THE SHIP-SUBSIDY BIEL. Ml' I; /. I; V SPEECH (II HON. HMDS N. LITTAUER, OF NEW YORK, IN THE HOUSE OF REPRESENTATIVES, Tuesday, February 26,1907. * 7245 WASHINGTON. 1907 . SPEECH OF HON. LUCIUS N. LITTAUER. The House being in Committee of the Whole House on the state of the Union and having under consideration the bill (S. 529) to promote the national defense, to create a naval reserve, to establish American ocean mail lines to foreign markets, and to promote commerce— Mr. LITTAUER said: Mr. Chairman : The deplorable decay and humiliating condi¬ tion of our ocean merchant marine, which in the day of its glory fifty years ago ruled the seas, but which to-day is prac¬ tically driven from the ocean, has engaged the attention during the last decade of interested and patriotic men both in and out of Congress. Many measures proposing to rehabilitate this important serv¬ ice have failed of enactment. Early in the first session of this Congress, carrying out in greater part the recommendations of the Merchant Marine Commission established by Congress in 1904, an act was passed by the Senate whose title read, “ to promote the national defense, to create a naval reserve, to es¬ tablish American ocean mail lines to foreign markets, and to promote commerce.” That act, for which the measure now be¬ fore you is a substitute, had three main provisions. First. It provided for a general ship subsidy, a cargo subsidy to ships engaged in carrying freight over the ocean, and to ships engaged in deep-sea fisheries—a subsidy based upon ton¬ nage, which by some was thought to be a bonus to the ships in these trades. Second. It provided for the establishment of eleven specified mail routes to foreign countries, but did not take advantage of our recent experience, for it provided for those routes at a slow rate of speed and with a low compensation. Third. It sought to create a naval reserve under definite pro¬ visions. No subject has received more generally favorable assent than the necessity for the upbuilding of our merchant marine which, in 1855, carried over 75 per cent of our commerce and in 1905 carried 12 per cent. The withdrawal of mail subsidies J)y our Government in 1858 at the critical time in the change in ocean vessels from wooden sail ships to steam-propelled iron and steel ships, and the continued increasing subsidies at this time of foreign governments, especially Great Britain, were the main causes of this result. I take it for granted that no man within the sound of my voice would deny the desirability to the interests of the United States to build up our ocean merchant marine at least so it might be on a par with the other industries of our country. 7245 3 4 Our national platforms have time and again favored the en¬ acting of legislation which would build up this lost trade. Mr. SULZER. Will the gentleman yield for a question? Mr. LITTAUER. Yes. Mr. SULZER. I would like to ask the gentleman from New York when the Republican party in a national platform ever declared in favor of a ship subsidy to build up the merchant marine? Mr. LITTAUER. I am speaking of a mail subsidy in its relating to building up the merchant marine. I do not care to be interrupted at this time. I am making a general statement now, and if the gentleman will reserve his particular questions until a later time I shall be pleased to answer him. Mr. SULZER. I want to say to the gentleman that no Re¬ publican national platform ever advocated ship subsidies. Mr. LITTAUER. Our national platforms have repeatedly demanded that Congress should pass measures to rehabilitate this loss of trade. Our Presidents have in messages called the attention of Congress to the desirability of rehabilitating our merchant marine not only from the standpoint of material profit, but from its broader bearings on our political relations with foreign nations and from its particular bearing upon our military strength at sea. The Senate bill, in long consideration before the Committee on the Merchant Marine and Fisheries, seemed impossible of favor¬ able report. There was early disclosed a decided opposition to a cargo subsidy, both from the standpoint of utility as well as propriety. Many amendments and limitations to the Senate measure were offered, including tonnage taxes and discriminat¬ ing duties impossible of enactment without the abrogation of over thirty treaties with foreign countries. Discriminating duties, moreover, have in modern times been proved unsatisfactory, notably in the case of France, and have been dropped wherever enacted by other nations. And yet there were two projects in the Senate bill which seemed to meet with approval of the com¬ mittee, as well as of Congress in general. They were the projects for the expansion of our mail service and the creation of a naval reserve. But even on these two subjects much objection was heard and strenuous antagonism raised to some of the conditions in the Senate bill. It was my part, after a careful study of the problem, to suggest the measure that is now before you for con¬ sideration, the salient features of which are, first and foremost, the entire and utter elimination of any and every subsidy to ships based on cargo carried. There is not a single provision in this bill that appropriates a dollar fqr a general-cargo sub¬ sidy. Second, the selection of such mail-carrying routes as would appear to be immediately desirable for the interests of the United States in establishing both commercial and political relations where our present status is a weak one, but where our possibilities are the very strongest. In doing this we take heed of the experience had under existing law, under the mail- subsidy act of 1891, by providing ample and proper compensa¬ tion that would make it possible to carry out the purposes for which this bill is proposed; in which regard the act of 1891 has in part signally failed. What is now proposed is to take up the well-established na- 7245 5 tional policy of mail subsidy where it has proved inadequate and to make provision such as would surely accomplish the pur¬ pose of rapid mail communication with South America, Austra¬ lia, and the Orient, in ships of 16 knots speed, faster and supe¬ rior to those of competing nations now running to those coun¬ tries ; the ships to be built in the United States on designs to be approved by the Navy Department, with a view’ to their use as naval scouts, auxiliary cruisers, and transports, to be held at the disposal of the Government in time of war, which will carry an increased proportion of American citizens in their crews and a number of American boys as cadets. Mr. SHERLEY. Is the gentleman aware of the fact that Admiral Dewey, in the report made to the House and Senate relative to the speed of vessels adaptable for scout purposes, said that the speed should be at least 20 knots? Mr. LITTAUER. Yes; and how does that affect my state¬ ment, if you please? Mr. SHERLEY. The gentleman just made the statement that he was providing for ships that would be suitable for scout purposes. Mr. LITTAUER. Yes. No doubt ships of 20 or 24 or even 26 knots would be better than those of 16 knots. Nevertheless, a ship running 16 knots is available as a scout, if not a perfect one. Again, if not available for scout purposes, 16-knot ships are faster than are generally run to the countries with which we seek to establish mail communication, and as such will be more available, because of their rapidity, as well as for trans¬ ports and general naval auxiliaries. Sixteen knots is the mini¬ mum speed provided in the measure. I understand there is to be an amendment offered here that will authorize the Post¬ master-General to accept the bid of the shipowner who will propose to cover the routes in the most rapid fashion; at any rate, we try to establish a 16-knot basis. We retain the Senate provision for the creation of the naval reserve, specify compensation subject to annual Congressional appropriation, but we have eliminated from the Senate proposi¬ tion all those provisions which seem to point toward compulsion or impressment or conscription of seamen, which the sailors’ unions and labor unions complained against so generally. The bill as it is to-day before you for consideration is, as I again repeat, in no way a ship-subsidy bill. It has not a single provision to give a dollar to cargo-carrying vessels. It is an ocean mail bill pure and simple, a virtual extension of existing law, with the incidental provision for the establishment of a naval reserve to be voluntary with every officer and seaman, whether he be employed in the coastwise, lake, or foreign service, while it is optional with the owners of the American ships to carry naval-reserve men or not or in any proportion that they may see fit. The bill proposes an expenditure of public money not as a bonus or gift, but as compensation for specified public service, the transportation of American ocean mails by Ameri¬ can ocean steamships and the establishment of a superior ocean mail service to those countries of the world where it is conceded our present service is inferior, and where political and com¬ mercial considerations plainly suggest it should be the best. It is not a measure to benefit existing lines or prosperous cor¬ porations. 