposition and involved so iriuch money that before long they had to have recourse to foreign means and to get the Federal Government to back them up in it. . Mr. Hardy'. Then they had to negotiate with private capitalists, the Morgans of this country and European countries, to carry the business very largely? Mr. Slechta. Exactly. Mr. Hardy". And they sold bonds at 5 per cent and agreed not to keep them outstanding only a certain length of time and will probably wind up with a loss. SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 655 Mr. Slechta. Any undue interference on the part of the Govern- ment with the laws of supply and demand, I believe, except in rare mstances, in any such scheme is doomed to failure. Mr. Hardy. But you rather admit that the conference lines inter- fered considerably with the matter of freights and tonnage. i\Ir. Slechta. I say, in exceptional instances. It is 'a question there whether they have interfered with it. The Chairman. The immediate effect of this agreement between the conference lines was to affect the price. You say you offered to carry the coffee for 25 cents a sack? Mr. Slechta. Yes. The Chairman. And they were paying the conference lines 50 cents a sack. That was a direct violation of the law of supply and demand. Mr. Slechta. Fifty cents a sack is about the right price that it ought to be worth to carry it, and it is Avorth that. Mr. Curry. But, still, the Brazilian Government, that owned its own line, was not in a position to take advantage of that low rate. There must be a cause there, somewhere. Mr: Slechta. It could not go to the shipper and say, " Here, you have got to give us the trade; we can compel you to." The only way to do is to put certain restrictions upon the other shipping companies, and say, " Here, we won't let you come into the. port." and allow absolute freedom in shipping the cargo. Mr. Curry. As far as that is concerned, it Icoks to me that practi- cally the capital of Europe controls the coffee business and the ship- ping business of Brazil, notwithstanding Brazil owns its own ship- ping lines. For instance, there just comes to my mind the proposi- tion of the Argentine Republic which owns its water front, and it is supposed to be a public utility : but the Argentine Republic can not do anything with its water front, for the reason it is financed and developed by British capital, the same as its railroads are financed and developed by British capital and the bonds are owned by British capital. Mr. Slechta. Quite true. Mr. Curry. And there was a contract between the Argentine Re- public and the bondholders that whenever the Argentine Government thinks it can do better, it is free to do so ; but before the Government does so, it has to take up those bonds. And as it has not the money and can not get the money to take up the bonds, because it is so tied up down there, although they own the water front, the British ship- ping interests have absolute control of it, and they have control of the railroads of the Argentina. The Chairman. Is there anything further from this Avitness? Mr. Slechta. I do not care to take up any more of your time. Mr. Curry, I would like to ask if the Brazilian Government still wants to sell its ships? Mr. Slechta. No, sir. Mr. Curry. Not until after this Avar is over? Mr. Slechta. The point is, they found they could not dispose of them under the restrictions they placed upon any proposed possible purchaser. Mr. Curry. They are rather old ships noAv, anyway. 656 SHIPPING BOARD, NAVAL AUXILIARY", AND MERCHANT MARINE. Mr. Slechta. It is not so much that. The ships can be repaired, and any ship has its price, whether it is old or new. Mr. Curry. Now it has. Mr. Slechta. It has at any time. It is essentialy a question of price, whether on account of the restrictions a tentative purchaser was willing to pay the Government's price — in the last instance, at least. And they were not willing to submit to those conditions and to the terms and restrictions which the Government would place upon the purchaser. And finding that out, the Government, so far as its administration at present is concerned, has decided to retain the line entirely. As a matter of fact, while I was in Rio, just a short time ago, a bill w^as presented in Congress authorizing the ex- ecutive to dispose of the line, but it never came to a second reading. Mr. Curry. Was it a paying investment before the war? Mr. Slechta. Immediately before the war the company was being placed gradually upon a very much better basis. So far as the coast- wise service is concerned, it has very little Telation to the conditions abroad, any more than our own coastwise service. At the present time it is true that in certain lines of trade the rates have been in- creased on the coast here: but in general they have not. In Brazil they have not at all; the rates are just the same as they were before the war, because it is monopolized. Mr. Greene. Do I unders^.and you that these terminals and serv- ices in Brazil are* owned by foreign governments — the British Gov- ernment, for instance? ]Mr. Slechta. No; I did not sa}^ that. They are, as a matter of fact, in most places — not necessarily foreign capital. The dock facilities in all of those ports, which are modern dock facilities, are partially owned under the control of the Government. INIr. Greene. But they are not^ — let us say, for instance, that a Government line should be established, or that the United States Government should establish lines here. AVould they have free access to these terminals? Mr. Slechta. They are free to anybody who will pay the price. Mr. Curry. Is the price the same ? Mr, Slechta. The same to everybody except Brazilian mail lines. They have a. certain advantage. Mr. Edmonds. You have not said anything at all about the regu- lation of our rates in this bill. Have you read those regulations over ? Mr. Slechta. Yes; I have read those provisions in the bill. Mr. Edmonds. Have you anything at all to suggest in connection with those provisions? Mr. Slechta. I do not feel competent to discuss the feasibility of putting in such povisions in the bill ; but I do think it would be a very difficult thing to carry out, and I feel it would discourage for- eign capital from carrying on transportation facilities. I think it would bring us reprisals from foreign countries. Th§ Chairman. We could not prevent abuses? Mr. Slechta. Not necessarily that; but, for instance, at such a time as this, take our own case. If the Government were to step in and say " Here, you can not increase your rates now," simply be- cause the demand for tonnage has so increased we would be forced to withdraw our service, that is all. SHIPPING BOAED, NAVAL AUXILIAKY, AND MERCHANT MARINE. 657 The Chairman. Do you suppose a shipping board, created under the terms of this bill, would not have as much sense and discretion as a steamship agent ? Mr. Slechta. Naturally they would not look at the thing from the same point of view. If this shipping board is to have power The CiiAiR-^iAN. You mean they would pursue a policy that would divorce and deii}^ the American shipper of a service by forcing valu- able tonnage out of the trade? Mr. Slechta. I am not assuming anything of the sort ; no. But I simply point out the possibility of it ; that is all. The Chairman. We can imagine a great many things that might ensue if people would not exercise ordinary common sense in business. Mr. Slechta. The thing I want particularly to emphasize is, that it seems a very difficult thing to do. The Chairman. I agree with 3^ou. Mr. Slechta. Our rates are changing constantly. The Chairman. Do you think there ought to be discrimination be- tween' shippers? Mr. Slechta. No. sir; I do not. I believe in regulation along that line. The Chairman. Do you think it ought to be prevented? Mr. Slechta. I think so. The Chairman. Do you think the deferred rebate system should be prohibited? Mr. Slechta. The deferred rebate system, as far as exports are concerned, is prohibited now. The Chair:man. Very well; should it not be prohibited to any ves- sels entering or leaving American ports if it operates to the disad- vantage of our own freight? Mr. Slechta. Yes: I think that too would be very difficult. The Chairman. That is one of the powers this board might exer- cise under the provisions of section 9. INIr. Greene. We ought to have the gentleman tell us about it. You say that would be difficult. Tell us what the difficulties are. 'Mr. Slechta. I merely mentioned that it would be a difficult thing in my opinion, because I do not know enough about it to be abso- luteh^ certain, But on my recent trip to Brazil, I was told that one line operating from a certain country to Brazilian ports pays certain of its largest shippers regular rebates and it is clone in this way: This particular line has its home office in London and there is no contract existing; nothing in writing to show what those particular shippers may expect or have a right to, but every six months there is a check passed from the London office through a bank (it does not disclose, naturally, the identity of the person who makes the deposit with the bank) to those shippers. Mr Hardy. That is the old process that used to be used with the cattlemen shipping car loads of cattle on the railroads. Mr. Slechta. Absolutely. Mr. Hardy. It took a great deal of trouble to break it up, but we finally did break it up. Mr. Slechta. But here you have of necessity the investigations in foreign countries. Mr. Hardy. Oh, I admit the difficulty is greater because the field is wider and the evidence is a little more difficult to get. 658 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Slechta. Yes; absolutely. Mr. Hardy. But, if under our laws, we find a man in Brazil who ships coffee to London, and that man is tied down by an agreement that they will hold deferred rebates on his shipments to London so as to prevent him from securing some desirable carrier to New York, we have got to get at it in some way or else confess our inability at- tached to the whole question. Is not that about it ? Mr. Slechta. I am perfectly willing to concede and to emphasize the importance of such legislation, but that does not prevent me from expressing my views as to the difficult}^ of doing it. The CHAiR:\rAN. We agree with you that it is difficult. But aside from how this commerce shall be carried, if we are going to promote our foreign commerce we have to do all we can to protect the Amer- ican shipper in that regard, must we not? Mr. Slechta. Yes; I think so. The Chairman. Is there any objection to clothing this shipping board with power to do that as far as they may? Mr. Slechta. I have no views to express on it as far as being op- posed to it. Mr. Edmonds. One of the reasons for this bill, as I understand it, was to bring down the freight rates. Mr. Slechta. Yes. Mr. Edmonds, If any attempt was made by this board at the pres- ent day to bring down freight rates it would simplj" result in the tonnage going from our country and being used in some other serv- ice, would it not? ]\Ir. Slechta. Absolutely; that is my opinion. Mr. Edmonds. Mr. Baker, in his book, states that we should have a maximlim freight rate and the board should be alloAved to make a minimum freight rate underneath it, which I presume is the under- standing of the framers of this bill. Therefore the board would set the maximum freight rate and, in special cases, would make a mini- mum rate. Now, if we are going to bring down freight rates the board necessarily would have to make that freight rate very much below the exorbitant freight rate that is being made to-day, and nat- urally the tonnage would then go in other lines and would not come to our ports at all. The Chairman. I assume this committee in any legislation it pro- poses along that line would undertake to carry out, as nearly as they may, the recommendations in our report in the Sixty-third Congress. I assume that would be our wish, because I believe those recommen- dation are sound. To go to work and undertake to limit the power of the board specifically, in every possible direction, would be unwise in my judg- ment. Mr. Slechta. Speaking of the control of freight rates in any way, in so far as reducing them is concerned, let me cite an illustration that may possibly illustrate to you the result that such control might have in some cases. One of our competitors in the Brazilian service at the present time is the United States Steel Corporation, because they run a subsidiary line which they call the United States & Brazil ■ Steamship Co. Recently they have been diverting such steamers as they could charter, and two of their steamers have been chartered SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 659 recently from the American-Hawaiian Line, and the purpose is to use those steamers that have been diverted in their own business. In fact, we ourselves have chartered one or two of them for carry- ing coal to Brazil, simply because we did not want them delayed by waiting for cargo in New York. A few days ago they chartered the Columbus^ which is a steamer of about 10,500 tons, one of the narrow boats of the American-Hawaiian Line, and paid $122,000 a month for her. That steamer cost between $600,000 and $700,000. You can see that the American-Hawaiian Line within six months, which is the term of the charter, will be able to build a new vessel from what she will earn on that one. Within a week another vessel of the same type was chartered by the American-Hawaiian Line to the United States Steel Corporation for the same business for $146,000 a month. The rise in one week from the increased demand represents $24,000. That difference alone is fully twice what tliat steamer would bring in normal times. The Chairman. They want that steamer for what purpose? Mr. Slechta. They want it for cari-ying manganese from Brazil. The Chairman. To what place? Mr. Slechta. To the United States. The Chairman. To use for what purpose? ]\Ir. Slechta. As a matter of fact the stuff is sold in the open market in Philadelphia. But the j^oint I wanted to make is that there you have an American companv reaping a tremendous profit from the operation of its boats in that service. They were with- drawn from the Panama Canal service because the Panama Canal is closed and they did not wish to run around the Plorn. and so it is taking the money and putting it in the bank. Yerv well. Does the Government propose to do anything which will prevent those com- panies, such as the American-HaAvaiian Line, from obtaining that maximum return and taking advantage of conditions over which they have absolutely no control? The American Steel Corporation IS certainly not a philanthropic institution. It goes to them and says " we want your steamers and will pay any price you want for them." That is practically what it amounts to. And this bill pro- poses to put boats in competition with the American-Hawaiian Line? I do not say that in the way of criticism, but simply to point out one possible result. The Chairman. We had a gentleman before this committee the other day representing the American Cast Iron Pipe Co., of Bir- mingham, Ala. A contract is to be let in Argentina about the middle of this month, I think on the 14th. for 26.000 or 28.000 tons of water pipe. His company wants to bid in competition with the British companies. Do you know where he can get the tonnage at any price? Mr. Slechta. Surely. He can get tonnage just the same as the Steel Corporation is getting that tonnage that I refer to now. The Chairman. He says that the lowest rate they would quote would he $30 a ton. and they would not guarantee him tonnage at that price. Mr. Slechta. He can charter boats if he wants to. if he wants to pav the price. The Chairman. What price? 660 SHIPPING BOAED;, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Slechta. As I say, that is an illustration that the present price is anywhere The Chairman. You have not any vessels on your line that are now available? Mr. Slechta. We do not run to Argentina. The Chairman. Do you know of any vessels for charter that could be gotten for $12 to $15 a ton? That is what the British shipping interests are quoting to their manufacturers — -a price of about $12 to $14 a ton ; and the lowest price he can get is $30 a ton. Mr. Slechta. How does he know that the British manufacturers are getting that ? The Chairman. Because he has investigated it. Mr. Slechta. I do not believe it. The Chairman. I do. Mr. Slechta. I do not, because I know too much about freight rates from England to South America. The Chairman. He has inA estigated it, and his company has inves- tigated it. Mr. Curry. Do you not think, possibly, that condition might have been brought about by the fact that British manufacturers, importers and exporters, have an interest in their merchant marine? Mr. Slechta. No. That is true in a very few cases. In the coal trade there are certain large shippers of coal in Wales who have interests in steamship companies. But, so far as the manufacturing interests of Great Britain, as a rule, are concerned, they have very little inter- est except as ordinary investors in steamship companies. So far as the management of them are concerned, they have no interest in them whatever. The British steamship agent is the freest man in the world, and he takes the highest amount of money wherever he can get it. That has been my experience. Mr. Curry. It is a fact, is it not, that the importers and exporters and manufacturers do invest in the minority stock of the merchant marine, but they do not have any controlling interest? Mr. Slechta. That is possible. The steamship business is one of the most prolific sources of investment and revenue in Great Britain, of course. Mr. Curry. The board of trade looks out to see that their manu- facturers get the advantage? Mr. Slechta. Yes; but my explanation of the point Judge Alex- ander has raised is this: It is true that in a great many instances rates from Europe at the present time are lower than from the United States. That they are as much lower as you point out, I do not believe. Mr. Curry. We have abundant proof that the British manufac- turer gets the advantage. ]\Ir. Slechta. Personally, I am very much interested in the sub- ject, and I do not believe there is any discrimination; but the expla- nation of it, as I said in the beginning, the exports from Europe to South America have fallen off tremendously because, in the first place, prices have been increased, and, in the second place, many manufacturers have devoted their productive capacity entirely to the production of munitions of war. There are certain things which they can not sell, and there are certain other things on which the prices have increased very greatly, and they can not buy them in SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 661 South America. But there are several hirge steamship lines oper- ating hirgely for the benefit of the passenger service and for which no other business is available, like the Royal Mail Line, the Pacific Steam Navigation Co., the Italian lines, one of two French lines which still operate, and two Spanish lines, to the seacoast of South America run largely because of the passenger business. There is an enormous passenger business; not so much now, but before the war they had a very large passenger business of the class of immigrant travel. Those boats they are running now because there is no other place for them to run; they are passenger boats, and for whatever cargo capacity they have they offer the space at low rates because the supply of tonnage exceeds the demand, comparatively speaking. For instance, the conditions in the transportation business from the United States to South America The Chairman. Here is what Mr. Lake said; see if his informa- tion is entitled to more weight than the opinion you have just now expressed. I am reading from his statement before the committee: As we anticipated, our president has cabled us to find out what can be done in the way of froi.ulit, so that he can nako quotations. Tn order to know wliat we have to do to meet competition, Secretary Kedfield, at our request, cal)led to Mr. Ilaldwin, our commercial attache, in T-ondon, to ascertain what the frei,2;ht rates are on ca>^t-iron pipe from British ports to Argentina at the present time. Mr. Baldwin cabled, in reply, that the basic rates prevailing ai-e from $14 to $15 a ton. Since this cable was received our Mr. McWane has cabled that the British foundries were working with British steamship lines^ and would keep us out if they could. He said the lowest rate he could get quoted from here was $30 a ton. Is there anything else you want of this gentleman; w'e have an- other gentleman here this morning who w^ants to be heard? Mr. Greene. Suppose you reply to the chairman's question. Mr. Slechta. I think what I have ah'eady said is about the only ansAver I can make to that; and that is, while it may be true that the steamship people are assisting the manufacturers there to get that business, it is simply because they w^ant to fill the steamer space. They have the room and have got to run those steamers down there an3^way; it is not because they want to shut out the American manu- facturer, because those lines have no service from the United States. INIr. RowE. Your steamship company frequently makes very low rates? ^ ]\Ir. Slechta. Yes, sir. I can refer to half a dozen large manu- facturers who will assure you we have given them rates frequently in competition with European manufacturers and in order that they could get the business we have cut them below reasonable rates. Mr. Hardy. I think you made the remark as applied to normal times just now when you said in fact the freest agents in the world were the English shipping companies and they went where the dollar called them. Mr. Slechta. Absolutely. Mr. Hardy. That it was the fact prior to this condition existing now. And what the European governments are going to do to compel their ship lines to favor their ow^n commerce hereafter is another question. Mr. Slechta. I agree with you there just now. 662 SHIPPING BOAKD^ NAVAL AUXILIAEV, AND MEECHANT MAKINE. Mr. HAitDY. I believe our investigation of the shipping combina- tion shows that the shij^ping line hunted the money, and that was all. Mr. Slechta. Yes: I quite agree with you. Mr. Hardy. That is a different situatitm now. Mr. Edmonds. Mr. Chairman, I would like to ask the gentleman a question. If normal times returned and if this board places in commission between here and Brazil a regular running freight and passenger line, would we be able to build up traffic with Brazil itself for exports from this country a sufficient quantity of traffic to guar- antee the running of that line '( Mr. Slechta. That is a pretty difficult question to answer. Mr. Edmonds. Then, I will put it in a little more concrete way. Will 30ur steamship line buy coal from this country after the war is over or will they buy coal from Wales as they have heretofore? Mr. Slechta. That is something that can not be fully guaranteed, but, personally— the point is, after the war is over, are they going back to England for it I Mr. Edmonds. It is not a question of price at all :f Mr. Slechta, Yes; it is, too. The Chairman. In other words, will they pay $3 to $4 a ton for coal there rather than $2.80 a ton here? Mr. Slechta. In the first place, there is that condition which I referred to as the interest of certain people, who have the coal trade under their command not only in Wales but in Brazil, large coal companies with deposits in Brazil and the same companies more or less control the tonnage and they can make the freight rates to suit their own convenience. Mr. Edmonds. Within the past 20 years the coal men of the United States have endeavored to capture the Brazilian business. There was no trouble in price, no trouble with freights, and no trouble in getting the boats. Mr. Slechta. There was trouble in getting the cargo even before. Mr. Edmonds. They had no trouble in sending full cargo freights there; but we found when we got down there that our coal was condemned bj' foreign employees of the different steamers. I have talked to a man, who has been in San Paulo for a number of years, he lives in my neighborhood, he secured and had charge of the build- ing of a large electric plant down there, and he has had charge of it since it was ])uilt. He tells me you can not overcome the objection that is made to the quality of American coal — unfairly, I claim. Mr. Slechta. There is no doubt about it. Mr. Edmonds. Nevertheless, they have foreign employees in those places, who are sent there l)y those companies, and, of course, capi- talists have paid out money for construction in different lines. Mr. Slechta. There are companies in Brazil that use an enormous tonnage of American coal and they claim that they get the same effi- ciency — now that their firemen have learned to fire American coal — that they get from Welch coal. Mr. Edmonds. I say it was unfair competition, there was no ques- tion about that. But our coal men gave up sending coal down there for the simple reason thej' did not want to have to send a man down there after every cargo to show the men how to burn it or else have it condemned. i SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 663 Vnother thing I ^Yant to ask you as an American and not as the representative of the Lloyd-Brazileiro, and that is this: Do you approve of taking Porto Rico out of the coastwise traffic or do you think that we ought to retain it for our own coastwise ships? Mr. Slechta. It is pretty difficult for me to answer that unoffi- <;ially, because I am somewhat interested in it. as a matter of fact, not personally, but on behalf of our company. We have just recently changed our schedule for call from Barbados to Porto Rico, for the reason that the freight rates on coal carried in American boats, al- though the American boats have a monopoly of the coastwise service, is so much lower than it is in foreign boats. Mr. Edmonds. Your line, I can naturally understand, would be very glad indeed to carry freight to and from Porto Rico and have it opened up to ocean traffic; but as an American would you like to see Hawaii or Porto Rico, as a shipper Mr. Slechta. Xo: I do not think it would be a good thing. Mr. Edmonds. You would not want to see Porto Rico and Hawaii taken out of the coastwise trade? Mr. Slechta. I do not think that ought to be done. Hawaii and Porto Rico are a part of the United States. Why not cut Florida out, or San Francisco? Mr. Edmonds. You think they ought to be retained as they are to-day? Mr. Slechta. Absolutely. Mr. Edmonds. And Alaska, of course? Mr. Slechta. Yes; they ought to be on the same basis. If it is desirable to give the coastwise business to foreign boats in any part of the United States, give it to all. The Chairman. American ships sailing from here to South Amer- ica ought not to be permitted to carry freight to or from ports in the United States or Porto Rico? Mr. Slechta. I do not think that; no. The Chairman. That is what he wants 3^ou to say. Mr. Slechta. No. Mr. Edmonds. I am talking about foreign ships, Judge, and you know I am, too. The Chairman. There is no suggestion here that foreign ships will do it. but just American ships under the American flag. I am op- posed to foreign ships doing that, just as w^ell as you are. Mr. Edmonds. I know you are, and I want to bring it out, because I know 3'ou are opposed to it; but I call attention to section 4, on which Secretary Redfield said it does give that right to foreign ships. Mr. Curry. Do you know the net loss sustained by the Brazilian Government in running a Government-owned line? Mr. Slechta. Do you refer to the entire line — the entire service — coastwise as well as New York? Mr. Curry. You can take both together if you wish to, Mr. Slechta. As far as the New York service is concerned, during the last eight years we have probably come out about even. In the coastwise business, since the war started — since the Government took it over — they have been able to ju.st about break even, I believe; and especially since the war startecl. They do not differentiate closely enough between receipts from the American line and from the coast- wise business so that I can say. 664 SttirPlXG BOAED, NAVAL AUXILIAEY, AND MERCHANT MARINE. Mr. CuRKY. They lump both together? Mr. Slechta. They have to, because our boats that run from New York also carry cargo coastwise in Brazil. Mr. CuRKT. You think you come out about even? Mr. Slechta. I think so. Mr. Curry. Without charging anything off for depreciation? Mr. Slechta. Yes; exactly. Mr. Bodenbero. But you have no figures on that and do not know definitely? Mr. Slechta. I have the figures published by the Government; but they are not closely enough analyzed so that a steamship man could really sa3^ Mr. Hardy. D(,es the Brazilian Government for the Lloyd-Bra- zileiro permit those ships to be bought anywhere it can buy them cheapest, or must they buy ships built in Brazil? Mr. Slechta. They do not build any ships in Brazil, practically. Mr. Hardy. They buy wherever they can get them the cheapest? Mr. Slechta. Yes; they bought all of them. Mr. Hardy. But you would feel very much opposed to limiting those ships engaged in the American lines and refusing to let them touch at intermediate points and get cargo? Mr. Slechta. I do not see Avhy that handicap should be placed upon American ships engaged in the foreign trade. JSIr. Hardy! Exactly. You think American ships, under the American flag, owned by American citizens, should be' allowed to call on their whole course and to load and unload cargo? Mr. Slechta. I certainly do. Mr. Edmonds. You mean an American-constructed ship? Mr. Slechta. I would not say that. I am thoroughly in favor of removing every restriction upon increasing the American merchant marine. If they can buy ships cheaper somewhere else, if they can build ships cheaper somewhere else, or if they can man ships cheaper somewhere else, that is the way I am Avilling to operate. Mr. Ed:monds. You want an American-owned ship to stop wherever it wants, when it leaves New York, along its routes Mr. Slechta. Exactly. The Chicago. New York & St. Paul are more British, as far as capital is concerned, than they are American. Mr. Greene. Would you believe in keeping foreign officers on those vessels ? Mr. Slechta. I would not say officers; no. I think they ought to have American officers — at least Americans or those who intend to become Americans and have declared their intention to become Americans. ]VIr. Greene. That is, you would not favor putting vessels we happen to buy helter-skelter under foreign officers who happen to be running them at that time, would you? Mr. Slechta. It is a question of expediency, possibly. If we had the right kind of American officers, I would give them the first chance. Mr. Greene. There was evidence furnished that there were an ample number of officers waiting for a berth, but they did not get it. Mr. Slechta. Of course, I think it is a pretty difficult proposi- tion. I think it would be a little bit unreasonable to insist the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 665 minute the ship was transferred from the British flag to the Ameri- can flag that those officers should lose their positions to Americans just simply because Americans were given the positions as officers. 1 think there ought to be a certain* time given for the owners to transfer and change their officers. ISIr. Greene. You would not think they ought to be given seven years' time, would you? Mr. Slechta. No; I do not. I think six months or a year would be ample. Mr. Greene. I would not give them seven minutes. Mr. Slechta. That is a matter of opinion, of course. STATEMENT OF JAMES L. COWLES, PRESIDENT OF THE WORLD POSTAL LEAGUE. I am the president and treasurer of the World Postal League, an association located at 810 Colorado Building, AYashington, D. C, and having for its purpose the establishment of a United States of the world — Avith no moie legal barriers to intercourse between the different States than now exist between the States of our Union and bound together by a great postal service — international postal trans- ports, international postal cables — a service covering the entire ma- chinery of public transportation and transmission, earth, air, and sea, a ser\ ice supported by low, uniform tolls, door to door every- where within the system of mechanical transport. cooperation vs. competition. The most of the evils of our time have come down to us, I believe, from the days when the common trade of mankind was that of the hunter, and business consisted chiefly in exchanges of blows with club and battle-ax. Fear, death-dealing fear, checked all human advancement. In those days each man differed from the other, chiefly as do the beasts and birds of prey, in brute force and in cunning; the lion and the eagle were the loftiest of human ideals; "Might was right" and the most successful killer was king. To the men of that era, the earth was a great plain, broken here and there by lofty mountains, impassible rivers, and vast unknown oceans; but yet a plain producing eveiywhere the same things — other animals or other men upon whom the superior lion or eagle might prey. Creators of nothing, exploiters neither of the forest, the field, or the mine: when for any cause the needed supply of prey failed in any particular hunting ground, the only recourse left to the hunter was to die or to kill and eat his neighbor and his neighbor's prey. Meat was the common diet, and whether brute or human, fish or fowl, was a matter of little moment. All men were cannibals. In those good old times the roads were trails, and on this Conti- nent, in lack of other burden-bearing animals, land transport even as late as a hundred years ago, rested chiefly on the back of the In- dian women, the hunter's wife. Here each man's gain was indeed another man's loss, and each tribe was perforce it's neighbor's enemy. 666 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Here, competition "The survival of the superior beast or bird of prey Avas the common hiw, brute and human." In the East, on the other hand, the horse, the ox, the ass, the camel, and the elephant, long ago relieved the woman somewhat from her degradation as a beast of burden, and the wise men of the East, taught by their mothers other trades than that of the hunter, early conceived the truth that "Competition"^ — ^the law of the brute — did not, of necessity, apply to man. In the slow development of the divine attributes that separated them from the brutes, the Eastern sages, becoming, in a measure, creators — sons of God, exploiters of field, forest, and mine, dis- covered in the benefits arising from the exchange of their creations that cooperation might be, or at least might become, the law of human life, and that mankind might live as brothers. The comparatively safe navigation of their mid-earth seas favored these civilizing ideas, and when it was found that the earth was a sphere, with infinite varieties of soil and climate, each part adapted to the cultivation of products that satisfied the other's needs, then it became evident that the realization of the Prophet's dream only awaited the inventor's deed. The deed is well-nigh done. The Indian woman, dragging her painful way along the forest trail, has given place to the electric car on the T-rail: the dugout and the sailboat have given way to the steamboat ancl the steamship ; the wireless telegraph and telephone have taken the place of the signal-fire; the carrier pigeon has given place to the airship. The natural obstacles to human intercourse are on the verge of annihilation. The main lines of the world's great circulating and nervous system that is soon to transform the old hunting grounds of the cannibals to the abode of the sons and daughters of God — each by virtue of his or her divinity, the superior and therefore the complement of the other — the main lines of this greatest of human creations are already built. The land, water, and air lines — railway, trolley, auto, and airship lines — motor-boat, steamboat, and steamship lines, telegraph and tele- phone lines, wire and wireless of our modern world are its circulat- ing and nervous S3^stem, and the ocean transports of to-day are i most essential part of this mechanism. Upon the construction, maintenance, and operation, and upon the taxes levied for the use of this life-determining mechanism, more than upon anything else, does the general economic, as well as the social and political development of modern humanity depend. Left in the control of private speculators determining the rates for its use upon the value of the service rendered, it will become a public curse, as was the case with the Cursus Publicus, the transport service of Imperial Rome. On the other hand, managed by public servants, with rates for its use determined on the cost of the service rendered, or, it may be, run absolutely free and supported by the taxation of the districts which it serves and to which it gives practically all their commercial value, every step in its improvement will be for the common advancement, with the result that in the course of time this old, warring earth may become a bit of Heaven — a home in which every human being shall find delieht in the service of the other. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 667 Competition between the different parts of this great mechanism is as absurd, as wasteful, and as harmful as competition would be between the arteries, veins, and nerves of the human body. In recent years Congress, State legislatures, cities, and towns have expended hundreds of millions of dollars of the hard earnings of our common people in railway, trolley, river, and harbor improve- ments, which, under the control of our great circulating and nervous system by pi-ivate speculators, have often resulted in increased rates of transportation, increased cost of living, and lessened opportunities for getting a living. Notwithstanding the scores of millions of dollars spent for the improvement of navigation upon the Great Lakes, the rail, lake-and- rail rate on flour and mill stuffs from Minneapolis to Xew York City is 3 cents a hundred pounds higher than it was 15 years ago — 23 cents to-day. as against 20 cents in iSOO. And the same thing is true as to ocean transportation. The Mer- chant Marine and Fisheries Committee of the Sixty-third Congress infoi'med us that in the four years previous to the European war the specuhitors controlling trans- Atlantic trade had increased their rates, in some cases over 100 per cent; this in spite of the fact that during the same period the public on both sides of the Atlantic had expended immense suins for their harbor improvements. Great, however, as were the enormous taxes levied upon the general public by the world's ocean-transport speculators before the war now waging in Europe, they w'ere as nothing compared with the taxes now levied by them upon our suffering w^orld, in some instances seven times as much as they were 12 months ago. Some of their vessels are said to have paid for themselves in a single trip. POSTAL TKANSPOr.TS. If the world is to receive any adequate i-eturn for the $100,000,000 of labor expended on the Panama Canal, its business must be run not by private S])eculators. for private profit, as our land service is run to-day, but by the representatives of the Americans Avho have built the canal for the common welfare. The private speculators now controlling the world's ocean traffic tax our Government for the transport of our mails across the Atlan- tic, by steamers not under contract. United States register, letters (sealed parcels) 80 cents a pound. $1,600 a ton; on other mail matter (unsealed parcels) 8 cents a pound. $160 a ton; foreign register, let- ters, 35 cents a pound, $700 a ton : other matter, 4^ cents a pound, or $90 a ton — the cost to the steamships being the same in either case. Under its mail contract, New York to Southampton, $1 a mile, regardless the mail handled, the International Mercantile Marine Co. levies a tax of over 15 cents a pound, over $300 a ton on all the mail carried. Similar taxes are levied upon our Government in all our ocean mail traffic, and yet the express companies doing business be- tween New York and London serve their large patrons at less than $20 a ton. With Government-owned ships, the business might well be done for less than $10 a ton. A weekly naval mail line of well-equipped fast steamers, ocean postal transports, the best of their kind upon the ocean, run by officers 668 SHIPPING BOAED, NAVAL AUXILIARY^ AND MERCHANT MARINE. and men of the American Navy between New York and San Fran- cisco, at rates determined not on what might be exacted from the public but on the cost of the service rendered, would be an object lesson as to the possibilities of a Government-owned merchant marine that would astound the world. The establishment of similar lines jointly owned and operated by this country and the States of South America would be great steps toward the advancement of the world's peace and the world's prosperity. The United States of the world, with all legal barriers to inter- course between the different States abolished, and all physical bar- riers overcome by a world postal service covering the entire business of public transportation and transmission — " the parliament of man ; the federation of the world," the dream of the poet Tennyson in 1812 — is, we hope, to quickly follow the close of the European war. Inaugurated in 1874, by Dr. Stephan's establishment of an inter- national 5-cent half -ounce (soon to be 2 cents an ounce) letter post, it remains to so extend this great service that within a few brief years the weakest hand, the most timid voice may reach to the ends of the earth and command its richest treasures. The advantages to follow the abolition of the legal barriers to intercourse between the nations have been conclusively proved by our own history. The benefits that would accrue from a world-wide system of door-to-door, low, uniform postal tolls have been clearly demon- strated in our 50-year-old flat letter post, our 30-year-old flat rate magazine and newspaper pest, in the flat-rate commcdit}' service of our continental railroad traffic and in the flat-rate passenger service of our city trolley lines. When our public transport machinery is run by the public au- thority, with the public convenience, the public security, the public prosperity, its sole aim, the service will be infinitely safer, better, and less expensive than to-day. The voters, equal joint stockholders in our great public business, will not submit to slipshod management or to public plunder. Ultimately, the service will be absolutely free and will be supported as our common highways and bridges are supported to-day, by the taxation of the districts which the machin- ery serves, and to which it gives their commercial value. "While, how- ever, it is supported by tolls, it will be insisted that these tolls shall be altogether regardless of distance, and as to merchandise or produce shall be determined simply by the weight of the parcel car- ried and the space it may occupy. As to any special care received, that will be a matter of insurance. If the Titanic had been a postal transport owned and operated either by the United States or Great Britain, or by the two coun- tries in cooperation, she would hardly have met her fate running at 25 miles an hour among the icebergs, for a speed record intended to win the patronage of a few wealthy travelers, a large part of whose expenses are paid b}- their humbler friends in the steerage. Our National Government — the great joint-stock corporation in which every voter has an equal share — is the only power that can be safely intrusted with the ownership and operation of the circulating and nervous system of our national life. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 669 The substitution of electricity for steam in land transportation is cutting down the cost of the business full one-half. Similar improve- ments in water transportation are producing similar results. On the St. Paul Railway in Montana the electric engines will do away with hauling coal, coal-storage yards, and water tanks, and will lengthen the present freight divisions of 100 miles to at least 200 miles. Their freiglit locomotives now in use haul 1,650 tons at a speed of 8 to 10 miles an hour. The electric locomotives are expected to haul 2,500 tons at 15 to 20 miles an hour. On the down grades the motors will be reversed, thus acting as brakes and at the same time storing up powder for use on the next rise. There will of course be an important saving of labor. The Diesel oil engine is revolutioniz- ing ocean transportation. Note the possibilities — with low-rate Government bonds substituted for the high-rate bonds and stock of private ow^nership, with our ma- chinery of transportation and transmission run by electricity devel- oped by water power or from foal at the mines and distributed by cable, with all merchandise in a common class, the countless small parcels of individual products of the old classified service giving place to a comparatively few large parcels made up of several different l^roducts. with persons and produce transported from starting point to destination over the lines of lowest grades, least obstructive curves, and shortest distance, with the machinery adapted to each particular service used in every instance, and with the lowest local rate of to-day adopted as the uniform standard rate for all distances, the schedule of our international flat-rate post office will be something as follows: r)0()r to door within the system of mochanical transport. Merchandise and produce rates determined by space and weight; extra care and special service to be met by insnrance. All matter to l)e in one class. BnJk freight rates, .$1 per ton — 40 cubic feet space. Parcels, bulk limit up to 100 pounds, 2 cubic feet space; over 100 to 200 pounds, 4 cubic feet space. Rates. — Sealed parcels requiring preferential delivery and special care (valu- able lettei's, marked "preferential delivery ") up to 1 pound, 2 cents. Ordinary parcels, sealed or unsealed, up to 1 pound, 1 cent ; over 1 to 5 pounds, 2 cents ; over 5 to 11 pounds, 5 cents ; over 11 to 30 pounds, 10 cents ; over 30 to 60 pounds, 15 cents ; over 60 to 100 pounds, 20 cents ; over 100 to 200 pounds, the ordinary barrel, 25 cents, etc. Transmission services. — 10 cents telegrams ; 3 cents telephones. Passenger serviee. — Millions of passengers are transported over the Alps by the Swiss post every year. Rates. — Local services, making all stops (like city trolley services^), 5 cents a trip; express services, stopping at distances 10 to 40 miles, 25 cent a trip;- limited services, stopping at greater distances or over, $1 a trip. And the receipts will be infinitely larger than they are to-day. Baggage. — Subject to parcel rates. Save where carried in hand, there will be no free baggage. Special services. — For parlor and sleeping cars, as well as for freight handled in cars, heated in winter and cooled in summer, the rates will be on the same cost of the service basis. Insurance service, quick and safe, secured by insurance against loss, damage, or delay. With such an international postal service and w^ith the old legal restrictions to international intercourse abolished, a new world will come into being within w^hich war will be as unthinkable as it is to-day within our American Union. 32910—16 43 670 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. If, however, war may come, the absolute control of our machinery of public transportation and transmission — earth, air, and water lines, national and international — will give us such an advantage over our foes that a very small army and navy will suffice for our com- plete protection. Is this system of rates absurd ? It is based on years of study and on principles as certain as the law of gravitation. Gentlemen, the systems of land and ocean transportation can not be long separated. They must be joined together eventually, and they should be joined together immediately. If circumstances are for a time to keep them apart, an ocean merchant marine, a system of ocean postal transports is an immediate necessity, and our busi- ness relations with South America demand the establishment of a system of ocean postal transports jointly owned and operated by ourselves and the different States of South America, a service guar- anteeing at once equality of transport rates and transport privileges to all their respective citizens as Avell as the joint protection of their persons and produce from attack by any outside power. A service of this character proposed to our South American friends could hardly fail of their acceptance, and our American world would enter upon an era of peace and of prosperity such as s 1912.. . Income on s me voliimie as 1912 ^t Average rate per ton. Total freit^ht revenue. f 2. 72 S140, 877, 711 6. 72 369, 2.56, 146 14.00 790,109,222 31.50 i 1,777,746,749 What dividends did this business pay nt the former rates in 1010 :'nd 1012? Special Diplomatic and Consular Report, page 39, says, thnt in lOOS the White Star Line paid 10 per cent, in 1000 it paid 20 per cent. In lOld the details of the year's business were as follows (this White Star is one of the Morgan- owned lines of the I. M. M.) : "The best asset of the trust has been the White Star Line, which in 1910 earned a net profit of $2,620,880 on a capital of $3,630.(100, after writing off $1,701,770.92 for depreciation. A dividend of 30 per cent was paid in that year by this company alone and a balance carried forward or placed to various re- serves, among which was an insurance fund for which $487,000 was set aside in view of the increase of the fleet.'" This line was charging the same for service as others in the s^une ti-ade. Turning to page 41 of Senate Document No. 601. Sixty-third Congress, second session, you will find the following: "The Holland Amerika. Line earnel altout 50 per cent net upon its capital during the first fiscal year 1013.'" (This line had also become one of the Morgan possessions.) The Hamburg- American Line earned about 30 per cent net during its fl.scal year of 1913. F. E. Dixon & Co., of London, who owned and oiier,- ted a large fleet of "tramp" freighters showed earnings of about 50 per cent. (Tramp ships are those that have no regular routes, but are sent wherever ordered.) These are only a few specific instances of steamship line earnings. They are not at all unusual, but are the regular thing in the shipping business. Here, then, are the facts: In 1910 and 1912 these lines were paying 30 per cent to 50 per cent. The average cost of carrying our commerce for those years was less than $6.72 for in 1910 the cost of carrying farm products (Feb. 10) from I'ortland and Boston, was $2.69. These rates were gradually increased until September 1, 1912, they went to $6.72. To be again conservative, let us make our calculations from the point most favorable to them. To-day the rates upon cotton, wheat, apples, and meat averages $31.50 per ton of 2,000 pounds. 680 SHIPPING BOARD, XAVAL AUXILIAEY, AND MERCHANT MARINE. To-day to carry the 56.437,614 tons they carried in 1912 for $369,256,146, thereby "earning a net dividend of 30 per cent to 50 per cent, they now receive $1,777,746,749. This enormous amount would give them a dividend of 30 per cent to 50 per cent and a surplus for a single year of the enormous amount of $1,408,490,603. Perhaps we can comprehend how much that is by comparison. The entire disbursements of the United States Government during the year 1912, including the Army, Navy, and pork barrel ^y-is '_ $656. 623. 597 The total value of the State of Maine. 1910. census 451. 780. 119 Let us build State roads enough to go around the world, 24,000 miles at $5,000 per mile 120,000.000 We will build 100 first-class ships at $1,000,000 each, to carry our commerce 100, 000. 000 Provide a working capital of 50. 000. 000 1,378, 403. 716 We find we would still have a balance of $30,086,887. Did your Senators and Representatives go into hysterics a year ago at the idea of our Government raising $30,000,000 to go into this business to relieve us from these conditions the same as they organized the parcel post to relieve us from the express monopoly? Does it not look as if this country of ours was fast being preempted as a park and grazing ground for those interests while our Representatives at Washing- ton act as police to keep the people off the gi-ass? This is but one of the many devices of this system for gathering the wealth produced by the people of this country into the treasury of this group of multi- millionaires. These same gentlemen manipulate our railroads with a similar result to them- selves at the expense of the stockholder and the public; here, however, we have exercised a partial control, but on the water they have had a free-for-all. go-as- you-please — competition reversed, each competing to get the last possible penny out of the public. Our ships, I'ailroads, trolleys, Standard Oil and other oil companies, American Woolen Co., United States Steel, coal mines, grain, and tobacco companies are interwoven and controlled by men who can operate them as by one mind, either with or without visible legal connection of combination. I wish to call the special attention of our friends who are laboring earnestly for the worthy object of rural credits to these facts. These interests now hold the power, and exercise it, to fix the price of whatever we have to sell and what- ever we have to buy. Our flr.st object .siiouUl be to remedy this. We can not fill the bag by stopping the leak on the side while the bottom is all open. Here is an illustration that can be verified : A farmer in the East produces 2,000 barrels of apples ; his cost of freight has increased $1.25 per barrel, a total freight increase of $2. 5(X) The farmer in the AVest, 10,000 bushels of wheat ; his cost of freight has increased 33 cents per bushel, a total of 3. 300 The planter in the South raises 50 tons of cotton; his freight has in- creased $33 per ton, a total of 1. 650 Total cost from increased freight rates 7. 450 Let us suppose that each of these is mortgaged for $5,000 at 6 per ceut__ 300 Reduced by rural credits to 3 per cent 150 Total savings for each ^ 150 Total for all three 450 IncTease in ocean freight — a present loss 7, 450 Savings from rural credits — yet to be won 450 7.000 Suppose the annual interest rate on the mortgage is 12 per cent, making the annual interest charge $600. Suppose this is reduced to 3 per cent by rural credits. The saving for each would be only $450, or a total of $1,350. whereas the total loss from increased freights being $7,450, the net loss would be $6,100. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT M4RINF.. 681 And, mind, the increase in freight rates represents a present loss to farmers, whereas the gain through rural-credits legislation is yet to be won, and at best it will be some time before its full effect can be felt. TAXATION BY THE INVISIBLE GOVERNMENT. This is taxation for private interests levied by the invisible government. Morgan and his associates were obtaining control so much of the English merchant marine that the Government interfered and prevented him from taking over the Cunard Line, the Government furnishing the Gunard Co. the funds to build the Liiisitania and Mauritana at a rate of 2f per cent and a special subsidy of $730,000. Germany frowned upon our exercising our right to control our own commerce because her great and growing merchant marine was reaping huge profits out of us until the outbreak of the rs^ar. Our American financiers could not be content with their little corporation interest at home, like the Steel Trust, with its $1,440,000 capitalization, the oil companies, railroads, etc., they must attack us from without as well as from within and here is a little sketch of how they did it. (P. 38, Special Diplomatic and Counsular Report.) " On February 14, 1902, an agreement was concluded by the American syndf- cate and the White Star Line for the purchase of its shares. Each holder of a share of 1,000 pounds sterling ($4,860) in the Oceanic Steam Navigation Co. received 4,196 pounds ($20,390) in cash and 6,000 pounds ($29,100) in preferred and common of the trust. The managers of the line, Messrs. Ismay, Inu-ie i^ Co., received 10 times their profits for the year 1900, and undertook for 14 years not to associate themselves w'ith any other shipping enterprise trading to ports which the White Star had used." They did these things because they could make the people pay. We have paid now for 14 years and in order to make us keep it up they see they must run our Government. Can they do it? Put the Farjuers' Open Forum into the home of every farmer and let him have the chance to find out the facts; then look out for the scythe and the reaper. Remember " The mills of the Gods grind slowly, but they grind exceeding small." West Paris, Me. Mr. Hampton. Here is a copy of the current issue of Successful Farming, one of the largest and most representative papers in the Central West, having a paid circulation of more than 700,000 copies. The Chairman. Where is it published? Mr. Hampton. It is published at Des Moines, Iowa, right in the middle of the agricultural belt of this country; and I want to call your attention to a leading editorial on ocean freight rates which, I think, should go in the record. I want to call your attention espe- cially to the concluding paragraph; it is very short. It reads: We don't w'ant a ship subsidy ; never. We are already giving the shipping interests more than enough. We want Government competition by Government controlled or owned merchant vessels, or speedily an international commerce commission to regulate ocean freight rates. (The editorial referred to follows:) OCEAN freight BATES. The producer pays the freight, whether he be manufacturer or farmer. In normal times the exporter into any country must lay down his goods at a price not exceeding the prevailing price for the same class of goods made at home. He must compete with the home product that does not have to pay any ocean freight. Hence the foreign-made goods must sell at the price of home- made goods, less the freight. For this reason the exporter pays for the products he exports only enough to allow him to pay the ocean freight and insurance to the foreign country and make a profit, in other words, the producer pays the freight and insurance to 682 SHIPPING BOAED^ XAVAL AUXILIARY, AND MERCHANT MARINE. the foreign markets because the buyer, the exporter, will not. He is like the banker charging usury who takes the interest out in advance. Since the war has made more hazardous ocean shipping, insurance rates have gone up and the risk has increased until ocean freight rates have jumped to unreasonable demands. There is no established rate. The freighters charge just what they please because they can. Some of the belligerent countries have fixed the maximum price of goods, and this allows the ocean freighters to charge up to the limit. The American producers are paying these outrageous freights. Before the war it cost 4 cents a bushel to get wheat to Liverpool ; now it is 40 cents. Everything in proportion. We don't want a ship subsidy ; never. We are already giving the shipping Interests more than enough. We want Government competition by Government controlled or owned merchant vessels, or speedily an international conmierce commission to regulate ocean freight rates. Mr. Hampton (proceeding). Just briefly in regard to the position of the organized farmers of the United States on ship subsidies. For more than 10 years they have taken the most determined stand against any ship-subsidy legislation by the United States Congress. They have carried their opposition to the point of sending their rep- resentatives into every agricultural district of the United States to arouse the farmers to fight it. In the Congress in the year 1907 — I forget the number of that Congress — when Gen. Grosvenor, of Ohio, was in charge of the ship-subsidy bill Mr. Hardy. The Fifty-ninth Congress. Mr. HA^rpTON. The Fifty-ninth Congress — it was fought right to the very closing daj's of Congress, and the organized forces behind the ship-subsidy proposition mot the farmers in a convention that was held in the Xew WiHard Hotel in this city in January of that year and were absolutely annihilated. I took part in that meeting, and Mr. Aaron Jones, past master of the National Grange, was the chief spokesman and led the fight, supported by State Master F. A. Derthick, of Ohio. The Grange representatives thoroughly con- vinced that convention that the farmers Avould fight ship subsidv in any form to the limit. And, Mr. Chairman, the farmers are abso- lutely opposed to and will fight ship-subsidy legislation every time it comes up. I can give a complete record of the farmers' fight against ship subsidies to any member of this committee or of Con- gress. We have in condensed form the history of that entire fight, but it is too long for the record here. Now, in regard to the matter which the chairman mentioned. At the meeting the other day when representatives of the Grange were testifying some members of this committee questioned their state- ments that the world's price fixed the domestic price of the staples of agriculture. It was astounding to me that any Member of Con- gress should challenge the correctness of these statements. In the last Congress, the Sixty-third Congress, a joint resolution (H. J. 311) was introduced by Mr. Alexander, the chairman of this committee, and referred to the Committee on Foreign Commerce, I think The Chairman. The Committee on Foreign Affairs. Mr. Hampton. The Committee on Foreign Affairs, which took that resolution under consideration and had hearings. The Chairman. If there is no objection, I would like to have that resolution go into the record at this point. Mr. Hampton. I myself, Mr. Chairman, was going to ask at the conclusion of my statement that the official report should be included. SHIPPING BOAHD, NAVAL AUXILIARY. AND MEECHANT MAEINE. QS'd^ (The resolution and official report referred to are as follows:) Steadying the World's Pkice of the Staples. [H. J. Res. 311, 63d Cong., 2d. Sess.] In the House of Representatives. July 31, 1914. Mr. Alexander introduced the following joint resolution ; which was referred to the Committee on Foreign Affairs and ordered to be printed. JOINT RESOLUTION Instructing American delegate to tiie International Institute of Agri- culture to present to the permanent committee for action at the general assembly in 1915 certain resolutions. Resolved by the Senate and House of Representatives of the United States of American in Congress assembled, That in accordance with the authority of letter (f) of article nine of the treaty establishing the institute, which provides that it shall " submit to the approval of the Governments, if there be need, measures for the protection of the conmion interests of farmers," the American delegate to the International Institute of Agriculture is hereby instructed to present (during the 1914 fall sessions) to the permanent committee the fol- lowing re.