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AMERICAN MERCHANT MARINE - John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States, vol. 1 Abdication-Duty 
Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 1 Abdication-Duty.
Part of: Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States, 3 vols.
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AMERICAN MERCHANT MARINE
AMERICAN MERCHANT MARINE; Its Growth, Decadence, and Causes of Decay. The building and use of ships were employments to which the founders of the North American colonies and then descendants subsequently, until within a very recent period, may be said to have taken to naturally; and from the middle of the seventeenth until the middle of the nineteenth century—a period of 200 years—they were the two industries whose competition England, with good cause, especially dreaded. In fact, within little more than twenty-five years after the settlement of New England, or in 1650, the English parliament, in full accord with the then spirit of the age, felt it necessary to enact a statute for the avowed purpose of protecting English shipping against the competition of the English plantations in America, which statute was reënacted or amended in the direction of further restriction in 1661, and again in 1663. By the statute of 1650 the export and import trade of the English colonies was restricted to English or colony built ships; but by the statute of 1663 nothing was allowed to be imported into a British plantation except in an English-built ship "where of the master and three-fourths of the crew are English."
—But, notwithstanding these restrictions, the business of ship-building and ship-using in the American colonies was one that would not stay restricted, but continued to grow in spite of all efforts of the mother country to the contrary. At the time of the breaking out of the American revolution and for long afterward there were more people in the northern part of New England—Maine and New Hampshire—engaged in ship-building and in navigation than there were in agriculture, and Massachusetts at the same time was estimated to have owned one vessel for every one hundred of its inhabitants. The enactment of arbitrary laws on the part of Great Britain to prevent her American colonists from freely participating in the carrying trade and commerce of the ocean was, however, a sore grievance, and ultimately, as is well known, constituted one of the prime causes of the American revolution. They were, furthermore, from the very first either openly or secretly resisted and evaded, and under their influence the colonists became a nation of law-breakers. Nine-tenths of their merchants were smugglers. One-quarter of all the signers of the declaration of independence were bred to commerce, to the command of ships and to contraband trade. Hancock, Trumbull, (Brother Jonathan), and Hamilton, were all known to be cognizant of contraband transactions, and approved of them. Hancock was the prince of contraband traders, and, with John Adams as his counsel, was appointed for trial before the admiralty court in Boston, at the exact hour of the shedding of blood at Lexington, in a suit for $500,000 penalties alleged to have been incurred by him as a smuggler. The pertinency of the introduction of these historical facts in this connection is to be found in the evidence they embody of the opinions entertained by the founders of the republic respecting the justice or expedience of laws arbitrarily enacted for the restriction of commerce and the freedom of trade. Men like Hancock, Trumbull and Hamilton, who were merchants before they became statesmen, had, as the result of personal experience, been led to feel that the government of Great Britain, in endeavoring through such laws to restrain the colonists from engaging freely in a department of otherwise law-full industry and from enjoying the fruits of their labors, contravened their natural rights, reaffirmed the principle of slavery and became their enemy. Every evasion of such statutes was, therefore, in their view, a blow in favor of liberty. Hence also the origin of that count in the indictment against the king of Great Britain embodied in the declaration of independence "of cutting off our trade with all parts of the world." It is interesting also to note, how, subsequent to the revolution, a determined effort was made by American statesmen, to incorporate the idea of free commerce and unrestricted trade with all nations as a part of the fundamental and permanent policy of the new republic. Thus, up to that time, treaties of commerce between nations had been little other than agreements to secure special and exclusive privileges to the contracting parties, and to antagonize as far as possible the commercial interests of all other countries. But in the treaty of commerce entered into between France and the United States, in 1778, the commissioners of the two nations—Franklin, Deane, Lee and Gerard—evidently determined to attempt to inaugurate a more generous policy and establish a precedent for freer and better commercial relations between different countries than had hitherto prevailed. It was accordingly agreed in the treaty in question to avoid "all those burdensome prejudices which are usually sources of debate, embarrassment and discontent," and to take as the "basis of their agreement the most perfect equality and reciprocity." And they further stated the principle which they had adopted as a guide in their negotiations to be that of "founding the advantages of commerce solely upon reciprocal utility and the just rules of free intercourse." The traditions and customs of Europe were, however, too strong to be at once broken down; and in the end the United States abandoned its efforts in behalf of a new commercial policy, and within a comparatively few years afterward enacted a commercial code as illiberal and narrow in many respects as any that had preceded it.