7245 6 It provides for seven lines of mail communication, each one of which is warranted by the expenditure proposed in order to produce the results desired, for, of course, inadequate appro¬ priation would prove as ineffective as the act of 1891 proved to these countries, bringing no results. It is in no way any change in the policy of our country, a policy steadily pursued from 1848 to 1858, reenacted in the postal-subsidy act of 1891 under a Republican Administration, which enactment was a policy not changed in a single condition when the control of our Federal legislative and executive departments followed into the hands of the Democratic party under Cleveland, so that above all we have a right to appeal to both sides of the House that this meas¬ ure should receive consideration on the merits of each one of its projects, the general policy having been upheld by the Dem¬ ocratic as well as the Republican party when each was in full bontrol of the Government. We are to-day paying $1,400,000 for the carrying of our mails over six routes to Europe, the West Indies, Mexico, Venezuela, and Australasia. The vessels which carry these mails are the most modern and efficient in our ocean fleet of to-day; in fact, they constitute a large part of our steam tonnage regularly engaged in foreign trade. Mr. SULLIVAN. Will the gentleman yield for a question? Mr. LITTAUER. Yes. Mr. SULLIVAN. Does it occur to the gentleman that if they had brought in a bill lowering the duties upon South American products, and at the same time providing a mail subsidy for ships to South America, that then you would have a compre¬ hensive scheme of legislation which the gentlemen upon the Democratic side would be glad to support? Mr. LITTAUER. My belief is that if we had free trade with South America our commerce would not for the time being be much increased at all. We import about $75,000,000 from Brazil, largely coffee and rubber. Now, as to Argentina, where our trade affects the leather interests of the country—the shoemaking interest of Massachu¬ setts—we find that 80 per cent of all the hides produced in Ar¬ gentina come now to the United States under duty. Eighty per cent of all the hides produced in Argentina reaches us, so that all we could increase our trade in hides would be but 20 per cent. Mr. SULLIVAN.. The gentleman leaves out one element, and that is that if we got these hides free from duty we could manu¬ facture our shoes cheaper and sell more shoes to European and Asiatic countries than we do now. Mr. LITTAUER. We might manufacture a pair of shoes 2 cents, perhaps 3 cents, a pair cheaper. No figures have ever been presented to me showing any more, and I have been brought up not in the shoe business, but in the leather business. I do not believe that the duty on hides makes the cost or has ever made the cost of a pair of shoes 2 cents higher than if the duty was entirely removed from hides. Mr. SULLIVAN. I want to inform the gentleman that 3 cents in the price of a pair of shoes at wholesale is such an element as to make the difference between success and failure between persons on both sides of the line—that is to say, the man who is manufacturing at 3 cents higher than the other loses out on account of that small item. Mr. LITTAUER. 1 can not agree at all with the statement, 7245 and I do not believe it would make a difference in the exports of a hundred pair of shoes in a year, and I think I have as much right to my statement as the gentleman from Massachu¬ setts has to his. There is no experiment of any kind connected with this bill. It is founded on a partially successful experience of our own and follows in the exact lines of the eminently successful ex¬ perience of Great Britain for over sixty years, of Germany, and of France, and of Italy, and most emphatically in late years of Japan. Great Britain was the pioneer in this policy of mail subsidy, on which she has expended $300,000,000. Her stated object was rapid, frequent, and punctual communication to feed the main arteries of her commerce, to foster maritime enterprise, and to encourage the building of superior vessels, which would promote wealth in time of peace and be a defense in time of war. Mr. MARTIN. If the gentleman will permit, if I understand this bill and report, it is a bill for purely a mail subsidy. Mr. LITTAUER. Purely so. Mr. MARTIN. Take for example the first proposed route provided in this bill between American ports and Brazil. In what manner is the American mail to Brazil now being carried under’ our postal service? v Mr. LITTAUER. I will say via Liverpool and Europe to a great extent. To-day we have not a single regular and reliable mail connection with Brazil or that coast of South America. We send occasionally mails on some slow ship, neither regular in sailing nor rapid nor punctual, but often the regular way of sending our mail to-day is via Liverpool and Havre. Mr. MARTIN. I notice that the provision requiring a sub¬ sidized mail route to Brazil provides no limit of compensation for a monthly service, and- Mr. LITTAUER. If the gentleman will’ excuse me, I will reach that later, because I wish to take up each route and dis¬ cuss it. Mr. MARTIN. I desire to question the gentleman when he reaches that point. Mr. LITTAUER. Incidental to the main purpose of mail communication arise interests of the utmost moment to this country in the conditions existing to-day. To carry out the provisions submitted to you will promote the steel-ship building industry, will promote the maintenance of shipyards with skilled workmen, an industry as much a part of the national defense in its ability to build war vessels as is the building up of the Navy itself. Without shipyards we can have no ships, and without ships we can have no naval reserve, again as essential to the Navy as the National Guard of our States is in relation to the Army. Materials for the building of ships in the foreign service are by the Dingley Act free of duty, but bear in mind that in the cost of a ship labor plays an altogether greater part than materials, for we are clearly advised that 60 per cent of the total cost of a vessel is for labor in assembling the materials at the shipyard, while of the balance of 40 per cent, 30 per cent is in the labor expended in making the materials •ready for their purposes. It is the high rate of American wages that makes shipbuilding 30 per cent dearer in the United States than in England, while the cost of the raw materials plays but a very small part, indeed, in the calculation. 7245 8 Mr. SHERLEY. Will the gentleman at that point permit me? Is it not also true that no ship built of foreign material upon which duty has not been paid can be used in the coastwise trade for a longer period than two months in any one year? Mr. LITTAUER. Why, certainly; as I said a moment ago, these ships have to ply across the ocean. Mr. SHERLEY. Is it not also true that no shipowner is will¬ ing to take advantage of that provision when it prevents his ship from being put into the coastwise trade, should circum¬ stances make it necessary? Mr. LITTAUER. I do not think so. Mr. SHERLEY. That is the statement of Mr. Arthur Sewall. who practically tried it. Mr. LITTAUER. I would not second it. Now, coming back to the materials. Mr. FOSS. May I ask the gentleman a question? I want to ask the gentleman w hether or not he has any opinion from the Navy Department as to the provisions in this bill relating to the Naval Reserve feature? Mr. LITTAUER. W r e have had a great number of letters rec¬ ommending them all —practically recommending the provisions of the Senate bill. We have eliminated, in connection with the Naval Reserve, all the provisions that look toward compulsion. To-day the compensation is specified, the conditions are speci¬ fied ; but we make it voluntary for any sailor or officer engaged in the lake, coastwise, or foreign service to join the Naval Re¬ serve, if he come within the requirements, and to accept these emoluments, as he may choose. Then we make it entirely vol¬ untary