tional treasury to pay subventions of five, four, and two and a half dollars a gross ton per year to American buil: vessels employed in the foreign trade; second, an appropriation of money to pay retainers to volunteers, in order to encourage the existence of a naval volunteer force; and third, an appropriation of money to pay subventions for carrying the mails to foreign ports in this continent to South America and Africa, and to Asia and the Philippines.

It is a trite question to ask concerning the present condition of our foreign trade by sea, because ninety-two percent of it is carried in vessels owned and manned by foreign nations. And it is valuable, as a preliminary to the discussion of these chief features of the bill, to fix in mind two questions:-Are the measures in the bill sound in principle or calculated in practical operation to deprive foreign nations. of their ascendancy over and possession of the greater part of American commerce in the foreign trade? The second question is, will these measures restore to the United States control over its own commerce and enable it to protect itself from the usurpations of foreign nations? In monetary value this loss of control and the usurpations of foreign nations has cost the United States during the past thirty years the sum of $3,500,000,000, and we now pay each day to foreign nations about $500,000 for our shipping.

Turning here to the first chief provision of the bill in order, a naval volunteer enrollment. Two matters must be considered in any determination of the necessity for

such an enrolled volunteer force. One is that a retainer would have little influence in increasing the number of practical sea-men for the emergency, of war. The other is that an effective law for the protection of American shipping in the foreign trade would exclude the necessity for such a bonus, for a healthy demand for seamen would be thus stimulated by an increased commerce. An increased commerce engenders the sea-habit, and an abundance of sailors of good fighting quality are available in time of war. This fact was well evidenced by the wonderful American successes on the ocean in the war of 1812. But the navigation laws in force up to this time were protective laws.

The desideratum is to stimulate. the demand from the outside for American vessels and sailors.

The second chief provision of the bill is a tonnage subvention.

Broadly speaking, upon general principles any business that must be given a bounty to sustain it is a bad business venture. This is true of a tonnage bounty for American vessels.

The practical operation of a tonnage bounty would be as follows:Every owner of an American vessel participating in the foreign trade (and they are few), or deep. sea fisheries, would be given by the government a bounty amounting to from two to fifty thousand dollars, more or less, each, per year, according to the size or tonnage of the vessel. And how would such a method work! The result would be that the owner of large vessels would possess an immense advantage over the owners of small ones. because a bounty would furnish

ships of high tonnage a large capital, while these same ships have a larger earning capacity. The reason that a big ship receives a large tonnage bounty is obvious; the advantage in earning capacity is explained in this way. The greater the carrying capacity of a vessel, the less proportionately it costs to transport its freight. While a ship with a small cargo capacity may earn a slight profit, provided it carries enough freight to pay its expenses, a ship carrying a large cargo earns a profit commensurate with the excess of its carrying capacity over the amount of freight sufficient to pay its operating expenses. In vessels of from eight to fifteen thousand tons, this excess is very large and represents the ship's earning capacity.

By this method, the government would appear to be in the relation of a silent and interested partner with the shipping companies operating large ships, and the latter would grow richer and stronger, while the smaller companies must take the business which remains and be worsted in an unequal commercial struggle. As has been set forth the large vessels gain the ascendancy, not only on account of their large tonnage bounty, but by reason of their greater profits. Consequently, they would be able to make cheaper freight rates, and control the shipping of the nation. An illustration of big ships eligible to receive tonnage bounties are four twenty thousand ton steamships of the Great Northern Railroad Company on the Pacific, each of which would receive about $100,000. Fifteen big steamships of the Standard Oil Company also would receive

large bounties.

These steamships would thus be able to control largely the shipping at their port of entry. It is significant that the President of the Great Northern Railroad Company, Mr. J. J. Hill, does not favor subsidies on principle or as a business proposition, a fact to which I will refer later in this article.

On the other side, it may be contended that a tonnage bounty would be of much needed aid to vessels of small tonnage, employed in the foreign trade, and enable them to compete more easily with foreign ships of the same class. This is fair reasoning, so far as it goes. But it must be understood that capital invested in a foreign built ship, particularly in England, is fully twenty-five percent less than in an American vessel of like tonnage, and the cost of manning is also less. Hence a bounty for American vessels of small tonnage would only about offset the advantage of a smaller investment possessed by the foreign ship. But whence is the gain to the little American vessel, when the big American vessel controls the shipping rates!

Partnership on the part of the government with any private business is undemocratic, and tends to create a monopoly for a few companies or individuals, which is unjust to the other companies or individuals attempting to win success in the same line of commerce. The provision in this section of the bill is is "an article of co-partnership" with owners of big ships to the disadvantage of owners of small ones.

The third chief provision, embodied in section five of this bill, provides for subventions for the carrying of mails on American

steamships. Contracts for this purpose with any American Steamship Company are limited to a term not less than five nor more than ten years; whereas, the payment of tonnage bounties, as provided under the section previously discussed, may be paid indefinitely.

The United States now pays mail subventions to six lines, amounting to $1,515,000.00 per year. Thirteen new mail subventions would increase the amount paid for carrying foreign mails to about $4,500,000 yearly. Tonnage bounties, added to this sum, make a possible annual expenditure of about $7,000,000, which more than equals the subsidies and bounties, aggregating $6,636,612, now paid by the English government yearly. This latter sum, paid by England, includes the new Cunard subsidy of one million and one hundred thousand dollars. which was England's method of meeting any possible advantage lent to American shipping by J. P. Morgan & Company's shipping trust combine, formed a few years ago.

This is a special example of the action other nations or England herself again may take to meet any extension of a subvention policy on the part of the United States government. Any possibility of such commercial warfare may now be avoided by enacting laws for the protection of American commerce, which is the needful policy.

