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Title: Manual of Ship Subsidies
Author: Bacon, Edwin M.
Language: English
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An Historical Summary of the Systems of All Nations






X       RUSSIA


The intent of this little book is to furnish in compact form the history
of the development of the ship subsidies systems of the maritime nations
of the world, and an outline of the present laws or regulations of those
nations. It is a manual of facts and not of opinions. The author's aim
has been to present impartially the facts as they appear, without color
or prejudice, with a view to providing a practical manual of information
and ready reference. He has gathered the material from documentary
sources as far as practicable, and from recognized authorities, American
and foreign, on the general history of the rise and progress of the
mercantile marine of the world as well as on the special topic of ship
subsidies. These sources and authorities are named in the footnotes, and
volume and page given so that reference can easily be made to them for
details impossible to give in the contracted space to which this manual
is necessarily confined.


  September 1, 1911.



The term _subsidy_, defined in the dictionaries as a Government grant in
aid of a commercial enterprise, is given different shadings of meaning
in different countries. In all, however, except Great Britain, it is
broadly accepted as equivalent to a bounty, or a premium, open or
concealed, directly or indirectly paid by Government to individuals or
companies for the encouragement or fostering of the trade or commerce of
the nation granting it.

Ship subsidies are in various forms: premiums on construction of
vessels; navigation bounties; trade bounties; fishing bounties; postal
subsidies for the carriage of ocean mails; naval subventions; Government
loans on low rates of interest.

In Great Britain they comprise postal subsidies and naval subventions,
ostensibly payments for oversea and colonial mail service exclusively,
or compensation for such construction of merchant ships under the
Admiralty regulations as will make them at once available for service as
armed cruisers and transports. They are assumed to be not bounties in
excess of the actual value of the service performed, with the real
though concealed object of fostering the development of British overseas
navigation. Still, notwithstanding this assumption, such has been their
practical effect.

Their original objects when first applied to steamship service, as
defined by a Parliamentary committee in 1853, were--"to afford us rapid,
frequent, and punctual communications with distant ports which feed the
main arteries of British commerce, and with the most important of our
foreign possessions; to foster maritime enterprise; and to encourage the
production of a superior class of vessels, which would promote the
convenience and wealth of the country in time of peace, and assist in
defending its shores against hostile aggression." To foster British
commerce they have undeniably been employed to meet and check foreign
competition on the seas, as the record shows.

In the United States they have taken the form of postal subsidies openly
granted for the two-fold purpose of the transportation of the ocean
mails in American-built and American-owned ships, and the encouragement
of American shipbuilding and ship-using.



England has never granted general ship-construction or navigation
bounties except in the reigns of Elizabeth and James I. Under Elizabeth
Parliament offered a bounty of five shillings per ton to every ship
above one hundred tons burden; and under James I that law was revived,
with the bounty applying only to vessels of two hundred tons or over.[A]

A policy of Government favoritism to shipping, however, began far back
in the dim ninth century with Alfred the Great. Under the inspiration of
this Saxon of many virtues, his people increased the number of English
merchant vessels and laid the foundation for the creation and
maintenance of a royal navy.[B] The Saxon Athelstan, Alfred's grandson,
whose attention to commerce was also marked, first made it a way to
honor, one of his laws enacting that a merchant or mariner successfully
accomplishing three voyages on the high seas with a ship and a cargo of
his own should be advanced to the dignity of a thane (baron).[C]

The first navigation law was enacted in the year 1381, fifth of Richard
II. This act, introduced "to awaken industry and increase the wealth of
the inhabitants and extend their influence,"[D] ordained that "none of
the King's liege people should from henceforth ship any merchandise in
going out or coming within the realm of England but only in the ships of
the King's liegeance, on penalty of forfeiture of vessel and cargo."[E]

This act of Richard II was the forerunner of the code of Cromwell, which
came to be called the "Great Maritime Charter of England," and the
fundamental principles of which held up to the second quarter of the
nineteenth century.

Under Charles I was enacted (1646) the first restrictive act with
relation to the commerce of the colonies, which ordained "That none in
any of the ports of the plantations of Virginia, Bermuda, Barbados, and
other places of America, shall suffer any ship or vessel to lade any
goods of the growth of the plantations and carry them to foreign ports
except in English bottoms," under forfeiture of certain exemptions from
customs.[F] It was followed up four years later (1650) under the
Commonwealth, by an act prohibiting "all foreign vessels whatever from
lading with the plantations of America without having obtained a

Cromwell's code, of which the act of 1381 was the germ, was established
the next year, 1651. Its primary object was to check the maritime
supremacy of Holland, then attaining dominance of the sea; and to strike
a decisive blow at her naval power. The ultimate aim was to secure to
England the whole carrying trade of the world, Europe only excepted.[H]
These were its chief provisions: that no goods or commodities whatever
of the growth, production, or manufacture of Asia, Africa, or America
should be imported either into England or Ireland, or any of the
plantations, except in English-built ships, owned by English subjects,
navigated by English masters, and of which three-fourths of the crew
were Englishmen; or in such ships as were the real property of the
people of the country or place in which the goods were produced, or from
which they could only be, or most usually were, exported.[I] This last
clause was the blow direct to Holland, for the Dutch had little native
products to export, and their ships were mainly employed in carrying the
produce of other countries to all foreign markets. It was answered with
war, the fierce naval war of 1652-1654, in which was exhibited that
famous spectacle of the at first victorious Dutch admiral, Van Tromp,
sweeping the English Channel with a broom at his masthead.

With the final defeat of the Dutch after hard fighting on both sides,
their virtual submission to the English Navigation Act, and their
admission of the English "sovereignty of the seas,"[J] by their consent
to "strike their flag to the shipping of the Commonwealth," England, in
her turn, became the chief sea power of the world.[K] During the ten
years of peace that followed, however, the Dutch despite the English
Navigation Act, succeeded in increasing their shipping, and regained
much of the carrying trade if not their lost leadership.[L]

Cromwell's act was confirmed by Charles II in 1660, and made the basis
of the code which then her statesmen exalted as "The Great Maritime
Charter of England."

Early in Charles II's reign also (in 1662) indirect bounties were
offered for the encouragement of the building of larger and more
efficient ships for service in time of war. These were grants of
one-tenth of the customs dues on the cargo, for two years, to every
vessel having two and one-half or three decks, and carrying thirty
guns.[M] Thirty years later (1694), in William and Mary's reign, the
time was extended to three years. Under William and Mary the granting of
bounties on naval stores was begun, and this system was continued till
George III's time.[M] With William and Mary's reign also began the
giving of indirect bounties to fishermen for the catching and curing of
fish. After the middle of the eighteenth century vessels engaged in the
fisheries were regularly subsidized, with the object of training sailors
for the merchant marine and the royal navy.[M]

While the fundamental rules of the "Maritime Charter" of 1660 remained
practically unimpaired, although in the succeeding years hundreds of
regulating statutes were passed, breaks were made in the restrictive
barriers of the code during the first third of the nineteenth century by
the adoption of the principle of maritime reciprocity.[N] In 1815 (July
3) a convention establishing a "reciprocal liberty of commerce," between
the "territories of Great Britain in Europe and those of the United
States," was signed in London.[O] In 1824-1826 reciprocity treaties were
entered into with various continental powers. In 1827 (August 6) the
treaty of 1815 with the United States was renewed. In 1830 a treaty for
regulating the commercial intercourse between the British colonial
possessions and the United States was executed.[P] Under these
conventions, repeatedly interrupted by British Orders in Council and by
Presidents' proclamations,[Q] the trading intercourse between both
countries was regulated till the abrogation of the code of 1660.

In 1844 an indirect move against the code was made, with the appointment
of a committee of the House of Commons to inquire into the working of
the reciprocal treaties and the condition of the mercantile marine of
the country.[R]

At this period the competition of the United States in the overseas
carrying trade of the world was hard pressing England. The Americans
were building the best wooden ships, superior in model and
seaworthiness, the fastest sailers. They were leading in shipbuilding.
Much of the British shipping trade was carried on in American-built
vessels. The splendid American clipper ships were almost monopolizing
the carrying trade between Great Britain and the United States. Most of
the shipping of the world was yet in wooden bottoms. Iron ships were in
service, but iron-shipbuilding was in its infancy.

The Parliamentary inquiry of 1844 was followed up in 1847 with a move
openly against the ancient code. Its principles as they then stood,
essentially as in 1660, despite the multitude of regulating statutes,
are thus enumerated:

     1. Certain named articles of European produce could only be
     imported into the United Kingdom for consumption in British
     ships, or in ships of the country of which the goods were the
     produce, or of the country from which they were usually imported.

     2. No produce of Asia, Africa, or America could be imported for
     consumption into the United Kingdom from Europe in any ships; and
     such produce could only be imported from any other place in
     British ships, or in ships of the country of which the goods were
     the produce and from which they were usually imported.

     3. No goods could be carried coastwise from one part of the
     United Kingdom to another in any but British ships.

     4. No goods could be exported from the United Kingdom to any of
     the British possessions in Asia, Africa, or America (with some
     exceptions with regard to India) in any but British ships.

     5. No goods could be carried from any one British possession in
     Asia, Africa, or America, to another, nor from one part of such
     possession to another part of the same, in any but British ships.

     6. No goods could be imported into any British possession in
     Asia, Africa, or America in any but British ships, or in ships of
     the country of which the goods were the produce; provided, also,
     that such ships brought the goods from that country.

     7. No foreign ships were allowed to trade with any of the British
     possessions unless they had been especially authorized to do so
     by an Order in Council.

     8. Powers were given to the Queen in Council which enabled her to
     impose differential duties on the ships of any foreign country
     which did the same with reference to British ships; and also to
     place restrictions on importations from any foreign countries
     which placed restrictions on British importations with such

Finally, in 1849, with the adoption of the commercial policy founded on
freedom of trade, came the repeal of the restrictive code, excepting
only the rule as to the British coasting trade; and in 1854 the
restrictions on that trade were removed, throwing it also open to the
participation of all nations.

Meanwhile the British ocean-mail subsidy system for steamship service,
instituted with the satisfactory application of steam to ocean
navigation, in the late eighteen-thirties, had become established: the
first contract for open ocean service, made in 1837, being for the
carriage of the Peninsular mails to Spain and Portugal. Although
successful ventures in transatlantic steam navigation had begun nearly a
score of years earlier, the practicability of the employment of steam in
this service was not fully tested to the satisfaction of the British
Admiralty till 1838.

In this, as in so many other innovations, Americans led the way. The
first steamer to cross the Atlantic was an American-built and
American-manned craft. This pioneer was the _Savannah_, built in New
York and bought for service between Savannah and Liverpool. She was a
full-rigged sailing-vessel, of 300 tons, with auxiliary steam power
furnished by an engine built in New Jersey. Her paddles were removable,
so fashioned that they could be folded fan-like when the ship was under
sail only.[S] She made the initial voyage, from Savannah to Liverpool,
in the Summer of 1819, and accomplished it in twenty-seven days,[T]
eighty hours of the time under steam. Afterwards she made a trip to St.
Petersburg, partly steaming and partly sailing, with calls at ports
along the way. Her gallant performance attracted wide attention, but
upon her return to America she finally brought up at New York, where her
machinery was removed and sold.

An English-built full-fledged steamer made the next venture, but not
until a decade after the _Savannah's_ feat. This was the _Curaçoa_, 350
tons, and one hundred horsepower, built for Hollanders, and sent out
from England in 1829. The third was by a Canada-built ship--the _Royal
William_, 500 or more tons, and eighty horsepower, with English-built
engines, launched at Three Rivers. She crossed from Quebec to Gravesend
in 1833. The next were the convincing tests that settled for the
Admiralty the question of transatlantic mail service by steamship
instead of sailing packet. These were the voyages out and back of the
_Sirius_ and the _Great Western_ in 1838.

The _Sirius_ had been in service between London and Cork. The _Great
Western_ was new, and was the first steamship to be specially
constructed for the trade between England and the United States. Both
were much larger than their three predecessors in steam transatlantic
ventures, and better equipped. The _Sirius_ started out with ninety-four
passengers, on the fourth of April, 1838, and reached New York on the
twenty-first, a passage of seventeen days. The _Great Western_, also
with a full complement of passengers, left three days after the
_Sirius_, sailing from Bristol, and swung into New York harbor on the
twenty-third, making her passage in two days' less time than her rival.
Both were hailed in New York with "immense acclamation." They sailed on
their homeward voyage in May, six days apart, and made the return
passage respectively in sixteen and fourteen days. The _Great Western_
on her second homeward voyage beat all records, making the run in twelve
days and fourteen hours, and "bringing with her the advices of the
fastest American sailing-ships which had started from New York long
before her."[U] This clinched the matter. The Admiralty now invited
tenders for the transatlantic mail service, by steam, between Liverpool,
Halifax, and New York.

The first call for tenders was made in October, 1838. The St. George's
Packet Company, owners of the _Sirius_, and the Great Western Steamship
Company, owners of the _Great Western_, put in bids, the former offering
a monthly service between Cork, Halifax, and New York for a yearly
subsidy of sixty-five thousand pounds; the latter, a monthly service
between Bristol, Halifax, and New York for forty-five thousand pounds a

Neither offer was accepted for the reason, as was stated, that a
semimonthly service was desired.[V] Instead, private arrangements were
made with Samuel Cunard and associates for a carriage between Liverpool,
Halifax, Quebec, and Boston, twice a month, for a term of seven years,
the subsidy to be sixty thousand pounds annually, less four thousand
pounds for making only one voyage a month in the winter season.[W] The
contract required Mr. Cunard and his associates to furnish five ocean
steamships and two river steamers, the latter on the St. Lawrence.[V]
There were also definite restrictions as to turning their steamers over
to the Government for use in time of war. All were to be inspected by
Admiralty officers, and were to carry officers of the navy to care for
the mails.[X] The service was started with the _Britannia_, the first of
the four to be finished, sailing from Liverpool for Boston on July 4,
1840. Thus was begun the career of the celebrated Cunard Line. In 1841
the subsidy was increased to eighty thousand pounds, and the number of
steamers to five; and in 1846, a further increase brought the subsidy to
eighty-five thousand pounds.[Y]

The Admiralty's favoritism toward the Cunard associates aroused a
protest from the unsuccessful bidders for the subsidy, and at length the
Great Western Company, whose bid had been the lowest, caused a
Parliamentary inquiry to be made into the transaction. They complained
that a monopoly had been granted "to their injury and to that of other
owners of steamships engaged in the trade, and who were desirous of
entering it"; and they asked the inquiry on the broad grounds "that the
public were taxed for a service from which one company alone derived the
advantage, and which could be equally well done and at less expense if
mails were sent out by all steamers engaged in the trade, each receiving
a certain amount percentage on the letters they carried."[Z] Although
the fact was brought out in the testimony that the Great Western Company
had offered to perform the service on practically the same basis as the
Cunard associates, and that afterwards the Great Western had proposed to
do it at half the subsidy to the Cunarders, the investigating committee
sustained the Admiralty's action.[AA]

The Great Western Company overcame the advantage of the Cunarders in the
latter's high mail subsidy by increased enterprise and superior
management; and prospered. In 1843 they launched the _Great Britain_,
the largest and finest steamship up to that period built for overseas
service.[AB] She was, moreover, distinguished as the first liner to be
built of iron instead of wood, and to be propelled by the screw instead
of the paddle-wheel. In the latter innovation, however, she was not the
pioneer. Again the Americans were first in the application of the
auxiliary screw to ocean navigation,[AC] as they had been first in
despatching a steamer across the Atlantic.

The initial transatlantic subsidy to the Cunard Company was followed up
in 1840 and 1841 with contracts for steam mail-carriage to the West
Indies and South American ports.[AD] The first (1840) went to the Royal
Mail Steam Packet Company, for the West Indian service, the mail subsidy
fixed at two hundred and forty thousand pounds a year;[AE] the second
(1841), to the Pacific Steam Navigation Company. The latter enterprise
was promoted by an American,[AF] after he had failed to obtain support
in his own country[AG] for a project to establish an American steamship
line to ports along the west coast of South America, a field in which
American sailing ships had long been preëminent.[AH]

Up to 1847 the British lines monopolized the transatlantic service. Then
the situation became enlivened by the advent of competing American
steamships subsidized by the United States Government, with high-paying
mail contracts. The first of these was the New York, Havre, and Bremen
line starting in 1847; the next, the celebrated Collins Line between New
York and Liverpool, underway in 1850. The competing vessels were
American-built, wooden side-wheelers; those of the Collins Line superior
in equipment and in passenger accommodations, and faster sailers, than
the British craft.[AI] To meet this competition the Cunard Company
increased their fleet while the Admiralty increased the subsidy. Four
new steamers were first added, in 1848, to run directly between
Liverpool and New York, and the postal subsidy was raised to one hundred
and forty-five thousand pounds a year for forty-four voyages--three
thousand nine hundred and twenty-five pounds a voyage.[AJ] The
competition began sharply with the regular running of the Collins
liners, in 1850. Meanwhile during this year and the next additional
contracts were given the Cunard Company for carrying the mails between
Halifax, New York, and Bermuda, on the North American side, in small
steamers, fitted with space for mounting an 18-pounder pivot-gun,
subsidy ten thousand six hundred pounds a year; and for a monthly mail
conveyance between Bermuda and St. Thomas, subsidy four thousand one
hundred pounds a year.[AK] These services united the West Indies with
the United States and Canada.[AK]

In 1851 John Inman entered the trade with his "Inman Line" of
transatlantic screw steamers, which were to carry general cargo and
emigrant passengers, then a steadily increasing business, and to be
independent in all respects of either the Admiralty or the
Post-Office.[AL] The unsubsidized line prospered. The next year (1852)
the Cunard Company increased their liners' horsepower, and the Admiralty
again increased their subsidy. The contract, now made to run for ten
years, provided a subsidy of one hundred and seventy-three thousand
three hundred and forty pounds per fifty-two round trips a year. The
Americans were pressing them closer. Now freight rates were cut, and the
British premier is quoted as advising the Cunard Company to run without
freight if necessary to "beat off the American line."[AM] The increasing
subsidies occasioned a Parliamentary investigation. The committee,
evidently impressed by the gravity of the American competition, reported
that "the cost of the North American service was not excessive," but
they advised that all contracts thereafter "be let at public
bidding."[AN] This recommendation was not heeded. In 1857, upon the plea
that the Americans were about to build larger and more powerful liners,
the Cunard Company asked a five years' extension of the contract of
1852. The extension was promptly granted. At the same time they were
awarded an additional subsidy of three thousand pounds for a monthly
mail service between New York and Nassau in the Bahamas.[AO] The next
year (1858) after suffering crushing disasters in the loss of two of
their steamers, and the withdrawal of their subsidy, the Collins Company
failed, and their line was abandoned.[AP] So this competition ended.

Meanwhile complaints of the Admiralty's partiality in the allotment of
the contracts had been renewed more vigorously, with wider criticism of
grants for mail carriage largely in excess of the postage received; and
in 1859-60 another Parliamentary investigation was made. The ultimate
result of this inquiry was a radical change in the system. The
management of the ocean mail-service was taken from the Admiralty and
placed wholly in the hands of the Post-Office Department; and at the
expiration of the Cunard Company's extended contract, the service was
thrown open to public competition, as the Parliamentary committee of
1846 had advised.

Bids were now received from the Cunard, the Inman, the North German
Lloyd, and other lines. The Inman Company had previously offered to
perform the service, and had done so for sea-postage only.[AQ] Contracts
were finally concluded with the three named. The contract with the Inman
Line was for a fortnightly Halifax service, for seven hundred and fifty
pounds the round trip, nineteen thousand five hundred pounds a year, and
a weekly New York service for sea-postage. That with the Cunard Line was
for a weekly service to New York at a fixed subsidy of eighty thousand
pounds. That with the North German Lloyd was for a weekly service, at
the sea-postage. These contracts were to run for a year only. The
Cunard's subsidy, although considerably less than half the amount that
the company had received the previous ten years, showed a loss to the
Government, at sea-postage rates, of forty-four thousand one hundred and
ninety-six pounds, since the amount actually earned at sea-postage
rates was twenty-eight thousand six hundred and eighty-six pounds.[AR]

When advertisements for tenders were next issued, it was found that the
Cunard and Inman companies had formed a "community of interests," with
an agreement not to underbid each other. They asked a ten years'
contract on the basis of fifty thousand pounds fixed subsidy for a
weekly service. Instead, they were awarded seven years' contracts: the
Cunard for a semi-weekly service, seventy thousand pounds subsidy; the
Inman, for a weekly service, thirty-five thousand pounds subsidy.[AR] At
the same time contracts were made with the North German Lloyd and the
Hamburg-American lines for a weekly service for the sea-postage.