<^olutions, to the end that they may be submitted for action at the general assembly in 1915, so as to permit the proposed conference to be held in Rome during the fortnight preceding the session of the general assembly of the^institute in 1917 : " resolutions. " The general assembly instructs the International Institute of Agriculture to invite the adhering Governments to participate in an international conference on the subject of steadying the world's price of the staples. " This conference shall consist of members appointed by each of the Gov- ernments adhering to the institute, and is to consider the advisability of formulating a convention for the establishment of a permanent International Commerce Commission on Merchant Marine and on Ocean Freight Rates with consultative, deliberative, and advisory powers. " Said conference to be held in Rome during the fortnight preceding the ses- sion of the general assembly of the institute in 1917 " Mr. Goodwin of Arkansas, from the Connnittee on Foreign Affairs, submitted the following report (to accompany H. J. Res. 311) : The Connnittee on Foreign Affairs, to which was refei-red the resolution (H. J. Res. 311) instructing the American delegate to the International Insti- tute of Agriculture to present to the permanent committee for action at the general assembly of the institute in 191.5 certain resolutions, reports the same back to the House with the recommendation that it do pass. The International Institute of Agriculture, having its seat at Rome, Italy, is a permanent Government institution created by treaties signed June 7, 1905, between the United States and the following powers: Italy, Montenegro, Rus- sia, Argentine Republic, Roumania, Servla, Belgium, Salvador, Portugal, Mex- ico, Luxemburg, Switzerland, Persia, Japan, Ecuador, Bulgaria, Denmark, Spain, France, Sweden, The Netherlands, Greece, Uruguay. Germany, Cuba, Austria-Hungary, Norway, Egypt, Great Britain, Guatemala, Ethiopia, Nica- )-agua, Brazil, Costa Rica, Chile, Peru, China. Parguay, and Turkey. Since the creation of the institute 14 other powers have become adherents, making the total number at this time 54 nations represented in the institution. Confining its operations within an international sphere, the institute is ■ authorized and directed, among other things, to submit to the approval of the Governments, if there be need, measures for the protection of the common inter- ests of farmers, and it is under the subsection designated " f," article 9, of the treaty referred to that it is proposed to instruct the American delegate to offer a resolution inviting the adhering Governments to participate in an interna- tional conference on the subject of steadying the world's price of the staple agricultural products. If the invitation thus extended is accepted, a conference consisting of dele- gates or members named by each of the adhering Governments will meet in Rome to consider the advisability of formulating a convention for the establish- 684 bHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. nient of a permanent international commerce commission on merchant marine and ocean freight rates, with consultative, deliberative, and advisory powers. The committee held hearings on the resolution, the testimony taken developing the following facts : That of the entire ocean freight traffic, seven-ninths consist of bulk traffic, the greater proportion of which is the staples of agriculture. That two-ninths of the total ocean freight traffic consist of package traffic, including practically all manufactured articles. That while the freight rate on package traffic can not be changed by the carriers without giving 30 to 60 days' notice to shippers, the rate on bulk traffic may be, and in fact is, changed without notice and fluctuates hourly. That the domestic price of the staples of agriculture is governed by the ex- port price, which fluctuates with the rise and fall of ocean freight rates on bulk traffic. That the world's price of the staples of agriculture can not be steadied until a fixed rate can be established on bulk traffic the same as package traffic. Independent of the abnormal conditions whicL now obtain, the ocean freight rates have increased within the past two years fi'om 100 to 200 per cent and are controlled absolutely by a shipping trust which arl)itrarily fixes the charge for carrying the staple commodities, and the burden of increased rates has Ijeen borne largely by the bulk traflie. The broad, international scope of the question is patent, and it is one of primary importance to every agricultural nation in the world. The conunittee heard ]Mr. David Lubin. American delegate to the interfta- tional institute, whose testimony indicates that favorable action will be taken by the adhering Governments on the resolution thus initiated by the United States. Mr. Hampton (continuing). That resolution was reported back to the House and, after debate, carried practically unanimously, and in a few days carried through the Senate and was signed by the President. That resolution was absolutely a piece of waste paper and a joke on the farmer, unless the hearings and debate had con- clusively demonstrated to Congress and the President that.the world's price does fix the domestic price. If it is not true. House joint reso- lution 311 Ijad no justification. But it is true; and you will find b}^ looking over the record of the debate in the House on that resolution that the keynote of all speeches, of Republicans and Democrats alike, was that the farmer had a vital concern in orean freight rates, because the domestic price of the staples of agriculture was the world price less the cost of transportation and middlemen's charges. I submit, Mr. Chairman, some excerpts from the speeches in that debate. (Excerpts from the debate in Congress on H. J. Res. 311 :) Julius Kahn (California). Now, the question of ocean carriage has much to do with fixing the price of many of these staples that the whole world consumes. At the present time the ocean-carrying freight varies on the staples of agriculture practically from day to day. The manufactured commodities have steady and fixed rates ; the various steamship companies have agi'ee- ments under the terms of which they will not change these latter rates except upon 30 or 60 days' notice. No such agreement holds with regard to corn or wool or cotton or the foodstufCs which the world requires. The consequence is that the producer of these commodities is constantly at the mercy of the ocean carriers, so far as the price he gets for his commodity is concerned, because in most instances the price of his commodity is fixed not in the United States but in some foreign country. And therefore the farmer's price in the United States is the foreign price less the cost of carriage to the foreign port where the world price is made. Mr. Cooper (Wisconsin). IMr. Speaker, I am obliged to the gentleman from Illinois [Mr. Mann]. As a member of the Committee on Foreign Affairs I heard the testimony given by Mr. David Lubin, and by other thoroughly SKIPPING BOARD, NAVAL AUXILIAEY, AND MERCHANT' MARINE. 685 informed witnesses, as to the merits of this resolution, and I am convinced tliat it ought to pass. Tlie facts are very simple. Seven-ninths of the entire ocean traffic is what is called bulk traffic, and practically all of this comes from the farms of the country. When farm products are carried on land the farmers know precisely what the freight rate is, and the railroads can not change that freight rate without first giving notice of 30 or 60 days. Even then they can not change it without the consent of the interstate commerce commission, which before reaching a decision takes into account the interests of the railroads and the interests of the shippers. But, in the case of ocean freight rates on grain, as was shown by the testimony, they may vary in an hour from 1 cent to 25 cents a bushel. This resolution simply provides as its ultimate purpose that the International Institute of Agriculture shall call an international conference to consider the subject of steadying the world's price of the staples of agriculture and the advisability of establishing an international commerce commission on merchant marine with advisory and consultative powers concerning the rates to be paid on ocean traffic. It is a resolution of great importance, and I hope that it will pass without a dissenting vote. [Applause.] Mr. Greene. What has been the elfect of the resohition which you sa}' passed both branches? AVhat has become of it? Mr, Hampton. The resolution is now on the calendar, if that is the proper term, of the International Institute of Agriculture for the hrst thing to be acted upon by that institute as soon as the war is over. The war has interrupted the activities of the International Institute of Agriculture to that degree Mr. Hardy. Ha\e you tlie expression of the delegates from France, Great Britain, and Italy with reference to this resolution after it was suggested by Mr. Lubin? ^Ir. Hampton. In the debate on the floor or of the delegates? Mr. Hardy. In Rome when he proposed it. ^Ir. Hampton. T have a co])y of the official report sent out by Mr. Lubin covering that right here [indicating], and therein is a state- ment of the formal presentation of the resolution to the institute by Mr. Lubin and the comments of the different delegates. Mr. Hardy. I would like to have that go in the record, because it is very interesting. It shows their attitude. Mr. RoDENBERG. I think it ought to go in. (The remarks above referred to are as follows:) Steadying the World's Price of the Staples. resolutions by the congress of the united states presented to the international institute of agriculture. [February 27, 1915.] The President. I wish to remind the Permanent Committee that the resolu- .-ion passed by the United States Congress, which Mr. Lubin, the American dele- gate, will now present, was already communicated to the committee last October. As the delegate was then in the United States it was decided to defer action until his I'eturn. I now give him the floor. Mr. LiTBiN (delegate of the United States). In accordance with instructions from the Government of the United States, I herewith present to the Permanent Committee the following resolutions of Congress: " JOINT RESOLUTION Instructing the American delegate to the International Institute of Agriculture to present to the Permanent Committee for action at the general assembly in 1915 certain resolutions. " Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That in accordance with the authority of letter (/) of article nine of the treaty establishing the institute which provides that it 32910—16 44 686 SHIPPING BOAED, NAVAL AUXTLIAKY, AND MERCHANT MARINE. * shall submit to the approval of the Governments, if there be need, measures for the proection of the common interests of farmers,' the American delegate to the International Institute of Agriculture is hereby instructed to present (during the 1914 fall sessions) to the Permanent Committee the following resolutions to the end that they may be submitted for action at the general assembly in 1915. so as to permit the proposed conference to be held in Rome during the fortnight preceding the session of the general assembly of the institute in 1917 : " ' Resolutions.— The general assembly instructs the International Institute of Agriculture to invite the adhering Governments to participate in an interna- tional conference on the subject of steadying the world's price of the staples. " ' This conference shall consist of members appointed by each of the Govern- ments adhering to the institute and is to consider the advisability of formulating a convention for the establishment of a permanent international commerce com- mission on merchant marine and on ocean freight rates with consultative, de- liberative, and advisory powers. " ' Said conference to be held in Rome during the fortnight preceding the ses- sion of the general assembly of the institute in 1917.' " I now move that the proposal contained in the above resolutions be placed on the program of the next general assembly. The President. Gentlemen, you have heard the motion. What is your pleasure? Mr. Dop (delegate of France). In the first place I wish to express our thanks to the delegate of the United States, and through him to the Government of his country. By placing before the Institute so important a question as that of ocean freight rates, the United States is taking a direct and effective step toward the solution of a problem which is of the greatest economic and po- litical importance to the whole world. Ocean freight rates have become the pivot on which turns the whole problem of the cost of cereals. It is therefore both the duty and the interest of the International Institute of Agriculture to accept with the greatest favor the proposal laid before it. Consequently, I feel justified in stating that my Government will be quite willing to accept the pro- posal made by the Government of the United States. Mr. DE MiKLOs (delegate of Hungary). I wish here to declare that my govern- ment has authorized nie to give its adherance to the proposal made by tlie Gov- ernment of the United States that the next general assembly should deal with the question of ocean freight rates. Mr. Zabiello (delegate of Russia). I wish to congratulate Mr. Lubin on the great success he has had and on the valuable work he has performed in his country by getting the Government of the United States to ask that the question of ocean freight rates be placed on the program of the general assembly. The proposal is one of the greatest importance, more especially for my country, which, in the matter of ocean fi-eight rates, is almost entirely dependent on other countries. I can only express my entire support of the proposal that the question be made part of the program of the next general assembly. Dr. MuLLER (delegate of Germany). I wish to associate myself i.v the con- gratulations which have been addressed to Mr. Lubin for his initiative. I have not been instructed to make a special declaration on the motion before us. but I can state that my government takes a great interest in this question. If the proposal is o be brought before the general assembly or a special conference it is necessary that a preliminra-y study be made. Consequently, I would ask that the secretary general be instructed to take up this subject. Mr. DE Pozzi (delegate of Austria). In the firi5t place I wish to declare myself heartily in favor of the motion presented by Mr. Lubin. I make a motion that a reporter be at once named to study the question along with the proper bureau of the institute. Sir .Tames Wilson (delegate of Great Britain). I wish to give my entire support to the motion presented by Mr. Lubin that the resolutions of Congress be placed before the next general assembly. I agree, however, with the presi- dent that next October will be the proper time for deciding whether the bureau should be ordered to draw up a report on the subject dealt with in the resolu- tions passed by the Congress of the United States which call for a special con- ference to be held. Mr. Aldunate (delegate of Chile). As the representative of a country which does not possess a merchant marine, I deem it proper for me to say a few words. The whole of Latin America has at present to submit to the freight rates formed in the great countries which possess powerful merchant marines. It is therefore of the utmost importance for our countries, for their economic SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 687 and commercial prosperity, that a neutral ground be found, such as is afforded by this institute, in which it is possible for us not only to get in touch with those countries which determine freight rates, but where we may find some protection for our interests which are at stake. I deem it proper to make this statement so that the merchant-marine countries may take into due considera- tion the situation of those nations which are subject to them for ocean carriage. These nations are of great importance to the mecrliant-marine countries, as it is they who supply tlie goods to be carried, and as they also largely supply Eluroiie with her foodstuffs and with the raw material for her factories. Con- sequently, although I have not received direct instructions on this head, I am interpreting faithfully the economic policy to which my Government constantly adheres when I give my full support to the proposal which has been brought before the Permanent Committee by the Congress of the United States. Mr. Pineiro Sokondo (delegate of Argentina). First of all, I wish to con- gi'atulate Mr. Lubin on the fact that, thanks to his efforts, this important ques- tion has been brought before us by the Congress of the United States. It is a question of exceptional importance for the Argentine, which has not got a merchant marine, and which now finds itself compelled to pay enormous freight rates in order to export its products, freight rates which amount in certain cases to fully half the value of the product. Mr. KoviRA (delegate of Uruguay). I entirely agree with the remarks which have just been made by the delegate of Argentina, and which hold good for the country which I represent. The resoultion passed by Congress has my hearty support. The Presidext. I put to the vote the motion submitted by IMr. Lubin. that the proposal relative to ocean-freight rates, contained in the resolution passed by the Congress of the United States, be made part of the program of the next general assembly of the institute. (The motion was carried unanimously.) Mr. Hampton (proceeding). Now, Mr. Chairman and gentlemen of the committee, the merchants' associations, so far as I have been able to review their activities, have taken a stand for ship subsidies. It is diametrically opposed to that taken by the organized farmers. The}' take a stand in favor of a monopoly of the coastwise trade. The farmers take an unalterable stand in opposition to that. Conse- quently on the general plan for legislation to build up our merchant marine they are as far apart as the poles. Mr. Greene. What did you mean in regard to the coastwise trade? The}' want it open to all the world? Mr. Hampton. I want it open. Mr. Greene. You want it open; but what is the position of the farmers? Mr. Hamiton. The general position of the farmers is that they want American ships, regardless of where they are built, to have all the privileges of American commerce ; that there shall be no restric- tions, and that the building up of our American merchant marine shall not be handicapped and harassed by being made simply a cat's- paw to pull the chestnuts out of the fire for the building up of an industry that is of necessity an auxiliary industry. In other words, they want the horse before the cart instead of the cart before the horse. Mr. Kodenbeeg. That phase of the question has been discussed by the grange and they have taken an official position on it? Mr. Ha:mpton. It has been discussed by the grange again and again during the last 10 years, since they have been discussing a merchant marine. Mr. Loud. I could not understand that statement. I would like to have you answer that question. 688 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Greene. 1 asked you whether the farmers' organizations are in favor of opening the coastwise trade to all the vessels of all the world, of whatever nationality or whatever flag. Mr. Hampton. No; they are not favorable to foreign ships: that is, ships sailing under f oreigTi flags entering into the coastwise trade ; but they are in favor of any ship, no matter where it is built, that comes under the American flag having all the privileges of American commerce, coastwise and otherwise. Is that a clear answer to the question. Mr. Greene. No. Are they in favor of restricting that to Ameri- can oiHcered ships and American manned ships, or are they willing that foreigners should command the ships or foreigners should sail the ships in the coastwise trade? Mr. Hampton, The farmers are absolutely in favor of the freedom of the seas, so far as^the sailors are concerned, and stand unquali- fiedly for the seamen's bill which passed Congress a short time ago. Mr. Greene. That is not the question I asked— about the seaman's bill. I asked v hether they are in favor of employing foreign officers and foreign seamen on vessels admitted to the coastwise trade in any form whatsoever, or whether they are in favor of having for- eign officers on those ships and foreign crews. Mr. Hampton. I would not say that they had gone into a close discussion of that particular question. Mr. Greene. That is a very important phase of the question, and I would like to know. That is a very important phase of the ques- tion as to whether or not they are going to have the coastwise trade thrown open to all the world to any vessel that happens to have the American flag at its masthead, no matter where it came from. And then for the vessel to be officered and manned by a foreign crew. Are they in favor of those vessels, officered and manned by foreign crews, being admitted to the coastAvise trade of the United States? Mr. Hampton. If the navigation laws Mr. Greene. It has nothing to do with the navigation laws. I asked you that plain question, if the farmers had decided that in any formal action? Mr. Hampton. Yes and no. Now, can I explain the " 3'es," and car. I explain the " no " ? Mr. Greene. Yes; explain the "yes." The Chairman. Mr. Greene, let me clear up the situation a little bit. Under the existing law, none of the crew on vessels in the coast- wise trade, under the American flag, except the watch officers, are required to be American citizens. As a matter of fact, of the crews on all vessels in the coastwise trade, at least 75 per cent of them are not American citizens, aside from the watch officers. Now. as to the farmers' organizations, as Mr. Greene suggested, have they consid- ered whether or not the offi.cers on American ships should be for- eigners? I do not believe the other question is pertinent, because we have no law requiring them to be American citizens. Have they con- sidered that question ? Mr. Hampton. They have considered it in a broad, general way; in this way, that they are not in favor of making any discrimination in the officers or men on board of one class of American ships as against ships in another class. If you allow foreign officers or for- 1 SHIPPING BOARD, KAVAL AUXILIARY, AXD MERCHANT MARINE. 689 eign seamen upon ocean-going American ships, then yon should allow those same seamen to operate in the coastwise trade. We do not make a distinction between coastwise trade and foreign trade so far as ships under the American flag are concerned. Mr. Greene. That is 3^our individual opinion, as I understand it? Mr. Hampton. No ; it is not my individual opinion. Mr. Greene. I asked you for the opinion of the farmers. Mr. Hampton. It is the opinion of the farmers. The Chairman. Let me clear up another situation right at that point. The only instance where these ships under the American flag are permitted to have the watch officers who are foreigners is under the ship-registry act of August 18, 1914 ; that is, the passage of that bill gave the President the power to suspend our navigation laws with relation to foreign-built ships brought under American registry. That legislation was supported by the United States Steel Corpora- tion, the Standard Oil Co., the United Fruit Co., and other companies whose vessels were under foreign flags to avoid what they thought an insuperable difficulty when they brought their vessels under the American flag if they were required to have them manned by Ameri- can officers; that that power was vested in the President to sus- pend our navigation laws. That is a temporary measure, as I understand, and what you might regard as an emergency measure; and that legislation was pressed by those interests. Mr. Hampton. That is as I understand it. The Chairman. Have your farmers considered that question? Mr. Hampton. In a broad, general way; yes. The farmers have no desire to put obstructions in the way of adjusting the old method of operating on the seas with new and better methods. They recognize there must be some give and take. If 3^ou will go back a while, when the question of the seamen's bill was under discussion in the House, with Mr. Wilson, who is now Sec- retary of Labor, in charge of the bill (at least the bill was known as the Wilson bill), that bill was taken up for general discussion by the farmers because Mr. Wilson is a member of the Grange — he is a farmer and a member of the Grange of Pennsylvania — and it was dis- cussed as a Grange measure, and on broad general principles they are quite willing to stand by what Senator La Follette, Secretary Wilson, and Mr. Andrew Furuseth, and the other men who have made a close study of that law approve and indorse. That is the position, I think, you will find the organized farmers of the United States generally take. Mr. Hardy. Let me interrupt you with a few questions along the line of American seamen. Are you aware to-day there is in the coast- wise trade no law requiring seamen on the coastwise ships under the American flag to be American citizens ? Are you aware of that fact ? Mr. Hampton. I understand that is the case. Mr. Hardy. Then, are you further aware of the fact that the sea- men's law did not change that status, but did require that 75 per cent of the seamen in all departments should be able to understand the language of the officers; and are you aware that the shipowners who most intensely hug the coastwise monopoly to their breasts fought that seamen's act not on the ground of any requirement that they be 690 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. American citizens but that they understand the language of the officers ? Mr. Hampton. Yes. Mr. Hardy. Can you see any consistency in fighting the seamen's bill on that ground and then opposing foreign-built ships coming into our trade because they are not manned by and officered by Ameri- can officers and seamen? In other words, it seems to me they just re- Terse themselves. When you propose to let foreign-built ships into the coastwise trade under the American flag under the same conditions that they go in the foreign trade they object to that proposition be- cause it does not require American seamen on them. Does not that seem to you entirely inconsistent ? Mr. Hampton. I don't know that I would care to testify upon that particular point. Mr. Hardy. The question as I see it from the farmers' standpoint The Chairman. He was called here to express his opinion on this bill. Mr. Hampton. If I undertake to testify in behalf of the prepared- ness portion of this legislation my petition might be different in that case. It would be a personal position. But the farmers' interest in this question is not because of the importance of preparedness, it is because of its effect on the price of the staples of agriculture. They consider an unregulated ocean merchant marine a menace to the prosperity of the farmer. And to continue, when this war ends, the dependence of this country upon a foreign merchant marine they consider a continuous menace, because of the various things that have been brought out in these hearings, and which you all well under- stand. And they expect the United States Congress to take some action that will give them relief. One the one hand, as we see it, there are the shipping interests coming here and asking year after year for ship subsidies and private operation without regulation — with all the monopoly features of the present conditions. On the other hand, there are the farmers, with an unalterable opposition to ship subsidies and a demand for Govern- ment owned and operated ships, at least to the extent of a reasonable percentage of the foreign commerce of the United States. Between these two extremes is this bill which this committee is now consider- ing. We are willing to accept it as a reasonable compromise between these opposing forces. Mr. Hardy. As a step forward? Mr. Hampton. As a step forward, conditional that you do not have any monopoly of the coastwise trade in this bill, and that you strengthen, as much as you possibly can. the Government ownership and operation features; and these conditions are vital, so far as the farmers' support is concerned. No one understands the farmers' side of this subject who does not know how the question of the unregu- lated freight rates of the ocean lead up to the exchanges where the wheat and the other staples are bought and sold. On this point, Mr. Chairman, I submit excerpts from a statement formally pre- sented to Congress by Mr. Lubin, during the consideration of House Joint Resolution 311, printed in the hearings and in the Congres- sional Eecord, and reprinted in farm papers in all parts of the coun- try. The excerpts I submit, and to which I especially desire to call SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 691 3^our attention, show the power of the shipping combine to raise and lower at will the prices of the staples of agriculture. I give them as they were published in the Farmers' Open Forum : Power of the Ship Combine. to raise and lower the price of the staples of agricttlture. [From the Farmers' Open Forum.] The following extracts from the report of Hon. David Lubin, the United States delegate to the International Institute of Agriculture, should be studied carefully bj' every wide-awake farmer if he would understand the deadly danger of producers — not only of America but of the entire world — being " milked " of their profits as long as ocean freight rates on the staples of agriculture are at the mercy of foreign and privately owned and unregulated shipping combines. We quote: As we have seen, the chamber of commerce of New York states that wheat is carried at one tiiue free of charge as ballast, and at another time at a charge of lOd. and 12d. per bushel ; and the San Francisco Chamber of Commerce writes that " rates fluctuate from day to day, and a rate reported to-day might be twice as high or twice as low to-morrow." Therefore the shipper must guess, and so must everyone else guess, so long as rates are unfixed. If the shipper wins on the guess, what he wins comes directly out of the pocket of the producer ; if he loses, he tries hard to recoup himself in his next deal, and also out of the producer's pocket. But this is only the beginning of the mischief. The confusion arising out of the system of unfixed rates for ocean carriage of the staples and the consequent uncertainty in price determining lead to economic evils so far-reaching as to affect the people everywhere. A comprehensive grasp of the significance of this evil may be obtained by the consideration of the following: The staples of agriculture being sold on the world's bourses and exchanges at the world's price, it necessarily follows that a rise in ocean freight rates at one or more leading ports of an exporting country by reducing the price on the quantity exported must necessarily reduce the price on the remaining quantity in the home market for the buyer on the bourses or exchanges, whether he buys for export or for home use, pays the same price. We can thus see how sensitive to change is the world's price and the home price of the staples when influenced by unfixed rates for ocean carriage. Were there fixed rates for the carriage of the staples, subject, say, to 30 or 60 days' notice of change, as is the case with the " package traffic," it would then settle the major evil in the question before us, the evil of constant and unnecessary price disturbances. But, apart from such disturbances, under the present system of unfixed rates there is yet another point which calls for our consideration. Under present conditions the chief directors of a few of the larger shipping rings, by federating their efforts, are in a position to raise and lower, by previous arrangement, the prices of the staples in any and all of the principal ports of the world. Acting under exclusive and advanced knowledge of the rates they will charge, they could low^er the price of the staples by raising the cost of car- riage, and then, directly or indirectly, buy them in the bourses. They could then raise the price of the staples by lowering the cost of carriage, when they would sell. They could thus at will and by arrangement lower the price of the product and buy, then raise the price and sell and pocket the difference. But the economic loss occasioned by such raising and lowering of prices at will would be very much greater than the amount the directors of the shipping rings might pocket, for raising or lowering the cost of carriage means raising or lowering the price of the staples on the home market directly and raising or lowering the world's price indirectly. Here we see that the price of the annual world's production of the staples, the value of which we may roughly estimate at a hundred billion dollars a year, and which represents the foodstuffs and the raw material for clothing and for house furnishing of all the people of the world, is permitted to be battledored and shuttlecocked through the action of the federated shipping rings. 692 SHIPPING BOARD, XAVAL AUXILIARY, AND MliKCHAXT MARINE. We are thus forced to the conclusion that it is possible under this system for a few powerful directors of federated shipping rings to exert more effective economic control over the nations than can be exerted by any President, Emperor. King, or Prince ; and so long as these federated shipping rings have it in their power to dictate at will the rise and fall in price of the world's food products, of the- world's raw materials for clothing and for furnishing, so long do they in reality usurp a power which does not belong to them, a power which they should not have. Mr. Hampton (proceeding). As long as that unregulated condi- tion exists every farmer of the United States who has studied the question knows he can not stop the robber}^ of the cream of his profits. The farmers are going to stop this robbery of the cream of their profits before they get through ; but they are simply asking the United States Congress now to give immediate relief, so far as the}^ can, by the passage of a reasonable shipping bill. Mr. Lazaro. What do you think of the bill under consideration ? Mr. Hampton. I think it is a fairly good bill as a step in the right direction. If you leave the monopoly of the coastwise trade features in it, it is a bill that will not commend itself very strongly to the farmers, in my judgment. You have got to eliminate that and strengthen the Government ownership and operation. I do not mean to say there are not other weaknesses in the bill. But, broadh% I consider it a piece of constructive legislation that will go far in the bui^lding up of an American merchant marine. It is. as I view it, the second half of the shears that will cut the Gordian knot that has been hornswoggling us all of these years, the first half being the sea- men's bill, also passed by this committee. I think with those two measures honestly administered we shall have paved the way for the restoration of American ships manned by American seamen on every sea. Mr. Hardy. As I understand, in your opinion the farmers would like to see this bill passed, but would like to see it amended so that ships bought abroad could enter into the coastwise trade ? Mr. Hampton. Yes, sir; emphatically. Mr. Greene. Will you answer a question for me? Mr. Hampton. Yes. Mr. Greene. In what way has the coastwise trade injuriously affected the farmer in the price of his grain ? Mr. Hampton. A ship comes to New York from Liverpool Mr. Greene. Oh, no; I am talking about the coastwise trade. You have spoken about the injury of the coastwise trade, that the coastwise trade has injured the farmer. In what way has it affected the farmer? Mr. Hampton. I only know how to answer a question one way. The way you would like me to say is " Yes " or " No." Mr. Greene. No; go ahead and explain yourself. Mr. Hampton. You want to put me in the position of the man who was asked the question, " Have you stopped beating your wife ? " and I do not want to be put in that position. Mr. Greene. No; I asked you in what way the coastwise trade has injured the farmer. Mr. Hampton. A ship comes to New York from some foreign port and has got to get a return cargo of corn, cotton, or wheat in Gal- veston. Under this restricted law forbidding them to enter the coast- wise trade they have got to go in ballast to Galveston, and the expense SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 693 of that dead trip has got to be charged up against the ocean freight rates either going or coming, or both. You can see, therefore, that you will compel them to take a long ocean voyage at a dead loss, and to make up that loss by heavier charges on the return cargo of wheat, cotton, etc., whereas if they could pick up a cargo in New York for Galveston they could cross the ocean at a cheaper rate. In the development of an American merchant marine the freedom of the coastwise trade is vital to the farmer. It is not only in carrying farm produce in big ships to Europe and to long-distance ports that free access to the coastwise trade is necessary, but it is fully as necessary to the little ships butting in to Canadian, Central Ameri- can, and West India Island ports, and so forth and so on, which develops trade enormously if it is free. It is this small-ship business which makes feeders for the business of the bigger ships the final business. Mr. Greene. Do you Imow anything about the coastwise trade on the Lakes? Mr. Hampton. Somewhat. Mr. Greene. What has been the effect of our coastwise trade on the Lakes? Has the price of freight gone up on the Lakes? Is it high or is it low ? Is it not a fact that on the Lakes they have the lowest freights of an}^ place, anywhere in the world, and that is con- fined wholly to the coastwise trade? There are not any foreign steamers in the Lake trade, and the price of freights on the Lakes is lower than anywhere else in the world. Is not wheat, grain, and everything else carried on the Lakes at a lower price than any- where else ? Mr. Hampton. Granting it is so, what has that to do with the question ? Mr. Greene. I simply asked you the question as to whether the coastwise trade has injuriously affected the farmers on the Lakes? Mr. Hampton. Do you think the freights on the Lakes, if I may ask a question Mr. Greene. I am not on the stand. I asked you the question, and I want you to answer the questions I ask you. I am not a witness. Mr. Hampton. I am not quite prepared to say that a discussion of the quetsion of shipping on the Lakes is pertinent to the question now before this committee. Mr. Greene. That is coastwise trade, and a very important part of the merchant marine of this country. Mr. Hampton. If it was left to me to decide, I would certainly make the traffic on the Lakes open to all. The Chairman. If you will read the decision of the United States district court the other day, in Michigan, on a question growing out of the Eastland disaster, where the defendants were asking to be discharged when application was made to transfer the case to the jurisdiction of the United States court of Illinois, you will find that there is a distinction between coastwise trade and the trade on the Great Lakes. Mr. Greene, I know, but that is coastwise trade, is it not? The Chairman. It is not, Avithin the meaning of our navigation laws, I believe. I have the opinion here of the court. But, then, I do not care to waste time on it. 694 SHIPPING BOARD, NAVAL AUXILTAEY, AND MERCHANT MARINE. Mr. Hampton. I admit that so far as traffic on the Lakes has been free it has been a positive benefit to the western farmers in moving their crops to the seaboard. Mr. Greene. Yes; and that is all coastwise trade; no foreign-built vessels are admitted to that trade. Mr. Hampton. But I consider it a very important question from my point of view, whether it would not have been still better if the farmers had had the benefits that would come from an intermingling of the Canadian and American traffic. Mr. Loud. Suppose there was an intermingling of the transpor- tation, the marketing of grain between Canada and the United States would also be commingled, would it not ? Mr. Hampton. Yes. That would be a good thing. Mr. Hardy. If the vessels on the Lakes could be bought cheaper than they can now, that would undoubtedly reduce the rates, what- ever they are now, or it should ; is not that true ? Mr. Hampton. Certainly. Mr. Hardy. As I understand it, the merchant vessels on the Lakes are of a peculiar kind and are built in the United States lay stand- ardized methods and are supposed to be very cheaply built. I do not know about that. But the fact is in the coastwise trade our ves- sels are more costly than when built abroad and that the overseas trade vessels built here are more costly than vessels built abroad. And it is simply a question of cheapening the freights by cheapening the cost of the vessel; is not that so? Mr. Hampton. I think so. Mr. Greene. I would like to ask a question now as to whether vessels can be built more cheaply abroad than they can here at the present day. Mr. Hampton. According to the testimony laid before this com- mittee, which is my authority Mr. Greene. I have not seen any testimony that they can be built cheaper abroad to-day than they can in this country. Mr. Hampton. The testimony I have read, which is presented to this committee, is my authority for the statement that we are now able to build ships as cheaply here as they can be built abroad, and that the need of a subsidy, even from the point of view of the most rabid ship subsidy hunters is greatly minimized, if not elimi- nated. Mr. Greene. Do you know anything about the action of Italy, France, England, Germany, and the other foreign Governments as to whether the}^ have subsidies or not ? Mr. Hampton. My information on those points is mostly gained from congressional documents, most of which are documents from this committee. But I do not think it is necessary to enter into that discussion. Mr. Greene. You 'say it is not necessary to subsidize vessels here, and I ask you why you think it is necessary to subsidize vessels abroad. Their vessels have been subsidized from all time, and a merchant marine, as far as I understand it, has been built up and sustained by subsidies in all those foreign conutries. Mr. Hampton. I never stated that I believed it was necessary to subsidize foreign shijos. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 695 Mr. Greene. I did not say that you said it, but you said that is the argument why there should be no subsidy here ; and I asked you then if you had to compete with the foreign trade with the foreign- built vessels that are subsidized and liberally subsidized, whether they would not be subject to unfair competition if there was nothing to give our ships any advantage on this side of the Avater — if the American vessel would not be handicapped in endeavoring to secure ocean trade. Mr. Hampton. I do not believe myself from my investigations that the ocean-carrying trade of any nation, to any considerable extent, has been built up on subsidies. Certainly it is not true of the British merchant marine, which is the biggest merchant marine in the world. Mr. Greene. What has it been built up on, if it has not been built on subsidies? Mr. Hampton. Enterprise; by being able to build the ships cheap- est and being able to operate them the cheapest. Mr. Greene. And they have not subsidized them? Mr. Hampton. As far as developing foreign commerce is con- cerned, they have all the incidents of trade in their favor. Mr. Rodenberg. And subsidy in addition? Mr. Hampton. The subsidy of the British Government to its mer- chant marine is infinitesimal. Mr. Rowe. AVould you be willing this Government should sub- sidize to the same extent that the British Government does? Mr. Rodenberg. Do you take them as a standard? Mr. Hampton. No; that is a different question. Mr. Greene. I do not know^ why; I can not understand why, if other Governments subsidize their vessels and give them a direct advantage to enable them to build up their trade, which you say England has built up, built up their trade both home and abroad, it is not necessarj?^ here. Mr. Hampton. I do not believe the British trade has been built up by subsidies. The Chairman. I want to sa}^ right here, Mr. Hampton, and I challenge contradiction, that the British trade, that is, the cargo trade, has never been built up by subsidy at all; that it has not re- ceived any relief in the way of subsidy. Mr. Hampton. That has been by understanding. The Chairman. Very well ; let us clear that up. They have paid what is termed " subsidy " in the matter of mail pay to certain ships just as we have to four ships under the American flag in our overseas trade, under the ocean mail pay act of March 3, 1891. But I do not Imow of any nation, unless it is France (and I will not say as to that) that subsidizes its cargo-carrying merchant marine ships. If there is any nation that does so I am open to information. But they do pay what we call ocean mail pay to certain lines of ships. Mr. Greene. Certain subventions are paid by nearly every foreign Government in some form — you may not call it " subsidy." Mr. Rodenberg. How have the amounts paid by the English Gov- ernment on mails compared with the amounts we pay? The Chairman. Less. Mr. Rodenberg. They pay less? 696 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. The Chairman. Yes. Mr. Hardy. Let me state right here that Senator Burton some years ago, in a most able speech, made the statement, in which he was not contradicted, that there was no merchant marine built up by sub- sidies anywhere in the world. Mr. Burke. Why should they be, in view of the fact, which is acknowledged, that the operation of the foreign ships is much cheaper than the operation of our ships, and that the cost of construction of forei*:n ships is cheaper than the cost of construction of our ships? Why, then, is it necessary for foreign ships to be paid a subsidy ? Mr. Greene. Because they do; that is all. Mr. Burke. Why? Mr. Greene. Because they think it is necessary and want to build it up. That is a well-known fact in shipping circles — that they think it is necessary. Mr. Burke. Why should it be necessary? Mr. Greene. I am not saying why. I am not here to be questioned as to that — as to why — because I do not undertake to run all the countries of the world. I am trying to look out for America, if I can. Mr. Hampton. My purpose, Mr. Chairman, in coming before this committee was not to discuss the merits or demerits of high-speed passenger vessels or the question of mail subventions. My purpose here is to bring to your attention the tremendous vital interests the farmers have in the cargo-carrying traffic on the ocean. They are the biggest exporters in this country, measured in bulk. They have a right to some consideration. And we are not concerned directly with the question of whether you are going to build under the American flag a Lusitania and the corresponding ships that will speed the mails across the ocean so much faster, or whether they can be comman- cleered by the United States Government for special naval purposes in time of war. We are here on the question of the cargo end of this proposition, and we believe if there is going to be any Govern- ment aid in building an American merchant marine that affects the cargo freights and commerce of the United States that it should be done by direct Government ownership and operation. That is our position, and we are willing to modify that position to some ex- tent — or, at least, what we consider a very big extent, so as to get a solution of the present distressing situation — along the lines of the bill that is now pending before this committee. We hope you will take action and report a bill with a broadening of it as I have indi- cated to-day. That is my position and that is the position I think you will find that the farmers of the United States — from Maine to California, from the Canadian line to the Mexican Gulf — are taking as they study the proposition. Mr. Saunders. You rather mean that we ought to get ready for another situation like the present one; not that we could do any- thing to relieve the present situation ? Mr. Hampton. I have not touched upon one or two points because I am not sufficiently familiar with them to add any value to the testimon}^ presented to this committee; but I think if this bill passed. and it was broad enough so that we could immediately bring into operation for mercantile purposes the naval and military reserve SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 697 ships, transports, supply ships, etc., that are now practically rotting at the wharves, so that they could come into the commerce of the country, it would be a good thing. Mr. Loud. Where are those ships lying idle at the wharves? The Navy Department said they had not one. I have a letter up in my office saying that they have not a single idle naval auxiliary, a letter I received last week. On what authority do you make that state- ment ^ Mr. Hampton. Only on general authority. Mr. Loud. I can bring you down the letter that will make that statement clear to you. I do not think it is proper to put misin- formation into the record. Mr. Hampton. Your statement would correct the misinformation there. Mr. Greene. T make the motion that Mr. Loud put the letter into the record. Mr. Loud. I have right here the printed information from the Navy Department in which they say they have no idle auxiliaries. Mr. Hampton. If there are no idle auxiliaries, Mr. Chairman, then we could not bring them into operation now. But it is common sense, in answer to that, if you have a Navy, such as is now proposed, that you would have to add auxiliaries to adequately supply it, which could not be used in peace times by the Navy, and they will rot at the wharves unless you provide means for them to be placed in the commerce of the United States. Mr. RoDENBERG. If vour statement in the first instance relative to vessels rotting at the wharves was correct, it would not be necessary even then. Mr. Loud. Here is the letter which says " the number of naval colliers is now insufficient to replenish the stock of fuel at east const stations." This is a letter to Chairman Padgett, of the Naval Com- mittee, in response to resolution No. 79, introduced by myself, asking that the relief material and supplies for Belgium and other Euro- pean countries might be transported by the auxiliaries of the Navy, and they replied that they have no ships for any such purpose: that they are all busy. Mr. Hampton. Does that cover military transports? Mr. Loud. No. The Chairiman. I have made inquiry like Mr. Loud in that con- nection through the Department of Commerce and was informed there were no naval auxiliaries ntw available and only two trans- ports that might be made available, but it would require an expend- iture of $50,000 on each one in the way of repairs. That is in con- nection with Mr. Lake's statement before the committee that he had not had an opportunity to bid on a contract for water pipe in Argen- tina and, if possible, I wanted by joint resolution of Congress to make available our naval auxiliaries to meet those acute situations in our foreign commerce. And that was mv information. Mr. Greene. Now, Mr. Chairman, I ask that Mr. Loud's statement which he has there be placed in the record. The Chairman. Either the letter to him or that, whichever he prefers. 698 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Loud. And I object to such a statement as this being put in the record : Should the merchant-marine bill pass it will put in operation some of our vessels now lying idle. Where are those ships lying idle at the present time? Nobody knows, because there are none. Then this goes on to say : Ten colliers that were used during the Spanish-American War, that have a capacity of 10,000 tons, could carry a cargo to Europe and one back every month, thus making 24 trips in a year, and paying for themselves in six mouths, are locked to our wharves because of our antiquated shipping laws. That sounds familiar to you? Mr. EoDENBERG. Who is the author of that article? Mr. Hampton. Mr. William T. Creasy. Mr. Loud. I do not like to see such material as that go into the record when there is no foundation for it. I say that has a familiar sound to you ? Mr. Hardy. If 3'ou are asking me that question, it does sound so. But if we have a law that forbids a naval vessel ever being used for the benefit of our commerce, it is an antiquated law; and we have such a law. Now, you say there are no idle ships and the chairman has just stated there are two military transports now lying at the wharves but which will take $50,000 to repair. There is a part of your idle ships. The truth is I am in favor of letting every ship owned by the Ignited States be used for the benefit of our people. Mr. Loud. So am I. That is a great hobby of mine, so far as that is concerned. Mr. Hardy. Yes; you introduced that resolution, but now you seem to be talking against it. Mr. Loud. When it says here that there are 10 colliers that are tied up to the wharves, we want some evidence that that is true ; because we know it is not a fact. The Chairman. We have your statement and mine as to existing conditions, so far as we have been able to investigate them. Mr. Rodenberg. You want to put the Secretary's information in here because that is official. The Chairman. I say either the letter to him or the letter of the Secretary. Mr. Greene. Ought this statement to go into the record that speaks of there being 10 colliers tied up to the wharves, if there is no truth in it? Mr. Eodenberg. Let it go in and then let the official denial fol- low it. Mr. RowE. It is very good as showing the reason why the farmers voted the way they did. Mr. Loud. The letter is only about two or three lines long and answers the direct statement that there are no idle colliers at this time. (The letters above referred to are as follows:) Admiral Blue, Chief, Bureatt of Navigation, Citij. My Deak Admiral: In Document No. 20, present session, page 201, I notice where seven of the colliers were in reserve or under repairs for part of the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 69i> years 1914 and 1915. I desire to ask if any of the auxiliaries belonging to the Navy are now in reserve, and if so, will you kindly give me the names of such ships. Thanking you for this information, I am. Very truly, yours, Geo. a. Loud. Navy Department, Bureau of Navigation, * Washington, D. C, February 29, 1916. My Dear Mr. Loud: Referring to your letter of the 25th instant, I beg to> inform you that at the present none of the naval colliers are in reserve or out of service. Very sincerely, yours, J. H. Dayton, Acting Chief of Bureau. Hon. George A. Loud, M. C. House of Representatives, Washington, D. C. transportation of relief supplies in naval colliers. Navy Department, Washington, February 19, 1916. My Dear Mr. Padgett : I have given careful consideration to your letter of February 5. referring to me for recommendation and report House resolution No. 79. relative to the transportation of relief supplies in naval colliers. I have also obtained the opinion of the Secretary of State in regard to the proposed resolution, as suggested by you, and a copy of his letter is inclosed. The objections to the proposed resolution are twofold. First, an interna- tional objection, the character of which is set forth in the letter from the Sec- retary of State, in whose opinion I concur. Second, a departmental objection. The services of all naval colliers are urgently required for supplying the needs of the ships and shore stations of the Navy, and the use of any naval colliers whatsoever for the purposes indi- cated in the proposed resolution would seriously cripple the efficiency of the Navy. Present conditions are bound to hold during the continuance of the present war, and for some time thereafter. Even if colliers were available, their use for the purposes indicated would involve expenses for steaming coal, stevedoring, etc., and if these expenses are not borne by the relief organizations, they must be borne by the Navy from already overburdened appropriations. I inclose a letter from the Bureau of Supplies and Accounts, approved by the Chief of Naval Operations, giving the detailed reasons for this objection. For the reasons above given I earnestly recommend that House resolution No. 79 be not enacted into law. Very sincerely, JosEPHUs Daniels. Hon. L. P. Padgett. M. C, Chairman Committee on Naval Affairs, House of Representatives, Washington, D. C. Mr. Hardy. When was the article ^Yritten to which Mr. Loud so strenuously objects? Mr. Hampton. It was published in the current number of the Penns3'lvania Grange News. Mr. Loud. It is March. Mr. Hampton. It is the official paper of the Pennsylvania State Grange, March, 1916. Mr. Hardy. Now you have that article and those letters both in the record. CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on Merchant Marine and Fisheries, House of Representatives, Saturday, March 4, 1916. STATEMENT OF CAPT. W. S. A. SMITH, EXPERT IN FARM PRACTICE, UNITED STATES DEPARTMENT OF AGRICUL- TURE. The Chairman. How long have you been in the Agricultural DeT)artment ? Capt. Smith. Just a year. I came down here last year. But I do not represent the department here in any way at all. The Chairman. \^1iat was 3'our business before ? Capt. Smith. Prior to that time I had been one of the large farmers in Iowa for 18 years. Before that I was 21 years at sea and had command of a ship for about 10 years. The Chairman. Proceed. Capt. Smith. I do not quite understand what I am here for. I was asked to appear here, and I do not understand just on what lines, Mr. Chairman. The Chairman. The only question before the committee is the con- sideration of House bill 10500, and I presume the committee would like to have an expression of opinion from you with reference to the merits of this proposed legilsation. Mr. Greene. Wlio asked you to come before the committee ? The Chairman. Mr. Hampton requested me to invite him to appear before the committee, and I requested the Secretary of Agriculture to grant him leave for that purpose. Capt. Smith. What I meant was this, that I did not know what particular point I was here for, because I have had rather a peculiar career, having had an intimate knowledge of shipping, and havmg been brought up on the seacoast and lived in a shipbuilding yard practi- call}^ all of my life, saw the building of four new ships, and superin- tended the building of the last one, which I sailed, and it gave me a rather peculiar experience in the shipping line. The Chairman. Where were you raised? Capt. Smith. In Dundee, Scotland. The Chairman. Have you read this bill? Capt. Smith. Yes, sir; I have gone over this bill very carefully. The Chairman. Give the committee any suggestions you have to make in regard to it. Capt. Smith. The question in section 4, as to the coastwise article in there, I do not know whether I need discuss that at aU, because you 32910—16 45 701 702 SHIPPING BOARD, NAVAI, AUXILIARY, AND MERCHANT MARINE. have it; but in section 11 there is in this bill a section that I was not quite able to understand, that is in section 1 1 where you provide here that the officers and crews of such vessels wno may volunteer for the purpose may be enrolled as members of such reserve in various ranks and ratings, corresponding to those of the United States Navj^ not above the rank of lieutenant commander, provided they are citizens of the United States, under such regulations as may be prescribed by the Secretary of the Navy with the approval of the board. And then it goes on to state the remuneration which those men will get ; and I can not, as a seaman, see on what basis that remuneration is fixed and why it should be fixed on that fine and what you are giving that money for. The Chairman. The purpose, as I understand it, is to build up the naval reserve. Instead of having these men on battleships and bat- tle cruisers and naval auxiliaries in time of peace without anything to do, to encourage men to go into the merchant-marine service. At the same time it is intended to give them additional pay with a view to obtaining them for service in the Navy in the event of war. Capt. Smith. Yes, sir; in Great Britain they have a naval reserve in which a seaman — I do not know the exact amount he gets, but it is very small — gets something like $5 or $6 a month extra if he joins the naval reserve; and then, in case of war, if he is called on, the very minute he steps aboard of a man-of-war, the .So or so a month which he has been receiving stops, and then he gets, aboard that man-of-war, the same rates and the same privileges as anyone in the same rank that he is; but in this peculiar case that you have here, you take the case here of these two army transports that met off of the Canary Islands, the British and German, in which the British was sunk. Suppose we were to have a war now and had happened to have a vessel in the Canary Islands, and you say to a vessel, "we will send you some guns and make you into an Army auxiliary," and suppose I have joined that vessel under the rate of $5 a month by joining the reserve and in a week that vessel is sunk; I woidd get about 75 cents, or my widow would, for joining it. If I joined that vessel it seems to me I ought to join with the same pay and the same pension as the other members get. But when you simply pay $5 a month you have two rates of pay aboard a vessel which will create aU kinds of feeling. He is to get $5 a month more. More than what? More than the present rate of pay; but that might mean that if he goes aboard a man-of-war, when he is caUed in the reserve, he is paid as an able seaman $30 a month, whereas these men might in a pinch like now, be getting $40, and this Avould make it S45. Ihe Chairman. This does not apply to a man-of-war or the Navy at all; it applies to merchant vessels. Capt. Smith. I understand that, sir; but when that vessel is taken in as a naval reserve vessel, she becomes a part of the Navy. The Chairman. Very well; when they are taken in as a naval reserve vessel, if these men then enlist in the Navy, they will get the pay of the man in the Navy, will they not ? Capt. Smith. It does not say so here. The Chairman. It says under regulations to be prescribed by the Secretary of the Navy with the approval of the board. Capt. Smith. It seems to me — 1 may be wTong in it — if the first part had been left in and the remuneration had been left out, and it SHIPPING BOAED, NAVAL AUXILIARY, AND MEKCHANT MARINE. 703 had all just simply been left to the Secretary of the Navy as to the kind of a naval reserve he wanted, I think it would be stronger. The Chairman. In the British merchant marine there are certain men who belong to the naval reserve. Capt. Smith. Yes, sir. The Chairman. What pay do they get? Capt. Smith. I do not know what it is, because I have been away from there for 17 years, I do not remember. The Chairman. They do not get the same pay as men in the navy, do they? Capt. Smith. When they are changed they do; yes, sir. Mr. Hardy. This section 11 only applies to vessels being operated under this act; when the vessel is taken over by the Navy, it would^ not be operated under this act. The Chairman. No. Mr. Hardy. It won't apply at that time. I think that will relieve your misapprehension. The Chairman. Yes; being operated under this act as a mercan- tile marine. When they are transferred to the Navy then they would come under that law and the regulations affecting the Navy. Mr. Hardy. As a part of the naval force. The Chairman. This provision in the bill was framed by men who are qiiite familiar with the Navy and the law affecting the Navy, and they do not see any such difiiculty as seems to arise in your mind. Mr. Hardy. It seems to me it would certainly induce more Ameri- can boys to go aboard these merchant ships and become a source from which our Navy could draw resources in time of war, giving them some advantage by reason of their volunteering to become a naval reserve force. Capt. Smith. Yes, sir. Mr. Rodenberg. You are now an American citizen, are you not? Capt. Smith. Yes, sir. There is one other thing which I heard here. I heard Mr. Hampton on the stand speaking of the attitude of the American farmer. When you get west of Pittsburgh the Ameri- can farmer is extremely interested in the mercantile marine bill from the preparedness end, but the other end has never been put in front of them. Mr. Hardy. Has never been what ? Capt. Smith. The other end has never been put in front of them very strongly. In all of the literature out West, in all of the articles dealing with our proposed shipping bill, they have been putting it in front of the farmer from the preparedness point — from the trans- port end more than the other way. He does not have any clear undei*standmg of it all through the Middle West from the cargo- canymg end. The Chairman. In which end is he interested ? Capt. Smith. He would be extremely interested in the other if he ever had it explained a little bit. And the backbone of all of the mercantile marme is the tramp steamer. That is the backbone of the mercantile marine. But there are so many wrong statements made as to the reason why we do not get a mercantile marine here. There has not been, up to the time that the war broke out, any great profit in a mercantile marine for any stockholder. If you take it for 704 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. a term of years, the British mercantile marine has been built up largely because the people were forced to take shares in that. The Chairman. Explain that. We heard Mr. Curry develop that. Capt. Smith. I beg your pardon. The Chairman. One of the members of the committee developed that point in part. Tell us what you know about it. Capt. Smith. If the shipo"\vner in Great Britain is the managing owner of 12 ships he naturally sees to it that he has the controlling interest. Thirty-three sixty-fourtlis give him the controlling hiterest, and he naturally sees to it that as long as he or his family or his heirs keep that controlling interest they control the 12 ships. Now, it is necessary for that man to see that these ships do not deteriorate, and in nearly all of these shipping companies in England there is a clause that when the ship is lost they do not take the money and divide it among the stockholders, but that clause provides that another ship shall be built with that money. And now here a ship is lost. She has gone out of date. The insurance is S100,000. The demand for 50 years has gone from a 600-ton ship to a 6,000-ton ship. So he says to the stockholders: "We have got to get a new ship and can no'^t build a $100,000 ship, but we must build a $200,000 ship now, and you have to put up the other $100,000." The other ^stockholders say, ''Why, I have not been getting any great dividends from ships; I do not beheve I want to take any more stock." But here is a man supplymg that ship with paints. He says, "Why, you are suppl^mig mj ships with paints and oils. If you want to hold that business, you take a share of stock or some- bod}^ else will supply it." And after this man has taken two or three shares, he goes to the man who makes the paint and he says, "Here, I can not take any more shares; they do not pay any divi- dends. If you want to seU me paint, you have to take a share." And so the whole of Great Britam is interlocked, not in the direct profit, but in the indirect profit. They make the profit out of the business; but their business is profitable. But I am talking here of a direct profit, and you can not take the last two years as a sample. You take the average stockholder of shipping in Great Britain up to the last five or six years, you could not get your money out of these shipping companies. If you had a widow and she tried to sell her shares in shipping, she would not get very much for them. They are practically unsalable because they are tied up in these contracts or in these old agreements of the limited liabihty company, as they call it in England. The shipper now or the o^\^ler in Great Britain, when he has a ship beginning to get out of class, sells it to a Norrv^e^ian or to the Swedes, who run a whole lot cheaper and have a difterent classification with Lloyds, which allows them to buy a cheaper ship and to compete — — Mr. HiftiDY. You say that a man who controls these ships owns thirty-three sixty-fourths ? Capt. Smith. Yes, sir. Mr. Hardy, He wants it so that he can control the ship. Now he has his aU invested in there, has he not ? What inducement is there for a man to own thirty-three sixty-fourths if there is no profit in British shipping? Mr. RoDENBERG. There is a good salary attached to it. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 705 Capt. Smith. A great many of those limited liability companies when they started out 60 or 80 years ago, had a very innocent look- ing little clause in. them which stated that the managing owner was to receive 2 per cent of the gross. And when they started in the ship was makmg two voyages in 12 months, of only 500 tons register, and it did not amount to a great deal. The Cunard Co. started that way. But you can imagine what it means now with a ship of 40,000 tons registry, when he gets 2 per cent out of the gross every 10 days. He has a fat thing. Mr. Hardy. So that the owner of that per cent is simply gobbling up the profits of the whole business ? Capt. Smith. I have known the case of a line which when it first started went to Australia, and that ship was managed by Thomas Greenland & Co., in London, and during many years the owners of the ship presented them with enough money to keep them going out of their profits, because of their rake-off — I can not call it a rake-off; it was the agreement and they were entitled to it. But the profits are large and all of the profits go to the managing owner and not to the stockholders. Mr. Hardy. So it amounts to this, that, in ^England, under the compulsion of business conditions, the public are called upon to subscribe to nondividend paying stock- because they are benefited indirectly; while the man who owns the major interest takes all of the profits out of the business ? Capt. Smith. Exactly; without a doubt. Mr. Hardy. Tliat is a business scheme which is not lacking in shrewdness. Mr. RoDENBERG. That is high finance. Capt. Smith. Shipping is a great gamble, and has always been a great gamble, the same as oil in Texas. You have five or six years of good times Mr. Greene. I did not know they had anything down in Texas that there was a gamble in, except cotton. Mr. RowE. What do you think about Govermnent-owned ships in America ? You are an American citizen ; are you in favor of Govermnent-owned and Government-operated ships ? Capt. Smith. The point in favor of this new bill is here, that it does not stipulate for Government-owned ships. If this bill was a straight out bill calling for Government-owned ships, as an American citizen I would not be in favor of it. But as this bill is now, it does not call for Government-owned ships ; it calls for the Government to start those ships and to leave the citizen or citizens the privilege of buying them. But I can not see why anyone should object to it on that basis. Mr. RowE. Do you think the Government, if it did operate ships, would make any money out of it? I mean covering a long period of years ; not just now. Capt. Smith. You are going back to the question of direct return, Mr, RowE. Yes; to the question of direct return after you have charged off depreciation from your boat. Mr. RoDENBERG. The Government could not make any indirect profits. Capt. Smith, No; I do not think I would undertake to buy my stock for the direct profits, I would not expect to get very large 706 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. dividends if it was a case of a direct profit. But the indirect profit from the building up of this trade — it would have a very great bearing, there is no question about it. The greatest handicap you have to this provision in here is the coastwise provision on your shipping. If you undertake to build up a commerce with South America to-day, you have got to allow your people to compete. You have a firm in New York to-day which is going to charter a ship to send her to Buenos Aires. I have a little factory 40 miles from Norfolk down here, and I have 40 tons which I want to ship from there. How do I have to ship that to get it to Buenos Aires ? I have to ship those goods to New York to be loaded. The freight from Norfolk to New York is more than the freight down the other way. If it was pos- sible for that ship to come down there and gather up half a cargo at Norfolk, and to go on, it would be a very great help. Mr. RowE. That is the main reason you believe in tramp steamers, is it not, because they can stop at any place and load cargo ? Capt. Smith. Yes, sir. We are putting all of our weight here on those larger vessels and When you spoke here to-day of Great Britain subsidizing her steamships, there are no tramp steamers receiving anything in the wa}i5 of a subsidy. The vessels subsidized are the large boats carrying the mails which may be used as transports. They are built under Government supervision and may be called upon, and they receive a subsidy for that. There is no such thing as a tramp steamer receiving a subsidy'". And it is the tramp steamer that has built up the commerce of Great Britain, It is the tramp steamer that we want here, and it is the tramp steamer which you shut out by leaving those old regulations in operation which you have here now. Mr, Greene. I understand there is no law that prohibits a foreign vessel from taking on cargo and carrying it to Buenos Aires, to a foreign port ? Capt, Smith. No, sir; there is no law prohibiting that. Mr. Greene, But if she goes from port to port, and she takes cargo at Norfolk and carries it to Charleston, that would be con- trary to the law, Capt. Smith. Yes, sir. When I speak of the coastwise law I moan you have extended those coastwise laws to such an extent that in a way it seems sort of a joke. If you had a provision that it was legitimate coastwise trade here I would not care to see it. But where now a ship under this bill, for instance, built on the Clyde, comes over here and is put under the American flag and American registry, and I, as the master of that ship, am offered a cargo in New York of 6,000 tons for Japan and 4,000 tons for San Francisco, to go through the Panama Canal, you help make the canal pay by doing that if I can discharge that 4,000 tons at San Francisco and take another 4,000 tons aboard for Japan; but I am prohibited from doing that, and yet an old coaster can do it. It is a dog in the manger. Now, if you are going to build up 5^our foreign trade why should not that vessel be allowed to go to San Francisco ? You have got to carry that stuff and your coastwise vessels can not do this, and yet that big vessel is prohibited from doing it. That is what I object to. I do not object to the little fellows, the coasters, having the right, but they are not able to do this, and yet you shut us out by this provision. riHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 707 Mr. Loud. What is the reason the lumber carriers brincring himber from the Pacific coast around to New York can not bring the return cargo of 4,000 tons you spoke of? Capt. Smith. I did not quite get that. Mr. Loud. What is the reason the lumber carriers carrying bulk freight and lumber from the western coast around to the east coast can not on the return trip carry the 4,000 tons that you spoke of. You say it could not be carried. Why could it not be carried by the coas^vise ships ? You say it could not be carried by the coastwise ships. Capt.. vSm iTii . Why not? Mr. Loud. Yes, why not. Capt. Smith. A vessel is not coastwise if she is going to Japan. Mr. Loud. But the lum.ber carriers and the other bulk carriers, carrying cargoes from the western coast around to the eastern coast, to New York, are coastwise. Capt. Smith. Certainly they are. Mr. Loud. "WTiy could they not carry the 4,000 tons around to San Francisco ? Capt. Smith. Because they do not hav^^ enough of them to do it. But in order to g(>t some more — that is what this is for, I under- stand Mr. Loud. It is just the other way. The bulk of the stuff goes around and there is no return cargo for them. Your example does not work out very well, it seems to me. Capt. Smith. 1 am not quite sure. The Chairman. There is a demand on the Pacific coast, as I understand, for a larg(^r tonnage from the Pacific coast east — that is, to carry the lumber, the fish, and the fruits, and other commodities of the Pacific coast not only to foreign countries, but to the eastern coast. Capt. Smith. Mr. Chairman, the point that the gentleman brings out, it seems to me, brings up the very point that I wanted to bring out plainly. He says, Why don't they carry a cargo back? Because they do not get it to carry, do they ? Mr. Loud. They would get it if the Enghsh ships did not take it. There is plenty of tonnage moving in this direction. STATEMENT OF CAPT. WILLIAM A. WESCOTT, PRESIDENT OF THE MASTERS, MATES, AND PILOTS ASSOCIATION OF THE PACIFIC COAST. Capt. Wescott. ^Iv. Chau*man, I desire to state that for many years I have heard the same statement as made by Capt. Smith in reference to the method used in the upbuilding of the British mer- chant marine; that is, in the matter of a kind of a forced proposition on the British manufacturers to take stock in British vessels. But I am of the opinion that Capt. Smith cut the matter a trifle short, or probably it may have slipped his memory; I therefore want to ask Capt. Smith if it is not a fact that once such manufacturers put their money in such vessels, if it is not pretty hard for them to ever get it out agam? Mr. PIardy. Yes; he stated that. Mr. RowE. He said they could not sell their interest. 708 SHIPPING BOAED, NAVAL AUXILIAEY, AND MERCHANT MAEINE. Capt. Wescott. I missed that. Mr. Saunders. He said if a widow had some of that stock and tried to get rid of it she would have a pretty hard time. • Capt. Wescott. Another matter I have in mind, Mr. Chairman: For many years I have always thought it was a pretty hard proposi- tion for an American shipowner to compete with British ships under those conditions and make any money, because the British manu- facturers do not expect dividends from such stocks. If they get 2 or 2^7 per cent interest on their money, they think they are doing well. Am I correct, Capt. Smith ? Capt. Smith. Yes, sir. Capt. Wescott. The managing owners, as Capt. Smith states, con- trol 33 shares of stock, which is the controlling interest, the number of shares of stock in each vessel being 65. Mr. Greene. Sixty-four. Capt. Wescott. I thought it was 65. The managing owner is the man who makes the money. It is the same on the Pacific coast at the present time in the coastwise trade. Companies are formed by some would-be managing owner, they being very careful in the mat- ter of having control of the majority of the stock. They receive from 3 to 5 per cent of the vessel's gross earnings tor their services, and they become very wealthy, while the stockholders receive but a very small dividend, if any. The Chairman. It appears that our American shipowners have caught on to the British plan and are working it here ? Capt. Wescott. Certainly. Mr. Chairman, I consider this bill a very good one; but I do not see any way other than that the Gov- ernment will lose money in undertaking to compete with the mer- chant marine of Great Britain. There was a gentleman before this committee last Thursday who represented some Brazihan hne. He stated to the committee that they coidd not in normal times get a reasonable amount of cargo for their ships, and he also stated that the shippers preferred for some reason to sliip their freight by British vessels. Why ? Because the British manufacturers own an interest in the ships, and for that reason whenever they buy any foreign goods they order such goods shipped on vessels in which they own an interest. Is that correct, Capt. Smith. Capt. Smith. That is correct. Mr. Rowe. They are stockholders? Capt. Wescott. Certainly they are stockholders. That is the reason, Mr. Chairman, that our American shipping is handicapped in the foreign trade under those conditions. The Japanese vessels receive a subsidv from their Government. Take the Toyo Kishen Kaisha Co., who receive from $1,200,000 to $1,300,000 as a subsidy. But there is a clause inserted in the agree- ment between the Government and all subsidized Unes that the corn- panies receiving a subsidy from the Government can not raise their freight rates on Japanese goods. Therefore the manufacturers of Japan can send their product to foreign markets at the same freight rates that they did prior to the war. At the same time they charge exorbitant rates on freight from the Chinese ports or from the ports on the Pacific to the Orient. What I have stated is common knowl edge along the water front of San Francisco. SHIPPING BOARD, NAVAL AUXILIAEY, AND MERCHANT MARINE. 709 Mr. Chairman, my friend Mr. Hampton, when the question was asked him if the farmers were in favor of manning vessels with foreign officers and foreign seamen, did not really commit himself one way or the other. The Chairman. He said that they approved of the seamen's bill. Capt. Wescott. The seaman's bill had nothing to do with the nativity or citizenship of the officers. The other question, as Judge Hardy has stated Mr. Hardy. I will call your attention to another statement he made. Captain: He said he wanted the over-seas navigation to be conducted under the same rule, as to officers and men, that the coastwise was; that he wanted no distinction between them. Capt. Wescott. I am well aware of that. But, Judge, I believe you have reversed it. He stated that he wanted to see the coastwise trade conducted the same as the over-sea trade. Mr. Hardy. Tliat is exactly what I have just stated. He wanted no distinction between the two. Capt. Wescott. I know, but I understood you to say that he stated he wanted the over-sea trade conducted the same as the coast- wise trade. Mr. Hardy. Would not that be the coastwise the same as the over- sea? Capt. Wescott. No. In the over-sea trade they are permitting noncitizcns at the present time to man such vessels. I want to say that between 900 and a thousand of them are acting as officers of ves- sels at the present time. Mr. Hardy. You and I are misunderstanding each other entirely. Mr. Hampton wanted the two placed under the same regulations. Capt. Wescott. Certainly, the same regulations. Mr. Saunders. Which is to be brought to the other ? Mr. Hardy. He did not sa}^ that; he said he wanted no difference between them. Ml-. Saunders. No, Capt. Westcott, I think, stated what I under- stood Mr. Hampton to say. Ml". Hardy. We wont argue about it. Capt. Wescott. IMr. Chairman, to-day we have dozens of ships sailing the high seas with not an American citizen on board of them — naturalized or native-born. Mr. Greene. And under the American flag? Capt. Wescott. I am an American by birth; my ancestors before me were one of the 86 of the first famihes to settle in the State of Rhode Island, and I for one do not believe it is right or just to permit the honor of the American flag to be entrusted to noncitizens of the country. Ml*. Burke. Is that true of any ship except ships which have been recently placed under American registry ? Capt. Wescott. No, but there are 150 of them. Mr. Burke. Is not the law limited to a period of two years ? Capt. Wescott. Seven years. Mr. Greene: The law did not limit it; that is the time to which the President limited it. Capt. Wescott. I have heard remarks at different times about the British service, that they permit this and permit that in regard 710 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. to the ofRcers. I believe the chairman is well acquainted with the president of the British Board of Trade, Mr. Buxton. The Chairman. He was president of the board; he is now Governor General of the Union of South Africa. Capt. Wescott. Mr. Buxton was president of the board of trade at the time I have in mind, and while the members of the British Parliament were debating the question of not permitting an3"one other than British subjects to serve in the capacity as master or mates on British vessels, Mr. Buxton stated during the debate that by taking the whole of the British register throughout the world they had only 87 alien masters out of 7,995 certificates issued. And I want to say, Mr. Chairman, that out of the 87 masters at the least 50 of them are now citizens of the United States; I personally know 30 of them myself. There are 310 other officers who are not British subjects, making a total of 397 alien officers serving on British ves- sels in the capacity of masters or mates. We have only a few ships, but there are 900 serving in the capacity of masters, mates, or engi- neers who are not citizens of the United States. The Chairman. How many of those have declared their intention to become citizens of the United States since the passage of the bill? Capt. Wescott. That would be impossible for me to state, because I do not know. I would liave to interview each and every one of them separately. The Chairman. Your information is to the effect that many of them have ? Capt. Wescott. I have no information in regard to that subject. Tlie Chairman. I have heard statements made to that effect. Capt. Wescott. I won't say, Mr. Chairman. I believe any white man who comes to this country and declares his intentions of becom- ing a citizen in good faith, because he likes our form of government and our American institutions, and not for convenience sake as a great many do, are the kind of citizens we want. And I for one am willing to shake the hand of any such man warmly and say to him, "You are just as good an American as I am," but not otherwise. Mr. Greene. I would like to ask a question, whether an}" American citizens competent to command v(»ssels are now in this country who are not employed ? • Capt. Wescott. We have over 350 of them on the Pacific coast to my knowledge. Mr. Greene. You would think there would be as many on the Atlantic coast ? Ca])t. Wescott. I would naturally think so. Mr. Greene. More, would there not — it is a longer coast ? Capt. Wescott. I would naturally think so. Mr. RowE. They are out of employment? Capt. Wescott. They are out of employment. I want to say when the President issued the order suspending the law for seven years, there were 2,136 idle masters, mates, and engineers in the United States who would be only too willing to get a chance to make an honest living for themselves and their families. I wrote a letter to the President to that effect, and I also called on Secretary Sweet, and I was almost given to miderstand it would make no difference if there were 10,000 idle. SHIPPING BOARD, NAVAL AUXIIJAKV, AND MERCHANT MARINE. 711 Mr. Chairman, my principal reason for requesting to be heard was that I desired to substantiate what Capt. Smith has stated to the committee, which I consider essential; it clears up many matters, more so in fact than anything else in reference to the shipping bill which has come up before this committee. The Chairman. It just emphasizes another difficulty here; that is all I can see in it. Capt. Wescott. Most decidedly, Mr. Chairman, it shows very plainly that it is almost impossible for any person to make any money out of a vessel through tlie ownership of stock only; tliey must make it indirectly throuorh their manufactures, the same as in England. Mr. Hardy. I think the most important part of your testimony, Captain, is the fact that on the Pacific coast our people are following the example of England there and subscribing to the stock with a view to the indirect benefit. Capt. Wescott. No; the managing owners make them believe that they will receive large dividends if they will only invest their money with them. Of course, in tlie coastwise trade in many cases they receive a small dividend. Mr. Hardy. You think they fooled them? Capt. Wescott. The managing owners are making immense profits. Mr. Wescott. Mr. Chairman, the members of the British Parlia- ment, realizing the danger in the mattsr if permitting alien officers to be employed on British vessels, expressed themselves in very emphatic terms during the debate on an appropriation bill, which I respectfully request be made a part of the record in order to corroborate the state- ment which I have made in reference to the number of alien oflficers in possession of British certificates. The debate on that particular subject was published verbatim in the Guild Gazette February 2, 1914, and reads as follows: Mr. Peto. The question of alien officers on British ships is one which undoubtedly requires regulation at once. The number of alien officers may not seem very great. We have 63 alien masters and mates on sailing ships, and 62 alien masters and 272 alien officers on steamships, but 1 say that under present conditions there ought to be none. Whatever may be necessary with regard to the crew, it would be perfectly simple to make it an absolute condition of flying the British flag that the ship should be adequately officered, and officered by British subjects. The Admiralty have recently, and I think very properly, taken steps to use our merchant fleet as the eyes of the navy. They have issued a form to steamship owners asking them to com- municate with their captains and to arrange that in time of \^ ar information should be given as to the character of every vessel which is sighted. That may be of enormous importance, but, considering that when the pilotage bill was before the house, it was felt necessary to give special powers to the Admiralty to preclude alien officers who hold the pilot cerdficates from certain pilotage districts, surely it is equally necessary that the board of trade should collaborate with the Admiralty in this matter of alien masters. Pilotage into port is not the only thing of importance in the time of a naval war. It is clearly of importance that the navy should have immediate information of foreign vessels sighted in certain waters. Such information at once communicated by the right people might be the means of saving us from naval disaster, or at any rate of putting us in a very much better position than if we had not the information. It is not safe or wise or in accordance with the course taken by the Government under the pilotage bill that we should any longer allow the flying of the British flag by vessels with alien masters and officers. I have given particulars to the right honorable gentlemen especially of vessels trading in the Mediterranean. In one case there was not a single person of English nationality on board. The ownership was more than suspect, and the officering and manning of the vessel left no possible doubt in anyone's mind. It was to all intents and purposes a foreign vessel, but it was kept on the British register probably for the 712 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. purpose of carrying on a trade which a vessel belonging to a possible enemy power would not be able to carry on. There is the case of a mail line of steamers carrying British mails and enormoiis numbers of passengers. There are 19 vessels of that line and there are only 10 officers of British nationality altogether. It is simply a que.-'tion of pay and nothing else. They will not pay the standard rate for British officers, and they therefore have men whose names show the nationality to which they belong. I do not know whether I called the attention of the president of the board of trade to the case of the steamship Calvados, which went ashore in March last, and in which there was great loss of life. The life-sa^-ing apparatus was absolutely inadequate, and the court made the strongest statement to the board of trade. I should like to read a line or two of the finding of the court: "The court desired specially to direct the attention of the board of trade to the want of certificated officers on board a ship flying the British flag, and to the fact that the court was unable to deal with masters or mates of foreign nationality, owing to ex- territorial jurisdiction in this country. They also desired to direct the attention of the board of trade to the insufficiency of the means of saving life existing on board." That is the case of the steamship Calvados, the inquiry into which was held on 10th and 11th March last. A number of the passengers and crew were frozen to death, and a great many others were drowned. Sir Gilbert Parker. There is another point which my honorable friend brought up, and that is the emplovTnent of alien shipmasters in our merchant service. The president of the board of trade may have some ground for complaint. He may say that when this bill was on upstairs this question ought to have been adequately dealt with. I think all of us who were on that committee are somewhat to blame for not pushing tliis question as they pushed the question of the aUen pilots. I must take my share of that responsibility, but there are difficulties in the case. It would be a very dangerous and difficult tiling for the Government, if it had the power, to say that no aUen shipmaster should be employed on British ships or on ships which fly the British flag. It would raise very serious international questions. For instance, we have got steamship lines between the United States and this countr>' which fly the British flag behind wliich is British money, but behind which also is American money, and they are practically American liners. In the same way with the cross-channel traffic. It would be an exceedingly difficult thing for the Government to insist that there should be no alien shipmasters upon lines of that sort. My honorable friend mentioned a line running from Smyrna and the Asia Minor ports to Alexandria and also Constantinople. There, again, it is a very serious question. I have thought much of it, and I always find great difficulty. It would be a very hard thing for this Government to prevent the Egj^ptian Government, who, naturally, want to do as well as they can by their Egyptian citizens, from becoming officers on ships that fly the British flag. It is a situation that I do not see the way out of at a moment's notice, nor do I see a way out of the situation which would be created were we to say that none but British officers should be employed on those lines of steamers running'between the United States and this country, but my honorable friend has shown the way out. He has said that under the pilotage act the question of alien pilots was raised, apd the president of the board of trade had great difficulty, which, however, he sur- mounted, because it was an international question as this is an international question, of great gravity. He was able to secure that the Admiralty should be the final arbiter in regard to the employment of alien pilots. That, I think, was a very wise arrange- ment securing the national interests, but also preventing international difficulties. This, undoubtedly, is a grievance. I think there is as much danger in having alien shipmasters working our waters as alien pilots, and, if it were possible, the president of the board of trade ought to possess himself of the same powers as he secured under the pilotage act lately passed in this house. I am saying this with no little sense of the gravity of the situation, because I understand how great are the difficulties of the department over which the right honorable gentleman rules, but I am absolutely certain that when there is a question so grave to our national interests as this is every attempt should be made by tlie Government to alter the conditions in some way — if not by legislation by Such agreement as the president of the board of trade might be able to make. I beg the president of the board of trade to consider very carefully the situation which hesays exists, and to deal with it not Avith the idea of getting rid of a parliamentary difficulty, but of doing a real national dutv. Mr. Shirley Benn. There are one or two points in connection with alien captains to which I -svish to refer. I may be told that the president of the board of trade has strong views on the subject and agrees with me, but that he has not got the power to deal with it. I should, however, like to suggest one or two methods by which he could ta'ce action. There is nothing more dangerous to our commerce than having foreiga captains on British vessels. There is no telling in case of war what wrongful com- SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. 713 municatione British ships oflBcered by foreigners might not make to our naval authori- tie.^. Thoy are allowed, where they have pilotage certificates, to bring their vessels into British ports, althougli fortunately, under the new pilotage act, they are not allowed to bring their shi])s into the Thames, the Harwich, the Humber, or the Grimsby pilot dis- tricts. But if the board of trade would take counsel with the admiralty and arrange that no foreigner should in any circumstances, whether he had a certificate as a Brit- ish master or a pilotage certificate, be allowed to navigate any ship into a British harbor, I believe that it would be an extremely good thing, not only for this country, but for our pilotage and our commerce. More dangerous" even than tliis is the per- mission given to employ captains with alien certificates on British ships which do not come to our home ports. British law is supposed to be supreme on 3very British ship, but the man who executes it is frequently not a Britisher. I had a case a good many years ago, in Mobile, Ala., Avhere a British steamer came in and the captain signed on a new crew. I asked liim for his certificate. He said, "I have not got to show you my certificate; I am not an Englishman, I am a foreigner." I said, "I have got your paper and yiur ship will not leave tliis port antil I either see your'cer- tificate or get instructions from a higher authority than I ami' He said, "This mat- ter was tried out in New Orleans and the consul there was told that it is not necessary for him to see my certificate. He could not indorse it and he could not cancel it." For a day I held the shin, when I got instructions to let the captain go without my seeing the certificate. The crew had been signed on at the British consulate, and the captain was not subject to British law. 1 should like to suggest to the pre.^ident of the board of trade that he should issue a reirulation that no consular officer should ever give up the pipers of a British steamer until he had .seen the certificate of the captain "and satisfied himself that the captain was a fit and prop':'r person to command a British vessel. I would go further and say that we ought not to allow any foi-eigner ever to raise a British flag on a British vessel, and that every captain of a 13ritish vessel should have to enter on the ship a larger number of British sailors than of foreigners. There is one other point in connection with the steamer ('(ilrarh.i to which my honorable friend, the member for Devizes, referred a short time ago. That vessel, which was lost, sailed from Constantinople with a Greek who had a Turkish certificate, with a chief officer who was a purser, and a boatswain who was a second officer. They had a crew of 14 hands and 120 passengers on board, with boat accommodation for only 40. The board of trade had an inquiry, which was held on the 10th and lUh of March, and I should like to ask the president if he intends to take any steps against the British owner of that vessel for ha^^ng failed to provide the nece.si^iry boats. It seems to me that something should be done in the matter. I hop3 that the president of the board of trade will give very great consideration to this question of foreign captains commanding our British ves- sels and coming into our British ports, and that he will, if he finds it possible, take whatever steps he can to prevent these British steamers officered by foreigners from using the British consular offices. Mr. Butcher. I wish to emphasize some of the points in relation to the mercantile marine which have been raised by my honorable friend beside me. The first is the question of alien masters and officers in command of British ships. It reallj^ does seem an abuse in itself that British ships, enjoying the privileges of British law and registra- tion at a Briti.'^h port, should be in the position that the master and every officer on board may be an alien; that is, according to the present state of the law, possible. In the case just referred to, that of the Calvados, she was officered by aliens, and met with this disaster. Apparently questions were asked, but there was no help for it, according to the present law, so I am told. Not only is it an abuse in itself that it should be so, but it is a danger, espocially in war time. We know that in war time confidential information has to be given to the masters of British ships, and it hardly needs any comment to show what the position ^v«ruld be if the masters who get that confidential information were foreigners who could give it to our enemies. I do hcpe that is a matter which the president of the board of trade will take into consideration and deal with. Then there is the question of the manning of British ships by for- eigners. Cases have been referred to in "this house, in which British ships have been manned entirely by foreigners, not a single man of British extraction being on board any of them. Surely that can not be right. The president of the board of trade was asked a question about it in the house not very long ago, and he gave an answer from which I gather that he is entirely in sympathy with the view that some restriction should be placed on the manning of British ships entirely by foreigners. My hon- orable friend, the member for Devizes [Mr. Peto], referred to the case of a ship which 714 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. went out manned entirely by foreigners, and he asked the president of the board of trade the following question: " Will the honorable gentleman take some steps to put a stop to this national scandal of ships being allowed to fly the British flag officered and manned entu-ely by aliens?" The president of the board »f trade replied: "This raises a very large legal question. I am somewhat in sympathy with the honorable member's views, but do not think it can be raised alone in reference to the question." I hope the right honorable gentleman will give some practical proof of his sympathy in this matter. j\Ir. Shirley Benn. Wha,t other nations admit British captains'* Mr. Buxton. I can not say offhand. I will look it up. At all events, the figures I want to give are really an answer to all these complaints. Taking the whole of the British register throughout the world there are at present 7,995 masters, of whom only 87 are aliens — a percentage of over just 1 percent. I really think, under these circumstances, it would be rather a large thing to ask that we should undertake a difficult international question for such a small percentage as that. (Thereupon, at 12 o'clock noon, the committee adjourned until Tuesday morning, March 7, 1916, at 10.30 o'clock a. am.) Committee on Merchaxt Marine and Fisheries, House of Representatives, WasMngton, D. C, Tuesday, March 7, 1916. The committee met at 10.15 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. Capt. Smith, who appeared before us last Satur- day, desires to make a further statement in connection with the bill. He is a large farmer and is affiliated with the farmers' organizations. STATEMENT OF CAPT. W. S. A. SMITH, EXPERT IN FARM PRACTICE, UNITED STATES DEPARTMENT OF AGRICUL- TURE. Capt. Smith. Mi". Chairman, the last time I was up here, in speak- ing of the methods which are used in England to encourage shipping, I f(>lt I had left it unfinished, and that it might appear that those methods which they used woidd be against this country in any way going into shipping. On the contrary, I am very much in favor of the shipping bill, and I just wanted to add a few more items that I thought might have a little interest. Shipping is very spasmodic in its profits. There are periods of years which elapse when the stockholders receive little or no profits and the shipbuilding yards have hard work to keep their plants running. Tlien follows a period of years in which shipbuilding pays well, and it is during this period that new companies are formed and new stockholders are taken in. In periods of depression many of the large shipbuilding firms in England, in order to keep their plants running, will often start from four to six ships and build the hulls, waiting for a customer to buy before finishing, so that the vessel when finished may meet the requirements of the customer and can be finished in a hurry. In the case of tramp steamers, there is little variance in the hull. When ship subsidy was started in France it came at a time when freights were fairly low, and the French nation did not respond very readily. The orders for ships from the British sliipbuLlders being SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 715 also slack, the conscquonco was that he went to France to a shipowner and said: "We have from four to six ships on the stocks partly finished which we will sell you at cost, and we will take 25 per cent of the stock in payment, because the ship subsidy which your country pays will enable you to make a profit over any British tramp, and it will also allow us to clear our shipbuilding yards and keep our plants f3ing until timrs improve." On this basis a large percentage of rench tramp steamers and sailing vessels were built on the Clyde for French owners. And so you find vessels owned to-da}^ by British shipbuilders and French investors. Xliis pv'cuUar interlocking that England has applies not only in EnglaiKl but to the other countries in wliich they do business. As, for instance, a shipowner when his steamer is chartered will see to it that wIku they have a ship coming back it will be consigned to a firm in England, so that they receive a fee for collecting the freight and everything else and it brings in business. And I was afraid the last day I was up here I mij^ht have left the impression that so strong was that hold in England it would be impossible for this country to get in. But this thing works both ways, because if we start shipping in this country, any shipowner w'dl naturally see that his shipping and his business is done with people in fon^ign countries who will give him business in retui'ii. So that this is not a thing to be afraid of in any way. This interlocking that they have in England is something that would com<' to us when we once started shipping here. In all the talk about the cost of labor and operating iVmerican- owncd sliips, it is well to bear in mind what has happened in the last 40 yeai*s. My firet voyage in command I had command of a ship of 1,150 tons, which carried 1,500 tons dead-weight with a crew of 32 men. To-day, with a crew of 32 men, it is possible to carry 5,000 tons instead of 1,500 tons. And with the change that is now going on, changing from steam to oil, and with the knowledge that the great- est expc use of a steamer is in the engine room, the labor question will decrease every year, as the carrying capacity of these vessels in- creases and as the cost of the engine room decreases. So that I do not feel that we should look at labor as it is now, but as to what it will be when we utilize these newer ships. Speaking of the impression that is among the farmers in the West in regard to the shipping bill, there is one point I am afraid on which there has been a good deal of misapprehension, and that is this: The\' have the impression out there that j^ou are now trying to put in a bill that will provide for ships enough to carry all of the American products. As a matter of fact, this bill only calls for $50,000,000, which, at most, will only build 150 to 200 ships, which will smiply relieve the congestion. Because with the number of vessels that have been lost in this war, and the number of vessels that will be lost in this war, 200 ships is merely relief. But the impression has gained ground all over the West that 3^ou are going to attempt to carry all American products in American bottoms. The 200 ships that this bill would build at the very most, as I say, would be a very small thing. I cpiito realize that when this war is over there will be a great attempt to build up the foreign shipping again. But there is a great question whether there will be much loose capital floating around to invest in shipping over there after the war as there was before the war. 716 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. One more point, gentlemen, as to how the farmer feels on this shipping bill. Ten or 12 years ago, when corn be^an to go up in the Middle West and live stock went up in the MidcUe West, and lands naturally followed, we had good prices. But just when it got to its height the consumer came in and said, "The cost of living is too hi^h." The consequence was that the tariff was taken off of beef and beef began coming in from South America, and the tariff was taken off of grain and grain came in from South America and Canada. It was figured on this basis that Congress in its wisdom said that we could not afford to protect the corn-belt States at the cost of the Nation. The consequence was that if tl^ war had not broken out there would have been a very large business in foreign boef and a very large busi- ness in foreign grain, which would have seriously affected the farmer. Now the fanner had to take his medicine. I quite realize m this shippuig bill that the shipping men all up and down the coast naturally are opposed to any change in the shipping law which will interfere with their business. I do not blame them for that one bit; but the farmers in the West feel if it is to be looked at from the national pomt of view, so far as their protection goes, the shipphig mdustry should also be looked at from the national pouit 01 view. The other day when I was up here, I was asked the question if I was opposed to Government ownership, aid I qualified my answer by stathig, if I recollect right, that this bill did not call for Government ownership; but I also stated at that time that I would not care to own the stock m a ship. I would like to explain one word more. I had been talking all through my statement simply from a stock proposition. I am not opposed to Government ships; I am not op- posed to anything that will give us a start in the merchant marine. I was simply speaking there, looking at it from a stock proposition alone. It is quite possible and very probable after these high rates of freight are over, that these vessels may not pay any large dividends; but we can well afford to have these vessels, even if they are run at a small loss for the benefit that they would do as a whole. Mr. Greene. I would like to ask you a question ? Capt. Smith. Yes, sir. ]VIr. Greene. How do you figure 200 ships could be built with $50,000,000? Capt. Smith. I do not pretend to make that as an absolute state- ment. I meant that was the very most that could be built. Mr. Greene. I know, but how could you build at the very most 200 ships with $50,000,000 ? Capt. Smith. Would not that be $250,000 a ship ? Mr. Curry. Yes. Capt. Smith. Is that unreasonable ? Mr. Greene. I asked you. You are a marine man; I am not a marine man. I want to get that information. You claim to be acquainted with marine matters and have sailed on the sea, and I want to know how you figure out 200 vessels suitable to go across the ocean could be built for $50,000,000. Mr, Loud. The naval colliers cost something over $1,000,000 apiece. Capt. Smith. That, Mr. Congressman — I simply made the broad statement — strengthens the point I tried to bring out. If you can SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 7 17 only build 50, it is still further in favor of the ])ill, because it will relieve the congestion and will not be a menace. Mr. Greene. You have stated this bill is not a Governmont- ownership bill. What do you call it? Capt. Smith. I beg pardon. Mr. Greene. You have stated this bill is not a Government- ownership bill. What kind of a bill do you call it? Capt. Smith. It does not provide absolutely for Government own- ership. It leaves it open so that those ships can be sold. The Chairman. And chartered. In fact, that is the primary purpose, is it not, under the bill ? Capt. Smith. Yes, sir; as I understand it. Mr. Greene. But the Government furnishes the capital, provided the other people do not. Capt. Smith. Yes, sir, Mr. Greene. According to your statement, when you testified a few days ago, there was not much possibility of private individuals going into the venture in this country. Consequently, the Govern- ment would have to furnish the capital, would it not ? Capt. Smith. Yes, sir. •*- Mr. Greene. And if you are going to build 200 ships the $50,000,- 000 would not touch it ? The Chairman. $50,000,000 prior to the war would have built 200 cargo ships of 5,000 tons ^ross burden. Mr. Greene. If you arc talking about sailing vessels, that is all right. The Chairman. No, not sailing vessels; steamers. They could be built for an average of $35 a gross ton, and, in some instances, less. Capt. Smith. That is the idea. Mr. Greene. Of course, we have to face the situation as it is to-day. The Chairman. To-day we could not touch it. We all agree to that. I was talking of the situation before the war. It would be unwise to build ships at the present time. Capt. Smith. As I understand, it does not stipulate in the bill that this $50,000,000 has all got to be spent at once. The Chairman. Oh, no; it would be very unwise to build ships at the present prices, I admit. Capt. Smith. Exactly. I understand that. It was simply to get a start. Mr. Loud. May I make a suggestion here, that the small coUiers which the Navy bought about three years before the war, carrying 6,200 tons of coal, cost a little over $600,000 apiece. The Chairman. Oh, yes; they paid good round prices for them. Mr. Loud. There was a great deal of competition in the bidding for those boats. The Chairman. Apparently so; yes. Mr. Curry. I think before the war a 5,000-ton boat could be bought for $250,000. At the present time it is worth $1,000,000. The Chairman. Oh, yes; you can not figure on the conditions that exist to-day; they are abnormal. Mr. Hardy. I understand the Government could sell its Panama ships, or some of the ships they bought for the Spanish War, for more than they gave for them. 32910—10 46 718 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. The Chairman. I know our colleague, Mr. Loud, has given consid- erable study to this question, and I agree with him that this would be a good time to clean up those old ships. Mr. Loud. Would not this be a good place to inject hito the record the statement I showed you the other day? The Chairman. I think so, as soon as Capt. Smith concludes. Capt. Smith. That is practically all I had to say, Mr. Chairman. Mr. Curry. I would like to ask you what you think of the Harter Act, as to the limitation of liability? Capt. Smith. I do not believe I am capable of answering that. Mr. Curry. I understood you were an expert on shipping. Capt. Smith. No, sir. I do not pretend to be. Mr. Loud. Mr. Chairman, I will insert at this point this statement I showed you a few days ago, which I think will be of interest to the committee. Mr. Greene. What is the nature of it? Mr. Loud. It is a criticism of the holding in the Navy organization of the old colliers that are antiq^uated, and suggesting that they should be sold now while large prices can be realized for them, and that money invested in new and modern ships for the Navy. I show here that out of 53 auxiUary ships, 30 of them are old and antiquated craft, averaging 25 years of age. And as a busmess proposition, those ships should be sold while we can get enormous prices for them and replaced with modern, large-capacity ships that are better fitted for the service of the Navy. (The statement offered by Mr. Loud is as follows :) NAVAL AUXILIARIES. By looking. over the list of ships in actual service of the Navy, we find that there are 53 auxiliary ships, of which 25 are piven as colliers and 28 as tenders, supply ships, special types, and hosjntal ships. While 14 of the colliers and 9 of the other ships are of modern construction, we find that there are 30 of these auxiliaries 18 years and over, most of them ])urchased during the Spanish-American "War, and which are of small tonnage, expensive to o])erate, and ill fitted for the service for which they are used It would seem to any business man or any person of reasonable judgment that now, while vessels are selling for three or four times their normal value, would be a golden opportunity to sell these old ships which are nearly ready for the scrap pile and replace them with new, up-to-date construction. As a concrete example of what this means we find that the collier Justin, which was piu-chased during the Spanish-American War, was built in 1891 and is now 25 years old. This ship was recently sold; the price paid 18 years ago for this ship was $145,000 and when discarded it was valued at $75,000. It was recently sold under sealed bid and the Government received for this old craft $301,070. One would presume that every naval officer who has had anything to do with these auxiliary ships is well aware that these obsolete ships should be gotten rid of, but naval officers are not business men, and no one thinks it is his particular business to suggest or urge the matter, whereas it would be greatly to the interest of the Xavy to replace these old colliers with the accepted type of modern naval collier which have 19,3G0 tons displacement, and carries 12,500 tons of coal, with 14-knot speed. Of the 15 Army tran.sports, only one of which is of modern construction, the other 14 ranging from 22 to 42 years, the average age over 29 years. The life of the ordinary steel ship is generally considered as 20 years, so it A^-ill be readily understood that 14 out of 15 transports are ready for the scrap pile and should be sold at once while there is a golden opportunity to do so, and thus realize three or four times their normal value, owing to the scarcity of commercial tonnage. (These are 18 to 41 years old. Average age of these 30 old ships is 25.7 years.) SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 719 Mr. Curry. I would also like to insert this clipping, which I have taken from the newspaper. (The cUpping referred to is as follows:) [Special to the Christian Science Monitor.] TRADE PROPOSALS OP GLASGOW MERCHANTS. Glasgow, Scotland, February 28, 1916. The Glasgow < 'hamber of Commerce at its last meeting unanimously passed the folio wang resolutions: "(1) That the Government be urged to take immediate steps for the establishment of a department of commerce and industry and the appointment of a minieter of commerce with cabinet rank, in order that the manufacturing and commercial inter- ests of the British Empire may be in future effectively promoted and safeguarded. "(2) That the Government take immediate steps to consult the governments of the dominions overseas and ascertain (a) their views in regard to the various trade problems arising as the result of the war and (b) the regulation of trade relations with enemy countries, and the control of businesses in the colonies managed or owned by subjects of enemy countries, it being important that then: views be first obtained before any definite steps are taken by this country. "(3) That the Government be urged to inquire into the desirability of subsidizing or otherwise protecting for a period those industries in this country which since the beginning of the war have been producing commodities formerly obtained from enemy countries. "(4) That the question of preferential reciprocal trading relations between all parts of the British Empire, reciprocal trading relations between the British Empire and allied countries, the favorable treatment of neutral countries, and the regulation, by tariffs or otherwise, of trade relations with er?my countries, be considered by the Government, and steps taken to render impossible return to pre-war conditions." The other points taken up deal with harbor facilities and shipping dues; pilotage certificates; commercial establishments used as political agencies; stricter naturali- zation laws; reorganization of the consular service; and revision and improvement of the present banking system. (Thereupon, at 10.45 o'clock a. m., the hearing was adjourned until to-morrow, Wednesday, March 8, 1916, at 10.30 o'clock a. m.) CREATING A SHIPPING BOARD, A NAVAL AUXILIARY, AND A MERCHANT MARINE. Committee on Merchant Marine and Fisheries, House of Representatives, Wednesday, March 8, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. Mr. W. E. Humphrey, of Washington, is present this morning and desires to be heard on this bill. Of course the older members of the committee will remember that Mr. Humphrey was a member of this committee for a number of years, until the Sixty- third Congress, as I recoUect. STATEMENT OF HON. WILLIAM E. HUMPHREY, A REPRESENT- ATIVE IN CONGRESS FROM THE STATE OF WASHINGTON. Mr. Humphrey. Mr. Chairman and members of the committee, I first want to thank you for the opportunity of coming here and talk- ing in this room where I have spent so many days in times gone by. I am appearing here this mornmg rather as a matter of duty than with a hope that I may accomplish anything so far as the defeat of this biU is concerned. In saying that, I say it with aU kindness, f or I have sat face to face with a good many of the gentlemen around this board, and we have differed a great many times, too, but I have never lost any respect for any man on this committee and I trust that he has not for me, because I did not agree with him. I come here because of the importance this bill means to my por- tion of the country, and I think it might not be out of place briefly to recount some of the things that have taken place so far as mer- chant marine legislation is concerned since I became a member of this committee, almost 14 years ago. When I first came to Congress the Payne-Hanna bill was then being considered. That was practically an extension of the old act of March 3, 1891. That bill substantially passed the House once and was filibustered to death in the Senate. At one time it passed the Senate by unanimous consent, without a vote being cast against it or roll call demanded. But it never went upon the statute books. And during all the years I have been a Member of Congress both parties are to blame with regard to merchant-marine legislation. The Kepubhcan Party never passed anything that was of any benefit to our American merchant marine, and since the Democratic Party has been in power they have not only not passed anythmg for the benefit of the merchant marine, but they have passed two or three acts which are very hostile to it. They have succeeded in driving 721 722 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. most of the ships that still remained in the deep sea trade' from under the flag. The next thing after the act of 1891, as I recall, was the free-ship proposition. For many years as I sat at this table, every time that a proposition was suggested or mentioned to assist the American mer- chant marine we were met with the question of free ships. And I remember that I caused a great deal oi astonishment among some of my friends on this committee — my friend Mr. Greene for one — when one day I announced I was going to vote for a bill that had a free- ship clause in it. He was apparently much disturbed and he wanted to know why. He thought I had changed my position. I said, "I am in favor of a free-ship clause being put in, because it will do no good, and I want a free-ship bill to be enacted and to let it go upon the statute books to demonstrate it has no value and perhaps we can get rid of it." It went upon the statute books and has been there ever since, and so far as I know not a single ship has ever taken advantage of it. Then next came the matter of discriminating duties. I have always been in favor of discriminating duties upward, but I have been opposed to discriminating duties downward, because it has been demonstrated, many times, that with a discriminating duty down- ward would amount to nothing — between here and South America it would not amount to enough to run a line of canoes. But it had to be tried. We tried that, and it went upon the statute books, and the only thing we have accumulated under that is a lawsuit in which the Government may have to pay something between ten and twenty million dollars. Well, we had to have something more, and the next was free regis- ter, and we placed upon the statute books a law permitting any old tub which floated anywhere on the sea to come under the American flag, and we waived the inspection laws for two years and allowed them to put foreign oflficers upon ships for seven years. We got some ships under that. The war was coming on; they did not love the American flag, but they feared the submarme, and a great many of them came under our flag. And what a merchant marine it is. And how it thrills the heart of every patriotic American as he looks upon ships built abroad, manned by foreign officers, foreign sailors, the flag upon it probably made of foreign cloth, and the dye stamped upon the flag out of German dyes. Any man who can be proud of that kind of an American merchant marme is entitled to my admiration. Well, I have no objection to that. It has done no harm. I do not think it has done any good. So far as I know, it has not added a single ton available for American commerce. So far as I know, not a single ship has changed its run from what it hkd been under the foreign flag. It has been of no benefit in that respect. The great foreim corporations wanted to get under the flag only for its protection during the war. I am not blaming them for that. And just as soon as the war is over, they will go back, just as soon as they can, unless we pass a law, as I see Secretary Redfield advocates, not permitting them to withdraw. I will not discuss that proposition. Then the next act we had was the Panama Canal act, and that was the first act since I have been a Member of Congress, the first act in 50 years that has been written upon the statute books that was of any advantage to the American merchant marine. I had in my pos- SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE, 723 session a list of some 54 vessels that were being constructed for use through the Panama Canal, when suddenly it was announced that the President had changed his attitude and that the bill giving free passage to American ships in the coastwise trade through the Panama Canal was to be repealed. Had we left the Panama Canal act upon the statute books, we would have had a great merchant marine between these two coasts that would have been suitable for naval auxiliaries and would have been a great step toward giving us a mer- chant marine. The repeal of that law not only destroyed an oppor- tunity to build up a merchant marine but, so far as our coast was concerned, it was one of the greatest strokes toward paralyzing busi- ness that was ever written upon the statute books of this country. That placed a tax of $1.50 a thousand upon every 1,000 feet of lumber brought from the Pacific coast to the Atlantic. And not only on that which goes through, or that would go through the canal itself, but upon all the lumber that goes across the continent by rail it placed an additional freight rate of $60 a car upon every car of freight that passes across this continent. We followed that by th? seamen's bill. We had a little left yet. There were a few vessels still flying the American flag that ran across the Pacific Ocean. I remember distinctly that I stood upon the floor of tlie House when that bill was under consideration and I made the statrment that if that law went upon the statute books every ship fl3ing the American flag in the foreign trade on the Pacific would disappear within 60 days after it went into force. They disap- peared before it went into force. You can argue what you please as to what caused those vessels to disappear, but they are gone. The men who owned and run them say the seamen's bill was responsible for tliL'ir going. But it is one thing absolutely sure — they are gone; that you enacted >our seamen's bill and those vess^els disappeared. I have heard Mr. Schweiin before this committee say substantially several times that if that bill was enacted the Pacific Mail steamers would cease to run across the Pacific. Last summer, in order to be sure, and also before I made that statement on the floor of the House, I wrote to Ml-. Schwerin and I told him I did not want to be placed in a false position; that Secretary Wilson and many others had made the statement that it was merely a bluff about his going to withdraw; and Secretary Wilson, soon after they were withdrawn, said they intended to withdi'aw them anyway. Mr. Schwerin wrote me and said that if the seamen's law was passed, those vessels would stop running. Some have said it was because of the Panama Canal act that they withdrew, but that act had been upon the statute books for some time. I am not going to argue further as to why they withdrew. Certainly so far as the Minnesota was concerned, no one can contend it was on account of the Panama Canal act, because the Minnesota was so large she could not get through the canal, and certainly the canal was m no way the cause of the Minnesota disappearing. The Chairman. Right at that point. The Minnesota belonged to the Northern Pacific Railway Co., did it not? Mr. Humphrey. Yes, it did. The Chairman. A gentleman told me, who was as close to Mr. Hill as any man living, so far as I know, that they did not care anything 724 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. about the seamen's bill, and they had no objection to its being enacted into la^v. Mr. Humphrey. That man who told you that evidently did not coiTcctly state it, or else Mr. Hill's manager was in a funny perform- ance when doAMi here before a committee he made the state- ment The Chairman. No representative of Mr. Hill's was ever before this committee and opposed the passage of that law. Mr. Humphrey. That may be true enough, but before its passage he was before the Senate committee and I have the hearmg right here in my hand. Mr. Lacey appeared before that committee, page 288, part 5, of the hearing, and Mr. Lacey made the following statement: Therefore I wish to say that if this bill should become a law the steamship Min- nesota would have to withdraw. I do not know how much more emphatic or how much more direct you can get it, when the manager of the company and the manager of the ship itself appears before a committee and makes the state- ment in so many words — the manager of the steamship Minnesota, the man who was running it and was responsible for it. Mr. Hardy. You are aware of the fact that a great many advo- cates of subsidy also advocate none but American seamen on our steamships, are you not ? Mr. Humphrey. Oh, yes; I am aware of that. Mr. Hardy. Then what consistency is there in the position of a man who advocates subsidy and at the same time wants American seamen on our boats and then complains of the seamen's bill because it requires 75 per cent of the crew to be able to understand the language of the officers ? Mr. Humphrey. Oh, the seamen's bill was a proposition to take care of the imaginary American sailor. Mr. Hardy. What I am getting at is tliis: How can a man advo- cate none but American sailors on American vessels and at the same time object to a bill which requires only 75 per cent had to be able to understand the language of the officers ? Mr. Humphrey. I can not see how the gentleman can misunder- stand the attitude, as long as he has sat at this table, of those who have advocated a mail subvention of subsidy — I have never called it anything but a subsidy — and have advocated that in considera- tion of the fact that they were going to receive that subsidy thi.t they should have a certain per cent of American sailors. Mr. Hardy. That was with the idea that all American ships should have American sailors; and yet when we required only 75 per cent to be able to understand the language of the officers, they criticize that bill. Mr. Humphrey. But the 75 per cent you want to put on is on a ship which you are not assisting. I want a ship running across the ocean to use the same class of crews which are used by the ships with which they are in competition, competing vessels that receive $100,000 in gold for each round trip. And yet with that handicap, with the handicap of cheap construction, then you want to place the addi- tional burden of this seamen's bill upon those ships. Now, I do not care anything about what you may argue back and forth; the truth is that the American vessels are gone; and you voted for the bill that drove them off. You can explam it as long as you please, I SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 725 but you can not explain it to me if you sat there and argued from now until sundown, 1 would be of the same opinion and you would be of the same ojiinion that you arc now, so we will just call it off. Mr. Hardy. I am just trying to get you to reconcile your position. Mr. Humphrey. I am not going to reconcile my position, it does not need it. Mr. Hardy. You criticize that bill because it requires 75 per cent to understand the English language, and yet you turn around and want nothing but American seamen on American ships. Mr. Humphrey. You can not put that in my mouth. I did not say because it required 75 per cent to understand the language. The Chairman. The bill passed the House, under the rules, unanimously. Mr. Humphrey'. No; it did not pass unanimously. The Chairman. Nobody voted against it. Mr. Humphrey. I did not vote against it, no; because I knew I could not get a roll call. I have been in the House long enough not to go through the silly performance of standing up on the floor and asking for a roll call when I know I can not get it. Mr. Burke. What is there in the seamen's law, outside of the lan- guage test, which you could claim would operate detrimentally upon your Pacific-American lines ? Mr. Humphrey. Outside of the language test? Mr. Burke. Outside of the language test. Mr. Humphrey. If you will just read section 13, you will see. Let me give you something on that. I wonder if the gentleman remem- bers that it requires that a seaman shall be so old; it requires that he shall have so much experience; it requires that he shall have a certain amount of his w:iges advanced to him; it requires that w^hen that vessel comes into port if any American citizen files an affidavit that some man on there has not had the requisite experience, that he does not understand the language of his officers, that he is not of a certain age, by the filing of that affidavit the ship can be held up and a muster taken to determine the fact. And as soon as that is fin- ished, then another aflidavit can be filed and another muster demanded, and that ship can not depart from port until they have complied with all the requirements of the law. And then if the crew deserts the ship can not depart until it has a crew of the kind which it came in with. To illustrate, suppose a Japanese vessel comes into the port of Seattle when they have a labor dispute and some man files an affidavit that some seaman upon that vessel is not of the required age — is not 19 years old — and has not had three years' experience, he can tie up that ship until they have a muster of the crew. Then, when he gets through with that, some other man files another affidavit, and he says there are some members of that crew that do not understand the language of the officers, and it is tied up again and another muster of the crew. Mr. Haedy^ May I suggest to you Mr, Humiheey. I reiuse to be interrupted until I have finished. And now you go through that performance, and there is no end to it. Do you suppose a ship wants to submit to that? Is that any burden ? It is not the language test. Mr. Hardy. I want to raise a point of order, that we are not pro- ceeding to discusfe the seamen's bill. 726 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Humphrey. I was just about through. Mr. Hardy. I was kindly seeking to direct your attention to that fact. Mr. Humphrey. The language test is only one of the immaterial parts of the seamen's law. Mr. Burke. I am glad to hear you say so. That was about the sole objection of your Pacific steamship owners to it. Mr. Humphrey. Now, let me give the gentlemen one other thing while I am on that. I did not intend to speak on this. The Chairman. You argue here that such a thing is so and so; we do not agr-ee with your construction of that law at all. 