on the shipowner to have in his crews a large or a small percentage or number of sailors belonging to the reserve, as he may choose. Mr. FOSS. May I ask the gentleman whether there were ever any hearings before‘the committee on this particular substitute relating to the Naval Reserve? Mr. LITTAUER. No ; there were none. It is practically the same measure that has been thoroughly discussed and approved by the Navy, with the elimination of everything that we felt was subject to great criticism, but we wanted to eliminate any¬ thing that might look toward compulsion. We had no desire whatever to try to force men into the Naval Reserve. It was to be a voluntary organization, the same as our militia. It is nothing but a fitting school. These men, if they belong to the three marine services—lake, coastwise, and foreign—have a right, provided they are American citizens, to join the reserve under such regulations as the Secretary of the Navy will make. They join for four years. They receive, according to their sta¬ tion and their ability as seamen, certain annual retainers, as do the British naval reserves. That compensation has to be pro¬ vided for each year by Congressional appropriation, but it would appear that under these regulations we might create a naval reserve of perhaps 2,000 men. And if we could, and could train them a week or two each year, the small expense that would be involved in this matter would not be worthy of serious consid¬ eration. Now, I was coming to the point in the consideration of the * construction of ships that it is really the cost of labor, the rate of American wages, that makes it impossible to build ships here 7245 9 in competition with ships built in foreign countries. We are told that ships in our country cost from 20 to 30 per cent more than ships built in foreign yards. Sixty per cent of the gross cost of a ship is labor; and, then, you must remember that most of the materials when they reach the shipyard have been already improved, and labor is here again the greater part of the cost. It is the high rate of American wages, not the cost of raw materials, that has to do with our inability to compete with foreign nations in the building of ships. Mr. SHERLEY. Will the gentleman yield? Mr. LITTAUER. Yes. Mr. SHERLEY. Is it not true that upon the Great Lakes they are building ships cheaper than they are building them anywhere in the world? Mr. LITTAUER. The kind of ships w r e build on the Great Lakes are different in many ways. There are great cargo-carry¬ ing ships; enormous carrying ships, in a certain way; ships that would not be particularly fitted for ocean traffic, fresh¬ water steamers which in many particulars are cheaper than steamers for salt-water use. Mr. SHERLEY. I appreciate that, but they are ships in which the labor element is as large as in ships that are fitted for ocean voyages. Mr. LITTAUER. And without any foreign competition at all. They must be built in American yards. The policy of every great maritime power of Europe is to in¬ duce the building of its mail steamships as well as its w r ar ves¬ sels in its own shipyards. The ships which will be built in the United States, if this bill is to be carried into effect, will result in an additional fleet of from twenty-seven to thirty fast steel merchant steamers, made suitable, in accordance with the pro¬ visions of the bill, for auxiliary purposes in times of war, pre¬ cisely similar to the way similar fleets are called into existence, and supported in precisely the same manner to aid the navies of England, France, Germany, Russia, Italy, Spain, and japan. Germany follows the “ free-ship ” policy as to ordinary steam¬ ers, permitting her citizens to acquire ships w r here they will; but Germany stipulates that the steamships of her subsidized mail lines must be built in German shipyards and as far as possible of German materials. The “ free-ship ” argument has no basis, on precedent of other countries, in connection witfi subsidized mail lines. There are on the seas, in foreign trade, 196 ships of 16-knots speed. Of 19 no definite information could be had, but 150 of the 196 receive subsidies, w^hile but 27 receive no subsidy. Of the seven projects of this bill, four apply to the countries south of us in the American Continent, with w’hom we have a vital political and commercial interest, and three to the Orient. The Monroe doctrine impels us, in the furtherance of its high¬ est purpose, to cultivate relations of political and commercial intimacy with the governments of Central and South America. Within ten years w^e have acquired in the Pacific Ocean the Hawaiian Archipelago, the Philippine Archipelago, a portion of the Samoan group, and the island of Guam. We have under¬ taken to construct at enormous cost the Panama Canal. All of w r hich acquisitions and undertakings carry w r ith them oppor¬ tunities in the expansion of our trade in South America and in 7245 10 the Pacific. It is in these two directions that this bill seeks to take advantage of our commercial opportunities. The very first step, if we desire new foreign markets, must be rapid mail com¬ munication, providing amply, at the same time, conveniences that will enable the buyers and sellers of these countries to come to us rapidly and easily, as well as to permit ours to go to them. Mail communication with regularity and rapidity of service are primary and imperative needs of commerce, just as com¬ merce is the best promoter of international friendship. The better mail facilities provided, the greater in experience has been the expansion of national trade. Experience has there¬ fore compelled nations, without regard to expense, to foster and promote progress in their foreign postal service. Rapidity and regularity are the essential requirements. Every mer¬ chant recognizes that the approaches to a market must be quick and convenient and regular; hence the imperative de¬ mand for fast and frequent mail and passenger steamers on all the ocean highways of the world. All nations are seeking to transport their mails under their own flag. No agents are equal to steamships in inducing a foreign demand for the prod¬ ucts of a country. The ocean mail service of the United States has proved to be a source of great profit. The superintendent of foreign mails calls attention to the fact that in the fiscal year 1906 the cost of ocean mail service was $2,965,624.21, while the postage collected on articles exchanged with foreign countries, leaving out Canada and Mexico, amounted to $6,008,807.53, leaving a net profit of $3,043,183.32—a profit of $3,000,000 which it would ap¬ pear could well be spent in the development of our ocean mail service, as is proposed in this bill, and in making such ocean mail service efficient. Every dollar of these $3,000,000 is made at the expense of the commerce of the United States. The profit to-day, or rather during the year 1906, was $3,000,000, but this profit, as the figures show, has been a progressive one. During the last four years, from 1903 to 1906, inclusive, it has averaged $2,567,830.45 per year, while in the four preceding years, from 1899 to 1902, inclusive, the profit amounted to but $1,240,706.26 each year. While no doubt this increase of 100 per cent in profit arising from the carriage of ocean mails during the last four years, in comparison with the previous four years, may, in part, arise from the wonderful expansion of trade in exports and imports during this period, it would seem that we would have a right to infer that this increase of profit would continue in almost like proportion, and especially so if we expend these profits in the development of the trade which makes them an incident. It will take at least four years to build the ships required to take advantage of the provisions of this act. If the same ratio of increase in the profits of our mail service continues, we will at that time be making a profit of $5,000,000 out of the ocean- mail service, while this bill calls for an extreme expenditure, if every opportunity it offers is taken advantage of, of $3,850,000. Mr. SHERLEY. Mr. Chairman, will the gentleman tell how much was charged to the expenses of operating the mail serv¬ ice, for the operating cost of the post-office system of America? Mr. LITTAUER. Will the gentleman repeat that question, as I did not hear the last of it? 7245 11 Mr. SHERLEY. Why, the proposition is simply this: How much have you charged against the receipts from the foreign mail service to the cost of operating the postal service in this country ? Mr. LITTAUER. I have charged whatever the cost actu¬ ally was. The cost was $2,965,624.21. Now, the