The Cunard and Inman grants were sharply criticised, and a Parliamentary
committee was appointed to investigate them. The committee's report
sustained the critics. It observed that "the payments to be made when
compared with those made by the American Post Office for the homeward
mails are widely different, inasmuch as the American Post Office has
hitherto paid only for actual services rendered at about half the rate
of the British Post Office when paying by the quantity of letters
carried." The committee recommended that these contracts be disapproved,
and that the system of fixed subsidies be abolished. "Under all
circumstances," they concluded, "we are of the opinion that, considering
the already large and continually increasing means of communication with
the United States, there is no longer any necessity for fixed subsidies
for a term of years in the case of this service."[AS] This
recommendation, however, was not accepted, and the contracts were duly

The report of this Parliamentary committee is significant in the
evidence it indirectly affords, confirming the declaration of
1853,[AT]--that the postal subsidies were not as assumed, payments
solely for services rendered, but in fact were concealed bounties.

In 1871-72, when a renewed effort was made to establish an American
line of American-built ships,[AU] the British subsidies were again
increased. Then, also, was instituted by the Admiralty the naval
subvention system--the payment of annual retainers to certain classes of
merchant steamers, the largest and swiftest, in readiness for quick
conversion into auxiliary naval ships in case of war, and to preclude
their becoming available for the service of any power inimical to
British interests.

At the expiration of the Cunard and Inman seven years' contracts the
postmaster-general applied the principle of payment according to weight
throughout for the carriage of the North American mails. But preference
was given to British ships, these receiving higher rates per pound than
the foreign. In 1887 an arrangement was entered into by which the Cunard
and Oceanic lines were to carry all mails except specially directed
letters, and the pay was reduced.[AV] This method of payment continued
till 1903.

Then another sharp change was made in the subsidy system to meet
another, and most threatening American move. In 1902 was formed by
certain American steamship men, through the assistance of J. Pierpont
Morgan, the "International Mercantile Marine Company," in popular
parlance, the "Morgan Steamship Merger," a "combine" of a large
proportion of the transatlantic steam lines.[AW] Upon this, in response
to a popular clamor, subsidy, and in a large dose, was openly granted to
sustain British supremacy in overseas steam-shipping. To keep the Cunard
Line out of the American merger, and hold it absolutely under British
control and British capitalization, and, furthermore, to aid the company
immediately to build ships capable of equalling if not surpassing the
highest type of ocean liners that had to that time been produced (the
highest type then being German-built steamers operating under the German
flag), the Cunard Company were resubsidized with a special fixed subsidy
of three-quarters of a million dollars a year, instead of the Admiralty
subvention of about seventy-five thousand dollars, and in addition to
their regular mail pay, the subsidy to run for a period of twenty years
after the completion of the second of two high-grade, high-speed ocean
"greyhounds" called for for the Atlantic trade. The Government were to
lend the money for the construction of the two new ships at the rate of
2-3/4 per cent per annum, the company to repay the loan by annual
payments extending over twenty years. The company on their part pledged
themselves, until the expiry of the agreement, to remain a purely
British undertaking, the management, the stock of the corporation, and
their ships, to be in the hands of or held by British subjects only.
They were to hold the whole of their fleet, including the two new
vessels, and all others to be built, at the disposal of the Government,
the latter being at liberty to charter or purchase any or all at agreed
rates. They were not to raise freights unduly nor to give any
preferential rates to foreigners.[AX] The subsidy is equivalent to about
twenty thousand dollars for an outward voyage of three thousand miles.

       *       *       *       *       *

Of the British colonies, Canada grants mail and steamship subsidies, and
fisheries bounties. In 1909-10 the Dominion's expenditures in mail and
steamship subsidies amounted to a total equivalent to $1,736,372. The
amount appropriated for 1910-11 increased to $2,054,200; while the
estimates for 1911-12 reached a total of $2,006,206. In these estimates
the larger items were: for service between Canada and Great Britain;
Australia by the Pacific; Canadian Atlantic ports and Australia and New
Zealand; South Africa; Mexico by the Atlantic, and by the Pacific; West
Indies and South America; China and Japan; Canada and France.[AY] The
home Government pays the same amount as Canada toward maintaining the
China and Japan, and British West Indies services.[AZ] The fisheries
bounties amounted to one hundred and sixty thousand dollars in 1909.[BA]

       *       *       *       *       *

The grand total of subsidies and subventions paid by Great Britain and
all her colonies in 1911 approximate ten million dollars annually. The
subsidies and mail pay of the Imperial Government amounted, in round
numbers, to four million dollars, of which, in 1910, the Cunard Company
received seven hundred and twenty-nine thousand dollars.[BB] Besides the
Admiralty subventions, retainer bounties are paid to merchant seamen and
fishermen of the Royal Naval Reserve.

Since the establishment of steam in regular ocean navigation, and the
substitution of iron for wooden ships, England has maintained her
leadership among the maritime nations. The total tonnage of the United
Kingdom and her colonies, steam and sailing ships, in 1910-11, stood at
19,012,294 tons.[BC] nearly four fold that of any other nation.


[Footnote A: Royal Meeker, "History of Ship Subsidies."]

[Footnote B: John E. Green, "Short History of the English People."]

[Footnote C: W.H. Lindsay, "History of Merchant Shipping."]

[Footnote D: Lindsay.]

[Footnote E: David A. Wells, "Our Merchant Marine," p. 96.]

[Footnote F: John Lewis Ricardo, "The Anatomy of the Navigation Laws,"
p. 111.]

[Footnote G: Lindsay, vol. III.]

[Footnote H: Lindsay, "Our Navigation Laws"; also his History.]

[Footnote I: Ricardo; also Lindsay in other words.]

[Footnote J: Meaning the waters between Great Britain and the

[Footnote K: Green, p. 593.]

[Footnote L: Ricardo, p. 26.]

[Footnote M: Meeker.]

[Footnote N: W.W. Bates, "American Marine," pp. 57-59.]

[Footnote O: John Macgregor, "Commercial Tariffs."]

[Footnote P: Lindsay, vol. III, p. 65.]

[Footnote Q: Macgregor.]

[Footnote R: Lindsay, vol. III, p. 69; also pp. 53-54 and 107.]

[Footnote S: Rear-Admiral George H. Preble, "Chronological History of
Steam Navigation."]

[Footnote T: Preble. Lindsay says thirty-seven.]

[Footnote U: Preble, p. 137; also Bates, p. 185.]

[Footnote V: Meeker.]

[Footnote W: Parliamentary papers 1839, vol. XLVI, no. 566, as to the
private contract.]

[Footnote X: Lindsay, vol. IV.]

[Footnote Y: Meeker; also Parl. papers 1849, vol. XII, no. 571.]

[Footnote Z: Lindsay, vol. X; also Parl. papers, report H. of C., Aug.,

[Footnote AA: Report of Select Com. (1846) Parl. papers, vol. XV, no.
565, p. 3.]

[Footnote AB: Lindsay, vol. IV.]

[Footnote AC: The _Princeton_, sloop-of-war fitted with the Ericsson
screw, launched the same year.]

[Footnote AD: Lindsay, vol. IV, p. 198, _note_.]

[Footnote AE: John R. Spears, "The Story of the American Merchant
Marine," pp. 254-255.]

[Footnote AF: William Wheelwright, of Newburyport, Massachusetts,
sometime American consul at Guayaquil.]

[Footnote AG: Winthrop L. Marvin, "The American Merchant Marine," p.
231; also Preble; and Lindsay, vol. IV, pp. 316-330.]

[Footnote AH: Marvin, p. 231.]

[Footnote AI: See p. 76, _post_.]

[Footnote AJ: Meeker.]

[Footnote AK: Lindsay, vol. IV, p. 198, _note_.]

[Footnote AL: Wells, p. 148.]

[Footnote AM: Bates, p. 87; also p. 130.]

[Footnote AN: Meeker.]

[Footnote AO: Meeker.]

[Footnote AP: See p. 77, _post_.]

[Footnote AQ: Meeker.]

[Footnote AR: Meeker.]

[Footnote AS: Parl. papers, 1867-68, 1868-69.]

[Footnote AT: See p. 20, _ante_.]

[Footnote AU: The American Steamship Co. of Phila., with 4 iron steamers
built on the Delaware--the _Pennsylvania_, _Ohio_, _Indiana_, and

[Footnote AV: Meeker.]

[Footnote AW: Ultimately embracing the American, Red Star, White Star,
Atlantic Transport, and Dominion Lines.]

[Footnote AX: For details of this contract see report of (U.S.)
commissioner of navigation for 1903, pp. 48-52, and 224-268. The two
steamships called for were the _Lusitania_, 31,550 gross tons, launched
June 7, 1906; and the _Mauretania_, 31,937 gross tons, launched Sept.
19, 1906, both quadruple screw turbines, about 70,000 horsepower; the
largest, fastest, and completest steamers afloat till the production in
1911 of the _Olympic_, 45,324 gross tons, of the International
Mercantile Marine Co.'s White Star Line.]

[Footnote AY: U.S. consul, Charlottetown, P.E.I. in daily Con. Repts.
(Jan. 20) 1911, no. 16.]

[Footnote AZ: Consul General Small, Halifax, in Con. Repts. (Dec.) 1905,
no. 303.]

[Footnote BA: The American Year Book, 1911.]

[Footnote BB: American Year Book, 1911.]

[Footnote BC: Lloyd's Register, 1910-11.]



France has been rightly termed the bounty-giving nation _par
excellence_.[BD] She first adopted a policy of State protection of
native shipping in the middle of the sixteenth century with the
enactment (1560) of an exclusive Navigation Act, forbidding her subjects
to freight foreign vessels in any port of the realm, and prohibiting
foreign ships from carrying any kind of merchandise from French
ports.[BE] This was followed up in the next century with the institution
of the direct bounty system to foster French-built ships.[BD]

In the reign of Louis XIV, Colbert, Louis's celebrated finance minister,
perfected (about 1661) an elaborate system of navigation laws, evidently
copied from the rigorous English code. This was directed primarily
against the commerce of Holland and England, with the ultimate object of
upbuilding the home merchant marine and the laying of a broad basis for
a national navy.[BF] These acts included decrees giving French ships the
monopoly of trade to and from the colonies of France; imposing tonnage
duties on foreign shipping; awarding direct premiums on French-built
ships. England retaliated immediately. Holland remonstrated first, then
made reprisals. For a time under Colbert's energetic administration of
the finances and the marine, "prosperity grew apace. At the end of
twelve years everything was flourishing."[BG] Then came the six years'
war (1672-1678) with France and England combined against Holland, and at
its end the French merchant marine lay sorely crippled.[BG]

Still the fundamental principles of the stringent navigation laws long
remained. A decree in 1681, and subsequent ordinances, defined what
should constitute a French vessel; and corporal punishment was ordained
against a captain for a second offence in navigating a vessel of alien
ownership under the French flag.[BH] By later decrees, no alien was
permitted to command a French vessel. An ordinance of 1727 further
restricted alien command by shutting out even French subjects who had
married aliens.[BH] It was required that every French vessel should be
manned by a crew two-thirds of whom were French subjects.[BH] The system
of regulations restricting the trade of the French colonies to French
ships, and to the home market held till well into the nineteenth

During the Revolution a decree (May, 1791) prohibited acquisition of all
vessels of foreign build. In 1793 (Sept.) it was ordained that no
foreign commodities, productions, or merchandise should be imported into
France, or into any of her colonies or possessions, except directly in
French ships, or in ships belonging to the inhabitants of the countries
in which the articles imported were produced, or from the ordinary ports
of sale or exportation. All officers and three-fourths of the crew were
required to be natives of the country of which the foreign vessel bore
the flag, under penalty of confiscation of vessel and cargo, and a fine
enforcible under pain of imprisonment. A tonnage tax was levied on
foreign ships alone.

Despite this elaborate code designed for its benefit the domestic
mercantile marine almost entirely disappeared during the wars of the
Republic and the Empire; and after the Restoration its revival was so
slow that for some time foreign ships were absolutely necessary for the
supply of the French market.[BH] Still the underlying principles of the
code were retained by the Restoration Government, modified in a few
particulars. The modifications included the removal of the prohibition
on indirect commerce--- the carrying trade between France and other
countries:--yet advantage even in this commerce was held for the French
flag through "flag surtaxes," added to the ordinary customs duties
levied upon the merchandise imported into France in foreign bottoms,
and by the tonnage charges.[BI] A law of March, 1822, renewed the
prohibition against the importation of foreign-built ships.[BI]

Early under Napoleon III movements toward the adoption of an economic
policy similar to that then established in England were begun, and
shortly a succession of radical changes in the maritime code were
instituted.[BJ] In 1860 a commercial treaty with England was entered
into. In 1861 freedom of access of foreign shipping to the French West
Indies was permitted, subject to the payment of special duties varying
according to the ports whence the goods were brought, or to which they
were imported. Then at length, in 1866, numerous restrictions of the old
code were swept away.[BJ] This law of 1866 (May) admitted duty-free all
materials, raw or manufactured, including boilers and parts of engines
necessary for the construction, rigging, and outfitting of iron or
wooden ships; abolished a premium, or bounty, granted by a law of 1841
(May) on all steam engines manufactured in France intended for
international navigation; admitted to registration foreign-built and
fully equipped ships upon the payment of two francs a ton; abolished all
tonnage duties on foreign ships, except such as had been or might be
levied for the improvement of certain commercial harbors; abolished the
flag surtaxes; opened colonial navigation to foreign ships. The monopoly
of the coasting trade alone was retained for French ships.[BK]

Complaints against these new regulations were promptly raised by
shipbuilders and ship-outfitters,[BK] and in 1870 a Parliamentary
inquiry into their grievances was made. It appeared that shipbuilders,
though enabled to import free such materials as they needed, were
handicapped by numerous and extensive formalities; while the outfitters
were embarrassed by special burdens which the law laid upon them, and
which their British competitors did not have to bear.[BL] In 1872 laws
were passed which reversed much of the act of 1866. A tax of from
thirty to fifty francs a ton measurement was re-imposed on all foreign
ships purchased for registration in France, together with a duty on
marine engines; again a tonnage duty, of from fifty centimes to one
franc, was imposed on ships of any flag coming from a foreign country or
from the French colonies; and the provisions freeing materials for ship
construction, and admitting foreign-built ships to French registration
upon payment of the two-franc tax per ton, were repealed.[BM] In 1873 an
extra-parliamentary commission took up the general question of the state
of the commercial marine,[BN] and the outcome of this inquiry was the
establishment of the system of direct bounties. This system was applied
for the first time in the Merchant Marine Act passed in January, 1881.

The act of 1881 granted both construction and navigation premiums, and
was limited to ten years. The construction bounties, as was declared,
were given "as compensation for the increased cost which the customs
tariff imposed on shipbuilders" in consequence of the repeal of the law
granting free import of materials by construction; the navigation
bounties, "for the purpose of compensating the mercantile navy for the
service it renders the country in the recruitment of the military navy."
The construction bounties, on gross tonnage, were as follows: for wooden
ships of less than 200 tons, ten francs a ton; of more than 200 tons,
twenty francs; for composite ships, that is, ships with iron or steel
beams and wooden sides, forty francs a ton; for iron or steel ships,
sixty francs; for engines placed on steamers, and for boilers and other
auxiliary apparatus, twelve francs per 100 kilograms; for renewing
boilers, eight francs per 100 kilograms of new material used; for any
modification of a ship increasing its tonnage, the above rates on the
net increase of tonnage.[BO] The navigation bounties were confined to
ships engaged in the foreign trade, and were to be reduced annually
during the ten years' term of the law.[BP] They were thus fixed: for
French-built ships, one franc and fifty centimes a registered ton for
every thousand sea miles sailed the first year, the rate to diminish
each succeeding year of the term seven francs and fifty centimes on
wooden ships, and five centimes on iron and steel ships; for
foreign-built ships owned by Frenchmen admitted to registry, one-half
the above rates; for French-built steamers constructed according to
plans of the Navy Department, an increase of fifteen per cent above the
ordinary rate.[BQ]

The first effect of this law was to stimulate the organization of a
number of new steamship companies, and to occasion activity in various
ship-yards, foreign (English) as well as home, in building steamships
for their service.[BR] Most of the domestic-built iron and steam tonnage
produced during the law's ten years' term was of steamers.[BS] The
tonnage of steamships increased from 278,000 tons in 1880 to 500,000
tons in 1890. Of this increase more than three-fifths were represented
by vessels bought in other countries.[BT] The results of the navigation
bounties are shown in official statistics covering the years 1882-1890.
During this period iron or steel French-built ships earning these
bounties increased from 159,714 tons to 190,831 tons, gross tonnage;
while wooden or composite tonnage decreased from 150,233 tons to 57,068
gross. Foreign-built iron or steel tonnage earning the bounties
increased from 43,787 tons to 91,170 tons, gross; and wooden or
composite tonnage increased from 1,220 tons to 9,799 tons, gross.[BS] In
1891 the law which had then reached its limit of ten years was extended
for two years. Doubting its renewal shipowners had sometime before
ceased to increase their fleets.[BS]

These results were variously pronounced unsatisfactory, and a revised or
a new law was called for, with more and higher bounties. Owners of
wooden sailing-ships were especially clamorous for larger benefits. They
argued that sailing-ships being much slower than steamers should
therefore receive higher mileage subsidies in order to compete on equal
terms with steamships.[BU]

A new law was enacted in 1893 (January 30). This act cut off bounties to
foreign-built ships, and granted increased construction premiums. The
construction subsidies were again declared to be given as "compensation
for the charges imposed on shipbuilders by the customs tariff"; the
navigation bounties, "by way of compensation for the burden imposed on
the merchant marine as an instrument for recruiting the military
marine." The construction subsidies were not to be definitely earned
till the ships were registered as French; and by ships built in France
for foreign mercantile fleets, not till they had been delivered. The
navigation bounties were accorded to French-built ships, of more than 80
tons for sailing-ships, and 100 tons gross for steamers, engaged in
making long voyages and in international coasting; and were limited to
ten years. They were based on gross tonnage per thousand sailed miles.
To merchant steamships built in accordance with plans approved by the
Navy Department, the rate of fifteen per cent above the regular
navigation bounty provided in the law of 1881, was increased to
twenty-five per cent. All ships receiving the navigation bounty were
subject to impressment in case of war.[BV]

The effect of this law appears to have been a division of the interests
of shipowners and shipbuilders. The shipowners found the builders
constantly increasing their prices until a point was reached where they
were accused of absorbing both premiums for construction and navigation,
by calculating the amount of bounty which proposed construction would
demand, and adding that amount to their cost price.[BW] The increase of
the bounty on sailing-ships was made in the expectation that it would
check their falling off, which had been rapid since the development of
steamship building; merchant sailing-ships were regarded as the best
school for seamen, all of whom in French commerce, up to the age of
forty-five, are subject at any time to draft into the national navy. It
did this and more. There resulted the "strange phenomenon," as Professor
Viallatés puts it, "of a steady increase in the sailing-fleet, while the
number of steam-ships remained stationary."[BX]

Thus, like its predecessor, unsatisfactory, the law of 1893 was
succeeded by another act further enlarging the bounty system. This law
was promulgated in 1902 (April 7). It provided three classes of bounty:
construction and navigation as before, and "commission compensation" or
"shipping premiums." The construction bounty remained as in previous
law. The navigation bounty, now introduced as awarded "as a general
compensation for the charges imposed on the merchant navy, and for the
excessive cost of vessels built in France," was increased.[BY] It was
payable to all French-built sea-going ships, steam and sailing, of over
100 tons gross, and less than fifteen years old, and was limited to
twelve years. To stimulate speed development, only ships showing a trial
speed of at least twelve knots with half load were to receive the full
navigation bounty; to those making less than twelve knots the bounty was
diminished by five per cent; to those making less than eleven, by ten
per cent. The shipping bounty was declared to be granted "as
compensation for the charges imposed on the mercantile marine" by making
merchant vessels practically schools for seamen. It was a "chartered
allowance" made to foreign-built iron or steel steamers manned under the
French flag for long voyages or for international coastwise trade, of
more than 100 gross tons, belonging to French private persons or
joint-stock or other companies, the latter having on their boards a
majority of French citizens, and the chairman and managers being French.
This allowance was reckoned on the gross tonnage, and per day while the
steamer was in actual commission (three hundred days the maximum number
in any one year).[BX] The rate varied according to the tonnage. Up to
2000 tons gross, it was fixed at five centimes per ton; from 2000 to
3000 tons, at four centimes; 3000 to 4000, three centimes; above 4000,
two centimes; over 7000, the same grant as 7000. The creation of this
"chartered allowance," as Professor Viallatés explains, was to prevent
the navigation bounty from becoming to the same extent as under the
previous law merely another form of bounty upon shipbuilding. It could
so become, he points out, only to the extent of which it exceeded the
owner's bounty.[BZ]

Not all of the shipping and navigation bounties were to go to
shipowners. Five per cent was to be retained for sailors' insurance
"with a view to reducing the deductions imposed on them for the purpose
of that insurance"; and six per cent to be reserved for distribution for
the benefit of marines, as follows: "two-thirds to the provident fund,
with a view to diminishing the deductions on mariners' pay and to
increasing the funds for assisting the victims of shipwreck and other
accidents, or their families; one-third to the invalids' fund, with a
view to granting subventions to the chambers of commerce or public
institutions for the creation and support of sailors' homes in French
ports, intended to assist the nautical population, or of any other
institutions likely to be of use to them, especially schools for
seamen." The requirement in the old law of 1793 as to the composition of
the crews of French merchant ships was modified, reducing the proportion
of sailors who must be Frenchmen.