—Let us next briefly trace the experience of American shipping subsequent to the revolution. At the time of the formation of the constitution in 1789 the registered tonnage of the United States, by which is to be understood the tonnage engaged in foreign trade, was 123,893 tons. During the next succeeding eight years, or from 1789 to 1797, it increased 384 per cent., but this remarkable increase was exceptional, and was due to the almost universal state of war in Europe, which threw the carrying trade of the world in an equal degree into our hands. Between 1797 and 1807 the increase was 42 per cent., or from 507,777 tons to 848,307 tons. Between 1807 and 1837 there was no increase, but periods of decrease (as between 1811-14 and 1818-25), and again of partial recovery, so that in 1837 the amount of American registered tonnage was only 810,000 tons, or about 38,000 tons less than it was thirty years previously, or in 1807. Subsequent to 1837, the increase was again rapid; rising from 810,000 in that year to 1,241,000 in 1847, to 2,268,000 in 1857, and culminating with 2,496,000 tons in 1861, or at the period of the outbreak of the war. The maximum tonnage of the United States at any one time registered and enrolled, (or engaged in foreign and domestic trade), and in the fisheries was in 1861, namely, 5,539,813 tons. The tonnage of the world at that time, divided among the different nationalities, was also approximately as follows:
The tonnage belonging to the United States in 1861 was therefore but a little smaller than that of Great Britain, and nearly as large as the entire tonnage of all maritime nations combined, with the exception of Great Britain. In respect to the international carrying trade of the world, the United States had more tonnage engaged than all other nations combined, exclusive of Great Britain.
—Another point of Great importance in this connection is, that from 1855 to 1860, the period when the American shipping interest attained its greatest prosperity, the tonnage of the United States engaged in foreign trade was more than 50 per cent. in excess of what would have been requisite to carry all the exports and the imports of the country; or, in other words, if American vessels had exclusively moved all our exports and all our imports form 1855 to 1860 there would have remained some 1,300,000 tons of American shipping to be otherwise accounted for in respect to business. But as the American vessels did not at that time exclusively carry all our imports and exports, and as fully 25 per cent. of the foreign trade of the United States was then done by foreign vessels, it follows that the tonnage of the United States in 1855-60, which was in excess of the immediate trade requirements of the country, was much more than 1,300,000 tons. This surplus was in the employment of foreigners and engaged in a trade with which the United States had no connection except as a carrier; and in this business, the ships employed, not unfrequently, did not return for years to their home ports. At the same time, the amount of American tonnage transferred by sale to foreigners was very considerable, and for the year 1855, amounted to 65,000 tons.
—Attention should also be here called to the circumstance that the remarkable results as above detailed were achieved at a time when the differences in the wages of seamen, and the cost of stores, rigging, etc., on American vessels in favor of their foreign competitors, was very marked, if not fully as great as at present. The explanation of this anomaly is that the crews of American vessels, although paid higher wages than the seamen of any other nationalities, were more efficient, consequently fewer men were needed, which reduced the cost and risk of navigation, and this last in turn reduced the cost of insurance, as compared with English ships, even in English companies. The Americans also very early introduced labor-saving machines and mechanism, as for managing the top-sails, handling and lifting the anchor, loading and unloading freights, which also largely dispensed with the necessity of manual labor. Vessels of the United States at the time under consideration were better modeled than vessels of foreign construction, and, being better modeled and better handled, they sailed faster, and as a general rule could make four voyages while the Englishman, under similar circumstances and with similar vessels, could make but three. American ship-owners, consequently, obtained more freight and often better prices—a sixteenth of a penny more per pound, for example, in cotton—and in English ports, other things being equal, English merchants preferred to ship in American rather than in British bottoms. In 1857, when the rebellion in India broke out and the British government found it necessary to dispatch troops and stores with the greatest promptitude, the vessels that were first chartered, at the highest prices, which were most relied upon and did the best service, were the magnificent American-built clippers at that time largely engaged in the India and China trade.
—The statistics of American shipping thus far presented have not discriminated between sailing vessels and steamers. But there is a point just here of no little importance as throwing light on what subsequently happened. It is this: British foreign steam shipping practically dates from 1838, when the Sirius and Great Western, the two pioneer vessels, crossed the Atlantic to New York. The increase in this department was at first very slow, and thirteen years later, or in 1851, the total British steam tonnage engaged in foreign trade was only 65,921 tons. The foreign steam shipping of the United States may be said to date from 1848, when it amounted to about 16,000 tons. For a number of years next subsequent its increase was so rapid that in 1851 the foreign steam tonnage of the United States and Great Britain were almost equal; that of the former being 62,392 tons, and that of the latter 65,920 tons. The prospect, therefore, at one time was that the United States, although late in the start in this new department of foreign shipping, must soon equal, if not overtake, her great commercial competitor, Great Britain. And after the year 1851 the American growth steadily continued down to the year 1855, when our aggregate steam tonnage engaged in foreign trade amounted to 115,000 tons. But from that time onward there was no more progress, but a retrograde movement; so that in 1862 the aggregate foreign steam commerce of the United States was less by 1,000 tons than it was in 1855. But even before the outbreak of the war "there were no ocean mail steamers, away from our own coasts, anywhere on the globe under the American flag, except, perhaps, on the route between New York and Havre, where two steamships may then have been in commission, which, however, were soon afterwards withdrawn. The two or three steamship companies which had been in existence in New York had either failed or abandoned the business; and the entire mail passenger and freight traffic between Great Britain and the United States, so far as this was carried on by steam, was controlled then (as it mainly is now) by British companies."
—The year 1856 further marks a great natural division in the history of the entire foreign mercantile marine and ship-building industry of the United States. The record thus far has been substantially a record of a most remarkable progress and prosperity. The record hereafter is to be a record of decadence and disaster, which, considering the magnitude of the capital and interests involved, is almost without a parallel in the history of modern civilization.