profits on that might be the difference between these figures and the income that the United States has had from postage going to foreign countries—postage based upon the weight of packages and letters and other mail carried. Mr. SHERLEY. If the gentleman will permit, I do not believe he will want that answer to stand. Do you mean to tell the committee that there has been charged against the re¬ ceipts for the foreign mail service any of the expenses incident to the post-office service in America, other than simply the pay¬ ment of the steamship companies? Mr. LITTAUER. The carriage across the seas is the main expense charged, and the Superintendent of Foreign Mails ex¬ plains particulars. Mr. SHERLEY. Does the gentleman consider it fair or any¬ thing but a trick of bookkeeping to talk about a balance in favor of the ocean trade of $3,000,000 or more, when he does not charge against that trade any of the expense incident to the Post-Office Department? Mr. LITTAUER. I can not see by what process of reasoning the gentleman wants to make any addition to the cost of the carriage across the ocean in relation to the postal revenue. We have received it because these mails go to foreign countries. The income figured is separate from the domestic cost. If we had not postal communication with foreign countries we would not have received $6,000,000. Mr. SHERLEY. But the gentleman must realize that the cost of carrying the foreign mail, both that which goes out and that which comes in, is not limited simply to crossing the water. Mr. LITTAUER. True. That is the ocean carriage. Now, then, it is the carriage of a letter that leaves Washington and goes through New York to Liverpool or to London, and the do¬ mestic charge, the charge for the railway mail service to New York, is not included. Mr. SHERLEY. But is not that an expense of the Post- Office Department, and should they not include every expense for the actual carriage of the mail on land as well as on the water ? Mr. LITTAUER. Let us put it on that basis, and let me begin my argument, and my argument is that it cost for the foreign carriage over $6,000,000 last year, and we made out of this carriage across the ocean not less than $3,000,000. The volume of the ocean mails of the United States is proved to be practically the same as the ocean mails of Great Britain. To carry these mails the United States spends $3,000,000 out of the $6,000,000 she receives for the carriage of same, while Great Britain spends $6,000,000 subsidizing her fleet of high¬ speed ocean steamers to all parts of the world, supporting and training of her naval reserves. We spend $3,000,000 on an inferior mail service, conducted chiefly by foreign steamers. Great Britain spends $6,000,000 on a superb ocean mail fleet, suitable for war purposes, manned by navad reserves, every ship contributing to her naval and commercial power. 7245 12 Mr. PRINCE. On page 19 of the bill, section 3, you pro¬ vide for the Naval Reserve, providing for officers, petty officers and men, limiting the number to not to exceed 10,000, and speci¬ fying the pay that each shall receive. Have you figured out what would be the average pay of each of these 10,000 men who may be regarded as a part of the Naval Reserve? Mr. LITTAUER. I have not. And I do not believe we can. It would be simply an estimate that anyone might make, from any standpoint, but without any reasoning from experience. Membership in the Naval Reserve would be entirely voluntary. How do we know whether it is going to be a taking proposition or not? The unions may be against it. Mr. PRINCE. I am assuming that we are passing a working bill, and that it will go into effect and meet with the approval of the people, and that 10,000 men will be added to the Naval Reserve of the United States. Mr. LITTAUER. That is the utmost limit that might be added. Mr. PRINCE. I find here for each officer of the line, refer¬ ring now to page 20, the highest officer receives $110 a year and the lowest receives $24 a year, so I suppose we may properly make an average of $50 or $60. Mr. LITTAUER. Oh, no; the seamen far outnumber the officers. The number of officers of high rank to whom $110 per year would be paid would be very few, and if the gentle¬ man will read the section carefully he will see that the pay¬ ment of these sums is dependent upon annual appropriations by Congress and the submission of estimates. So I take it for granted that after this bill becomes a law a further appro¬ priation will have to be made to cover the expenses of the Naval Reserve, and until such appropriation is made the pro¬ vision in regard to the reserve can not go into operation. Mr. PRINCE. We are now proceeding to make a contract which will last for ten years, and we are to pay so much for the transportation of the mails, and we are likely to add 10,000 men to the Naval Reserve by virtue of this, who, in addition to the $3,700,000, are also to be paid out of the Treasury. Will the gentleman be kind enough to state whether you are not helping to pay the seamen who go upon these vessels, and to that extent making an additional gift to the shipowners by re¬ ducing the pay that they would have to give to the men by the amount that the Government will pay? Mr. LITTAUER. I do not believe that result will at all come about. I do not believe the compensation offered in this bill is going to lead to the establishment of a naval reserve of 10,000 or even of 2,000. The best authorities have told me that the Naval Reserve need not be expected to be any considerable number at any early date. We will gain by experience, and perhaps will be able to amend the law, but in no way will it act as a sort of bonus to shipowners. Mr. FOWLER. You mean to the shipowners? Mr. LITTAUER. It will not be a bonus to the shipowners through a gratuity toward the wages of the sailors. This bill provides for a monthly service over its specified routes at one-half the compensation given for a fortnightly service. The monthly service would give twelve communica¬ tions a year, and the fortnightly service would give twenty- 7245 13 six. The subsidy is not increased in proportion, because the number of ships required for a fortnightly service being greater than the number required for a monthly service could be built for less money. As to the rates of compensation in this bill, I would state that they have been the subject of most careful study, and prac¬ tically represent 10 per cent on the first cost of ships that will be necessary to conduct the service. This percentage is prac¬ tically the same as the English Government is giving the Cunard Line for the building of the two enormous steamers now under way to keep her mail service with New York ahead of that of her competitors. She believes that it is so much to the advan¬ tage of her trade to lead in this service, already so fully estab¬ lished, that she made a loan of $13,000,000, which she supple¬ ments with the guaranty for mail and admiralty subsidy to the company, because of these two steamers in an actual aggre¬ gate of $1,210,500 a year for the next twenty years, or a little less than 10 per cent on the loan made. Mr. STAFFORD. I want to ask the gentleman from New York this question. He was discussing the total expenditure that Great Britain makes for its mail subsidy as compared with that proposed by this bill. Has the gentleman any data com¬ paring the total mileage covered under the Great Britain sub¬ sidy with that proposed in this bill? Mr. LITTAUER. I have not. I do not believe that Great Britain’s subsidy is given by mileage, although I do remember that the subsidy from Great Britain to South Africa is based upon substantially the same figures and the same percentage as the subsidy here proposed from the Atlantic coast to Buenos Ayres. Mr. STAFFORD. Does the gentleman know whether she pays the same rate of subsidies for all mail service? Mr. LITTAUER. Oh, no; it depends altogether upon the conditions of trade. She seeks to help where help is needed, and gives much greater subsidies in some directions than she does in others, the same as we do in this bill. Mr. STAFFORD. Under the present law the compensation is the same only it varies according to mileage? Mr. LITTAUER. Mileage and speed alone, but that is not so in the provisions of this bill. Mr. STAFFORD. It is as far as the speed is concerned. Mr. LITTAUER. Yes; but when you go to miles it is a dif¬ ferent matter. I am going to comment on that very subject. Now, the subsidies in this bill are based as near as possible on 10 per cent of the first cost of the ships necessary to carry them out. Mr. SHERLEY. Will the gentleman allow