French-built ships were privileged to chose between the shipping and the
navigation bounties. To obtain the shipping bounty for the maximum of
three hundred days steamers must make during the year a minimum of
thirty-five thousand miles if engaged in the overseas trade, or
twenty-five thousand if in "_cabotage international_."[CA] Shipowners
agreeing to maintain on routes not served by the subsidized main
steamers a regular line, performing a fixed minimum of journeys per
year, with vessels of a certain age and tonnage, were permitted to
claim, in lieu of the regular bounties, a fixed subsidy during the term
of their agreement, equal to the average of the bounties to which the
vessels in commission would be entitled for the whole of the journeys
performed. The new tonnage to be admitted to the benefit of the law was
limited to three hundred thousand gross tons of steamers and one hundred
thousand gross tons of sailing-ships; of which new tonnage freight-built
ships could form two-fifths. The appropriation for the payment of the
bounties was also limited, to guard against a too heavy burden upon the
national treasury. This was fixed at two hundred million francs: one
hundred and fifty million for the shipping and navigation bounties and
fifty million for the construction bounties.[CB]

Unforeseen results of an unsatisfactory nature followed the application
of this law. Professor Viallatés effectively states them in the fewest

     "To be sure of profiting by the advantages of the law the
     ship-owners hastened to order vessels and to place them on the
     stocks. Their haste increased when it was seen that there existed
     a considerable discrepancy between the allowed tonnage and the
     money appropriated. The appropriation of one hundred and fifty
     million francs, opened to assure the payment of the navigation
     bounties and the compensation for outfit, was much too little.
     The rush was such, as soon as this formidable mistake was
     discovered, that, less than nine months after its promulgation,
     from December 20, 1902, the useful effect of the law was
     completely exhausted."!

Thereupon resort was had to another Extra-Parliamentary commission to
frame another system. The result was a law of 1906 (April), which
separated the shipbuilder from the shipowner. The provisions for the
construction bounty were redrawn with the object, as Professor Viallatés
explains,[CC] "not only to equalize the customs duties affecting the
materials employed, but also to give the builders a compensation
sufficient to enable them to concede to the French shipowners the same
prices as foreign builders." The rates were thus fixed on gross
measurement: for iron and steel steamships, one hundred and forty-five
francs per ton; for sailing-ships, ninety-five francs per ton: these
bounties to decrease annually to four francs and fifty centimes for
steamships and three francs ninety centimes for sailing-ships during the
first ten years of the law's application, thereafter to stand at one
hundred francs and sixty-five francs, respectively; for engines and
auxiliary apparatus, twenty-seven francs fifty centimes per hundred
kilograms. The navigation bounty to owners of French or foreign-built
ships under the French flag, was calculated per day of actual running:
for steamships, four centimes per ton gross up to 3000 tons; three
centimes more up to 6000; two more to 6000 and above; for sailing-ships,
three centimes per ton up to 500 tons, two more up to 1000, and one more
to 1000 and above. This bounty to continue for the first twelve years of
the law. The provisions for fostering speed development in steamships
excluded from compensation those making on trial, half laden, less than
nine knots, in place of ten in the previous law; reduced the rate to
fifteen per cent of the bounty for those showing more than nine and less
than ten knots; and increased this rate by ten per cent for those making
at least fourteen knots, by twenty-five per cent for fifteen knots, and
thirty per cent for sixteen knots. The extra bounty equal to twenty-five
per cent of the regular navigation bounty to steamships constructed on
plans approved by the Navy Department, and the provision making all
merchant ships subject to requisition by the Government in case of war,
were retained as in previous laws.[CD] This is the law at present in

The total cost of the French bounty system in the twenty-four years from
its establishment with the law of 1881 to 1904, when the law of 1902 had
practically run out, was in round numbers upward of three hundred and
eighty-one million francs. Professor Viallatés shows that the new law of
1906 would absorb during the first seven years of its application,
upward of eighty-four million francs.[CE]

These construction and navigation bounties are exclusive of the
subventions to steamships for carrying the mails. The establishment of
the French postal ocean steamship subsidy system dates back to 1857,
when a contract was made with the Union Maritime Company for a service
to New York, Mexico, and the West Indies. The assertion is made by
Professor Meeker that the French postal subventions paid "ostensibly
for the furtherance of the mails," are "both greater in amount and more
influential upon shipbuilding, navigation, and commerce than are the
general premiums upon shipbuilding and navigation."[CF] Says Viallatés:

     "The system is calculated to secure regular and rapid postal
     communication with certain countries beyond seas, and at the same
     time to constitute an auxiliary fleet capable of being utilized
     by the navy in times of war. The existence of fixed lines with
     constant service is also a means of favoring the expansion of the
     national commerce. The State obtains, moreover, in exchange for
     the subsidy, direct advantages; the free carriage of the mails
     and the funds of the public treasury; transport of officials at a
     reduced price, and of arms and stores destined for the service of
     the State."


     "The greater part of the concealed subventions undoubtedly goes
     to the shipbuilders, for all mail contract steamers must be built
     in French yards and of French materials. These first costs are
     estimated to be from twenty-five to fifty per cent greater in
     France than in England."[CG]

There is no competition in the letting of the French mail contracts.
They go to four steamship concerns. For many years more than one half of
the total steam tonnage of France has been owned by these four
subsidized lines: the _Compagnie Générale Transatlantique_, the
_Compagnie des Messagéries Maritimes_, the _Chargeurs Réunis_, and the
_Compagnie Fraissant_.[CG]

The great ship-yards have developed a capacity for building steamships
of the largest class. The tonnage since 1881, when it had fallen to
914,000 tons, had increased only to 1,052,193 tons in 1900. By 1910-11,
it had reached 1,882,280 tons.[CH] The total mail subsidies average, in
round numbers, five million dollars a year, while the construction and
navigation bounties amount to three and a half million dollars

Practically every French vessel floating the French flag and engaged in
foreign trade either receives or has received subsidies, or bounties,
from the Government.[CI]


[Footnote BD: Meeker.]

[Footnote BE: Lindsay, vol. III.]

[Footnote BF: Rear-Admiral Alfred T. Mahan, "The Influence of Sea Power
upon History," pp. 105-107.]

[Footnote BG: Mahan, p. 73.]

[Footnote BH: Lindsay, vol. III.]

[Footnote BI: Prof. Achille Viallatés, "How France Protects Her Merchant
Marine," in North American Review, vol. 184, 1907.]

[Footnote BJ: Lindsay, vol. III.]

[Footnote BK: Lindsay, vol. III, also Viallatés.]

[Footnote BL: Viallatés.]

[Footnote BM: Lindsay, vol. III, pp. 457-458.]

[Footnote BN: Viallatés.]

[Footnote BO: Meeker. Also Wells, pp. 163-164, _note_.]

[Footnote BP: Wells, pp. 163-164, _note._]

[Footnote BQ: Meeker. Also Wells.]

[Footnote BR: Wells, p. 164.]

[Footnote BS: Meeker.]

[Footnote BT: Viallatés.]

[Footnote BU: Meeker.]

[Footnote BV: For this law see Meeker.]

[Footnote BW: U.S. Consul Robert Skinner, Marseilles; Con. Repts., xol.
XVIII (1900), p. 36.]

[Footnote BX: Viallatés.]

[Footnote BY: Meeker.]

[Footnote BZ: North American Review, vol. CLXXXIV, 1907.]

[Footnote CA: Embracing voyages within the limits of the ports of the
Mediterranean, North Africa, and Europe below the Arctic

[Footnote CB: Meeker and Viallatés, summaries of this law.]

[Footnote CC: North American Review, vol. CLXXXIV, 1907.]

[Footnote CD: For this law see Senate Doc. no. 488, 59th Cong., 1st

[Footnote CE: North American Review, vol. CLXXXIV, 1907.]

[Footnote CF: Meeker.]

[Footnote CG: Meeker.]

[Footnote CH: Lloyd's Register, 1910-11.]

[Footnote CI: Senate Rept., no. 10, 59th, Cong., 1st sess.]



Germany was a close follower of France in the adoption of the direct
ship bounty system. Only two months after the promulgation of the
initial French law of 1881, Bismarck brought the question before the
Reichstag, with an exhibit of this act. In an elaborate memorial (April
6, 1881) he reviewed the general subject of State bounties and subsidies
to shipping in various maritime countries, and closed with this pointed
declaration: "It is deserving of serious consideration whether, under
the circumstances as given, German shipping and German commerce can
hope" for further prosperous developments as against the competition of
other nations aided by public funds and assistance.[CJ]

At this time the German marine was represented by a substantial fleet of
merchant steamships, but all were foreign-built, mostly from British
ship-yards. The Government was paying only a postal subsidy of about
forty-seven thousand dollars--a sum in proportion to the weight of the
parcels forwarded--in the overseas trade to the participating German
steam lines. A first step had been taken indirectly in favor of domestic
shipbuilding six years earlier (1879), when Bismarck, in introducing the
general protective system, exempted this industry, and free entry was
permitted to German ship-yards of materials used in the construction and
equipment of merchant as well as of war-ships, which then were only on
the domestic stocks.[CK] Bismarck's proposal of 1881, to meet French
subsidies with German subsidies, was avowedly with the single object of
promoting with State aid a German mercantile marine.

The project was brought before the Reichstag early in 1884 and warmly
discussed. Earnest protests were raised against it by shipping merchants
of the chief German seaports;[CL] while earnest support came from other
merchants and varied interests. The initial proposal was for the
establishment of a subsidized mail service by German steamships. It
contemplated an annual subsidy of four million marks, with fifteen
years' contracts, for such service between Germany and Australia and
East Asia. The measure was defeated in the Reichstag that year. Brought
forward the next year (1885), and in a new form, it was finally enacted
in April and went into effect the following July.

This law increased the annual subsidy from four million marks as first
proposed to four million four hundred thousand marks, of which one
million seven hundred thousand was offered for the East Asian line, to
China and Japan; two million three hundred thousand for the Australian
line, and four hundred thousand for a branch line connecting Trieste
with the Australian line at Alexandria. The contracts in accordance with
it all went to the North German Lloyd Company, of Bremen. The convention
between the Government and this company required that the new vessels to
be furnished must be built in German yards and of German material. The
coal supply was, as far as practicable, to be of German product. The
chancellor was empowered to take over all the company's steamers for the
mobilization of the navy, at their full value, or on hire at proper
compensation. The sale or loan of a steamer to a foreign power could be
made only by permission of the chancellor. The number of voyages to be
made on each line yearly, and the rate of speed, were set down in
careful detail. Failure to observe the table of voyages, without
sufficient reason, subjected the company to heavy penalties. All persons
employed in connection with the mail service were, if practicable, to be
German subjects. All officers in the service of the empire, relief
crews, weapons, ammunition, equipments, or supplies for the imperial
navy, were to be carried at twenty per cent under the regular

Subsequent laws made additions to the free list of raw and manufactured
shipbuilding material; and preferential rates on the State railroads
were arranged for the transportation of steel, iron, timber, from the
interior, where these are found at an average distance of some four
hundred miles from the coast, to the ship-yards.[CN] Speedily large and
superior steamships were designed and turned out from the enlarged
ship-yards, the first ocean flyer being the _Auguste Victoria_ for the
Hamburg-American Line. In 1890 a subsidy of ninety thousand marks
annually was granted for an East African line on a ten-years' contract.
Within less than six years the establishment of a fortnightly Asiatic
service was agitated; and in 1896 a bill granting a yearly subsidy of
one million four hundred thousand marks therefor, was brought before the
Reichstag. If this were forthcoming the North German Lloyd agreed,
besides furnishing the fortnightly service, to increase the speed of
their steamers, to send ships direct to Japan, and to meet all
requirements of the Admiralty with respect to ships and crews.[CO]

Now the advocates of further subsidies maintained that the policy
instituted with the law of 1885 had proved its effectiveness. The
indirect advantages from the subventions were claimed to be quite as
great as the direct. While before 1885 all large ships for German
companies had been ordered in England, now all large ships for the
German transatlantic lines were built in Germany.[CO] This condition,
the increasing activity in domestic shipbuilding, and the steady growth
of the empire's commercial marine, were presented as conclusive evidence
of the law's effect. Germany was now pressing into sharp rivalry with
England, and turning out larger and speedier steamships.[CP] The
increased subsidy for the China service was especially urged upon these
grounds: the importance of placing the German mail service in the East
on a par with the services of England and France, the benefits to
commerce, and the aid of the national defence.[CQ]

The measure met opposition at the session in which it was first
introduced; but at the next session (1898), after amendment, it became
law. By this act the subsidy was fixed at one million and a half marks a
year for the extension of the East Asiatic service to China direct, and
for making the whole service fortnightly; and the contract was extended
for another fifteen years. It was conditioned that if foreign competing
lines should increase the speed of their ships the North German Lloyd
must do likewise, and without additional subsidy, unless the foreign
companies should receive extra payments.[CR]

The total annual subventions for the Asiatic and Australian service had
now reached five million five hundred and ninety thousand marks
($1,330,420). After January, 1899, under a contract between the North
German Lloyd and the Hamburg-American Line then made, a part of this
subsidy went to the latter. In 1901 the subvention to the East African
line was increased to one million three hundred and fifty thousand
marks. Thus Germany's grand total of annual payments in postal
subventions had reached six million nine hundred and forty thousand

Besides these postal subventions and the free entry to materials used in
ship-construction and equipment, and the preferential railway rates on
long hauls of the heavy domestic materials, barely covering the cost of
handling and transportation,[CS] the Government bestows a special form
of indirect bounty upon the subsidized steamship lines in the shape of
largely reduced through freight rates. These include substantial
reductions on merchandise exported from inland Germany to East Africa
and the Levant. Thus the combined land and sea through rates are brought
considerably below those in force on goods sent to German ports for
direct importation.[CT]

Under these and other favoring conditions the German merchant marine has
advanced in total tonnage from an insignificant place in 1880 to the
third in rank among the maritime nations in 1911. Between 1885 and
1900, a period of only fifteen years, its growth was tenfold.[CU] In
1890 the gross tonnage stood at 928,911 tons: in 1900 it had reached a
total of 2,159,919 tons. Steamers and sailing-ships were nearly equal in
tonnage. German-built steamships had won the speed record in ocean
liners. Thereafter the output of steamships became much the larger, and
in 1906 the Government was taking measures to revive the sailing-ship
trade, because of its value as a training-school for seamen for the
navy.[CV] In 1910-11 the total tonnage was recorded at 4,333,186

The other influences contributing to this extraordinary growth are
variously stated according to the observer's point of view. The United
States consul at Hamburg sees them in the "rapid transformation of the
country from a non-producing nation into one of the foremost industrial
powers of Europe, a large available supply of excellent and cheap labor,
and the geographical situation of the empire."[CX] The historian of
Modern Germany sees them in German business methods:

     "The astonishing success of the German shipbuilding industry is
     due partly to its excellent management and organization; partly
     to the application of science and experience to industry; * * *
     partly to the harmonious co-ordination and co-operation of the
     various economic factors which in more individualistic countries,
     such as Great Britain, are not co-ordinated, and often serve
     rather to obstruct and to retard progress by unnecessary friction
     than to provide it by harmonious action."[CY]


[Footnote CJ: For this Memorial see U.S. Con. Rept., no. 112, Jan.,
1890, pp. 108-118.]

[Footnote CK: J. Ellis Barker, "Modern Germany," 3rd edition, 1909.]

[Footnote CL: Wells, p. 166.]

[Footnote CM: U.S. Con. Rept., no. 61, 1886, pp. 285-287.]

[Footnote CN: Barker, 3rd ed.]

[Footnote CO: Meeker.]

[Footnote CP: U.S. Con. Repts., 1889, no. 101, p. 544.]

[Footnote CQ: Meeker. Also German report on the operation of the law of
1885, in report of (U.S.) commissioner of navigation for 1898.]

[Footnote CR: Meeker. Also German report on the operating of the law of
1885, in report of commission of navigation for 1898.]

[Footnote CS: Barker, 3rd ed.]

[Footnote CT: Meeker.]

[Footnote CU: Barker, 3rd ed.]

[Footnote CV: U.S. Con. Rept, no. 13, July, 1906, pp. 87-89.]

[Footnote CW: Lloyd's Register, 1910-11.]

[Footnote CX: U.S. Consul General Robert P. Skinner, Hamburg, in Daily
Con. Repts., April 8, 1911, no. 82.]

[Footnote CY: Barker, Modern Germany, p. 490.]



The home Government of the Netherlands gives neither construction nor
navigation bounties. Only subventions to steamship lines for carrying
the mails are granted. The single purpose of these subventions is
declared to be to secure the prompt and effective furtherance of the
mails at reasonable cost.[CZ] The contracts are not publicly let, but go
to the several steamship lines plying to foreign ports and to the Dutch
colonies. The amounts fixed by contract are at a given rate per voyage.
The cost of the subventions to the Dutch East Indian lines is divided
equally between the home and colonial Governments. Independently of the
home Government the Dutch East Indian Government grants general mileage
subventions for the maintenance of lines making regular communication
with the various ports of the East Indies.[CZ] Holland's gross tonnage
in 1910 had reached the respectable total of 1,015,193 tons,[DA] ranking
her eighth among the maritime nations.

       *       *       *       *       *

Belgium had a subsidy system for shipbuilding before 1852. At present
neither bounties to domestic shipping nor postal subventions are paid by
the Government. Subsidies, or premiums, however, are given to certain
foreign steamship lines to encourage the commerce of Antwerp. These
include an annual payment of eighty thousand francs ($15,440), and the
refunding of lighterage and pilotage dues, to the North German Lloyd on
their East Asiatic and Australian lines; and fifteen hundred francs
($289.50) to the German-Australian line for each call to and from
Australia, the maximum subvention limited to thirty-nine thousand francs
($7527). A Danish steamship concern is also exempted from lighterage
and harbor dues and granted other facilities, but receives no money
premiums.[DB] Belgium tonnage in 1910 comprised only 165 steam and
sailing ships for a total of 299,638 tons.[DC]


[Footnote CZ: Meeker.]

[Footnote DA: Lloyd's Register, 1910-11.]

[Footnote DB: Meeker.]

[Footnote DC: Lloyd's Register, 1910-11.]