—The decline in American ship-building and in the American carrying trade upon the ocean did not, as is popularly supposed, commence with the war, and was not occasioned by the depredations of the confederate cruisers. These agencies simply helped on a decadence that had previously commenced, and which probably would have progressed just as far as it now has had no war intervened. The first symptoms of this decadence appeared in 1856 in the falling off in the sales of American tonnage to foreigners; the reduction being from 65,000, in 1855, to 42,000 in 1856; to 26,000 in 1858, and to 17,000 in 1860. During the war, however, the transfers of American tonnage to foreign flags again increased very largely; and for the years 1862 to 1865 inclusive, amounted to the large aggregate of 824,652 tons, or to more than one-fourth of all the registered tonnage (the tonnage engaged in foreign trade) of the United States in 1860. But these transfers it is well understood were not in the nature of ordinary business, but for the sake of obtaining a more complete immunity from destruction upon the high seas than the United States at that time was able to afford. The year 1856 also marks the time when the growth of our foreign steamshipping was arrested and a retrograde movement inaugurated, so that, as before stated, our aggregate tonnage in this department was 1,000 tons less in 1862 than it was in 1855. The total tonnage of every description built in the United States also declined from 582,450 tons, in 1855, (the largest amount ever built in any one year) to 212,892 tons in 1860, a reduction of over 60 per cent. in five years. The year 1855-6 was also the period when American vessels carried the maximum percentage (75.2 per cent.) of the exports and imports of the United States. After 1856 this business steadily declined from 75.2 per cent. in 1856 to 73.7 per cent. in 1858; 66.5 per cent. in 1859, and 65.2 in 1861, the year of the outbreak of the war. Notwithstanding this, the records of the United States treasury department show that the aggregate of American tonnage engaged in foreign trade and the total aggregate of the entire mercantile marine of the United States were both greater in 1861 than at any former period. Whether it was at this latter date all profitably employed, as it certainly was at an earlier period, can not now be affirmed.
—What happened in the twenty years that elapsed between 1860-61 and 1880 is shown by the treasury statistical statement. Our aggregate tonnage of every description, registered and enrolled, sail and steam, employed upon the ocean, upon the lakes, upon our rivers and harbors, has declined from 5,539,813 tons in 1861 to 4,008,034 in 1880—a reduction of over 26 per cent.
—Our tonnage engaged in foreign trade has declined during the same period from 2,496,894 tons to 1,314,402 tons—a reduction of 47 per cent.
—The aggregate of tonnage of every description built in the United States in 1855 was 583,450; in 1861, 233,193 tons, and in 1880, 157,409 tons—a reduction of annual increment since 1855 of 73 per cent., and since 1861 of 32 per cent. How rapidly furthermore this former great branch of American industry is decaying may be also illustrated by the statement that the American tonnage built in 1880 was 35,622 less than 1879, and 78,095 tons less than in 1878. There was a falling off in the shipbuilding of the New England States during 1880 of 9,500 tons as compared with 1879, 44,012 tons as compared with 1878, and 105,123 as compared with 1875; while for our entire seaboard—Atlantic, Gulf and Pacific—the tonnage built in 1880 was 142,755 tons less than the product of 1875.
—But the changes which have taken place within the last twenty-five years in the ocean carrying trade of the United States constitute by far the most striking illustrations of the tremendous decadence and wreck which our foreign maritime commerce and commercial marine within that period experienced. During the whole period between 1855 and 1860 there was, as before noticed, at least a million and a half of American tonnage exclusively in foreign employ, "carrying cargoes from foreign ports to foreign ports for foreigners, to be used by foreigners, and in which business Americans had no direct interest but to receive in cash their freight money, to be sent home and added to the productive capital of the country." Of this great and profitable business a small proportion (in 1881) probably yet remains, but how much it is difficult to state with accuracy.
—Again, in 1856, out of the total value of all the exports from and of all the imports into the United States the American commercial marine transported 75.2 per cent. The record of the experience of the twenty-five years next succeeding is exhibited in the following table:
Percentage of the exports and imports of the United States carried in American vessels from 1556 to 1880 inclusive:
Or to sum up in a few words, of the goods, wares and merchandise exported and imported into the United States during the fiscal year 1880, American vessels transported only 17.4 per cent. and foreign vessels 82.6 per cent.
—Startling, however, as are these statistics, they nevertheless fail to convey the exact truth of the situation at the present time of writing. For it must be borne in mind, that while the business of American shipping engaged in foreign trade has been rapidly disappearing, the opportunities for business have at the same time been increasing in a far more rapid ratio: or, to put the case differently, while there never was so much business calling for the employment of merchant vessels in the history of the world as at the present time, the extent to which the capital and industry of the United States participate in this business is annually growing less and less. Thus, taking merely the trade of the United States as an example, we find that out of a total value of exports and imports in 1860 of $762,000,000, the value transported in American vessels was $507,000,000, or 66.5 per cent.; but in 1880, out of a total value of exports and imports of $1,589,000,000, American vessels transported a value of only $28,000,000, or 17.6 per cent., a little more than half of what was done twenty years ago, or in 1860. Of this enormous increase every maritime nation of any note, with the exception of the United States, has taken a share. American tonnage alone exhibits a decrease. Thus comparing 1880 with 1856, the foreign tonnage entering the sea-ports of the United States increased nearly 11,000,000 tons; whereas the American tonnage entered during the same period exhibits a decrease of over 65,000 tons. British tonnage increased its proportion from 935,000 tons in 1856 to 7,903,000 in 1880; Germany, during the same time, from 166,000 to 1,089,000; Sweden and Norway from 20,662 to 1,234,000; Austria from 1,477 to 206,000; Spain from 63,813 to 227,496; while Russia, whose vessels participated in our trade in 1856 to the extent of only 40 tons in 1880, reported 104,049 tons.