'Mr. Humphrey. I am well aware of that. You did not agree with my statement that those ships The Chairman. We think your statement is wholly untenable and unjustifiable by anything contained in the law itself. I am willing, however, you should go ahead and make those much-exaggerated statements, because they will be just that much more easily refuted. Mr. Humphrey. I never did agree with the gentlemen and I never will agree, but, unfortunately for my portion of the country, those prophecies came true, just as my prophecies before came true. Out on the Pacific coast we are caring more about having ships on the sea than we are about carrying out some pet theory. I was m Seattle when the Minnesota made its last visit. I saw that ship as it got ready to depart, and I saw it go out of that port. I remembered the day when it had come mto the port flying the American flag. And as that ship went out on the Pacific, as it passed San Francisco, it sent this dispatch, which I want to put in the record: To the good people of San Francisco: The Great Northern steamship Minnesota, the finest ship that ever sailed the seas and the largest sliip flying the American flag, is now passing down your beautiful city, b lund to a foreign country, never again to rclui'n with Old Glory flying over her stern. Tlie reason for tliis is well known to all business interests of the country. I bid you farewell . Thomas W. Gorlick, Commander Steamship " Minnesota." I put that telegram against all your arguments on the seamen's bill. The Chairman. What has become of the Minnesota? Mr. Humphrey. I understood it was sold the other day for $3,000,- 000 to an English firm. That is the last I have seen about it. Inasmuch as we have gone into the seamen's bill, I am gomg to take a minute or two more. Mr. Hardy. We are not having a hearing on the seamen's bill, and it seems to me that with regard for the record in this case, you ought to omit any remarks on that bill, because it would provoke an endless discussion. Mr. Humphrey. I notice Mr. McAdoo the other day referred to the seamen's bill in two or three places, and I will be through with the seamen's bill in about four minutes. Mr. Hardy. All right, then; I have no objection. Mr. Humphrey. The great argument made in favor of the sea- men's bill was that it was gomg to help the American sailor. I have no objection to helping the American sailor, so far as anj^thing that will help the American sailor, so far as anything will take care of him; but I want to impress agam upon this committee and to SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 727 put some statements in the record to show that the American sailor is an imaginary quantity, and that we have shed our tears and sniffled over something that did not exist, except in the minds of the gentlemen on the committee. I hold in my hand here a statement from the Seattle Post-Intelligencer of February 15 last. It says that they have been examining some of those American sailors who were to be benefited by the seamen's law, out upon the Pacific coast. They found 891 in Seattle that passed the test. Of this number nine were American citizens. These are the ones that we were legislating for, and driving the American ships from thi sea, for the benefit of 9 American sailors out of 891. I wiU ask to have this in- serted in the hearing, because I do not want to take the time to read it. (The clipping above referred to is as follows:) [The Post-Intelligencer, Tuts lay, Feb. 15, 1916.] AMERICAN SEAMEN. The foreign trade department of the San Francisco Chamber of Commerce ha recently compiled from the offices of the various collectors of customs in the ocean ports ot this country the statistics relating to the enrollment of "American" seamen under the seamen's law, ostensibly designed for their protection. The showing is a startling one. In the Puget Sound district, for example, the number of seamen who have proved qualified uncler the act and who therefore received certificates as by the law required was 891. Of this number 9, or about 1 per cent of the whole number, were of American birth, or strictly American seamen. Further, but 18 of the whole number were even naturalized. The unnaturalized aUens who have received certificates under this act for the protection of "American" seamen constituted 97 per cent of the whole number. Puget Sound, it may be admitted, makes the worst sho\ving in this respect of any ocean port of the country, but only in degi'ee. Portland, with but 226 enrolled sea- men, has fully 11 native Americans among her American seamen and but 76 per cent of unnaturalized aliens. The average for the whole country is 17 per cent natives, 8 per cent naturalized, and 75 per cent aliens who have not sought American citizen - Bhip. For the benefit, ostensibly, of the aliens who have been working on American ships under the guise of "American seamen," Congi'ess has deliberately turned the carrying trade of the Pacific over to Japan. If there ever was a bill passed under rottenly false pretenses, it is this so-called seamen's bill, which Congress manifests no disposition to repeal or even to modify. Mr. Hardy. Will you let me ask you a question with reference to a past matter Mr. Humphrey. Yes. Mr. Hardy (continuing). Because my memory is not clear about it. Did you ask me at one time if you were absent to have you recorded in favor of what was then known as the Wilson bill — or the seamen's bill at that time — when you were on the committee ? Mr. Hlimphrey. Did I ask what ? !Mr. Hardy. It seems to me that at one time when we were discussing the present seamen's bill, as it was then, providing for the abolishing of imprisonment and abolishing of arrest for desertion, you asked me to have you recorded in favor of that bill. Do you recollect anything about that? I^Ir. HuMPHKEY. No ; you are mistaken about that. I was in favor of the particular section abolishing imprisonment. Mr. Hardy. Wliat bill was it that you asked me to record you in favor of, and I think I made a statement Mr. PIuMPHREY. It was probably the bill that Capt. Wescott was in favor of. 728 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Hardy. And I made a statement on the floor. Mr. Humphrey. That was the bill in which Capt. Wescott was interested. Mr. Hardy. That may have been. Mr. Humphrey. Oh, yes; I was in favor of that bill. I was in favor of the bill relating to officers. Mr. Hardy. Deahng with officers and minor officers, the bill known as the Hardy bill, you asked me to record you in favor of that bill ? Mr. Humphrey. Yes, Now, I want to place in the record a state- ment in regard to the wages received by seamen going out of Puget Sound and running to Alaska. Tliis is a coast proposition, and I take pride in submitting it, because I have heard so many statements around this table about the poor wages of the seamen that I am glad to put in the record here an official statement of what the seamen do receive. The Chairman. You do not mean to say the statements were by members of the committee ? Mr. Humphrey. Wliat is that ? The Chairman. You spoke of statements around this table, you do not mean statements made by members of the committee ? Mr. Humphrey. No; statements to the committee about the wages of the seamen. I want to read part of a letter which has come from an officer of the Department of Commerce submitted to me. I am not going to put his name in the record. I am perfectly willing that any member of this committee should look at the letter and see that it is genuine, but I do not care to make his name public. He says: Hon. W. E. Humphrey, Washington, D. C. Dear Sir: In fulfillment of my promise, I take pleasure in inclosing to you a memo, of the amounts paid to the deck officers, boatswain, carpenter, watchman, and able- bodied seaman on a number of the ships making this port their home port. This memo, will show the capacity in which employed, the rate of wages per month, the amount paid each man, the name of the shij), lier run, the number of da>s for which the pay is given, and the date on which the ships were paid off. The amounts you may verify, if you wish. It would be possible to give you a list where the amounts paid would be larger. The inclosed list is a good average. According to an agreement with the seamen's union, all work performed before 7 o'clock in the morning and after 5 o'clock in the afternoon, all holidays, and all Sundays in port are considered overtime and must be paid at the rate of 50 cents an hour. This is also the agreement with the water tenders, oilers, firemen, and coal- pa?sers' union, and the cooks and stewards' union. From 75 per cent to 90 per cent of these crews are of foreign birth, and but a compar- atively small number of them are naturalized citizens. When an American-born youth, of American parents, goes as deck boy, life is made such a burden for him by other members of the crew that usually one voyage is enough. One effect of the new law (see inclosed marked copies) is the driving of the old- time deep-water seaman from the sea. It has been the custom, ever sijice the be- ginning of ships, for seamen to separate themselves from their pay when they come ashore in the shortest time possible and to draw upon their advances for their cloth- ing, shoes, and tobacco for the new voyage. Not able to get clothing, they are com- pelled to stay ashore without money, and, unfitted to earn a livelihood on shore, become vagrants for others to support. The ship is then supplied with seamen by the seamen's union. Only those acceptable to the agents of the seamen's union are admitted to the union. If you desire any further information that I can give on this subject, I will be very glad to have you so advise me. Yours, respectfully. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 729 Mr. Greene. What is the date of that? • Mr. Hltviphrey. It is dated December 4, 1915. The Chairman. Vfho did you say furnished that information ? Mr. Humphrey. I say I will furnish the name to the committee. It comes to me confidentially from an officer in the Department of Commerce and Labor. Now, I ask the privilege of printing the list he furnishes me, and I do hope the committee wiU have the time to look at it, because you may be surprised to know how much the able seaman on those short runs to Alaska receives. He receives almost as much pay as the captain, more than the first, second, third, and fourth mates, and more than any other of the officers. To give you one illustration here, for 21 days the captain received $111, and one able seaman received Mr. Hardy. What objection has that gentleman to his name being put in the record ? He is an officer of the Government Mr. Humphrey. That is the reason. Mr. Hardy (continuing). And he is sending the information to another officer of the Government. Mr. Hltvipheey. I will show the gentleman the letter if he wants to look at it. Mr. PIardy. I think the world ought to have the information. It is official. Mr. Humphrey. I will say this information is taken from the records, and if anyone wants to dispute it, he will know where to find the information. The Chairman. This is in the coastwise trade ? Mr. Humphrey. It is in the coastwise trade, but I wanted to call your attention to this particularly, I will cite just one or two in- stances. The captain received for 21 days, $105. One of the able seamen received S101.65; another, $101.65; another one, $99.15. And they run on down like that. The watchman received $37.40; the quartermaster, $61.15. And this shows all the way through that the able seamen received almost as much as the captain and more than the ordinary officar. Mr. Hardy. You say that is in the Alaskan trade ? Mr. Hitviphrey. Yes, I am not showing that as a criticism; I am showing it as a matter of satisfaction to show that the stories we have heard so often that the seamen of the country are underpaid is not correct. Mr. Hardy. You do not question the statements of witnesses, who have come before us like Mr. Schwerin, and who have given the wages of his seamen ? Mr. Humphrey. Not a bit. The Chairman. He said they were from $15 to $21 a month. (The statement offered by Mr. Humphrey follows.) 730 SHIPPIKG BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. • Rate of wages per month. Valdez, Alaska- City of Puebla, Nov. 4, 1915, for about 21 days (passenger and freight). Skagway , Alaska. Ketchikan, Alaska. Valdez, Alaska. Capacity in which employed. Spokane, Oct. 20, 1915, for 12 days (passpnger and freight). City of Seattle, Oct. 17, 1915, for 13 days (passenger and freight). North- land, Nov. 8, 1915, for 24 days (freight only). Despatch, Alameda, Nov. 8, Nov. 8, 1915, for 1915. for 19 days 23 days (passenger (passeiiger and and freight), freight). Admiral Farragut, Nov. 9, 1915, for 22 days (passenger and freight). Master and pilot Do $150.00 150.00 / 105.00 \ 100.00 85.00 70.00 60.00 55.00 / 55.00 \ 50.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 $111.00 105.00 1 74.35 $62.50 62.50 44.50 $67.10 67.10 47.60 $122.65 $97.65 $118.65 118. 65 80.30 68.80 43.00 $113.00 101. 00 Chief mate 66.00 48.00 76.35 78.65 64.85 Third mate ! 51.00 Fourth mate 63.35 26.00 51.25 49.25 36.00 33.75 33.75 36.75 36.25 49.25 49.25 49.25 49.25 52.25 52.25 1 56.25 54.00 27.00 49.35 47.15 22.90 44.90 43.15 43.80 29.55 47.15 58.15 47.15 47.15 47.15 56.65 89.30 79.15 41.10 51.10 53.35 52.10 52.35 87.60 87.75 85.35 ; 73. .35 \ 92. 10 f 87.85 \ 87.35 / 87. 35 \ 87.35 95.35 101. 65 Carpenter } 93. 40 37.40 61.15 73. 15 61.40 69.65 101. 65 95. 65 101. 60 93.15 99.15 97.15 / 87.40 \ 89. 15 83.40 91.75 72.80 Quartermaster ..... Do 67.15 66.65 55.35 55.15 65.90 62. 15 68. 40 68.40 Do Do Able seaman 86.75 84.50 80.10 83.00 86.65 80.40 91.05 Do "■ 78.30 Do 72.00 Do 100.80 Do 82.75 96.05 Do 68.65 63. es Do Do Mr. Humphrey. Now, Mr. Chairman, I want to talk about this bill for a few moments. I am not going to go into the details of the bill. I might say in a general way that I am somewhat inclined to believe it would be a propitious time for a shipping board of some character to be created that would have the power to assist American shipping. If that element is in your bill, and I understand it is, why that part of it I would have no objection to, because if there has ever been a time in the history of American shippmg when we need some authority to act, it is now. Mr. LoLT). And brains. Mr. Humphrey. Yes. If we had a board of that character now, we would not be troubled with this matter of the seamen's bill. The Chairman. Do you not think there ought to be some depart- ment of the Government whose attention should be given exclusively to the development of our merchant marme ? Mr. HuiiPHREY. You mean some department or bureau ? The Chairman. Yes. Mr. Humphrey. Yes; I do. That is what I am trying to say. The Chairman. In years past it has been a mere mcident and re- ceived very little attention. Mr. HL'iiPHREY. 1 want for just a moment to go back to the sea- men's bill, because in looking over Mr. McAdoo's testimony I find something which answers Mr. Burke's cfuestion as to what objection I had. I want to direct your particular attention to one phase of the seamen's bill, and I do not want to leave it in that way. I notice in the hearings that Mr, McAdoo said he could not understand why Robert Dollar had taken his ships from Seattle over to Vancouver. SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. 731 I will give you a little incident that first brought that to my attention, I was out in Ballard last summer and went into the office of the Stimpson Lum})er & Shingle Mill Co. and saw the manager there, whom I happened to know very well, and he said, "Mr. Humphrey, what did you pass the seamen's bill for?" I said, "I did not have anything to do with it; do not accuse me of passing the seamen's bill." lie then showed a letter from Robert Dollar, in which Mr, Dollar had notified him they were going to transfer their ships over to Vancouver. And he said, "For many years we have sold the Robert Dollar Co. at the rate of S100,000 worth of lumber a month." Here was a loss of 81,200,000 to a single mdl, and that is gone and is now transferred over to British Cokmibia. There is that one aspect of the seamen's bill. And the laboring people of the State of Washington lost more by that one transac tion alone than all the result of the sea- men's bill will ever bring to them. And that is not tru3 only of the Dollar Line, I have in my office now a set of resolutions from the Merchants' Association of Seattle. They are very much alarmed and have called my attention to the fact that all of the foreign lines, except the Japanese line, are going to go over to British Columbia. And why should they not do it? Why should they go to Seattle when it would cost them from •? 10,000 to S30,000 more than to go to Van- couver? And just as soon as we seek to enforce the bill — the Ameri- can vessels are all already gone — we will lose all the foreign lines except the eTapan?se line. Now, 1 made the prophesy about the American ships being driven from the sea, and T make the prophesy now that if you keep the sea- men's bill upon the statute books all the foreign lines into Puget Sound will go to Vancouv(n* except the Japanese line. And that is the" situation we are in out there, and do you wonder that we feel somewhat sensitive when we see, in addition to all this, one more proposition, Government ownership, to make forever hopeless the opportunity of getting an American merchant marine ? And I notice Mr. McAdoo, in his statements, does not take a posi- tion anywhere. I refer to his remarks because he is tlie special pro- ponent of this bill. First he holds out the impression that he is going to run these vessels for the purpose of budding up American ( ommerce, and he thinks they may carry that freight, and it is going to be a great thing. Then when asked the question by Mr. Saunders or some one else, he said there would not be a sufficient number of vessels to cause competition that would create trouble with the vessels already running. Now, we have had some experience out on Puget Sound about a Government-ownership proposition. When I first came down here to Congress we were running out of Puget Sound a couple of transports, one of which was the »Dix, which I think is still rumiing. At that time we had the Minnesota and the Dakota; the two ships of the Boston Steamship Co., and the three ships, I think, of the Boston Tow Boat Co. I think that is the exact number. Am I right about that, Mr. Hadley? Mr. Hadley. I think that is approximately correct, Mr, Humphrey. This one transport, the Dix, continued to run out of Puget Sound. Those American vessels that were then running from Puget Sound to the Orient pleaded with the Government to let them carry .Ai-my supplies for the Philippines. They said if they had that that they could' continue to run. The department refused to 732 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. do it. They sent them on the Army transports. And I had an investigation made, and it was demonstrated b^^^ond the question of doubt that every ton of freight that was carried cost the Government 25 per cent more than it would to cany it on these private ships. But that did not make any difference. They had that steamer and they continued to run it, and the result is that the old Dix remains and the American ships have gone. Now, do not get the idea because you run a few Government ships you are not going to discourage competition. And I want to call your attention to this fact. It appears all through these hearings, \\-ithout going into great detail about it, that they pretend there is a great emergency existing. Is there ? Is there a great emergency existing to-day ? The Chairman. 1 say yes. Mr. Humphrey. Where? The Chairman. Right in our trade on the Atlantic coast. Mr. Humphrey. No greater emergency exists to-day thaa has ex- isted for the last 10 years. The Chairman. I deny that, and these hearings show that that statement is not correct in any sense. Mr. Humphrey. I have read the hearings — statements that I have heard for the la^t 10 years. The Chairman. If you read aU these hearings, Mr. Humphrey, you will change your mind. Mr. Humphrey. No, I think not. If there is such an emer- gency- The Chairman. I think we all agree there is an emergency. Mr. Humphrey. If there is such an emergency about it, will the chairman explain why it is we are carrying more commerce to Europe to-day than ever before? And how does it get over there? It don't fly. Mr, Burke. How can you explain that the freight rates on the average are about 800 per cent higher? Mr. Hltviphrey. I can explain that ' The Chairman. The shippmg men say it is based on the law of supply and demand, that the demand for ships so far exceeds the supply that the freight rates have gone up in some instances a thou- sand per cent, and yet you say there is no emergency ? Mr. Humphrey. I do not think there is any that this legislation would remedy. Mr. Hardy. Did you read Mr. Lake's testimony about his efforts to get some cargo space? Mr. Humphrey. Yes; and I have known for the last 10 years that you could not get cargo from South America, and for 10 years past the ships have been coming to this country from South xlmerica in ballast. ^Ir. Hardy. Do you mean to say you can read Mr. Lake's testimony and say there is no greater scarcity of tonnage now than there has been for 10 years past? Mr. Humphrey. There is a greater scarcity of tonnage from here to Europe and throughout the world. I admit that, because a great deal has been destroyed; but there is no such emergency as can be met by this bill. Suppose, for the sake of the argument, that you pass this biU. Where are you going to construct those ships ? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 733 The Chairman. In American shipyards. ' Mr. Humphrey. Where are the American shipyards ? The Chairman. We have 50 of them. Mr. Hl^iphrey. Wliere? The Chairman. On the Great Lakes and on the Atlantic and Pacific coasts. They are all ready to extend their facilities to build battleships and cruisers, and I assume they would do the same to build merchant ships. Mr". HuTviPHREY. That is a different proposition. The Chairman. IVIr. Penton was before this committee the other day. You know him quite well because he was your colaborer for subsidy many years ago. He said they could build a 10,000-ton ship on the Great Lakes now and put it under its own steam in six weeks. Mr. Humphrey. That is true; but how are you going to get it out to the ocean ? Tlie Chairman. If it is not over 260 feet long and 45 feet wide we cf>n get it out. Mr. Hltmphrey. I would like to see you get a 10,000-ton ship, or any other vessel of that size, out of the Great Lakes. Mr. Loiro. You would have to cut it in two pieces ? Mr. Humphrey. Yes; you would have to cut it in two pieces. Mr. Hardy. Why can they not build them in shipyards on the coa?t as weU as on the Lakes ? Mr. Humphrey. You can in time to come, of course. The Chairman. I do not know that that particular ship can be gotten through to the ocean. Fu-st he said it could be finished in 10 weeks and then he wrote me the other day and said it was 6 weeks. Mr. Humphrey. And that has been done in the development of our coastwise trade which my friend Mr. Hardy has always looked upon so — I will not say unfavorably — but which he has wanted to change. Mr. Hardy. I just want to verify that. Mr. Humphrey. I have here a statement in my hand from the Seattle Post-InteUigencer of March 2, about a miUion-doUar steamer to be built in Seattle. Mr. Hardy. Before you get off to that, let me ask you one question in connection with this so-called free sliip biU: Do you remember that you and I both agreed that it would not add a ship to our mer- chant registrj^ ? Mr. Hltmphrey. Yes. » Mr. Hardy. And I told you and you agreed that there was no in- ducement, under that limited free ship bill, for any ship to come under our flag, and the prophecy thg-t both of us made was that none would. And they did not until this war came on. Mr. Hltimphrey. Now, Mr. Chairman, according to the statement by Secretary Kedfield, he says the vessels which are now being con- structed in this country are divided as follows: Sixty-four tankers, 71 cargo boats, 10 passenger and cargo boats, 16 colliers, 19 car floats, and 50 of other classes, a total of 230, amounting to 901,471 gross tons. If that is correct — and I have no reason to doubt it — then our shipyards are taking advantage of the situatioji, and they are building just as rapidly as they can. Every shipyard in this country to-day, so far as I know, is full. And if you were to give an order for 32910—16 47 734 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. a ship to-morrow, according to Secretary Redfield — here is what he says; I will quote it. Ho says: "I doubt if it is possible to obtain a ship in this country at least until the latter part of 1917." Mr. Burke. Mr. Humphrey, let me say that about four weeks ago some Norwegian parties contracted with a shipbuilding firm at Manitowoc, on the west shore of Lake Michigan, for two vessels, with a tonnage of some seven or eight thousand tons. Mr. Humphrey. I do not doubt that. The Chairman. What would you advise us to do, nothing at all ? Or is that your attitude because we can not get the ships right on the spot ? Mr. Humphrey. I would advise you at this time not to go on record before the country as in favor of Government ownership and Govern- ment operation oi these vessels. The Chairman. Would you be in favor of passing a ship subsidy bill at this time ? Mr. Humphrey. Wliat is that ? The Chairman. Would you be in favor of passing a ship subsidy bill at this time ? Mr. Humphrey. It would depend very much upon what the pro- visions of that subsidy bill were. I do not know whether you can get vessels or not. The Chairman. Take the one you introduced in a former Congress. Mr. Humphrey. Yes, I would. The Chairman. Could you get any ships immediately if that be- came a law ? Mr. HtTMPHREY. You could not get ships immediately, but you would not make any payments until you could get them. The Chairman. Is there any necessity for a subsidy now, when we are building ships in American shipj^ards as cheaply as they can be built abroad ? And is not the cost of operating ships now under the American and foreign flags practicall}" the same ? Mr. Humphrey'. I very much doubt, Mr. Chairman, if there is any necessity of doing anything at this time further than creating a ship- ping board. Now we all have one purpose; we are all trying to build up an American merchant marine, and we might just as well look at the situation as it is. After this war closes there is going to be a tremendous amount of this tonnage released, undoubtedly, and the price of ships is going to drop. Suppose that you commence to build your ships, or to go out and buy them, you are going to pay the very highest prices that have ever been known in the history of the world ; you are going to commence construction at a time when it will cost you more than it ever has before. I do not think the emergency now is any greater than it has been in years gone by. There is trouble everywhere, but we can not build and get ready by the time this war ends, in all probability. And would private parties, in the situation we are in, commence such an undertaking as this now, without regard to the question of the Government ownei'ship features of it ? If you will permit me, I want to refer to one or two statements that Mr. McAdoo made, although I think I have already largely covered that, except that he repeats on several occasions — he first makes the statement that these vessels, if they are constructed, are intended to run "where private enterprise for some reason does not find the inducement to go. If that is true, then they are going to SHIPPING BOARD, NAVAL AUXILIARY, AND IMERCHANT MARINE. 735 run at a loss. And there is certain talk about paying a subsidy, and I want to call the chairman's attention to this fact, that you are going to pay a subsidy anyway. If you employ private parties, the subsidy that you pay to private lines, theoretically at least, and as near as we were able to figure out when we proposed those bills, was to make up the difference in cost of what it cost to operate an An.eri- can ship and a foreign ship; or, in other words, to enable them to run. And if you run your Government-owned ship, you are going to pay that loss anyway; you are going to sustain that loss just the same whether you pay it on a line of vessels the Government runs or a line of vessels run by private parties. Mr. Loud. But you have a sugar-coated pill here, haven't you? Mr. Humphrey. That is the situation in which you find yourself. I was especially struck by the statement of Secretary McAdoo where he said that in a subsidy there was nothing definite. He never v/as more greatly in error on anything than that. All of those subsidy bills specified certain kinds of ships, of certain tonnage, of a certain speed, making a certain number of trips, and being in shape to be turned over to the Government upon a moment's notice, and to carry a certain number of boys, and not a penny was to be paid until that was done. What is there that is definite in Mr. McAdoo's proposition ? The Chairman. And that was to be paid without reference to the element of profits. I will say very frankly, if we were going to have any form of subsidy legislation, it ought to be along the lines of the bill introduced by Mr. Rowe, of New York, which was framed by the Chamber of Commerce of New York. That is the most rational sub- sidy bill to my mind, because that cuts out the element of profit and simply proposes to equalize the cost in construction and operation. Mr. Humphrey. I want to call attention to one feature of Secretary McAdoo's statement right here: In criticizing subsidy, he said it was indefinite. He is cleany in error, as every man knows who has con- sidered one of those bills. And I want to call your attention to this proposition. Did you ever have anything brought before Congress that was more indefinite and uncertain than this proposition ? What kind of a vessel are you going to have ? What character is it going to be ? Is it going to be a fruit carrier, so that we can get fruit from the Pacific coast around to the Atlantic, or over to Europe ? Is it going to be a lumber carrier, so that we can carry cargoes to South America and to the Orient ? Or is it going to be a fast vessel that runs across the Atlantic ? What is going to be the character of it ? He speaks about getting in the neighborhood of from 50 to 75 vessels for naval auxiliaries for $50,000,000. I have just read here where a contract is to be let for a million-doUar freight steamer in Seattle. If you are going to have naval auxiliaries, and that is what it comes back to finally (he takes the position that this is for the purpose of getting naval auxiliaries), do you think w^e are going to get naval auxiliaries for less than a million dollars apiece ? The Chairman. Wliat kind of vessels do you think we need as naval auxiliaries? Mr. Humphrey. Various kinds. There are some of the colliers — • I am not an expert and I do not pretend to be an expert, but my friend Loud here does. 736 SHIPPING BOARD, XAVAL AUXILIARY, AND MERCHANT MARINE. The Chairman. We had an expert before the committee, Admiral Benson, who stated we needed merchant vessels. Mr. Humphrey. Of what character ? The Chairman. We need vessels ordinarily that may be used as cargo ships — for colliers; then we need vessels of the mail, package freight, and passenger type. In fact, the best types of merchant vessels are the kind of vessels that would be available and useful as naval auxiliaries. And I was told by the vice president and general manager of the Newport News Ship Building Co. that there was a whole lot of misinformation or misconception about the kind of vessels that might be used as naval auxiUaries. He said we need merchant ships, the kind that can be most profitably used in trade as merchant ships, to be taken over as naval auxiUaries in time of war. Mr. Humphrey. If they were simply for naval auxiliaries, of course they would vary in price; but if you are going to have any scout cruisers and that class of vessels, such as the requirements we used to make in the subsidy propositions, they are goin^ very much beyond it. The Chairman. I think you wiU a^ee with me it would not be practicable at aU to build a merchant ship of 25 or 30 Imot speed. In other words, you could not operate a merchant ship hke that profit- ably in any trade. Mr. Humphrey. No; it could not be operated for mail carriage? The Chairman. Because, when you get beyond a 16-knot speed you increase the cost of operating the ship ver}' rapidly. Mr. Humphrey. Here is a clipping handed to me by Mr. Loud, showing that the Prometheus, which was built in 1907, cost 81,605,000. And if Secretary McAdoo is right, it would cost twice as much to-day. Mr. Loud. It has a capacity of between five and six thousand tons. Mr. Humphrey. Mr. Loud says it has a capacity of between five and six thousand tons, and the price is SI, 605, 622. The Chairman. What is the speed ? Mr. Loud. Sixteen knots. The Prometheus and the Vestal have a speed of 16 knots. They were built for colliers . The Chairman. They were to accompany the fleet? Mr, Humphrey. Yes; to accompany the fleet. I say, Mr. Chair- man, there are certain classes that would be; but you take these others The Chairman. I would hate to think that a board created under this act would have so little sense as to build a collier or merchant vessel of that type. Mr. HuiviPHREY. According to these figures here, if Secretary McAdoo is right, the one costing $1,738,000 and the other $1,605,000, they would cost in the neighborhood of $3,000,000 each. Another thing to which 1 desire to call attention. Suppose that you did buy these ships. That is only the beginning of it. Where are you going to operate them? Where have you any terminals? Who is going to decide upon where to run them? The Chairman. They have some terminals in Seattle, I am certain. Mr. HuiMPHREY. But they do not belong to the Government, unfortunately. The Chairman. They are available to the Government. Mr. Humphrey. Oh, yes; they are if you pay for them, but they are not going to give them to the Government for nothing. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 737 The Chairman. The trusts out on the coast won't utilize them. You have noticed that ? Mr. Humphrey, I have noticed that statement by my friend, Bob Bridges, and he has been nw good friend for many years, and he is my friend now: but mj^ friend Robert can take a little corpora- tion shadow and hold it so close to his eyes that it shuts out all the rest of the universe. He is a very estimable gentleman, but I would not take his judgment alone on any proposition. The Chairman. The port of Seattle invested $5,000,000 in those terminals. Mr. Humphrey. I think more than that. The Chairman. And I doubt if there are as fine terminals in any port in the United States as they have in Seattle. And yet the Waterhouse Co. and some of the other steamship companies rofuse to consign goods over or to unload cargoes at those docks. Mr. Humphrey. I saw that statement The Chairman. We want to correct that under section 9 of this bill. Mr. Humphrey. You do not have to go into Government owner- ship to correct that. The Chairman. We are going to correct it under section 9 of this bill. Mr. Humphrey'. You do not have to have Government owner- ship. The Chairman. The Government has to use its strong arm to do it. Mr. Humphrey. To start with, I always take an ex parte state- ment with some degree of allowance. Perhaps if you heard the other side of the story it might be different. The Chairman. You do not want to be understood as saying there is nothing in the conditions there which needs ccyiTCct ing ? Mr. Humphrey. I do not know whether there is or not; but I say frankly I would not be carried off of my feet by any statement Mr. Bridges makes. The Chairman. I was out there and saw those terminals. Mr. Humphrey. There is no question about their being wonderful terminals. I think probably they are the best on the Pacific coast with one or two exceptions. I think Los Angeles and San Francisco has the equal of them. I am glad my friend Judge Alexander came out there and saw what we were doing on the Pacific coast. I just want to say this one thing now in addition: It a.ppears irom the statement of Secretary Redfield that all the shipyards of this country are crowded. I have not heard the evidence here, and I do not know whether there is any claim that there are ships anywhere in the v,"orld that can be bought nov\'. I see Secretary McAdoo says he could have bought them. The Chairman. No; not novv'. Mr. Humphrey. Not now; no. So we are faced with the situation tnat when this war closes there is going to be a great release of tonnage, and there is going to be a readjustment of all the shipping of the world, and it does seem to me that this would be the most inopportune time possible for us to embark upon this new and untried policy of Government ov>'iiership. Now, with all kindness and without want- ing to say anything harsh about either one of them, I call the attention of the committee to the statement made bv Secretarv McAdoo and 738 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Secretary Redficld time and again. It runs all through this hearing which I read last night. They seem to be imbued with the idea that they can run a shipping business or any other business better than anybody else. Frequently Mr. McAdoo makes this statement, that they are going to demonstrate to the world how to build ships; that they are going to do it better and cheaper than it has ever been done before. And one of the main arguments he makes is that he wants the Government to give him S50,000,000 in order that he can demon- strate to the world that the}^ can build ships cheaper than anyone else ever has built them. The Chairman. Not he, but we. Mr. Humphrey. Yes; we. The Chairman. The American citizens. Mr. Humphrey. Now my friend, Secretary Redfield, has made statements of the same character. Secretary Redfield believes he can run any business, from making matches to building battleships, better than anyone in the United States, and a great deal better than anyone in the business. I do not agree w^ith him. I think that this whole proposition is simply imtenable and uncertain — a mere dream. They have not given to you any definite details about what they expect to do. And if some man had come in here with a sub- sidy proposition that the Government pay out $50,000,000 in sub- sidy and did not specify the character of the ship, did not tell you where it was going to run, and told you nothing about it, except "'if you will do that, I will go and build ships cheaper than anybody else in the world ever has done and demonstrate to the rest of the nations of the world and to the shipping people that they do not understand their business," how long w^ould you have listened to it? I do not believe there is any human being living that w^ould take his own capital and go into a proposition of that kind, and I think it takes the National Treasury to start an imdertakinglike that, and I do not believe that either one of those gentlemen would invest their own capital in such an undertaking. Mr. Greene. I want to ask you a few questions. A gentleman by the name of Smith, Capt. Smith, appeared before us yesterday and made the statement that w^ith the $50,000,000 we could build 200 ships. He came here as an expert seaman and as an expert agriculturalist, and I do not know now many other lines he was expert in — an expert seaman and he had commanded vessels — and he made the statement clearly and distinctly that with the $50,000,000 provided in this bill, you could construct 200 ships that would be suitable for the over-seas trade. The Chairman. In normal times. Mr. Greene. Oh, no; he did not. The Chairman. Now, treat the gentleman fairly. He said in normal times, and I say that was not only possible but it could have been done prior to the war in Europe. Mr. Greene. No; he states it could be done with this money now, as I understood him. The Chairman. Oh, no. Now, you ought to be fair. Mr. Greene. I want to be corrected if he did not; but I think he stated distinctly — and I asked him the question how many ships could be built with this money (and the record will show whether I am correct or not), and he said 200. I asked him how many ships SHIPPING BOABD, NAVAL AUXILIAEY, AND MERCHANT MARINE. 739 he supposed could be built with this money, and he said 200 with the $50,000,000. He said that would be about $250,000 apiece. Mr. Curry. I think he did correct himself. Mr. Hardy. The gentleman was very modest and claimed he did not know much about that part of the subject. Mr. Greene. He stated it rather broadly when he stated it. If he corrected it afterwards, I did not hear him. Mr. Hardy. He was brought over by yourself and others. Mr. Greene. Oh, no; he was not brought over by me. It was in answer to plain questions that were asked him as an expert. The Chairman. I think his statement is consistent and sensible. Mr. Greene. There is another thing I want to ask you, and that is how long a vessel could come through the WeUand Canal ? Mr. Humphrey. I do not know, Mr. Greene; I am not an expert. Mr. Greene. I am told that no vessel over 236 feet in length could come through. The Chairman. Secretary Redfield made that statement. Mr. Humphrey. Permit me just here to read something that Sec- retary McAdoo said. He said, in answer to a question from you Mr. Greene: I understand that not a great deal of equipment would be necessary if the machinery and the material was shipped there to be assembled at those yards. You see, a lot of this stuff can be turned out in the interior of the country and shipped and assembled on the seacoast. I merely call attention to that to show that while I know nothing whatever about shipbuilding, the proponent of this bill apparently knows as little about ship construction. The Chairman. I suppose he had in mind that ship your friend Penton said they could build up there in six weeks. Mr. HuTMPHREY. My friend Penton could demonstrate that he knew a great deal more than the one making this statement. The Chairman. Have you read his testimony ? Mr. Humphrey. I have read Secretary McAdoo's testimony, and I am convinced that he knew nothing about shipbuilding; that he is simply a dreamer, and is asking the United States to give him $50,000,000 in order to demonstrate that the other men on the earth do not know their business. Mr. Hardy. Do you think he is any more of a dreamer than the man who with an increase of a thousand per cent in freight rates thinks it is necessary to-day to give subsidy ? Mr. Humphrey. I am not going to discuss the question of sub- sidy with 3^ou. Mr. Hardy. I want that sort of a dream. Mr. Humphrey, The gentleman has had his dreams around this table the same as I have, but unfortunately mine have always come true. ^Ir. Hardy. I want to say that it has frequently been argued by the gentlemen who have appeared here before us that this bill is in the nature of a subsidy. If I believed it was, we would reverse our positions, for I would be inclined to fight it if I thought it was a genuine subsidy bill. That is my contribution. I do not mean to arouse an argument, because I know you and I never could agree. Mr. Humphrey. I will make this one statement now, with due apologies to m}^ friend Judge Hardy, that it must take a peculiar 740 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. character of mentality in a man who can hold up his hands in horror at taking out of the Government Treasury a few million dollars to pay ships to operate in a specific undertaking, in a specific service, ships of a certain character, to be at the command of the Govern- ment in time of war, and yet to advocate the taking of $50,000,000 out of the Treasury in a lump to go to a half-baked socialistic scheme that nobody knows where it is going to lead to. Mr. Hardy. The peculiar mentality is on the part of the gentle- man from Washington. Mr. Humphrey. If mine is peculiar and yours is normal, I will take the peculiar position. Mr. Hardy. The point is the gentleman can not stand for a simple, straight-cut proposition. I say, if this was a subsidy proposition our positions would be reversed; you would be for it and I woidd be against it. Now, the mentality of some gentlemen is such that they see in this bill a subsidy. The truth is it is farthest from a subsidy. A subsidy is a kind of a bounty given to a private individual. This is a contribution to the general welfare. I am about sure that the gentleman does not contend that the building of the Panama Canal was a subsid}^. But I have heard it argued that the improvement of our rivers and harbors is a subsidy, and that our post office is a subsidy. Mr. Humphrey. I think so. Mr. Hardy. But the trouble with that class of subsidy is it goes for the benefit of the public and not for the benefit of some special, private interests. That is the reason I favor that class of general benefit and the gentleman favors the other, of special benefit. Now that may be a peculiar mental attitude, but it nevertheless is mine. Mr. Humphrey. You won't have to argue with me about that mat- ter, for it is peculiar. I admit it. Now, Mr. Chairman, while I do not intend to go into the subsidy business, I wish some day my friend would arise in his place in the House and denounce the subsidies we pay to the magazines of this country, amounting to some $63,000,000 a year. That is a private enterprise, and that money goes straight to them. We give them $63,000,000 a year. They do not pay the Government anything in return. The Chairman. I w^ill not say wdiat I think about that. Mr. Humphrey. Whether it is a subsidy, or whatever you may call it, it all gets back to the National Treasury, and I do not see any difference whether you take it out and call it a subvention, or whether you reach straight in and take it out in a lump and call it something else. The Chairman. You and I both know how to get 1-cent postage for the American people in a practical way, Mr. Humphrey. I will vote for it, if you will introduce a bill. 1 am in favor of it. The Chairman. But you won't vote to increase the rate on second- class mail matter to equal half the cost to the United States Gov- ernment for carrying it? Mr. Humphrey. I won't! You give me an opportunity and I w^ill vote for it in a minute. I think that is the most obnoxious, inde- fensible subsidy in the world. And that is the reason we have to pay 2 cents on our letters. Here we have magazines circulating adver- tisements in this country, 70 per cent of which is advertismg matter, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 741 and yet the business man has to pay five times as much to advertise as the magazines do. And then for a man to stand up in holy horror here and talk virtuously about being opposed to subsidy. You will never get me in that position so far as magazines are concerned. IViU'. Hardy. The gentleman is opposed to subsidy if it is a general benefit to the public at large. I know that. He is not in favor of that a particle. Mr. Hltmphrey. Judge Hardy and I will never agree on subsidy, Mr. Edmonds. I want to go back to the bill and ask you a few questions. You say that you are in favor of a shipping board. What powers would 3'ou propose to give the shipping board ? ^Ir. Humphrey. Mi\ Edmonds, to be frank with you and with the committee, I have not given this question much study and I do not know that my opinion would be of much value. But it has seemed to me for a good many years, and I think my friend Hardy will agree with me on that (I liope so), that in the present condition we have, and with the many complaints that are made that the American ship is not fairly treated — and I do not think anybody has any thought but what that is true, in the foreign fields, at least — that it might be a wise thing to have a board and to give it power, perhaps not as great as the board of trade in England, but to give it some power over regulating those things until we can get American ships on the seas. ^ir. Edmonds. You mean to regulate the rates ? ^ii\ Hltmphrey. I am not sure whether you should go that far or not. Probably that would be a good thing; but I do not know. But I want to say one thing, that I was glad to see Secretary McAdoo come out in favor of Americjin combinations if necessary in the foreign trade. It has seemed to me for many years it was a shame and an outrage that we woidd not permit the American shippers and American ships to combine in foreign fields where they have to fight combina- tions. For years upon the Pacific coast, we have suffered from that very identical thing, that they would not permit the lumbermen on the Pacific coast to combine so that they could send one agent down to South America to represent all of them, so that when he would give a price it would represent the price of all the manufacturers of lumber, so that we could invade the market and fight competition of our competitors who are doing exactly the same thing. The foreign lumber manufacturers have a representative there who speaks for all of them. And I am mighty glad to see Secretary McAdoo make that statement, because I think that is right. The Chairman. I think that is coming. Mr. Hltmphrey. I think so. In my judgment, that provision should never have been in. the antitrust law. Attorney General Wickersham made a written statement once that this provision did not apply to the foreign trade. I saw that letter; but it is so close a question that no man wa^ited to take the chances of being prosecuted. Mr. Cltrry. The Navy will be short of auxiliaries in the near future and they will need auxiliary ships. Now, suppose this bill was changed so as to provide an, appropriation of $50,000,000 to be exj)ended by the Government in the construction of naval auxiliaries in the navy yards of the United States (those are the only yards not being used to capacity at the present time, although some of them arc), those naval auxiliaries to be used in the over-seas trade and commerce in 742 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. times like the present conditions, would you object to the bill then ? That is, to take out absolutely the proposition of Government owner- ship, so far as appropriating more than this 850,000,000 is concerned, and to use this $50,000,000 for the construction of naval auxiliaries, to be constructed in such manner as could be used for carriers ahd to use them then in the over-seas trade to relieve conditions such as prevail at the present time ? Mr. Humphrey. I think that would be less objectionable than the shape in which it is now. If there is a condition which exists in our Navy where, for the purpose of defense, to make our Navy useful — if that emergency exists, then — ^I think we ought to take some steps to provide relief, if it is not to be provided in private yards, through our navy yards. The Chairman. Admiral Benson testified before the committee that we needed about 600,000 tons of merchant ships now that could be made available as naval auxiliaries; that is, as a complement to our present Naval Fstablishment. Mr. Humphrey. I notice Secretary McAdoo says that would sup- ply ah out 40 per cent of what we need. But, Mr. Curry, there is this thing to be thought about: There are two questions presented there, both of them worthy of consideration. If we are going to have those ships, the question arises, Shall we tie them up and not operate them? On the other hand, if they once enter into trade, it is very doubtful whether we would ever be able to get them out. Now, we have hf d experience with the transports to which I called attention before you e?me in. We know how it is with all Government opera- tions and bureaus; they are ambitious, and if you allow a department to h^ive ships they are ver}' apt to be like all the other departments — and it is not to their discredit, but it is to their credit — and they become enthused with the work and they want to reach out more and more. And if you once commence a proposition of Government ownership, I do not think you wiU ever end it, and the result will l)e that private ownership will be destroyed. I think whenever you reach that point you have to take the choice between the two, because private enterprise is not going to build ships and go into competition witli the Government, with the National Treasury in liack of it. Mr. Curry. This will not l)e a ])ermanent entering into the busi- ness. If they were naval auxiliaries they would be absolutely under the control of the Secretary of the Xavy, and he could r.ay what ships could be spared from the Navy, and he could say when they wanted them back again. Mr. Humphrey. I understand there are quite a good many now — quite a number which could be spared if operated as economically as the ordinary merchant ship. Mr. Curry. That ought to be done, don't you think? Mr. Humphrey. It is a question for the Navy to decide. They have the control of them. Mr. Hadley. He has asked your attitude in reference to the ques- tion as he put it. Now, suppose — -the section providing for a corpora- tion and for the Government to take stock (which is referred to as the Government-ownership provision, whether it be that or not) should be eliminated and a provision was retained, as Mr. Curry sug- gests, for naval auxiliaries and appropriation made for an investment of that kind, and also limited to the leasing by the Government of SHIPPING BOARD, NAVAL AUXILIAEY, AND MEECHANT MARINE. 743 those auxiliaries in times of peace, with certain requirements of serv- ice and, instead of Government operation, to provide for their opera- tion by lessees, and if they could not be found to be operated by the Government, so that they would not necessarily be absolutely tied up, how would that provision in a bill be regarded by you ? Mr. Humphrey. I think that would be better than Government ownership. As I said, Mr. Curry, before you came in, we had some experience out at Seattle with Government ownership with the trans- f)orts there. We got one old transport and it kept running and we ost seven merchant ships. Had we kept that one Government- owned ship out probably we could have kept the others running. The Chairman. Have you read this bill, Mr. Humphrey? Mr. Humphrey. Yes. I understand it is not the purpose, at least from reading Secretary McAdoo's statement, for them to operate except as the last extremity, although I think there is still a provi- sion The Chairman. Section 8 provides that in cases where private enter- prise will not utilize these ships, to open up trade to American com- merce, that the Government may open up a line. But the prime purpose of the bill is for the Government to expend this money in the building of ships to be leased or chartered to private parties to be operated in these trades that will facilitate the extension of our foreign commerce. That is the prime purpose. There is this reserve power in the Government that if there are trades where it is desired to open up our commerce and where the field is not sufhciently inviting for private capital, then the Government may establish a Ime or put on tramps. Now, that is it: it is reduced to a minimum. And if that provision were out of the bill, the question is whether or not the people who might want to charter these ships would not take advantage of the Government and say, " We will take the ships, but we wiU take them at our own price." Mr. Humphrey. I imagine if this bill was enacted and judging partly from what Secretary McAdoo said, that if they had any ships available on the Pacific one of the first things they would do would be to start a line from San Francisco and Seattle across the Pacific. There are no American ships there, and if they started running, I doubt whether they would ever come back again. Mr. Curry. You take that as a foregone conclusion, that that is what would be done. Of course I do not believe in the Government entering into business in competition with its citizens and driving them out of business. I believe the business of the Government is to govern; but when the Government can run a business for the benefit of all of its citizens better than an individual that is a different propo- sition; and here is the position that confronts us particularly on the Pacific — the Japanese lines give preferential duties to their own peo- ple, as you know. Mr. Humphrey. I know it. Mr. Curry. These subsidized Japanese lines, and even the tramps, are not permitted to raise the freight rates to Japanese exporters and importers, but they can make all the mone}' they please out of ;70u or me or anyone else who has goods to ship. That is the condition we have on the Pacific at the present time. Mr. Humphrey. Will you permit me, right at that place, to call your attention to the fact that on October 16, 1915, that very thing 744 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MAEINF. was done. Japan ordered a general advance on cargoes and products from all ports here. Tlie rates from Japan to the United States con- tinue as they are, but the new rates are S9 a thousand feet on lumber from Washington and $7 from Manila, and an advance on flour ot S5.58 a barrel and $6 from Manila. Ml'. Curry. That is practically the same as the condition in Great Britain. There is very little rise in the rates on exports from Great Britain but a great deal on imports. Mr. Humphrey. Yes. Mr. Curry. Suppose that this bill was changed S3 as to provide for $50,000,000 worth of naval auxiUaries, and those auxiliaries to be built in such manner that they could be used as freight ships: what harm would there be, when they were not doing anything else, in putting them in the over-sea trade from Seattle or San Francisco to go over to Japan and to give the American exporter a chance? Of course, I do not mean putting them into that business, to the detriment of an American line, and keeping them in that business in perpetuity, but to relieve a condition like the present: those sliips to be absolutely under the control of the Secretary of the Nav}', but at the time when they were not used for naval purposes, the Secretary of the Navy can say to this shipping board, ''You can have this, that, or the other ship, to put into any trade you think would be beneficial to the American exporter and importer," and they could be used in that way in lines not now adequately served and to be recalled by the Secretary of the Navy at any time wlien he wanted back those ships for the use of the Navy. Do you think tliat would be a bad proposition ? Mr. Humphrey. I am not going to admit the premises of your proposition, that the conditions on the Pacific are to remain as they arc. If we are to abandon tlie idea that the American flag can ever be placed back on the ocean again, except by Government ownership, then I think I agree with 3^ou. Mr. Curry. No; I think you must have forgotten my first state- ment of four or five minutes ago, that this is to meet a condition that exists to-day, not a permanent proposition. If there is an American line running or an American line put into the trade, why, we would take these off. Mr. Humphrey. Oh, if we had the ships already constructed and it was an emergency proposition, under conditions such as we have now, I would see no objection to running them. But the objection I have to this proposition, Mr. Curry, is in the first place it is wholly indefinite and uncertain. You do not know what you are going to do; you simply ask in this bill to appropriate $50,000,000 for some board to go to work and do something with it. Mr. Curry. That is one of my objections to the bill. Mr. Humphrey. Under this proposition, we all know that political influence will appear immediately. Suppose you have these vessels, where arc you going to run them l Mr. Curry. Give tliem to me and I will run them. Mr. Humphrey. You will have New York and San Francisco thinking they ought to have them, and New Orleans will wnnt them and Seattle will think they ought to have theirs. Mr. Edmonds. As long as you do not raise any objection, give them to Philadelphia. You do not seem to object to Philadelphia. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 745 Mr. Hr.MPHKEY. Yes; give them all to one place. The trouble with this thing is you are going to scatter them around, to take what you can ])uikl with the $50,000,000 and scatter them around all over the country, and you will just have enough to discourage private enterprise and do no good. Mr. Curry. A couple of those ships could be built at Bremerton veiy easily, and a couple at Mare Island, and used to relieve the ship- ping coriditions on the Pacific. I am opposed to Government ownership of our merchant marine just as strongly as vou are. Mr. Humphrey. 