The Imperial Government of Austria-Hungary spurred by the action of
Germany, instituted a direct subsidy system, also modelled after that of
France, in 1893, when the Austrian merchant marine was languishing.[DD]

A postal subsidy had long been in operation, the subsidies being all
awarded to a single steamship company--the Austrian Lloyd, earlier the
Austro-Hungarian Lloyd. They were practically mileage and speed
bounties,[DE] increasing with the extension of service. Ten-years'
contracts were at first made with this company. The contracts, executed
in 1888, particularly guarded domestic interests. In the purchase of
materials it was required that preference be given to Austro-Hungarian
industries. The coal used must be bought from Austro-Hungarian subjects
in the proportion of two tons from Austria and one ton from Hungary,
provided that "the price is not greater than foreign coal, and that the
steam-producing power of the native coal is equal to at least
eighty-four per cent of that of foreign coal." In the building and
repairing of their ships, or parts of ships, and engines, the company
must also favor home interests. Ships, engines, or boilers could be
ordered abroad only with the consent of the foreign office when shown
that the work cannot be made in Austria within proper time, or that the
want can be supplied by a foreign country on more favorable terms.[DF]

By a law of July, 1891, the rates for mail-contract steamships were
fixed as follows: for fast lines, making above ten knots, a maximum rate
of seventy kreutzers per nautical mile; for slower lines, fifty
kreutzers a mile. The total amount of mileage bounty payable each year
was limited to two million nine hundred and ten thousand florins. But
in addition to this bounty the Government agreed to pay the Suez Canal
tolls. To encourage the Austrian Lloyd to build larger and swifter
vessels the Government further agreed to advance the company one million
and a half florins. This was to be furnished in three equal payments
yearly (1891, 1892, 1893), and was to be repaid in five equal payments
of three hundred thousand florins each, beginning in January, 1902. The
company's ships were to be exempted from consular fees, "the same as
vessels of the imperial navy"; and were to be at the disposal of the
naval and military departments in case of war. All the officials of the
company were to be Austrian subjects, "naval officers either active or
retired to be given the preference"; and there was to be an
administrative committee of eight members, the president appointed by
the Emperor and two other members by the ministry of commerce, the
intention of this provision being to give the Government control over
the company's affairs.[DG]

The general subsidy law of 1893 (November 28) was the outcome of the
deliberations of a special Parliamentary committee appointed that year;
and its declared object, as set forth in this committee's report, was
"to put a stop to the decline of our merchant fleet, to allow it to cope
with foreign competition, and to secure for the inhabitants of our coast
needed employment and profits in maritime pursuits."[DG] Three years
before (1890), with the same object in view, a preliminary step had been
taken in the exemption of all iron and steel steam and sailing ships
from trading and income taxes while engaged in ocean voyages.[DG]

The law provided two classes of subsidies--a trade bounty and a
navigation bounty. They were to go to all steamers and sailing-ships
engaged in the deepseas trade or long-coasting trade, and not receiving
mail subventions. At this time a large percentage of the Austrian steam
tonnage was receiving the postal subsidies, and most of this tonnage was
owned by the Austrian Lloyd Company.[DG] The trade bounty was for ships
making long voyages; the navigation bounty for those engaged in
coastwise voyaging. Ships entitled to the trade bounty were required to
be owned at least two-thirds by Austrian subjects, to be not over
fifteen years old, and registered A1 or A2. The rates were thus fixed:
for the first year after launching, iron or steel steamers, six florins
($2.44) per ton, iron or steel sailing-ships, four florins and fifty
kreutzers; wooden or composite (part iron) sailing-ships, three florins.
After the first year the rate was to be reduced five per cent annually
till the end of the fifteenth year. As an inducement to employ home work
and to utilize home materials, the bounty was to be increased by ten per
cent for iron or steel sailing-ships built in the Austrian ship-yards,
and by twenty-five per cent if at least one-half of the materials used
in the construction were of Austrian origin. If more than one year had
elapsed since the launching of a ship otherwise entitled to a bounty, a
deduction of fifteen per cent was to be made for each year that had
passed. The navigation bounty was fixed at five kreutzers per net ton of
capacity for every hundred nautical miles sailed. The exemption from the
production and income taxes, granted in 1890, was extended for a term of
five years from January 1, 1894. The law was to be in force for ten

As the end of the term of this law was approaching ship-owners began
agitating for its renewal with an increase in the subsidy. Since its
enactment the production of steam tonnage had been accelerated, and the
decline of sail tonnage had been checked; but no marked change in the
merchant marine generally had been manifest.[DH] Of the bounties paid
the Austrian Lloyd had received a large share in behalf of their ships
which were not directly under contract for the mail service. The
remainder went to the various companies controlling the coast and river
trade. The ten to twenty-five per cent addition to the trade bounty for
ships built in domestic yards and from domestic materials, finally went
for the most part to a single large building concern at Trieste. While
most of the Austrian tonnage was yet of foreign build, mostly
constructed in British yards, the increase in the proportion of domestic
build was considerable after 1893. The greater part of the materials
used was Austrian product. Consequently allied industries increased with
this increased output of home ships.[DI]

At length in 1907 (February 23) a new law was enacted increasing the
navigation and construction bounties. For the navigation subsidies, to
go to shipowners according to the tonnage of the ships and the number of
miles run, allotments were thus made: for the first year, $852,600; for
1908, $893,200; 1909, $954,100; 1910, $1,015,000; 1911, $1,075,000; and
for the five years remaining of the term, of the law--which ends
December 31, 1916--$1,136,800 a year. The construction subsidies were
raised as follows: for ships launched after July 1, 1907: steamers built
of iron and steel $8.12 per gross ton, sailing-ships of iron and steel,
$2.84; for marine engines, boilers, pipes, and auxiliary apparatus,
$1.62 per 220.46 pounds. To entitle a ship to these bounties fifty per
cent of the materials used in its construction must be home product.[DJ]

This year (1907) also the annual postal subventions to the Austrian
Lloyd were increased $1,486,586, for a further period of fifteen years.
This contract called for an increase of speed to the Levant and the
Orient. The Suez Canal tolls were to be paid by the Government as

       *       *       *       *       *

The Kingdom of Hungary grants bounties to Hungarian ships, or ships
owned in greater part by Hungarian subjects, independently of the
Imperial Government. Her first general bounty law was also enacted in
1893 and was limited to ten years. The subsidies granted were of two
classes--premium on purchase, and a mileage bounty. The purchase subsidy
was based on net tonnage and was payable for a term of fifteen years
from the date of the ship's launching, reduced each succeeding year by
seven per cent; the mileage subsidy, for the same term, was in
proportion to the length of the voyages made "in the interest of
national commerce whether to or from Hungarian ports." The premiums on
purchase were thus fixed for the first year: for vessels employed in
long-distance coasting trade--sailing-ships, six krone (each 20 cents);
steamers, nine krone per ton; employed in deep-sea trade,--sailing-ships,
nine krone; steamers, twelve krone per ton. Iron or steel ships rated
first class were entitled to these bounties. The mileage subsidy was
fixed at five hellers per ton, per hundred nautical miles run. It was
offered only for voyages "to places where no company in receipt of
State subsidies is obliged to maintain regular communications;" and
it was not to be given for "petty coasting trade."[DK]

This law was succeeded by an act of 1895 granting construction bounties,
with the intent of fostering domestic shipping and the use of domestic
material. The rates were proportioned according to the amount of foreign
or domestic material used, construction with domestic product receiving
the highest bounty. These rates were: for iron or steel hulls, thirty to
sixty krone per ton; for wooden ships, ten to twenty-five krone per ton;
for engines and auxiliary machinery, ten to fifteen krone per ton of
materials used; for boilers and pipes, six to ten krone per ton of
material. The total amount to be paid out yearly was limited to the
modest figure of two hundred thousand krone ($40,600).[DL]

The law of 1895 in reality was not effective, for ships of the Hungarian
merchant marine continued to be built in foreign parts--mainly in
British yards;[DK] and while the carrying capacity had considerably
increased, the tonnage had continued to decline.[DK] By 1904 the
situation had become so unsatisfactory that, as the American consul at
Budapest wrote, the passing of a new navigation-development law by
Hungary's Parliament had, it was believed, become a pressing

       *       *       *       *       *

In 1909 the Austrian Government guaranteed a maximum sum of one million
crowns (approximating $200,000) annually to the Austro-American Shipping
Company for their service between Trieste and Brazil and Argentine
ports. Should the service tend successfully to promote home industries
and agriculture, this subsidy was to be increased, the amount of
increase to depend upon the amount of cargo carried in excess of a
certain minimum. The contract was to run for fifteen years from January
1, 1910. The service, beginning with sailings three times a month, was
to become weekly on January 1, 1911.[DN]

The total Austria-Hungary tonnage in 1910-11 was recorded at 779,029


[Footnote DD: Meeker.]

[Footnote DE: U.S. Con. Rept., Jan., 1890, no. 112, p. 95-96.]

[Footnote DF: U.S. Con. Repts., vol. XXXII, 1890, no. 112, pp. 23-24.]

[Footnote DG: Meeker.]

[Footnote DH: U.S. Con. Rept., no. 282, March, 1904, pp. 645-646.]

[Footnote DI: Meeker.]

[Footnote DJ: U.S. Con. Rept., no. 320, July, 1907, p. 180.]

[Footnote DK: Meeker.]

[Footnote DL: Meeker. Also Parl. papers, Com., 1909, no. 4, p. 8.]

[Footnote DM: U.S. Con. Rept., no. 283, April, 1904, p. 304.]

[Footnote DN: U.S. Con. Rept., no. 352, Jan., 1910, p. 45.]

[Footnote DO: Lloyd's Register, 1910-11.]



Early after its establishment in 1861 the Kingdom of Italy adopted a
subsidy system with the object of reviving and upbuilding the then
languishing Italian merchant marine. This policy was instituted in 1866
with the grant of premiums on the construction of wooden ships. At the
same time materials used in the construction, repair, or enlargement of
ships were made duty-free.[DP]

For a while under these conditions, before iron ships had come much into
use, the merchant marine prospered. Then it again began to languish; and
in 1881 the promulgation of the French general bounty law was made the
special occasion for considering the adoption of a similar measure.[DQ]
The draft of a bill modelled after that law was promptly introduced in
the Chamber of Deputies, in February. But with its consideration such
perplexities arose that at length the whole subject was referred to a
commission of inquiry, to investigate and report a more satisfactory
one. The result of this inquiry was a bill which became law December 6,
1885, to continue in force for ten years.

This law provided for general construction subsidies, on the following
scale: for steamers and sailing-ships built of iron or steel, sixty lire
($11.58) per gross ton; for steam or sailing ships built of wood,
fifteen lire; for _galleggianti_ (floating material: the term signifying
merchant ships navigating the Italian seaboard, rivers, and lakes, but
not provided with certificates of nationality), of iron or steel, thirty
lire; for construction and repairs of marine engines, ten lire per
quintal; for marine boilers, six lire per hundred kilograms of weight.
These bounties were to be increased from 10 to 20 per cent (according to
the degree of speed and other desirable qualities shown) for steamers
built on plans approved by the Government engineers as to be
convertible into cruisers, showing a speed of not less than fourteen
knots an hour, and with sufficient coal-carrying space to steam four
thousand miles at ten knots. The law was applicable to ships bought
abroad as well as those of domestic build. But it forbade the sale or
charter to a foreigner of any steamer upon which the bounty had been
paid, except by Government permission. The laws of 1866 granting
premiums and free entry to shipbuilding materials were suspended during
the ten years' term of this act.[DR]

In 1888, a new tariff of the previous year (July, 1887) having increased
the customs duties on shipbuilding materials, additional bounties on
construction and repair were granted by a royal decree to offset these
disadvantages to the shipbuilders. A provision was added for the payment
of fifty lire per gross ton for construction of war-ships, and eight and
a half-lire per horsepower for engines, nine and a half lire per quintal
for boilers, and eleven lire per quintal for other apparatus, to be used
in war-ships. Navigation bounties were also added to Italian ships as
follows: 0.65 lire per gross ton for every thousand sea miles run beyond
the Suez Canal or the Strait of Gibraltar to or from ports outside of
Europe; the same for ships sailing between one continent with its
adjacent islands and another continent with its adjacent islands,
outside the Mediterranean. Sailing-ships of above fifteen years of age
were ineligible to these bounties; so also were mail-route steamers.[DS]

In 1896, after the expiration of this law, a new law was enacted (July
23) closely modelled upon it. The construction subsidies were the same,
except that war-ships built for foreign countries were debarred from
receiving bounties. The navigation subsidy per gross ton for every
thousand sea miles sailed beyond the Suez Canal and the Strait of
Gibraltar was increased to 0.80 lire, the rate to be diminished by ten
centimes for steamers and fifteen centimes for sailing-ships every three
years. An important addition was the reënactment of the customs rebates
on shipbuilding materials. This law was also to be in force ten

In 1900 (November 16) a royal decree was issued modifying the law of
1896 in several particulars. No bounty was hereafter to be allowed to
vessels built in Italian yards for foreigners. The customs drawbacks
were abrogated, and in place of them was granted a bounty of five lire
per quintal of metal used in repairs. A bounty of fifty-five lire per
gross ton was offered for iron or steel steamers showing a speed of
above fifteen knots; fifty lire, for steamers speeding twelve to fifteen
knots; forty-five lire, for steamers or sailing-ships with speed below
twelve knots; and thirteen lire per net ton for modern hulls. The
navigation subsidies per gross ton per thousand miles, were thus fixed:
for steamers, forty centimes up to the fifteenth year after
construction; for sailing-ships, twenty centimes up to the twenty-first
year after construction. The yearly distances run for which the bounties
were to be paid were limited to thirty-two thousand miles for a steamer
below twelve knots; forty thousand for one of twelve to fifteen knots;
fifty thousand above fifteen knots, and ten thousand for a sailing-ship.
All Italian ships were eligible to this bounty; foreign ships were
debarred. The maximum expenditure for all the bounties was limited to
ten million lire ($2,000,000) a year.

In 1910 (May) a new subsidy bill was enacted providing for the
continuance of the arrangement under the measure of 1900, with a few
immaterial modifications.[DT] Early in 1911 the Government was reported
to have in readiness ten bills looking to the support of domestic
shipping and shipbuilding. Eight of these had relation to the increase
of subsidy on the Italian mail and cargo service of the Mediterranean.
Other routes subsidized included lines to Central America, Chile,
Canada. Domestic shipbuilding was to be aided to the extent of twelve
hundred and forty thousand dollars.[DU]

Italy's mail subvention system dates from 1877, when the Italian
steamship companies by a convention (July 15) consolidated with the
Government.[DV] All the lines receiving the mail subsidy came to be
owned by a single powerful corporation, the Italian General Navigation
Company. While the rates paid per mile are not so high as those paid by
several other countries, the requirements as to size of vessels, speed,
and amount of service to be rendered, are less exacting. Accordingly
these subventions are in fact, as Professor Meeker recognizes them,
"partly in the nature of concealed bounties." In 1879 the Government
spent in these subventions a total equalling $1,593,214. By 1889 the
total had only slightly increased, the amount that year being
$1,849,392. In 1908 the total was $2,328,917. The mail steamships are
required to carry government civil and military employees at half price.

Previous to 1896 the Italian General Navigation Company owned more than
half of the Italian steam tonnage, and most of the large steamships.[DW]
After 1896 the sail tonnage steadily increased. In 1905 it was recorded
that "the Italian flag now flies over some of the best modern
transatlantic liners in the port of New York; the Mediterranean is full
of Italian ships; and the Lloyd Italiano has five new ten-thousand-ton
steamers nearly ready for service in South America."[DX] Between 1890
and 1910 the Italian gross tonnage increased from 809,598 tons to
1,320,653 tons.[DY]


[Footnote DP: Meeker.]

[Footnote DQ: Bismarck's Memorial to the German Reichstag, April, 1881.]

[Footnote DR: U.S. Con. Rept., Jan., 1890, no. 112, pp. 61-62. Also

[Footnote DS: Meeker.]

[Footnote DT: U.S. Consul J. K. Wood, Venice, in Daily Con. Repts., no.
30, Aug 9, 1910.]

[Footnote DU: U.S. Consul T. St. J. Gaffney, Dresden, Germany, in Daily
Con. Repts., no. 83, April 10, 1911.]

[Footnote DV: Meeker.]

[Footnote DW: Meeker.]

[Footnote DX: U.S. Senate Rept., no. 10, 59th Cong., 1st sess.]

[Footnote DY: Lloyd's Register, 1910-11.]



Spain instituted a ship-construction bounty system in 1880, when her
merchant marine was languishing, and in 1886 a comprehensive system of
mail subventions, contracting for the whole ocean service with a single
steamship company, _La Compañia Transatlantica Española_.

Previous to 1886, for a quarter of a century and more, postal
subventions had been given to private commercial houses, or individuals,
providing steam communication with the Spanish colonies and foreign
ports; but much of the service during that period had been performed by
this company through cessions from the holders of the contracts. Before
the adoption of the private contract system, the service to the colonies
had been performed by the first regular steamship line between the
Peninsula and the Antilles (in 1850), established at the State's
expense. The ships of this line were all under the command of officers
of the navy, and performed various services for the Government besides
carrying the mails and despatches.

Under the contract of 1886 (ratified by the Cortes in 1887) the company
were to furnish all the mail steam communication between the Peninsula
and the colonies and possessions, and foreign ports, for a total maximum
subvention of 8,445,222 pesetas ($1,689,044) annually. The subsidy was
calculated on the number of nautical miles run. The total sum was
distributed among the budgets for the Peninsula and the several
colonies.[DZ] In 1909 the subvention was redistributed over the various
lines, the total amounting in round numbers to $1,665,600. The contract
went as a whole also to the Spanish Transatlantic Company, to run for
twenty years. A particular requirement was that the company must favor
Spanish trade in every possible way.[EA]

The first construction subsidy law, that of 1880 (June 25), granted a
bounty of forty francs ($7.72) per measured ton of 2.83 cubic metres on
all ships built in Spain. All tariff duties paid on imported materials
for building, careening, or repairing ships or their machinery, were to
be refunded by the Government.[EB]

During the decade between 1880 and 1890 the Spanish marine slowly
increased. Further to foster it, in 1895 a more general subsidy law was
enacted. This act granted a construction subsidy of forty pesetas
($7.72) per gross ton for wooden ships; seventy-five pesetas ($14.48),
for iron and steel steamers; and fifty-five pesetas ($10.62), for ships
of mixed construction and for sailing-ships of iron and steel.[EC]

The year following the passage of this law was marked by rapid expansion
in the national marine. Then came a more rapid decline. This was due, it
is assumed, to increased taxes, and business depression occasioned by
the colonial wars, involving enlarged Government expenditures and the
cutting off of much colonial trade.[EC] During the war with the United
States (1898) Spain lost eighteen large steamers of 31,316 tons. After
that war, with the development of her national resources, the Spanish
marine again began rapidly to grow.[EC]

In 1909 (law of June 14) the system was extended with the addition of
general navigation bounties calling for an annual expenditure of
2,750,000 pesetas ($530,750). For ships making monthly sailings to
various named points, among them Brazil, Uruguay, and the Argentines,
and semi-weekly sailings to Algeria, bounties were provided ranging from
seven to seventeen cents per ton gross for every thousand miles run, to
continue for a period of ten years. Spanish ships manned by Spanish
crews and ranked by maritime agencies as first class were made eligible
to them. All ships receiving these bounties must admit naval cadets and
perform certain services for the Government. To shipbuilders, as off-set
to the duties on imported materials which they must pay, bounties for
port materials as well as for ships were granted by this law. The
construction subsidies were increased to $13.84 per gross ton for wooden
ships not possessing their own motor power, and $17.30 self-propelling;
$20.76 for iron or steel ships without motor, $27.68 for ships for
freight only, $29.41, freight and passengers; and $32 passengers only.
Ten per cent of the bounties for passenger ships was to be added for
each knot made above fourteen per hour. The sale of a ship to a
foreigner within two years after the ship's construction was made
invalid unless about a third of the bounty received be repaid. Ships
built abroad for Spanish citizens were to be relieved of certain duties
"provided it appears that it was absolutely necessary that they be built

The total amount paid in mail subventions in 1910 was $1,858,186; in
navigation subsidies, $1,291,826. The total Spanish tonnage the same
year comprised 579 vessels of 765,460 tons.[EE]

       *       *       *       *       *

Portugal grants postal subventions of comparatively small amounts to
three steamship companies which perform all her mail carrying. A move
toward the institution of a general subsidy system was made in 1899,
when a bill was before the Cortes providing construction and navigation
bounties for the encouragement of domestic shipbuilding and ship-using;
but this measure was not enacted. In 1911 the republic offered a subsidy
of one thousand dollars per voyage in either direction for steamship
service between Lisbon and New York, with call at the Azores, the
contract to run for three years.[EF] Portugal controls her shipping
service with her colonies, the trade with them being restricted to the
Portuguese flag.[EG] Her total tonnage is small: in 1910 only 110,183


[Footnote DZ: U.S. Con. Rept., no. 112, January, 1890, pp. 54-56.]

[Footnote EA: U.S. Vice Con. Gen. William Dawson jr., Con. Repts., no.
349, Oct., 1910.]

[Footnote EB: U.S. Con. Repts., 1890.]

[Footnote EC: Meeker.]

[Footnote ED: U.S. Con. Rept., no. 349, Oct., 1909.]

[Footnote EE: Lloyd's Register, 1910-11.]

[Footnote EF: Daily Con. Repts., no. 106, May 1, 1911.]

[Footnote EG: Meeker. Also Parliamentary papers.]

[Footnote EH: Lloyd's Register, 1910-11.]