—The tonnage of iron vessels, sail and steam, built in the United States from 1876 to 1880 inclusive, amounted to only 101,823 tons, and this trifling amount was almost entirely for our coastwise or home trade, in which no foreign competition whatever is allowed under the provisions of our navigation laws. No iron sailing vessels were built in the United States between 1871 and 1880; but during the latter year 44 tons were reported by the treasury department as having been constructed. Per contra the increase of iron shipbuilding in Great Britain during the corresponding period amounted to 1,800,193 tons.
—From these exhibits it is easy to comprehend the tremendous change that took place between 1856 and 1880 in the great department of domestic industry under consideration as measured in ship-building and in the business for which ships are constructed and used. Let us next endeavor to gauge the amount of this loss as measured in money.
—In 1855 the amount expended in the United States in the construction of new vessels was estimated at about $25,000,000 per annum; and a sum considerably in excess of this for the repair and rebuilding of old vessels; or a total for this branch of domestic industry of from $55,000,000 to $60,000,000 per annum. The bulk of this large expenditure was very largely for the labor of construction. A present (1881) annual expenditure in the United States of $25,000,000 for similar purposes would probably be an over rather than an under estimate. We start off in the money account, therefore, with a loss to the industry and business of the country in the two items of ship building and ship repairing of from $30,000,000 to $35,000,000 per annum.
—Again, the business of transporting merchandise or passengers by land or by sea is as much a productive industry as the raising of wheat, the spinning of fibres or the smelting or forging of iron. It adds to human comfort, it supplies wants, creates values, increases abundance.
—In foreign commerce, the freights paid on the things transported are as much exports or imports as the merchandise which is exported or imported. Thus, if 2,000 tons of coal of the value of $10,000 are sent in a vessel of the United States to China, and the freight on the same is $6,000, this freight is as much of an export of the results of American industry as the coal, and if paid and returned to the United States in the form of coin or tea or silk, may, and under ordinary circumstances will, add as much proportionally to the general wealth of the country as the proceeds of the sale of the coal upon which the freight was earned. On the other hand, if the coal is transported in a foreign vessel, the freight earned does not increase the capital or benefit the labor of the United States, but of the country to which the vessel belongs. The amount paid for the transport of the imports and exports of the United States for the calendar year 1879, has been estimated by the best authorities, (Henry Hall, of the U.S. census and Dr. E. H. Walker, late statistician of the New York produce exchange), at $88,000,000 as a minimum for exports and about $45,000,000 on imports, or an annual total of $133,000,000. For the fiscal year ending June 30, 1880, Mr. Hall also reports 18,000,000 of gross tons of the produce and manufactures of the United States as exported, and 3,900,000 tons of the produce and manufactures of foreign countries as imported into the United States, the exports—grain, provisions, cotton, petroleum, etc.—representing a large bulk in comparison with value, and the imports—textiles, drugs, manufactures of metals, etc.—large value in proportion to bulk.
—Of the above estimated aggregate of freights paid on the exports and imports of the United States, probably not more than one-fifth, or $26,000,000 as a maximum, was carried under the American flag. If the proportions of the carrying trade which were controlled by the United States in 1860 had been simply maintained, without any increase, the present (1880) worth of the business which has been lost to the country in this department of domestic industry must be estimated at $86,000,000—$26,000,000, or $60,000,000 per annum.
—Adding to these estimates the loss of business consequent on the decline of ship building and ship repairing, and also the nearly total loss of the great business of ocean passenger and immigrant carriage—to be estimated for the year 1880 at not less than $15,000,000—and we have the sum of one hundred millions of dollars as the smallest measure in money of the annual worth, in 1880, of the business which the United States has lost in consequence of the decay of her commercial marine. If we assume, however, only seventy-five millions as the loss which the business and national wealth of the country at present annually sustains by reason of the decay of our industries of ship building, ship repairing and ship using in foreign commerce, then this loss would be equivalent to the almost complete wiping-out of the business of pig-iron smelting as it existed in the United States in 1870; to forty-five per cent. of our manufacture of cotton goods at the same period, and nearly the same proportion of the value of our woolen and worsted industries.
—As illustrating, furthermore, the extent to which the ocean carrying business is capable of development as a national industry, attention is asked to the fact that the gross amount of freight—exclusive of that on bullion—earned by British vessels on the transport of the exports and imports of the united kingdom for the year 1875-6 was estimated by the best authorities as £56,000,000, or $280,000,000.
—But the direct losses occasioned by the decay of our ocean commercial marine are insignificant in comparison with the indirect losses due to the loss of trade from an inability to make exchanges promptly, regularly and cheaply with foreign countries. No matter how well stocked the store may be with good, cheap and desirable goods, if would-be customers find great inconveniences in the way of getting to the store and in transporting to it their products for barter or exchange, they will not come, but trade elsewhere.
