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CHAPTER XXI.

THE OCEAN POST AND SHIP SUBSIDIES, BOUNTIES, AND GRA

TUITIES.

Ocean Mail Service. In considering the general subject of subsidies, we should recognize three distinct classes of vessels that have been made the objects of State assistance in Europe. These classes are known as mail and passenger steamers under subsidy contracts; passenger and freight steamers under naval subvention contracts; and cargo carriers, of sail or steam, under bounty laws. Up to the present time no nation aids its shipping in more than two of these ways. Only Great Britain pays naval subvention besides mail subsidy. Nearly all the other Governments pay mail subsidies, and several pay bounties. A few substitute certain gratuities for regular bounties. For instance, Russia and Austria-Hungary pay the Suez Canal dues for their vessels using it.

That subsidies and bounties are protective in their nature, there can be no doubt. They are so intended, and it depends on circumstances to what extent protection may be realized. The theory of their action is, not to foster employment, but to supplement freightage, and to pay for service offered or performed.

It is a strange inconsistency of our Government, to continue to make and to maintain reciprocity conventions with nations resorting to protection by Treasury aid. The theory of reciprocity is non-protection. We observe our agreement for nonprotection by duties, but allow all nations to violate their agreements, and to protect as they please, so they do it with money. But we do not, and cannot follow this course, and have no reason to keep the agreements that others break in spirit, if not in word.

England, as the "mother of subsidy," has made long and constant use of it. This is not to say, however, that subsidy is the principal ship protection of Great Britain. It has been said that the British found subsidy "an amazing stimulant for navigation and commerce." But it was the steamship and THE OCEAN POST that should have this credit. Of these quickening forces the British had a monopoly for several years in some trades they hold it still. Their general navigation has never been aided directly by public money. We have already explained the various protections applied in support of the British general marine. England is rich, but she could not afford financial aid — amounting to hundreds of millions annually — even if there were need for it.

The British Ocean Post. The story of Britain's experience with subsidy what she used it for and the results - has often been perverted. Indeed, the more reckless advocates of its general use in our country have not scrupled to assert that the magnitude and dominance of the British marine is due entirely to national gifts of money. Steam propulsion to sea-going vessels having been applied successfully in England by 1837, the immediate object of subsidy was the establishment of an OCEAN POST by steamship lines. Having a larger commerce and greater need for these than any other nation, the British were first to act, and to launch out their gold. They were leading the world in manufactures, as well as commerce and navigation. Markets everywhere were necessary to progress. To maintain ascendency, they must lead in all expedients for increasing their business. England had become a first-class power (1) through the operation of her "navigation laws" and the work of her marine; (2) owing to successful wars and the prowess of her navy; (3) by means of her tariff system and the development of her manufacturing power; (4) through the extension of her colonial system, and control of markets. She could cut no figure in the world, and remain in her insular home. Her laws built up industries in special lines, made the United Kingdom the "work-shop of the world," and offered all men wishing to buy or sell the great

est market on the globe. to immense proportions

That her marine flourished and grew with 43 colonies of her own

was

not singular. There were ten merchants to employ British ships where one stood by to engage tonnage of a different flag. France in vain attempted emulation. The German States had once been rivals. The United States, crippled in ship protection, still struggled for second place at sea. The British Government therefore felt it must reach out and at all points make supremacy sure. All eyes turned wistfully to steam navigation, not only for the navy, but the marine - particularly the postal service.

A Wide-Awake Mercantile Interest. British merchants pointed out to the Government the advantage to them of lessening the time of communication and of travel between their own and other countries; of providing regular, rapid, reliable British steam transit to and from every place where Englishmen could introduce or establish commerce; and that governmental agency alone could effect these essential services: the certain control of commerce, the more advantageous rule of Colonies, and the assumption of the political destinies of many inferior nations through the medium of superior postal facilities. It was easy for an imperial statesman to encourage the commerce on which the wealth, power, and glory of his nation depended. The general marine needed no "aid," nor did it ever ask for any protection from the day the different nations entered into conventions for "Maritime reciprocity." The mail and passenger service, however, would not be undertaken at a loss. There were routes on which naval steamers plied with mails at considerable public Why not subsidize private ships? Manifestly, the cost to the Treasury, deducting postage receipts, would be greatly under the mark of naval ships.

cost.