Denmark pays postal subventions to two steamship companies for carrying
the mails to Sweden and to Iceland, and "trade" subsidies to other
companies to encourage particularly the export trade. The latter are
payments directly for reductions in freight rates, which are supervised
by the Government.[EI] The postal subventions are not large, and they
are generally accepted as only fair remuneration for service

       *       *       *       *       *

Norway and Sweden both give subsidies for mail carriage solely, and
grant no direct bounties on shipping. Both, however, undertake the
furtherance of commerce and navigation through "State contributions," in
the form of loans to shipowners from Government funds.[EK] Such aid has
been granted to several steamship lines. In 1910 the Swedish Government
granted a loan equivalent to half a million dollars American money
toward the capital of a new line between Swedish ports and New York,
Philadelphia, and Baltimore.[EL] Shipping is exempt from taxation in
both countries.[EM] The Swedish tonnage in 1910 stood at a total of 1472
vessels of 918,079 tons.[EN]

       *       *       *       *       *

In Norway the laws put no restriction upon shipowners as to purchase in
any market. Most of her steam tonnage is foreign-bought, and largely
second-hand. Her merchant fleet, however, consists for the greater part,
of wooden sailing-ships, and these are mostly of domestic build.[EM]
Besides the mail subsidies the Government grant "trade" subsidies to
some forty Norwegian steamship companies to enable them to maintain
routes to various foreign ports. These subsidies amount to about half a
million dollars annually.[EO] In 1910 Norway stood in tonnage fourth
among European maritime countries: her total tonnage being 2,014,533
tons.[EP] Norway has by far the largest percentage of sea-faring
population, and her mariners are found in the crews of all nations in
Europe and America.


[Footnote EI: Meeker.]

[Footnote EJ: Parl. papers.]

[Footnote EK: Meeker.]

[Footnote EL: U.S. Con. Rept., no. 82, 1910, p. 106.]

[Footnote EM: Meeker.]

[Footnote EN: Lloyd's Register, 1910-11.]

[Footnote EO: Report of (U.S.) commissioner of navigation for 1909.]

[Footnote EP: Lloyd's Register, 1910-11.]



In Russia steamship lines were early subsidized with mileage bounties,
besides receiving postal subventions; and later the Government adopted
the policy of returning the Suez Canal tolls to the subsidized lines.
The mileage subsidies are direct bounties avowedly for the encouragement
of Russian navigation, and are very large.[EQ]

In 1898 a Government commission, appointed to consider and report upon
the state of the empire's mercantile marine, declared that Russia was
losing a vast sum annually through the lack of a sufficient commercial
fleet of her own, and yet no progress seemed to be making toward
increasing her tonnage. To remedy this unsatisfactory condition the
commission suggested the removal of the duty on ships built abroad for
Russia, and the free admission of all material necessary for ship

Favoring laws followed. By a measure of July that year (1898) ships
bought abroad, if destined for the foreign sea-borne trade, were
exempted for a period of ten years from the heavy duties levied on such
vessels.[EQ] The next year (1899) the coasting trade, reserved
exclusively for Russian ships, was extended to include navigation
between any two Russian ports in any seas; and, further to restrict this
trade to subjects of the empire, it was enacted that ships engaged in it
must be manned exclusively by Russian officers and seamen.[EQ]

At this period Russia's shipping industry, outside the Government works
for the construction of battle-ships, was of comparatively little
consequence. In the few extensive ship-yards river steamers, tugs, and
other small craft, built from Russian materials and by Russian workmen,
were chiefly turned out. The materials could be bought cheaper abroad,
but Russian labor was cheaper. According to the United States consul at
St. Petersburg, the wages of common workmen were then from fifty-one to
sixty-four cents a day, while skilled workmen were receiving but
seventy-seven cents to one dollar a day.[ES]

In the decade 1890-1901 the amount of subsidies expended directly to
encourage shipping increased rapidly, and the tonnage increased in
extent and importance. In 1890-91 the total tonnage stood at 427,335
tons of which 156,070 were steam and 271,265 sailing ships. In 1902-03 a
total of 800,334 tons was reached, of which 556,102 were steam and
244,232 sailing ships.[ET]

In 1902 the granting of bounties in the form of loans to ship-owners was
proposed, with the object of inducing them to buy Russian ships built of
Russian materials instead of foreign product. The scheme contemplated a
mortgage on the finished ship at fifty per cent of the actual cost,
without interest, to cover a period of twenty years, the loans to be in
equal yearly payments. The amount of the bounty was to depend upon the
difference between the cost of home-built and foreign-built ships. The
loans were to be made only on first-class sea-going steamers. The plans
and specifications were to be approved by the minister of finance before
building; and steamers of over one thousand tons register must show an
average speed of not less than ten knots on a six hours' trial; those
under one thousand tons, of not less than eight knots. In addition to
the loans the Government was to bear part of the expense of insurance.
To facilitate the export of Russian goods in Russian-built ships, a
rebate was allowed of half the expense of Russian coal used in steamers
carrying less than three-fourths of a full cargo on export, and one-half
cargo on import. It was estimated that this scheme for fostering
domestic shipbuilding would entail smaller drafts on the national
treasury than would the granting of direct construction and navigation

Progress was checked appreciably by the war with Japan (1904-05). But
the year after, the empire was active again in advancing her interests
in the East, by systematically granting subsidies to steamship lines to
various Asiatic points.[EV] By 1909 the tonnage had been brought to a
total of 700,959 tons, approaching that of the year before the war. Of
this total 443,243 was steam tonnage. The greater part of the steam
fleet was foreign built, only 167 of the total, 898 steamers, being of
Russian product. The largest number were built in England (341). Others
were obtained from various European yards. More than ninety per cent
were of iron and steel. Of the sailing-ships, ninety per cent were home
product.[EW] In 1910 the total tonnage stood at 887,325 tons.[EX]

The mileage subsidies in 1910 were going principally to eleven steamship
companies; the postal subventions mainly to four. Those receiving the
mileage subsidies carry the mails and Government passengers free. The
largest mileage subsidy goes to the Black Sea Navigation Company, the
oldest and most important of the subsidized lines (founded in 1856, with
Government aid).[EY] In addition to the subsidy the Government pays back
the Suez Canal tolls. The Russian Volunteer Fleet stands second on the
list of subsidy receivers. This is practically a Government affair. It
was created in the war-time of 1877-78, by private subscription, as an
auxiliary war fleet; and was reorganized for general service in 1892.
The members of the board of managers are State nominees, and the
officers and crews are regarded as employees of the crown.[EZ] The
subsidy is fixed at six hundred thousand rubles ($309,999) a year; and
the refunded Suez Canal tolls amount to another six hundred thousand

The mileage subsidies, given directly to foster shipping, increased
rapidly from year to year after 1890, while the postal subventions, for
mail carriage chiefly, remained practically constant.[FB]


[Footnote EQ: Meeker.]

[Footnote ER: U.S. Consul Smith, Moscow, in Con. Rept., no. 216, p. 149,
Sept., 1898.]

[Footnote ES: U.S. Con. Gen. R.T. Greener, St. Petersburg, in U.S. Con.
Rept., no. 236, p. 91, May, 1900.]

[Footnote ET: Report of The Merchant Marine Commission (U.S.), 1905,
vol. II, p. 947.]

[Footnote EU: U.S. Commercial Agent R.T. Greener, Vladivostock, in U.S.
Con. Repts., no. 265, p. 218, October, 1902.]

[Footnote EV: Same, no. 313, p. 140, October, 1906.]

[Footnote EW: Con. Gen. John H. Snodgrass, Moscow, in U.S. Con. Repts.,
no. 354, pp. 32-33, March, 1910.]

[Footnote EX: Lloyd's Register, 1910-11.]

[Footnote EY: Con. Gen. Snodgrass, Con. Repts., no. 102, Oct., 1910.]

[Footnote EZ: Parl. papers: Report of com. of enquiry into Steamship
Subsidies, 1901.]

[Footnote FA: List given in Rept. of Mer. Marine Com., with totals paid
in 1902-03, vol. 2, p. 946.]

[Footnote FB: Mecker.]



While France is the bounty-giving nation _par excellence_, Japan is a
pressing second. The development of a modern merchant marine, together
with a modern navy, was among the first undertakings of the awakening
empire upon her assumption of Occidental civilization. Adopting what
seemed to her statesmen of the new regime, from their study of Western
methods, to be the speediest way to that end, she started out
energetically to attain it through lavish money-grants from the national
treasury for the establishment of steamship companies of her own people
in coastwise and ocean service, and of modernized ship-yards and

The initial venture resulted in the creation of a steamship monopoly.
This was the subsidizing, in 1877, of the pioneer concern, to supply
steam communication between various domestic ports, and also with
Siberia, China, and Corea. It was founded by a broad-visioned Japanese
merchant, Jwasaki Yataro,[FC] and controlled by him. To break his
monopoly the Government in 1882 set up a rival State-supported
company.[FC] After a period of "desperate competition" and warfare,
Jwasaki persuaded the new concern to unite with his. So was effected a
community of interests after the most approved Western pattern.[FC] By
this union was formed, in 1885, the powerful _Nippon Yusen Kaisha_
(Japan Mail Steamship Company), which remained the most powerful of
Japanese steamship establishments, with lines running to the same ports
to which the American steamers run.

Coincident with the State-aiding of steamship companies was the granting
of liberal postal subvention. Next followed the institution of a general
subsidy system, frankly designed to stimulate domestic shipbuilding and
to further navigation by Japanese ships.

This system was embodied in two acts promulgated in 1896, the year after
the finish of the Japan-China War (1894-95), when the merchant marine
was growing pretty rapidly, but not rapidly enough for the aspiring
nation. These were, a Shipbuilding Encouragement Law, the aim of which
was to stimulate the building of vessels above 700 tons; and a
Navigation Encouragement Law, to foster open-sea navigation. Their model
was the French system.

These laws offered construction and navigation subsidies, and also made
provision for a widely extended postal service with increased postal
subventions. The construction bounties were available for "any company
composed of Japanese subjects exclusively as members and shareholders
which shall establish a ship-yard conforming to the requirements of the
Minister of State for Communications, and shall build ships." The rates
were fixed as follows: for ships of over 1000 tons, twenty yen ($9.96)
per gross ton; of over 700 and under 1000 tons, twelve yen; for engines
built with ships, or in any other domestic dock-yard, with the consent
of the Minister of Communications, five yen per horsepower. Japanese
materials only were to be used, unless the Minister of Communications
should give permission to use foreign materials. The navigation bounties
were granted only for iron and steel ships owned exclusively by Japanese
subjects, and plying between Japan and foreign ports. The rates in this
class were: twenty-five sen (about 12-1/2 cents) per gross ton per
thousand miles run for ships of 1000 tons steaming at ten knots an hour;
ten per cent added for every additional 500 tons up to 6000 tons, and
twenty per cent for every additional knot up to seventeen. Foreign-built
ships less than five years old, owned by Japanese, were admitted to
these bounties. The postal routes established were fifteen in number,
calling for an annual expenditure of 4,964,404 yen (about $2,482,202)
when in full operation. The payments for postal service were to be
computed at the mileage rate given for navigation. Previous to this act
the postal subventions had amounted annually to nine hundred and
forty-five thousand yen in 1890 and 1891, and nine hundred and thirty
thousand yen in the subsequent years.[FD]

The effect of these laws was to stimulate overproduction. The _Nippon
Yusen Kaisha_ ordered eighteen large freight steamers aggregating 88,000
tons. Other companies doubled and trebled their fleets.[FD] One result
of the overproduction was the forcing down of freights. This, together
with the business depression of 1898-99, brought losses to the shipping
companies despite the large subsidies. The rapidly increasing amounts of
the subsidies, too, were giving the Government concern. From a total of
1,027,275 yen in 1896 the sum expended annually had grown by 1899 to
5,846,956 yen. The total paid between 1896 and 1899 had amounted to
13,133,440 yen, about $6,566,720.[FD]

Accordingly, in 1899 (March), a law was enacted modifying the system.
The navigation bounties on foreign-built ships were reduced by half,
while the subventions to the postal lines were fixed at certain yearly
sums. A law of 1900 (February 23) extended the postal services. Under
these laws the postal subventions reached a total of about 5,647,811 yen
($2,823,905) a year. Of this total the _Nippon Yusen Kaisha's_ was the
lion's share,--4,299,861 yen, about $2,149,930.[FD]

After the passage of these laws the various companies further increased
their tonnage, but the merchant marine grew more wholesomely for a
while. In 1902 the total tonnage had reached 934,000 tons, and the
Japanese mercantile fleet had risen to the position of eighth in the
world in point of tonnage, whereas in 1892 it was only thirteenth.[FE]
In 1907 the United States consul at Yokohama wrote: "The building of
ships of over ten thousand tons in Japanese yards is now quite
common.... The war [with Russia] has given a great impetus to the
shipbuilding and dock-yard industry which has made remarkable progress
during the last few years."[FF]

That year (1907) the Government brought forward several ship-subsidy
bills making provision for further Japan sea services.[FG] In 1908 the
amount of State aid to the merchant marine had increased to an
equivalent of $6,170,566 and additional amounts were asked for, one for
the line to South America.[FH] The budget for 1908-09 carried the
largest amounts yet devoted by Japan to ship subsidizing. At the end of
1908 official statistics placed the number of steamers at 1618, with a
gross tonnage of 1,153,340.42. Of these, one hundred and one were
steamers of more than three thousand tons.[FH]

In 1909 a new subsidy system was adopted (the laws of 1896 revised), to
go into effect January 1 1910. The fixed navigation bounties granted by
the old system on specified routes were abolished, and a general subsidy
offered open to all steamships conforming to the provisions of the new
law. The subsidized open-sea routes, however, were limited to four--the
European, the North American, South American, and Australian;[FI] and
coasting services in the Far East were not affected. Among other
conditions imposed on the beneficiaries were the requirements that
steamers must carry more than one-half their maximum load; that each
must have a wireless telegraph outfit, this, however, instituted at the
Government's expense; that the Department of Communications be furnished
with information as to freights and passenger rates; and that proper
terminal facilities, as piers, warehouses, lighters, be provided by the
subsidized companies.[FJ] The steamers receiving the full subsidy must
be home-built, of steel, of over 3000 tons gross, and showing a speed of
at least twelve knots per hour. The rate was fixed at fifty sen per
gross ton for every thousand nautical miles, and ten per cent of this
sum added per additional speed of one nautical mile an hour, according
to the conditions of the route. Upon a vessel the age of which exceeds
five years the subsidy decreases five per cent each year till the age
of fifteen is reached, when it ceases. Foreign-built steamers under five
years of age, which may be put in service with the sanction of the
Government authorities, are entitled to half of the subsidy. The
construction subsidies were arranged in two classes, and each class in
four grades.[FK] The rates were slightly increased over those of the law
of 1896, and their benefits were limited to steel vessels of over 1000
tons instead of 700 tons.

The total appropriations for ship subsidies in the budget for 1911-12
amounted, in American money, to $6,845,995, of which $6,294,020 were for
navigation, and $551,975 for construction subsidies: an increase of
$478,387 in the former class over the appropriation of the previous
year, and a decrease in the latter class of $6,835.[FL]

The total Japanese tonnage in 1910 stood at 1,149,200 tons.[FM] The
_Nippon Yusen Kaisha_ practically owns nine-tenths of the ocean-going
steamships flying the Japanese flag.[FN]

       *       *       *       *       *

China, too, taking on Western ways, is emulating Japan in establishing a
modern merchant marine. The Government is giving State aid to native
steamship companies, and subsidizing ship-yards. According to the United
States consul-general at Hongkong the Government is now (1911) to
furnish half of the amount of an extension of the capital of the Chinese
Merchants' Steam Navigation Company to twenty million taels (about
$12,600,000 gold), and thirty additional steamers of modern type are to
be built for service--ten on foreign routes, including a route to the
United States, and twenty on routes between Chinese ports; while a new
ship-yard is to be set up at Shanghai under Government auspices,
capitalized at five million taels (about $3,200,000 gold).


[Footnote FC: Meeker.]

[Footnote FD: Meeker.]

[Footnote FE: U.S. Con. Rept., no. 282, March, 1904.]

[Footnote FF: U.S. Con. Rept., no. 316, Jan, 1907, pp. 92-93.]

[Footnote FG: Con. Gen. H.B. Miller, Yokohama, in Con. Repts., no. 32,
pp. 120-121, May, 1907.]

[Footnote FH: Vice Con. Gen. E.G. Babbitt, Yokohama, in Con. Repts., no.
344, p. 216, May, 1909.]

[Footnote FI: Japan Year Book, 1911.]

[Footnote FJ: U.S. Con. Gen. Thomas Sammons, Yokohama, in Daily Con.
Repts., no. 38, Aug. 17, 1910.]

[Footnote FK: Japan Year Book, 1911.]

[Footnote FL: U.S. Ambassador Thomas J. O'Brien, Tokyo, in Daily Con.
Repts., no. 123, May 26, 1911.]

[Footnote FM: Lloyd's Register, 1910-11.]

[Footnote FN: Japan Year Book, 1911.]



Brazil gives subventions from the Federal treasury to several foreign
steamship companies, and some of the States of the federation also make
similar grants from their treasuries. Besides the subventions to lines
to foreign ports, the Government grants State aid to a considerable
number of coast lines operating between Rio de Janeiro and other
Brazilian ports. The total amount of the subventions in 1910 was equal
to $1,437,880.[FO] The principal beneficiary was the _Lloyd Brazileiro_,
maintaining the line between Brazilian ports and the United States.

       *       *       *       *       *

Argentina is adopting a policy of giving subsidies to foreign steamship
companies which extend her communications with foreign ports. As far
back as 1865 a decree was issued offering a subsidy of twenty thousand
dollars a year for a line between Argentina and the United States. But
it was not taken. In 1911 the Government was prepared to pay a subsidy
to a new steamship company promoted to furnish a regular service to
South Africa.[FP] In 1911 there appeared the first steam vessel flying
the American flag at Buenos Aires in twenty years.[FQ]

Chile grants mail subsidies, which have no appreciable effect in the
merchant marine.[FR]


[Footnote FO: Con. Gen. George E. Anderson, Rio de Janeiro, in Daily
Con. Repts., no. 55, p. 719, Sept. 7, 1910.]

[Footnote FP: Daily Con. Repts., March 18, 1911.]

[Footnote FQ: Same, January 20, 1911.]

[Footnote FR: Meeker.]



While a navigation code founded in 1790 and 1792, and developed in 1816,
1817, and 1820, after the model of the then existing English code,[FS]
has been retained in modified form through enactments in subsequent
years, a system of general ship-subsidies, though repeatedly proposed,
has never been adopted by the United States. From 1793 to 1866 bounties
were given to fishing vessels and men employed in the bank and other
deep-sea fisheries,[FT] but no subsidies to the merchant marine were
granted till 1845, and these were only postal subsidies--payments in
excess of an equivalent for services to be rendered in ocean
mail-carriage. The law enacted that year had for its declared purpose
the encouragement of American ocean steamship-building and running. With
this act, therefore, the real history of Government aid to domestic
shipping in this country begins.

At the time of the adoption of this policy America was still leading the
world in ocean sailing-ships with her splendid fleets of fast-sailing
packets and "clippers", while England had taken the lead in steamships.
The law of 1845 was the culmination of a move begun in Congress in 1841,
the year after the first Cunarder had crossed from Liverpool to Halifax
and Boston. Its aim was to parry England's bold stroke for maritime
supremacy with her State-aided steamship lines, and directly to "protect
our merchant shipping from this new and strange menace."[FU] The first
move of 1841 was for an appropriation of a million dollars annually for
foreign-mails carriage in American-owned ships.[FU]

The law of 1845 (March 3) authorized the postmaster-general to contract
with American ship-owners exclusively for this service to be performed
in American vessels, steamships preferred, and by American citizens, for
a period of from four to ten years, with the proviso that Congress by
joint resolve might at any time terminate a contract. The subsidy was
embodied in the rates of postage thus fixed: upon all letters and
packets not exceeding a half-ounce in weight, between any ports of the
United States and any foreign ports not less than three thousand miles
distant, twenty-four cents, with the inland postage added; upon letters
and packets over one half-ounce in weight, and not exceeding one ounce,
forty-eight cents, and for every additional half-ounce or fraction of an
ounce, fifteen cents; to any of the West India Islands, or islands in
the Gulf of Mexico, ten cents, twenty cents, and five cents,
respectively; upon each newspaper, pamphlet, and price-current to any of
the ports and places above enumerated, three cents: inland postage to be
added in all cases. The postmaster-general was to give the preference to
such bidder as should propose to carry the mails in a steamship rather
than a sailing-ship. Contractors were to turn their ships over to the
Government upon demand for conversion into ships of war, the Government
to pay therefor the fair full value, as ascertained by appraisers. The
postmaster-general was further authorized to make ten-years' contracts
for mail carriage from place to place in the United States in steamboats
by sea, or on the Gulf of Mexico, or on the Mississippi River up to New
Orleans, on the same conditions regarding the transfer of the ships to
the Government when required for use as war ships.[FV]

The next year, 1846, in the annual post-office appropriations act (June
19), provision was made for the application of twenty-five thousand
dollars toward the establishment of a line of mail steamers between the
United States and Bremen; and early in 1847 (February 3) a contract was
duly concluded for a Bremen and Havre service, the first under the law
of 1845.