1 think wo agree on that. Mr. Loud. This bill provides there is to be a commission of five, and two of that commission will be cabinet officers. Would you favor putting cabinet officers on such a commission? Mr. Humphrey. No; I would not. Because the average cabinet officer is just what he ought to be; he is a good man for that place, and usually a politician, and he ought to be; but he does not usually know very much about business. From what I have known of cabi- net officers since I have been liere, they have little knowledge of busi- ness. And if they are going into business they ought to be divorced from politics. But that is a minor consideration. Mr. IIadley. I do not think you got the full force of my question as to whether your objection would go to the leasing of auxiliaries as against Goverimient ownership. Mr. IIiMPiiKEY. I think that would be much preferable. Mr. Hadley. In leasing, in case a lessee could not be found, then for the Government to be free to operate, because private parties would not bo interested. Mr. Humphrey. I will tell you why, Mr. Hadley, I think leasing would be far preferable, because my experience has been, and that has been in shipping, too, as well as other matters, that it costs a great deal more for the Government to operate vessels or do almost any other kuid of business, except where it is a natural monopoly, like our city water or city lights; and I had that illustrated in rcgr^rd to the transport service. I had a thorough investigation made of that and had a committee appointed to investigate it when I first came down here. They carried passengers for S. dollar a head, and they credited themselves with what the private lines charged for carrying them, so that the more people they carried for nothing the more money they made. That was exactly what it demonstrated; but it showed in going through the books that it was costing the Govern- ment aU the way from 25 to 50 per cent more to get the same v/ork done than it could be done for b}" a private line; and yet we could not stop it. Secretary of War Root, I think, ordered part of them stopped at one time and wanted to sell them, but it caused a great uproar, just as you would have now from the Army officers and all the men connected with that department, if you wanted to discontinue them. Mr. Greene. I was talking with you about the length of vessels that can come through the WeUand Locks. I am informed that no vessel over 236 feet in length can come through those locks. And if vessels were built of a greater length on the Lakes they would have to be cut in two and put together at Montreal and taken through in separate parts. 746 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARIN C. The Chairman. That is the way they build them and that is the way they get them throiigh. It is entirely practicable. Mr. Humphrey. They do get some of them through. Some of them on our coast were brought through. Mr. Greene. But they have to be taken in pieces and then put together. Mr. Humphrey. Yes. Mr. RoAVE. But they are only brought through in extreme times; in times like these when there is a demand for steamers and you can not get them. The Chairman. Oh, no. I do not think that is correct. I think for several years past they have been doing that. Mr. Greene. Can you produce the evidence of their doing that to any great extent ? Mr. Loud. It is only a very rare and occasional thing it is done. The Chairman. I do not know to what extent, but I have heard of it. Mr. Loud. It is only at times when a very large price can be ob- tained for the ship that they will do that thing to it. Mr. Greene. That is what I would like to know. I do not know whether Mr. Humphrey knows, but if the chairman has the informa- tion I would like to have it. The Chairman. Mr. Duff made a statemont to me about that. Mr. Edwin H. Duff. Mr. Chairman, the only information I have about it is that I was negotiating during the past six months for a steamer to be brought through the Welland Canal, and we had a price of about $23,000 for cutting her apart and rejoining her at Montreal. It was perfectly practicable to do it. The total cost of the vessel was something under $300,000. So that was only about 10 per cent of the total cost of the vessel. The Chairman. But if the vessel was built in the first instance with a view of cutting it up or building it in sections and then taking it through the canal, that would eliminate part of that cost, would it not? Mr. Duff. If it was contemplated, yes. This was a vessel already constructed and sold for use on the Atlantic coast, and they had to cut her apart and then ta join it together at Montreal. The Chairman. But if they were built in the first instance with a view of taking them througli, and they were built in sections and then rebuilt at Montreal, that woulel reduce the cost? Mr. Duff. That would materially reduce the cost; yes, sir. Mr. Greene. I would like to submit the following to be printed in the record: To the Maine State Board of Trade: Your committee on merchant marine has considered the maritime questions and before the country and begs leave to report: It indorses the declaration of the United States Chamber of Commerce that it would be a mistake for the Government to enter the shipping business; particularly at this time when every available merchant sliip is in operation throughout the world and every American shipyard is being worked to its greatest capacity in an effort to meet the demands of private capital for more vessels. Your committee calls attention to the following facts: 1. More merchant tonnage is now building in the United States than at any other time in the history of the country. 2. War conditions have made it possible at this time to build ships in the United States as cheaply as they can be built anywhere. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINS. 747 3. The wholesale building of vessels made possible by the present unprecedented demand, and the development resulting therefrom, together with the higher wages which workmen in foreign shipyards now receive and will continue to demand for some years at least, give promise that the America*! shipbuilder may be able to con- tinue his successful competition with foreign yards even after the end of the European war. Therefore there certainly is not now, and possibly there never will be, any substantial reason for tlu-eatening the owners of American ships with legislative changes which may mean a serious disturbance of our coastwise carrying trade. 4. The extended testimony recently taken by the shipping committee of Congress, testimony exhibiting all varieties of opinion, is in absolute agreement on the one point that to retain and build up American trade in foreign countries American ships are necessary. 5. The difference in the cost of operating a ship under the American flag and one under the foreign flag has been greatly reduced; and it is the testimony of Secretary Redfield that this former great handicap of American ship operators will be further reduced and may entirely disappear. Wherefore your committee is of the opinion that there is no call for radical action at this time; that private capital now so actively engaged in creating a fleet of Amer- ican-built vessels shovUd not be hampered in its work by the threat of Government competition; and that when the new conditions of ocean transportation which will surely become manifest when the merchant fleets of the world resume their peaceful service, have become known and understood, then the Government should ascertain what, if any, unfair advantages foreign shipowners still retain over their American competitors, and enact such legislation as may enable American shipyards to continue in operation and Americans to send their products abroad under the American flag. Respectfully submitted. Edward C. Plummer, Fritz H. Jordan, Henry Lord, Committee. Mr, RowE. I would like to have printed in the record the following resolution received from the Maritime Exchange of New York: Maritime Association of the Port of New York, Ne-w York City, March 15, 1916. Hon. Frederick W. Rowe, Committee on the Merchant Marine and Fisheries, House of Representatives, Washington, D. C. Dear Sir: I beg to hand you herewith resolutions adopted by the board of direc- tors of the Maritime Association of the Port of New York at a regular monthly meeting held on the 8th instant, viz: Whereas, legislation has again been proposed in Congress (H. R. 10500) which pro- vides in effect for Government ownership and operation of merchant vessels, including the regulation of rates to be charged by all corporations, firms, and indi- viduals engaged as common carriers between ports of the United States and between the United States and foreign ports and its Territorial possessions, and further providing for the licensing of all such operators before they shall be permitted to engage in trade: Therefore be it Resolved, That the Maritime Association of the Port of New York reaffirms its previous action in opposition to the principle of a Government ownership and opera- tion as applied to the merchant marine, believing it to be not only impracticable but ineffectual to achieA'e the ends sought, for the following reasons: 1. The number of vessels which it would be possible to obtain either by building, charter, or purchase within the limits of the appropriation contemplated, would not be sufficient to appreciably affect present existing conditions, even if such vessels could be promptly secured. In view of the position taken by belligerent nations regarding the transfer of their ships, and the crowded condition of American ship- yards, there would appear to be no vessels available for the Government to secure at this time. It is apparent, therefore, that by the tim.e a sufficient nuro.ber of vessels could be acquired to carry out the plan proposed, normal conditions ft ill undoubtedly prevail, and the Government will find itself with a large amount of vessel property on its hands for which it will have no use except in direct competition with the owners and operators of American vessels, who would be unable to operate their ships in cojnpetition with a Government line in which the items of interest, depre- ciation, and insm-ance, and the necessity for making a profit, or at least me'^ting expenses, were not taken into consideration. 748 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 2. That the regulation of rates as contemplated could have but one result — to place our foreign carrying trade solely in the hands of foreign competing vessels, over which the proposed shipping board could exercise no control. An advantage would thus be gained by, our competitors which would force our vessels to withdraw from the trade, and the shippers would face conditions which would be a serious handicap in the conduct of their business, and which in the case of the smaller shipper would be practically prohibitive. Further, our shippers would be placed at a serious disadvantage in competition with foreign shippers, in that the latter would necessarily know the freight rate on which our shippers had to figure to do business, and consequently they, with the aid of a foreign government subsidized line, would be able to compete successfully. Further, the law of supply and demand has always been the best regulator of rates. 3. It is apparent that the experienced shipping men throughout the country, from their intimate knowledge of shipping affairs as a result of years of application and a careful study of the particular needs of various trades, should be in the very best position to accurately forecast the effects of the legislation proposed, and they are practically unanimous in their opinion as to the futility of the proposition as an aid to the upbuilding of an American merchant marine or as an incentive to the extension of our foreign trade. On the other hand, they believe that any attempt by the Gov- ernment to engage in the shipping business would so hamper and discourage present owners and operators of American ships that they would be compelled to withdraw from trade; it would mean the loss of a large amount of capital which has been invested in good faith by the American ship owner, often in the face of most discouraging con- ditions and burdensome legislation. 4. We believe it would be most undesirable that the Secretary of the Navy and the Secretary of Commerce should be named as members of a board such as is pro- posed, for the reason that these gentlemen have such a multiplicity of affairs in con- nection with their respective departments requiring their constant attention, that they would be unable to devote sufficient time to the affairs of the shipping board, that would enable them to acquire that thorough and comprehensive knowledge of shipping affairs which a member of such a board should possess. 5. It is apparent that, in view of the large orders that have been placed by American shipowners within the past year for the construction of vessels, which orders are now taxing American shipyards to their utmost capacity, that there is no hesitation on the part of our people to invest in vessel property when a fair return on the invest- ment is promised, all of which we believe should receive due consideration in con- gressional councils and result in the enactment of legislation which will lessen the difficulties mth which American shipowners have long contended in competition for the foreign trade. Further, that while all shipbuilding plants have contracted for practically all of the vessels they can build within the next two years, many other vessels would have been contracted for, for later delivery, liad it not been for the possibility of unfavor- able legislation, niakiug it difficult to secure sufficient capital to build these vessels, and in many instances causing the prospective owners to discontinue their negotiations. 6. The ^laritime Association of the Fort of New York, comprising in its member- ship representatives of practically all interests identified with shipping at this port. resj)ectfully urges that legislation inimi< al to our shipping interests such as proposed in H. R. 10500 })e not enacted, and respectfully submits that the present situation as regards shipping facilities will in no wise be improved by the entrance of Govern- ment ownership, which we consider an extremely dangerous experiment, the effect of which will be disastrous to our merchant marine and detrimental to the interests of the country at large. Very respectfully, yours, J. B. MoRRELL, President. Attest: Jos. M. DowD, Secretary. The Chairman. I have several communications which I will place in the record. The first is a communication from the Mobile (Ala.) Chamber of Commerce and Business League to the President of the United States, indorsing the shipping bill. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 749 Mobile Chamber op Commerce and Business League, Mobile, Ala., February 24, 1916. Hon. WooDROw Wilson, President United States of America, Washington, D. C. Dear Sir: At a meeting of the general membership of the Mobile Chamber of Com- merce and Business League, held Monday, February 21, a resolution was passed indorsing the plan of the administration promoting American merchant marine. The resolution is in accordance with the bill introduced in Congress by Representative Alexander. We take pleasure in advising you to this effect. Yours, re^ectfully. Mobile Chamber of Commerce and Business League. By E. M. Bailey, President. Xlso copy of circulnr letter from the Commissioner of Navigation to collectors of customs, showing why more foreign ships are not taking out American registers : Department of Commerce, Bureau op Navigation, Washington, January 22, 1916. ( 'ollrctor of customs. Sir: In the past 11 moiiihs leading maritime nations possessing over three-fourths of the world's merchant shipping under foreign flags have passed laws or issued decrees forbidding their citizens or subjects to sell and transfer to the flag of another nation any merchant ship under their respective flags except by a special permit from the (TO\ernment. Great Britain enacted such a law on February 12; Austria-Hungary issued such a decree on August 27; Denmark on October 8; Germany enacted such a law on October 21, France on November 11; Norway issued a decree on December 6; Brazil on December 9; and Spain ])romulgated a law on January 9, 1916. The mer- chant shipping of these countries aggregates 33,900,000 gross tons out of a total of 43,370,000 gross tons of all foreign nations. Other nations may promidgate similar laws or decrees for the duration of the war, and notice of such laws or decrees may not 1)0 received in this countrv until after they have taken effect. The Bureau of Navigation suggests that prospective American purchasers of ships under foreign flags ^\•ith a ^•iew to American registry vdU consult their ovm interest in a clear title if in all cases they acquaint themselves with the transfer law of the nation Avhose flag the shi]i, jiroposed to be bought, now flies. Please bring the subject to the notice of those concerned. Respectfully, E. T. Chamberlain, Commissioner. Also a list of foreign built vessels prepared by the Commissioner of Navigation to which American registers have been granted under the act of August 18, 1914, up to March 21, 1916; also list of American vessels sold to foreignei-s from September 1, 1914, to March 21, 1916: Foreign-built vessels admitted to American registry under the act of Aug. 18, 1914- Official No. Signal letters. 212529 LDNS.... 212543 LDNV . . . 212925 LDPF.... 212565 LDPJ.... 212566 LDPK... 212568 212569 LDPM... LDPN... 212570 212571 212572 LDPQ... LDPR... LDPS... Name of vessel. Oceana' a Moldegaard ' Windrush' Tivives i Trinidadian' Roseway 2 Santa Rosalia 2. Transferred to Spanish 32910—16 48 Kentra ^ Bantu 2 Crofton Hall K.. flag. Gross tons. When buUt. 7,796 1891 2,852 1906 1,531 1891 5,017 1911 2,450 1892 291 5409 1907 1811 4,682 4,188 5,773 1906 1901 1913 Present owner. Morse Dry Dock & Repair Co. Bull-Insular Steam- ship Co, Shepard & Morse Lumber Co. Tivives Steamship Corporation. Gulf Refinmg Co F.H.Farwell Unitfd States Steel Products Co. do do do Home port. Passenger vessel. 2 Freight vessel. New York, N.Y. Wilmington, Del. Boston, Mass. New York, N.Y. Port Arthur, Tex. Do. New York, N.Y Do. Do. Do. » Tanl:er. 750 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Foreign-built vessels admitted to American registry under the act of Aug. 18, 1914 — Coatd. Official No. 212573 212786 212747 212853 212S86 212693 212583 212584 212585 212587 0) 212592 212596 212597 212600 212710 212601 212603 212604 212605 212606 213488 212612 212613 212646 212970 212627 212628 212632 212633 212634 212635 212641 212642 212647 212649 212650 212648 212651 212652 212653 Signal letters. Rig. LDPT... LDPV.... LDPW... LDQB... LDQC... LDQF... LDQG... LDQH... LDQJ.... LDQK... LDQM... LDQX... LDQF... LDQR... LDQS.... LDQT.... LDQV... LDQW... LDRB... LDRC... LDRF... LDRH... LDRJ.... LDRK... LDRM... LDRN... LDRQ... LDRS.... LDRT... LDRV... LDRW... LDSB.... LDSC... LDSF.... LDSG.... LDSH.... LDSJ.... LDSK.... LDSM.... LDSN.... LDSP.... Bark. St.s.. St.s. St.s. St.s. St.s. St.s. St.s. St.s. St.s. St.s. St.s. St.s. St.s. Sch. St.s St.s., St.s., St.s., St.s. St.s. Ship. St.s. Bun St.s Bark St.s. St.s. St.s. St.s. St.s. St.s. St.s. St.s. Sch.. St.s. St.s. St.s. St.s. St.s. St.s. Name ol vessel. Annie M. Reid '. San Francisco '.. Buenaventura '. Charlton Hall' . . CrasterHall '... Howie'.; Hall'... Zacapa2 Cartago 2 Sixaola^ Brabant 3 FoxtonHall*.. Limon ' Pannco '■> Pinar del Rio C.V,'. Mills'.. Suriname 2 Brin'Ji!la3. Turialha 2. Metapan'... Heredia^.. . Esparta '. . . Avon ' Abangarez^. E.R. Sterling «. Coppename 2. . . Snowdon ' Platurias C.A.Canfields. Parismina. Almirante ■ Atenas 2... San Jose 1 . Motanos Caloria3 Louise M. Rich ard.' Marowijne 2 ■ Saramacca 2. . Norman Bridge 3 Santa Marta 2 Carillo' Pastores* Gross tons. When built. 2,165 5,102 4,881 4,749 4,319 4,922 5,012 4,937 5,017 2,773 4,246 3,297 2,556 2,504 371 3,274 4,170 4,952 5,011 4,943 3,297 1,573 4,954 2 577 3,181 1,111 3,445 6,350 4,937 5,010 4,961 3,296 2, 7.'?0 4,095 441 1892 1914 1913 1907 1909 1910 1909 1908 1911 1890 1902 1904 1888 1895 1904 1908 1894 1909 1909 1908 1904 1884 1909 1883 1908 1877 1892 1913 1908 1909 1909 1904 1890 1906 1906 Present owner. James Rolph, jr. United States Steel Products Co. do do do do Zacapa Steamship Corporation. Cartago Steamship Corporation. Slxaola Steamship Corporation. TheTe-xasCo 3, 191 1908 3,283 1908 4,288 1913 5,013 1909 5,012 1911 7,781 1912 United States £ teel Products Co. Limon Steamship Corporation. Freeport & Tampico Fuel Oil Transpor- tation Coiporation. Ameriean i^- e nban Steamship Line (Inc.), John George Mui'phy. . Suriname Steamship Corporation. Standard Oil Co Turialha Steamship Corporation. Metapan Steamship Corporation, Heredia Steamship Corporation, Esparta Steamship Corporation. Avon Shipping Co. (IJIC), Abangarez Steamship Corporation. Sterling Ship Co Coppename Steamship Corporation. Snowdon Shipping Co. (Inc.). Standard Oil Co Petroleum Transport Co. Parismina Steamship Corporation. Almirante Steamship Corporation. A 1 1 e n a s Steamship Corporation. San Jose Steamship Corporation. Standard Oil Co do Ernest H. Richard Marowijne Steamship Corporation. Saramacca Steamship Corporation. Petroleum Transport Co. Santa Marta Steam- ship Corporation. Carillo Steamship Cor- poration, Pastoies Steamship Corporation. Home port. ' Freight vessel. 2 Passenger vessel. 3 Tanker. * Provisional register through American consul. 5 Freight vessel. Foxton Hall burned at Watling Island, Bahamas, Sept. 23, 8 Freight vessel. Formerly barkentine Everett G. Griggs. ' Vessel foundered Aug. 14-15, 1915, oil coast of Yucatan, San Francisco, Cal. yew York, N.Y. Do. Do. Do. Do. Do. Do. Do. Port Arthur, Tex. New York, N.Y. Do. Do. Do. Mobile, Ala. yew Yon ,X.Y. Do. Do. Do. Do. Do. Boston, Mass. XewYork,"N.Y. Seattle, Wash. New York, N.Y. Boston, Mass. New York, N.Y. Los Angeles, Cal. New York, "K.Y. Do. Do. Do. Do. Do. Gulfport, Miss. New York, N. Y. Do Los Angeles, Cal. New York, N.Y. Do. Do. 1914. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 751 Foreign-built vessels admitted to American registry under the act of Aug. 18, 1914 — Contd. Official No. 212654 212655 212656 212657 212658 212671 212672 212673 212675 212798 212682 212683 212688 212694 212C95 212697 212698 212701 212702 212821 212716 212725 212726 212728 212738 212744 212917 212762 212766 212859 212782 212852 212787 212790 213023 212S80 212841 212810 213029 213098 212822 212825 212828 Signal letters. LDSQ.... LDSR.... LDST.... LDSV.... LDSW... LDTB... LDTC... LDTF.... LDTG... LDTJ.... LDTK... LDTM... LDTN... LDTP.... LDTQ... LDTR... LDTS.... LUTV... LDTW... LDVB... LDVC... LDVF... LDVJ.... LDVK... LDVM... LDVP... LDPC... LDVQ... LDVS.... LDVT... LDWH.. LDWJ... LDWK.. LDWM.. LDWP... LDWQ... LDWS... LDWT... LDWV... LFBC... LFBD... LFBG... LFBK... LFBM... Rig. St. s St. s Ship Ship.... Ship.... St. s Sch. b... Name of vessel. Gross tons. When built. Present owner. Calamares i . Tenadores.. Brynhilda -. Pass of Balmaha^ Rhine 2 Orleanian i Vera Cruz 2 3.. Sch. b... Tampico2 4. St.s 1 Wieos St. s ! Dochra2.... St. s Llama ss St.s I Edward L. Do- heny.5 St.s I Sacramento Sch. b...i Tiixpam 2 o Sch. b...l Panuco 2 a St.s Herbert G.Wy- I lie.5 Bkn Skoda 2 Bark i I'ilsrim - ' Ship Timandra2. St.s St.s. St.s. Bark.... St.s Santa Clara ■ Javary 2 Charles E. Har- wood.5 Anna Maria D'Abundo.2 Greenbrier 28..., Sch W. H.Baxter29.. Bkn i Stranger2 St.s ; Robert Dollar 2 . St.s ! Westwego 5 10. .. Bkn. St.s. St. s. St.s. St. s. Ship. St.s.... Ship.. St.s.. St.s.. Sch.. St.s.. St.s.. Ship. St.s.. Bark. St. Paul 2 10. Gushing = Colusa 1 Oregon 2 Cacique 2 Vmcent 212. Mundale 2. . Dunsyre 2 Baton Rouge ' Bay way » Delta2 Petrolite= Coming ^ Poltalloch 2 15 Gargoyle s Edna M.Smith 2 H 7,782 7,782 1,502 1,571 1,690 2,29S 1,934 1,994 2,748 4,309 3,189 6,170 5,692 869 646 4,292 744 1,629 1,579 2,584 1,249 3,178 954 3, 331 399 640 5,356 5,275 471 6,894 5,732 727 6,202 1,904 3,285 2,149 4,973 5,083 317 3,710 5,073 2,253 4,433 816 1913 1913 1885 1888 1896 1880 1884 1900 1888 1906 1890 1913 1900 1881 1868 1912 1893 1893 1885 1896 1898 1913 1903 1893 1893 1893 1911 1890 1903 1913 1890 1910 1894 1906 1891 1913 1913 1892 1894 1913 1893 1902 1903 Calamares Steamship Corporation. Tenadores Steamship Corporation. Harby Steamship Co. (Inc.). ....do Rhine Shipping Co. (Inc.). R. Lawrence Smith (Inc.). The Texas Co ....do Standard Oil Co La Plata Steamship Co. (Inc.). Standard Oil Co Petroleum Transport Co. Northern & Southern Steamship Co. Cuba Distilling Co do Petroleum Transport Co. Charles S. Rodden Pil{,Tim Shippinf: Co . . Timandra Shipping Co. American & Cuban Steamship Line (Inc.). L. C. Gil espie & Sons. Petroleuim Transport Co. Mclntyre Lumber & Export Co. Coast Steamship Co . . . J. C. Peterson Edward L. Whitney.. Dollar Steamship Line Union Petroleum Steamship Co. George J. Santa Cruz.. Standard Oil Co W. R. Grace & Co Home port. Andrew Olsen W. R. Grace & Co Harby Steamship Co. (Inc.). Munson Steamship Line. Eschen & Minor Co. . . Standard Oil Co do A. F.Dantzler Standard Oil Co do Eschen & Minor Co. . . Vacuum Oil Co Alfred L. Staples 1 Passenger vessel. 2 Freight vessel. s Formerly sch. b. Glenlui. * Formerly sch. b. France Marie. 6 Tanker. 6 Stranded Oct. 29, 1915, Westray Firth, Scotland. ' Vessel abandoned at sea, Dec. 15, 1914, lat. 68° N., long. 37° W, 8 Vessel sunk by striking mine, North Sea^ Apr. 2, 1915. 9 Vessel stranded, Habana Harbor, Cuba,' Jan. 22, 1915. to Formerly st. s. Steaua Romana. New York, N.Y. Do. Do. Do. Boston, Mass. New York, N.Y. Port Arthur, Tex. Do. New Yor;c, N. Y. Do. Do. Los Angeles, Cal. San Francisco, Cal. New York, N.Y. Do. Los Angeles, Cal. Mobile, Ala. Boston, Mass. Do. New York, N.Y. Do. Los Angeles, Cal. Mobile, Ala. Wilmington, Del. Gulfport, Miss. Mobile, Ala. San Francisco, Cal. Philadelphia, Pa. Mobile, Ala. New York, N.Y. San Francisco Cal. New York, N.Y Do. Do. Do. San Frai; Cisco. New York. Do. Gulfport, Miss. New York. Do. San Francisco. New York. Mobile, Ala. a Transferred to Cuban flag 752 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. Foreign-built vessels admitted to American registry under the act of Aug. 18, 1914 — Contd. Official No. Signal letters. Rig. Name of vessel. Gross tons. When buUt. Present owner. Home port. 212833 212835 LFBP.... LFBQ . . . LFBR. . . LFBS.... LFBT.... LFBV... LFCB.... LFCD.... LFCG.... LFCH.... LFCJ.... LFCK.... LFCM.... LFCN.... LFCP.... LFCR.... LFCT...; LFCV.... LFCW... LFDB... LFDC... LFDG... LFDH... LFDK... LFDM... LFDS.... LFDT... LFDW... LFGB.... LFGH... LFGJ.... LFGK... LFGM... LFGN... LFGP.... LFGR... LFGS.... LFGT.... LFGV.... LFHD... LFHT... KWTM.. LFHR... LFJD.... LFJG ... LFDJ.... LFJH.... LFJK.... LFJM.... LFJN.... St. s.... St. s.... St.s.... St. s.... St.s St.s.... Bkn.... St.s St.s.... St. s St.s.... St.s.... St.s.... St.s.... St.s.... St.s St.s.... St.s.... St.s.... St.s.... St. s St.s.... St.s St.s.... St.s.... St.s St.s.... St.s.... St.s Bark.... St.s St.s St.s St. s St. y.... Sell St.s Sch Ship St.s St.s St. v.... Bark. . . . St. y.... St.s St.s St.s St.s St.s Ga. y... Princeton ' Somerset ' Maracas2 Georgiana ^ Caddo 1 5,081 5,079 2,925 4,596 6,329 4,204 939 6,268 1,352 3,296 3,544 6,395 4,170 4,216 1,.530 5,335 6,303 3,490 7,318 4,045 5,075 7,574 4,046 3,671 3,190 4,374 3,652 615 3,292 1,528 4,360 593 449 7,129 426 779 7,224 461 2,340 2,265 3,143 602 1,057 397 2,333 6,766 10,073 3,402 3,535 22 1912 1913 1887 1909 1912 1901 1891 1902 1883 1898 1900 1912 1906 1890 1892 1907 1908 1906 1902 1913 1913 1896 1914 1903 1914 1907 1904 1901 1910 1891 1912 1896 1905 1913 1907 1892 1913 1904 1888 1893 1890 1907 1873 1898 1893 1914 1914 1892 1894 1909 Standard Oil Co do New York. Do 212839 212840 212945 New York Trans-At- lantic Steamship Co. Walker & Armstrong. . Standard Oil Co New York & Oriental Steamship Co. (Inc.) George Taber Hav Standard Oil Co.". I. A. Alessi Do. Savannah, Ga. New York. 212922 212871 212872 212873 Satsuma ^ Lovisas * DeSotoi Neptune ^ = Baj-amo « Daeia3fi Chinchas Southerner 3 M.S. Dollars «.. Colon - a Dayton i Bradford i Santiago ■* Coalinga ' Moreni ' Do. Do. Do. Do 212888 212890 212892 212893 212897 212899 213095 213126 New York & Cuba Mail Steamship Co. Edward N. Breitung.. W. R.Grace & Co.... Walker, Armstrong & Co. Dollar Steamship Line American-M e x i c a n Steamship & Trad- Co. Standard Oil Co do Do. Marquette, Mich. New York. Savannah, Ga. San Francisco. San Diego, Cal. New York. Do. 212909 212911 212912 New York & Cuba Mail Steamship Co. Union Steamship Co. . Standard Oil Co .. ..do Do. San Francisco. New York. 212913 Pioneer ' California '■> Polarine i Camaguey '■> Munwood ^ Suruga 3 Antilla^ Balbca ■ Guantanamo^... Belmont ^ Evangeline 2 Benito Juarez 2.. Sonora Do. 212914 212916 212919 212924 212935 212936 212944 212946 212949 212951 213252 John A. Hooper Standard Oil Co New York & Cuba Mail Steamship Co. Munson Steamship Line. Barber & Co. (Inc.)... New York & Cuba Mail Steamship Co. American-M e .x i c a n Steamship & Trad- ing Co. New York & Cuba Mail Steamship Co. Hall Shipping Co Evangelme Co. (Inc.). American-M e x i c a n Steamship & Trad- ing Co. San Francisco. New Yor!c. Do. Do. Do. Do. San Diego, Cal. New York. Boston. Do. San Diego, Cal. Do. 212964 212974 Ardmore ' Owera 8 Standard Oil Co Peter G. Gerry Cowles Ship Supply Co. Standard Oil Co Bessie A. Somerville.. James Rolph, jr Pierce Oil Corporation. Housatonic Steam- ship Co. (Inc.). Charles W. Harkness. . Peter H. Crowell John H. Hanan Sun Co New York. Providence, R. I 212982 212984 212985 213770 213022 213094 213125 213090 213277 Gypsum Em- press.3 Muskogee ' Hieronymus ^ . . . Golden Gates... Mexicano ' Housatonic^ Agawa8,9 Ruth Stark 3. . . . Surfs Mobile, Ala. New York. Pensacola, Fla. San Francisco. New York. Do. Do. Boston. New York. 213282 Atlantic Sun ■>... Matiaieock ' Standard i Sarnias Philadelphia. New York. Do. 213157 212154 Standard Oil Co do 213170 Sarnia Steamship Cor- poration. Sibiria Steamship Cor- poration. Nathaniel H. Stone, trustee, 614 Sears Building. Do. 213171 Sibirias Do. 213173 Kitty AS Boston. 1 Tanker. 2 Passenger vessel. 3 Freight vessel. * Stranded off St. Thomas Island, Dutch West Indies, Feb. 28, 1915. * Formerly St. s. Evelyn. 6 Vessel seized by French Government May 3, 1915; sunk by submarine Nov. 8, 1915. » Provisional register through American consul. 8 Pleasure vessel. 9 Formerly American-owned undocumented yacht. a Transferred to British flag. SHIPPING BOAED, NAVAL AUXILIAEY, AND MERCHANT MAEINE. 753 Foreign-built vessels admiUed io American registry under the act of Aug. 18, 1914 — Contd. Official No. 213270 213305 2133fi9 213407 213443 213528 (') 213628 213696 213621 213201 213659 213660 213661 213697 213604 213590 213610 213636 213646 (•*) 213706 213743 213762 (») (?) 213893 213890 213896 {^) 0) (") Signal letters. LFJW... LFKH.. LFKR.. LFKS... LFMB.. LFMV.. LFNB... LFNC... LFND.. LFMG.. LFJQ... LFNJ... LFNK.. LFNM.. LFNR.. LFNT... KWTB.. LFPG.... LFPJ.... LFPK... I.FPQ.... LFQO... LFQR... LFQT.... LFQV... LFRM. LFSJ... LFSK.. T,VSVI.. LFSN.. I/FSP. LFSQ. Rig. Bkn... Bkn.v. Ga. s.. St. s.. Bark. . St. s... St. s... St. s... St. s... St. s... St. s... St. s... St. s... St. s... St. s... Sch. b. St. y.. Ga. y. St.s. Sch... St. s. . . St. s. . . St.s... St. s. . . St.s... St.s... St.s... St. V . . Ship.. Bark.. St. s.. St. s.. St. s.. Name of vessel. Hildegard ' Altai Glenpool 2 Communipaw 2. Paolina 1 Winnebago ' . . . Solveig 1 622 1,381 5,459 3,710 1,337 4,362 4,409 3,718 3,826 4,471 3,300 2,892 Maumee 2,556 Winneconne 1 . . . ' 1, 869 Ausablei ' 3,153 1 Prins Valdemar I 1.338 Ca.'Jiana^ * 1,227 Kankanee > . , AUa^uash '.. Manitowoc 1. San Mateo ' . Genesee ■ Gross tons. Ycndys *... Muskegon • . Albania '.. Yucatan 1 . Hocking 1 . Edna ' -Amazonia ' . . . Repu1)!ic 1 Constitucion2. Healdton . . liemlik *... ICatherine '. I'hyllis'... Venezula .. Colombia Ecuador . 3,321 257 751 2,553 1,783 2,199 3,932 3,358 4, 4,S9 405 2, 202 2,217 5,641 5,644 5,688 When built. 1876 1900 1913 1913 1900 1900 1901 1899 1905 1902 1900 1907 1901 1892 1908 1908 1905 1896 1895 1903 1891 1907 1899 1908 1903 1887 1886 1915 1915 1915 Present owner. George J. Santa Cruz. . Barkentine Alta Co Standard Oil Co do Edward L. Whitney.. Winnebago Steamship Corporation. American Trans-At- lantic Co. do do Manitowoc Steamship Corporation. San Mateo Steamship Corporation. American Trans- At- lantic Co. Maumee Steamship Corporation. Winneconne Steam- ship Corporation. A merican Trans- At- lantic Co. G. W. McNear(Inc.).. Edward L. Doheny... Irving J. Bissel Home port. American Transatlan- tic Co. Wm. Willard Howard. J. W. Jolly American Transatlan- tic Co. Sudden .t Ohristenson Lawrence Smith (Inc.) John A. Hooper Caribbean A: Southern Steam.ship Co. (Inc.). Standard Oil Co Willis Sharpe Kilmer. . Pacific Freighters Co. . do Pacific Mail Steam- ship Co. do do Mobile. San Francisco. New York. Do. Mobile. New York. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. San Francisco. Los Angeles, Cal. Grand Haven, Mich. New York. Do. Philadelphia. N'ew York. San Friincisco. New Y-.rk. San Fr.nxisco. New York.N.Y. Do. San Francisco. Do. New York, N. Y. Do. Do. Gross tons. Total fiscal year ended June 30, 1915 Total July 1, 1915, to Mar. 21, 1916.. Grand total. Mar. 21, 1916 1 Freight vessel. 2 Tanker. 3 Provisional register through American consul. < Pleasure vessel. 6 Formerly American-owned undocumented yacht. 754 SHIPPING BOAED, NAVAL AUXILIAEY, AND MERCHANT MARINE American vessels sold alien during the period Sept. 1, 1914, to Feb. 1, 1916. SEPT. 1, 1914, TO JUNE 30, 1915. Name of vessel. SAILING VESSELS. Arthur D. Story Cecilia Sudden Gossip Hunter Independence II J. B. Newland John D. Bradley Olga C^uickstep Willie L. Swift Rosefield Total (11) STEAM VESSELS. E. M. Peck H. N. Jex James H. Shigley SAILING VESSELS. Alice B. L. Pennington City of Sheboygan Essex J. M. Weatherwax Mary A . Whalen Moravia Tacoma Fifi Graziela Panuca Tuxpam lona Tunnell White Wings Total (14) STEAM VESSELS. Case Delhi Sparling Toledo South American Gross tons. 10.3 643 122 197 14.5 157 112 113 104 100 685 2,481 1,809 420 459 Transferred to- British flag. Do. Do. Do. Do. Do. Do. Do. Do. Dominican flag. Spanish flag. British ; Do. Do. Name of vessel. STEAM VESSELS— continued Mariska , William Henry Mack , Crescent ". Forward Total (7) UNKIGGED VESSELS. Dredger Standard No.2 Chicken M. B.Co. No. 14 T U V Total (8) Gross tons. 2,325 3,781 239 255 9,288 159 114 205 142 269 343 343 343 1,918 Transferred to- British fli Do. Mexican I Do. British flag. Do. Cuban flag. Mexican flag. Do. Do. Do. Do. JULY 1, 1915, TO FEB. 1, 1916. 648 7,510 100 British flag. 1,142 Do. 248 Do. 116 Do. 384 Do. 134 Do. 1,067 Do. 105 Do. 368 Cuban flag. 368 Do. 646 Do. 869 Do. 1,315 Portuguese Do. 278 British flag. 986 Do. 109 Do. 211 Chilean flag 276 Cuban flag. STEAM VESSELS— continued. Success 308 2,481 727 2,094 7,796 Morris Adler N r w e gian Oregon Atlanta Mexican flag. Spanish flag. Oceana - - Total (10).. 17,266 :ls. GAS VESSI Pinta 100 281 British flag. H n d u r an Advance -- flag. Total (2)... 381 :SSELS. No.2 UNRIGGED VI P. S. B.&D.Co Iron Side 119 138 142 British flag. Cuban flag. Mexican flag. Uxmal Total (3)... 399 SUMMARY. Sept.1,1914, to June 30, 1915. July 1, 1915, to Feb. 1, 1916. Total. Number. Gross. Number. Gross. Number. Gross. Sailing U 7 2,481 9,288 14 10 ■2 3 7, 510 17,266 381 399 25 17 2 11 9,991 26, 554 381 Steam Gas Unrigged 8 1,918 2,317 Total 20 13 687 M 25,556 55 39,243 SHIPPING BOARD, NAVAL AUXILIAEY, AND MERCHANT MARINE. 755 In addition to the foregoing the following-named yachts were sold alien: SEPT. 1, 1914, TO JUNE 30, 1915. Gross tons. Transferred to- Steam yacht Nournahal Steam yacht Zoraya . . . Total (2) 768 129 Brazilian fla British flag. 897 JULY 1, 1915, TO FEB. 1, 1916. Steam yacht .Mameda 113 Mexican Steam yacht Cohimbia 682 British flag Steam yacht Waturus 571 Do. Total (3) Also letter from Dr. E. E. Pratt, Chief of the Bureau of Foreign and Domestic Commerce, to the Secretary of Commerce, giving extract from Commercial Attache Arnold's weekly report regarding shipping conditions on the Pacific coast: Department op Commerce," Bureau of Foreign and Domestic Commerce, Washington, February 23, 1916. The Secretary of Commerce: It is thought that the following extract from Commercial Attache Arnold's weekly- report of January 1, 1916, on the shipping situation in the Pacific will be of interest, as it supplements material on the same subject which has been previously referred to you: "I have had a number of interviews during the week with Minister Keinsch in regard to possi})le American enterprise, especially construction work, w^hich resulted in his sending a number of telegrams to interests in America in regard thereto. The unfortunate situation in connection with possible American development here is the shipping question. I do hope the bureau and the department will use every possible effort to get something done which will put American ships under American flags in the Pacific. It is sad, indeed, to sit here and see our opportunities in this country vanishing like the mist before the morning sun, simply because we have no ships to work these opportunities. Give us American ships on the Pacific and we can increase our ( hina trade by 100 per cent and make for ourselves a position in this market during the war from which it will be impossible to dislodge us after the conclusion thereof. But without ships we can only sit by and sigh and we see these marvelous opportunities sliding by, probably never again to return: at least not in the same in\dting way, for after the war is over there will be many hungry mouths yearning for a chance to meet these opportunities, and on that account we will not be in a position to take the advantage of them that we now could. We want ships, ships, ships; but to do us good, the greatest good, we want them now. A year hence may be too late, for by that time others may have crept in ahead of us and taken the gold apple of opportunity from us. It is indeed unfortunate that the American flag should have been withdrawn from the Pacific just at that moment when its presence there could have meant more to us than at any other time in the entire history of our trade with the Orient." E. E. Pratt. 756 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Also a letter from the Secretary of the Treasury, giving excerpt from a letter from Mr. Daniel Kelleher, chairman of the board of the Seattle National Bank, in reference to shippmg lumber on the Pacific coast: Treasury Department, Washington, February 24, 1916. Dear Judge: I take pleasure in sending yoxi, for your information, the folloAving excerpt from a letter, dated February 18, 1916, which I received to-day fn^m Mr. Daniel Kelleher, chairman of the board of the Seattle National Bank, of Seattle, Wash. : "Our lumber business, though we are getting a little better price for lumber here, is still in very bad shape, and as I wrote you before, I can't see any chance for ma- terial improvement until we get by some means some ships to transi)ort our lumber in. P'or example, a case came under my observation here in Seattle to-day that is typical of the bcal .situation. One of the owners of a mill, a customer of our bank, i.s to-day loading a cargo of lumber at his mill for shipment to Australia. The mill owner gets about $24,000 for his lumber delivered to the dock here; this is at the rate of about $12 per M for his lumber. The shipowner gets for transporting this lumber about $48,000, or $24 per M for the lumber. In ordinary times, the mill owner would get about $12 per M for his lumber, and the sliip owner about $8 per M. With $16 per M added for freight, I can see but little chance for improvment in the lumber busi- ness out here. This same ship owner who gets $48,000 for this one cargo, recently bought his ship at a total price of $15,000." Faithfully, yours, W. G. McAdoo. Hon. J. W. Alexander, House of Representatives. Also a clipping from the United States Commerce Reports of Feb- ruary 2, 1916, entitled "World built fewer ships last year": [United States Commerce Reports, Feb. 2, 1916.] World Built Fewer Ships Last Year. The principal features of the world shipbuilding industry all through 1915 were the reduced output in the combatant countries and the increased activity in the countries not directly ai^ected by the war, states the Glasgov/ (Scotland) Herald in a special shipbuilding, engineering, and commercial supplement. These changes are graphi- cally shown by the table below, which gives the international tonnage output for the past two years: Countries. 1914 1915 Vessels. Tons. I. H. P. Vessels. Tons. I. H. P. 817 454 23 966,839 508,945 246,370 639, 654 540,290 186.890 298 207 12 384, 417 233, 501 31,418 310.574 Scotland 205. 288 24. 732 Total, United Kingdom 1,294 271 1,722,154 67,994 1,366,834 24,276 517 183 649, 336 32,937 540,594 British Dominions 14,072 Foreign countries: United States 156 28 16 68 39 98 184 54 164 674 67 14 9 29 270.962 78, 457 10,395 16,664 33. 463 196, 540 505.719 41,792 136,309 279,584 54, 108 33, 976 21.197 14, 657 306, 465 58,300 (1) 12, 120 19, 551 203.630 572.653 35, 455 125,614 116,618 39, 555 61,000 33,000 13,760 127 270, 124 322, 168 Belgium China 50 40 32 46 4 127 390 86 13 33 8,073 61,361 41,438 179,804 20,230 92,213 217,592 61,477 792 14,306 25,927 6. 400 Denmark 32,042 France 20,950 Germany 188. 156 Italy 20.000 Japan 182,039 Netherlands 114.510 Norway 41,925 Russia 540 Spain 13, 750 Sweden 32.530 Total, foreign countries 1,600 1,694,023 2 1,597,721 955 989,337 975,010 Grand total 3,165 3,484,171 2, 988, 831 1,655 1,671,610 1,529.676 1 Data not available. * Exclusive of Belgium. SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 757 It ia a fact of great importance, says the Herald, that although the shipbuilding and engineering figures for the United Kingdom include absolutely no warship work, while in the other countries referred to there is included all warship work reports of which have been received, the purely British production is larger than that of any other countrj-. It need scarcely be added that the position occupied by Germany in this list is probably far too low, as its figures represent very little more than the merchant vessels, reports of the launching of which have been received. MANY ORDERS ON HAND IN OTHER COUNTRIES. Evidence of the extent to which Scandinavian shipyards are benefiting by the demand for cargo steamers may be found in the large amount of new work on hand in Denmark, Norway, and Sweden. At Copenhagen Burmeister & Wain have on the stocks 6 vessels, and on hand further a number of orders for delivery in 1917, 1918, 1919, and 1920, and even 1921 while the Copenhagen Shipbuilding Co. has 9 steamers and the Marstal Co. 4 motor vessels. At Christiana the Akers Co. is building 9 steamers and the Nylands Co. the same number; the Bergen Co. have 16 vessels on order; the Drontheim Co., 7; the Fredrikstad Co., vessels aggregating 48,220 tons; the-Larvik Slip Co., 3; the Laxevaags Co., of Bergen, 6; the Moss Co., 5; the Porsgrund Co., 4; the Pusnses Co., of Arendal, 8; and the Stavanger Co., 3. In Sweden the Eriksbergs Co., of Goteborg, has 7 vessels on order; the Helsingborg Co., 1; the Kockums Co., of Malmo, 1; Lindholmens Co., of Goteborg, 4; the Lodose Wharf Co., 3: the Motala Works, 3 tugs; and the Oscarshamn Works, 6 steamers. The Sociedad Espanola de Construccion Naval, of Cartagena and Ferrol, which was started a nurnber of years ago by a British syndicate for the purpose of building ships for the Spanish Navy, is now being permitted to undertake private work, and has booked a number of orders for merchant steamers. A beginning is being made at Ferrol, where the firm is constructing a passenger steamer of 14,000 tons displacement for the Cia. Transatlantica of Barcelona. At Hongkong there is a great pressure of new shipbuilding. The Hongkong & Whampoa Dock Co. has on hand a large number of steamers for British. Dutch, and Norwegian owners, while the Taikoo Dockyard Co. is building six vessels, three of them for LiA^erpool owners and three for China. The Taikoo yard can now under- take the construction of vessels up to 10,000 tons measurement. Tlie majority of the Japanese shipyards are full of work, and they will be kept busy well into 1917. The work in hand, however, does not show anything of very great size — nothing over 9,500 tons. The number which is to be built rather than size is what is most impressive. New passenger ships are conspicuous by their absence, and the country is setting itself to the building of cargo ships. The types of these vary considerably. Among them the Isherwood system has a prominent place. The Osaka Iron Works has in hand six 8,000-ton steamers and sixteen 3,200-ton steamers, all of this type. Two of the steamers which are to be built at Nagasaki are to have geared turbines. Also text of the shipping bill recently presented in the French Chamber of Deputies : [Translation.] No. 1659. Chamber of Deputies. Eleventh Legislature, session of 1916. Written report of the meeting of January 13, 1916. Propoced law determining the conditions under which advances may be made to French sliipowners to buy ships mechanically propelled, coming from allied or neutral countries. (Referred to the merchant marine commission.) Presented in the name of M. Raymond Poincare, President of the French Republic, by Rear Admiral Lacaze, minister of the navy, and by M. A. Ribot, minister of finances. STATEMENT OF REASONS. Gentlemen: The increase of our commercial fleet is a measure which should not be deferred. While the war lasts, we have an opportunity to benefit French commerce by recover- ing, in part, the heavy tribute which we are now paying to foreign shipowners in the form of marine freights. After the war our maritime commerce will need a numl^er of ships sufficient to insure a continuation of the ser-vices heretofore maintained by our comj anies and 758 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. to make possible the organization of new lines. It is on this condition only that the economic life of France will be able to recover and to create large resources necessary for the work of national rehabilitation. Our ports will be \dsited by a larger number of ships from now on, and the free play of economic laws will tend to lower the freights. Furthermore, the proportion of French tonnage in our foreign trade will be larger, and action by the Government, if demanded by circumstances, would be of greater effect in the domain of transporta- tion. The vicissitudes of war have reduced the effective strength of our merchant fleet. The strenuous service to which our ships have been subjected since August, 1914, the re suiting we ir and tear, the impossibility of reopening our shipyards before the ter- mination of hostilities, all this compels, us if we would be ready in time, to obtain without delay a number of ships from other countries to replace those lost and to supplement those in active service. In its earnest desire to improve the conditions under which the country procures its food supply, to stop the waste of the national wealth, and to secure the future of ir merchant marine, the Government has examined various solutions proposed. It is of the opinion that the end sought can only be achieved by encouraging private initiative and giving aid to shipo^vners in order to induce them to buy ships in allied or neutral countries. The granting, under proper guaranties, of 1' ans repayable in annual ir.stalments, and the determination of a fixed sum to be paid as indemnity in case a ship go acquii'ed should be requisitioned by the Government, are the measures which will best meet the y)resent needs of the shipowners. There seems to be no doubt of the general utility of these measures, as the shipowner? will be under the double obligation of k 'pping the ships so acquired as part of our rarechant fleet for five years at least, and ot employing them in the French import trade until the crisis now prevailing in miritime trans]>ortatic)n shall have moderated. For the foregoing reasons, and because of the principles adopted by the Parliament to favor the buying of British prizes (law of Apr. 19, 1915), the Government has been lei to submit the proposed law, the substance of v^'hich follows: PROPOSED LAW. The President of the French Republic decrees: The proposed law, the text of which folio v\'s, will be presented to the Chamber of Deputies by the minister of the navy and by the minister of finances, who are charged with revealing the principles and sustaining the discussion: Article 1. Until the expiration of twelve months after the conclusion of peace the Govern- ment may invest a sum not exceeding 100 million francs in loans to French ship- oY.'ners, to cover a part of the sums necessary for the purchase of ships with mechanical propulsion, said shipowners to be approved of by the minister of the navy, on the advice of the minister of finances. Ships to be allied or neutral. The advances thus made shall be productive of interest at the rates charged by the Bank of France on loans on securities. The minister of finances is authorized to open, among the special services of the treasury, an account entitled "Advances to shipowners to buy shii^s." This account will be debited in the sum total of advances m.ade in conformity with the present law and credited with the repayments made by the shii:)owners. Article 2. The maximum amount of advances made according to the first article is determined iu the following fashion: Navigation companies possessing a fleet of 20,000 tons or more may receive 70 per cent of the purchase price. Navigation com,panies possessing a fleet of less than 20,000 tons, or for new enter- prises, 80 per cent of the pm'chase price. Article 3. The advances thus made shall be repayed b}^ the shipowners according to the following conditions: ] . In three equal annual installments in the case of navigation companies possessing a fleet of 20,000 or more tons. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 759 2. In four annual equal installments in the case of navigation companies possessing a fleet of less than 20,000 tons, or of new companies. 3. In eight annual equal installments for fisliing enterprises. The interest falling due will be added to the sum total of each of the above annuities. The first annuity in each case will be payable at the expiration of a year following the date of the delivery of the ship to the sliipowner. Article 4. Government experts shall inspect the ships, which must be seaworthy and in good condition at the time of their delivery to the shipowners, and guaranteed against the consequence of any preference or mortgage. Article 5. The shipowner who wishes to be admitted as a beneficiary under the provisions of the preceding articles, should address a request to the minister of the navy. This request shall be accompanied: L By a deed of surety which will be applied to the sums advanced and not guaran- tsed by a mortgage. The security given must be satisfactory to the minister of finance. 2. By an agreement made by the shipowner to give to the Government of France a mortgage (first\ on the ship from the time it shall come under French registry, as surety a sum equal to half the price of purchase and to insure, with delegation of benefit to the Government, the ship against all risks, inclusive of risk of war, even to complete repayment of the sum advanced. Navigation societies which have established an insurance fund for their own ships may be excused by a special decision from contracting insurance as above noted. The surety, whether for the total advances having a mortgage concession on the ship acquired, or for the portion of the advances not guaranteed by this mortgage, may be replaced by a mortgage (first) on the other ships of the shipowner. Once agreed uj^on. he will abide by the demands in the order of their reception. All transfer of order will be null and void. Article 6. The shipowner must agree to pay a sum equal to the sum total of the purchase price if, in the course of the present war and during a period of five years, to date from the signing of the treaty of peace, he transfers directly to a stranger, to a strange society, or to a French society, whose organization does not conform to article I, section 3, of the law of April 7. 1902, either the property itself, or the use of the purchased ship, or if he mortgages it for the profit of the same persons or societies. He is under the additional obligation, until the expiration of six months after the conclusion of peace, to carry imports intended for French ports only, though one- fourth of the cargo may be carried to allied or neutral countries, or to pay to the treasury a sum equal to double the sum total of freights collected for cargoes unloaded outside of French ports over and above the proportion fixed above. The same obligation m.ust be undertaken by the fishing-boat owners and the owners of tow boats, who will be obliged, the first to bring into French ports three-quarters of their catch and the second to make at least three-quarters of their voyages coming from or proceeding to the same ports. These agi-eements will be guaranteed by security satisfactory to the minister of finance. Article 7. In the event of requisition of one of the ships acquired during the continuance of the present law the indemnity shall be determined in accordance with the prevailing charter rates, reduced by 15 per cent. Article 8. A decree decided upon by the ministers of the marine and of finance shall determine the conditions under which the present law shall apply, notably those relative to the age of the ships which are the object of it. Signed at Paris, January 13, 1916, by R. Poincare. For the President of the Republic: Amiral Lacaze, Minister of the Marine. A. RiBOT, Minister of Finances. 760 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINK. Also letter from Dr. E. E. Pratt, Chief of Bureau of Foreign and Domestic Commerce, quoting statement in the Agence Economique & Financiere of February 5, 1916, relative to the freight situation in Italy: Department of Commerce, Bureau of Foreign and Domestic Commerce, Washington, February 26, 1916. lion. Joshua W. Alexander, House of Representatives, Washington, D. C. My Dear Congressman: The Agence Economique & Financiere, in the supple- ment to its issue of February 5, 1916, a copy of which was forwarded to the bureau by Commercial Attache Veditz, at Paris, contains the following statement transmitted by its correspondents in Rome and Milan relative to the freight situation in Italy: "Ocean freight rates have increased greatly; also demands upon the Government to proceed to requisition ships and to create a special department for the merchant marine. The State now has the railroads, why should it not temporarily become a ship operator? "The increase in the cost of coal and grain being determined almost entirely by the supply of ships, the press is bringing pressiu-e to bear upon the Government to have England put at the entire dit5poaal of Italy the largest possible number of ships. The Chamber of Commerce of Milan, discussing this all-important question in a special meeting, has expressed the Avish that negotiations be entered into quickly with the French Government mth a view to apphdng the urgent remedies which the situation demands. "The noted economist. Senator Maggiorino Ferraris, director of the Nuova Anto- logia, has sent a letter to the press in which he urges an imxnediate agreement between Italy, France, and England for the establishment, in a common spirit of liberality andby joint regulations, of freight rates upon the basis of service rendered. He also urged the intensive utilization of the maritine resources of the three countries under the control of a single international commission and the reservation of ships for the most urgent needs and for the transportation of the commodities most necessary for the use of the armies and the people of the allied nations." I believe that the above item may be of some interest to you in connection with the proposed shipping board. With kind regards, I am, Very truly, yours, E. E. Pratt, Chief of Bureau. Also clipping from United States Commerce Reports of date Feb- ruary 26, 1916, entitled 'Toal freights from Cardiff." [Commerce Reports, Feb. 26, 1916J COAL FREIGHTS FROM CARDIFF. [Consul Lorin A. Lathrop, Cardiff, Wales.] The following table shows the coal freights per ton of 2,240 pounds from Cardiff, Wales, in the first week of February, 1916, and comparisons with those in December, 1915, and Avith prewar rates: Port. Alexandria. . . Barcelona Bordeaux Buenos Aires Genoa Febru- Decem- Average, I ary, 1916. ber, 1915. 1914. I $20.06 $17.64 $2.49 ' 13.37 9.97 2.21 i 8.49 8.78 1.36 11.18 10.94 3.43 14.59 16.05 2.15 Port. Lisbon Marseille Montevideo Naples Rio de Janeiro. Febru- Decem- ary, 1916. ber, 1915. $8.02 $7.90 16.00 14.66 10.94 9.60 14.59 16.05 10.33 10.45 Average, 1914. $1.51 2.10 3.29 2.20 3.40 The prices for coal f . o. b. Cardiff per ton of 2,240 pounds on February 5, 1916, were as follows: Admiralty s-^conds, $8.50; best drj^s. $8.50; black veins, $8.50; best house (at pit mouth), $5.83; best small steams, $4.74; briquets. $7.78; and coke (special foundry), $11.55. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 761 Also a letter from Hon. Frank L. Polk, Counselor Department of State, to the Secretary of Commerce, stating the President of Salva- dor desires steamship lines to be established between the ports of the United States and ports of Salvador. Department of State, Washimiton, January 17, 1916. The Secretary of Commerce. Sir: I have the honor to inform you that this department has recently been in- formed by Henry F. Tennant, Esq", charge d'affaires of the American Legation at San Salvador, that the President of Salvador has advised him that the Government of that country desires one or more American steamship lines to be estabUshed between the ports of the United States and the ports of Salvador. The President of Salvador expresses the desire that American stearnship lines be established to do a commercial transport business between the Atlantic and Pacific ports of the United States and the ports of Salvador averaging at least one ship per month which would touch directly at Acajutla from New York to San Francisco, and vice versa. I have the honor to communicate the suggestion of the President of Salvador for such recommendations or action as the Department of Commerce may deem appro- priate and to request that this department be advised from time to time of the results of any action that the Department of Commerce may take in the matter in order that information as to developments may be communicated in turn to the American Legation in Salvador and to the President of that Republic. I have the honor to be, sir, your obedient servant. For the Secretary of State : Frank L. Polk, Counselur. Also a letter from the Secretary of Commerce, inclosing a letter from the Commissioner of Fisheries, showing that large bone deposits on the Pribilof Islands can not be utilized because of lack of shipping facilities: Department op Commerce, Office of the Secretary, Washington, February 19, 1916. My Dear Mr. Chairman: Your attention is invited to a copy of an identical report presented to the Chief of the liureau of Soils of the Department of Agriculture to the Secretary of Agriculture and by the Commissioner of Fisheries to me concerning the large bone deposits which have been found to be available on the Pribilof Islands. They represent the accumulations of a century or more and constitute probably the largest known bone deposits in the world. They have not been fully suryeyed, but one of the deposits (and there are many) lies at the water front and is a mile long by half a mile broad. Its thickness is not fully determined, but an average depth of 2 feet is perhaps a reasonable estimate, and in places where it has been exposed by the sea or by workings it is known to be 6 feet deep. The value of these deposits is large, certainly it runs into the millions, possibly into manv millions of dollars. The physical conditions have preserved the fertiliz- ing properties of the bones in a remarkable wav. a>J the analysis shows. Our agri- culture greatly needs this material and the demand is such that the wholesale price for raw ground bone was $35 a ton in December. Grinding is cheap, costing, say 75 cents a ton. An abundant supply of labor is available on the spot. The problem of utilizing this immense deposit is one of transportation. It imme- diately concerns the farmers of our land to have it brought into use as promptly and as cheaplv as possible. Here are many cargoes available, calling for transportation, of a material the country needs. Here is a Government asset of undetermined but great value. Here is the fertilizer of which our fields are in need. Where are the ships to bring it to market? The deposits are Government property to be developed for the account of the Public Treasury, and ordinary business sense dictates that the development should be as prompt as possible. The matter has come definitely to my knowledge within a few days and is now presented to you for the consideration of your committee in connection with the pend- ing bill to establish a United States shipping board, in the thought that your wisdom may provide a means of dealing in an appropriate manner with this valuable asset. Yours, verv truly, William C. PtEDFiELD, Secretary Hon. J. W. Alexander, Chairman Committee on Merchant Marine and Fisheries. 762 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHAA'T MARINE. February 18, 1916. The Secretary of Commerce: With reference to the possibility of using the deposits of bones on the Pribilof Islands for fertilizer purposes in the United States or abroad the following statement is sub- mitted: Bone has long been recognized as one of the most important sources of fertilizer material. Containing as it does both nitrogen and phosphoric acid for many tj'pes of soil it is a highly valuable soil amendment. No treatment save grinding is necessary to r;uiier its fertilizer ingredients available, and in the shape of ground bone its use antedates that of phosphate rock as a source of phosi^horic acid. The bison bones which at one time were strewn over our western plains have all been gathered and turned into fertilizer, and the battle fields of Europe have been searched with the same object. The supply of bones in recent years has been limited . Most of that now available is turned out as a by-product of the meat-packing establishments, and we annually import about .?1,000,0U0 worth from abroad. These imports come mainly from Argentina, Canada, Mexico, and ITruguay, with a sm^all amount from Belgium. It is thus apparent that the material is valuable enough to bear the cost of shipment for long distances. Very extensive accumulations of fur-seal and sea-lion bones exist on both St. Paul and St. George Islands. Some of these represent the killings since Alaska came into the possession of the United States, while others go back to the days of the Russian jurisdiction, when exceedingly large killings were made. The deposits on more recent killing grounds are well known, but the earlier accumidations are to a consid- erable extent obscured by soil and vegetation. The deposits are adjacent to the shore, but none of them have ever been examined with reference to their area and depth, and it would be imsafe to make any official estimate of the quantity of bones that might be available. It is known, however, that, at the prevailing .prices, the fertilizer value of the bones would rim into millions of dollars. The chemical analysis made by the Bureau of Soils of specimens of bone from the bottom and from the surface of the deposits shows an average of about 4.5 per cent of nitrogen and about 23 per cent of phosphoric acid, equivalent to 5.5 per cent am- monia and 50.3 per cent bone phosphate. The wholesale price for raw ground bone of about this quality was from $27.25 to $28 a ton in December, 1913, when normal prices prevailed, and $35 a ton in December, 1915. The retail price in March, 1914, when practically normal price.? prevailed, was about $38 a ton, and the price in December, 1915, about $41. These figures include the cost of grinding the bone, which, in the United States, would be about 75 cents a ton. Whether or not it would be advisable, in order to furnis-h work for the natives, to do the grinding on the islands is a matter which may be left for future determination. If a power grinding mill were installed, the necessary fuel would have to V)e transported to the i'^lands, a? no natural source of fuel exist?. The bags used in bringing coal to the islands are prob- ably too coarsely woven to be used as containers for ground bone, though they might be used for the bones in the raw state. Ground bone for fertilizer purposes is used more largely in the northeastern section of the country than elsewhere and it is probable that the deposits on the Pril'ilof Islands would have to be brought within reach of this section to find the mo^t favor- able market. No freight rate from the islands to the Pacific coajt ports of the United States can be given, since no freight carriers regularly call at the i-lands. From the Pacific coast to the Atlantic seaboard, a ia the Panama Canal, freight rates in normal times are about $6 a ton. The la=t quoted rate before the recent clo-ing of the canal wa?, however, between $11 and $12 a ton, and the rate will probably be near the.