—Having inquired into and acquainted ourselves with the present condition of our foreign commercial marine, and having traced the gradual changes which have taken place in our ship-building industry and foreign carrying trade within the last quarter of a century, embraced between the years 1855 and 1880, we are now prepared to enter upon a discussion and analysis of the causes which have produced the existing most remarkable, and at the same time nationally discreditable condition of American ocean commerce.
—The facts already presented fully demonstrate that the war of the rebellion was not the cause, and did not mark the commencement of the decadence of American shipping, although the contrary is often and perhaps generally assumed by those who have undertaken to discuss this subject. The war simply hastened a decay which had already commenced, and under the same influences and conditions as have otherwise prevailed the same results would undoubtedly have been reached, even if no war had intervened. Neither can the paralysis with which the great branches of domestic industry under consideration have been smitten and have been threatened with extinction, be referred to such agencies as fluctuations of supply and demand, foreign wars, or financial revulsions at home or abroad, for all these influences have operated in the past, but have produced no such results, either in this country or elsewhere, as those we are considering. During the latter years of the period we are now treating—1878-80—the general prosperity of the country, measured by the volume of business transacted, and the amount of resulting profits, has been greater than ever before, and yet there has been not only no resuscitation of the American commercial marine, but rather a marked and further decline. It has been also a popular idea, that the continued decadence of American shipping since the close of the war in 1865, was in part due to the system of vicious irredeemable currency which the war engendered; but the currency of the country was restored to a specie basis in January, 1879, and foreign nations have no longer any advantage in this respect over the United States; and yet there were not half as many vessels built during the prosperous specie paying year of 1880, as during the height of the inflation period of 1868. To what then is the deplorable result, which no one denies has happened, to be attributed? The answer first is, not to one, but to several causes. The primary cause was, what may be termed a natural one, the result of the progress of the age and a higher degree of civilization—namely, the substitution of steam in the place of wind as an agent for ship propulsion, and the substitution of iron in the place of wood as a material for ship construction; and for nations or individuals to have attempted to permanently counteract the influence of these substitutions by legislation or any specific commercial policy, was as useless, as our own experience proves, as to have sought to arrest the stars in their courses. So long as wood was the article mainly used in the construction of vessels the United States had an advantage over foreign nations in the cost of the material, in the skill which we had acquired in working the same, and in the positive genius for the management of wooden sailing ships which natural faculty and more than two centuries of experience may be claimed to have nationally engendered. When, however, the steam engine was substituted for the sail, and iron for wood, then these advantages were in a great degree neutralized or wholly swept away.
—Foreign steam shipping and the successful application of iron to the construction of vessels designed for ocean navigation were accomplished facts in Great Britain as early as 1840. As is generally the case with all new inventions and discoveries, these startling innovations on an old established order of things were in the outset regarded doubtfully and, indeed, did not command the full confidence of the commercial public in both respects until a considerably later period. The application of steam to ocean navigation was the first to be accepted as an absolute necessity, and therefore as inevitable. The Americans waited until English experience had proved the fact to their full satisfaction, and then embraced the idea so eagerly and turned it to practical account so rapidly that the foreign steam tonnage of the United States, which really commenced to exist in 1848, nearly equaled in 1851 (as before shown) the entire steam tonnage of Great Britain of longer growth, and continued to regularly and largely increase until 1856. But during the period between 1848 and 1855 the commercial public had become pretty generally satisfied in respect to certain other matters. They had been taught by further experience that iron in the construction of vessels was much more durable than wood, and that whatever difference, therefore, there might be in the first cost, the iron vessel in the long run is cheaper than the wooden one. They had learned that iron vessels are more rigid than wooden vessels, and that the former are therefore better adapted to withstand the strain of heavy steam machinery, and also that from lack of the necessary strength and rigidity the application of the most economical method of propulsion—namely, the screw—is impracticable in the case of wooden vessels of large capacity. They had also learned that iron ships are superior to wooden ships in buoyancy, and hence draw less water with a given tonnage, carry a greater weight of cargo, and have a greater stowage capacity. In short, they had come to know that for the most practical purposes wooden ships in competition with iron ships were nowhere. American ship owners, merchants and navigators, or at least the more enterprising of their number, were not more backward in learning and understanding the significance of these facts than their English competitors; and the conditions of the hour for the continued prosperity of the American merchant marine were fully set forth in various commercial journals of the United States.