This was a five years' contract entered into with the Ocean Steam
Navigation Company, upon the basis of an earlier agreement (February
1846) with Edward Mills of New York, which Mr. Mills had transferred to
the new organization. The subsidy was fixed at one hundred thousand
dollars a year for each ship going by Cowes to Bremen and back to New
York once in two months a year, and seventy-five thousand dollars a year
for each ship going by Cowes to Havre and back to New York. The
contractors were to build within a year's time four first-class
steamships of not less than 1400 tons, nor less than a thousand
horsepower; and were to run their line "with greater speed to the
distance than is performed by the Cunard Line between Boston and
Liverpool and back."[FW] Provision for the subsidy thus called for was
promptly made in this item in the post-office appropriation bill for the
ensuing year, approved March 2: "for transportation by steam-ships
between New York and Bremen according to the contract with Edward Mills,

The next step was the enactment of a law which had for its declared
objects "to provide efficient mail services, to encourage navigation and
commerce, and to build up a powerful fleet in case of war."[FY] This
measure, approved March 3, 1847, entitled "An act to provide for the
building and equipment of four naval steamships," made provision for the
construction, with Government aid, of merchant mail-steamships under the
supervision of the Navy Department that they might be rendered suitable
if needed for war service.

The act directed the secretary of the navy to accept on the part of the
Government certain proposals that had been made for the carriage of the
United States mails to foreign ports in American-built and
American-owned steamships. These proposals had been submitted to the
postmaster-general (March 6, 1846) by Edward K. Collins and associates
(James Brown and Stewart Brown) of New York, and A.G. Sloo of
Cincinnati: one for mail transportation by steamship between New York
and Liverpool, semimonthly, the other between New York and New Orleans,
Havana, and Chagres, twice a month. The secretary was directed to
contract with Messrs. Collins and Sloo in accordance with the provisions
laid down in this act. These required that the steamers be built under
the inspection of naval constructors and be acceptable to the Navy
Department; that each ship carry four passed midshipmen of the navy to
serve as watch-officers, and a mail agent approved by the
postmaster-general. Mr. Sloo's ships for his West India service were to
be commanded by officers of the navy not below the grade of lieutenant.
The secretary was further directed to contract for mail-carriage beyond
the Isthmus,--from Panama up the Pacific coast to some point in the
Territory of Oregon, once a month each way; but this service could be
performed in either steam or sailing ships, as should be deemed more

All the contracts thus provided for were concluded the same year. Each
was to run for ten years. The first executed was that with Mr. Sloo. It
called for five steamships of not less than 1500 tons, and a
semi-monthly service. The line was to touch at Charleston, if
practicable, and at Savannah. The ships were to have engines by direct
action; and each ship was to be sheathed with copper. The subsidy was
fixed at two hundred and ninety thousand dollars a year, a rate of
$1.83-1/2 per mile, the distance to be sailed out and back being 158,000
miles.[GA] Mr. Sloo immediately set over his contract to George Law,
Marshall O. Roberts, and Bowes McIlvaine, of New York.[GB] The second
contract was for the Pacific service, connecting with the mail by the
Sloo line across the Isthmus. This was made with Arnold Harris of
Arkansas. It provided for a monthly service between Panama and Astoria,
Oregon, calling at San Diego, Monterey, and San Francisco, with a
subsidy of one hundred and ninety-nine thousand dollars per annum. Three
steamers were to be furnished, two of not less than a thousand tons
each. Upon receiving the contract Mr. Harris immediately transferred it
to W.H. Aspinwall of New York, representing the newly formed Pacific
Mail Steamship Company.[GC] The third was the Collins contract. This
stipulated for a semi-monthly service between New York and Liverpool
during the eight open months of the year, and a monthly service through
the four winter months, with five steamers, each of not less than 2000
tons and engines of a thousand horsepower. The first ship was to be
ready for service in eighteen months after the date of the contract,
November 1, 1847. The subsidy was fixed at $19,250 per twenty round
trips, or three hundred and eighty-five thousand dollars a year, a rate
of $3.11 a mile for sailing about 124,000 miles.[GD]

By subsequent acts the secretary of the navy was authorized to advance
twenty-five thousand dollars a month on each of the ships called for by
these several contracts from the time of their launching to their
finish; and the date of the completion of the first Collins steamer and
the opening of the New York and Liverpool service was extended to June
1, 1850.[GE]

At the same time that the secretary of the navy was executing these
contracts the postmaster-general under the authority of an act "to
establish certain Post Routes and for other purposes," also approved
March 3, 1847,[GF] was contracting for a steamship mail-service between
Charleston and Havana, with a subsidy of forty-five thousand dollars per
annum. This contract was entered into with M.C. Mordecai of Charleston,
who agreed to furnish steamships suitable for war purposes, and to
perform a monthly service.[GG] Several other propositions for steamship
service to various foreign countries were made to the postmaster-general
at this time, but none was accepted.[GH]

The pioneer Bremen-Havre line began its service on the first day of June
1847, with two steamers. These were the _Washington_ and the _Hermann_,
built in New York, strong and large, of 1640 tons and 1734 tons,
respectively, side-wheelers, bark-rigged. At first they made the run to
Bremen in from twelve to seventeen days, much better time than the
average clipper.[GI] But up to 1851 they had no regular schedule of
sailings, and, their speed being unsatisfactory, few mails were sent by
them. The subsidy payments, therefore, were made for each voyage
separately.[GJ] They had also ceased to command the patronage of
travellers. Nevertheless, as a committee of the Senate in 1850 reported,
they were believed to have been "profitable to their owners as freight
vessels, and of essential service in promoting the interests of American
commerce."[GK] The full service, with twelve trips to Bremen and twelve
to Havre, was finally begun in 1851, when two more, and larger
ships,--the _Franklin_ and the _Humboldt_, each of 2184 tons, were added
to the Havre line. Four years before, the original company, because of
financial difficulties, had organized a separate corporation for the
Havre service. In 1852 Congress extended the contract to 1857;[GJ] and
Southampton was made the point of shifting the mails.

The New York and Chagres, the Charleston and Havana, and the Pacific
line, were all under way before the close of 1848. The Pacific line was
the first in operation. The service began with the three steamers called
for by the contract, the first sailing from New York on the sixth of
October, the other two early in December. They were the _California_,
1050 tons, the _Panama_, 1087 tons, the _Oregon_, 1099 tons, all built
in New York. The New York and Chagres line was started also in December
with the sailing of the _Falcon_, 1000 tons, a purchased steamer which
the Navy Department accepted temporarily, while the new ships were
building, that the service might be immediately begun. The opening of
the new territory south of Oregon acquired through the Mexican War, and
the beginning of the rush of the "Argonauts" to the newly discovered
gold fields of California, had made all concerned anxious to get these
connecting steamship lines a-going.

At first the service was halting because of unavoidable circumstances.
The Pacific Company were unable at once to meet the demands. Sufficient
or competent crews could not be obtained on the California coast during
the gold excitement,[GL] at fever heat in 1849. But it was not long
before more ships were put on, and the service improved and prospered.
By September, 1849, the Chagres company had their first completed ship
in commission. This was the _Ohio_, 2432 tons, built in New York. By
June, 1850, the second, the _Georgia_ (and the third of the line, for
the _Falcon_ was retained) was running. Soon afterwards the _Illinois_
was added. At about the same time the Pacific company had added two more
to their fleet--the _Columbia_ and the _Tennessee_. In 1851 the
postmaster-general was authorized to increase the Pacific trips to
semi-monthly; and the subsidy was increased. An additional contract
(March 13) was then made with Mr. Aspinwall, as president of the Pacific
Mail.[GM] This called for the enlargement of the line within a year, to
six steamers; and for semi-monthly trips from Panama to Oregon and back,
with stops and mail delivery at named points in California; and
increased the company's subsidy by one hundred and forty-nine thousand
two hundred and fifty dollars per annum. Thus the yearly total became
three hundred and forty-eight thousand two hundred and fifty dollars.
Before the semi-monthly trips were begun, San Diego and Monterey were
dropped for the regular service, to be served by a slower line.[GN] Also
this year (1851) two more steamers were added to the fleet.

By this time on the Atlantic side the Collins Line was in promising
operation. The service had auspiciously begun in 1850 with four of the
five steamships called for by the contract. These were the _Atlantic_,
2845 tons, the _Arctic_, 2856 tons, the _Baltic_, 2723 tons, and the
_Pacific_, 2707 tons, each some seven hundred tons larger than the
measurement stipulated--"at least 2000 tons." All were built in New
York ship-yards; were especially designed for fast sailing; and in size,
model, finish, and fittings were pronounced to be "such steamers as the
world had never seen."[GO] In all respects they were superior to the
Cunarders with which they were aggressively to compete; and it was the
boast of the Americans that they would "beat the English in steam
navigation, as they had beaten them in fast sailing." All associated
with the enterprise were of large experience in maritime affairs. Mr.
Collins, a native of Truro, Cape Cod, and long a shipping merchant of
New York, had been at the head of fast clipper-ship lines--the New
Orleans and Vera Cruz packet line, and the more famous "Dramatic line"
(the ships named for plays and players) of transatlantic sailers. The
commanders of the steamers were all tried clipper captains.

The _Atlantic_ made the initial voyage, steaming gallantly out of New
York harbor on the twenty-seventh of April, a month before the contract
time for the beginning of the service. The _Pacific_ followed in June,
the _Baltic_ in November, the _Arctic_ in December. They beat the
Cunarders' time on the average by a day. Their popularity was
immediately established. Their passenger traffic rapidly increased. But
the severe condition of the mail contract, with their quick sailings
allowing only short stays in port, made it impossible for the company to
secure a profitable share of the freight business without a heavy outlay
for slower cargo boats. Within a few months after the start of the line
the Cunard Company had cut freight rates from seven pounds ten shillings
per ton to four pounds. So, while the Collins ships continued steadily
to outsail the Cunarders and got the bulk of the passenger traffic, the
Cunarders got most of the freighting. Moreover, the Collins ships were
far more expensive to run. Indeed, the cost of the rapid service was
enormous. Mr. Collins stated before a committee of Congress that to
save a day or a day and a half in the run between New York and Liverpool
cost the company nearly a million dollars annually.

Accordingly more subsidy was asked for. This was granted in 1852, the
act being stimulated by England's move late in 1851 in raising the
Cunards' subsidy to £173,340 ($843,000), for forty-four trips a year:
about nineteen thousand dollars per voyage. The extra allowance lifted
the Collins subsidy to $853,000 for twenty-six trips a year,
thirty-three thousand dollars per voyage, a rate of upward of five
dollars a mile.[GP]

The competition now became sharper. Still the Collins Line maintained
its record sailings, and continued to beat the English. Then it was
sharply checked by a grave disaster. On the twenty-fourth of September,
1854, the _Arctic_, when forty miles off Cape Race, rushing through a
fog, was rammed by a French steamer, and sunk with three hundred and
seven souls. This calamity had a depressing effect on the company's
affairs. Two years later, in 1856, Congress determined to reduce the
subsidy, and notice of the discontinuance of the extra allowance of 1852
was ordered.[GQ] Only a few weeks after this action another disaster,
even more appalling than the first one, befell the company. On September
23 the _Pacific_ sailed from Liverpool for her homeward voyage with a
full complement of passengers; passed to sea out of sight; and was never
more heard of. She was replaced by the _Adriatic_, the fifth ship called
for by the contract, which was launched the year before, the largest,
finest, swiftest, and most luxurious then afloat; and the company
struggled on against accumulating odds.

At length, in 1858, Congress abandoned the subsidy system and returned
to the method of payment for foreign mail-carriage according to the
actual service rendered, with a proviso, however, favoring American
ships, such to receive the inland-postage plus the sea postage, while
foreign ships were to have the sea postage only.[GR]

This was the final blow. The last voyage of the Collins Line was made
in January, 1859. Then it perished. In April following, the ships were
seized by the mortgagees and sold. So closed the career of the pioneer
United States ship company in the transatlantic service. The splendid
_Adriatic_ passed to English ownership and the American flag gave way to
the British. For several years this ship "held the transatlantic record
with a passage of five days nineteen hours from Galway to St.

Of the other subsidized lines, the ships of the Bremen service were
withdrawn and laid up after the subsidy ceased. The Havre line continued
a while longer with two ships that had replaced the _Humboldt_ and the
_Franklin_, both of which had been lost,--the _Humboldt_ wrecked at
Halifax on December 5, 1853; the _Franklin_ stranded on Montauk Point on
July 17, 1854. Then with the charter of the two new steamers by the
Government in 1861 for use in the Civil War, the Havre line also

The cost to the Government of this first steamship subsidy venture,
covering the thirteen years between 1845 and 1858, was approximately
fourteen and a half million dollars.[GT]

Meanwhile, within this period, the American wooden sailing-ships
continued to be the glory of the seas, and the American clippers reached
their highest development. The appearance of steamships on the North
Atlantic and the Pacific had inspired the producers of the "wonderful
American sailing-ships" to greater efforts for their perfection; and the
clipper, surpassing all other types of sailers in size, sea-qualities,
and speed, was the result of the intensified rivalry of canvas and
steam.[GU] The American clipper-ship era fairly opened with the advent
of the Collins Steamship Line.[GV] Between 1850 and 1855 clipper-ships
were built for nearly every trade,[GW] and they were on every sea. Some
of the first were employed in the transatlantic packet service. More
became engaged particularly in the "booming" trade to California, in the
long-voyage traffic to China and India.[GX] "When John Bull came
floating into San Francisco, or Sydney, or Melbourne, he used to find
Uncle Sam sitting carelessly, with his legs dangling over the wharf,
smoking his pipe, with his cargo sold and his pockets full of
money."[GY] The Crimean War, 1853-56, opened a new and prosperous market
for American fast sailing-ships, as transports. To meet the demand
American ship-yards produced in 1855 more tonnage than they had ever
built before.[GZ] The sailing-ship interests strenuously opposed the
subsidy system. They denounced it as class legislation unjustly favoring
the few, and urged its abolishment.[HA] How strong this influence was in
bringing about the change in policy is a mooted question.

       *       *       *       *       *

No further move for fostering the American merchant marine with State
aid directly or indirectly, was made till 1864. Then the
steamship-subsidizing policy was revived, first with a proposition for
the establishment of an American mail-line to Brazil. A subsidy of two
hundred and fifty thousand dollars per year was proposed, one hundred
and fifty thousand to be paid by the United States and one hundred
thousand by the Brazilian Government. Congress endorsed the scheme. The
act embodying it (May 28)[HB] authorized the postmaster-general to
contract for a monthly service between the two countries, touching at
St. Thomas, W.I., by first-class American sea-going steamships of not
less than 2000 tons. The steamers were to be built under naval
inspection, and to be subject to taking for war service. Bids were to be
openly advertised for. The contract was to run for ten years. Thus was
established the pioneer American line between Philadelphia and Rio de
Janeiro, which continued from 1865 to 1876, and was then abandoned.

In the same session of Congress a bill was introduced, authorizing an
annual subsidy of five hundred thousand dollars for an ocean
mail-steamship service to Japan and China via Hawaii. This also received
favorable consideration, and was passed February 17, 1865. The service
was to be monthly, performed by American-built ships of not less than
3000 tons, also constructed under naval inspection. Tenders for the
contract were to be advertised for, but bids only from United States
citizens were to be entertained. The contract was to run for ten years.
Only one bidder appeared (as was evidently expected)--the Pacific Mail
Steamship Company. The contract went to that company, and under it, in
1867, their prosperous Asiatic service began. At the outset they were
released from the obligation of stopping at Hawaii, and Congress voted
another subsidy--seventy five thousand dollars per annum--for a distinct
Hawaiian service.[HC] The contract for this service, also advertised
for, went to the California, Oregon, and Mexican Line.

       *       *       *       *       *

Thus far the granting of postal subsidies for the establishment of
steamship lines alone had engaged the advocates of State aid to American
shipping. Now was agitated the institution of a general subsidy system
as a means of fostering the rehabilitation of the merchant marine of all
classes in ocean service, sailing-ships as well as steamers. The
situation had become acute. Through the great loss of tonnage in the
Civil War, and through the steadily advancing change from wood to iron
in ship construction and from sail to steam propulsion, the American
merchant marine had been brought distressingly low. From 1861, when the
United States was standing second in rank among the nations in the
extent of her ocean tonnage, to 1866, this tonnage had declined from
2,642,648 to 1,492,926 tons: a loss of more than forty-three per cent;
while England, the first in rank and chief competitor, had in the same
period gained 986,715 tons, or more than forty per cent. Moreover, of
this increase in English tonnage, a large percentage had been in
steamers, one ton of which class was estimated to be equal in
efficiency to three tons of sailing-ships; while, by substituting
largely iron for wood, England had gained a still further advantage in
her much larger class of iron vessels, doubly as durable as those of

The matter was brought up in Congress by a resolution of the House,
March 22, 1869, calling for the appointment of a select committee, "to
inquire into and report at the next session of Congress the causes of
the great reduction of American tonnage engaged in the foreign carrying
trade, and the great depression of the navigation interests of the
country; and also to report what measures are necessary to increase our
ocean tonnage, revive our navigation interests, and regain for our
country the position it once had among the nations as a great maritime
power." Of this committee Representative John Lynch of Maine was made

The committee gave a series of hearings mainly in Atlantic seaboard
cities, and submitted their report on February 17, 1870, accompanied by
two bills recommended for passage; the one, a bounty bill, the other,
relative to tonnage duties. With these measures the history of years of
effort to establish the principle of general ship-subsidies in the
American economic system properly begins.

The Lynch bounty bill, entitled "An act to revive the navigation and
commercial interests of the United States," made provision for the
remission of duties upon the raw materials entering into the
construction of sailing and steam-ships; for the taking in bond, free of
duty, of all stores used in vessels in sailing to foreign ports; and for
bounties, or subsidies, to American sailing and steam-ships engaged in
foreign commerce, already built as well as to be built: the aid being
extended to those already built because they had been sailed during the
Civil War and since "at great disadvantage."[HE] The amount of duties to
be remitted was to be equal to the amount per ton collected on the
materials required for certain defined classes of ships: on wooden
vessels, eight dollars a ton; on iron, twelve dollars a ton; on
composite vessels (vessels composed of iron frames and wooden
planking), twelve dollars a ton; on iron steamers, fifteen dollars a
ton. Where American materials were used in the construction of iron or
composite vessels, allowance was to be made of an amount equivalent to
the duties imposed on similar articles of foreign manufacture. The
bounties were thus classified: to owners of American registered ships
engaging for more than six months in a year in the carrying trade
between America and foreign ports, or between ports of foreign
countries, a dollar and a half per ton upon a sailing-ship each year so
engaged, and a dollar and a half upon a steamer running to and from the
ports of the British North American provinces; four dollars upon a
steamer running to and from any European port; and three dollars to and
from all other foreign ports.[HF]

The intent of the second bill, "imposing tonnage duties and for other
purposes," was the readjustment of the existing tax upon tonnage so that
it should fall "more equitably upon the different classes of vessels
affected thereby."[HF] It removed all tonnage, harbor, pilotage, and
other like taxes imposed upon shipping by State and municipal authority
(except wharfage, pierage, and dockage); and imposed a duty of thirty
cents per ton on all ships, vessels, or steamers entered in the United

The committee's measures were ably advocated, but they finally went down
in defeat.

       *       *       *       *       *

In 1872 the Pacific Mail Steamship Company came forward with an offer to
add another monthly mail-steamship service to Japan and China, for an
additional subsidy of a half million dollars a year. At the same session
a project to establish a subsidized line to Australia was introduced;
another, for a subsidized line from New Orleans to Cuba. These failed,
while the scheme of the Pacific Mail won. A bill authorizing such
contract was enacted June 1, that year, after prolonged and warm
debates, and by close votes in House and Senate. Two years afterwards it
was discovered that bribery had been employed in securing the passage of
that act; the charge being that a million dollars had been spent by a
corrupt lobby in pushing the bill through.[HG] Upon these disclosures,
and because the company had failed to fulfil its conditions, Congress,
by act of March 3, 1875, abrogated the contract.[HH] In 1877 the first
contract with the Pacific Mail for the Japan and China service, expired.
During its ten years' term the company had received from the Government
a total of $4,583,333.33.[HI]

With the Pacific Mail exposure the word subsidy became unsavory to the
public taste, and for some years after no subsidy measure, however
carefully guarded or respectably backed, could find favor in Congress. A
second project for subsidizing a new line to Brazil, proposed by John
Roach, the noted American shipbuilder, in 1879, was among those
ventured, only to fail.