me a question right there? Mr. LITTAUER. Certainly. Mr. SHERLEY. Was there any testimony of any kind before the committee relative to what the cost of the ships would be according to the terms of this bill? Mr. LITTAUER. The committee did not enter upon that sub¬ ject. Mr. SHERLEY. Was there any data before the committee showing what the size of the ships would be under the terms of this bill? 7245 14 Mr. LITTAUER. No; nor could there be. Mr. SHERLEY. Was there any as to the cost of maintain¬ ing such a ship or its probable earning capacity, or any other detailed statement by which we could gather how much was necessary in order to give the shipowner a reasonable profit? Mr. LITTAUER. No; but we do know that if we want to make a service successful, if we want to make up in the ship- subsidy legislation where our failures have been in the past and where lines have not been extended, we know that we have got to follow in the footsteps of other nations that have been successful. Now, the gentleman could ask a thousand questions on that line, hut I would like to make my statement, and then I will answer his questions if I can. [The time of Mr. Littauer having expired, he was yielded fifteen minutes more by the gentleman from Ohio, Mr. Grosve- nor]. Mr. LITTAUER. Would it not be well for the United States to pattern after the action of the great maritime nation of Great Britain, 25 per cent only of whose foreign-going steamships are engaged in the carrying trade to and from the United States and in carrying 50 per cent of all that is shipped out of and into the United States over the ocean? Compare her liberality with the results of our own mail subsidy between New York and Europe, where under the act of 1891 there was paid on our contract last year $762,638, while if we had paid for the weight of the mails carried under this subsidy contract at our regular statutory rate this line would have been entitled to $910,542, so that the Government saved nearly $150,000 on the most decried contract in existence under the mail-subsidy act of 1891. Through the provisions of that act, paying subsidy of $4 per mile to a line already in existence, we last year saved the Government $150,000, and besides that had the steamships of the line available for Government pur¬ poses in times of war should there have been a repetition of the necessity for their use as there was in the Spanish war, when without the Yale and Harvard and others of this line we would have had to pay enormous prices for whatever ships we might have had to use as scouts and transports for the Army in that war. Mr. MARTIN. Will the gentleman yield for a question? Mr. LITTAUER. Yes. Mr. MARTIN. Does the act of 1891, under which the so- called “ subsidy contracts ” are made, authorize the Postmaster- General to make similar contracts between American ports and South American ports? Mr. LITTAUER. Anywhere; provided they come up to the conditions; the rate is dependent upon the mileage. Mr. MARTIN. Why is it that contracts with other countries have not been entered into? Mr. LITTAUER. Because the rates are inadequate. Mr. KAHN. Will the gentleman yield for a question? Mr. LITTAUER. Yes. Mr. KAHN. The Oceanic Steamship Company is operating a line from San Francisco to Australia under existing law, and has an indebtedness now of- Mr. LITTAUER. It is losing money every year. Mr. KAHN. Of over $2,000,000. Its stock is down to about 7245 15 $2 a share and its bonds are down to $60 or $65. It has de¬ faulted in its interest, simply because it has tried to live up to its contract. Mr. LITTAUER. Yes; and yet its ships are among the most modern built of ships; and if we were to have any trouble in the Pacific, they would be demanded and be most necessary for the purposes of the National Government. Mr. KAHN. They make 16 knots right along. Mr. LITTAUER. Yes; 16 knots. They will come in under this bill, and I will explain their status in a moment. Mr. MARTIN. Approximately, how much of an increase of sibsidy, by any proportion that the gentleman can give us, would this new bill provide for? Mr. LITTAUER. Double. Mr. MARTIN. As compared with the other. Mr. LITTAUER. Yes; this new bill provides for 16-knot ships. Under the old law the subsidy is $2, and under this proposed bill it will be at'least $4 and over. Mr. MARTIN. The compensation would be about double? Mr. LITTAUER. Yes; and must necessarily be so. I will explain that when I get to the routes. Mr. SHERLEY. Was not that the basis of pay that would have been paid if this mail had not been carried by American subsidized routes, the one-sixty rate? Mr. LITTAUER. It unquestionably was the rate that applied to American ships. Mr. SHERLEY. Is it not true that the same mail could have been carried, and other mail was being carried, at 44 cents? Mr. LITTAUER. By subsidized foreign line ships. Mr. SHERLEY. We are paying only 44 cents. Mr. LITTAUER. We were paying 44 cents to foreign subsi¬ dized lines, but under the laws of the land as they stand to¬ day, had the American Line, like the Pacific Mail, refused to accept the terms of the subsidy it would have received $910,000 for what under the subsidy act it received $752,000. If you want to consider some other set of circumstances, if her ships had be¬ longed to foreigners, and had been subsidized by England, we would have had a different rate for such ships than we have for our own; but under and according to the laws of the land, without any change, if this subsidy contract had not been in existence, that line would have received $150,000 more than it did under the subsidy for carrying the same mails. Mr. SHERLEY. And if the contract had not been in exist¬ ence and the mail had been given to a foreign line, the Govern¬ ment would have saved a considerable sum. Is not that true? Mr. LITTAUER. The Government pays to foreign lines one rate for the carriage of mails. It pays to the American lines another rate. The point of my argument is that this contract has been decried by gentlemen like the gentleman from Ken¬ tucky [Mr. Sherley], but that it has resulted in a profit to the United States. Mr. SHERLEY. Assuming we would have to carry it at the one-sixty rate. Mr. LITTAUER. Assuming we would have to do the work as we did it, but the mails were carried by the American Line, and we have made this profit of $150,000. Mr. STAFFORD. That is the only case where the pay would have been in excess? 7245 16 Mr. LITTAUER. Yes. Mr. STAFFORD. Because of the density of traffic. Mr. LITTAUER. Yes; and that is the only case where the Government pays $4 a mile, because it is the only line in which we have 20-knots ships. Mr. MARTIN. I want to ask the gentleman another ques¬ tion. It seems to me that the gentleman is right now upon the point I was seeking to get some information upon before, and that is this: What, approximately, is the cost of the present service we are now obtaining, the present mail service, say, to Brazil, for example? Mr. LITTAUER. Oh, that I do not recall; but it is all set forth in the report of the superintendent of foreign mails. Mr. MARTIN. How does that compare with the cost of the service that is proposed under this new legislation? Mr. LITTAUER. Oh, I could not give you that figure. I do not know how our mails go. Our mails go in part in one way and in part in another. They are sent to Europe, and if the steamers go from Liverpool at an earlier date to Rio de Janeiro and Buenos Ayres, they are sent from Liverpool; if not, they are dispatched from Havre or from Hamburg. Mr. MARTIN. We have no mail contracts for carrying them? Mr. LITTAUER. None whatever. Mr. GAINES of Tennessee. Will the gentleman yield for a question? Mr. LITTAUER. Yes. Mr. GAINES of Tennessee. Will the gentleman, before he concludes, tell the committee what has been the history, whether financially successful or not, with the lines that we have sub¬ sidized heretofore—the Roach and the Collins lines, and the other firms—and what the difference is between the bills they were subsidized under and the present one? Mr. GROSVENOR. The gentleman will find all that in the Record in the morning in the extension of my speech. Mr. GAINES of Tennessee. The gentleman is so capable of telling the House everything that it may desire to know that I would like to have it. Mr. LITTAUER. Now, I want to try to get along and make my few points if I am able to do so. The French Government is acting just like the English Government. The French Govern¬ ment has a contract with the great French line, the Compagnie Gen§rale Transatlantique. It pays that company $1,289,000 of subvention from Havre to New York. That same company runs ships