^e figures upon the reopening of the canal. A Navy collier takes coal to Alaskan points and to the inlands several times a year and returns empty. It is possible that arrange- ments might be made by which such a vessel could be used as a means of transporting the deposits to the United States. A Navy collier coidd probably carry five or six thousand tons of the bone and could land the cargo at Norfolk within easy reach of the best market. It is possible also that one or more of the large fertilizer companies might contract to handle the depo.-its under such restrictions as the Secretary of Commerce might decide were ad\d~able. If the privilege of utilizing the refuse parts of the seals killed in coming years is awarded to a private firm, on competitive bids, the working of the old deposits might very properly be made a part of the same contract. The difficulties of the situation are the absence of harbors and the boisterous surf, making necessary the use of lighters or the running of aerial cables from the shore to an off-lying vessel. The loading of the material with lighters would be possible only in summer, as at other seasons there is too much risk to small boats in making landings through the surf. The coal and supplies now brought to the islands are unloaded by SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 763 lighters, and the same boats returning empty to the vessel might be employed to carry the bones. The time needed to load the vessel would, therefore, not be much greater than that now employed in unloading, since the two operations could be carried on simultaneously. The native inhabitants of the seal islands can be employed in digging out the deposits and making them ready for shipment, but it is believed that labor from the mainland will be necessary for the full exploitation of the bones after commercial killing is resumed, because the natives will then be fully occupied in caring for the fresh carcasses. The cost of native labor could be fixed at the rate of $1.50 a day. It is possible that a market nearer the islands might be found in Japan, which country annually imports considerable quantities of fertilizer material. The present price of sulphuric acid has tended to reduce the supply of acid phosphate and to increase the price, and under existing conditions any additional source of phosphates and ammonia is to be welcomed. H. M. Smith, Commis-ioner. Also a resolution adopted by the Jefferson Grange No. 133, Jefferson Township, Moody County, S. Dak., favoring the shipping bill: Jefferson Grange, No. 133, Jefferson Township, Moody County, Colman, S. Dak., January 1, 1916. Resolved. That, we, the members of Jefferson Grange, No. 133, in meeting assem- bled, view with astonishment and indignation the fact, that since the opening of the markets the present season the price of wheat, oats, and barley throughout the United States has scarcely covered the cost of production, while the price of said products throughout the markets of the world have been the highest known during a period of 40 years. That we believe that said conditions, entailing as they do the wholesale robbery of the farmers of the United States, have been brought "about by powerful speculative interests commonly known as market manipulators, through cooperation, combination, and collusion, through which the storage capacity of the country is controlled as well as the operations of all chambers of commerce and boards of trade. That year after year, during the flood tide of marketing, we see the above-described manipulations repeated with ever abnorm-al enrichment of the grain-gambling inter- ests, and the consequent impoverishment of the agriculturists, the real wealth pro- cers of the country. That during the first 120 days since the opening of markets this year, the speculative grain interests took a toll from the South Dakota farmer in the handlaing of oats, based on the Liverpool price, of over 90 per cent of the price the farmers received ; and on wheat the toll of the interests averaged above 42 per cent of the price received on the farms within the limits of the State of South Dakota. There- fore be it further Resolved, That w' e demand the erection of great storage elevators in all of the primary grain terminals of this country by the Government of the United States, to the end that grain may be therein stored and money obtained upon warehouse receipts. That in the erection of elevators we see protection alike for producer and consumer, inasmuch as grain stored in such elevators instead of being rushed to market in the fall to obtain money with which to pay debts, would prevent market flooding arid •would be available later when the speculative interests get the bulk of the gi-ain in their possession to prevent the boosting of prices beyond a reasonable amount. Resolved further. That we pledge ourselves to support only such candidates for Con- gi-ess and for the Senate of the United States as will pledge themselves to support and work for the above-described measures with a law establishing a merchant marine as now favored by the present administration, whereby vast sums may be saved to the farmers of the United States in the shipment of their produce to foreign countries; and be it Resolved further, That a copy of these resolutions be sent to each Member of Con- gress and Senator at Washington, and that copies be also transmitted to the President of the United States and the Secretary of Agriculture. [seal.] N. p. Pitsenbarger, Master. Rob McDowell, Secretary. 764 SHiPPlNG BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Also shipping catechism by Capt. C. A. McAllister, of the Coast Guard, Department of the Treasury: SHIPPING CATECHISM. 1. Why do we need ships? Answer. The United States has the largest foreign trade of any nation. 2. What ships have been used heretofore to carry oiu* exports and imports? Answer. About 88 per cent of our foreign shipping business has been conducted in ships l)elonging to our foreign rivals. 3. Why can not we continue to use these ships? Answer. How long could your grocer stay in business if he relied entirely upon his rivals to deliver his goods? Besides that, over 1,600,000 tons of shipj^ing has been de- stroyed diiring the existing war. The noraial amount of new shipping necessary for the world's trade has not been constructed, as the shipyards of the leading shipbuilding countries (all belligerents) have been largely engaged in building war vessels. Fur- thermore, submarine warfare is daily adding to the deficit. 4. Who will suffer most from this shortage of carriers? Answer. The United States of America. 5. How can we prevent it? Answer. By enacting the pending shipping bill considerable relief will be fuinished. 6. How? Answer. This bill creates a shipping board to supervise shipping in general and to prevent any unfair competition on the part of our foreign rivals. It further provides for a bond issue of $50,000,000 to create about 400,000 tons of new shipping. In time of war these new ships are to be used as naval auxiliaries, but in times of peace they are to be leased to private corporations who offer the best bid to carry American goods and to extend our foreign shipping. 7. What do you mean by naval auxiliaries? Answer. They are primarily of a merchant-ship t}"pe, and are used in war times to transport troops, ammunition, coal, oil, water, food, and stores to the Army and Navy wherever they are operating. They are as essential as the fighting ships "themselves, for without such supplies the ships and soldiers can not operate. 8. If they are used during times of peace for mercantile purposes, is that not Gov- ernment ownership? Answer. Yes and no. It Is true that the Government will own the ships, but they will be leased to private indi'viduals or corporations to transact the business of the country. A better way to put it Is that It will be utilizing an emergency equipment provided for war purposes, in the legitimate business of promoting our foreign trade in times of peace, which will benefit all classes of people. It will turn nonproductive ships into productive ones. Strictly war craft, such as battleships and torpedo boats, are a constant source of expense in both war and peace. 9. It has been said that the Government will operate these ships. Is that true? Answer. Only in the contingency that private parties will not start steamehlp lines where the demands of trade call for them. Even then the Government will operate them through a private corporation, of wliich the Government will control the ma- jority of the stock, as Is now being done successfully with the vessels belonging to the Panama Railroad Co. 10. How can a private corporation backed by the Government run such a line, , where private parties will not? Answer. Because the Government gets its capital at half the interest for which private parties can get it, and because the Government can and will operate steamers without any profit, as it Is not in the business for a profit; only for the benefit of all the people. Private concerns would expect from 8 to 10 per cent profit before enter- ing any new enterprise. After the line has been established and put on a paying basis, the Government would undoubtedly withdraw and lease the ships to private parties. 11. Would not the Government-owned sliips be more liable to international com- plications in war times than would the privately owned ships? Answer. Not at all, as section 6 of the shipping bill expressly provides that all such ships leased or operated under the direction of the shipping board will have the same privileges and responsibilities as any other American-owned ship, no more, no less. The Government protects its flag, no matter on what vessel it files, regard- less of the owners of the ships. 12. How can one of these ships be successfully operated in competition with foreign ships, as I understand foreigners pay cheaper wages, provide cheaper food, etc.? SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 765 Answer. The original cost of the ships is now practically equalized among all nations. The principal .costs of operation of any ship are (a) overhead expanses, which include interest on capital, insurance, corporation taxes, etc.; (5) wages of officers and men, and the cost of their food; (c) fuel. The ships to be created by the bill will have the advantage of half the interest charge on capital, and a greatly re- duced corporation tax, as it is only 1 per cent in this country, compared to from" 6 to 8 per cent on the ships of our leading foreign competitors. The insurance and depre- ciation charges are the same on similar ships, no matter where owned or operated. At the present time wages on ships of all nations are about at a parity, with possibly a disadvantage of from 5 to 10 per cent on American ships in the Atlantic trade, and perhaps a considerably greater disadvantage in the Pacific. Food on American ships always has been and always will be, in all probability, better than on foreign ships, but the difference in cost is so small as to be negligible. Fuel on most ships costs frequently as much or more than wages, and here is where the new ships will benefit. Such advances have been made in marine engineering of late that a modern ship can be operated at from 30 to 50 per cent less cost for fuel then on ships built 5 to 25 years ago. Our rivals are all burdened Avith ships averaging from 12 to 15 years old.' We have practically none to begin -with, so all of the proposed fleet will be modern and economical. It can be easily demonstrated that the saving in fuel on these proposed American ships will more than offset the additional cost for wages and food and any other disadvantages as to cost Avhich they may have. Cheapness of timber created for us a magnificent fleet of vessels in the foreign trade dm'ing our early days, and the practical control of the world's oil supply will do it for us now. 13. WTiere will you get the men to man tliese ships? Answer. At first we will have to take the average sailors of the world, as they come, but the bill pro\ddes that oflicers and men who are American citizens and serving on these ships can be enrolled into the United States Naval Reserve, for which they will receive extra piy equiv^alent to one-twelfth of what they ordinarily earn per year. The reason young Americans have not gone to sea of late, is principally because they had no American ships to go on and sail to foreign ports. This visiting of foreign countries and being piid for it will appeal to many young men, as it has done in the United States Nav>% where the percentage of American citizens has been increased from 35 to over 95 per cent in 20 years. 14. Suppose this bill should pass, where will you get the shii:)S, as I understand American shipyards are now congested wT-th work? Answer. There never has and never will be in tliis country any lack of facilities for embarking in an enter]:)rise of this kind if the Government will furnish the work. If the private yards see the opj^ortunity to build standard ships, they will enlarge their equipment to meet the new conditions. Undoubtedly such a large order for new construction would evolve a "standard" ship, an object long sought in this country, and one that will greatly reduce the cost of construction. 15. What other important features are there in the bill? Answer. The shipping board is authorized to give goods carried in American ships preference in railroad rates, to expedite deliveries for foreign shipment and otherwise to encourage our foreign trade. In other words, this is one of the few bills ever seriously considered by Congress wherein Americans are given preference over their foreign rivals in the shipping trade, and it is high time that something like this was done, if we are to continue our national prosperity. 16. What is the cause of the present embargoes by the principal railroads on freight for seaports? Answer. Entirely due to lack of ships to carry the goods to foreign countries. 17. Is there not a large fleet of vessels now being built in our sliipyards? Answer. Yes; over 900,000 tons of shipping is now under construction. Of that amount, over 60 per cent are tankers and colliers, wliich will not extend our trade in manufactured goods. Of the remainder the majority are for the coastwise trade, and for foreign owners. Very little tonnage is now under construction for our export trade. 18. Do you think the bill will pass? Answer. Yes; as the American people as a whole are now fully alive to the impor- tance of having sometliing done for their shipping. They know that if the bill is not passed they will lose the "greatest opportunity ever presented to a nation for increas- ing its wealth and prosperity. 32910—16 49 766 SHilPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Also extract from letter of Commercial Attache Baldwin, at London, to the Bureau of Foreign and Domestic Commerce regading the British shipping board. Departmext of Commerce, Bureau of Foreign and Domestic Commerce, Washington, March 1, 1916. Hon. Joshua W. Alexander, House of Representatives, Washington, D. C. My Dear Congressman: The bureau is in receipt of a letter from Commercial Attach^ Baldwin, at London, under date of February 11, sui)plementin? information already received from him. in regard to the British shipping board. The folio vring extract will perhaps be of interest to you : "The development of the control of shipping hes been somewhat haphazard, one phase of the subject after another receiving consideration; and the result has been that those who deal in the chartering of ships have found it very difficult to make Bure that all the requirements of these various committees have been complied with. The article in the 1 ondon Times of January 25, by Leslie Scott, to which reference was made in my cablegram of yesterday, lists the shipping committees to that date as follows: "1. The admiralty transjiort department, with its ad\nisory committee of ship- owners, which requisitions ships for naval and military transport purposes. "2. The requisitioning (carriage of foodstuffs^ committee appointed last November by the president of the board of trade, which requisitions ships for carriage of foodstuffs and other merchandise. "3. The ship licensing committee, which grants or refuses licenses for the carriage of goods between foreign port and foreign port by British steamships registered in the United Kingdom. "4. The ports and transit executive committee, which deals with problems of the congestion of ports in the United Kingdom. "5. The railways executive committee (the supply of wagons is of vital importance to the clearing of congestion at the ports). "6. The war trade department (coal division), which deals with the export of coal. "7. The commission Internationale de ra\itaillement, which considers the needs of Ihe allies. "8. The interratioral joint committee for the purchase of wheat, referred to by the president of the board of trade in the Bouse of ( ommors on Jaruary 19. "Sirce that time the committee of w hich I ord C urzon is chairman, has been estab- lished (as far as I can learn) to be a sort of supercorrmittee ard to coordinate their activities. Through my relatiors w i'h shippirg people in London 1 receive the infor- mation that this last committee (as the colloquial phrase expresses it here) is the 'top dog.' "While the Government has not assumed entire control of British shipping to the extent of managing the operation of ships, the restrictions now imposed practically amount to a Government disposition of shipping operations." Attention is also invited to the attached page 11,170 of the London Gazette for November 12, 1915, whi(h contains further information concerning the functions of the ship licensing committee, which is No. 3 of the various committees enumerated above. I trust that this material may be of some assistance to you in connection with your consideration of the proposed shipping board. Very truly, yours, E. A. Brand, Acting Chief of Bureau. Also clipping from the London Gazette of November 12, 1915, con- cerning the functions of the ship licensing committee: At the court at Buckingham Palace, the 10th day of November, 1915. Present, the King's Most Excellent Majr sty in Council. Whereas a state of war exists between His Majesty and the German Emperor, the Emperor of Austria, King of Hungary, the Sultan of Turkey, and the King of the Bulgarians; And wdiereas His Majesty holds it to be his prerogative duty as well as his prerogative right to take all steps necessary for the defense and protection of the realm; SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 767 And whereas it has been made to appear to His Majesty that it is essential to the defense and protection of the realm that, in the exercise of his prerogatives as aforesaid, he should prohibit as from and after the 1st day of December, 1915, the carrying of cargo from any foreign port to any other foreign port by any British steamship registered in the United Kingdom exceeding 500 tons gross tonnage — and whether or not such ship while carrying such cargo calls at any intermediate port within his Majesty's dominions — unless the owner or charterer of such steamship has been granted exemp- tion by license as hereinafter provided : Now, therefore, His Majesty is pleased, by and with the advice of his privy council, and in exercise of liis prerogatives as aforesaid and of all other powers him thereunto enabling, to order, and it is hereby ordered, that from and after the 1st day of Decem- ber, 1915, no British steamship registered in the United Kingdom exceeding 500 tons gross tonnage shall carry any cargo from any foreign ]:)ort to any other foreign port — and whether or not such sliip wliile carrying such cargo calls at any intermediate port within His Majesty's dominions — unless the owner or charterer of such steamship has been granted exemption by license as hereinafter provided. And His Majesty doth hereby declare that the expression "foreign port" herein used shall mean and include any jiort outside his Majesty's dominions. And His Majesty, by and with the advice aforesaid, and in exercise of his prerrga- tives and powers as aforesaid, is further pleased to authorize and direct the preddent of the board of trade to appoint a committee of persons to carry out and give effect 1o the pro\'isions hereof, and that the said committee shall have power to grant licenses of exemption therefrom to or in favor of owners and charterers of such steamships as aforesaid, which licenses may be general in reference to classes of ships or their voyages or special. And His Majesty is further pleased to authorize the president of the board of trade from time to time to add other persons as members of such committee, and to substi- tute as members thereof other persons for such members as may, from time to time die, resign, or be or become incapable of acting thereon. And the president of the board of trade is to act and to give instructions and directions accordingly. Almeric FitzRoy. Also a memorandum showing the ocean freight rate3 on tobacco, unmanufactured, as they were prior to outbreak of the war and as they were in March, 1916. Ocean freight rates on tobacco, unmanufactured. Baltimore to — Liverpool . . Rotterdam . France. Italy... New Orleans to — England France Italy Netherlands.. July, 1914. 34 cents per 100 pounds Maryland leaf, 43| cents per 100 pounds. Virginia and Kentuclcy leaf, 30 cents per 100 pounds. None do 43 to 54 cents per 100 pounds . 43 cents per 100 pounds 43 cents per 100 pounds 48 to 50 cents per 100 pounds . Before war. New York to — I England ! 30 cents per 100 poimds France j 80 cents per 100 pounds Italy I 60.8 cents per 100 pounds Holland ! 27 cents per 100 pounds March, 1916. Jan. 19, 1916 (latest data obtaina- ble), S2.50 per 100 pounds. $1.25 per 100 pounds : per 100 pounds . None. . do. February, 1916. $3.50 per 100 pounds $3.50 per 100 pounds $2.30 per 100 pounds $2.25 to $3 per 100 pounds . Present time. $1.50 per 100 pounds $3 per 100 pounds . . . do $2.25 per 100 pounds . Increase. Per cent. 636 186 567 714-548 714 435 350-523 400 275 393 733 768 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Also a letter from the Freiberg Lumber Co., of Cincinnati, Ohio, to Mr. W. C. Culkins, executive secretary of the Cincinnati Chamber of Commerce, showing lack of shipping facilities: The Freiberg Lumber Co., Cincinnati, Ohio, February 23, 1916. W. C. Culkins, Executive Secretary, Chamber of Commerce, Cincinnati, Ohio. Dear Sir: Pursuant to the conversation the writer had with you this morning, we would greatly appreciate it indeed if you would be kind enough to take up with the authorities in Wasliington the conditions now prevailing in the steamship business. We have from four to five million feet of mahogany logs to move from Nicaragua to Gulf ports. We have made innumerable efforts to get a boat, without success, and the chief reason, as we see, of these deplorable conditions is the fact that the boats have been allowed to get into the hands of speculators, whom we find are asking abnormal prices, and we don't tliink tliis is fair to those who are in the legitimate business to pay such heavy rates as they propose to charge. Our purpose of writing this letter to you is to bring this matter before the attention of Washington, if you possibly can, and see if there is any way at all for us to obtain suitable tonnage for bringing up the wood we have to tliis country and bridging over the difficulties we are up against now, as we have been compelled to shut down our plant owing to the fact that we are out of timber for the past four weeks, being unsuc- cessful in landing a suitable boat for handling this business. At the present time we are requiring a ship of 2,000 tons dead-weight capacity, or less, whicli we could use for a period of six to nine months, steady work. Any tiling you can do toward alleviating the above conditions will be greatly appre- ciated by us. Thanking you in advance for your efforts in our behalf, we are, Yours, very truly, The Freiberg Lumber Co., Harry A. Freiberg, President. Also a letter from Mr. Arthur Hastings, president of the Ameri- can Writing Paper Co., regarding shipping conditions: American Writing Paper Co., Holyoke, Mass., March 4, 1916. Hon. Wm. C. Redfield, Department of Commerce, Washington, D. C. My Dear Mr. Secretary: In further reply to yoiu* valued communication of the 2d. I quite agree with you on the shipping question, and the necessity of this country's owning or controlling plenty of ships to do our commerce. It is a matter that I have always held should have been taken up intelligently by this Government 60 that we coiild hold the trade, at least contingent to this continent. Just what has been in the minds of legislators for the last 50 years in reference to this matter, I do not know, and have never been able to satisfy myself that they cared very much or they would have taken it up more intelligently. I am not familiar with the present shipping bill so that I do not feel competent to pass upon it. but ships we should have \mder our own flag. Yours, very truly, Arthur C. Hastings, President. Also a clipping from Montreal (Quebec) Gazette, entitled "Govern- ment-owned line of Hudson Bay steamers " : Government-Owned Line of Hudson Bay Steamers. EXPECTED to CARRY PART OF CANADA'S 1917 WHEAT CROP OVERSEAS — RAILWAY being rushed — LAYING OP STEEL WILL BE COMPLETED BY THE FALL OF 1916, IT IS EXPECTED. [Special to the Gazette.] Ottawa, November 19. A Government-owned line of steamers out of Hudson Bay will be established, it is understood, on the completion of the line and terminals of Canada's new northern port and will be in operation in time to carry part of the 1917 wheat crop to its desti- nation overseas, it is hoped. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 769 Work on the construction of the line is being expedited with a view to completing thelajdng of steel by the fall of next year. If this is done, as stated, the route will be in a position to compete for the movement of the Canadian grain crop of 1917. On account of the prejudice created against the route by the results of careless navi- gation in Hudson Bay, it is expected that insurance rates will at first be so high that it will be necessary for the Government to operate its own line of steamers. This, it may be stated, will, according to present intentions, be done. There now remain only 100 more miles of grading to be done on the Hudson Bay Railway. The roadbed has been graded for almost 90 miles beyond Manitou, on the Nelson River, and is now waiting for the steel. A bridge has still to be constructed across this river, but it will be taken up in a "knockdown" condition and will not take long to erect, though the span is of considerable length. Work at the terminals is also proceeding, while at the same time wireless stations are being placed. There will be a chain of these covering the whole route from Port Nelson to the mouth of Hudson Straits. Also a letter from Mr. William E. Peck, of New York, giving additional information on shipping conditions : William E. Peck & Co. (Inc.), New YorTc, March 10, 1916. Hon. Joshua W. Alexander, House of Representathes, Washington, D. C. Dear Sir: The freight situation continues to get worse instead of better, and recently a charter has been made from New York to Buenos Aires at the rate of $95,000 per month for a steamer which can carry 8,500 tons of freight, and I understand that two more charters are about to be executed at the rate of $115,000 per month. As three months are required for the round trip, you can readily see that the freight rates on many of the commodities which we ship will be prohibitive. As I remarked when I attended the recent hearing on the Alexander bill, "Some bill ought to be passed as quickly as possible to relieve the situation," and I therefore trust that your bill, with the few changes suggested by the New York Chamber of Commerce committee, will have the early attention of Congress. The shipping situation is getting so dreadfully bad that men who were formerly ultraconservative as regards any Government aid are now beginning to realize that unless the Government steps in and does something for the relief of our shipping that the exports of this country are going to be terribly curtailed. Yours, very truly, W. E. Peck. Also letter from the Secretary of Commerce, quoting a letter from the White Star Line regarding shipments to Liverpool: Department of Commerce, Washington, March 11, 1916. My Dear Judge Alexander: Permit me to quote in full letter which speaks for itself: 11 Broadway, New York, March 8, 1916. The Industrial Press, 140 Lafayette Street, City. Gentlemen: Referring to you letter of the 7th instant, beg to say at the present time we have no space to offer for shipments of any kind to Liverpool inasmuch as the British Government has taken practically all space by our steamers for their require- ments. Yours, truly, White Star Line, Per A. T. Allen. It would be hard to conceive a more humiliating position for our country than this. I earnestly hope the new shipping bill will relieve the situation which now appears so heavily against us. Yours, very truly, William 0. Redfield, Secretary. Hon. J. W. Alexander, House of Representatives, Washington, D. C. 770 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Also letter from Dr. E. E. Pratt, Chief of the Bureau of Foreign and Domestic Commerce, quoting cablegram from Commercial Attach^ Veditz, at Madrid, regarding the creation of a commission to regulate shipping for the Spanish Government: Department of Commerce, Bureau of Foreign and Domestic Commerce, Washington, March 10, 1916. Hon. Joshua W. Alexander, House of Representatives, Washington, D. C. My Dear Congres.'sman: The bureau is this morning in receipt of a cablegram from Commercial Attache Veditz, at Madrid, as follows: "Spanish royal decree March 3 creates commission regulate ocean transportation of necessities, especially wheat and coal. It may requisition hundred thousand tons Spanish ships fix freights for above imports and maximum selling prices thereof here." I believe that this information may prove to be of some interest to you in con- nection with the proposed shipping board, inasmuch as it means that the shipping of still another neutral nation will be greatly restricted. There is also inclosed for your information a marked copy of Commerce Reports, containing another announce- ment from Commercial Attache Veditz to the effect that the Pinillos Steamship Co, has just announced the suspension of its mail steamship service between Spain and America. "With kind regards, I am, Very truly, yours, E. E. Pratt, Chief of Bureau. Also clipping from United States Commerce Reports, announcing suspension of mail steamship service between Spain and America: SUSPENSION OF SPANISH STEAMSHIP LINE. [Commercial Attach^ C. \V. A. Veditz, Madrid, Feb. 11.] The Pinillos Steamship Co. has just announced the suspension of its mail steamship service between Spain and America, on account of the abolition of the Government navigation subsidies. The company operated mail steamers twice a month to Cuba and Porto Ptico, and once a month to South America. Also resolution of the American Chamber of Commerce of China: To the President of the United States and the Secretary of Department of Commerce: Whereas subsequent to the enactment of the La Follette seamen's bill the Pacific Mail Steamship Co.'s fleet of five vessels, the Great Northern Steamship Co.'s mara- moth liner Minnesota, and the Dollar Steamship Co.'s three liners under the Ameri- can flag, constituting the entire American mercantile marine in the trans-Pacific trade, have been sold and withdrawn from the Pacific (with the exception of the Robert Dollar, which is to make VancouA'er its only American port of call); and Whereas the withdrawal of the American mercantile fleet from the Pacific at this time will be many fold more disastrous in its effects on America's trade with China than had it happened during peace time for the following reasons: (a) The Canadian Pacific fleet and a number of the Standard Oil Co.'s vessels under the British flag on the Pacific have been commandeered by the British Government for war service. (b) Because of the scarcity of tonnage, the Japanese Government has instructed its subsidized trans-Pacific Uners to give exporters from Japan preference in allot- ments c f tonnage. (c) The British enemy trading act and regulations, as in operation in China, interpret as enemy cargo any goods from which German or Austrian firms or indi- viduals can directly or indirectly profit in the cargo itself or in the preparation thereof and prohibits British ships and lighterage companies from handling any such cargo, even though absolute American or other neutral ownership may be proven before the cargo leaves the port, and in this connection requires that neutral applicants for British tonnage submit all documents pertaining to orders to the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 771 Britisli consular authorities for inspection and approval before British shipping companies will be allowed to accept neutral cargo for shipment. As it is estimated that above 75 per cent of the export trade from China to the United States (tea and silk excepted) has been d ^ne through German firms, which alone possess the facilities for handling this trade, the bulk of China's export trade with the United States falls into the category of "enemy trade" under the British enemy trading act as operated in China; thus it becomes impossible for American firms to partici- pate in this trade so long as they are dependent upon British ships. (d) Not only does the enemy trading act interfere with shipments from China to the United States, but importations by American merchants are seriously ham- pered from the fact that the British consular authorities, in some instances, demand insight into all details of CA-ery transaction undertaken by these American import firms and have issued an order that any import cargo handled by British ships shall not be delivered until the documents have been approved by British authorities. Through fear that this approval of a shipment might not be forthcoming, one of the largest American shipping firms in the Orient has instructed its United States offices not to accept any cargo for Shanghai, fearing that it might be held liable of violation of the common carrier act if it was forbidden to deliver cargo which it had taken for transportation to this port. Thus it has become exceedingly difficult for American import firms to be certain of receiving goods they have ordered, since the lack of American tonnage restricts their incoming shipments to British and Japanese vessels. (e) The regular line Japanese steamships loading cargo in Cliina ports are obliged to load in midstream, necessitating the use of lighters, which are for the most part controlled by British tug and lighter companies, which has the effect of placing cargo shipped by these steamers under British supervision so far as concerns the British trading act and regulations. (/) The general curtailment of Chinese exports to Europe owing to the war has caused a substantial reduction in the values of some of these products, and the clos- ing of other sources of supply has increased the demands for certain other China products; these factors combined with the very favorable export exchange make for increased demands in the United States for China's articles of export and in spite of advances in freight to from 100 to 150 per cent now as compared with those ruling before the European war, the volume of export trade from China to the United States during this period has increased greatly. (g) The trans Pacific shipping faciliti( s, including the ships until recently under the American flag, thos'' ^\ithdrawn or sold, thos^' commandeered by the British Government, and the British and Japanes? ships now in oporation under restriction have not exceeded the cargo requirements for this trade, even during normal times. (h) Unusual oppartuniti' s for the development of American export trade with China pr< sent th^ms Ives during this time wh<:>n Europ'^an suppli-^s are cut off from this market, but ( hina must s '11 her products if she would maintain her import trade. By facilitating the movement of exports from China to the Unit^'d States the way is paved for increas d imports from America and for the establishment of a market for American products in (_ hina which it may bo possible to hold after the conclusion of the war and which without the war it may have been impossible to establish: Now, therefor.^ be it Resolved, That we, the American Chamber of Commerce of China, in the interest of American trade in ( hina and especially in light of the advantageous opportunities which would be accorded this trade at this time when the Europ' an nations are engaged in war, provided we had adequate shipping facilities under the American flag to handle this trade, do earnestly urge taking of such action as will result in the immedi- ate repeal of the destructive La FoUette seamen's bill and the enaction of such other legislation as will encourage the immediate development of an American merchant marine in the trans Pacific trade, and that, pending the enactment of the necessary remedial measures, our Department of State in conference with the British authorities secure the recognition of the right of Americans to the shipment of bona fide American- owned cargo on British ships and importations thereof irrt spective of prior ownership. American Chamber of Commerce of China. By J. H. McIMiCHAEL, President. By P. L. Bryant, Secretary. Shanghai, November 1, 1915. 772 SHIPPING BOARD, NAVAL AUXILIARY, AXD MERCHANT MARINE. Also, letter from Mr. Lorenzo Daniels, of the firm of Busk & Daniels, New York: Lamport & Holt Line, Busk & Daniels, General Agents, New York, March 7, 1916. Hon. J. W. Alexander, Chairman Committee on the Merchant Marine and Fisheries, Washington, D. C. Dear Sir: We have had several calls from newspaper representatives and others relative to some testimony in the minutes of the present hearing at Washington to the effect that the Lamport & Holt Line had been asked to quote on a tender for a large quantity of pipe bound to South America and that, because we had not quoted freight rates, we were discriminating against the American shipper. ^ These statements are ridiculous for the reason that for considerably over a year now the Lamport & Holt Line have not operated cargo boats in thrir South American Ber\'ice from New York, but have confined themsf-lves practically to the passenger steamers sailing fortnightly. These steam. -rs are insulated for refrigeration throughout and are not able to carry rough cargo. Those conditions on their face explain the reason why we were not interested in quoting a rate on several thousand tons of rough water pipes. Furthermore, I would take the opportunity of calling your attention to the fact that the trade between the United States and South America is now practically in the hands of lines operating American steamers, together with the steamers of the National Brazil Line and augmented by the boats of neutral countri-^s, such as Norway, Denmark, etc. If you will take the announcements of the lines in to-day 's Journal of Commerce you will iind that the Lloyd Brazileiro, owned by the Brazilian Government, announce the sailing of 8 Brazilian steamers; the United States & Brazil Line announce the sailing of three 10,000-ton American boats; Funch, Edye & Co., 1 American and 1 Danish steamer; Barber & Co., 1 American and 2 Norwegian steamers; Houlder, Weir & Boyd, 1 American and 1 Norwegian; the Prince Line, 1 British steamer monthly; the Norton Line, 3 American steamers of large tonnage; making a total of 9 American steamers, 8 Brazilian steamers, 3 Norwegian, and 1 Danish steamer; and, including our own announcement of 3 British steamers, a total of only 5 British steamers, covering the departures near by for Brazil and Kiver Plate ports. The trade to-day, therefore, as you will soe, is in the hands principally of the Amer- ican and Brazilian steamers, and we believe the rates are higher than they have ever been before. It is our personal regret that we are not able to place more tonnage in this trade and to enjoy the present high market rates for transportation that are being taken advantage of principally by the American and Brazilian tonnage. Possibly, in fairness to ourselves and in refutal of the statements that appear on your minutes, it may be desirable that this letter be made a matter of record . Yours, faithfully, Lorenzo Daniels. P. S. — I omitted to include 2 American steamers of the Grace Line and 1 American steamer of the New York & South American Line, serving Bahia Blanca and ports to the south of Buenos Aires, on their way to the West Coast. Total, 29 steamers (24 American, etc., 5 British). Also a letter from Dr. E. E. Pratt, Chief of the Bureau of Foreign and Domestic Commerce, transmitting data on the subject of ocean freight rates: Department of Commerce, Bureau of Foreign and Domestic Commerce, Washington, March 16, 1916. Dear Judge Alexander: In response to the verbal request made by you some weeks ago I am transmitting herewith considerable data on the subject of ocean freight rates from the ports of New York, Boston, New Orleans, San Francisco, and Seattle. These data were compiled for the most part by the commercial agents in charge of the district offices of this bm'eau at the specified ports, although considerable data also were taken from material in the bureau's files. As you wall observe, rates on the first of each quarter in 1914 and 1915 are shown for all of the specified American ports, and also at the close of each week from January 1, 1914, to March 11, 1916, for the ports of New York and Boston. The data cover a SHIPPING BOARD, NAVAL AUXILIAEY, AND MEECHANT MAKINE. 773 wide variety of commodities as well as a considerable number of foreign ports, and afford, therefore, an adequate basis for gauging the movement in ocean freight rates during the past two years. As a supplement to the data on freight rates from the United States it was thought pertinent to submit data and charts sho\ving freight rates to and from British ports. These figures are taken from reliable British sources and indicate clearly the move = ment during the years covered not only in British freights but in freights throughout the world. Much of the British data istaken from Fairplay, one of theleading marine journals, and much also from the Cardiff and South Wales journal of Commerce Indus- trial ReAdew for 1916. In considering ocean freight rates from the United States during the past two years account must, of course, be taken of the great decrease in the merchant shipping available for purely commercial uses and also of the unusual disturbance in trade routes that has occurred as a result of the present war. The working of the economic laws of supply and demand has perhaps never been as clearly illustrated, at least BO far as the shipping industry is concerned, as at the present time. The causes for the lack of merchant tonnage are well known, namely (1) the elimination of the merchant ships of Germany and Austria-Hungary; (2) the withdrawal of merchant ships for use as transports and for other military and naval purposes; and (3) the loss of ships through submarine and mining operations. Another cause for the shortage of merchant ships, and this is an important one, although it is seldom stressed, is that the shipyards of the countries at war have been given over almost entirely to the con- struction and repair of naval vessels, with the result that the merchant shipping of the world has failed to receive its normal accession of new tonnage. Special emphasis should be laid upon the fact that the war is causing unusual disturbance of merchant shipping by reason of extraordinary demands for tonnage in the trans-Atlantic trade for mo\dng enormous cargoes of bulk products from American to British and French ports. This demand has been so great and the rates offered so high that ships have been diverted from their ordinary routes to this trans- Atlantic trade. The data shown in the accompanying tables are, unless otherwise specified, for line or berth traffic, since these data are considered more valuable for the present purpose and could be more easily secured for the entire period of two years. "While charter rates are regarded by many as a better indication of the lack or scarcity of tonnage, they are, nevertheless, subject to wider fluctuations, particularly under the present war conditions. Much of the data have been taken from the freight circulars of forwarding agents, such as Lunham and Moore, of New York City, and of the export freight departments of railroads, such as the Boston & Albany Railroad and the Boston & Maine Railroad. The rates, as (| noted in these circulars, are "for general information only" and "sub- ject to confirmation." In many cases, also, the rates shown in the accompanying tables have been taken from actual manifests. The situation as affecting charter rates has not, however, been overlooked. A review of the course of charter rates during the past two years will be found in the report of the New York district office of this bureau and in an extract from the Jour- nal of Commerce of March 4, 1916. Regarding the general trend in freight rates between January 1, 1914, and January 1, 1916, a few comments seem pertinent. Take, for instance, the rates on grain from New York and Boston to Liveri^ool. In January, 1914, the rate from New York and Boston to Liveri^ool was 4.1 cents per bushel; one year later the rate from New York to Liverpool was 18.3 cents and from Boston to Liverpool 13.2 to 15.2 cents per bushel. In January, 1916, the rate from New York to Liverpool was 40.6 cents per bushel and from Boston to Liverpool it was 34.5 to 36.5 cents. From these data it appears that the rate on grain from New York to Liverpool was, in .January, 1916, about 10 times as high as in January, 1914, while the rate from Boston to Liverpool was only about 9 times as great. It will be noted that in January of the present year grain could be shipped from 4 to 6 cents per bushel less from Boston than from New York. The higher rate from New York is probably due to the long delays and high demur- rage charges resulting from the present congestion at the port of New York In general, it can be said that the increase in ocean freight rates has been more pro- nounced in the case of grain than in the case of any other important commodity. Whereas the increase in the rate on grain from New York to Liverpool has been about 900 per cent in the past two years, the increase in the rate on flour has been about 500 per cent, and the increase in the rate on provisions only 400 per cent. The higher increase in the rates on grain may be accounted for by the fact that in ordinary times grain is carried at especially low rates because of its desirability as ballast as well as for the reason that it can be easily taken on and discharged. 774 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Extended comparisons might be made as to the course of freight rates on a single commodity from one port or from several ports. In fact, it is impossible in this short space to more than hint at possible comparisons and deductions. It is well, however, to call attention to at least one more striking feature regarding the rates from New York as compared with Boston. On January 1, 1914, the rate per 100 pounds on flour to Liverpool was 15 cents both at New York and Boston; on January 1, 1916, the rate from Boston to Liverpool was 80 cents per 100 pounds, while the rate from New York was 90 cents. A glance at the tables showing week by week from January' 1, 1914, to March 11, 1916, the quoted rates on important commodities exported from New York to a num- ber of European ports, shows that the trend in rates is still upward and at an acceler- ated rate. Diu-ing the year 1914 the rate on grain increased about 14 cents per bushel and during 1915, about 22 cents per bushel, but during the first two months of 1916 the increase was 10 cents per bushel. The advances in rates from New Orleans to European ports have been fully as pronounced as the increases from New York to the same ports. At both New York and New Orleans the rate on cotton shipments to J iverpool has increased about 900 per cent in the past two years, but it is still far cheaper, as far as the ocean rate is concerned, to ship cotton from ^e\x York, in spite of its congested condition, than from New Orleans. On January 1. 1916. the rate per 100 pounds of cotton was S2.25 from New York and S3 from New Orleans. The cost of shipping other commodities is considerably higher at New Orleans than at New York. To ship wheat from New Orleans to Glasgow, on January 1. 1916, cost 54.8 cents per bushel, while the rate from New York to I iverpool was 40.6 cents. The greater distance from British ports is not the only reason for the higher rates from New Orleans as compared with Xew York. A more significant reason is to be found in the greater volume of commerce and the greater diversity and extent of shipping at the port of New York. These facts seem pertinent at the present time when considerable stress is being laid upon the congestion at the port of New York and when efforts are being made to divert export tratiic to other ports. Regarding freight rates from Seattle and San j rancisco it would seem from the data at hand as though the trans-Facific rates have not. in general, increased in the same ratio as the trans-Atlantic rates. In this connection a comparison between the rates on specified commodities from New York to Liverpool and between Seattle and Hongkong may be illuminating. The rate on sack flour from New York to Liverpool increased in the period between January 1. 1914, and January 1, 1916, from 15 cents per 100 pounds to 90 cents, whereas the rate on the same commodity from Seattle to Hongkong increased during this period from 25 cents per 100 pounds to 75 cents. On January 1, 1914. the rate on flour from New York to 1 iverpool was 10 cents per 100 pounds less than the rate on flour from Seattle to Hongkong, but on January 1, 1916, the rate from New York to I iverpool was 15 cents more per 100 pounds than the corresponding rate from Seattle to Hong'ong. The trans- Pacific rates on other commodities, such as wheat, lard, and meat products, show comparatively little increase during the past two years. This is more significant in the case of wheat than in the case of lard and meat products, since under ordinary con- ditions there is a large volume of wheat moved and comparatively little lard and meat. The rates on boots and shoes show a comparatively small increase during the past two years; in other words, from 60 cents to only 75 cents per 100 pounds. In certain other commodities the trans- Pacific rates from Seattle have increased in a remarkable degree. The rate on agricultural machinery was three times as high on January 1, 1916, as on January 1, 1914, while the rate on copper was twace as high; the rate on sewing machines, over two and one-half times as high; the rate on leather shipped in cases, about five times as high; and the rate on canned salmon, twice as high. The greatest increases, however, have been in steel products. On January 1, 1914, the cost of transporting bar ii'on, sheet iron, or wii'e from Seattle to Hongkong was only $3.60 per short ton, but on January 1, 1916, the rate was $30, there ha\ing been an increase of S14 per short ton since October 1, 1915. Regarding the freisht rates on coal from Welsh ports, which are shown in the tables taken from the Carditf and South \Yales Journal of Commerce Industrial Review for 1916, it Avill be seen that the increase in coal rates from Welsh ports has been even higher than our own. In this connection it is well to remember that exports of coal are a big factor in British shipping, since they insure bulk cargo for the return voyage to many of the ships carrying bulk freight to Great Britain, and that in ordinary times the outward rate on coal is, therefore, low. At present, however, since British ships are not in general pursuing their ordinary routes but have been diverted largely to trans-Atlantic trade with the United States, the tonnage available for coal has been considerably curtailed, with the result that in certain directions the rates from Wales SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 775 have been almost prohibitive, and little or no tonnage has been offered even at the present abnormal rates, as, for example, in the case of shipments to Genoa and Naples. This fact should be borne in mind in any consideration of the increases during the past two years in freight rates on coal from Welsh ports. Yours, very truly, E. E. Pratt, Chief of Bureau. Hon. J. W. Alexander, Chairman Committee on the Merchant Marine and Fisheries, House of Representatives, Washington, D. C. [Report prepared by the New York district office of the Bureau of Foreign and Domestic Commerce.) Increase ix Ocean Freight Rates from January I, 1914, to January 1, 1916. The steady increase in ocean freight rates as a result of the scarcity of cargo tonnage and other conditions arising from the European war is shown in the accompanying figures covering the principal comniodities exported from the port of New York. The folio iving report presents the facts in regard to the increase in (1) berth rates and (2 1 charter rates. 1. increase in steamship berth rates. The increase in the steamship berth rates from the port of New York to various Euro- pean ports is shown in the accompanying tables, which show the rates on sack flour, compressed cotton, grain, provisions, and measurement goods. These tables afford, therefore, an excellent ba'-is for the study of the general increase in freight rates resulting from the scarcity of cargo tonnage and from other conditions. The table showing rates for measurement goods covers the rates for practically all articles of general merchandise as well as for a large group of miscellaneous products including steel products, machinery, and other manufactured articles. The rates for cotton, grain, provisions, and sack flour, furnish a sufficient basis also for deductions regarding the increase in freight rates on bulk commodities carried by regular line steamships. 'The increases between January 1, 1914, and December 31, 1915, in the steamship berth rates vary considerably for the specified commodities. The general increase during the period has been between 500 and 1,000 per cent. The increase in rates for grain has been particularly marked. On January' 31, 1914, the "berth rate for grain from New York to Liverpool was $0.0G07 per 100 pounds and on December 31, 1915, $0.67, an increase of 1,000 per cent. Moreover, on the latter date, with the exception of movement by Government arrange- ments, it was practically impossible to transport grain in regular-line steamships, the bulk of the grain movement having been turned over to independent vessels chartered for the purpose. A similar increase is seen in the berth rates on cotton from New York. On January 3, 1914, the rate per 100 pounds on cotton from New York to Liverpool was 28 cents, and on December 31, 1915, $2.25. Th'e same general ratio of increase is also noticeable in the berth rates for provisions, sack flour, and measurement goods. Berth rates for measurement goods during the period studied have also shown a marked increase. On January 3, 1914, the rate per 100 pounds for the carrying of manufactured articles from New York to Liverpool was 21 cents, and on December 31, 1915, 63 cents. While the most noticeable increases in steamship berth rates have been m the rates from the United States to European ports, still the great demand for cargo space for transatlantic tonnage has caused similar increases in the rates to other parts of the world. One very striking illustration of this fact is the rate on cement from New York to the River Plate. Previous to the war, rates on cement from New York to the River Plate were very low, about $5 per ton, but to-day an export manager of a large cement manufacturing house in New York reports that he is in a position to quote a selling price for cement in New York of 68 cents per barrel or about $3.40 per ton, while the freight rate on cement from New York to River Plate ports is $16 per ton. The great discrepancy between the cost of the manufactured article and the ocean transporta- tion rate is evident. Moreover, in this connection it should be remembered that the rates on cement from England to SouthAmerican ports have not shown so great a rela- tive increase as the rates from New York to South American ports. At the time the quoted rate from New York to the River Plate was $14 per ton, the rate from Liverpool to the River Plate was approximately $9 per ton. 776 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 2. IXCREASE IN CHARTER RATES. The great increa.«es in the steamship-berth rates is paralleled by the increases in the steamship charter rates for full cargoes from New York to European ports. The bulk of the freight tonnage in foreign trade is moved by tramp steamers which are owned by independent steamship companies and are chartered through steamship agents and brokers to individuals and firms desiring steamers for the movement of full cargoes. No industry is more directly affected by conditions of the demand and supply than the steamship industry and the creation of a great demand for cargo space in any section of the world's markets has a direct effect upon steamship charter rates and berth rates in all parts of the world, (barter rates fluctuate directly in relation to the available cargo tonnage and the demand for cargo space. The great increase in char- ter rates, therefore, presents the best evidence of the scarcity of tonnage at the present time and the need of additional tonnage if any relief is to be expected. Grain charlers. — Charters for grain are usually based on a charter of a steamship for the transportation of a certain number of quarters, each quarter consisting of approxi- mately 480 pounds, or 8 bushels. On January 3, 1914, when the movement of grain was at a very low ebb, the charter rate from New York to English ports was 2 shillings 1^ pence ($0.52) per quarter. On December 31, 1915, the charter rate was about 13 shillings 6 pence (33.29) per quarter. The charter rate on December 31, 1915, on grain from New York to Mediterranean ports was 18 shillings ($4.38), while the average rate for grain between the United States and other European ports was between 12 and 14 shillings ($2.92 to $3.41) per quarter. One interesting feature in connection with the increase in charter rates for grain is the fact that it occured largely during the late summer and fall of 1915. In the fall of 1914, although there was a very large demand for carsro space for grain movement, the charter rates ranged between 5 and 8 shillings ($1.22 to $1.95) per quarter. Even as late as April 3, 1915, the charter rates on grain from New York to European ports were about 9 shillings ($2.19), but during September, October, November, and December, 1915, there was a very great increase in the rates, showing not only a greater demand for cargo tonnage, but also a decrease in the available supply. Coal charters. — The movement of coal between the United States and foreign coun- tries is carried on primarily on a charter basis, as full cargo shipments are made. The increase in the charter rates on coal therefore furnishes another criterion of the ship- ping situation. Previous to the outbreak of the European war there was very little movement of coal from the United States to European or other ports. On July 3, 1914, however, a schooner was chartered for the movement of coal from Philadelphia to Calais at $1.10 per ton. Asa result of the conditions resultingin ascarcityof steam- ship tonnage a steamer was chartered on December 31, 1915, for the movement of coal from Norfolk to Boston at $3.25 per ton dead-weight. Petroleum charters. — In the foreign trade petroleum is carried largely in tank steamers. There is therefore a definite limit to the amount of steamship tonnage available for the handling of petroleum in bulk. Nevertheless the increase in the charter rates for petroleum has been marked, and it is practically impossible at the present time to secure charters for tank steamers at any rate on account of the great scarcity of tonnage. On April 4, 1914, the charter rates for the movement of case oil from New York to the Far East was 17i cents per case. On December 31. 1915, a steamer was chartered from New York to AustraUa at a charter rate of $1.50 per case, and a sailing vessel was chartered for the movement of petroleiim in baiTels from Philadelphia to the United Kingdom at 13 shillings 6 pence ($3.29) per ton. Miscellaneous charters. — A great part of the movement of freight by chartered vessels is carried on under different forms of charter. There has been a marked tendency in shipping circles to adopt the time charter, and the increase in the rates for time char- ters for steamships and sailing vessels has been remarkable. Time charters for indi- vidual steamsliips are usually based on (1) the payment of a lump sum covering the period of the voyage, (2) payment on a monthly basis, or (3) a payment of a lump sum per ton of dead-weight capacity of vessel. A typical time charter in January, 1914, for a steamer in the trans-Atlantic trade, for one round trip, was made at the rate of 3 shillings 7^ pence ($0.88) per ton dead- weight. In December, 1915, a steamer of about the same tonnage was chartered for one round trip in the trans-Atlantic trade on a basis of 30 shillings ($7.30) per ton dead-weight. This illustration is typical of a number of others of similar character. ThiLs, a steamer of about 2,500 tons was chartered for 12 months in April, 1914, on the basis of 2 shillings lOi pence ($0.70) per ton dead-weight. In October, 1915, not only was SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 777 it extremely difficult to secure a charter covering so long a period of time, but a steamer of approximately the same tonnage was chartered for one round trip from the United States to the Far East on the basis of 15 shillings ($3.65) per ton deadweight. Time charters for larger vessels, especially for particular trades, have gone as high as $54,000 per month, as in the case of American vessels used in the cotton trade with Germany last fall when it was possible to ship raw cotton to Bremen direct. Another striking illustration of the tremendous increase in charter rates is shown by the charter of a small steamship of 989 tons for the West Indian and coastwise trade, on December 31, 1915, for 12 months at the rate of 87,000 per month. Charters to South America. — The increase in charter rates for the movement of goods between the United States and South America is of particular interest. On January 3, 1914, a steamer of about 3,200 tons was chartered for the movement of coal from the United States to Rio de Janeiro at 15 shillings ($3.65 ) per ton. On December 31, 1915, a Norwegian steamer of only 2,400 tons was chartered for the movement of coal from Atlantic ports to Rio de Janeiro on a basis of 52 shillings 6 pence ($12.70\ and a schooner of only 1,000 tons was chartered for the movement of coal from Norfolk to Para on the basis of $7.50 per ton. In view of the fact that the cost of the coal at Norfolk was approximately $2.85, the relation of the steamship rate to the cost of material was extremely noticeable. One of the commodities that has been severely affected by the increase in the freight rates is lumber. On January 3. 1914, a Russian steamer of about 1,500 tons was char- tered for the movement of lumber from one of the Gulf ports to the River Plate at 105 shillings ($25.55) per standard (2.000 board feet). On December 31, 1915, a sailing bark of 1,500 tons registry was chartered for the movement of timber from the Gulf to British ports, a shorter voyage, at 320 shillings ($77.86) per standard. Another striking illustration of the great increase in the freight rates during the last 12 months is shown by the fact that on January 3, 1914, a steamer of 2,200 tons register was chartered for the New York and South American trade at the rate of 4 shillings 7^ pence ($1.13) per ton dead-weight, and in December 31, 1915, a Norwegian bark of 1,500 tons register was chartered for the movement of nitrate from South America to the United States on a basis of 70 shillings ($17.03) per ton dead-weight. General summary. — The above tables and facts bring out four salient points: 1. A very steady and remarkable increase in steamf5hip rates fi-om New York to all parts of the world' is noticeable. This has been particularly true of steamship berth rates and even been more marked in the matter of charter rates. 2. A scarcity in steamship tonnage, which was noticeable at the outbreak of the war on account of "the withdrawal of the German and Aastrian i.ierchant shipping, and the requisition of a large part of the British marine under Admii-alty orders, has been instrumental in causing a decrease in the supply of steamship tonnage. The decrease of steamship tonnage has been accompanied by a steady growth in the demand for cargo space for the movement of goods from New York to Europe. As a result, steam- ship rates have continued and will continue to mount unless some changes can be brought about in the present situation. 