       *       *       *       *       *

A decade later, in 1889, when conditions seemed to be growing more
propitious, the subject was revived with vigor by the introduction of a
navigation subsidy bill proposed by the American Shipping League.[HJ]
From this evolved in 1890 a tonnage bounty bill reported in the House by
Representative James M. Farquhar of New York.[HK] The final outcome,
indirectly, of these moves was the reëstablishment of the postal subsidy
system, abandoned in 1858, in the enactment March 3, 1891, of what is
known as the Postal Aid Law.

This one ship-subsidy law now on the statutes was in its original draft
one of two proposed measures, termed respectively the Mail Ship Bill and
the Cargo Ship Bill, both reported in the Senate by Senator William P.
Frye of Maine. The Cargo Bill provided for navigation bounties to
sailing-ships and steamers. The objects of these measures, as stated by
the promoters, were "(1) to secure regular and quicker service to
countries now reached; (2) to make new and direct commercial exchanges
with countries not now reached; (3) to develop new and enlarge old
markets in the interest of producers and consumers under the
reciprocity treaties completed and under consideration; (4) to assist
the promotion of a powerful naval reserve; (S) to establish a
training-school for American seamen."[HL]

Both bills passed the Senate, but the House rejected the Cargo Bill and
passed the Mail Bill only after amending it essentially. The subsidy
rate was cut one-third on steamers of the first class--the highest class
of ocean liners,[HM]--and was reduced on the second class. The act as
finally approved comprises the following features:

Empowering the postmaster-general to contract for terms of from five to
ten years with American citizens for carrying the mails on American
steamships between ports of the United States and ports in foreign
countries, the Dominion of Canada excepted; the service on such lines
"to be equitably distributed among the Atlantic, Mexican Gulf, and
Pacific ports." Proposals to be invited by public advertisement three
months before the letting of a contract; and the contract to go to the
lowest responsible bidder. The steamships employed, to be
American-built, owned and officered by American citizens; and the
following proportion of the crews American citizens, to wit: "during the
first two years of each contract, one-fourth thereof; during the next
three succeeding years, one-third thereof; and during the remaining time
of the continuance of such contract, at least one-half thereof." The
subsidized steamships are ranked in four classes: in the first class,
iron or steel screw steamships, capable of making a speed of twenty
knots an hour at sea of ordinary weather, and of a gross tonnage of not
less than 8,000 tons; second class, iron or steel, speed of sixteen
knots, 5,000 tons; third class, iron or steel, fourteen knots, 2,500
tons; fourth class, iron or steel, or wooden, twelve knots, 1,500 tons.
Only those of the first class eligible to the contract service between
the United States and Great Britain. All except the fourth class to be
constructed under the supervision of the Navy Department, with
particular reference to prompt and economical conversion into auxiliary
cruisers, of sufficient strength and stability to carry and sustain at
least four effective rifled cannon of a calibre of not less than six
inches; and to be of the highest rating known to maritime commerce.

The subsidy, or rate of compensation, as it is termed, for mail-carriage
is thus fixed in each class: first class, not exceeding four dollars (in
the original draft six dollars) a mile; second class, two dollars a
mile, by the shortest practicable route for each outward voyage; third
class, one dollar a mile; fourth class, two-thirds of a dollar a mile
for the actual number of miles required by the Post Office Department to
be travelled on each outward bound voyage. Pro rata deductions from the
compensations, and penalties, are imposed for omission of a voyage or
voyages, and for delays or irregularities in service. No steamship in
the contract service is to receive any other bounty or subsidy from the
national treasury. Sanction is given to naval officers to volunteer for
service on the contract mail steamships; and, while so employed, they
are to receive furlough pay in addition to their steamship pay, provided
they are required to perform such duties as appertain to the merchant
service. The training-school for seamen is established by a provision
requiring that the contract steamers "shall take cadets or apprentices,
one American-born boy for each thousand tons gross register, and one for
each majority fraction thereof, who shall be educated in the duties of
seamanship, rank as petty officers, and receive such pay for their
services as may be reasonable."[HN]

The first advertisements for proposals under this act resulted in
contracts with eleven existing lines, of the third and fourth classes.
No bids were received for the North Atlantic service calling for
American-built steamships in the first class. But an offer was made by
the American Line[HO] to begin the performance of the service with two
British-built liners--the _City of New York_ and the _City of
Paris_--acquired from the Inman Line, if these steamers were admitted
to American registry, the company agreeing immediately to order two
similar ships from American shipyards and add these to their fleet. The
proposition was accepted, and a supplementary act was passed (May 10,
1892), legalizing such registry.[HP] The new American ships were
promptly built,--the _St. Louis_ and the _St. Paul_, launched November,
1894, and April, 1895, respectively,--each 11,600 tons, "larger,
swifter, safer, and more luxurious"[HQ] than the two British-built
vessels: a perfection of workmanship deemed a matter for congratulation
by patriotic Americans. To this extent at least the subsidy law was
declared to have been beneficent.

It had become evident, however, that the law was not fostering the
establishment of new American-owned and American-built steamship lines
as its promoters had hoped. In 1893 the contract service had been
reduced by the discontinuance of three of the routes. In 1894 only three
contracts were in operation. Up to 1898 no lines had been established on
the Pacific under the law.

In the judgment of the subsidy advocates the law's failure to produce
the anticipated results only proved its inadequacy in not providing
enough subsidy. Accordingly, further measures were proposed affording a
more generous supply.

In December, 1898, Senator Mark Hanna, of Ohio, brought forward a bill
providing liberal navigation and speed bounties to all American vessels
engaged in the foreign trade. This measure, as defined by its title,
proposed "to promote the commerce and increase the foreign trade of the
United States, and to promote auxiliary cruisers, transports, and seamen
for Government use when necessary." The subsidy was again termed
"compensation." It was to be payable on gross tonnage for mileage sailed
both outward and homeward bound, according to speed. The rate to
steamships showing on trial test a speed above fourteen knots was to
increase proportionately; sailing-ships and steamers of less trial speed
than fourteen knots, were to receive the lowest rate. This was fixed at
one dollar and fifteen cents per gross ton for each hundred of the
first fifteen hundred miles sailed both outward and homeward bound, and
one cent per gross ton for each hundred miles over one hundred miles
both ways. The additional speed bounties ranged from one cent per gross
ton for steamers of 1,500 tons and speeding fourteen knots, to 3.2 cents
for those over 10,000 tons and showing twenty-three knots. The act was
to be in force for a term of twenty years, and no contracts were to be
made under it after ten years.

The Hanna bill met strong opposition, and was finally dropped. A
substitute measure, drawn by Senator Frye, of Maine, took its place.
This also was lost with the adjournment of the Fifty-seventh Congress.
At the opening of the next Congress, in December, 1901, Senator Frye
introduced his bill in an amended form. This offered subsidies to
contract mail-steamships based upon tonnage and speed, and practically
restored the rates of the original Postal Aid Bill. It further provided
a fixed subsidy upon tonnage to other American steamers and
sailing-ships, registered, and to be built in the United States. The
bill passed the Senate, but failed with the House.

       *       *       *       *       *

In 1903 the matter was taken up with greater vigor, by President
Roosevelt. In his annual message to Congress December 7, the President,
"deeply concerned at the decline of our ocean fleet and the loss of
skilled officers and seamen," recommended the appointment by Congress of
a joint commission to investigate and report at the next session, "what
legislation is desirable or necessary for the development of the
American merchant marine and American commerce, and, incidentally, of a
national ocean mail service of adequate auxiliary naval cruisers and
naval reserves."

In response Congress by act of April 28, 1904, created the Merchant
Marine Commission with power to make the broadest kind of an inquiry.
This body was composed of five Senators and five Representatives, two of
the Senators and two of the Representatives members of the minority
party. Senator Jacob H. Gallinger of New Hampshire was chairman. Eight
months between the adjournment and reassembling of Congress was devoted
to its appointed task. All the larger ports of the country were visited,
its itinerary embracing the principal cities on the North Atlantic
seaboard, on the Great Lakes, on the Pacific coast, and on the southern
coast and Gulf of Mexico. Hearings were given in all these places to
hundreds of citizens: commercial bodies, shipbuilders, shipowners,
shipping merchants, merchants in general trade, manufacturers, bankers,
lawyers, editors, doctrinaires. So wide indeed was the investigation,
and so liberal the "open door" rule, admitting for consideration any
"intelligent suggestion offered in good faith," that "alien agents" of
foreign steamships were heard with the rest.[HR] While differences of
opinion as to methods and policies naturally were encountered, the
commission declared that it found public sentiment, as this was sounded
throughout the United States, "practically unanimous not in merely
desiring, but in demanding an American ocean fleet, built, owned,
officered, and so far as may be, manned by our own people." This
sentiment was "just as earnest on the Great Lakes ... as on either

The results of the investigation were embodied in an elaborate report,
comprising majority and minority reports of the commission, and the mass
of testimony taken at the hearings: the whole filling three large
pamphlet volumes, in all of nearly two thousand pages.[HS]

The majority reported a bill. This was presented as merely an extension
of the principles of the Postal Aid Act of 1891, involving "no new
departure from the established practice of the Government." Its ocean
mail sections were intended "simply to strengthen the existing act on
lines where it has happened to prove inadequate." The subsidies which it
granted were termed, inoffensively, "subventions," and its promoters
protested that these "subventions" were "not in any opprobrious sense a
subsidy or bounty." They were "not bounties outright, or mere commercial
subsidies such as many of our contemporaries give." They were "granted
frankly in compensation for public services rendered and to be

The proposed measure, however, was more than an extension of the act of
1891. Its scope was indicated by its title: "To promote the national
defence, to create a force of naval volunteers, to establish American
ocean mail lines to foreign markets, to promote commerce, and to provide
revenue from tonnage." The subsidies offered comprised mail subventions
to steamships; subventions to general cargo carriers and deep-sea
fishing-ships, both steam and sail; and retainers to officers and men of
American merchant ships and deep-sea fishing vessels enrolling as naval
volunteers. It opened with provisions for the establishment of a naval

The new mail subsidies provided for ten specified lines of "steamships
of the United States" of sixteen, fourteen, thirteen, and twelve knots
speed, to the greater countries of South America, to Central America, to
Africa, and to the Orient, with a total maximum subsidy for the ten
lines of $2,665,000 a year. In all contracts it was to be specified that
the steamships must carry in their own crews a certain increasing
proportion, up to one-fourth, of men enrolled as naval volunteers. The
subventions to American general cargo carriers, or the "tramp" type of
ships, and deep-sea fishing-vessels, steam or sail, were fixed at these
rates: those engaged in the foreign trade for a full year, five dollars
per gross ton; so engaged for nine months and less than a year, four
dollars; for six months, two dollars. These subsidies were conditioned
upon these requirements: the employment in the crews of a certain
proportion of naval volunteers; one-sixth of the crews to be citizens of
the United States or "men who have declared their intentions to become
citizens;" ships to carry the mails when required free of charge; all
ordinary repairs to be made in the United States; the ships to be in
readiness for Government taking for naval service in time of need. The
payments in this class were to be made on contracts for a year at a
time, renewable from year to year; and no vessel was to receive them for
a longer period than ten years. The retainers to officers and men of the
merchant marine and deep-sea fishing-ships as inducements to enroll as
naval volunteers, were fixed at rates ranging from a hundred dollars a
year for the master or chief engineer of a large steamship to
twenty-five dollars for a sailor or fireman, and fifteen dollars for a
boy, these retainers being independent of their regular pay. The
provisions relating to tonnage revenue increased the tonnage taxes on
all vessels, American and foreign, entering American ports, with a
rebate of eighty per cent of the tonnage duties allowed to American
ships carrying American boys as apprentices and training them in
seamanship or engineering for the merchant service and naval

The minority report, signed by three of the four Democratic members of
the commission, although outlining measures of relief which, in the
judgment of the signers, would "accomplish substantial and permanent
good without injustice to any other American interest and without doing
violence to any fundamental principle of right or of organic law,"
proposed no bill. While the minority "saw objections to the entire bill"
recommended by the majority, they were disposed to withhold any
opposition except to the sections providing for direct subsidies. These
they declared to be "so obnoxious to Democratic principles and to the
economic sense of the country" that they were compelled to enter their
"earnest protest against their enactment into law." Instead of
subsidies, the remedial legislation which they outlined included: a
return to the discriminating-duty policy; and the putting on the free
list of all materials which enter into the construction of ships no
matter whether intended for foreign or domestic trade,--thus admitting
ships built from foreign materials, in whole or in part, to the
coastwise trade, from which they are now excluded. The minority held
also that it would probably "be necessary to remove the duties not only
for materials but from all materials sold cheaper abroad than at home,"
meaning steel and iron products. "In this way, and in this way only,
will our shipbuilders be enabled to obtain our materials at the prices
at which they are sold to foreign shipbuilders."[HV]

The report of the commission was submitted to the Fifty-eighth Congress,
third session, January 4, 1905.[HW] No action was had on the bill in
that Congress. It was referred to the committee on commerce; reported
back to the Senate with sundry amendments and a minority report against
it;[HX] was debated tentatively; and finally passed over at the request
of its sponsor, Senator Gallinger, who expressed himself as satisfied
that the bill could not receive the consideration it deserved at that
session. Meanwhile both Houses had directed a continuance of the
commission's inquiry. In May the chairman, Senator Gallinger, held
conferences in New York with several representatives of the shipping
interests who had not been heard; and later sessions were held in
Washington, at which other statements were received and considered.

At the opening of the Fifty-ninth Congress, December 4, 1905, Senator
Gallinger submitted a supplementary report of the commission, and with
it introduced a new bill--the previous bill in a new draft.[HY] At the
same time Representative Charles H. Grosvenor, of Ohio, the first House
member of the commission, introduced the bill to the House.

This draft added several new features to the original bill. The most
important were provisions for increasing the subsidies payable under the
law of 1891 to the single American contract line to Europe, and to the
Oceanic Line from San Francisco to Auckland and Sydney. These provisions
added two hundred and fifty thousand dollars to the former's subsidy of
seven hundred and fifty thousand, and two hundred and seventeen thousand
to the latter's of two hundred and eighty-three thousand. The reasons
given for these increases were: in the case of the American Line,
because this line "meets the fiercest competition of the State-aided
corporations of Europe, soon to be intensified by the new subvention of
one million one hundred thousand dollars granted to the Cunard Company
by the British Government, on terms so liberal as to make it equivalent
to one and a half million dollars a year"; and in the case of the
Australasia Line, because it "operates in Pacific waters where cost of
fuel, labor, etc., is considerably greater than at Atlantic ports; ...
is required to maintain a very high speed; ... employs exclusively white
crews instead of the Asiatics utilized by many other Pacific companies."
Another provision, as a special encouragement for American shipowners to
enter the Philippine trade, added a subvention of thirty per cent above
the regular rate, or six and a half dollars a ton. The naval volunteer
retainers were extended to seamen of the Great Lakes and coastwise

In the Senate the bill fared well as a whole. Like the original bill it
came back from the committee on commerce amended, though slightly, and
with a minority report against it: the minority again emphasizing their
"unqualified opposition to this renewed effort to donate to certain
favored interests moneys collected by the Government for public purposes
under its power of taxation."[IA] It was closely fought by the
opposition in debate, opened with Senator Gallinger's argument in its
behalf on January 8, 1906. But it successfully ran the gauntlet. Further
amended in several particulars, but unscathed in its essential parts, it
passed the Senate, February 14, by a vote of 38 to 27, five Republican
Senators and all the Democrats voting in the negative.[IB]

In the House its progress was less prosperous. It lay with the committee
on merchant marine and fisheries into the second session of this
Congress; and more hearings were given. Reframed after the enacting
clause, but practically the same in principle, it was reported back
January 19 (1907) by Mr. Grosvenor, accompanied by an explanatory
report of the majority of the committee;[IC] and bill and report were
referred to the whole House on the state of the Union. Later the views
of the minority were filed.[IC] On January 23 a message from President
Roosevelt in behalf of the measure was received. The president
particularly urged the "great desirability of enacting legislation to
help American shipping and American trade by encouraging the building
and running of lines of large and swift steamers to South America and
the Orient." As striking evidence of the "urgent need of our country's
making an effort to do something like its share of its own carrying
trade on the ocean," he directed attention to the address of Secretary
Root before the Trans-Mississippi Commercial Congress at Kansas City,
Mo., the previous November, giving the results of the secretary's
experiences on his recent South American tour. The proposed law, Mr.
Roosevelt repeated, was in no sense experimental. It was "based on the
best and most successful precedents, as for instance on the recent
Cunard contract with the British Government." So far as South America
was concerned, its aim was to "provide from the Atlantic and Pacific
coasts better American lines to the great ports of South America than
the present European lines." Under it "our trade friendship" would "be
made evident to the South American Republics."[ID]

Backed by the explanatory report and this message, the friends of the
measure opened the debate, February 25, Mr. Grosvenor leading. It was a
great debate, long and hot. Numerous amendments were put in; some
changing the proposed routes, others adding new ones. At length on March
1, three days before the end of this Congress, the much amended bill was
passed, and went back to the Senate for concurrence.[IE]

As it now stood it was shorn of the provisions for lines from the
Pacific coast to Japan, China, the Philippines, and Australasia. The new
subsidized lines were all to run to South America. Two of these were to
run from the Atlantic coast to Brazil and Argentina, respectively; one,
from the Pacific coast to Peru and Chile; and one from the Gulf of
Mexico to Brazil. On all four lines sixteen-knot steamers were required,
with speed on the average above the European mail lines to South
America. The subsidies were reserved exclusively to ships to be built in
the United States, so that the mail service could not be performed by
existing steamers; thus a wholly new ocean-mail fleet was

The bill was reached in the Senate March 2, and strenuous efforts were
made by Senator Gallinger and others to push it through. But it failed
in the closing hours of the session to reach a vote. So this measure

Another effort was made in the Sixtieth Congress. In his message at the
beginning of this Congress (December 2, 1907) President Roosevelt
recommended an amendment to the act of March 3, 1891, "which shall
authorize the postmaster-general in his discretion to enter into
contracts for the transportation of mails to the Republics of South
America, to Asia, the Philippines, and Australia at a rate not to exceed
four dollars a mile for steamships of sixteen-knots speed or upward,
subject to the restrictions and obligations" of that act. In other
words, to give the same subsidy to steamers in these services as allowed
to the twenty-knot American mail transatlantic line, instead of two
dollars a mile.[IH] A bill to this effect was introduced in the Senate
December 4[II]; on February 3, 1908, was reported back from the
committee on commerce so amended as to provide the four-dollar-a-mile
subsidy to American sixteen-knot steamers on routes of four thousand
miles or more to South America, the Philippines, Japan, China, and
Australasia; was debated at length; further amended; and finally,
passed, March 20. In the House it was referred to the committee on post
office and post roads;[IJ] issued therefrom in a dew draft;[IK] debated;
and finally failed to pass. Thereupon the subsidized service to
Australia by way of Honolulu and the Samoan group was abandoned.

Again the measure was pressed in the Sixty-first Congress. It now had
the backing of President Taft. In his annual message December 9, 1909,
"following," as he graciously said, "the course of my distinguished
predecessor," he earnestly recommended the passage of a "ship-subsidy
bill looking to the establishment of lines between our Atlantic seaboard
and the eastern coast of South America, China, Japan, and the
Philippines." The bill, as introduced by Senator Gallinger (February 23,
1910), provided for subsidized lines of the second and third classes on
routes to the points named by Mr. Taft, four thousand miles or more in
length outward voyage, or on routes to the Isthmus of Panama: the second
class to receive the subsidy rate per mile provided in the law of 1891
for steamers of the first class, and the third class the rate applicable
to the second class. If no contract should be made for a line between a
Southern port and South American ports, and two or more should be
established from Northern Atlantic ports, it was required that one of
the latter should touch outward and homeward at two ports of call south
of Cape Charles. The total expenditure for foreign mail-service in any
one year was limited--not to exceed the estimated revenue therefrom for
that year.[IL]

The bill came back from the committee on commerce in March without
amendment, and with a report.[IM] In June it was put over for
consideration in December of the third session of this Congress. When at
length it was reached, Senator Gallinger submitted a substitute. This,
instead of naming the points to be covered, provided for subsidized
routes to South America south of the equator outward voyage; provided
for one port of call instead of two on the Southern Atlantic coast;
guarded against "discrimination detrimental to the public interest," in
other words "combines," by a provision that no contract be awarded to
any bidder engaged in any competitive transportation business by rail,
or in the business of exporting or importing on his own account, or
bidding for or in the interest of any person or corporation engaged in
such business, or having control thereof through stock ownership or
otherwise; and fixed the limit of the total expenditure for foreign mail
service in any one year at four million dollars. This substitute was
finally passed on February 12, 1911, by a vote of 39 to 39, the chairman
casting his vote in the affirmative. In the House the measure went to
the committee on post office and post roads; and there rested.