—Had matters been allowed to take their natural course; had Americans been allowed to simply take the advantage of the world's progress which was taken by their competitors, it is reasonable to infer that there would have been no material decline in the American shipping interest, and no such condition of things to bewail as exists at present. To assume to the contrary is to assume that Americans would have made an exception of this one department of their domestic industry, and have failed to bring to it that sagacity and skill that before and since have characterized all their other business operations. But matters were not allowed to take their natural course. The means and appliances for the construction of iron vessels did not then exist in the United States; while Great Britain, commencing in 1839, (when John Laird constructed his iron steamers for the British navy which afterward took part in the Chinese war), and with seventeen years of experience, had become equipped in 1855 for the prosecution of this great industry. The facilities for the construction of steam machinery adapted to the most economical propulsion of ocean vessels, furthermore, were also inferior in the United States to those existing in Great Britain, and by reason of statute provisions (see NAVIGATION LAWS OF THE UNITED STATES), citizens of the United States interested in ocean commerce were absolutely prevented and forbidden from availing themselves of the results of British skill and superiority in the construction of vessels when such a policy was the only expedient which could have enabled them at the time to hold their position in the ocean carrying trade in competition with their foreign rivals. Now, there is very little sentimentality in the representatives of trade and commerce, whatever may be their nationality. They simply ask, "Who will serve us best and at the cheapest rate?" And the inability of the ships of the United States to do the work which trade and commerce required that they should do as well and cheaply as the ships of other nations being established, the decadence of American shipping commenced and was inevitable from the very hour when this fact was first recognized, which was about the year 1856. Here, then, we have the primary cause of the decay of the business of ship building in the United States and of our commercial marine. Other causes—hereafter noted—have since come in and helped the decay and are powerfully operative to prevent recovery; but so long as the conditions, which in the outset were the source of the trouble, continue to prevail, decay will continue to go on and there can be no recovery. Attention should here be called to the circumstance that the relation of the United States to Great Britain in this matter of ship construction and employment has been no different from the very outset of the new era in navigation from that of all other maritime nations, with the single exception that, as the interest of the United States in the new conditions was greater than that of all these others combined, it was incumbent on the former to act with the greatest wisdom and discretion, and not allow prejudice and ancient conservatism to prevent the removal of obstacles which stood in the way of national growth and development. But none of these nations, with the possible exception of old Spain, acted as did the United States Taking a practical, common-sense view of the situation and setting sentiment aside, they concluded that it would be the height of folly to permit a great and profitable department of their industries to be impaired or destroyed rather than allow certain improvements in the management of its details, because suggested and carried out by a foreign nation, to be purchased and adopted. And they, therefore, virtually said to their own people: "If England can build better and cheaper ships for ocean commerce than you can yourselves, and will furnish them to you on terms as favorable in every respect as is granted to her own citizens, and if your own private judgment and feeling of self-interest prompts you to buy and use such ships, the state will interpose no obstacles to your so doing. As between a business and the instrumentalities for doing business the interests of the first are to be first considered, for if the business fails, the instrumentalities employed in it, be they good or bad, will retain but little of value; whereas, on the other hand, if the business can be kept profitable there need be no apprehension as to a deficiency or imperfection of the instrumentalities." And the merchants and capitalists of these maritime states, adopting the course which seemed best to them under the circumstances, went to England and supplied themselves with ships and steamers of the most approved patterns, and sharing with the English the monopoly of owning and using the same, have always derived great profit therefrom. And the several states, furthermore which permitted their citizens to act without restraint in accordance with their own best judgment in this matter, have never had any such results as the United States has experienced, but, on the contrary, have seen their commercial tonnage and carrying trade upon the high seas largely increase, and if their shipping interests have since experienced any vicissitudes, they have not in any one instance been referred to influences even remotely connected with the liberal policy that was adopted. On the other hand, the policy of the United States under the same circumstances has been very much as if at the outset of the development of the railway system as an improved method of transporting goods and passengers, some one state of the Union—say Ohio, for example—had said, "We have no manufactories of locomotives or cars, or mills for rolling railway bars, within our territory; state pride and a desire to be wholly independent will not allow us to purchase these articles of Pennsylvania; therefore we will continue to use horses and wagons, which heretofore answered our purposes of transportation, and not use railroads until we can manufacture all railroad equipments ourselves." People in other states would have been prompted to characterize the action of the people of Ohio as irrational, and as in opposition to their material interests, and yet the boundary line which separates the United States from Great Britain is just as much a mater of artificial ordination as that which separates Ohio from Pennsylvania. But be this as it may, the result in the hypothetical case would have been exactly the same as is the result in the real case. Ohio would not have got her railroads not the wealth and development that would have flowed from their construction. The United States has not got the ships, or the wealth and business that have been attendant upon their possession and skillful employment in other countries.
—But, although the navigation laws of the United States have been undoubtedly the prime agency in originally occasioning this decadence, and subsequently preventing the resuscitation of American shipping engaged in foreign commerce, other influences have also powerfully contributed to the same results. Among these, the influence of the high protective tariff system of the United States which has been in operation since 1861, must be regarded as most prejudicial; first, by enhancing the price of nearly all articles entering into the domestic construction and equipment of vessels, and for which the allowance of a drawback on the importation of similar articles of foreign production has afforded but a partial relief; and secondly, by preventing that reciprocity of trade between the United States and various foreign countries, which is essential to the full and profitable employment of vessels. Ships are the children and not the parents, the effect and not the cause of commerce; and so long as the commercial policy of the United States restricts the producers of this country from freely exchanging the products of their labor with the products of the labor of the producers of other countries, foreign commerce will not develop or a national commercial marine find a basis for growth or even existence.