to the West Indies, and that line is subsidized at the rate of $939,524 for carrying mail communication there. This whole bill is based on the experience of nations which have been successful in fostering their commerce, successful in developing their merchant marine, which followed the establishment of subsidized mail lines. Now, we propose in this bill seven routes. The first one runs from a point on the Atlantic coast to Rio Janeiro. The subsidy proposed is $600,000, which would be for twenty-six departures each year, which would give an average of $23,077 for each voyage and would pay to the line about $4.62 for each mile of travel. Route No. 2, which extends again from a seaport on the Atlantic coast to Montevideo and Buenos Ayres would traverse a journey a thousand miles longer, 6,000 miles. The 7245 17 subsidy for fortnightly service is $800,000, or $33,077 per voyage, $5.01 per mile. Mr. WILSON. Mr. Chairman- The CHAIRMAN. Does the gentleman from New York yield? Mr. LITTAUER. Yes. Mr. WILSON. I was going to ask you one question. That is not the information you gave us the day when this bill was reported, and I was going to ask you where you got this infor¬ mation, and where you got the information based on- Mr. LITTAUER. Will the gentleman state in what regard this is not the same information? Mr. WILSON. I understand the amount of subsidy per trip and per mile- Mr. LITTAUER. I think the gentleman is mistaken. I think these are the identical figures for fortnightly services I presented before, the ones which I have just stated, but will ask the gentleman to point any figures which are not the same. Mr. WILSON. In the first you said the amount per trip would be $25,000. Mr. LITTAUER. My dear sir, if you will kindly divide 26 into $600,000, you get the result that will give you the correct figure I gave, and if you divide 12 into $300,000 you will get $25,000. Mr. WILSON. I asked where you got the information we did not have before. Mr. LITTAUER. I got it by dividing 26 into $600,000, $23,071, and then I divided the total amount of the trip by 5,000 miles to get the rate per mile. On the route to Buenos Ayres, $800,000 subsidy, 6,000 miles, the rate is higher than the rate to Brazil. Why? Because our trade with Brazil is but a small one in exports and a large one in imports. Ships will always be able to get a large cargo on a return voyage from Brazil, while our trade with Argentina and Uruguay is a larger one in export, and will probably grow to be still larger in ex¬ ports than imports. Mr. McNARY. Mr. Chairman- The CHAIRMAN. Does the gentleman from New York yield to the gentleman from Massachusetts? Mr. LITTAUER. I do. Mr. McNARY. I would like to ask the gentleman, if he has finished upon that particular point- Mr. LITTAUER. I have not. Mr. McNARY. I meant on the trade we get—why it is that the committee has reported as regards the Pacific coast ports that the line shall go north of Cape Mendocino- Mr. LITTAUER. I am coming to that in a moment. Mr. McNARY. Just a question—and why is it that on the Atlantic coast the provision is that practically all lines go from New York? Mr. LITTAUER. The gentleman's statement is absolutely incorrect so far as New York is concerned. The Postmaster- General, if this bill should become a law, would ask for bids. Bids might be received from New York, Portland, Boston, Balti¬ more, or wherever anyone was willing to enter into the condi¬ tions of the contract. There is nothing whatever in the bill which requires these lines to start from New York, but it is 7245 - 2 18 probable they would, because New York happens to be the great export and import center of the country. Mr. McNARY. Then, Mr. Chairman, in order to make that point clear, as long as it is provided in the Pacific coast division that a line shall go- Mr. LITTAUER. I will come to that by and by. Mr. McNARY. Wait a moment. Will the gentleman agree to an amendment for the committee providing a line shall go from certain points, dividing the Atlantic coast up the same as the Pacific coast? Mr. LITTAUER. If the gentleman will give me as good a reason why it should be done on the Atlantic coast as I can give him why it should be done on the' Pacific coast, I will accept the amendment. Mr. McNARY. I think I can. Mr. LITTAUER. Will the gentleman support the bill if I will do it? Mr. McNARY. With several other amendments, I will be de¬ lighted to do it. Mr. KAHN. Will the gentleman yield to me just for a mo¬ ment? Mr. LITTAUER. I want to go on. We sell the Argentine $16,000,000 worth of our manufactures. We buy from her to-day only $8,000,000 worth. Her exports are wool, $50,000,000; wheat, $51,000,000; corn, $33,000,000; 'linseed, $21,000,000; cattle and meat, $14,000,000, none of which can expect to find a market in this country, while, as I said before, of the one product, hides, we are now importing 80 per cent of all she produces. The capital city of the Argentine is Buenos Ayres, with a million people. The foreign trade of the country is $500,000,000, though the population is only 6,000,000—a greater foreign trade than has China, with 300,000,000 people, or Japan, with nearly 40,000,000 people. There will be required to estab¬ lish the route to Rio de Janeiro, Brazil, fortnightly service, five steamers, and these five steamers will cost about $6,000*000, exactly ten times the subsidy proposed, 10 per cent on the first cost of ships. The CHAIRMAN. The time of the gentleman has expired. Mr. SHERLEY. Mr. Chairman, I have taken a good deal of the gentleman’s time, and I am perfectly willing to yield him five minutes to be taken from my time. Mr. GROSVENOR. Mr. Chairman, let me make a statement. I will yield fifteen minutes more to the gentleman from New York, and state, in my opinion, that the gentleman controlling the time on the other side will recommend with myself that debate shall be extended longer than the five hours, so that we can give everybody a better chance to debate. The CHAIRMAN. The Chair understands the gentleman from Ohio [Mr. Grosvenor] to yield fifteen minutes to the gen¬ tleman from New York? Mr. GROSVENOR. I do. The CHAIRMAN. The gentleman from New York [Mr. Lit- tauer] is recognized in the time of the gentleman from Ohio [Mr. Grosvenor]. Mr. LITTAUER. Gentlemen, I believe if you will permit me to finish my statement, I will answer a good many of the questions you are bombarding me with from time to time. I 7245 19 have finished now with the consideration of the routes on the eastern coast of the United States. I will next proceed with the r6ute on the Pacific. The route is from the west coast of the United States to the west coast of South America, Callao, and Valparaiso, a distance of 6,000 miles, equal in length to the route to Argentina. But the subsidy on the west coast is $600,000, while on the east coast it is $800,000. Why? Because the 16-knot ship that will run over this route will have busi¬ ness at Panama, and that business will aid so materially that the subsidy need not be as great. Now, to-day the Pacific Mail Steamship Company runs over this route from San Francisco to Panama, but no American ship runs south of Panama. The Pacific Mail Steamship Com¬ pany over this route has nothing but slow steamers. She could not use a single steamer that she now possesses with which to establish this mail communication. She would have to build new steamers, just as any others who might care to enter that trade. Not a single American steamship runs to-day, regularly or expeditiously or any other way, from the Atlantic or the Pacific coasts of the United States to the ports specified in these three routes. The Secretary of State, after his notable trip to the east and west coasts of South America, lays particu¬ lar stress upon the desirability of more intimate trade relations with South America, and he declares that above all the most effective means of promoting such relations is the establishment of improved steamship communication between the continents, for modern commerce demands regularity and rapidity in mail communication, as well as comfortable, regular, and quick passen¬ ger transit for those who desire to trade with one another. The Pan-American Congress has at each meeting declared the de¬ sirability of better steamship communication between the Amer¬ ican countries. The congress held last August favored definite contracts with mail navigation lines, to connect the principal ports of the American countries, to be established by joint action of the countries affected. Peru voted this year an annual subsidy of $150,000 for fifteen years to improve her steamship communica¬ tion with the Isthmus of Panama, in order to bring her closer to our Atlantic and European ports. The Chilean budget this year contains an appropriation of $95,000 for substantially the same purpose, while on the east coast the Argentine Republic has under consideration a monthly subsidy of $25,000 for a fast mail line to improve her communication with Europe. Showing conclusively that these countries are ready to cooperate generously in providing a fast mail service. Now, on the Atlantic coast we have line No. 3, which will run from a port on the Gulf of Mexico to Panama. Here is one exception to the general rule. AVe provide here for boats of only 14-knot speed. We provide for a weekly boat. We leave out the monthly service and provide for a fortnightly or weekly service at an altogether lower rate of compensation, be¬ cause the business does not require it, and the line can be es¬ tablished without high compensation. The purpose of this line is to permit the commerce of the Mississippi Valley to get into close communication, not only with Panama, where our great expenditure is now taking place, but through Panama to the west coast of South America. 