A condition, however, confronts us, not a theory. New steamship lines must be established to serve our increasing foreign commerce. The fact is that the United States is losing a whole lot of trade with Argentina and Brazil and South Af

rica, because of a lack of steamship service direct to the United States. Nearly all the freight to and from Argentina and Brazil and this country is first carried to Europe; to England, France or Italy, and thence to its destination.

Direct steamship lines certainly are warranted by the present volume of trade. For note that the total export and import trade of Argentina with the United States in 1904 was $34,687,000, and the former country is growing rapidly in population and in wealth. From South Africa the export and import trade is now upwards of $30,000,000 yearly; and this freight was almost entirely conveyed by foreign vessels.

now

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The condition of American carrying trade in the Pacific ocean, especially in the orient, is no better than in the Atlantic. Diplomatists and travellers, journeying in the far East, hunt almost in vain for the American flag on vessels now doing the carrying trade there. To enable the United States to compete with those foreign vessels, controlling our trade with China and Japan, some measure must be instituted by Congress to gain back that carrying trade. It will not return of itself. It is proposed by this bill to administer the stimulant of expensive mail subventions and tonnage bounties to the present feeble body of American Shipping as an antidote. But such a stimulant can be but temporary and intermittent in effect. It could never control the situation for American ships. Why? Because the remedy proposed in this bill does not regulate the movement of foreign ships in the American foreign trade.

This is the thing that must be done.

And it can be done by exercise of the sovereign power, inherent in our government, on the ground of national duty.

This sovereign power includes the right to regulate conditions in the interest of public welfare and private justice, and to thwart usurpation of trade-rights on the part of great corporations abroad, as well as at home.

Discussing generally this bill, it ought not be necessary to reiterate, that the keynote to any and all objections to a subsidy and subvention bill is that none of its provisions attempts really to protect American Shipping in the foreign trade.

And for nearly fifty years, the industry of shipping has been the only one exposed directly to foreign competition.

What would happen if there were no tariff laws to protect certain American industries from the competition of aggressive foreign nations? Our American industries would be decimated, or many liquidated in bankruptcy, because of the cheaper labor of Europe and the Orient.

What would happen if there were no coast-wise laws to restrict to American owned vessels the sea commerce between American ports? Indeed, let us suppose that, instead of enacting coast-wise laws, Congress had passed a law to give subventions to American vessels and certain stated fees to American sailors and officers engaged in the coast-wise trade, as a means to stimulate and protect commerce between American cities and states from the aggressions of foreign ship-owners.

Such means as a protection would have been ineffective, absolutely.

And, it is evident, that the proposed bill would be equally ineffective as a protection in any true. sense against the aggression or greed of foreign ships.

The controlling thought in enacting our coast-wise laws was to protect American rights and to eliminate unjust competition; and the method of subventions does not accomplish this end.

Foreign ships have no right to come to the United States and engage in domestic commerce by sea, and the coast-wise laws stopped it by postive interdict.

It is contended, therefore, that the same considerations, which apply to the regulation of the coastwise commerce of the United States, apply equally well in kind to our foreign commerce. The same considerations, however, do not apply in extent, because the right of foreign nations to use their own ships in the direct trade with the United States must be considered. And it must be conceded that the rights of two nations engaging in direct trade are mutual.

Certainly, a subvention system cannot be justly claimed to protect American commerce, as a whole, and everyone who understands what abundant fruitage this purely artificial system would yield to a few American companies, has just cause to frown upon the further extension of a subvention policy.

A potent objection to a subsidy policy is easily advanced on moral grounds. Fifty years ago, a limited subsidy policy was the opportunity for bribery and favoritism.

Those who would pay for it, and

the favorites of politicians, invariably received the governmental subsidy.

This was a scandal and a festering sore on the body poli.ic.

Have we any guaranty that history will not repeat itself, in the year 1907, in the face of avoidable temptation!

A subsidy policy, moreover, stimulates the evil in a great present day problem, viz:, how to assert and protect the rights of all citizens, equally, in the face of corporate power and monopolist greed. Such a policy, once adopted, would concentrate more industrial wealth and political power in the hands of the few.

It is precipitous, to say the least, to throw American Shipping into the whirlpool of a subsidy system. A less dangerous position should be chosen upon calmer waters, and protection be given our shipping by shutting out usurpers by positive legislative enactment.

In order to promote the upbuilding of American shipping, the United States must have in view one object, viz., to carry a fair proportion of its own exports and imports in American vessels. It has never carried all of its imports and exports, even under its most exclusive policy, and never will, inasmuch as other foreign nations have reciprocal trade rights and facilities.

How, then, may the desired object be accomplished? It is answered by the application of a sys

tem which is correct in principle, democratic in method, and just and effective in operation.

The principle is one of reasonable national self-interest. The method is a regulation of shipping by navigation laws adaptable to present conditions and to the mutual rights of the United States and of each nation with which it has trade relations.

Whether such navigation laws shall take the form of a preferential duty, or otherwise, both the commercial and ethical conditions of modern life must determine.

A discriminating duty law, which favored the shipping interests of the United States by a ten percent rebate of tariff rates on goods shipped from all countries in American vessels, has the sanction of successful

operation. Ethical conditions, however, have changed, and the United States and the majority of nations, instead of feelings of hostility, now entertain the interests of peace and brotherhood one with another. And this changed attitude calls for a modification of measures.

An illustration will make clear the wide difference between a system of subventions and a preferential duty law, and the illustration, tho a crude one, is taken from the stenographic reports of the Merchant chant Marine Commission. The chairman, Senator Gallinger of New Hampshire, asked a certain witness. at a hearing a Portland, Oregon, the following question: "Is there any difference, in fact, between taking an amount of money out of the Treasury and paying it to the shipping interests, or halting the money before it reaches the Treasury and rebating it." Answer: "There