—Another serious obstacle in the way of the profitable employment of American vessels in foreign commerce, is the system of state or local taxation generally adopted by the several states of the federal union, under which ships are taxed as personal property, to their owners; a practice which does not prevail in any other of the leading maritime nations. The manner in which such taxes work to the disadvantage of American shipping may be thus illustrated: Let us suppose the projection of a new line of steamships to run between the United States and Europe in competition with existing lines, now controlled by foreign capitalists and registered under a foreign flag. If the nationality of the company is to be American and its location any one of our leading Atlantic cities—except Philadelphia—the taxation on the whole accessible capital or property of the company—ships, wharfs, machine shops, offices—and floating capital, will be from 1.50 to 2.50, or even greater per cent., on a pretty full valuation. In the State of New York the tax is to a great extent evaded. In many of the other states it is, however, rigidly enforced. [Since this article was written (1880), New York and Massachusetts have exempted ships engaged in foreign commerce from local taxation.] On the other hand, Pennsylvania, when she some years ago incorporated a local transatlantic steamship company having its situs in Philadelphia, judiciously exempted all ships engaged in foreign trade, as well as all other property—stocks, bonds, etc.—of the company in question, from all state taxation. Furthermore, until recently, the national government would have preferred an average tax under the tariff of about 40 per cent. on all articles of foreign production entering into the construction of vessels, and as a consequence it advanced the price of similar articles of domestic production to an equal or nearly corresponding extent. By the act of June, 1872, however, articles of foreign growth or production "necessary for the construction and equipment of vessels built in the United States for the purpose of being engaged in foreign trade" may be imported in bond free of duty; but vessels receiving the benefit of this provision are not allowed to engage in the coastwise trade of the United States for more than two months in any one year. As one consequence of this restriction, a New York ship owner stated at the recent meeting of the national board of trade (December, 1880,) that, having occasion to send a vessel built for foreign trade from New York to New Orleans for temporary employment, he was obliged before he could do it to pay $400 for duties on the suit of metal which had been previously placed on the ship's bottom. For some years after the war, also, when the shipping interests of the United States engaged in foreign trade had suffered exceptionally from the inability of the government to protect it from confederate cruisers, and when it, therefore, needed the kindliest and most fostering care, income taxes were imposed on the incomes of ship-owners (if they perchance happened to have any) and in addition heavy taxes on the gross receipts of their entire business and upon every passenger ticket by them sold. When the largest possible damage had been effected these national taxes were repealed. But the practice of Great Britain and other nations of allowing vessels employed in foreign commerce to take stores for voyage consumption out of bond free of duty has not as yet been thought worthy of imitation, and as a consequence the cost of ship supplies in the United States was reported by a committee of congress a few years ago to be about 20 per cent. in the aggregate in excess of the cost of supplies to vessels of Great Britain. If now, on the other hand, the situs of the prospective new steamship company is made foreign and its location fixed at Liverpool, the whole amount of local taxation to which the company would be subjected would be merely an assessment to the extent of from 10 to 25 per cent. on the rental—not capital—value of the premises occupied either as offices, storehouses or machine shops. Beyond this the British government would levy an income tax on the profits (if any) of the shareholders or owners, as individuals, which tax is at present about 2 per cent., but in 1875 and 1876 was less than 1 per cent.; and, omitting all other forms of direct taxation, would allow all articles subject to taxation either under the excise or tariff, such as distilled spirits, teas, sugars, coffee, wines and tobacco, which may be required for use on board the steamer in question, to be taken from bond free of duty. The difference in the return on the investment, therefore, growing out of the difference merely in the fiscal systems recognized in the different locations specified, would be of itself sufficient to afford to the foreign capitalist a dividend on his stock equal to at least one-half of the ordinary rate of European interest on the capital employed, while to the American investor the disadvantage would have an expression at least twofold greater through an increase of expenses and a diminution of profit which can be traced directly to a system of taxation which has enhanced the price of everything that has entered into the steamer, from the laying of her keel to the coal that feeds her engines. In Great Britain and other countries it is furthermore to be noted that the ownership of a ship that is idle and not earning, or employed and not earning, does not entail any burden of taxation, but in the United States it makes no difference whether the ship be at work or idle, profitably or unprofitably employed, she pays taxes all the same.
—With competition with foreign nations on terms of equality being, therefore, from the very outset, not less by state than by federal laws, rendered impossible, is it to be wondered at that the American ocean marine has declined almost to extinction, or that there are so few mechanical establishments in the United States capable of building or repairing first-class steamships?
—Tonnage taxes on shipping are not levied by Great Britain, nor, it is believed, by any other of the maritime states of Europe, except Spain. Prior to the war also there were no tonnage taxes in the United States, and their enactment in 1862 was due simply and exclusively to the urgent necessities of the government for revenue occasioned by the war. Those necessities having long since passed there is no good or sufficient reason for the continuance of such taxes. The rates imposed on American and foreign vessels being substantially the same, American vessels would not seem to be relatively at a disadvantage with foreign vessels on account of these taxes. But really they are; inasmuch as in the one case the effect of the tax is generally to reduce realized profits, while in the other it constitutes, under existing circumstances, an obstacle, as will be presently shown, in the way of realizing any profits at all.