7245 20 When we turn to the mail subsidies in the Pacific Ocean, wherein this bill proposes to increase the present subsidy of $300,000 by an addition of $1,600,000 in order to establish regu¬ lar communication with China, Japan, and the Philippines at a total utmost cost of $1,900,000, we find that the British Gov¬ ernment is paying for her mail lines to these countries, to Asia and Australia, $1,700,000 to the Peninsular and Oriental Steam¬ ship Company, and in addition $300,000 to the Canadian Pacific Company, making a total subvention for this service on the Pacific Ocean of $2,000,000. The German Government, for its service to Asia and Australia, pays the North German Lloyd Company 5,590,000 marks, or $1,320,000; the French Govern¬ ment pays the Messageries Maritime Steamship Company, for its service to Asia and Australia, $1,756,870. These foreign lines have been subsidized for many years and are well estab¬ lished, so that in view of the higher cost of construction of our ships as well as of their operation our proposed expendi¬ ture of $1,900,000, against expenditures of $2,000,000 by Great Britain and $1,750,000 by France and $1,320,000 by Germany, is not extravagant, but is quite on a par with those foreign sub¬ ventions. Bear in mind that these routes will give us weekly steamers to Manila, Chinese and Japanese ports as well as to Hawaii, and service at least once in three weeks to Samoa and Australia, The proposal in route No. 5, running from San Francisco to Hawaii, Japan, China, and the Philippines, is for a fort¬ nightly service, at a compensation of $700,000. This is the Pacific Mail Steamship route as far as China, which line is run in connection with what is known as the Harriman system of railroads which concentrate at San Francisco as terminal for freights for the Orient, drawn from all that part of the country south, let us say, of New York, Chicago, and Omaha, including the entire south and southwest sections of the United States, as well as the southern part of the Middle West. The Pacific Mail Steamship line is a necessary adjunct to the great systems of transcontinental railways known as “ the Harriman lines,” and, no doubt, will continue to run for freight purposes whether mail subsidies are granted or not, but will be run in the future, as it has been in the past, as an adjunct to this railroad system and not particularly to increase the mail facilities with the Orient or to build up ships as an auxiliary to the Navy, or to build up a naval reserve. This steamship company has been in existence since before the act of 1891 became a law, when her ships were of the slow class. Then she bid for and obtained a contract under the act of 1891, at the rate of $1 per mile, but abandoned it after a few voyages, in less than two years, as unprofitable, because of the requirements of the law. She has placed since in her service five rapid-running steamships, each one of which would be available for compensation under this bill, just as they are now available at the $2 rate provided by the act of 1891 for such service. At least, during the last five years, if the Pacific Mail Steamship Company had taken advantage of the sub¬ sidies now provided by law, she could have received $480,000 per annum, but she has constantly refused to do so. She was paid for such mails as she transported this past year about $82,000, thus forfeiting the opportunity of obtaining 7245 21 an additional $400,000 simply because she was unwilling to meet the requirements of the postal-subsidy act. Now, in the bill be¬ fore you we propose to offer a line running over the route that her ships partially run $700,000, but the conditions now im¬ posed are even much greater than the conditions of the old act. The regulations as to the nationality of seamen, payment of same, and the regulations as to the regularity of sailing are the same, because of which she refused to take advantage of the subsidy now provided by law. To them we have added that her ships, which but occasionally extend their journeys beyond Hongkong, must on each and every trip continue to the port of Manila, an additional journey of 628 miles each Way, or 1,256 miles for the round trip, of great advantage to the United States in quick and regular communication for mail and trans¬ portation of merchandise and Army supplies. We offer as an inducement an increase of $220,000 per year over the subsidy which she might have earned under existing law. I doubt whether this subsidy will ever be taken advantage of by the Pacific Mail, but I believe it is justified from every point of consideration and desirable, even if accepted by the Pacific Mail. Those who raise the old cry and point to this line as “ the nigger in the wood pile ” have given little study to the experience of the past and the considerations I have briefly alluded to, but simply follow the easiest line of criticism. If the Pacific Mail, Harriman’s lines, should accept the sub¬ sidy, it would mean the building of at least one and probably two 16-knot ships, together with regular communication be¬ tween San Francisco and our military garrisons, naval fleets, and markets in the Philippines, and above all the displacement on those five ships already in commission on this line, as well as the new ones that would have to be built, of the Chinese and Japanese sailors, and the engagement in their stead of Amer¬ ican sailors at American wages. I doubt whether the Pacific Mail, because of this addition of less than $300,000, will ever take advantage of the subsidy we now offer. Her ships are run in connection with a system of railroads. They do not want regular dates of sailing fixed by the Post-Office Department, as this law would require. They want to run whenever their cargo permits them to run; and I believe if they did run under this act, if they did come under its provisions, we would be justified, and that the United States would receive a good return for the proposed subsidy. Mr. DENBY. I beg the gentleman’s pardon for interrupting him, and will be as brief as possible. I should like to ask the gentleman whether he has any comparison showing the cost of maintenance? Mr. LITTAUER. I will come to that in a moment. If the Pacific Mail should take advantage of this subsidy she will have to build two ships of 16-knot speed and will have to make regular sailings. All their ships will have to come under the regulation as to sailors—that is, one-quarter of the sailors must be American citizens within two years, one-tliird within three years thereafter, and after five years one-half. What does that mean? That means that as the white man will not work with the Chinese or Japanese cooly, she must reform her en¬ tire crews and have them all white men and citizens. Mr. KAHN. I should like to suggest in that very connec- 7245 22 tion that this line is in direct competition with a Japanese line which employs all cheap cooly laborers, and also in direct competition with an English line which employs that kind oiS labor. Mr. LITTAUER. In connection with that I will show the difference in the wages and in the cost of running. The next route is the one referred to by the gentleman from Massachusetts, specifically stated to start from some port of the United States north of Cape Mendocino, which means Puget Sound. Route No. 6 extends from Puget Sound to Japan, China, and the Philippines. No single American ship now traverses this route, which could be used under the conditions proposed. It is true that Puget Sound is the