;

In the course of twenty years mail subsidy contracts were made as follows: Between Liverpool and the Isle of Man in 1833 London and Rotterdam in 1834; Falmouth and Gibraltar, 1837; Liverpool and Boston and New York, 1839; Aberdeen, Shetland and Orkneys, Malta, Alexandria, Suez, East Indies and China, 1840; the Panama and Valparaiso line, 1845; Holyhead and Kingston, 1848; the Channel Islands, West Coast of Africa and Cape of Good Hope, 1852; Calcutta via the Cape, Plymouth, Sydney, and New-South Wales, 1852. Since then the system has been extended to new routes from time to time.

French and Other Postal Lines. France soon followed Great Britain in establishing mail lines; in 1845-47 the United States did so. Afterward, other nations felt obliged to do likewise, and the subsidized ocean post became general; Great Britain keeping up more lines than all her rivals together. This postal development aided much to introduce steam navigation, particularly as it conduced to essential improvements in hull and machinery; but success for its original purpose does not necessarily warrant the use of subsidy for a very different object- the increase and support of a general or freighting marine. England has never so used it. Subsidy paid to mail steamers might be fairly called "compensation," for there is a public service, and a return in part, at least, of the money expended. British postal receipts have averaged half the subsidy. In the general or freighting marine there can be no such return of money. The only excuse given for subsidizing the foreigngoing marine of the United States is a pretense that "retaliation" would follow regulations of trade. We have what is worse than retaliation now all sorts of protections to contend against, with no chance whatever, under present policy, of regaining our lost ground. Foreign nations may be expected to antagonize any system of encouragement that shall cut down their present participation in our carrying trade, though they have no justification. But they have no power to defeat our efforts.

British Naval Subvention. This sort of protection, like that of subsidy, is limited to a certain number of vessels of a particular class suitable for cruisers or the transport service in time of war. The subvention is paid annually as for an option, and the vessels are subject to service when called for, in which case they are bought or chartered under provisions of law. The subvention fleet is under control of the Admiralty, while the subsidy fleet serves the Post-Office Department, but is also subject to Government call in emergencies. Subventioned vessels may be requisitioned for mail service, under provisions of contract. They number from ten to fifteen, and their scheme seems to be the encouragement of a specially able and useful class of ship, which might not otherwise be built. Their business is passengers and freight; and they all run in our trans-Atlantic

trade. The competition of this class of vessels, protected as it is by payments of money, may not violate the letter of our "Reciprocity Convention," but it does most certainly violate the spirit and object of it, and should not be tolerated, as it is. If the case were reversed, we would quickly hear from the other parties.

First Protest of Non-protection. After most nations had settled down to non-protection of navigation, it was 1869 before any country considered measures for shipping rehabilitation. The first to do so was the United States. The occasion was the great declension of our carriage in the foreign trade, then charged mainly to the loss of tonnage and of business by the Civil War. Legislative encouragement sound shipping protection was indicated. Mistaking the causes of our adversity, a bounty system-on building and owning-was proposed by a special committee of the House, the main idea being to follow England in the condemnation of wooden vessels and the substitution of iron, at the expense of the Treasury. Congress rejected the scheme. It was shown, then, that the true remedy would be the resumption of our early policy of discriminating duties.

Nimmo's Report on Maritime Reciprocity. On the 18th of July, 1870, Mr. Geo. S. Boutwell, Secretary of the Treasury, directed the Register to investigate and report from his Bureau the condition of our foreign commerce and the practical workings of maritime reciprocity. The task was undertaken by Joseph Nimmo, Jr., Chief of Tonnage Division. January 23d, 1871, a resolution of the House called for this report, which was transmitted, referred to the Committee of Ways and Means and printed. Nothing came of it. The heart of the shipping interest had been set upon "bounty," and a special committee had charge of the matter. Mr. Blaine was Speaker. It would seem, at first sight, that the Administration might have been opposed to the annulment of our reciprocity conventions at that juncture, the Alabama claims giving trouble enough, — but this was not so. The subject never came before the Cabinet.2

1 See Ex. Doc. No. 76, 41st Cong. 3d Session.

This statement is upon the authority of Ex-Secretary Boutwell.

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