3. The most important feature of the situation from the standpoint of the United States is the fact that the tremendous demand for cargo space coupled with the scarcity of steamship tonnage in the transatlantic trade has seriously affected the trade of the United States withneutral and outlying countries, such as South America, Australia, South Africa, and the Far East. It is'practically impossible to secm-e any tonnage either sailing or steam except at exorbitant rates for the transportation of goods from the United States to those countries. This is due to the length of the voyage and to the fact that greater profits can be secured in the shorter voyage at transatlantic rates. 4. There is a general feeling among shippers of goods from the port of New York that the Government might be able to materially assist the situation by seeming and opera- ating vessels which would be entered into service for the ]iurpose of moving American good's to such markets as Australia, the Far East, and South Afiica, for which at the present time it is practically impossible to secure cargo space at a rate which will enable the customer to purchase the goods. 778 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Ocean freight rates from Neiv York to European ports. GRAIN, PER BUSHEL. British ports. Danish port, Copen- hagen. Dutch port, Rotter- dam. French ports. Italian ports. Date. London. Liver- pool. «las- Hull, gow. "^'^• Havre. Mar- seille. Genoa. Naples. 1914. Jan. 3 10 17 24 31 Feb. 7 14 21 28 Mar. 7 14 21 28 Apr. 11 18 25 May 2 9 16 23 29 Cents. 4.6 4.6 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.5 4.1 5.1 5.1 Cents. 4.1 4.1 4.1 4.1 4.1 4.1 3.5 3.5 3.0 3.0 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 3.0 3.0 3.0 3.0 3.0 4.1 5.1 5.1 5.1 5.1 5.1 Cents. 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 3.5 3.0 3.0 3.0 3.0 4.1 3.0 3.0 3.0 3.0 Cents. 5.1 5.1 5.6 5.6 5.1 4.6 1 4.6 1 4.6 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 5.1 5.6 5.6 Cents. 5.7 6.1 6.1 6.1 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.3 5.3 5.3 6.1 6.1 6.1 6.1 Cents. 5.3 4.5 3.8 3.8 3.8 4.0 4.3 4.3 4.3 4.0 4.0 4.0 3.5 3.5 3.5 3.5 3.5 3.8 3.8 3.5 3.3 3.3 3.0 3.0 3.0 3.5 6.3 6.4 6.0 Cents. 8.4 8.4 8.0 8.0 7.6 7.6 7.6 7.6 7.6 7.2 7.2 6.5 6.5 6.5 6.5 7.2 6.5 6.5 6.5 6.1 6.1 • 6.1 6.1 6.1 6.1 6.1 7.2 7.2 7.6 Cents. 9.1 9.1 8.4 8.4 8.4 7.6 7.6 7.6 8.0 8.0 7.6 7.6 7.6 6.1 6.5 6.9 6.5 6.5 7.6 7.6 7.6 7.6 7.6 7.6 8.4 8.7 8.7 8.7 9.5 Cents. 9.1 9.1 8.4 8.4 6.9 7.2 7.2 7.2 6.1 6.1 5.3 5.3 4.6 4.2 4.2 4.2 6.1 6.1 5.3 5.3 5.3 5.3 6.1 6.1 6.1 6.9 6.9 6.9 8.4 1 Cents. 10.7 10.7 9.9 9.9 1 9.1 9.1 1 9.1 ! 9-1 9.1 9.1 \ 9.1 9.1 9.1 9.1 9.1 : 9.1 9.1 9.1 6.1 6.1 6.1 June 6 13 20 27 July 3 11 18 Aug. 1 81 4.1 4.1 4.1 4.1 4.1 4.1 3.0 3.0 6.1 9.1 ' 9.1 9.1 8.4 8.4 8.4 8.4 151 22' 291 Sept. 5 12 6.6 6.6 6.6 7.1 7.1 7.1 7.1 7.6 8.6 13.2 14.2 14.2 15.2 15.2 16.2 17.2 18.3 18.3 19.3 5.1 5.1 5.1 7.1 7.1 8.1 7.6 7.1 8.1 12.2 13.2 13.2 13.2 14.2 16.2 16.2 17.2 18.3 18.3 20.3 22.3 21.3 21.3 22.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 22.3 22.3 22.3 24.3 22.3 24.3 6.1 6.1 6.1 7.1 5.1 6.6 7.1 8.1 8.1 8.1 8.1 8.1 13.2 14.2 14.2 14.2 15.2 16.2 17.2 18.3 18.3 18.3 19.3 19.3 20.3 20.3 20.3 18.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 21.3 21.3 22.3 24.3 22.3 24.3 13.7 12.2 12.9 12.9 15.2 15.2 15.2 16.7 15.3 18.3 18.3 18. 3 18.3 25.9 7.6 7.6 8.4 8.4 8.4 8.7 19 9.9 9.9 9.9 11.0 12.2 13.7 13.7 16.7 19.0 19.8 19.8 24.3 25.9 10.7 12.2 12.2 12.2 12.2 26 13.7 Oct. 3 11.0 11.0 13.7 10 16.7 17 16.7 24 12.2 12.2 12.2 12.2 12.2 12.2 15.2 15.2 17.5 17.5 17.5 19.8 27.4 27.4 30.4 16.7 31 16.7 Nov. 7 17.5 14 19.0 21 19.0 28 20.5 Dec. 5 27.4 27.4 12 27.4 19 30.4 24 30.4 30.4 30.4 2S.9 33.5 33.5 30.4 30.4 30.4 33.5 33.5 1915. Jan 2 9 36.5 10 23 24.3 22.3 22.3 22.3 24.3 24.3 24.3 36.0 30 Feb. 6 13 20 27 Mar 6 13 20 27 42.6 42.6 42.6 36.5 36.5 33.5 33.5 33.5 27.4 27.4 Apr. 3 10 24.3 24.3 22.3 21.3 22.3 22.3 24.3 22 3 24.3 36.5 3fi.5 30.4 30.4 30.4 30.4 30.4 30.4 30.4 39.5 39.5 36.5 17 24.3 21.3 21.3 21.3 36.5 24 May 1 8 27.4 33.5 15 33.5 22 '.'.'.'.'..'.'.'. 33.5 31.9 33.5 29 3L9 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 779 Ocenn freight rates from Neiv York to European ports — Continued. GRAIN, PER BUSHEL— Continued. British ports. Danish port, Copen- hagen. Dutch port, Rotter- dam. French ports. Italian ports. Date. London. Liver- pool. Glas- gow. Hull. Havre. Mar- seille. Genoa. Naples. 1915. June 5 Cents. 24.3 24.3 22.3 21.3 21.3 21.3 21.3 21.3 21.3 20.3 20.3 20.3 22.3 24.3 28.4 28.4 30.4 36.5 40.6 40.6 40.6 40.6 40.6 40.6 40.6 38.5 38.5 40.6 40.6 40.6 40.6 40.6 42.6 44.6 44.6 44.6 48.7 50.7 50.7 50.7 50.7 Cents. 24.3 24.3 24.3 21.3 21.3 18.3 20.3 21.3 21.3 20.3 20.3 20.3 21.3 24.3 26.4 28.4 30.4 36.5 40.6 40.6 40.6 40.6 40.6 40.6 40.6 38.6 38.6 40 6 40.6 40.6 40.6 40.6 42.6 44 6 44.6 44.6 48.7 50.7 50.7 50.7 50.7 Cents. Cents. 24.3 22.3 21.3 21.3 16.2 16.2 18.2 21.3 22.3 24.3 24.3 24.3 30.4 30.4 30.4 30.4 32.4 36.5 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 48.7 50.7 60.8 60.8 60.8 Cents. 28.1 28.1 28.1 27.4 28.9 28.9 31.9 31.9 31.9 36.5 36.5 36.5 36.5 36.5 30.5 30.5 Cents. Cents. Cents. 30 4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 33.5 33.5 35.0 35.0 35.0 35.0 35.0 36.5 36.5 38.0 38.0 39.5 39.5 Cents. 31.9 31.9 Cents. 31 9 12 31 9 19 22.3 21.3 21.? 21.3 22.3 22.3 22.3 22.3 24.3 24.3 24.3 24.3 30.4 30.4 30.4 36.5 40.6 38.5 36.5 40.6 40.6 40.6 40.6 40.6 38.5 38.5 40.6 40.6 40.6 40.6 40.6 42.6 44.6 44.6 44.6 48.7 46.6 46.6 46.6 20 July 2 10 17 25.9 27.4 27.4 33.5 36.5 36.5 36.5 36.5 36.5 36.5 35.0 35.0 35.0 35.0 38.0 35.0 37.5 37.5 37.5 24 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 45.6 45.6 45.6 45.6 45.6 45.0 51.7 54.8 57.8 60.8 36 5 31 36 5 Aug. 7 36 5 14 21 36.5 36 5 28 30 5 Sept. 4 30 5 ^ 11 30.5 18 30 5 25 36 5 Oct. 2 36 5 9 45.6 45.6 16 45 6 23 48.7 45 6 30 45 6 Nov. 5 45.6 45.6 13 54.8 54.8 60.8 60.8 60.8 20 51.7 27 54 8 Dec. 4 37.0 57.8 11 60.8 18 79.1 24 79.1 31 1916. Jan. 8 15 22 78.0 78.0 29 Feb. 5 11 19 26 Mar. 4 11 SACK FLOUR, PER 100 POUNDS. 1914. Jan. 3 15.0 14.0 17.0 18.0 18.0 13.0 22.5 20.0 19.0 19.0 10 15.0 14.0 17.0 18.0 17.0 13.0 22.5 20.0 19.0 19.0 17 13.0 12.0 15.0 17.0 17.0 13.0 22.5 20.0 19.0 19.0 24 13.0 12.0 1.5.0 17.0 17.0 13.0 22.5 20.0 19.0 19.0 31 13.0 12.0 15.0 17.0 17.0 13.0 22.5 20.0 19.0 19.0 Teh. 7 13.0 12.0 15.0 17.0 17.0 12.0 22.5 20.0 19.0 19.0 14 13.0 12.0 15.0 17.0 17.0 12.0 22.5 20.0 19.0 19.0 21 13.0 12.0 15.0 17.0 17.0 12.0 22.5 20.0 19.0 19.0 28 13.0 12.0 15.0 17.0 17.0 12.0 22.5 20.0 19.0 19.0 Mar, 7 13.0 12.0 1.5.0 17.0 17.0 12.0 22.5 20.0 19.0 19.0 14 12.0 11.0 15.0 17.0 17.0 12.0 22.5 20.0 19.0 19.0 21 12.0 11.0 15.0 17.0 17.0 12.0 22.5 18.0 19.0 19.0 28 12.0 n.o 15.0 17.0 17.0 12.0 22.5 18.0 19.0 19.0 Apr. n 12.0 ILO 14.0 17.0 17.0 11.0 18.0 18.0 19.0 19.0 18 12.0 11.0 14.0 17:0 17.0 11.0 18.0 18.0 19.0 19.0 25 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 May 2 ILO 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 9 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 16 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 ?3 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 29 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 June 6 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 13 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 20 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 27 11.0 10.0 13.0 15.0 17.0 10.0 18.0 18.0 19.0 19.0 780 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Ocean freight rates from. New York to European ports — Continued. SAC K FLOUR, PER 100 POUNDS— Continued. British ports. Danish Dutch French ports. Italian ports. port, Copen- hagen. port, Rotter- dam. Date. London. Liyer- pool. Glas- gow. Hull. Havre. Mar- seille. Genoa. Naples. 1914. Cents. Cents. Cents. Cents. Cents. Cents. Cent^. Cents. Cents. Cents. July 3 13.0 12.0 14.0 17.0 19.0 10.0 18.0 18.0 19.0 19.0 11 13.0 12.0 14.0 17.0 20.0 10.0 18.0 18.0 19.0 19.0 18 13.0 12.0 14.0 17.0 20.0 11.0 18.0 18.0 19.0 19.0 Aufr. 1 8' 151 13.0 12.0 14.0 17.0 20.0 11.0 18.0 18.0 19.0 19.0 221 291 Sept. 5 2i.6' 20.' 6' ""22."6' ""2.5.'6' " "32.0 "'""mo' '""so.'o' ""'mo' ""43.'5" 43.'5 12 21.0 20.0 23.0 25.0 32. 21.0 30.0 30.0 43.5 43.5 19 21.0 20.0 23.0 25.0 32.0 21.0 25.0 34.0 36.9 36.9 26 21.0 20.0 23.0 25.0 32.0 21.0 25.0 34.0 36.9 36.9 Oct. 3 22.0 21.0 24.0 26.0 32.0 2.5.0 25.0 35.0 34.0 34.0 10 22.0 21.0 24.0 26.0 32.0 25. 25.0 35.0 34.0 34.0 17 22.0 21.0 24.0 26.0 35.0 25.0 26.3 35.0 34.0 34.0 24 22.0 21.0 24.0 26.0 35.0 25.0 26.3 35.0 34.0 34.0 31 22.0 21.0 25.0 26.0 35.0 25. 29.0 3.5.0 34.0 34.0 Noy. 7 25.0 24.0 26.0 28.0 35.0 27.0 36.0 37.5 35.0 35.0 14 25.0 24.0 27.0 28.0 40.0 30.0 40.0 42.5 40.0 40.0 21 27.0 26.0 29.0 30.0 45.0 32.0 40.0 45.0 45.0 45.0 28 27.0 26.0 29.0 30.0 55.0 32.0 40.0 4.5.0 50.0 50.0 Dee. 5 27.0 26.0 29.0 30.0 60.0 40.0 . 42. 50.0 55.0 55.0 12 30.0 26.0 29.0 30.0 60.0 55.0 47.0 55.0 60.0 60.0 19 35.0 26.0 29.0 30.0 65.0 55.0 47.0 55.0 65.0 65.0 24 35.0 35.0 30.0 35.0 65.0 55.0 47.0 55.0 65.0 65,0 W 1915. Jan. 2 40.0 40.0 35.0 35.0 60.0 55.0 47.0 50.0 65.0 65.0 9 40.0 40 40.0 40.0 65.0 60.0 52.5 5.5.0 70.0 70.0 16 40.0 40 40.0 40.0 70.0 60.0 100.0 55.0 70.0 70.0 23 40.0 40 40.0 40.0 70.0 60.0 100.0 55.0 70.0 70.0 30 40.0 40.0 40.0 40.0 70.0 60.0 75.0 55.0 75.0 75.0 Feb. 6 40.0 40 40.0 40.0 70.0 60.0 75.0 5.5.0 75.0 75.0 13 40.0 40 40.0 40.0 75.0 70.0 75.0 5.5.0 75.0 75.0 20 40.0 40.0 40.0 40.0 75.0 70.0 75.0 55.0 75.0 75.0 27 40.0 40.0 40.0 40.0 75.0 70.0 75.0 55.0 75.0 75.0 Mar. 6 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 75.0 85.0 75.0 70.0 70.0 80.0 63.0 63.0 75.0 60.0 6.5.0 75.0 75.0 75.0 75.0 75.0 13 75.0 20 46.'6' 75.0 27 40.0 40.0 40.0 40.0 75.0 80.0 63.0 60.0 75.0 75.0 Apr. 3 45.0 45.0 45.0 45.0 75.0 80.0 63.0 60.0 75.0 75.0 10 45.0 45.0 45.0 45.0 75.0 80.0 63.0 60.0 75.0 75.0 17 45.0 45.0 40.0 45.0 75.0 80.0 58.0 55.0 7.5.0 75.0 24 45.0 40.0 40.0 45.0 7.5.0 80.0 58.0 50.0 75.0 75.0 May 1 45.0 40.0 45.0 45.0 75.0 80.0 58.0 50.0 75.0 75r0 8 45.0 40.0 45.0 45.0 75.0 80.0 58.0 50.0 75.0 75.0 15 50.0 50.0 45.0 45.0 60.0 75.0 58.0 50.0 75.0 75.0 22 45 50.0 40.0 45.0 45.0 45.0 60.0 60.0 65.0 6.5.0 58.0 58.0 50.0 45.0 75.0 75.0 75.0 29 '"'so.'o' 75.0 June 5 50.0 45.0 50.0 45.0 60.0 65.0 50.0 42.0 75.0 75.0 12 50.0 45.0 50.0 45.0 55.0 65.0 50.0 42.0 75.0 75.0 19 45.0 45.0 5a 45.0 55.0 50.0 50.0 42.0 75.0 75.0 26 4.5.0 45.0 50.0 45.0 5.5.0 50.0 50.0 45.0 75.0 75.0 July 2 45.0 40.0 50.0 45.0 50.0 50.0 50.0 45.0 75.0 75.0 10 45.0 40.0 50.0 4.5.0 50.0 50.0 50.0 45.0 75.0 75.0 17 45.0 40.0 50.0 45.0 50.0 50.0 50.0 45.0 75.0 75.0 24 45.0 4.5.0 50.0 45.0 50.0 50.0 55.0 45.0 68.0 68.0 31 45.0 45.0 50.0 45.0 50.0 50.0 55.0 45.0 68.0 68 Aug. 7 45.0 4.5.0 50.0 45.0 50.0 50.0 5.5.0 4,5.0 68.0 68.0 14 45.0 45.0 50.0 4.5.0 60.0 50.0 6.5.0 50.0 65.0 65.0 21 50.0 4.5.0 55. 50.0 70.0 60.0 65.0 55.0 65.0 65 28 50.0 45.0 .55.0 60.0 70.0 60.0 65.0 60.0 65.0 65.0 Sept. 4 50.0 4.5.0 55.0 55.0 70.0 60.0 65.0 6.5.0 65.0 65 11 50.0 45.0 55.0 55.0 70.0 60.0 65.0 6.5.0 65.0 65.0 18 50.0 45.0 55.0 55.0 70.0 60.0 65.0 65.0 65.0 65.0 25 60.0 55.0 60.0 60.0 70.0 60.0 70.0 65.0 70.0 70.0 Oct. 2 65.0 65.0 6.5.0 6.5.0 75.0 6.5.0 80.0 70.0 75.0 75.0 9 70.0 65.0 70.0 70.0 75.0 70.0 90.0 70.0 80.0 80.0 16 70.0 65.0 70.0 70.0 75.0 70.0 90.0 80.0 80.0 80.0 23 7.5.0 70.0 70.0 70.0 75.0 70.0 90.0 80.0 80.0 80.0 30 75.0 70.0 70.0 70.0 75.0 70.0 100.0 80.0 80.0 80.0 Nov. 5 75.0 70.0 75.0 7.5.0 80.0 70.0 100.0 90.0 80.0 80.0 13 75.0 75.0 7.5.0 75.0 80.0 70.0 100.0 90.0 80.0 80.0 20 80.0 7.5.0 75.0 75.0 85.0 90.0 100.0 100.0 90.0 90.0 27 80.0 75.0 75.0 75.0 85.0 90.0 100.0 100.0 90.0 90.0 Owing to conditions abroad, no rates are quoted on freight of any kind to any European ports. SHIPPING BOARD, NAV.'^iL AUXILIARY, AND MERCHANT MARINE. 781 Ocean freight rates from New York to European ports — Continued. SACK FLOUR, PER 100 POUNDS— Continued. British ports. Danish port, Dutch port. French ports. Italian ports. Date London. Liver- pool. Glas- gow. Hull. Copen- hagen. Rotter- dam. Havre. Mar- seille. Genoa. Naples. 1915. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Dec. 4 80.0 75.0 75.0 75.0 100.0 100.0 100.0 100.0 100.0 100.0 11 80.0 75.0 75.0 75.0 100.0 100.0 110.0 120.0 110.0 110.0 18 80.0 80.0 7.5.0 75.0 100.0 100.0 110.0 120.0 110.0 110.0 24 90.0 80.0 75.0 75.0 110. C 100.0 110.0 120.0 110.0 110.0 31 90.0 85.0 80.0 80.0 110.0 100.0 120.0 120.0 120.0 120.0 1916. Jan. 8 90.0 85.0 81.0 80.0 110.0 100.0 120.0 120.0 120.0 120.0 15 90.0 85.0 81.0 80.0 110.0 100.0 125.0 125. 125.0 125.0 22 90.0 90.0 85.0 90.0 115.0 110.0 13.5.0 l.'iS. 135.0 13.5.0 29 90.0 90.0 90.0 90.0 115.0 110.0 135.0 135.0 150.0 1.50.0 Feb. 5 90.0 90.0 90.0 100.0 115.0 110.0 13.5.0 13.5.0 150.0 1.50.0 11 90.0 90.0 90.0 100.0 115.0 110.0 135.0 135.0 150.0 1.50.0 19 100.0 90.0 90.0 100.0 125.0 140.0 150. 150.0 200.0 200.0 26 100.0 90.0 95.0 100.0 125.0 140.0 I.tO.O 1.50. 175.0 175.0 Mar. 4 100.0 100.0 95.0 100.0 125.0 140.0 150.0 150.0 175.0 175.0 11 100.0 100.0 100.0 100.0 140.0 140.0 150.0 150.0 175.0 175.0 PROVISIONS, PER 100 POUNDS. 1914. Jan. 3 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 10 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 17 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 24 24.4 21.7 24.4 21.7 33.9 28. 30.0 32.6 32.6 32.6 31 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 Feb. 7 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 14 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 21 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 28 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 Mar. 7 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 14 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 21 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 28 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 Apr. 4 21.4 2L7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 U 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 18 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 25 24.4 21.7 24.4 21.7 3.3.9 28.0 30.0 32.6 32.6 32.6 May 2 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 9 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 16 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 23 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 29 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 June 6 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 13 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 20 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 27 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 July 3 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 11 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 18 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 25 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 Aug. 1 18 115 24.4 21.7 24.4 21.7 33.9 28.0 30.0 32.6 32.6 32.6 122 129 Sept. 5 24."4' 2i.'7' ■■■■-■- '""2i.'7' '"""33.'9' ""'28.'6' ""zb'.o '"'si'e' '32.'6' 32."6 12 32.6 32.6 32.6 32.6 35.3 35.3 32.6 32.6 50.2 50.2 38.0 38.0 40.0 40.0 43.5 43.5 43.5 19 '""38."6' 43.5 26 32.6 32.6 35.3 32.6 50.2 38.0 40.0 38.0 43.5 43.5 Oct. 3 32.6 32.6 35.3 32.6 50.2 38.0 40.0 38.0 43.5 43.5 10 32.6 32.6 35.3 32.6 50.2 38.0 40.0 38.0 43.5 43.5 17 32.6 32.6 35.3 32.6 50.2 38.0 40.0 38.0 43.5 43.6 24 32.6 32.6 35.3 32.6 50.2 ■38.0 40.0 38.0 43.5 43.5 31 32.6 32.6 35.3 32.6 50.2 38.0 40.0 38.0 43.5 43^ Nov. 7 32.6 32.6 35.3 32.6 50.2 38.0 40.0 38.0 43.5 43.5 14 32.6 32.6 35.3 32.6 50.2 38.0 40.0 38.0 43.5 43.5 21 32.6 32.6 35.3 32.6 50.2 38.0 40.0 43.5 54.3 54.3 28 32.6 32.6 35.3 32.6 50.2 38.0 40.0 43.5 54.3 54.3 Dec. 5 32.6 32.6 35.3 32.6 50.2 38.0 40.0 43.5 54.3 54.3 12 32.6 32.6 38.0 32.6 50.2 38.0 50.0 65.2 65.2 65.2 19 32.6 32.6 38.0 32.6 50.2 38.0 60.0 65.2 65.2 65.2 24 38.0 38.0 40.7 38.0 108.6 50.0 50.0 70.6 86.9 86.9 • Owing to conditions abroad, no rates aie quoted on freight of any kind to any European ports. 32910—16 50 782 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE, Ocean freight rates from New Yorh to European ports — Continued. PROVISIONS, PET! 100 POUNDS— Continued. British ports. Danish port. Dutch port, French ports. Italian ports. Date. London. Liver- pool. Glas- gow. Hull. Copen- hagen. Rotter- dam. Havre. Mar- seille. Genoa. Naples. 1915. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Cents. Jan. 2 38.0 38.0 40.7 38.0 108.6 60.0 60.0 70.6 108.6 108.6 9 38.0 38.0 40.7 38.0 108.6 60.0 60.0 70.6 108.6 108. 6 16 .38.0 38.0 40.7 .38.0 10S.6 60.0 60.0 70.6 108.6 108.6 23 38.0 38.0 43.5 43.5 162. 9 7.5.0 85.0 70.6 108.6 108.6 30 38.0 38.0 43.5 43.5 162.9 75.0 8.5.0 81.5 108.6 108. 6 Fell. 6 48.9 48.9 48.9 43. 5 162.9 125.0 85.0 81.5 .08.6 108.6 13 48.9 48.9 48.9 43.5 162.9 125. 125.0 81.5 108.6 108.6 20 48.9 54.3 48.9 43.5 162.9 125.0 125.0 81.5 108.6 108. e 27 65.2 65. 2 48.9 43.5 162.9 12.5.0 125.0 81.5 108.6 108.6 Mar. 6 65.2 65.2 48.9 43.5 162.9 125.0 125.0 81.5 108.6 108.6 13 65.2 65.2 65.2 54.3 162.9 150.0 125.0 81.5 108.6 108.6 20 65.2 65.2 65.2 65.2 195.5 175.0 125.0 86.9 108.6 108.6 27 65.2 65.2 65.2 65.2 195.5 175.0 125.0 108.6 108.6 108.6 Apr. 3 65.2 65.2 65.2 65.2 195.5 175.0 12.5.0 108.6 108.6 108.6 10 65.2 65.2 65.2 65.2 195.5 175.0 125.0 lOS. 6 108.6 108.6 17 65.2 65.2 65.2 65.2 195.5 175.0 125.0 108. 6 108.6 108.6 24 65.2 65.2 65.2 65.2 195.5 175.0 125.0 108.6 108.6 108. 6 May 1 65.2 65.2 65.2 65.2 195.5 175.0 125.0 108.6 108.6 108.6 8 65.2 65.2 65.2 6.5.2 195.5 175.0 12.5.0 108.6 10.S.6 108.6 15 65.2 65.2 65.2 65.2 195.5 175.0 125.0 108.6 108.6 108.6 22 65.2 65.2 65.2 65.2 13.5.8 100.0 125.0 198.6 108.6 108.6 29 65.2 65.2 65.2 65.2 135.8 100.0 125.0 108.6 10.S.6 108.6 June 5 65.2 65.2 65.2 65.2 1.3.5.8 100.0 "125.0 108.6 108.6 108.6 12 65.2 65.2 6.5.2 65.2 135.8 100.0 125.0 108.6 108.6 lOS. 6 19 65.2 65.2 65.2 6.5.2 135.8 100.0 125.0 108.6 108.6 108.6 26 65.2 65.2 65.2 65.2 135. 8 100.0 125.0 108.6 108.6 108. 6 July 2 65.2 65.2 65.2 65.2 13.5.8 100.0 125.0 108.6 108.6 108.6 10 65.2 65.2 65.2 65.2 135.8 100.0 125.0 108.6 108. 6 108.6 17 65.2 65.2 65.2 65.2 135.8 100.0 125.0 108.6 108.6 108.6 24 65.2 65.2 65.2 65.2 135.8 100.0 125.0 108.6 108.6 108.6 31 65.2 65.2 65.2 65.2 135.8 80.0 125.0 108.6 108.6 108.6 Aug. 7 65.2 65.2 65.2 65.2 124.9 80.0 125.0 108.6 108.6 108.6 14 65.2 65.2 65.2 6,5.2 124.9 90.0 125.0 108.6 108.6 108.6 21 65.2 65.2 65.2 65.2 124.9 90.0 125.0 108.6 108.6 108.6 28 65.2 65.2 65.2 6.5.2 124.9 90.0 125.0 108.6 108.6 lOS. 6 Sept. 4 05.2 65.2 6.5.2 65.2 1.50.0 110.0 125.0 89.3 108.6 108.6 11 68.0 68.0 68.0 68.0 158.0 125.0 125.0 89.3 108.6 108.6 18 68.0 68.0 68.0 68.0 158.0 125.0 125.0 89.3 108.6 108.6 25 80.0 SO.O 80.0 80.0 150.0 125.0 125.0 89.3 112.5 112.5 Oct. 2 80.0 80.0 80.0 80.0 150.0 125.0 125.0 89.3 112.5 112.5 9 90.0 100.0 80.0 80.0 150.0 125.0 125.0 89.3 112.5 112.5 16 90.0 90.0 80.0 80.0 17.5.0 125.0 126.0 111.6 112.5 112.5 23 90.0 90.0 90.0 80.0 175.0 125.0 125.0 111.6 112.5 112.5 30 90.0 90.0 90.0 SO.C 175.0 125.0 125.0 111.6 112.5 112.5 Noy. 5 90.0 90.0 90.0 80 175.0 125.0 125.0 111.6 112.5 112.5 13 90.0 90.0 90.0 90.0 190.0 125.0 125.0 133. 9 112.5 112.5 20 90.0 90.0 90.0 90.0 190.0 150.0 125.0 133. 9 112.5 112.5 27 90.0 90.0 90.0 90.0 190.0 150.0 125.0 133.9 112.5 112.5 Dec. 4 90.0 90.0 90.0 90.0 190.0 150.0 12.5.0 133.9 112.5 112.5 11 90.0 90.0 90.0 90.0 190.0 150.0 125.0 13.3.9 112.5 112.5 18 90.0 90.0 90.0 90.0 190.0 150.0 125.0 133.9 112.5 112.5 24 90.0 90.0 90.0 90.0 190.0 150.0 125.0 133.9 112.5 112.5 31 100.0 100.0 100.0 90.0 200.0 175.0 125.0 1.56.3 125.0 125.0 1916. Jan. 8 125.0 12.5.0 125.0 125.0 225.0 175.0 200.0 200.0 150.0 1.50.0 15 125.0 125.0 125.0 125. 225.0 175.0 200.0 200.0 150.0 150.0 22 125.0 125.0 125.0 125.0 225.0 175.0 200.0 200.0 150.0 150.0 29 125.0 125.0 12.5.0 125. 225.0 175.0 200.0 200.0 150.0 150.0 Feb. 5 125.0 125.0 125.0 125.0 22,5.0 175.0 200.0 200.0 150.0 150.0 11 125.0 125.0 125.0 125.0 225. 175. 200.0 250.0 175.0 175.0 19 125.0 125.0 125.0 125.0 225.0 175.0 200.0 250.0 17.5.0 175.0 26 125.0 125.0 125.0 125. 22.'^. 175.0 200.0 250.0 17.5.0 175.0 Mar. 4 125.0 125.0 125.0 125.0 225.0 175.0 200.0 250.0 175.0 175.0 11 125.0 125.0 125.0 125.0 225.0 175.0 200.0 250.0 175.0 175.0 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. 783 Ocean freight rates from New Yoric to European ports — Continued. COTTON, COMPRESSED, PER 100 POUNDS. Date. British port, Liver- pool. Danish port, Copen- hagen. Dutch port, Rotter- dam. French port, Havre. Italian ports. Genoa. Naples. Jan. 3 Jan. 10... Jan. 17... Jan. 24... Jan. 31... Feb. 7... Feb. 14.. Feb. 21.- Feb. 28. . Mar. 7. . . Mar. 14. . Mar. 21. . Mar. 28.. Apr. 4. . . Apr. U.. Apr. 18. . Apr. 25.. May 2.... May 9 May 16... May 23... May 29... June 6 . . . June 13. . June 20. . June 27 . . Julys.... July 11... July 18... Aug. 1 . . . Aug. 8'.. Aug. 15 1. Aug. 22 > . Aug. 29>. Sept. 5... Sept. 12.. Sept. 19.. Sept. 26.. Oct. 3.... Oct. 10... Oct. 17... Oct. 24... Oct. 31... Nov. 7... Nov. 14.. Nov. 21 . . Nov. 28.. Dec. 5.... Dec. 12... Dec. 19... Dec. 24... 1914. Cents 28. 28. 28. 25 25. 25. 25. 25. 25. 25. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. 20. Cents. 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.^0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 Cents. 35.0 35.0 35.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 Cents. 30.0 30.0 30..0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 Cents. 40.0 40.0 40.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 Cents. 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 Jan. 2... Jan.O... Jan. 16.. Jan. 23.. Jan.?0.. Feb. 6.. Feb. 13. Feb. :0. Feb. 27. Mar. 6.. Mar. 13. Mar. 20. Mar. 27. Apr. 3.. Apr. 10. Apr. 17. Apr. 24. May 1... Mays... 1915. 40.0 25.0 75.0 75.0 100.0 100.0 100.0 100.0 100.0 125.0 125.0 125.0 125.0 125.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 100.0 100.0 120.0 120.0 120.0 120.0 120.0 200.0 200.0 2.=i0. 250.0 250.0 250.0 225.0 225.0 225. 225.0 225. 225.0 225.0 225.0 225.0 225. 225.0 225.0 21.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 60.0 60.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 200.0 200.0 200. 200.0 200.0 200.0 200.0 200.0 200.0 200.0 300.0 300.0 300. 300.0 300.0 300.0 300. 22.5 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 80.0 80.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 125.0 125. 125.0 125.0 125.0 125.0 125.0 125. 125.0 125.0 1.50. 1.50. 150.0 150.0 150.0 150.0 150.0 30.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 80.0 80.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 » Owing to conditions abroad, no rates are quoted on freight of any kind to any European ports. 784 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Ocean freight rates from New York to European -ports — Continued. COTTON, COMPRESSED, PER 100 POUNDS— Continued. Date. 1915. May 15 May22 May29 , JuiieS June 12 June 19 June 26 July 2 July 10 July 17 Jul V 24 July .31 Aug.7 Aug. 14 Aug. 21 Auc. 2S Sept. 4 Sept. 11 Sept. 18 Sept. 25 Oct. 2 0(;t. 9 Oct. 16 Oct. 2.1 Oct. 30 Nov. 5 Nov. 12 Nov. 20 Nov.27 Dec.4 Dec. 11 Dec. 18 Dec. 24 Dec. 31 1916. Jan.8 Jan. 15 Jan. 22 Jan. 29 feb.5 Feb. 11 Feb. 19 Feb. 26 Mar. 4 Mar. 11 British port, Liver- pool. Cents. 200.0 12.x 125.0 125. 125.0 100.0 100. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 125.0 125.0 125. 125.0 125. 125.0 125.0 125.0 125. 125.0 125.0 125.0 125.0 150.0 150.0 150.0 200.0 225.0 225.0 250.0 250.0 250.0 250.0 250.0 250.0 250 275 275.0 Cents. 250.0 209.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200. 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 209.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 225.0 225.0 225.0 225.0 225. 225.0 275.0 275.0 27.5.0 275.0 275.0 275. 275. 275.0 275.0 300.0 300.0 Dutch port, Rotter- dam. French port, Havre. Italian ports. Genoa. Cents. 225.0 200.0 209.0 200.0 200.0 200.0 200.0 130.0 130. 130.0 130. 130.0 130.0 130.0 150.0 150.0 160.0 160.0 ICO.O 160.0 160.0 160.0 160. 16C. 160.0 160.0 160.0 225.0 225.0 225.0 225. 225.0 225.0 250.0 2.50.0 250.0 250.0 2.V).0 250.0 250.0 250.0 250.0 300.0 300.0 Cents. 300.0 150.0 150.0 150.0 150.0 150.0 1.50. 125.0 125.0 125.0 125.0 125.0 150.0 150.0 1,50.0 150.0 150. 150.0 1.50.0 150.0 150.0 150.0 150. 150.0 1.50.0 1.50.0 150.0 150.0 150.0 150.0 150.0 15(J.O 150.0 150.0 150.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 Naples. Cents. 150.0 125. 125. 125.0 125.0 125. 125.0 100.0 100.0 100.0 100.0 100.0 125. 125.0 135.0 135. 1.V5. 135.0 135.0 13.5.0 135.0 I 135.0 ! 135.0 ! 135.0 ! Ub \ 135.0 I 135.0 i 135.0 . 135.0 135.0 I 135.0 I 135.0 : 135.0 135.0 I 135.0 135.0 135. C 135.0 135. 135.0 1.35.0 13.5.0 135.0 135.0 Cents. 100.0 225.0 225.0 22.5.0 225.0 125.0 125.0 160.0 100 160.0 160.0 160.0 160.0 160.0 160.0 160 160.0 160.0 160.0 160.0 160.0 160.0 160.0 160.0 160 160.0 160.0 160.0 160.0 160.0 160 160.0 160. 160.0 160.0 160.0 160.0 160.0 160.0 160. U 160 160.0 160 160.0 MEASUREMENT GOODS, PER TON OR 40 CUBIC FEET. British ports. Danish port, Cfopen- hagen. Dutch port, Rotter- dam. French ports. Italian ports. Date. London. Liver- pool. Glas- gow. Hull. Havre. Mar- s««iUe. Genoa. Naples. 1914. Dollars. Dollar-1. Dollars. Dollars. Dollars. DoUar.i. Dollars. Dollars. Dollars. Dollars. Jan. 3 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 10 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 17 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 24 4.25 4.25 - 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 31 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 Feb. 7 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 14 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 21 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 28 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 Mar. 7 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 14 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 21 4.25 4.25 4.25 3.65 5.17 4.00 1 5.00 4.86 1 6.08 6.08 28 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 j 6.08 6.08 Apr. 11 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 1 6.08 «.08 18 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 25 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 «.0i SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 785 Ocean freight rates from New York to European ports — Continued. MEASUREMENT GOODS, PER TON OR 40 CUBIC FEET— Continued. British ports. Danish port, Dutch port, French ports. Italian ports. Date. London. Liver- pool. Glas- gow. Hull. Copen- hagen. Rotter- dam. Ha\Te. Mar- seille. Genoa. Naples. 1914. Dollars. Dollars. Dollars. Dollar.'^. Dollars. Dollars. Dollars. Dollars. Dollars. Dollars. May 2 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 9 4.25 4.25 1.25 3. 65 5.17 4.00 5.00 4.86 6.08 6.08 16 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 23 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.S6 6.08 e.08 29 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 June 6 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 13 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.S6 6.0s 6. 08 20 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 27 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 July 3 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.S6 6.08 6.08 11 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 18 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 Aug. 1 18 115 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 122 129 Sept. 5 4.' 25' 4.25' ""■■4."25' """.3." 65' ""h'.'v '"'4.' 66' '""5." 66' '"'4.' 86' ""6.'68' 6.' 68 12 4.25 4.25 4.25 3.65 5.17 4.00 5.00 4.86 6.08 6.08 19 4.86 4.86 6.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 26 4. 86 4.86 6.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 Oct. 3 4.86 4.86 6.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 10 4.86 4.86 6.08 4.86 U.25 6.00 6.00 8.51 9.73 9.73 17 4. 86 4.86 6.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 24 4.86 4.86 6.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 31 4.86 4.86 e.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 Nov. 7 4.86 4.86 6.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 14 4.86 4.86 6.08 4.86 11.25 6.00 6.00 8.51 9.73 9.73 21 4.86 4.86 e.08 4.86 11.25 6.00 10.00 8.51 9.73 9.73 28 4.86 4.86 6.08 4.86 11.25 6.00 10.00 8.51 9.73 9.73 Dec. 5 4.86 4.86 6.08 4.86 11.25 6.00 10.00 8.51 9.73 9.73 12 7.30 7.30 8.51 6.08 14.60 6.00 10.00 12.17 12.17 12.17 19 7.30 7.30 8.51 6.08 14.60 6.00 10.00 12.17 12.17 12.17 24 7.30 7.30 8.51 6.08 14.60 8.00 12.00 12.17 17.03 17.03 1915. Jan. 2 7.30 7.30 8.57 6.08 14.60 8.00 12.00 12.17 24.33 24. .33 9 7.30 7.30 8.51 6.08 14.60 8.00 12.00 12.17 24.33 24.33 16 7.30 7.30 8.51 6.08 17.03 8.00 12.00 12.17 24.33 24.33 23 9.73 9.73 8.51 6.08 17.03 12.00 20.00 1.5. 81 2-i.33 24.33 30 9.73 9.73 8.51 6.08 17.03 12.00 20.00 18.24 24.33 24.33 Feb. 6 9.73 9.73 8.51 6.08 17.03 12.00 20.00 18.24 24. .33 24.33 13 9.73 9.73 8.51 6.08 17.03 12.00 20.00 18.24 24.33 24.33 20 9.73 9.73 8.51 6.08 17.03 12.00 20.00 1.8.24 24.33 24. .33 27 9.73 9.73 8.51 6.08 17.03 12.00 20.00 18.24 24. 33 24.33 Mar. 6 9.73 9.73 8.51 6.08 17.03 12.00 20.00 18.24 24.33 24.33 13 9.73 9.73 9.73 6.08 19.47 12.00 20.00 1.8. 24 24.33 24.33 20 24.33 24.33 9.73 9.73 19.47 12.00 25.00 19.47 24. 33 24.33 27 24.33 24.33 9.73 9.73 19.47 12.00 2.V00 19.47 24.33 24.33 Apr. 3 10 24.33 24. 33 9.73 9.73 19.47 12.00 25.00 19.47 24. .33 24.33 24.33 24.33 9.73 9.73 19.47 12.00 25.00 19.47 24.33 24.33 17 24.33 24.33 9.73 9.73 19.47 12.00 25.00 19.47 24.33 24.33 24 24.33 24.33 9.73 9.73 19.47 12.00 25.00 19.47 24.33 24.33 May 1 g 24.33 24. 33 9.73 9.73 19.47 12.00 25.00 19.47 24.33 24.33 24.33 24. 33 9.73 9.73 19.47 12.00 25.00 19.47 19.47 24.33 16 24. 33 24.33 9.73 9.73 19,47 12.00 25.00 19.47 19.47 19.47 22 14.60 24. 33 12.17 19.47 16.00 20.00 . 18.24 19.47 19.47 29 14. (iO 14.60 14.60 14. (iO 14.60 14.60 14.60 14.60 14.60 14.60 12.17 12.17 12.17 12.17 12.17 19.47 19.47 19.47 19.47 10.47 16.00 16.00 16.00 16.00 16.00 20.00 20.00 20.00 20.00 20.00 18.24 18.24 18.24 18.24 18.24 19.47 19.47 19.47 19.47 19.47 19.47 June 5 12 19.47 19.47 19 19.47 26 19.47 July 2 10 14.60 14.60 14.60 14.60 14.60 14.60 14.60 14.60 14.60 14.60 14. 60 14.60 14.60 14.60 12.17 12.17 12.17 12.17 12.17 12.17 12.17 19.47 19.47 19.47 19.47 19.47 19.47 19. 47 16.00 16.00 16.00 16.00 16.00 16.00 16.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 18.24 18.24 18.24 18.24 18.24 18.24 IS. 24 19.47 19.47 19.47 19.47 19.47 19.47 19.47 19.47 19.47 17 19.47 24 19.47 31 19.47 Aug. 7 14 19.47 19.47 21 14.60 14.60 14.60 14.60 14.fiO 1 12. 80 14.60 14.60 14.fi0 14.60 14.60 12.80 12.17 12.17 12. 17 12.17 12.17 12.80 19.47 19.47 19.47 [ 19. 47 19. 47 20. 00 16.00 16.00 16.00 16.00 16.00 18.00 20.00 20.00 20. 00 20,00 20.00 20.00 18. 24 18.24 18. 24 18.24 18.24 20.00 19.47 19.47 19.47 19.47 20.00 20.00 19.47 28 19.47 Sept. 4 11 19.47 19.47 18 19.47 25 20.00 I Owing to conditions abroad, no rates are quoted on freight of any kind to any European port. 786 SHIPPING BOARD, XAVAL AUXiLlAKV, AND MERCHANT MARINE. Ocean freight rates from New York to European ports — Continued. MEASUREMENT GOODS, PER TON OR 40 CUBIC FEET— Continued. British ports. Danish port, Copen- hagen. Dutch port, Rotter- dam. French ports. Italian ports. Date. London. Liver- pool. Glas- gow. Dollars. Hull. Havre. Mar- seille. Genoa. Naples. 1916. Oct 2 Dollars. 12.80 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 25.20 25.20 25.20 25.20 25.20 25.20 25.20 25.20 25.20 25.20 25.20 Dollars. 12.80 15.20 15.20 18.80 18.80 18.80 18.80 18.80 18.80 18.80 18.80 18.80 18.80 25.20 25.20 25.20 25.20 «5.20 25.20 25. 20 25.20 25.20 25.20 25.20 Dollars. 12.80 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 15.20 ' 15.20 15.20 18.80 18.80 18.80 18.80 18.80 18.80 18.80 18.80 18.80 18.80 18.80 Dollars. 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20. 00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 25.20 25.20 25.20 30.00 30.00 Dollars. 18.00 18.00 18.00 18.00 18.00 18.00 18.00 18. 00 18.00 18.00 18.00 18.00 18. 00 18.00 18.00 18.00 18.00 18.00 18.00 20.00 20.00 20.00 20.00 20.00 Dollars. 20.00 20.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25. 00 25.00 25.00 25.00 25.00 25.00 25. 00 25.00 25.00 25.00 25.00 25.00 25.00 35. 00 35.00 Dollars. 20.00 20.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 35.00 35.00 35.00 35.00 40.00 40.00 50.00 50.00 50.00 50.00 50.00 Dollars. 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 30.00 30.00 30.00 30.00 30.00 Dollars. 20.00 9 20.00 16 20.00 23 20.00 30 20.00 Nov 5 20.00 13 20.00 20 20.00 27 20.00 Dec. 4 20.00 11 20.00 18 20.00 24 20.00 31 20.00 1916 Jan 8 20.00 15 20.00 22 20.00 29 20.00 Feb. 5 20.00 11 19 30. oe 30.00 26 30.00 Mar. 4 30.00 11 30.00 CHARTER RATES. An excellent account of the course of charter rates from American to European ?ort3 during the past two years is contained in the following extract from the New ork Journal of Commerce of March 4,1916: Charter Rates Still Advancing- -FuLL Cargo Quotations Have Made High Records. 8RAIN FIXTURES ON PRINCIPAL ROUTES HAVE INCREASED FROM EIGHT TO TWELVE TIMES OVER THE NORMAL — OTHER MARKETS HAVE HAD SIMILAR EXPERIENCE — LAW OF SUPPLY AND DEMAND WORKING RIGIDLY — ^NEUTRAL OWNERS ENJOYING FULL ADVANTAGE WITH THEIR AVAILABLE " FREE " TONNAGE. Steamer chartering activities in the American markets being restricted solely because of the acute scarcity of ocean tonnage, sail tonnage likewise limited, rates strong and continuing on an upward basis with freight offering freely, exporters have been keenly interested in the progress of charter rates during the past 18 months. An investigation into the course of the rates prevailing in the local steamer char- tering market for the past year and a half, taking re])resentative grain charters between the principal ports of traffic as the index shows that charter rates on steamers are now at levels ranging all the way from eight to twelve times what they were in June, 1914, two months before the war broke out. RATES DEPENDING ON WHAT IS ASKED. Quotations on grain fixtures for the past six months or more have been so change- able, new rates being stated on practicallj'- each steamer that has been fixed, as to make it practically impossible to say just what the current market rate is. Charters, have been fixed recently at rates which depended mainly on what the agents or owners asked for their individual steamers. Few "free" steamers have been available for grain cargoes out of this and other North Atlantic ports in recent months. It is estimated that approximately 80 per cent of the tonnage engaged in grain-carrying trips out of North Atlantic ports are working under requisition orders of the British, French, or other European Govern- ments. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 787 _ Portland (Me.) and Boston during the past three months have seldom had less than six or eight requisitioned steamers loading grain at docks within their harbors. Most of these vessels have been taking out the Canadian grain which was requisitioned some time ago, the Montreal season having closed, shipments being forwarded from Canada by rail to the American ports. RATES QUADRUPLED IN TEN MONTHS OF WAR. Two months before the war in Europe began (June, 1914), steamers were being fixed in the local market for full cargoes of grain between the so-called northern range porta of the Atlantic coast and United Kingdom ports at rates generally in the neighborhood of 2 shillings 3 pence per (quarter of 8 bushels. To the French Atlantic ports the rate was then about 2 sliilling 9 pence; to French Mediterranean ports, about 2 shil- lings 10 pence; to west Italy ports, the same. From Gulf ports to the United King- dom grain cargoes were being sent forward freely for 2 shillings 3 pence, while to Mediterranean ports from the Gulf, rates ranged anywhere from 2 shillings 10^ pence to 3 shillings 3 pence. One year after June, 1914, or 10 months jifter the war started, the full cargo grain- charter rates on steamers from North Atlantic ports of the United States had prac- tically quadrupled, reaching the level of 8 sliillingr? IJ pence (in June, 1915), and all the other ports realized similar advances. The greatest proportionate advance, however, ensued with the months following the summer of 1915, continuing as the shortage of steamers became more pronounced. In January this year full cargo grain-steamer charter rates were at the level of about 15 s'lilling-i 3 pence per quarter of 8 bushels, between North Atlantic ports and the United Kingdom; to French Atlantic ports they had advanced from 9 shillings 6 pence in June, 1915, to the level of 16 shillings, and from Gulf ports to Marseilles they had climbed from 10 shillings to 24 shillings. LAW OF SUPPLY AND DEMAND WORKING RIGIDLY. Despite the fact that the grain-charter rates had doubled within the space of seven months from the summer to the close of 1915, there has been no indication as yet that they have reached the top mark. With the British Government enforcing a license system for each voyage of all British ships in an effort to overcome the shortage in the freight space for the carriage of foodstuffs, and practically every other one of the allied Governments in Europe enforcing similar restrictions on their merchant steam- ers, the shortage of tonnage for private charters has lately become a matter of serious consideration by shippers generally. The law of supply and demand is working rigidly in the charter market these days, both agents and owners of available "free" tonnage for grain and other cargoes asking rates in full realization of the fact. From the beginning of this year down to the last few days, full cargo grain-charter rates on steamers for voyages between North At- lantic ports and the United Kingdom have further advanced from 15 shillings 3 pence to 17 shillings 9 pence; from northern range ports to the French Atlantic they have increased from ]6 shillings to 19 sliilUngs 3 pence; northern range to Marseilles from 23 to 24 shillings, with relative advances in the rates out of Gulf ports to the United Kingdom and the Mediterranean. How full cargo grain-charter rates for steamers have steadily advanced as the short- age of tonnage caused by the war has grown more and more acute and the comparative rates which prevailed two months before hostilities commenced may be seen in the following table: How grain charter rates have increased since the outbreak of the war. [Full cargo, steamers, per quarter of 8 bushels.] March, 1916. s. d. North Atlantic to United Kingdom 2 3 8 li 15 3 17 9 North Atlantic to French Atlantic 2 9 9 6 16 19 3 North Atlantic to JJar^eille 2 10 8 1 23 24 North Atlantic to we-t Italv 2 10 8 2 22 6 24 Gulf ports to United Kingdom 2 3 9 16 3 19 6 Montreal to Mediterranean Gulf ports to Mar-eille Gulf ports to Mediterranean. . . Jime, June, January, 1914. 1915. 1916. s. d. s. d. 6. d. 2 3 8 li 15 3 2 9 9 6 16 2 10 8 1 23 2 10 8 2 22 6 2 3 9 16 3 2 9 8 2 22 2 3 3 10 24 2 m 8 4 22 6 25 6 788 SHIPPING BOAKD, NAVAL AUXILIAKr, AND MERCHANT MARINE. "'kMiile the table given above reflects only the advances which have taken place in the steamer charter rates for full cargoes of grain, shipping men regard the grain char- ters as the best index of the progress of charier rates. An examination of the petro- leum, deals, and timber, as well as the miscellaneous full-cargo freight charters in the same periods of time, also shows that conditions in the other chartering activities were not far different. NEUTRALS ENJOYING HIGHEST RATES EVER KNOWN. A fact of striking interest at the present time is the strong advantage which neutral shipowners have been enjoying to the fullest degree for the past ten months orso. This has been especially true in the full-cargo charter markets, ^^^lile their British, French, Italian, and Russian competitors have been compelled to operate under Government orders at rates strictly fixed by those Governments, the neutral owners have been able to go into the market with their "free" tonnage and ask and receive the highest charter rates ever known. Neutral ships having the freedom of the seas, exempt from the disability under which the British tonnage is operating ^ith a tax of 50 per cent of their earnings, their owners have been and are reaping a 'golden harvest from the present exceptional values which their steamers command in ocean traffic. A fair example of the advan- tage which neutrals are enjoying is given in the fact that while British Government Bhipbrokers have been offering 137 shillings 6 pence for charters between the River Plate and the United Kingdom, neutral owners have fixed their vessels for such voyages with wheat cargoes at rates of 152 shillings 6 pence. From the northern range ports of the United States the same conditions prevail to the great benefit of the neutral owners. The British Government's shipbrokers have refused to concede over 15 shillings 6 pence for wheat cargo charters to British tonnage on the Bristol Channel voyage, neutrals have been able to get as high as 19 shillings 6 pence. On time-charter basis for 12 months rates of 32 shillings 6 pence have been bid for neutrals, while the British tonnage rate has been restricted to about 25 shillings. Increase in Ocean Freight Rates from January 1, 1914, to January 1, 1916. [Report prepared by the Boston district office of the Bureau of Foreign and Domestic Commerce.) Department of Commerce, Bureau of Foreign and Domestic Commerce, Boston, February 9, 1916. We received yesterday afternoon the statement of articles and ports, referred to in your letter of February 2, for which you desire freight rates for a period of time. We note that you desire the freight rates the first of each quarter on a number of articles from Boston to London, Liverpool, Copenhagen, Havre, Marseilles, Genoa, Naples, Rio de Janeiro, Valparaiso, Callao; also import rates to Boston from Liverpool, Buenos Aires, Rio de Janeiro, Valparaiso, and Callao; also data as to charter rates and other available pertinent facts connected with the shipping situation. In conducting this investigation I expsct to ask the agents of the steamship lines for the rates desired, also to enlist the aid of commercial organizations (like the N. E. Shoe & Leather Association): also to write direct to a large number of individual firms who export and import the articles stated. If there is anything in this procedure that is not in order, kindly let me know promptly. .... I have to-day called on a good many men in connection with this matter, and to show the trend of this work I list the main ones as follows: Mr. John Smith, of Patterson, Wylde & Co., agents for the Barber Line. This line operates chartered ships only and runs from Buenos Aires and Montexddeo (not touch- ing at Rio) to Boston, whence the ships go to New York for return cargo. No cargo is accepted at Boston and no rates available for shipping to South America. Mr. Smith promised to compile the rates to Boston from Buenos Aires, but states that he has five ships here now unloading and can not promise this material within a week at the earliest. Mr. F. H. Ryan, of A. C. Lombard's Sons, 110 State Street, agent for the Houston Line. This company owns its ships and. runs from Buenos Aires and Montevideo (not touching at Kio) to Boston and thence to New York for return cargo. As a rule they do not accept any freight at Boston, the only exceptions being at rare intervals when they have much unoccupied space. This procedure is so rare that they can not quote any rates at all to South America. Their rates from the Rio Plata to Boston SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 789 axe the same as to New York and will have to be obtained from the latter. However, Mr. Ryan promised to write for these. Mr. F. H. Ryan, of A. C. Lombard's Sors, agents for the Scandinavian-American Line. He promised to furnish the freight rates from Boston to Copenhagen for the articles stated so far as they have been handled by his line. Mr. Charles C. Stewart, agent of the Cunard Line. Mr. Stewart promises to fur- nish as early as possible, though this may be a week, the freight rates from Boston to Liverpool and to London. As to the import rates from Liverpool, he is of the opinion that they do not have all of this on record and is not sure if his company will let him furnish what he has. However, he will take the matter under consideration and furnish same if found advisable. Mr. George E. Dudley, general agent of the Boston c^ Maine Railroad, furnished their printed cards for the periods stated, showing export freight rates on a number of articles to various European ports. These rates are not firm quotations, but show the ruling market prices at the various dates. The cards are furnished for our use and may be kept. Mr. L. H. Peters, foreign freight agert of the New York Central & Hudson River and the Boston & Albany Railroads, furnished similar post cards showing freight rates on various articles at various times to European countries. Cards are from his files and have to be returned, so they are being copied here. The only two lines to Boston from South America are the Barber Line and the Hud- son Line, the Norton Line being discontinued to this port. There are therefore no rates to be obtained from Rio de Janeiro, Valparaiso, or Callao to Boston. There is no line from Boston to South America accepting fa-eight at this port, so no freight rates obtainable here to South America. Kindly let us know if you wish us to obtain railroad rates from Boston to New York, as such rates have to be added to the South American ocean rates from New York on goods shipped from here. There is no line running from Boston to any part of France, and no rates obtainable. The French Government gives a preferential treatment to goods imported in French bottoms, so there are no rates quoted for goods nor any goods for transshipment in England. All goods from this section for France go to New York to be loaded on French boats. W. A. Graham Clark, Commercial Agent, Department op Commerce, Bureau of Foreign and Domestic Commerce, Boston, March 10, 1916. In regard to the ocean freight rate investigation I beg to inclose herewith* some material as follows: (1) Data furnished by Mr. J. M. McLachland of the International Mercantile l\I#rine Co., 84 State Street, Boston, Mass., for the White Star and Leland Lines, as follows: Freight rates from Boston to London. Freight rates from Boston to Genoa. Freight rates from Boston to Naples. Freight rates from Boston to Liverpool. Freight rates from Liverpool to Boston. (2) Data furnished by Mr. Porter, of Furness, Withy & Co., 4 Liberty Square, Boston, Mass., agents for the Warren Line, Furness Line, etc., as follows: Freight rates from Boston to Liverpool. (3) Data furnished by Mr. F. H. Ryan, of A. C. Lombard's Sons, 110 State Street, Boston, Mass., agents for the Scandinavian-American Line and for the Houston Line, as follows: Freight rates from Boston to Copenhagen. Freight rates from Buenos Aires to Boston. (4) Data furnished by Mr. L. H. Peters, foreign freight agent of the New York Cen- tral and Boston & Albany Railroads, as per postcard circulars they issue regularly, as to freight rates from Boston to various points. Letters sent out to a hundred or more private firms produced no results, probably because these firms did not wish to divulge their rates or else had not kept a record of same for the dates wanted. Verv truly, yours, W. A. Graham Clark, Commercial Agent. 790 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Ocean freight rates from Boston to British ports. GRAIN, FLOUR, PROVISIONS, AND APPLES. [Published by Boston & Maine R. R. Co., Foreign Freight Department.] Date. Grain (per bushel). Sack flour (per 100 pounds). Provisions (per 100 pounds). Apples (per Vi arrel). Liver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- pool. don. gow. pool. don. gow. pool. don. gow. pool. don. gow. 1914. Jan. 9 $0,046 $0,051 SO. 051 $0.14 $0.15 $0.17 $0,217 $0,217 $0,244 $0,669 $0,669 $0.73 16 .041 .046 .041 .12 .13 .15 .217 .^44 .244 .669 .669 .73 23 .035 .(M6 .051 .12 .13 .15 .217 .217 .244 .669 .669 .73 30 .035 .041 .051 .12 .13 .15 .217 .217 .244 .669 .069 .73 Feb. 6 .03 .041 .051 .12 .13 .15 .217 .217 .244 .669 .669 .73 13 .03 .041 .051 .12 .13 .15 .217 .217 .244 .669 .669 .73 20 .03 .035 .051 .12 .13 .15 .217 .217 .244 .669 .669 .73 27 .03 .035 .051 .12 .13 .15 .217 .217 .244 .669 .669 .73 Mar. 6 .03 .035 .051 .12 .13 .15 .217 .217 .244 .669 .669 .73 13 .03 .035 .051 .11 .13 .15 .217 .217 .244 .609 .669 .73 20 .03 .035 .051 .11 .12 .15 .217 .217 .244 .669 .669 .73 27 Apr. (1) 10 .03 .03 .051 .11 .12 .14 .217 .217 .244 .669 .669 .73 .03 .03 .041 .11 .12 .14 .217 .217 .244 .669 .669 .73 17 .03 .03 .041 .11 .12 .14 .217 .217 .244 .669 .669 .73 24 .03 .03 .041 .10 .11 .13 .217 .217 .244 .669 .669 .73 May 1 .03 .03 .03 .10 .11 .13 .217 .217 .244 .669 .669 .73 8 .03 .03 .03 .10 .11 .13 .217 .217 .244 .669 .669 .73 15 .03 .03 .03 .10 .11 .13 .217 .217 .244 .669 .669 .73 22 .03 .03 .03 .10 .11 .13 .217 .217 .244 .669 .669 .73 29 .03 .03 .03 .10 .11 .13 .217 .217 .244 .669 .669 .73 June 5 .03 .03 .03 .10 .11 .13 .217 .217 .214 .669 .669 .73 12 .03 .03 .03 .10 .11 .13 .217 .217 .244 .669 .669 .7^ 19 .03 .03 .03 .10 .11 .13 .217 .217 .244 .669 .669 .73 26 .035 .035 .03 .10 .13 .13 .217 .217 .244 .669 .669 .73 July \ 3 .041 .041 .03 .10 .13 .14 .217 .217 .244 .669 .669 .73 t! 10 .046 .051 .03 .12 .13 .14 .217 .217 .244 .669 .669 .73 17 24 ' .046 .051 .03 .12 .13 .14 .217 .217 .244 .669 .669 .73 31 .051 .051 .03 .15 .16 .15 .217 .217 .244 .669 .669 ,73 Aug. 7 2 14 2 21 2 ::::::::r:: ::■: 28 .071 .081 .041 .20 .21 .23 .326 .326 .353 .973 .973 1.034 Sept. 4 .061 .061 .041 .20 .21 .23 .326 .326 .353 .973 .973 1.034 M .061 .061 .041 .20 .21 23 .326 .326 .353 .791 .791 .853 18 .061 .071 .041 .20 .21 .23 .326 .326 .353 .791 .791 .852 25 .071 .071 .041 .20 .22 .23 .326 .326 .353 .791 .791 .852 Oct. 2 .071 .081 .041 .21 .22 .24 .326 .326 .353 .791 .791 .852 9 .071 .081 .041 .21 .22 .24 .326 .326 .335 .791 .791 .852 16 .071 .081 .041 .21 .22 .24 .326 .326 .353 .791 .791 .852 23 .071 .081 .041 .21 .22 .24 .326 .326 .353 .791 .791 .852 30 .081 .101 .081 .21 .22 .24 .326 .326 .353 .791 .791 .852 Nov. 6 .111 .132 .081 .24 .25 .27 .326 .326 .353 .791 .791 .852 13 .122 .132 .122 .24 .25 .27 .326 .326 .353 .791 .791 .852 20 .132 .142 .122 .24 .25 .27 .326 .326 .353 .791 .791 .852 27 .132 .142 .122 .26 .27 .27 .326 .326 .353 .791 .791 .852 Dec. 4 .132 .142 .122 .26 .27 .29 .326 .326 .353 .791 .791 .852 11 .132 .152 .122 .26 .27 .29 .326 .326 .353 .791 .791 .852 18 .152 .172 .142 .26 .35 .31 .326 .326 .407 .791 .791 .852 24 .162 .172 .142 .40 .40 .31 .38 .38 .407 .791 .791 .852 1915. Jan. 1 .162 .172 .152 .40 .40 .35 .38 .38 .407 .791 .791 .852 8 .172 .182 .178 .40 .40 .40 .38 .38 .407 .791 .791 .852 15 .203 .183 .40 .40 .38 .407 .791 .852 22 .203 .203 .40 .40 .38 .435 .791 .913 29 .203 .203 .40 .40 .38 .435 .791 .913 Feb. 5 .203 .203 .40 .40 .489 .489 .791 .913 12 .223 .203 .40 .40 .489 .489 .791 .973 L: 19 .243 .203 .40 .40 .543 .516 .791 .973 26 .243 .203 .40 .40 .652 .543 .791 .973 Mar. 5 .243 .223 .40 .40 .652 .652 .791 .973 12 .264 .223 .45 .40 .652 .652 .791 .973 19 .264 .223 .50 .40 .652 .652 .791 .973 26 .264 • .223 .40 .40 .652 .652 .791 .973 Apr. 2 .264 .264 .223 .40 .50 .40 .652 .652 .652 .791 .791 .973 16 .243 .243 .223 .40 .50 .40 .652 .652 .652 1.034 1.0.34 .973 23 .243 .223 .223 .40 .45 .45 .652 .652 .652 1.095 1.034 .973 30 .223 .223 .223 .40 .45 .40 .652 .652 .652 1.217 1.034 .973 ' No data available. » No quotations on account of war. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 791 Ocean freight rates from Boston to British ports — Continued. GRAIN, FLOUR, PROVISIONS, AND APPLES— Continued. Date. Grain (per bushel). Sack flour (per 100 pounds). Provisions (per 100 pounds). Apples (per barrel). Liver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- pool. don. gow. pool. don. gow. pool. don. gow. pool. don. gow. 1915. May 7 $0,223 SO. 223 $0,223 SO. 40 $0.45 JO. 46 $0. 652 ^0.652 ?9.652 S1.217 SI. 034 80.973 14 .223 .223 .223 .45 .50 .46 .652 .652 .652 1.217 ;.034 .973 21 .243 .223 .223 .45 .50 .46 .652 .652 .652 1.217. 1.034 .973 28 .243 .223 .223 .45 .50 .45 .652 .652 .652 1.217 1 1.034 .973 June 4 .243 .223 .223 .45 .50 .50 .652 .652 .652 1.217 i 1.034 .973 11 .243 .223 .223 .45 .50 .50 .652 .652 .652 1.217 1.217 18 .223 .223 .223 .45 .50 .50 .652 .652 .652 1.217 1.217 '".'973 25 .223 .223 .223 .45 .50 .50 .652 .652 .652 1.217 1.217 .973 July 2 .203 .203 .223 .45 .50 .50 .652 .652 .652 1.217 1.217 .973 9 .203 .203 .223 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 16 .183 .203 .223 .40 .50 .50 .652 .652 .652 1.25 1.25 1.25 23 .203 .203 .223 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 30 .203 .203 .243 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 Aug. 6 .203 .203 .243 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 13 .203 .203 .243 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 20 .203 .203 .243 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 27 .203 .203 .243 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 Sept. 3 .203 .203 .243 .45 .50 .50 .652 .652 .652 1.25 1.25 1.25 10 .264 .264 .243 .45 .50 .55 .68 .68 .80 1.25 1.25 1.25 17 .264 .264 .243 .48 .50 .55 .68 .50 .80 1.25 1.25 1.25 24 .304 .304 .284 .50 .55 .60 .68 .80 .80 1.25 1.25 1.50 Oct. 1 .365 .365 .365 .60 .65 .60 .80 .80 .80 1.25 1.25 1.50 8 .406 .406 .365 .65 .75 .65 .80 .90 .80 1.25 1.25 1.50 15 .406 .406 .365 .70 .75 .70 .90 .90 .90 1.25 1.25 1.50 22 .365 .365 .365 .70 .70 .70 .90 .90 .90 1.25 1.25 1.50 29 .385 .385 .406 .70 .75 .75 .90 .90 .90 1.25 1.25 1.50 Nov. 5 .406 .406 .400 .70 .75 .75 .90 .90 .-90 1.25 1.25 1.50 12 .406 .406 .406 .70 .75 .75 .90 .90 .90 1.25 1.25 1.50 19 .385 .385 .406 .70 .80 .75 .90 .90 .90 1.25 1.25 1.75 26 .385 .365 .385 .70 .80 .75 .90 .90 .90 1.25 1.25 1.75 Dec. 3 .385 .365 .365 .70 .80 .75 .90 .90 .90 1.25 1.25 1.75 10 .385 .385 .385 .70 .80 .80 .90 .90 .90 1.25 1.25 1.75 17 .385 .406 .385 .80 .80 .80 .90 .90 .95 1.25 1.25 1.75 24 .385 .406 .406 .80 .80 .85 1.00 1.00 .95 1.25 1.25 1.75 31 .385 .406 .406 .80 .80 .85 1.00 1.00 1.00 1.25 1.25 1.75 1916. Jan. 7 .406 .406 .406 .80 .85 .85 1.25 1.25 1.10 1.25 1.25 1.75 14 .406 .406 .406 .80 .80 .85 1.25 1.25 1.10 1.25 1.25 1.75 21 .406 .406 .406 .80 .80 1.00 1.25 1.25 1.25 1.25 1.25 1.75 LUMBER (HARD AND SOFT), TOBACCO, AND COTTON. [Published by Boston & Maine R. R. Co., Foreign Freight Department.] Lumber (per 100 pounds). Tobacco (per 100 pounds). Cotton (per pounds) 100 Date. Hard. Soft. Li ver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- P 30l. don. gow. pool. don. gow. pool. don. gow. pool. don. gow. 1914. Jan. 9 $0 18* $0.21 $0.17 $0.24 $0.27 $0.24 $0.37 $0.35 $0.35 $0.20 $0.25 $0.30 16 18* .21 .17 .24 .27 .24 .37 .35 .35 .18 .25 .30 23 18* .21 .17 .24 .27 .24 .37 .35 .35 .18 .25 .30 30 IS* .21 .17 .24 .27 .24 .37 1 .35 .35 .18 .25 .30 Feb. 6 18* .21 .17 .24 .27 .24 .37 .35 .35 .16 .25 .30 13 18* .21 .17 .24 .27 .24 .31 .35 .35 .16 .25 .30 20 IS* .21 .17 .24 .27 .24 .31 .35 .35 .16 .25 .30 27 IS* .21 .17 .24 .27 .24 .31 1 .35 .35 .12 .25 .30 Mar. 6 18* .21 .17 .24 .27 .24 .31 .35 .35 .12 .25 .30 13 IS* .21 .17 .24 .27 .24 .31 .35 .35 .12 .25 .30 20 IS* .21 .17 .24 .27 .24 .31 .35 .35 .12 .25 .30 27 18J .21 .17 .24 .27 .24 .31 .35 .35 .12 .25 .30 792 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MAIMNE. Ocean freight rates from Boston to British ports — Continued. LUMBER (HARD AND SOFT), TOBACCO, AND COTTON— Continued. Lumber (per 100 pounds). Tobacco (per 100 pounds). Cotton (per pounds) 100 Date. Hard. Soft. Liver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- Liver- Lon- Glas- pool. don. gow. pool. don. gow. pool. don. gow. pool. don. gow. 1914. Apr. 3 ' 10 $0.18i $0.21 $0.17 $0.24 $0.27 $0.26 $0.31 $0.35 $0.35 $0.12 $0.25 $0.30 17 . 18J .21 .17 .24 .27 .26 .31 .35 .35 .12 .25 .30 24 .16§ .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 May 1 .m .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 8 .16J .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 15 .16i .21 .17 .22 .27 .26 .31 .35 .35 .15 .25 .30 22 .16i .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 29 .16i .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 June 5 .16J .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 12 .16* .21 .17 .22 .27 .26 .31 .35 .35 .15 .25 .30 19 .16i .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 26 .16* .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 July 3 .16i .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 10 .16J .21 .17 .22 .27 .26 .31 .35 .35 .12 .25 .30 17 24 ' .16i .21 .17 .22 .27 .26 .31 .35 .35 .15 .25 .30 31 .16J .21 .17 .22 .27 .26 .31 .35 .35 .25 .25 .30 Aug. 7 s 14* 21 ' ::: 28 .23 J .26 .29 .32 .31 .45 .25 Sept. 4 11 .23i .23i 26 20 29 .32 .27 .31 .45 .25 .26 .20 .29 .32 .27 .31 .45 .45 .25 .30 18 .23 J .26 ' .20 .29 .32 .27 .31 .45 .45 .25 .30 25 .23§ .26 .20 .29 .32 .27 .31 .45 .45 .30 .30 Oct. 2 .23i .26 .20 .29 .32 .27 .31 .45 .45 .30 .30 9 .23i .26 .20 .29 .32 .27 .31 .45 .45 .30 .30 16 .23§ .26 .20 .29 .32 .27 .31 .45 .45 .30 .30 23 .23J .26 .20 .29 .32 .27 .31 .45 .45 .30 .30 30 .23* .26 .20 .29 .32 .27 .40 .38 .45 .35 .30 Nov. 6 .26§ .28 .20 .32 .33 .27 .40 .38 .45 .45 .30 13 .25 .30 .20 .30 .35 .27 .40 .38 .45 .45 .30 20 .25 .30 .20 .30 .35 .27 .45 .38 .45 .45 .30 27 .26 .30 .20 .32 .35 .27 .50 .38 .45 .50 .30 Dec. 4 .26 .30 .20 .32 .35 .27 .50 .38 .50 .60 .50 11 .30 .30 .20 .35 .35 .27 .60 .62 .50 .60 .50 18 .30 .30 .20 .35 .35 .27 .60 .62 .50 .60 .50 24 .38 .38 .20 .435 .435 .27 1.00 1.00 .50 .75 .50 1915. Jan. 1 .38 .38 .20 .435 .435 .27 1.00 1.00 .50 .75 .50 8 .38 .38 .20 .435 .435 .27 1.00 1.00 .50 .85 .50 15 .435 .40 .40 .543 .543 .543 1.25 1.25 1.25 i.no i.no 1.00 1.00 22 """.'46' 1.00 ' 29 .35 1.00 1.00 Feb. 5 .50 .50 ..'>43 .40 1.25 1.00 1.00 1.00 12 .45 .35 .543 .40 1.25 1.00 1.00 1.00 19 .45 .35 .543 .40 1.25 1.00 1.00 1.00 26 .543 .40 .652 .45 1.50 1.00 1.00 I.no Mar. 5 .543 .543 .40 .45 .45 .50 1.25 1.25 1.00 1.00 1.00 1.00 1.00 12 .652 1.00 19 .543 .475 .652 .54 1.50 1.00 1.00 1.00 26 .543 .475 .652 .54 1.50 1.00 1.25 1.00 Apr. 2 .543 .CO .475 .652 .65 .54 L50 1.50 1.00 1.25 LOO 16 .652 .61 .575 .76 .67 .64 1.50 1.50 1.00 1.25 1.00 23 .052 .61 .575 .76 .67 .64 1.50 1.50 1.00 1.25 1.00 30 .f-52 .'■.52 .575 .76 .76 .64 1.25 1.50 I.no 1.00 1 00 May 7 .652 .652 .575 .76 .76 .64 1.25 1.50 1.00 1.00 I.no 14 .652 .652 .575 .76 .76 .64 1.25 1.50 I.no 1.00 1.00 21 .C52 .652 .575 .76 .76 .64 1.25 1.50 1.00 1.00 1.00 28 .652 .652 .575 .76 .76 .64 1.25 1.50 1.00 1.00 LOO June 4 .652 .652 .60 .76 .76 .66 1.25 1.50 1.00 1.00 1.00 11 .652 .652 .60 .76 .76 .65 1.25 1.50 1.00 1.00 1 00 18 .652 .652 .60 .76 .76 .66 1.25 1.50 1.00 1.00 1.00 25 .652 .652 .60 .76 .76 .66 1.25 1.50 1.00 I.no 1.00 July 2 .652 .652 .60 .76 .76 .66 1.25 1.50 1.00 1.00 1.00 9 .653 .652 .60 .76 .76 .66 1.15 1.50 1.00 1.00 1 00 16 .598 .652 .60 .706 .76 .66 1.15 1.50 1.00 23 .598 .652 .60 .706 .76 .66 1.15 1.50 1.00 30 .598 .652 .60 .706 .76 .66 1.15 1.50 1.25 1.00 i.66 1 No report at hand, « Unsettled conditions on account of war. » No data available. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 793 Ocean freight rates from Boston to British ports — Continued. LUMBER (HARD AND SOFT), TOBACCO, AND COTTON— Continued. Lumber (per 100 pounds). Tobacco (per 100 Cotton (per 100 Date. Hard. Soft. pounds). pounds). Liver- pool. Lon- 1 Glas- don. gow. Liver- pool. Lon- don. Glas- gow. Liver- pool. Lon- don. Glas- gow. Liver- pool. Lon- don. Glas- gow. 1915. Aug. 6 13 20 27 Sept. 3 10 17 24 Oct. 1 8 15 22 29 Nov. 5 12 19 26 Dec. 3 10 17 24 31 1916. Jan. 7 14 21 SO. 598 .598 .598 .598 .598 .65 .65 .65 .70 .70 .70 .70 .70 .70 .70 .70 .75 .85 .85 .95 .95 .95 1.10 1.10 1.10 SO. 652 .652 .652 .652 .652 .70 .70 .70 .75 .80 .85 .90 .95 .95 .95 .95 .95 .95 .95 .95 .95 .95 1.10 1.10 1.10 $0.60 .575 .5T5 .575 .60 .60 .60 .65 .68 .75 .70 .70 .70 .70 .70 .725 .725 .775 .775 .78 .80 .78 .80 .83 .83 $0,706 .706 .706 .706 .706 .70 .70 .70 .75 .75 .75 .75 .80 .80 .80 .80 .85 1.00 1.00 1.20 1.20 1.20 1.20 1.20 1.20 $0,679 .679 .679 .679 .679 .75 .75 .75 .80 .85 .90 .95 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.20 1.20 L20 $0.66 .64 .64 .64 .64 .66 .66 .70 .73 .83 .75 .75 .75 .75 .75 .78 .79 .84 .84 .84 .84 .84 .84 .89 • .89 $1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.35 1.35 1.50 1.75 2.00 3.00 3.00 3.00 $1.40 1.40 1.40 1.40 1.40 1.17 1.20 1.20 1.30 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 2 00 2.00 2.00 $1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.50 1.50 1.50 1.50 2.00 2.25 2.25 $1.00 1.00 1.00 1.00 1 00 1.00 1.15 1.25 1.25 1.25 1.25 1.00 1.25 1.25 1.25 1.25 1.25 1.50 1.75 2.00 2.00 2.25 2.75 2.75 2.75 '$i.'25' "2.06' 2.00 2.25 3.00 3.00 3.00 $1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.50 1.50 2.00 1.50 2.00 Import freight rates. FROM LIVERPOOL TO BOSTON. Commodity. Unit. 1914 Jan. 1. Apr. 1. July 1. Oct. 1. Cotton goods 40 cubic feet 2,240 pounds 40 cubic feet 2,240 pounds 40 cubic feet 2,240 pounds do $9.13 4.26 2.43- 4.26 8.21-21.29 9.13 3.04 / 9.13 \ 10. 34 4.26 6.08 18.25 9.13-18.25 $9.13 4.26 2.43- 4.26 8.21-21.29 9.13 3.04 9.13 10.34 4.26 6.08 18.25 9. 13-18. 25 $9.13 4.26 2. 43- 4. 26 8. 21-21. 29 9.13 3.04 9.13 10.34 4.26 6.08 18.25 9.13-18.25 $9.13 Cotton, raw 4.28 Earthenware and china 2.43- 4.26 Hides and skins 8.21-21.29 India rubber 13.38 Iron, lerromanganese 3.04 Tin in bars ... 9.13 10.34 4.26 do f do 6.08 Wool, raw (40 cubic feet do 18.25 9.13-18.25 Measuremen t goods Commodity. Cotton goods Cotton, raw Earthenware and china. Hides and skins India rubber Iron, ferromanganese - . . Tin, in bars Vegetable oils Wool, raw Measurement goods. Unit. 40 cubic feet.. 2,240 pounds. 40 cubic feet.. 2,240 pounds. 40cubif>feet.. 2,240 pounds. do do f....do [40 cubic feet. do 1915 Jan. 1. $13.38 5.47 3. 04- 4. 26 8. 21-21. 29 13.88 3.04 / 9.13 \ 10.34 5.47 9.13 18.25 13.38-2L90 Apr. 1. $13. 38 5.47 3. 04- 4. 26 8. 21-21. 29 13.38 3.04 9.13 10.34 5.47 9.13 18.25 13.38-21.90 Julyl. Oct. 1. Jan. 1, 1916. $13. 6. 3.65- 6. 8.21-21. 13. 3. 9. 10. 5. 9. 18. 13. 38-21. 38 08 08 29 38 04 I 13 34 47 j 13 25 1 90 13 $13. 38 6.08 65- 6. 08 21-21.29 13.38 3.65 9.13 10.34 5.47 9.13 18.25 38 21.90 $13.38 6.08 3. 65- 6. 08 8. 21-21. 29 13.38 3.65 9.13 10.34 5.47 9.13 18.25 13. 38-21. 90 794 SHIPPING BOARD, XAVAL AUXIL1.\RY, AND MERCHANT MARINE. Iviport freight rates — Continued. FROM BUEXOS AIRES TO BOSTON. Commodity. Unit. 1914 Jan. 1. Apr. 1. Julyl. Oct. 1. Hides, salt Per ton $6.50 .70 4.50 $6.50 .70 4.50 $6.50 .70 4.50 $6.60 Hides, dry 100 pounds 40 cubic feet .70 Wool, raw 4.50 Commodity. Unit. 1915 Jan. 1, Jan. 1. Apr. 1. Julyl. Oct. 1. 1916. Hides, salt Per ton $14.00 $14. 00 S14.0fl $14.00 1.50 12.00 $14.00 Hides, dry Wool, raw 100 pounds 40 cubic feet 1.50 12.00 1.50 1.50 12. 00 12. 