terminal of the Great Northern and Northern Pacific Railways and that a line thence to the Orient is necessary as an outlet and inlet for freight destined to and from Asia. Mr. James J. Hill, who controls these sys¬ tems of railways, could, like every other American, take advan¬ tage of this subsidy if he met its requirements, but he does not own a single vessel to-day that could possibly be used for the purposes of this bill. He, or anyone else, who took advantage of this subsidy, would be compelled to build at least six 16-knot ships which would, because of the great length of the route, have to be ships of the largest carrying capacity—of at least 10,000 tons burden. The ships to-day known as “ the Hill ships,” sail¬ ing from Puget Sound, never go beyond China. They have no communication with Manila. The CHAIRMAN. The time of the gentleman has expired. Mr. LITTAUER. I should like five minutes more. Mr. SHERLEY. I will now yield to the gentleman that same five minutes. The CHAIRMAN. The gentleman from New York is recog¬ nized for five minutes. Mr. LITTAUER. Now, gentlemen, from Puget Sound to the Orient, to Japan, China, and on to Manila, there does to-day sail an American line—the Boston Steamship Line. The ships of this line again could not become available under this subsidy because of their slow speed, but this line has now been driven out of existence in spite of the fact that it has the quartermas¬ ter’s contract with Manila, but runs without subsidy, because the Japanese are subsidizing their lines to such an extent as to make us realize plainly that Japan wants the supremacy of the trade in the Pacific; and this Boston line is now practically out of existence. Mr. HUMPHREY of Washington. Three out of the five steam¬ ers have quit within the last thirty days. Mr. LITTAUER. Now we come to the Oceanic Steamship Company, which runs to Hawaii, which runs to Samoa, and to New Zealand, and over to Sydney. This line has 16-knot ships, and she has three vessels now running. The subsidy which they receive is based on the act of 1891 of $2 a mile, which amounts in round figures to $280,000, and the provisions of this act arbitrarily gives them $200,000 in addition to the subsidies which they now receive. The officials of the line, as the gentle¬ man from California has stated a few days ago, show that their balance sheet is a horribly bad one; they say that they are losing something like $373,000 a year. We felt that if we gave 7245 23 them $200,000 toward that the line would be able to continue, because of the beautiful and fair prospects that there are in developing the trade there; and to show you what this trade is between the United States and Australasia I will say that from 1896 up to 1900 the imports were $20,000,000 and the ex¬ ports were $79,000,000. From 1900 to 1904, since this line has been in existence, our imports increased from $20,000,000 to $24,000,000, and to-day are $29,000,000, while the exports increased from $79,000,000 to $118,750,000. Surely, a trade that can make such a showing when in its infancy is worth preserving. It has been won, in part, through the Oceanic Line, and gives promise of still greater increase. In order to maintain mail ships on the Pacific Ocean in accordance with our American ideas and requirements, as de¬ manded by our statutes, a greater subsidy must necessarily be given. The requirement that a necessary percentage of Ameri¬ can citizens must- form part of the crews of our mail-subsidized steamers prevents the employment of Chinese seamen or stokers or the employment of lascar crews. The Oceanic Line pays in wages $235,440 a year. If the same crews were put on a basis of the Canadian-Australian Line the wages would amount to $176,690. If they were put on the basis of the Peninsular-Orien¬ tal Line, with lascar crews, they would amount to only $123,404, and if paid on the basis of the Japanese Line they would amount to but $97,908. The wages paid on our American lines are practically a little more than double what are paid on the English lines with lascar crews; two and a half times what is paid on the com¬ peting Japanese line. The average wage per month on the Oceanic Line S. S. Sonora is $41.65, while on the British line S. S. Orizaba it is about $17, and on tbe Japanese line S. S. America Marti, $13.95. In addition to the cost of labor must be added the price of fuel, which on the Pacific Ocean far exceeds the cost on the Atlantic. There is a practical and additional reason for the desirability for retaining the ships of this Oceanic Line as auxiliaries to our Navy. If we compare the cost of this subsidy with the cost of maintenance of like ships among our cruisers, we will find that three of these cruis¬ ers—the Buffalo, the Yankee, and the Prairie —are practically; the same size as the three ships of the Oceanic Line, and, with one-half the horsepower, cost us to maintain in 1904 over a million dollars—three times the amount of subsidy given to the Oceanic Line, carrying the mails and developing the trade of the United States. And it is on these grounds that we be¬ lieve that we are justified in increasing the mail subvention to this Oceanic Line, which receives but $20,000 per voyage—a lower subvention than is given by either British, Japanese, Ger¬ man, or French lines competing with it, the German line re¬ ceiving $41,000 a voyage and the French line $47,000, in com¬ parison with the $20,000 now paid and the $30,000 per voyage we propose to pay. The gentleman from Michigan [Mr. Fordney] called atten¬ tion yesterday to the fact that the subsidy to the Oceanic Line was $280,000, while she paid in wages but $235,000. That is true, but compare these figures with those of the British Pen¬ insular and Oriental Line, whose subsidy is for all her services £353,873, equal to $1,769,365, while her total expenditure for 7245 24 officers and crews is but £315,262, equal to $1,576,310. So this British line is also subsidized in greater amount than her pay roll. There can be no proper comparison between • pay roll and subsidy. The fullest development of our domestic commerce proceeds at a rate so rapid that we outstrip all records; we have pro¬ gressed beyond the development of our railways and are the marvel of mankind. Our lands are covered with farms, the chimneys of our factories dot the land, a network of railways connects all. Our production demands that we turn our en¬ deavors more and more each year to commercial expansion in trade across the seas. It already requires five and one-half mil¬ lion tons of shipping to handle the eighteen hundred million dol¬ lars of exports and thirteen hundred million dollars of imports, at a cost for ocean carriage of two hundred millions of dollars, of which ships flying the Stars and Stripes carry but 12 per cent. Our shipbuilders, our sailors, and our merchants will again prove that they excel those of other nations in ingenuity and enterprise, as they did so auspiciously in the first half of the last century, if the Government but gives them proper protec¬ tion. Great Britain with mail subsidies stood by her shipping and shipowners, with results that have added to her wealth, her strength, and her preeminence among nations. The United States expends at least $100,000,000 each year on its Navy. We will spend $400,000,000 in building the Panama Canal. Can we not, therefore, afford to devote five millions each year for carrying foreign mails, to the encouragement of our shipping? If we do not do so, we will soon realize that the four hundred millions spent on the Panama Canal will act as subsidy to the trade of foreign ships only. Our exports and imports now afford employment to foreign vessels. Our Post-Office Department expends the funds of the United States in payment to vessels of foreign nations which are available as auxiliaries to foreign navies, whose officers and seamen are being educated at our expense as a naval reserve for our rivals and possible enemies, while our Government is lacking in similar resources essential to our national defense. In this way our commerce is in reality an enormous subsidy to the sea power of foreign nations, building up the sea power of foreigners at the cost of our own. An aroused patriotic sentiment, favored by economic conditions, demands that the United States delay no longer in reviving her.merchant marine through mail subsidies, which have in the experience of all nations proved successful. I appeal to each one of you not to permit local or partisan consideration to influence your vote when the defense of the nation, the preservation of its power, and the prosperity of its people are at stake. 7245 o