—According to British maritime rules the tonnage capacity of vessels is reckoned on only such space as is available for cargo, and in the measurement of vessels for the ascertainment of their capacity allowance is made for the space occupied for the accommodation of the officers and crew and also by the machinery. In the United States the space occupied by the water closets and galley are alone exempt from admeasurement; and as a consequence American vessels are at a disadvantage as compared with British shipping in respect to tonnage and harbor dues and light money in ports where such taxes are levied. Again, a sailing vessel which enters an American port once a year is obliged to pay as much tonnage tax as a steamer that enters the same port every month; and if in a given line a steamer which has paid her tonnage taxes for a year becomes disabled and is withdrawn during the first month of the year the substitute steamer must pay tonnage all the same for another full year.
—The charges of our consular system are claimed, and undoubtedly with truth, to be another weighty burden on American shipping engaged in foreign trade. These fees are all fixed by congress, and paid into the United States treasury, and have evidently been arranged with the idea of not only rendering the United States consular system self-sustaining but of also making it a source of revenue to the government. For the fiscal year ending June 30, 1880, the amount of consular fees paid into the United States treasury was $592,161, and the amount disbursed for consular salaries $465,641. For contingencies pertaining to the consulates there was also disbursed the additional sum of $164,000. Compulsory pilotage, the three months' extra pay to crews discharged in foreign lands—the great mass of sailors being now of foreign nationality and as much at home in one port as another—and the obligatory employment of government officials for the shipment of sailors in American ports, are also further obstacles in the way of the prosperity of the American commercial marine from which its foreign competitors are either wholly or in a great degree exempt. By a system of compulsory dues on incoming and outgoing vessels, (from which only the coasting service is exempt), the Sandy Hook pilot service of the port of New York, which consists of 133 New York and 58 New Jersey pilots, derives a yearly income from the commerce of the port of $800,000 to $1,000,000. The specific amounts charged are said to be two and a half times in excess what is paid in Liverpool for similar service; and at the shipping convention at Boston in October, 1880, Mr. James E. Ward, of New York, stated that his firm "paid as large an amount for pilotage into New York harbor as they did to the captain of his steamship for sailing the vessel all the way to Cuba and back, facing all the dangers of the seas and the risk of contagion in Cuba." These compulsory pilot charges contribute to make New York one of the most expensive ports for shipping in the world.
—From this history of the rise and fall of the American merchant marine it must be evident that no one measure will arrest the decay of American shipping now in progress, bring back prosperity to the ocean carrying trade, or revive the shipbuilding interests of the United States; but that the field of reform to be entered upon is very large and the number of details to be attended to very numerous. Reform and prosperity are, however, both possible and practicable if the people of the United States desire and will it.
—To complete this history, a further special reference is needed to the American merchant marine engaged in "coastwise" or domestic commerce as contradistinguished from that engaged in "foreign" commerce. American vessels engaged in foreign trade, in order to be qualified by law for so doing, are required to be registered "by the collector of that collection district which includes the port to which such vessel shall belong at the time of her registry; which shall be deemed to be that at or nearest to which the owner, or managing owner, of such vessel usually resides" (U.S. Revised Statutes, section 4141.) Registered vessels are subject to the payment of tonnage taxes and various regulations from which vessels engaged exclusively in foreign trade are exempt. (See Revised Statutes of the United States, titles XL VIII and XLIX, sections 4131 to 4310 inclusive.) Vessels designed for the coastwise or domestic commerce, if of less than twenty tons burden, are required to be licensed, and if in excess of twenty tons are required to be both licensed and enrolled in the collection district where owned; are not subject to the payment of tonnage taxes, and are not permitted to engage in foreign trade, without changing their enrollment for a register. Vessels of foreign construction, or owned in part, or commanded by foreigners, are not permitted to engage in the coastwise or domestic commerce of the United States. Vessels licensed for the carrying on of fisheries can, before sailing, obtain special permits for touching or trading at foreign ports; but any such vessel found within three leagues of the coast with merchandise of foreign growth or production on board, exceeding five hundred dollars in value, without special permit for the carriage of the same, is made subject to confiscation, with cargo. For further details of regulations respecting the coastwise commerce of the United States, see Revised Statutes of the United States, title L, sections 4311-4390.
—The tonnage of vessels of the United States, owned by American citizens and sailing under the American flag, on the 30th of June, 1880, was as follows:
The employment of tonnage on the 30th of June, 1880, was reported by the register of the United States treasury to have been as follows:
The tonnage of sailing vessels—including canal boats and barges—and of steam vessels, comprising the merchant marine of the United States from 1860 to 1880 inclusive, is thus reported by the U.S. treasury department:
The following table exhibits the tonnage of vessels of the United States employed in the foreign trade, coastwise trade, whale fisheries, and in the cod and mackerel fisheries, from 1860 to 1880 inclusive:
The following table (derived from reports of the U. S. bureau of statistics) also exhibits the value of the imports and exports of the United State carried, respectively, in United States vessels and in foreign vessels, during the twenty-five years, from 1856 to 1880, with the percentage carried in vessels of the United States—(including merchandise and coin and bullion):
The following table, derived from the annual report of the U. S. bureau of statistics, exhibits the tonnage of American and foreign vessels entered at seaports of the United States during each year from 1860 to 1879 inclusive:
DAVID A. WELLS.