00 1.50 12.00 Increase in Ocean Freight Rates to the Far East from January 1, 1914, to January 1, 1916. [Report prepared by the Seattle district office of the Bureau of Foreign and Domestic Commerce.) The following statement regarding the ocean freight situation at Seattle on March 2, 1916, was prepared by Mr. W. B. Henderson, commercial agent in charge of the Seattle district office of the Bureau of Foreign and Domestic Commerce: Seattle, Wash., March 2, 1916. Referring again to your communication of February 2, in which you requested a detailed report on ocean freight rates for specified commodities and periods between Seattle and foreign ports, I have the honor to submit herewith the result of the inves- tigation on the sheets that were furnished by the bureau. In connection with tliis report I am submitting herewith, I have to state my utter inability to cover all commodities, all periods, and all destinations. However, the report is as complete as it could possibly be. owing to the unsettled conditions in shipping faciUties and the entire absence of published tariff schedules since the breaking out of the European war. My investigation necessitated about 35 calls for interviews with managers of ocean steamship companies, commercial organizations, and transportation companies. In most every case on first presenting the matter to a steamship line or the manager of a transportation bureau I was met with the blunt announcement ' ' there is no such thing now as an ocean freight tariff." They also said that old schedules had been de- stroyed. Nevertheless, by persistence I secured copies of the 1914 tariff schedules for most Lines operating in and out of this port. As to rate quotations for the latter part of 1915 and for January, 1916, there are none, or practically none. Most of the ships are working for all they can get or what they think they can get. There are, however, exceptions to this state of affairs. These exceptions are in the case of the Osaka Shosen Kaisha and the Nippon Yusen Kaisha, the two regular Japanese lines. The rates published by these companies in the tariff schedules for 1914 are more nearly in conformity with the charges they made for freight during the whole of 1915. For 1916 (January), their rates were i^erceptibly liigher, but in no wise to be likened to the enormous increases asked and obtained by others — notably the chartered lines. This investigation brought out some anomalous conditions bordering onto a para- doxical aspect, inasmuch as there are a greater number of Lines in the trade, a large increase in the number of vesesls entering and clearing from this port and Tacoma, while at the same time freight in these ports was never so congested and exporters so hard put to secure tonnage space. Yet at the same time, also, this section is manu- facturing and producing but a small proportion more than it was at this time two years ago. This condition, with its pecuLiar aspects, is accounted for by the arrangements that the transcontinentaL railroads have with the regular steamship companies plying to orient ports. The Chicago. Milwaukee & St. Paul and the Northern Pacific RaiLroada SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 795 have an understanding or a contract, as it were, vnih the two regular Japanese steam- Bhip companies for practically their entire space. They apportion this space so much to New York, so much to Chicago, to St. Louis, or Kansas City, as the case may be, and get the benefit of the rail charges on the long haul. This practically leaves the local exporter out of the deal, and as a consequence he must stay out of the business or else fall back on the chartered lines and tramp vessels with their advance in ocean freight rates of from 100 to 1,000 per cent. This situation applies to a large extent to the native products of this section, such as lumber, box shocks, wheat and flour, and canned salmon. Then, too, there appears to be a discrimination on the part of the Japanese lines on certain commodities, as for instance, a representative of one of the largest manufactiu"ers and exporters of flour told me that the Japanese lines had allotted so much space for flour from Puget Sound ports to ( hina. The amount of space which he mentioned is about two-fifths of the product for export by the mills of this section. This, he inferred, was to the advantage of Japan, which country is supplying the other three-fifths to China from her own mills. Another large export firm here claims that it can not get space promised at any rates for the next five months. He stated a specific case where he had for export a product which is now being booked by the steamship companies at the rate of $35 per ton. He tried for space some months ago and finally secured space from San Francisco on the condition, however, that the shipment be transported from Seattle over the lines of a certain railroad named. It so happens that in order to transport the goods over the particular line named that he must ship from Seattle to Denver and thence to San Francisco, thus making the freight rates prohibitive. He is now in the market for the same commodity on the lines of the specified railroads at a point nearer San Francisco, while his consignment is Ijdng in the Seattle warehouse. No living man co,uld make a complete analysis of the ocean freight rates here as they present themselves now, and only a very poor comparison can be had. So far as securing space is concerned for ships booked to sail in the near future, it is out of the question. A few orders are being booked for four or five months ahead and it would appear that unless the exporter received anormous profits on commodities exported a year ago when ocean freight rates were comparatively normal, it is hard to see where he can get any profit now (even if he secures space) at the abnormally high rates. Yet they are all in the market for tonnage space, and as a consequence new shipping agencies are daily springing up; old lines are adding extra vessels; and contracts are being let for building new ships. Besides the Frank Waterhouse Co. and the H. F. Ostrander Co., who are both chartering a large number of vessels, Grif- fiths & Sons, old-time shippers, have chartered several tramp vessels and impressed them into the trade, and recently a local concern has received a contract to build immediately a million-dollar ship. I am herewith inclosing the sheets filled out as fully as the figures can be obtained. I have also supplemented it by a statement showing the present rates that have been secured on tonnage from Seattle to Vladivostock, and I am also submitting a partial list of the parties interviewed in obtaining these rates. Very truly, yours, W. B. Henderson, Comvierdal Agent. I interviewed the following concerns here re the ocean freight rates : Mr. B. J. Orvinsck, of W. R. Grace & Co., as to the import rates from Cliilean points (Valparaiso, as specified in the report). He could only give me rates on copper. Mr. Fawkner, of Fawkner-Currie & Co., who operate a steamship line between here and South America, as to import rates on nitrates from Valparaiso. Mr. W. A. Hears, of the transportation bureau of the Seattle Chamber of Commerce, on rates generally. No particular information. Mr. W. D. Benson, manager of the Pacific Coast-Oriental Tariff Bureau, who is also connected with Frank AVaterhouse & Co. , as to rates generally. He supplied me with the greater portion of the rates for 1914 and part of 1915, and furnished me with a num- ber of schedules. Mr. F. M. Studley, manager of the Nippon Yusen Kaisha, on rates generally to the Orient. He supplied me with rates on several commodities to Hongkong and Shanghai. Mr. Manion, of the Blue Funnel Line, supplied me with rates to London. Mr. D. W. Burchard, of the Hamburg-American Line. No information. His line is interned and out of business, and the documents were burned at a recent fire. Mr. T. Stuart, recently connected with Robinson & Morrison, furnished some infor- mation regarding import rates to Sydney. 796 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Mr. Pettibone, formerly of the Canadian Trading Co. , now of the American Trading Co., furnished me with rates on lumber to Hongkong and Shanghai. Mr. Hodge, of the Northwest Trading Co. , furnished rates on flour, bar iron, sheet iron, wire, and some commodity rates to Shanghai and Hongkong. Mr. Parrott, of the firm of Parrott & Co., brokers, furnished general information. Mr. Erickson, of the American Express Co. , gave me considerable information regard- ing rates, especially on the old schedules of 1914. Mr. W. S. Allen, assistant manager of the Fisher Flouring Mills, furnished me valua- ble information regarding export rates to the Orient on flour. Mr. Robert Hill, manager of the Merchants' Exchange, gave me valuable assistance regarding rates on flour and wheat to London. Mr. H. F. Ostrander furnished valuable information as to rates on a number of com- modities to Shanghai and Hongkong. The following shipping agencies and exporters were visited in Tocoma, in connec- tion with the investigation of ocean freight rates: Mr. McKune, chairman transportation bureau, Tocoma Commercial Club and Chamber of Commerce. Mr. Giles Smith, acting secretary, Tacoma Commercial Club and Chamber of Com- merce. Mr. Hans Heidner, importer and exporter. Mr. J. B. Van Fossen, agent for Osaka Shosen Kaisha. Mr. J. T. Steeb, customhouse broker. Others interviewed in Seattle are as follows: A representative of M. Fiu'uya & Co. Northwest Trading Co. Mr. Pettibone. of the American Trading Co. The agent of the Norwegian-American Line, for information re freight rates to Scandinavian ports. A representative of W. R. Grace & Co., who are agents for the Johnson Line, regard- ing rates to Copenhagen. The vice consul for Norway. A representative of Fawkner-Currie Co., shipping agents. SIIII'I'INli BOARD, NAVAL AUXILIAKV, AND MliliCllANT MARINE. 797 "a cq •fc. 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CO-H •-> P* < OO r^ o 00 CC OOl^ , oo t-o 00 OCC cooo »^ t-^o e gS 88 00 00 00 CO 00 c 1^ , i-i t-^o c^ c^ irf t-^ 06 -i> ^' OJ • T-< I— ( O O 88 88 88 §8 885 ^^ t^d M cs 1^ ir> t-^ 06 -i «> oi >k «^r-< -H,-( 3 ■ t-» •w OJ 88 88 00 00 ocoo , CC 00 oct- r- 1 i^o c^ci 1^3 iO t-^ 06 ^^Oi li4 «©« '-■-< f-H 1— < O. < 88 88 88 §S 885 iH r^o c^ cs ir: iri t> 06 CO OJ 1-5 .-<™ ■S a 3 o o p. p. 8 m ■s •a o^ tS B •a g P< ■3 i • t t, ► £ 0. .2 6 g^ 1 X "fh'S^ C • e = n • r ■:- - c 2 c piflj £>2^ ->£ Jl^^ ^ M («5 ii M li^ ■5r^S-Sli;S CmMi-! I^ C3 fe C » S C3 m 1-1 M 00 O si c3 a, SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 799 Increase in Ocean Freight Rates from January 1, 1914, to January 1, 1916. (Report prepared by the New Orleans district office of the Bureau of Foreign and Domestic Ck)mmerce.] New Orleans, March 10, 1916. In compliance with the instructions given in your letter of February 2, dictated by Commercial Agent Jones, there are inclosed herewith ocean freight rate schedules covering the traffic between New Orleans and European ports. These schedules are as complete as it has been possible to make them from the data available. New Orleans ships very little outside of the first two classifications on the prepared schedule, and it has been impossible to obtain rates that would be of any value for comparative purposes on steel products, machinery, mineral and petroleum products, and mis- cellaneous manufactured goods. A large amount of oil is credited to the export figures of this port, but this moves in full cargo lots cliiefly from Baton Rouge. The figures supplied in the inclosed statements are taken from the books of the New Orleans Cotton Exchange, the files of the Lumber Trade Journal, files of the rate sheets issued by the Texas Transport & Terminal Co., A. H. Clement & Co., Ross & Heyn, and George Gerdes & Co., supplemented by figures taken from the actual manifests of the Ley land, Vogemann, Head, Pinillos, Gans, Norway-Mexico Gulf, Swedish-American-Mexico, Maclay-Prentice Co., and Pierce Cotoniera lines. 1 am gi'v'ing on these sheets the rates as quoted in the various sources of information, with footnotes indicating any variation in the unit of quantity. It would be mis- leading to the compiler of any report from this data for me to make any attempt at reducing these rates to a common basis. The fluctuation in sterling exchange has forced a good many changes in the methods of quoting during the last six months. For example, the cottonseed oil rate, has ordinarily been quoted in sliillings per barrel, but since the 1st of October a number of lines have changed their quotations to cents per hundred pounds to avoid the uncertainty of exchange fluctuations. To bring the shilling rates down to a dollar and cents iDasis due consideration must be given to the various exchange rates ruling at the time these quotations were made. In other cases the unit of quantity on wliich quotation is made has been changed. For instance, pine quotations are in some cases in shillings per standard and in otliera in dollars per thousand feet. This can readily be brought down to a common unit of quantity, but I believe such conversion should be done by the person making use of the figures rather than by the compiler of these charts, as he will then know exactly what has been done. Yours, very truly, E. E. JUDD, Commercial Agent in Charge. Another communication from the commercial agent in charge of the New Orleans district office of the Bureau of Foreign and Domestic Commerce may also be of interest in connection with the sliipping situation at the Gulf ports. This letter was in answer to a request from the bureau that the agent look into the possibilities of securing a vessel for the movement of mahogany from Central America to New Orleans for a large plant in Cincinnati : New Orleans, March 8, 1916. I have your letter of March 6, dictated by Commercial Agent Jones, inclosing copy of a letter from the Freiberg Lumber Co. to the Cincinnati Chamber of Commerce, asking for advice as to the conditions in shipping between Central America and the Gulf ports. I can, say, in general, that charters for Central American business have been practically unobtainable for the past several months, charter rates being way above what this traffic can bear. Steamers are absolutely out of the question, as they have all gone into th-e European trade with the exception of the regular line vessels carrying general cargo down and bringing bananas and other fruit back. There have been a few small sailing vessels on the market from time to time at high rates. The regular liners are not available for mahogany business as they will accept such cargo only in small quantities and at their regular shipping points. Most of the mahogany is loaded at small ports not regularly touched by these ships. The abnormal prices asked for tonnage in the Central American trade are only a logical result of the European situation. With cotton rates at $2.90 per hundred pounds to Liverpool, |3.15 to Havre, $3 to Barcelona, and $3.60 to Gothenberg, and 800 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. pig iron bringing $25 a ton, it is only natural that shipowners have thrown their ves- sels into the European trade. Shippers to Europe are literally begging for space at these prices. There has been a great deal of speculating in tonnage, but the rates are traceable directly to the enormous outbound traffic. I just heard to-day of one speculator who paid 170 shillings per dead-weight ton for a vessel with a capacity of sixteen to eighteen hundred tons. The market has dropped a little since then, so that the ship is only worth about 140 shillings now. This man stands to lose several thousand dollars on the venture in spite of the high rates prevailing. I am going further into this subject in the next day or so and will report if I find anything further of interest. I shall also do a little scouting around in shipping circles here and see if I can't pick up something for the Freiberg Co. I think I know where there is an 1,800-ton sailing vessel which might be glad to make a contract for mahogany business. Very truly, youi-s, E. E. JUDD, Commercial Agent in Charge. P. S. — In talking over the shipping situation with Mr. De Witt to-day I mentioned that a mahogany company wanted a 2,000-ton steamer. He said if he could find any such craft he would like to buy three of them at a good, fat figure, and pay a fine commission to the wizard who produced them. He said, ''I don't care about age, beauty, or flag if they will float and can sail without danger of being shot to pieces. And I can load them with something more profitable than mahogany." E.E.J. Ocean freight rates from Nevj Orleans to European ports. COTTON (COMPRESSED), PER 100 POUNDS. Port of destination. British ports: London I-ivcrpool Manchester Glasgow Dublin Belfast Scandinavian ports Gothenburg... Christiania Dutch ports: Amsterdam Rotterdam Havre. France Barcelona, Spain.. Italian ports: Genoa Naples 1914 Jan. 1. Apr. 1. July 1. Oct. 1 $0.48 .31 .38 .34 .48 .48 .63 .53 .40 .36 .38 .60 .45 .47J SO. 30 .33 .38 .38 .38 .43 i .43 ' .32 .34 I .34 i .40 .40 I .42J $0.28 .31 .35 .35 .35 .40 .40 .27 .28 .35 .40 .38 .40i $0.50 .50 .45 .45 .85 .72 .35 .50 .85 .60 .72J 1915 Jan. 1. Apr. 1. July 1. Oct. 1 $L15 1.00 1.00 .65 .65 $L40 1.60 1.15 $1.00 1.10 1.25 fL20 \ \ 2.00 / 2.52 2.50 / 1.20 \ 1.35 1.40 1.35 1.52§ 2.25 2.25 2.17 2.15 1.55 L40 1.75 1.75 1.75 1.75 1.52 1.50 1.20 1.40 1.25 1.25 $1.10 1.15 L75 1.75 2.02 2.00 L60 1.50 L75 1.75 1916, Jan. 1. $3.00 2.25 2.75 2.75 2.77 2.75 2.50 2.00 2.25 2.30 COTTONSEED OIL, PER BARREL OF 450 POUNDS. British ports: $1.22 1.35 1.53 1.35 L70 L70 $1.22 1.26 1.30 1.26 L70 L70 $1.10 1.17 1 22 L17 L70 L70 LIO .97 1.40 1.64 $4.87 L40 $2.43 3.60 3.69 3.60 8.52 4.26 V'4."3i' 3.89 4.87 $2.92 3.60 3.69 3.60 5.40 6.04 5.85 4.73 5.40 $2.03 $2.93 3 02 2.93 6.33 8.52 4.99 4.87 4.87 5.84 $5.40 Dublin 5.e3 Belfast Scandinavian ports: Gothenburg Christiania Dutch ports: AmstiTdam L62 2.03 5.40 8.55 L58 1.95 1.83 1.46 2.19 7.30 4.38 4.26 2.92 3.65 5.63 7.29* Rottf rdam 1.46 L4fi L70 1.46 L46 1.64 7.20 12. (» Genoa, Italy 6.53 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 801 Ocean freight rales from New Orleans to European ports — Continued. COTTONSEED CAKE, PER LONG TON. Port of destination. 1914 1915 1916, Jan. 1. Apr. 1. July 1. Oct. 1. Jan. 1. Apr. 1. July 1. Oct. 1. Jan. 1. British ports: Li\ erpool $3.65 3.65 4.62 5.11 4.62 5.11 4.87 3.89 3.65 4.02 5.35 $2.92 2.92 4.14 4.38 4.14 3.89 3.89 3.65 3.41 3.77 5.35 $2.43 2.43 3.89 4.14 3.89 3.89 3.89 3.29 3.04 3.16 5.35 $10.34 $10.34 10.34 13.39 13.87 13.39 14.60 14.60 14.83 14.60 12.17 14.60 $12. 17 10.95 14.60 15.09 14.60 15.68 15.68 22.85 22.40 16.80 18.37 G lasfTow $6.08 8. 03 $12. 17 12.66 12.17 18.25 15.82 19.96 19.70 17.03 20.08 $21.90 PuMin 22.39 Belfast 6.08 8.03 2L90 Scandinavian ports: 33.60 33.60 Dutch ports: 6.33 6.08 5.35 7.30 14.83 14.60 11.31 10.95 28.45 Rotterdam 28.00 Havre France 33.60 Genoa, Italy 30.24 WHEAT, PER BUSHEL OF 60 POUNDS. British ports: Liverpool Manchester Glasgow....' Scandinavian ports: Gothenburg Christiania .07 .07 .101 .101 .101 $0,061 .066 .101 .091 .091 $0. 061 .061 .087 .084 .061 .132 .091 $0. 152 .233 $0,264 .264 .213 $0,365 .365 $0,243 ' '.'35" FLOUR, PER 100 POUNDS. TOBACCO, PER 100 POUNDS. British ports: Liverpool Glasgow Belfast Christiania, Norway Dutch ports: Amsterdam Rotterdam i .48 Havre, France .48 Genoa, Italy .50 $0,415 .48 .49 .50 $0. 425 .415 .50 .48 .48 .43 $0,455 .45 .45 .70 .50 .48 .43 .43 $0. 465 .60 .60 .75 .72 .70 .50 .63 $0.70 .70 L25 2.57 2.55 1.40 1.55 $1.15 1.50 1.50 2.50 2.12 2.10 1.62 1.80 $1. 15 1.00 2.00 L77 1.75 1.40 1.30 $1.15 2.00 2.02 2.00 1.60 1.80 MEAT PRODUCTS, PER 100 POUNDS. British ports: Glasgow Belfast Dutch ports: Amsterdam Rotterdam . Havre, France.. Genoa, Italy $0.35 .35 .36 .35 .33 .36 $0.31 .30 .33 .34 $0.45 .45 .97 .95 .70 .82 $0.70 .70 1.77 1.75 1.10 1.30 $1.02 1.00 .90 1.10 $0.80 1.32 1.30 1.10 1.20 $0,548 .589 .589 British ports: ^. ^.20 .25 .26 .25 .26 .26 .21 .20 .22 .24 $0.18 .20 .21 .20 .23 .23 .18 .17 .19 .22 $0.18 .20 .21 .20 .23 .23 .17 .16 .18 .22 '"$6." 28' $0.23 .35 $0.40 .45 .47 .45 .75 .75 .88 .87 .75 .85 $0.55 .60 .61 .60 .61 .61 .53 .52 .55 .62 $0.55 .60 .61 .60 .70 .70 .70 .69 .75 .82 $1.01 Dublin 1.06 Belfast .28 .35 LOl Scandinavian ports: 1.25 .35 .29 .28 .24 .30 .60 .63 .62 .50 .56 L25 Dutch ports: A msterdam Lll LIO L50 1.35 $3.00 3.01 3.00 2.50 2.35 $1.52 1.50 2.75 1.50 802 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Ocean freight rates from Neiv Orleans to European ports — Continued. LUMBER (SOFT), PER 2,000 FEET. 1914 1915 1916, Jan. 1. Apr. 1. July 1. Oct. 1. Jan. 1. Apr- 1. July 1. Oct. 1. Jan. 1. British ports: $19.47 19.47 24.00 24.00 27.00 18.86 / 17.03 \ 19.47 23.00 24.00 21.90 32.00 $15.82 15.82 20.00 20.00 24.33 15.82 1 14.00 17.03 20.00 18.25 32.00 $14.60 14.60 13.00 16.00 19.47 13.39 12.78 14.60 14.00 17.64 32.00 $21.90 838.93 $41.37 41.37 U.56 52.32 48.67 66.91 34.00 73.00 66.00 $54.75 20.66 24.00 132.00 32.00 50.00 50.00 43.80 79.84 75.43 75.43 34.00 97.30 48.67 60.00 49.00 158.00 150.00 140.00 40.00 160.00 66.00 $24.33 Belfast Christiania, Norway Dutch ports: 28.22 28.11 24.33 14.00 24.33 76.65 73.00 46.23 24.00 54.75 188.00 180.00 230.00 50.00 200.00 Buenos Aires, Argentina 1 LUMBER (HARD), PER 100 POUNDS. Manchester. Glascow Dulilin Belfast Scandinavian ports: Gothenburg Christiania Dutch ports: Amsterdam Rotterdam Havre , France Genoa, Italy British ports: Liverpool $0.28 .30 .30 .34 .30 .40 .40 .32 .28 .33 .36 $0.25 .25 .28 .29 .28 .40 .40 .26 .24 .26 .34 $0.23 $0.30 $1.50 $0.70 $0.80 .23 .45 $0.50 .70 .75 .26 .30 .45 .65 .80 .80 .29 .37 .67 .82 .81 .28 .34 .45 .65 .80 .80 .35 .50 1.60 .95 .90 .35 .50 1.50 .95 .90 .22 .40 .97 L02 .82 1.22 .20 .38 .95 1.00 .80 1.20 .26 .33 .70 1.10 .85 .90 .26 .40 .83 1.30 LOO 1.20 $0.80 1.20 1.25 1.20 1.25 1.25 1.32 1.30 1.50 1.40 PIG IRON, PER LONG TON. British ports: Glasgow Belfast Dutch ports: Amsterdam. Rotterdam . . Havre, France.., Genoa, Italy $4.87 2.92 2.43 2.43 2.68 $3.04 3.04 2.92 2.43 2.43 2.43 $3.04 3.04 2.43 1.95 2.43 2.43 $5.47 5.47 3.16 3.65 $6.08 6.08 7.79 7.30 4.87 6.08 $8.52 8.52 7.79 7.30 7.30 8.03 $7.30 9.73 $8.96 9.75 ROSIN, PER LONG TON. British ports: Liverpool Gla.'^gow Belfast Christiania, Norway Dutch ports: Amsterdam Rotterdam Havre , France Genoa, Italy $3.41 4.14 4.62 5.47 3.77 4.48 3.65 15.50 6.33 9.13 5.60 8.51 4.87 »7.91 $8.76 8.76 12.17 17.52 21.28 10.95 1 13. 19 $13.39 13.39 13.39 30.42 19.96 22.40 17.03 122.85 $13.39 19.47 16.30 17.92 15.82 120.22 $14.60 24.64 24.42 26.88 16.80 22.40 $24.33 39.20 34.05 29.12 49.28 30.24 1 Plus 5 per cent primage. SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 803 Ocean Freight Rates to and from Ports of the United Kingdom. The fluctuations in Britit^h ocean freight rates to and from the ports of Great Britain are of particular interest to the whole world, not only because of the dominant posi- tion of Great Britain in the world's carrying trade but also because Great Britain draws its supplies from ])ractically every corner of the globe. y |i| ► The following comment and chart«:, taken fn m Appendix X\l of Kirkaldy's British Ship} ling: Its History, Organization, and Importance, throw^ considerable light on the course of ocean freight rates during a period of nearly 25 years: ^{§§§85^8% ""^ 1 "" 1 v\A±\ 1 ! 1 ' 1 1 1 1 li r II 2! MHrm-^- LLL ■ , rt'Fr'B-^-*! ^ ± '"" J- 4-+.4 TP r^^ <$ _ " it il . i ■ p~'^"-i --- - ? '- __ _I- V7, ,._,,.. , ^ — ' ^ y^ j_ ^ __ _ __j^i^ _ ^ _ -K IT !^^ N^ _ qi _ X it - -- ZIZ ZTZT^Zc^- __ "1^ "+" it ziz ^ft^ - _|_ 1. „ _ Cl "I" 3u _|_ _ .i^-^ - "1" — t ^^«= T _i. _i_ _ ■ _ d-it ^^ -- - ^ 2 _h>^__ J_ . ___ " _ _ 1 r- WttWW i 1 llijliilf^^ lEi=iE=EEEEEi=iEi=ii:liEEEE:Eiii::::i:::i: 1 ^^:_^i :::::iiiiii J X ^- = =="5 J ^----'"X"~it ■I" / — -r.^^ — S ^ ^ 1 i _^]^_ _- II 1 S ^^, - 1 , , -_ i -■^===^ _ _ •« < -- 5n vO-tTl ! 2 7|_1J reTTTTTTT J-hn t ' * ^B-U i i44Tl 1 ^ f ^ ^l-H -^ Z^? *: =fe H* -|- ""^--^.^ ' I - li^t^s*^-- 8 1 1 i 1 1 rrr rrtisJ- ^'^S'^l-M f III ii-ii-ilf^-iii II 1 1^^*-: 3: 1 yC ~ ff s ^|a §$«««>»«* freight fluctuations. The fluctuations whi( h have taken })la( e hi freights in different directions during the past 30 vears have been enormous, as has been evidenced by the tables compiled each year by Messrs. Angler Bros., and pubhshed in these columns. We have en- deavored, by the aid of these tables and the returns pubhshed by the board of trade from time to time, to give a diagram showing the extent of these rises. It should be mentioned, however, that averages are deceptive, and that it is impossible with the data obtainable to secure absolutely reliable figures, but with the information at our 804 SHIPPING BOAED, NAVAL AUXILIARY, AND MERCHANT MARINE. ^sposal Y^ have endeavored to make the comparison as complete as possible As the year 1900 is reckoned as the best year shipowners have had for many years we have taken this year as a basis, and show by percentages the rises and falls in' the years since 1884. tJ^l^ ^^L'^''^''T '* ^^} ^^ '^?^ *^^*' ^' ^'^"^^d^ both outward and homeward freights, 1889 was the record year, but from 1884 to 1889 freights were good and did not show any A-ery serious fluctuation. From 1889 to 1895 freights fell to the extent of 40 per cent The engineers' strike in 1897, by stopping the production of new shipping, together with the Spamsh-American war in 1898, sent outward and home- ward freights up to 91.35 per cent of the 1900 standard, and it was solely due to the demand of the Bntish Government for transports for South Africa that freights went up still higher in 1900, when as much as 35 shillings per ton gross per month was paid tor tne hinng of some of the large mail and passenger steamers for the transport of • ?P\ ui !^ lup.hgures for passenger steamers are, however, not taken into account m the table for obvious reasons. It should be borne in mind that since 1885 the size ot steamers engaged in the cargo-carrjdng trade has increased considerably, and that vessels owing to their increased size and better dispatch, can now carry cargo at a much lower rate to leave a profit than vessels could do 30 vears ago Ihe high freights for carrying cargo that were paid in 1900, however, were not the result ot an increase in trade generally, but were of a fictitious character, Avith the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 805 result when the transports, etc., were released by the Government, and had to seek freights in their regular trades, the result was disastrous, freights falling 26 per cent in the following year, and remaining at an unremunerative level until September, 1911, when, shipowners having for some years refrained from building to any large extent owing to the impossibility of profitably employing tonnage, the increased trade caused the demand for steamers to more than equal the supply, with the natural consequence that freights were forced up to a paying basis. At that time it was fully anticipated by shipowners generally that they were in for a year or two of good freights, although nothing of an extra abnormal character was anticipated. The strike in the Plate caused a large number of vessels to be tied up there which were consequently taken off the market. The coal strike in this county also caused a further large amount of tonnage to be laid idle, while the transport workers' strike in the middle of the year further delayed vessels. When the disputes were over there was a glut of goods" to be shifted at different parts of the world, with the resultthat in order to secure vessels the different markets had to increase the rates, and freights reached a point which no owner in liis wildest moment had anticipated. For In- stance, in order to induce vessels to go to the Plate in ballast, as much as 31 shillings had to be paid, which was directly attributable to the strike on this side tying tonnage up. The threatened closing of the Dardanelles was the final spurt, as much as 27 shillings being paid to induce owners to take the risk of loading in the Black Sea. It was generally recognized that the spurt in the autumn was more or less fictitious and would not last, and therefore the fall in freights which took place a month or so ago was not altogether unexpected. The sudden drop in Black Sea rates from 27 to 12 shillings caused other markets to fall in sympathy, but rates are still of a rernuner- ative character, and it is generally believed that shipowners will have nothing to complain of for some time to come in the rates of freight they will be able to obtain. As showing the freight fluctuations which have taken pbcc during the period from 1892 to 1912, we give, in the appended folding sheets, further diagrams showing the highest and lowest rates in the homeward trade from Odessa and the highest and low- est rates from Wales to Genoa. Freight Rates on Coal from British Ports in the Years 1909 to 1916, Inclusive. [Cardiff and South "Wales Journal of Commerce Industrial Review, 1916.] HOMEWARD FREIGHTS IN 1915 — KEEN COMPETITION FOR TONNAGE — ABNORMALLY HIGH RATES SECURED. The year 1915 has without doubt proved absolutely phenomenal so far as homeward freight rates are concerned. Generally, right through the whole of the period, ratos of freight have been very forcibly and continually advanced, w'ith the exception of one or two slight setbacks of a t'?'mporarj'- nature.' The fact that a large amount of the world's mercantile marine, such as that owned by Germany and Austria, having been of necessity withdrawn from trading on the high seas is, of course, in a considerable measure responsible for the enormous freights paid, but the main caus'^ is undoubtedly to be found in the fact that the liuilding of mercantile tonnage had practically ceased for the time being, in consequence of the requirements of more urgent national impor- tance. A further, and certainly not an unimportant cause, was the withdrawal of a large proportion of tonnage frorn the world's market by requisition (stated by the first lord of the admiralty in the House of Commons to be equal to three times the German mercantile marine) to cope with the government demands, with the result that the amount of available tonnage left free fo"r the world's trade was so utterly incomparative to the demand that charterers were by dire necessity compelled to compete most strongly in order to secure tonnage to carry out their contracts. Another important factor on the question of the scarcity of tonnage is that in normal times a large pro- portion of grain imported into the United Ivingdom, France, and Italy, etc., came from the Eussian Black Sea ports, which only entailed comparatively short voyages, whereas st^^amers have been compelled to make throughout 1915 considerably longer voyages, principally from North America, Argentina, and India, to bring the requisite grain to Great Britain and allied countries. THE PIVOT OF THE MARKET. An interesting point to note is that whereas the Black Sea market usually in normal times acts as a barometer to the various other homeward markets, the River Plate has been the pivot, governing to a large extent the whole of the markets duiing the period in question, and therefore the greatest attention of operators has been attracted to this 806 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANJ MARINE. particular market. In summing up the trend of the markets generally it is only really possible to take into consideration the lowest rates of freight, viz, at the beginning of the year, and compare them with the liighest rates. An important point, which in justice to sliipowners, must not be overlooked, is the predominatir g fact that a large discount from the high rates of freight must be made — workirg expenses having increased exceedingly, such as insurance, wages, and, most important of all, unpre- cedented delays in discharging at various United Kingdom and allied ports, steamers frequently lying idle for a month or more, particularly in the United Kingdom, Liverpool being a striking instance about April last, also west Italian ports recently, and cases are not by any means infrequent where owners were without any redress whatever in the way of obtaining demun-age. THE RIVER PLATE MARKET.. To deal with the River Plate market first, the opening of the year saw 60 shillings paid from not above San Lorenzo to United Kingdom for prompt tonnage, but at this time owners who operated ahead were compelled to accept an appreciable reduction, viz, 50 shillings lor February loading steamers, 45 shillii gs to 46 sliilUrgs 3 pence for March, and as low as 41 shillings 3 pence was taken for a steamer to load as late as April. Rates, however, for early part of the year continued to steadily creep up to the neighborhood of 75 shillings in April and May for steamers then prompt, but a setback followed, bringing the rates down to the neighborhood of 42 sliilUngs 6 pence to 45 sliillings by the end of June. This setback proved purely a temporary lull in consequence of a diminished demand for maize, and another great advance qiiickly set in until the rapid increase, which has since been of almost daily occurrence, has with the close of the year crept up to the unprecedented rate of 122 shillings 6 pence. Notwithstanding this figure, however, merchants now remain faced with the important fact that available tonnage is so extremely scarce as to almost prevent them taking the risk of concluding the sale of cargoes without first having tonnage in hand by which to cover their probable requirements, which naturally places an inevitable restriction on operations, resulting in practically a hand to mouth trade. Buenos Aires or La Plata to Northern States Kosario to United Kingdom San Lorenzo to — Spanish Mediterranean ports United Kingdom West Italy : 125 Nitrate ports to — Mediterranean United Kingdom and Continent 1915 Highest. Lowest. s. d. 61 123 «. i. 35 50 6 122 6 122 6 125 43 44 3 55 90 120 82 6 60 UNITED STATES SECTION. The United States market has doubtless seen the largest amount of actual trading compared with any other particular section, and a huge business has been transacted, mostly for oats, wheat, barley, coals, cotton, etc. In the early part of the year rates current were northern range, 6 shillings 6 pence per quarter for oats to the i rench Atlantic ports, while at the end of the year the value was 13 shillings 6 pence, an increase of over 100 per cent. To west Italy 10 shillings 6 pence per quarter, heavy- grain, and 8 shillings 3 pence for oats were the rates accepted in January, against 20 shillings 6 pence to 21 shillings, heavy grain, and 15 shillings the respective values in December. 1 or cotton on form "O" from the Gulf to ^ iverpool 100 shillings per net register ton for about 145 feet measurement was paid during January, against 185 shillings for similar measurement in December, and to the Mediterranean 120 shillings was paid for January and February loading, against 260 to 270 shillings in the last month of the year. SHIPPING BOARD, NAVAL AUXILIARY, AND MEECHANT MARINE. 807 Northern range ports to — Rio de Janeiro Ri\er I'late (lower ports) United Kingdom Gulf of Mexico to— Havre Liverpool Spani -h Mediterranean United Kingdom San Francisco to United Kingdom and Continent 1915 Highest. s. d. 40 9 52 6 13 3 190 170 24 15 105 Lowest. s. d. 37 31 11 9 12010 95 9 3 8 6 45 iO EASTERN BUSINESS. The advance in rates in the eastern market was, if anythicg, even more marked than otlier directions, in consequence of the fact that at the opecirg of the year the demand in this market was incomparative with that of other directions, and it became a common occurrence for steamers at the close of last year to proceed from Indian ports to the River Plate in ballast, owners findirg that notwithstandirg the long ballast passage the rate from the latter quarter showed remunerative advantages. Therefore, during January and February business from the East was confined witliin a very narrow margin. Bombay dealt in tonnage for February and March loading on the basis of 37 shilUrgs 6 pence" dead-weight, to United Kingdom in December, how- ever, 111 sliillings 3 pence was paid for a similar voyage, a fact which displays a fairly accurate idea as to the comparative ad^-ance in rates. From Karaclii, however, operations were practically confined to those of the Indian wheat committee, which chartered tonnage for the surplus amount of wheat exported from this country, at rates varyii g from about 45 to 55 sliilUrgs according to the rise in rates which took place from this quarter toward the middle of the year. From the rice ports Rangoon char- tered tonnage at 33 shillirgs 6 pence to Liverpool, compared with 127 sliillirgs 6 pence from Burmah to the United Kirgdom in December; wliile Saigon secured tonnage for February and March at 36 shillings 3 pence to French ports, whereas 130 shillings was paid in the closing month of 1915. Vladivostok obtained tonnage for February loading at 42 shilUngs 6 pence Hull, but merchants in December were confronted with the important factor of an almost entire scarcity of available tonnage, notwithstanding that 110 sliillirgs was obtainable. Therefore the percentage of the increased rates from tliis quarter to the close of the year compared with the state of the market at the opening of the period is probably the most marked in any direction. 1915 Highest. Lowest. Aden to Calcutta Calcutta to Colombo Madras coast to — Marseille (net) Marseille f less commission) Mauritius to United Kingdom Saigon to — France Liverpool Vladivostok to United Kingdom and Continent Rupees. 20 15 s. d. 145 120 105 130 76 3 87 6 Rupees. 13 7 s. d. 57 6 55 70 70 65 42 « MEDITERRANEAN OPERATIONS. The Mediterranean market has not shown a proportionate advance compared with other directions. As an instance, Alexandria was paying 25 shillings, London or Hull, during January and February, whereas the rate throughout the whole of the year only advanced to 47 shillings 6 pence. From the mineral ports, particularly South Spain, 6 shillings 6 pence to 7 shillings was freely paid to Cardiff for January, whereas 13 shillings was frequently done during the last quarter of the year to the same destina- tion; and to Glasgow tonnage was obtained at 7 shillings 9 pence for January, whereas 17 shillings to 17 shillings 3 pence was the rate freely procured in December. The 808 SHIPPING BOAKD, NAVAL AUXILIARY, AND MERCHANT MARINE. Bay ports varietl considerably at the opening of the year, the rate then obtainable being 12 shillings 6 pence to Middlesborough. The rate, however, steadily advanced to 18 shillings, but a setback from this quarter was noticeable toward the end of Feb- ruary to early March, when 15 shillings 3 pence to 15 sliillings 4^ pence was the ut- most obtainalde, and by April the rate had dropped to 13 shillings; by June and July 10 shiUings 6 pence to 10 shillings 9 pence was all that could be obtained. TMs was undoubtedly accounted for by the fact that a large amount of tonnage on requisition was released with the proviso that the owners should bring a cargo of ore home, but shortly afterwards tonnage again gradually grew scarcer, and by the middle of October 17 shillings was reached; while by the middle of December 21 shillings to 21 shillings 6 pence was freelv bidding and paid to the few steamers then available. Rates to other destinations "from BlU^ao varied proportionately at the opening of the year, 7 shil- Ungs, Newport, being the value at that time, whereas, for the middle of December, 17 shillings 3 pence was freely paid to Newport River. Marbella to West Hartlepool Oporto to Cardiff, Barry, or Xewport Porman to Tees Sagunto to— Glasgow Kewport Sfax to Nantes or La Pallice BALTIC AND WHITE SEA MARKETS. In the Baltic and White Sea section, although business reported during the past 12 months was by no means large compared with other markets, which is accounted for by the fact that a good number of timber freights from this direction were covered by steamers taken up on time-charter basis, in addition to which there were, of course, a number of restrictions in force operating against steamers entertaining this class of business, the principal being war risks, and rates consequently have ruled firm through- out the season. The greatest rise apparent was from Skutskar to London, rates having advanced from 70 shillings to 143 shillings 6 pence, paid late in the season. SkeUeftea to HuU Skutskar to London Soderhamn to London . . Siindswall to — Ayr or Aberdeen East Coast coal port London Highest. Lowest. s. d. 100 143 6 95 s. d. 85 70 70 80 81 6 128 67 6 77 6 70 TIME-CHARTER RATES. Rates on time-charter basis have varied considerably throughout the year — 9 shillings 6 pence to 10 shillings on the dead-weight for a period of 12 months, Irans- Atlantic trading being the value during January and February, but the advance which took place on the ordinary freight basis had the effect of bringing an almost daily rise into steamers' values on time charter, and by April 12 shillings 6 pence was freely paid, particularly for Italian charterers for a similar period, and by October 17 shillings 6 pence was reached, and by the close of the year tonnage had become 80 scarce as to force the rate to 25 shillings for British vesvsels, whereas tonnage under neutral flags were much more valuable during the closing months of the >ear, in consequence of restrictions in the trading limits of British steamers — an orderin council having been issued in November prohibiting British vessels from trading between one foreign port and another foreign port as from December 1, 1915 — and consequently large Norwegian tonnage commanded as much as 30 shillings for 12 months trans-Atlantic trading. SHIPPING BOAED, NAVAL AUXILIAKl , AND MERCHANT MARINE. 809 Time charter. Australian trade Continental trade Trans-Atlantic (delivery Northern States) Trans-Atlantic (delivery United Kinf^dom and Continent) . . White Sea trade (delivery and redelivery, United Kingdom) TYNE COAL FREIGHTS IN 1915 — EXTRAORDINARY RATES PAID. Rates of freight paid to shipping from the Tyne during 1915 reached unprecedented levels. In the first half of the yeai- rates from this district were comparatively much more remunerative than those obtainable in other markets, owing to the extra risks which ships had to run as a consequence of this part of the coast having been thickly strewn with mines by the Germans. The risk of encountering enemy warcraft also had the eff.^ct of keeping tonnage away from the district, with the result that mer- chants requiring boats had to pay extraordinary high rates, Algiers during January averaging 28 shillings 5 pence, Bordeaux 26 shillings 1 pence, Calais 19 shillings lOJ pence, Genoa 35 shillings, Havre 17 shillings dk pence, Port Said 28 shillings 8 pence, and St. Nazaire 26 shillings 7i pence. In February the demand was very brisk and rates materially hardened, Algiers averaging 29 shillings 9 pence, Genoa 39 shillings 7 pence, Havre 19 shillings 2 pence, London 12 shillings 5 pence, and Port Said 32 shill- ings 6 pence. In fact, so firm was the market that the Government requisitioned a large number of detained and captured enemy vessels and placed them under the management of two Newcastle owners in the coasting trade with instructions that rates were not to be forced in an upward direction. These vessels were, as a matter of fact, fixed at rates much below those current, and in April the average to London had dropped to 7 shillings 5^ pence, while for Algiers it worked out at 23 shillings 8 p'^nce, Genoa 35 shillings 8 pence. Port Said 27 shillings 6 pence, and St. Nazaire 18 shillings. The tonnage placed on the market by the government only caused a t-^mporary setback, and after a couple of months rates again moved in an upward direction. In June Al- giers averaged 19 shillings 9 pence, Genoa 27 shillings 11^ pence, Las Palmas 22 shill- ings 11 pence, London 7 shillings 3f pence, and St. Nazaire 19 shillings. At the close of September the action of the Greek Government in ordering Greek vessels to proceed to Piraeus further depleted the carrying capacity of available vessels, and rates ad- vanced by leaps and bounds, and before the close of the year eclipsed all previous records. In September Algiers averaged 27 shillings, which was increased to 32 shill- ings 9^ pence in October, 38 shillings 9 pence in November, and 41 shillings 8 pence in December. Bordeaux averaged 22 shillings 11 pence in September, 26 shillings IJ pence in October, 35 shillings 9| pence in November, and 33 shillings 3J pence in De- cember, while Genoa jumped from 32 shillings 2f pence in September to 44 shillings 7 pence in October, 53 shillings lOJ pence in November, and 64 shillings 10 pence in December. London averaged 8 shillings 7^ pence in September, which was increased to 9 shillings 4\ pence in October, 13 shillings 7^ pence in November, and 16 shillings 4 J pence in December, while St. Nazaire advanced from 21 shillings 6 pence in Septem- ber to 24 shillings 6 pence in October, and 33 shillings 6 pence in November. The monthly averages to represenative ports during the past year are appended: Monthly averages, 1915. Tyne to— Month. Algiers. Bor- deaux. Calais. Genoa. Havre. Las Palmas. Janrary s. d. 28 5 29 9 25 7 23 8 21 7 19 9 18 3 23 27 32 9i 38 9 41 8 «. d. 26 1 27 0| 25 3 17 6f 18 9 19 9J 18 5f 19 11 22 11 26 li 35 9J 36 Z\ s. d. 19 lOJ 18 6 22 10 19 3 15 m 15 11 13 9 16 6 18 li 18 1 23 6 23 6 s. d. 35 39 7 36 2 35 8 33 27 11§ 24 lOi 26 111 32 2f 44 7 53 lOi 64 10 s. d. 17 3| 19 2 14 9i 18 7i 15 7i 15 64 13 Of 13 9i 17 3 16 9 21 &h 25 lOi s. d. 23 7 February 24 9 March 24 10 April 24 7 May 23 3f June 22 11 July 20 3 Ausjust 18 7 September 23 11 October 31 1 November 26 6 December 35 5 810 SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. Monthly averages, 1915 — Continued. Month. January . . February. March April Tyne to— Lisbon. s. d. 25 IJ 25 4 22 8 May 22 June \ 19 5 July 18 4} August 19 September ; 23 4 October 27 November 29 8J December London. Port Said. Roche- fort. 27 6 25 26 6 24 5 23 8 36 10^ 45 5 51 Hi s. d. 16 3 30 17 19 6 19 7J 18 5 18 8 23 7J 25 29 37 8 St. Na- zaire. s. d. 26 7i 25 4i 24 18 16 19 17 7 19 Oi 21 6 24 6 33 6 32 8 LOWEST, HIGHEST, AND AVERAGE RATES IX 1915. The extraordinary levels whicli freights reached in 1915 will be gathered from the following table, shomng the lowest, highest, and average rates paid to representative ports during 1914 and 1915: Tyne to— 1914 1915 Lowest. Highest. Average. Lowest. Highest. Average. Algiers s. d. 5 7J 4 6 3 4^ 6 9 3 lOJ 6 5 1* 2 9" 6 9 4 7J s. d. 16 16 6 8 6 22 6 16 6 13 6 13 12 22 11 3 16 3 s. d. 7 11 7 4 0} 10 llj 7 8i 8 5J 8 1 4 6 10 6f 5 9i 7 11 f. d. 17 6 15 13 23 12- 15 9 15 3 6 23 16 16 s. d. 42 38 6 26 67 26 6 36 3 35 16 6 53 9 39 38 s. d. 26 25 0} 18 7 37 4 Calais Havre . 17 IJ Las Palmas 24 10 22 9 8 11 Port Said 32 5 23 1 St. Nazaire 4 3 23 7J . [Cardiff and South Wales Journal of Commerce Industrial Review, 1916.] Welsh Coal Freights in 1915. all previous records eclipsed — government measures to remedy tonnage scarcity — lowest, highest, and average rates — exclusive detailed sta- TISTICS. (On the pages immediately following this article exclusiA^e statistics showing the lowest, highest, and average rates of freights to all ports from Cardiff (including New- port loading) and to representative ports from Swansea are given.] Shipownera during the past 12 months enjoyed a period of prosperity never before realized in the annals of steamship owning. Rates rose to levels which eVen ahij)- owners themselves stated were " unreasonable. " Though 1914 was a year of extraordi- nary dislocation to the shipping industry, on account of the commencement of hos- tilities in the great war, difficulties of an unparalleled character arose in 1915, and the situation was intensified. In fact, shipowners have never been faced with such serious and grave problems as those encountered during the past 12 months, and it is to the credit of shipowners generally that the country was able to successfully grapple with the crises which arose at different periods. Though freight rates reached levels previously unthought of, shipowners in many cases were prevented from en]'o\ang the enormous freights obtainable by, in many cases, having their vessels — or a proportion — requisitioned by the admiralty on time charter rates which were very substantially below those offering on the market. Then again, the fact that Government measures were taken to regulate the export trade of 3ie United Kindgom, on account of the SHIPPING BOARD, NAVAL AUXILIARY, AND MERCHANT MARINE. 811 shortage of labor, and also to prevent certain commodities getting into the hands of the enemy, created at different times situations of much complexity. '^Tiile owners dur- ing the past year were in receipt of unprecedented freights, it must not be taken for granted that their profits were anything like what might have been expected having regard to the extraordinary figures which were paid. The profits were to some extent curtailed by lengthy detentions at the discharging ports, by substantial advances in wages, increased costs of insurance, stores, and bunker coal, and also by the excess profits tax, which claimed 50 per cent of the surplus over the average profits of any two of the three years 1911, 1912, 1913, chosen by the taxpayer. Early in the year, in order to reduce the liigh level of freight rates from the United Kingdom, the British Admiralty requisitioned interned alien vessels, which num- bered 73, of 92,345 gross tons, and 36 captured vessels of 56,766 gross tons, for the coasting coal trade. These vessels were placed under the management of two New- castle owners, who wei'e instructed not to force rates of freight up and also to fix their boats at below current rates in order to reduce rates, particularly to London. This scheme certainly for a time did cause the coasting market to display weakness, but the easiness was only of a temporary character, and rates again qiuckly returned to their normal course. Toward the close of January the freight market was appreciably stiffened by the ItaUan Government requisitioning about 200 Italian steamers for the carriage of foodstuffs and coal to Italy. In February the German submarine "block- ade" of England was initiated, but curiously enough, the enemy's futile attempt to isolate the British Isles did not cause rates of freight to advance, as would have been only natural on account of the increased risks which shipowners running to the United Kingdom had to undertake. Early in May an order in council was issued pro- hibiting the export of coal from the United Kingdom to all neutral countries except by Ucense. This order had a material effect on outward coal freights, for at the begin- mng Ucenses to ship were granted only on a very hmited scale, with the result that not nearly so much tonnage was requii'ed to transport the coal available for export. Con- sequently, tonnage for once being in excess of the demand, rates fell to levels which were the lowest recorded during the year. However, on May 23, Italy declared war on Austria and joined the alhes, and on May 26 it was officially announced that coal could be shipped to Italy, which was no longer a neutral country, without a license. As the Italian market was one of South Wales's largest customers, the effect of this announcement was to immediately increase the demand for vessels, which, by the way, had been diverted to other destinations on account of the difficulty in obtaining licenses to ship coal, and rates again advanced. WELSH miners' STRIKE. In July a very serious state of affairs was created by the action of the Welsh coal miners, who struck work for a week in order to force their demands for a revision of their coal-field agreement, which terminated on June 30. That the miners should have taken such drastic steps duiing a time when the country was engaged in a war of such magnitude will forever be a stain on the patriotism of a section of the com- munity which has so nobly responded to the call of men for His Majesty's forces. The owners had refused to enter into negotiations for a revision of the coal-field agree- ment on account of the fact that the miners were already receiving a 17^ per cent war bonus. Mutual arrangements having failed, the Government intervened, and proposals were put before the miners, which were rejected, and the miners on July 15 ceased work throughout South Wales, and did not recommence until July 22, after practically all their demands had been granted. This stoppage lost a large amount of business to the district and caused vessels to be diverted to other ports, while rates, owing to the smallness of the demand, descended to very low levels. Early in August it was announced that coal exports were prohibited to all countries except British possessions and protectorates without license. This order had practically no effect on the freight market, as by this time the coal licensing committee had got into thor- ough working order, and the new restriction created little fresh difficulty. Toward the end of September the shipping industry received a bombshell in the news that the Greek Government had issued instructions that all Greek vessels were to proceed to Pirpeus at once. The effect of this announcement was to send up rates to unprece- dented levels, for the tonnage shortage was very acute, and the withdrawal of the Greek mercantile marine — estimated at 474 vessels of about 549,983 tons — from the market further materially accentuated the scarcity of vessels which previously were much below those required to transport the world's commerce. But this was not the end of the new difficulty created, for a few days after news was received that an enormous landslide had taken place in the Panama Canal, and that the waterway would not be navigable until early in 1916. Thus the world's supply of tonnage 812 SHIPPING BOARD^ NAVAL AUXILIARY, AND MERCHANT MARINE, was further depleU-d, as a largo number of vessels were held up by the landslide, while those which had been about to go through the canal had to proceed by the old route, which appreciably prolonged the voyage and further dimini:rhed the carry- ing capacity of the world's tonnage. At this time affairs in the P>alkans had reached a crisis, and the whole world was waiting to see on which side the Balkan States would participate in the war. On Octol)er 12 England broke off diplomatic relations with Bulgaria, and it was fully anticipated that Greece would soon join in the war on the side of the (luadruple entente, but this expectation was unfortunately not realized. So acute had the tonnage scarcity position Ijeccme that on November 11 two new orders in council were issued which dealt for the first time directly with the shipping industry. It was officially announced that from December 1, 1915, all British vessels would be prohiVnted from trading l)etween one foreign port and another foreign port, except by license, and also that power had been given to requisition vessels for the carriage of necessities. The effect of this order was that vessels, except those granted a license, would upon discharging at a foreien port have to proceed back to the United Kingdom. STRIKIN'G FREIGHT COMPARISONS. During the last quarter of 1915 rates were at the highest levels touched throughout the whole of the year, up to 72 shillings 6 pence l>eing paid for Al.'xandria from Car- diff, 70 francs Algiers, 41 shillings Barcelona. 60 shillings Genoa, ^'.i shillings tiihraltar, 76 francs Mars'ille, 55 shillings Malta, 66 shillings Naples, and 70 shillings Port Said. The extraordinar>' height which freight rates n-ached in 1015 will be realized when it is borne in mind that the top rates for the same ports during 1914 were: Alexandria, 20 shillings 7\ pfuce; Algiers, 20 francs; Barcelona, 17 shillings 6 pence; Genoa, 18 shillings; Gil)raltar. 14 shillings; Marsiille, 23 francs; Malta, 18 shillings; and Port Said, 21 shillings 6 pence. For the bay and coast rates also broke all previous records, Cardiff to Bordeaux reaching the phenomenal figure of 45 francs in 1915. as compared with a top rate of l;i.87A francs in 1914, while Caen was done at 23 shillings against 12 shillings; Dieppe, 22 shillings 6 pence against 12 shillings 6 pence; Havre. 22 shil- lings against 1:} shillings: bi.sbon. 32 shillings 6 pence against 12 shillings; London, 16 shillings against 3 shillings KH pence; Kouen, 23 shillings against 14 shillings 6 pence; St. Nazaire, 41 francs against 14} francs; St. Malo, 18 shillings 6 pence against 11 shillings 6 pence; and Trouville, 23 shillings against 4 shillings 9 pence. The aver- age rates also showed a verv^ marked appreciation, Algiers, for instance, averaging 34.39.V francs for the whole of 1915, as compared with 9.21 francs in 1914, 10.06 francs in 1913, 12.09 francs in 1912, 8.53 francs in 1911, 7.12^ francs in 1910, and 6.62i francs in 1909. Alexandria averaged 36 shillings in 1915. against 10 shillings 3 pence, 9 shil- lings 10} pence, 11 shillings 4^ pence, 7 shillings 5] pence, 6 siiillii\gs 2} pence, and 5 shillings 1 1 pence, while the average for Barcelona in 1915 was 2S shillings 10} pence, compared with 9 sliillings IJ pence, 9 shillings 9} pence. 11 shillings 6} p(>nce, 8 shil- lings 5} pence, 7 shillings \ pence, and 6 shillings 10^ pence. Genoa in 1915 averaged 31 sliillings 8i pence, compared with 8 sliillings lOi pence, 9 shillings 1 pence, 11 shillings 7 pence, 8 shillings 1 pence, 6 shillings 8i pence, and 6 shillings 7* pence, while Marseille averaged 40.09J francs against 10.69 francs, 10. 87^ francs, 13 francs, 9.53 francs, 7.87^ francs, and 7.25 francs, while the average for Port Said in 1915 worked out at 35 shillings Of pence, against 9 sliillings 7h pence, 9 shillings 7 pence, 11 shil- lings l.\ pence, 7 shillings 6 pence, 6 shillings } pence, and 5 shillings 9 pence in the preceding six years, respectively. The bay and coasting section also advanced in proportion, Bordeaux averaging 24.94} francs com])ared with 7.17 francs, 6.90A francs, 8.0;i francs, 6.53 francs 5.47^ francs, and 5 francs, wiiile Dieppe averaged 13 shillings 2 pence, 4 shillings 4 pence, 4 sliillings 11 pence, 5 shillings 11} pence, 4 shillings 8 pence, 4 shillings 4h pence, and 4 shillings 3 pence. Havre averaged 14 shillings, against 5 shillings H pence, 4 shillings lOA pence, 5 shillings 9} pence, 4 shillings 8J pence, 4 shillings V pence, and 4 shillings 1 pence, and Lisbon averaged 20 shillings 10 pence in 1915, against 9 shillings U pence, 5 shillings 8A pence, 6 shillings 7} pence, 4 shillings 11 pence, 5 shillings k pence, and 4 shillings 11 pence, while the average for St. Nazaire worked out at 20.11 francs, constrasted with 7.62} francs, 6.57i francs, 7.61 francs, 6.06 francs, 4.78 francs, and 4.65 francs. For South America and Brazil average rates did not show such a marked advance owing to the fact that coal exports in this direction were considerably retarded by the stringency exercised by the war trades de])artment in the matter oT granting licen.ses. Consequently the demand for this direction was not so great as in other trades, with the result that freights did not advance in the same proportion, though they certainly reached figures unparalleled in the history of steamship owning. Cardiff to Montevideo averaged 30 shillings 6} pence in 1915, compared with 13 shillings 6^ pence, 16 shillings 9 J pence, 19 sliillings Sini'IMX(i I5UAHD, NAVAl. A U \ 1 LIAR V, AND MERCHANT MARINE. 813 ii peiut', l(j sliilliiigs 9^ peuce, 14 shillings (i pence, and iu shillings 6 pence, respee- tiyely, in the previous six years, while the average for Kiver Plate worked out at 30 shillings 5 pence, 14 sliillings U pence, 17 shillings 8 pence, 20 shillings 8^ pence. 18 shillings 1 J pence, 15 shillings 3 J pence, and 10 shillings 34 pence, while the Rio de Janeiro average was 2!> shillings 7 pence, against 13 shillings 3i pence, 16 shillings 10 pence, 20 shillings lA pence, Ki shillings 6| pence, 14 shillings 5^ pence, and 10 shil- lings Si pence. Ivates for the Far Eastern destinations, as was only to be expected, reached extraordinaiy levels, and Aden averaged 37 shillings 9 pence in 1915, against 11 sliillings 4i pence, 12 shillings J pence, 12 shillings 7 J pence, 9 shillings lU pence, 8 shillings 8 pence, and 7 shillings 6 pence, wliile the average for Colombo'worked out at 40 shillings 5 pence, 1 1 shillings IJ pence, 12 shillings 4 pence, 13 .shillings 4^ pence, 10 shillings M pence, 9 shillings 2f pence, and 7 shillings 11-^ pence. Canary Islands business was also confined witliin comparativeh' narrow limits during the year, but the average for the past 12 months fcr Las Palmas worked out at 21 shillings 11 pence, against 7 shillings 4.\ pence, 8 shillings 7i pence, 10 sliillings 8| pence,' 8 shillings 1\ pence, 7 .shillings 1^ pence, and G shillings l\ pence. From the above figures it will be noted that the average rates for the Mediterranean during 1915 were about four times as much as the average to the ."ame ports in 1914, while for the bay, coast, Canary Islands, and eastern ports they were a])out trebled, and for the South American and Hrazilian destinations doubled. -WERAGES AT THE K.\D OF EACH MONTH. A Striking illustration of the enormous ailvance which took place in freight rates iu the last (J uartcr of the year is given in the table published on another page showing the average rates of freight to representative ports from Cardiff and Swansea at the end of each succeeding month. For the Mediterranean ports the average during the llrst three months of the year steadily advanced, but in April, May, June, ami July showed steady declension, and in the last five months of the year jumped rapidly, Algiers, for iuBtance, advancing from a total average of 25.33 francs at the end of August to 25.50^ francs in September, and 28.97 francs in Octol)er, 31.80 francs in Novendjer, and 34.39^ francs in December. Genoa averaged 26 shillings 9il pence at the end of August, and jumped to 28 shillings in September, 29 shillings 2j pence in Octoljer, 30 shillings 8 pence iu November, and 31 .shillings Sh pence iu ftecember, while Marseille in- creased from an average of 28.9«j'| francs at the end t^O OOt-t— WO M rtrt CO »c »o M ■^ -^r lo lo OIM coco lOCD t^OSOSO CO t^ t^ CO ■W CD CO CO "" cor-t-co OOE- o go coooo O COt>-«l O W5 »0 u^ TJ» UO »0 NW^iO 0(N CO 00 OSTT 00 CC CO "5 CO I~ OS CO OSCOO^HCD CO t* OS IOt)< CD C5^ 00 OS ^ cot^o 1—1 TJ< OS ' -^coo ^*< m os.-< t^OOOO 00 OS csos OJOO CO M 1-1^ — I C*l CJ — ' -^ C^ C<1 I ' § h3 I ^ P3|i< O lOt^ »OCD CO SiTjxSico CO OOCOMIN ^ *o C»5 M s: ^ ^1 00 W3Q0 OOOOt^ t^ lO coco ■^ coc OOGO f-^ CO c^ r- >o CC CO ^ CO Tf ic ro -^ »o 05 IC-^CO GO CCOCO 00 ^cor* *> O 1-1 -^JiOOOS .-ooco s^i coco oot^os n OS CO 00 CO CO CO -tttOJ ^51 1-1 lai ir^ ^^"^ "^ O OS ^H t^t-t^l t^ -O 1-Hrt l-liJ-O CO C OSOOi-l rH«(N(M f-l .a 03 eooNN OOS.-I1-I t^ 1-1 CO CO 1-5 ri e^ ri 00 t^t^ ot» CO -Hrt COTf'W C CO i-< coc lO ^-^ OS lO OSCOi-l ir:) t^ 'tf' csQ OSi-( coosos o c^ oco ^ 00 00 ooos ■ 00 00 >--; o o CO OC t~CBO lOt^OS cococoos oiosos o-^osc^ OSC O CO CO O O O-H O OSCO OS rt rf -- ,-1 rt ^ -H.-I IN i-lrHCV< oaooocoocsg 2 -^ — oo gooo -= o o u — — ^ OS C OS OS Ol O O U G 1-1 OS OS c^ P OS SI (M CO TP ►2o 818 SHIPPING BOARD, XA\ AJ, AUXlLlAKi, AND MEKCHANT MARINE. repokt by the san francisco office of the bureau of foreign and domestic commerce relative to ocean freight rates from the port op san francisco. March 11, 1916. Bureau of Foreign and Domestic Com/nerce: Referring to Tjureau letter of February 2, calling for data ou ocean freight rates, and telegram of the 10th instant, stating that such data should be mailed to-day, there is inclosed such meager material as it has been possible to collect to date. Partial information is given as to rates to Hongkong, Manila, and Shanghai, furnished by the Toyo Kisen Kaisha; to Sydney, Australia, furnished by the Union Steamship Co. of New Zealand (Ltd.); to Copenhagen, Denmark, furnished by the East Asiatic Co. (Ltd.). Tnere has been no particular disposition to withhold information, except in one case, where the company did not care to go on record at all, but there has been a disposition to promise and not fulfill; parties, on whom I had particularly depended failed to supply the desired information, though personal calls were made in addition to written requests. Calls made yesterday, after receipt of telegram fi-om the bureau, brought forth renewed promises of data within a day or so from some of the concerns, but in other cases I was informed that it was simply impossible to get out the information, the general excuse being that it required too much work for an overburdened staff. This is borne out by the fact that several steamship companies are working evenings. Mr. H. E. Moore, traffic manager of W. R. Grace & Co., advised me yesterday that he had been obliged to neglect the ordinary coiTespondence for the past two weeks because of the great number of telegrams, cables, and conferences claiming his attention. I had been particularly depending on W. R. Grace & Co. for information as to rates to the west coast of South America. Mr. Moore stated that rates in that direction had not advanced to the extent that thej- had in other trade routes — that, for example, the old rate of $12 on general merchandise had risen to but SM per ton. The Toyo Kisen Kaisha is unable to raise its rates on boats subsidized by the Jap- anese Government, though seeking authority to do so; on its chartered boats, how- ever, the rates are considerably higher and are quoted only from boat to boat. This applies to the Java-Pacific Line and casual sailings, rates running anywhere from $30 to 160 per ton. The closing of the Panama Canal is to some extent responsible for the present high rates, as prior to its closing there were more ships available for the Oriental trade; the early opening of the canal will undoubtedly supply more carriers and place rates on a more stable basis, though they will probably remain high for some time to come. Mr. Otto Jelstrup, general agent of the East Asiatic Co. (Ltd.), advises that with the reopening of the canal a fleet of Danish motor ships will touch at San Fran- cisco every three weeks westbound. Mr. Back, of the Union Steam Ship Co. of Xew Zealand (Ltd.), in speaking of the difficulty of supplying data for this report, stated that they had offered $115,000 per month for the charter of one steamer and it had been refused, $140,000 being asked. Even at the lower rate it would be necessary for them to get $35 to $40 per ton for freight in order to make any profit. If the data on charters and rates promised "as soon as we can get at it" and "in a day or so" is received shortly it will be forwarded, though it may be too late for any particular use of the btu'eau. The various concerns from whom information is sought will, however, be visited again with hope of result.*. E. G. Babbitt, Vovanercial Agent. (Thereupon, at 12 oclock, tlic hearing was adjourned until to-mor- row, Thursday, March 9, 1916, at 10.30 o'clock a. m.) shipping board, naval auxiliary, and merchant marine. 819 Committee on Merchant Marine and Fisheries, House of Representatives, Thursday, March 9, 1916. The committee met at 10.30 o'clock a. m., Hon. Joshua W. Alex- ander (chairman) presiding. The Chairman. I desire to submit for the record the following telegram, received hj Mr. Edwin H. Duff from Mr. Wm. Livingstone, president of the Lake Carriers Association, Detroit, Mich. : Detroit, Mich., March 8, 1916. Edwin H. Duff, 1306 F Street, NW., Washington, D. C: Welland Canal is 26| miles long, has 25 locks, each 270 feet long and 45 feet wide, with 14 feet of water on sills. Total rise or lockage is 326| feet. These are dimen- sions of present old canal . New Welland Canal not expected to be completed until latter part year ]9]8. Wm. Livingstone, President Lake Carriers Association. 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