Various other subsidy bills and measures for the revival of the ocean
merchant marine without subsidies, were put into this Congress, as in
previous ones, but few escaped from the committees; and these few fell
short of passage.


[Footnote FS: Wells, chaps. 4 and 5, pp. 58-94. Also Rept. of
commissioner of navigation for 1909.]

[Footnote FT: U.S. Statutes at Large. Also Rept. of commission of
navigation, 1909.]

[Footnote FU: Marvin, pp. 240-241.]

[Footnote FV: U.S. Statutes at Large, vol. V, p. 748.]

[Footnote FW: This contract in Executive Document, 30th Cong., 1st sess,
no. 50.]

[Footnote FX: U.S. Statutes at Large, vol. IX, p. 152.]

[Footnote FY: Meeker.]

[Footnote FZ: U.S. Statutes at Large, vol. IX, p. 187.]

[Footnote GA: Meeker.]

[Footnote GB: For the Sloo contract see Exec. Does., 32nd Congr., 1st
sess., no. 91.]

[Footnote GC: For this contract see Exec. Docs., 32nd Cong., 1st sess.,
no. 91.]

[Footnote GD: Meeker. This contract in Exec. Docs., 32nd Cong., 1st
sess., no. 91, pp. 71-74.]

[Footnote GE: Navy appropriation bills, Aug. 3, 1848, March 3, 1849.]

[Footnote GF: U.S. Statutes at Large, vol. IX, p. 188.]

[Footnote GG: Exec. Docs., 30th Cong., 1st sess., no. 51.]

[Footnote GH: Exec. Docs., 30th Cong., 1st sess., no. 51.]

[Footnote GI: Marvin, p. 243.]

[Footnote GJ: Meeker.]

[Footnote GK: Report in the Senate Sept. 18, 1850, in Exec. Docs., 32nd
Cong., 1st sess., no. 91, pp. 14-15.]

[Footnote GL: Meeker.]

[Footnote GM: For contract see Exec. Docs., 32nd Cong., 1st sess., no.
91, pp. 154-157.]

[Footnote GN: Exec. Docs., 32nd Cong., 1st sess., no. 91, pp. 5-7.]

[Footnote GO: Marvin, p. 247. The measurement of these steamers is
differently given by Spears: p. 26. "When done, the ships were found to
have fine models--they rode the waves in a way that excited the
admiration of all sailors. But the keelsons under the engines were only
40 inches deep, while the keels were 277 ft. long, and there was 'give'
enough to rack the engines to pieces." Spears, p. 267.]

[Footnote GP: Meeker.]

[Footnote GQ: U.S. Statutes at Large, vol. XI, p. 101; chap. CLXI, Aug.
18, 1856.]

[Footnote GR: Same appropriation act for ocean steamship service, June
14, 1858.]

[Footnote GS: Marvin, p. 279.]

[Footnote GT: Meeker gives the details as follows: Bremen line (1847-57)
$2,000,000; Havre line (1852-57) $750,000; Collins line (1850-58)
$4,500,000; New York to Aspinwall (1848-58) $2,900,000; Astoria and San
Francisco to Panama (1848-58) $3,750,000; Charleston to Havana (1848-58)

[Footnote GU: Marvin, p. 253.]

[Footnote GV: Bates, p. 133.]

[Footnote GW: Same, p. 143.]

[Footnote GX: Marvin, p. 254.]

[Footnote GY: George Frisbie Hoar.]

[Footnote GZ: Marvin, p. 258.]

[Footnote HA: Bates, p. 142.]

[Footnote HB: United States Statutes at Large, vol. XIII, p. 93.]

[Footnote HC: Session of 1866-67.]

[Footnote HD: Report of the select committee on the merchant marine, in
Repts. of Committee, 1870, 41st Cong., 2d Bess., House Kept., no. 28.]

[Footnote HE: House Rept., no. 2378, 51st Cong., 2nd sess.]

[Footnote HF: House Report, no. 28, 41st Cong., 2d sess.]

[Footnote HG: House Docs., no. 598, also Miscellaneous Docs.; nos. 74
and 255, 42d Cong., 2nd sess.]

[Footnote HH: House Docs., no. 268, 43rd Cong., 1st sess.]

[Footnote HI: Meeker.]

[Footnote HJ: House Docs., Rept., no. 601, 51st Cong., 1st sess.]

[Footnote HK: Text of this bill in Bates, pp. 411-416.]

[Footnote HL: House Rept., no. 3273, 51st Cong., 2d sess.]

[Footnote HM: Marvin, p. 414.]

[Footnote HN: United States Statutes at Large, vol. XXVI, p. 830.]

[Footnote HO: Originally the International Navigation Company
established in Philadelphia in 1871, and beginning service between
Philadelphia and Liverpool with four American-built steamships.]

[Footnote HP: United States Statutes at Large, vol. XXVII, p. 27.]

[Footnote HQ: Marvin, p. 421.]

[Footnote HR: Report of The Merchant Marine Commission (1904), vol. I,
p. III.]

[Footnote HS: Report of The Merchant Marine Commission, together with
the testimony taken at the Hearings, 3 Vols., p. 1985; Senate Report,
no. 2755, 58th Cong., 3d sess.]

[Footnote HT: Same: Report of the majority, vol. I, pp. XXIII, XXX,

[Footnote HU: This bill in Report of the Merchant Marine Commission,
vol. I, pp. XLVI, LI.]

[Footnote HV: Rept. of The Merch. Marine Com., Views of the Minority,
Vol. I, p. LVI.]

[Footnote HW: Senate bill, 6291, 58th Cong., 3d sess.]

[Footnote HX: Senate Report no. 2949, 58th Cong., 3d sess.]

[Footnote HY: Senate Report no. 1, 59th Cong., 1st sess.]

[Footnote HZ: Senate Report no. I, 59th Cong., 1st sess. This bill is
Senate no. 529.]

[Footnote IA: Senate Report no. 10, 59th Cong., 1st sess.]

[Footnote IB: Cong. Record, vol. 40, part I, 59th Cong., 2d sess.]

[Footnote IC: House Report no. 6442, 59th Cong., 2d sess.]

[Footnote ID: House Doc. no. 4638, 59th Cong., 2d sess.]

[Footnote IE: Cong. Record, vol. 41, part 5, 59th Cong., 2d sess., p.

[Footnote IF: Cong. Record, 59th Cong., 2d sess., p. 4688.]

[Footnote IG: Same, p. 4653.]

[Footnote IH: Senate Report no. 168, 60th Cong., 1st sess.]

[Footnote II: Senate bill no. 28, 60th Cong., 1st sess.]

[Footnote IJ: Cong. Record, 65th Cong., p. 3743.]

[Footnote IK: House bill no. 22301, 60th Cong., 1st sess.]

[Footnote IL: Senate bill no. 6708, 60th Cong., 2d Sess.]

[Footnote IM: Senate Report no. 354, same.]



Ship subsidies, open or concealed, are now granted by nearly every
maritime nation. Whatever may be the designation of these Government
grants,--whether mail subsidies, naval subventions, retaining fees for
possible naval service, construction bounties, navigation bounties,
trade bounties, Government loans, Government partnerships, tariff
advantages, canal refunds,--whatever may be their form, all are
distinctly Government aids, direct or indirect, the primary object of
which is the development and expansion of the merchant marine of each
nation granting them; and generally, if not universally, the upbuilding
of this marine for service in time of need as an auxiliary to the
national navy.

Summarized, the various grants of the various nations thus appear:

_Great Britain_ grants mail subsidies, and admiralty subventions; her
colonies, steamship subsidies.

_France_: mail subsidies; construction and navigation bounties;
fisheries bounties.

_Germany_: mail subsidies; steamship subsidies; preferential rates on
the State railroads for shipbuilding materials.

_Belgium_: premiums to certain steamship lines; pilotage refunds.

_Austria-Hungary_: mail subsidies; construction and navigation bounties;
Suez Canal refunds. Hungary; bounties to Hungarian ships.

_Italy_: mail subsidies; construction and navigation bounties.

_Spain_: mail subsidies; construction and navigation bounties.

_Portugal_: mail subventions to steamship companies.

_Denmark_: trade subsidies; exemptions from harbor dues.

_Sweden_: State contributions--loans to steamship companies.

_Norway_: State contributions; trade subsidies.

_Russia_: mail subsidies; mileage subsidies; Government loans; steamship
subsidies; Suez Canal refunds.

_Japan_: State aid to steamship companies; mail subsidies; construction
and navigation bounties; fisheries bounties.

_China_: State aid to steamship companies; subsidies to ship-yards.

_South America_: Brazil and Argentina, subsidies to foreign steamship

_United States_: mail subsidies to seven steamship lines.

The United States confines the coastwise trade to American ships, and
these are exempted from tonnage dues. It excludes foreign-built ships
from American registry, admitting only American ships, or those taken in
war as prizes or forfeited for a breach of United States laws, belonging
to American citizens.[IN] Ownership of American ships is restricted to
"citizens of the United States, or a corporation organized under the
laws of any of the States thereof."[IO] The master of an American ship,
and all officers in charge of a watch, including the pilots, must be
American citizens. Since 1871 foreign materials for ship-building have
been admitted free of duty. Since 1909 such materials, and all articles
necessary for the outfit and equipment of ships, have been duty-free,
with this proviso: that vessels receiving these rebates of duties "shall
not be allowed to engage in the coastwise trade of the United States
more than six months in any one year," except upon repayment of the
duties remitted; and that vessels built for foreign account and
ownership shall not engage in this trade.[IP]

In 1910 the subsidized American service covered only the one
transatlantic line from New York to Southampton, calling at Plymouth and
Cherbourg; lines to the north coast of South America--to Venezuela; to
Mexico; to Havana; to Jamaica; and on the Pacific, from San Francisco to

The total cost of the service for the year on these seven subsidized
routes was $1,114,603.47, a net excess over the amount allowable at
present rates to steamers not under contract of $346,677.39, or,
deducting the amount would have been paid non-contract steamers for the
despatch of the foreign closed mails which these steamers carry without
additional cost to the department, a total excess of $293,013.40.[IQ]
"All other mail service between the United States and foreign
countries," the postmaster-general regretfully reported, is "wholly
dependent on steamships over whose sailings the department has no

       *       *       *       *       *

The total tonnage of the United States in 1910 as given by Lloyd's was
5,058,678 tons:

                              No. of vessels.     Tons.

Sea                                 2774        2,761,605
Northern Lakes                       606        2,256,619
Philippine Islands                    89           40,454
                                    ----        ---------
  Total                             3469        5,058,678

The number of ships on the lakes as given does not include wooden
vessels trading on the Great Lakes. While the ocean tonnage has declined
from more than two and a half million tons in 1861 to some eight hundred
thousand tons, that engaged in the coastwise and inland trade has
steadily increased for many years.[IS] On the Great Lakes especially is
employed a fine and powerful merchant fleet.



[Footnote IN: Registry law of 1792, in Revised Statutes, sec. 4132.]

[Footnote IO: Revised Statutes, see. 4131.]

[Footnote IP: Tariff act of Aug. 5, 1909, sec. 19.]

[Footnote IQ: Postoffice Department report, 1910.]

[Footnote IR: Postmaster-general Hitchcock, report, 1910.]

[Footnote IS: American Year Book, 1911.]


  _Adriatic_, the steamer,

  American Shipping League,

  American Steamship Company,

  American Year Book, _reference to_,

  Anderson, Com. Gen. George E., _reference to_,

  _Arctic_, the steamer,

  _Argentina_, use of subsidies in,

  Aspinwall, W.H.,

  _Atlantic_, the steamer,

  Atlantic Transport line,

  _Auguste Victoria_, the steamer,

  Australasia line,

  Australian line,

  Austria-Hungary, history of the use of subsidies in,
    provisions for two classes of subsidies in,
    increase in the proportion of steamers built in,
    total of tonnage in,
    grants of,

  Austrian Lloyd Company,

  Austro-American Shipping Company,

  Austro-Hungarian Lloyd Company, _see_ Austrian Lloyd Company.

  BABBITT, VICE CON. GEN. E.G., _reference to_,

  _Baltic_, the steamer,

  Barker, J. Ellis, _reference to his_ "Modern Germany,"

  Bates, W.W., _reference to his_, "American Marine,"

  Belgium, use of subsidies in,

  Bismarck's Memorial to the German Reichstag, _reference to_,

  Black Sea Navigation Company,

  Brazil, use of subventions in,

  _Britannia_, the steamer,

  Brown, James,

  Brown, Stewart,

  _California_, the steamer,

  Canada, granting of mail and steamship subsidies by,

  Cargo Ship Bill, the,

  Charleston and Havana line,

  _Chargeurs Réunis_,

  Chile, use of mail subsidies,

  China, use of subsidies in,

  Chinese Merchants' Steam Navigation Company,

  _City of New York_, the steamer,

  _City of Paris_, the steamer,

  "Clippers," American,

  Colbert, finance minister of France,

  Collins, Edward K.,

  Collins line, the,

  _Columbia_, the steamer,

  _Campagnie des Messagéries Maritimes_,

  _Compagnie Fraissant_,

  _Compagnie Générale Transatlantique_,

  Compañia Transatlantica Española, La,

  Cromwell, code of, _see_ Maritime Charter of England, Great,

  Cunard, Samuel,

  Cunard Company,

  _Curaçoa_, the steamer,

  DAWSON, GEN. WILLIAM, JR., _reference to_,

  Denmark, granting of postal subventions and "trade" subsidies by,

  Dominion line,

  "Dramatic line,"

  Dutch East Indian lines,


  East Asian line,

  England, history of the use of subsidies in,
    first navigation law of,
    Great Maritime Charter of,
    Cromwell's code for,
    competition between the United States and,
    testing of steam for navigation in,
    building of steamships,
    total of subsidies paid in,
    grants of,

  _Falcon_, the steamer,

  Farquhar, James M.,

  France, history of the use of subsidies in,
    the navigation laws of,
    the disappearance of the domestic mercantile marine of,
    commercial treaty between England and,
    the Merchant Marine Act of,
    organization of steamship companies in,
    granting of "shipping premiums" in,
    total cost of bounty system in,
    capacity of, for building steamships,
    grants of,

  _Franklin_, the steamer,

  Frye, William P.,

  GAFFNEY, T. ST. J., U.S. Consul,

  Gallinger, Jacob H.,

  _Georgia_, the steamer,

  German-Australian line,

  Germany, history of the use of subsidies in,
    first steps in domestic shipbuilding in,
    establishment of a subsidized mail service in,
    building of large steamships in,
    extraordinary growth of the merchant marine in,
    grants of,

  _Great Britain_, the steamer,

  _Great Western_, the steamer,

  Great Western Steamship Company,

  Green, John R., _reference to his_ "Short History of the English

  Greener, Gen. R.T., U.S. Con., _reference to_,

  Grosvenor, Charles H.,


  Hanna, Mark,

  Harris, Arnold,

  _Hermann_, the steamer,

  Hitchcock, Postmaster-General, _reference to_ Report of,

  Hoar, George Frisbie,

  Holland, maritime supremacy of,
    granting of subventions for carrying mails in,

  _Humboldt_, the steamer,

  Hungary, _see_ Austria-Hungary

  _Illinois_, the steamer,

  _Indiana_, the steamer,

  Inman, John,

  "Inman Line,"

  "International Mercantile Marine Company,"

  International Navigation Company, _see_ American Line

  Italian General Navigation Company,

  Italy, history of the use of subsidies in,
    construction, subsidies provided for in,
    mail subvention system of,
    increase of tonnage in,
    grants of,

  JAPAN, history of the use of subsidies in,

  Japan Mail Steamship Company, _see, Nippon Yusen Kaisha_, the

  Japan Year Book, _reference to_,

  Jwasaki Yataro, the Japanese merchant,


  Lindsay, W.H., _reference to his_ "History of Merchant Shipping,"
    _also his_, "Our Navigation Laws,"

  _Lloyd Brazileiro_, the,

  Lloyd Italiano line,

  Lloyd's Register, _reference to_,

  _Lusitania_, the steamer,

  Lynch, John,

  Lynch bounty bill,

  MACGREGOR, JOHN, _reference to his_, "Commercial Tariffs,"

  Mellvaine, Bowes,

  Mail Ship Bill, the,

  Maritime Charter of England, Great,

  Marvin, Winthrop L., _reference to his_ "American Merchant

  _Mauretania_, the steamer,

  Meeker, Royal, _reference to his_ "History of Ship Subsidies,"

  Merchant Marine Commission, the,

  Miller, Con. Gen. H.B., _reference to_,

  Mills, Edward,

  Mordecai, M.C.,

  Morgan, J. Pierpont,

  "Morgan Steamship Merger," _see_ "International Mercantile Marine

  NAVIGATION, Report of (U.S.) commissioner of, _reference to_,

  Navigation law, first English,

  New Orleans packet line,

  New York, Havre, and Bremen line,

  New York and Chagres line,

  _Nippon Yusen Kaisha_, the,

  North German Lloyd line,

  Norway, granting of subsidies for mail carriage by,

  O'BRIEN; THOMAS, U.S. Ambassador, _reference to_,

  Ocean Steam Navigation Company,

  _Ohio_, the steamer,

  _Olympic_, the steamer,

  _Oregon_, the steamer,

  _Pacific_, the steamer,

  Pacific Mail Steamship Company,

  Pacific Steam Navigation Company,

  _Panama_, the steamer,

  Parliamentary papers, _reference to_,

  _Pennsylvania_, the steamer,

  Portugal, granting of postal subventions and subsidies by,

  Postal Aid Law, the,

  Postal Ocean Steamship Company,

  Preble, George H., _reference to his_, "Chronological History of
    Steam Navigation,"

  _Princeton_, sloop-of-war, the,


  Ricardo, John Lewis, _reference to his_, "Anatomy of the Navigation

  Roach, John,

  Roberts, Marshall O.,

  Roosevelt, President,

  Root, Secretary,

  Royal Mail Steam Packet Company,

  _Royal William_, the steamer,

  Russia, history of the use of subsidies in,
    proposed granting of bounties in the form of loans,
    increase in the fleet of,
    grants of,

  Russian Volunteer Fleet,


  _St. Louis_, the steamer,

  _St. Paul_, the steamer,

  Sammons, Thomas, U.S. Con. Gen.,

  _Savannah_, the first steamer to cross the Atlantic,

  Shipbuilding, in the United States,
    in England,
    in France,
    in Germany,
    in Austria-Hungary,
    in Spain,
    in Russia,
    in Japan,
    in the United States,

  _Sirius_, the steamer,

  Sloo, A.G.,

  Skinner, Robert, U.S. Consul,

  Small, Consul General, _reference to_,

  Smith, U.S. Consul, _reference to_,

  Snodgrass, Con. Gen. John H., _reference to_,

  South America, use of subsidies in,

  Spain, history of the use of subsidies in,

  Spears, John R., _reference to his_ "Story of the American Merchant

  Subsidy, definition of term,
    various forms of,
    use of, in England,
    in Canada,
    in France,
    in Germany,
    in Holland and Belgium,
    in Austria-Hungary,
    in Italy,
    in Spain,
    in Portugal,
    in Denmark, Norway, and Sweden,
    in Russia,
    in Japan,
    in China,
    in South America,
    in the United States,
    summary of,

  Sweden, granting of subsidies for mail carriage by,


  _Tennessee_, the steamer,


  United States, competition in the overseas between England and the,
    history of the proposed system of ship subsidies in the,
    establishment of mail steamers in the,
    the "clippers" of the,
    revival of the steamship-subsidizing policy in the,
    condition of the merchant marine in the,
    bills in Congress relative to bounties in the,
    grants of the,
    ownership of ships in the,
    subsidized service of, in 1911,
    total tonnage of the,

  VAN TROMP, the Dutch admiral,

  Vera Cruz packet line,

  Viallatés, Achille, _reference to_,

  _Washington_, the steamer,

  Wells, David A., _reference to his_ "Our Merchant Marine,"

  Wheelwright, William,

  White Star Line,

  Wood, J.K., U.S. Consul, _reference to_,

*** End of this Doctrine Publishing Corporation Digital Book "Manual of Ship Subsidies" ***

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