Our Un-Mercantile Marine

I

MANY Americans have a commendable patriotic pride in our futile endeavor to build up a mercantile marine, but their enthusiasm is much greater than their knowledge of the practical difficulties. Our orators delight to refer to Old Glory in tremulous tones, to insist vigorously and vocipotently that we must have the largest fleet on the ocean, that our flag must fly in every harbor — ignoring entirely the question of cost and natural conditions. The poor taxpayers foot the bills, and, indirectly, that means that all of us contribute.

It is a common error to assume that ‘commerce follows the flag.’ The relative increase in our foreign commerce was greater for a few years before the war than it has been since. Prior to 1914, Russia was a great exporting nation — her shipping interest was comparatively insignificant. Argentina has large and increasing exports, all carried in foreign bottoms. Italy’s merchant fleet is much larger relatively than her exports. We find American automobiles in all parts of the civilized world. Ninety per cent of these were delivered by foreign vessels. Would a Japanese automobile buyer think it a privilege to have his automobile carried by American ships? All things being equal the foreign buyers naturally prefer to transport any merchandise that they buy in vessels of their own country. The most ardent advocates of an American mercantile marine have never claimed that we could operate vessels more economically than foreigners can. On an equal basis an English buyer will ship in English vessels his purchases made in the United States. We have cut, and in the future shall be obliged to cut again, freight and passenger rates. Our Government must make up the deficit in our marine operations. Other nations must meet our absorption of deficit, or have their ships driven from the seas.

It is difficult for anyone to determine exactly what our attempt to rehabilitate our mercantile marine has cost us, and it is very difficult to separate the legitimate expenses incurred during the war, when money was not an object, from the subsequent losses. Our gross expenditures were nearer two billion dollars than one billion, and we have lost many millions of dollars. Our annual loss this year, including depreciation, will be from $35,000,000 to $70,000,000, depending to quite an extent upon how depreciation is figured, when taken, and the number of vessels sold.

During the war, when it was proposed that the Government should take over and operate some of the large steel companies, the officers and stockholders of these companies remonstrated vigorously, and spent thousands of dollars in circulating printed statements— from which it was a fair inference that the operation of these companies was profitable to the stockholders. It is very seldom that any profitable private enterprise is recommended to the Government. If it were true that an American mercantile marine would yield a good return to the investor, there are many capitalists who could rcadily raise millions of dollars to buy and operate ships under our flag; but it is better to ‘let the Government do it.’

Thousands of patriotic Americans would be glad to invest in shipping companies if this investment were recommended by prominent bankers and those competent to manage, who would further evince their good faith by liberal subscriptions to the stock.

Any general restoration of our mercantile marine on a paying basis is impossible, and for the following reasons: American vessels cost more to build than do foreign vessels; wages of American officers and sailors are higher than are those paid by their competitors; American investors would expect a larger return on capital invested in shipping than the foreign companies are able to make, and the standard of living on American vessels is higher, and hence more expensive.

The oceans are naturally free, and heretofore the great maritime nations have attained importance, not through the aid of Government assistance, but because their sailors in years gone by were more hardy, more brave, or more adventurous than their competitors. At present supremacy is attained when vessels of any nation can be operated more ably and economically than those of their competitors, and hence serve the world more advantageously as common carriers.

The United States is handicapped more than any other nation in attempting to reëstablish a mercantile marine by the aid of assistance from the Government. Because of the superior opportunities offered its citizens on shore, there is to-day no incentive for capable, ambitious young Americans to go to sea, and few who are competently advised take the chance.

It has been suggested frequently that we attempt to compete for the carrying trade of the Pacific. The Japanese sailors are content to work for much less than our so-called American sailors are. The Japanese sailor is paid as well, proportionately, as the Japanese a-shore. On the other hand, few native-born Americans can be found among our Pacific sailors, because they find better opportunities on land. Are we ready to pay each American sailor on the Pacific a monthly bonus in a vain endeavor to resurrect our mercantile marine?

It may be a wise business policy for the Japanese to encourage the establishment of steamship companies, and to aid them by comparatively small subsidies, since it is evident that Japan is in a position to compete successfully for the carrying trade of the world with temporary assistance. We are not. The Japanese have no handicap in wages, no additional cost of ships, and no extra cost of operations, as we should have.

II

Our subsidy advocates are prone to refer to our former maritime supremacy, but during that period of supremacy America had the following distinct advantages: first, the cheapest and best lumber and spars in the world; second, the ablest and best ship-designers, builders, carpenters, sailmakers and riggers; third, an overseas carrying trade, which was usually profitable and yielded a large return on the capital invested. Fifty years ago it was not at all uncommon for an American clipper ship to pay for herself in one voyage. To-day, with the exception of iron considered as raw material, which is not relatively as important in the cost of a modern ship as wood was fifty years ago, we have no advantage over the foreigners. Besides this, there is — perhaps the most important factor of all — the fact that the Suez and Panama canals, the submarine cables, and the systematizing of freighting by modern methods have reduced the overseas carrying trade to a wellestablished and well-regulated business, which is keenly competed for, and which yields only what would be regarded in this country as a very small return on the capital invested.

It would be impossible to interest any successful and well-informed capitalist in an American steamship line for the transatlantic trade, because an American company could not pay a fair return on the capital invested.

Other qualities were demanded from sailors fifty years ago than those which are required to-day. The opportunity for exhibition of superiority to any appreciable degree is gone, because the qualities necessary now rest in mechanism and not in personnel. Captains cannot ‘carry on steam’ as they carried on sail. The speed of a modern steamship is largely beyond the control of the captain and crew; it is dependent upon mechanical appliances. Activity, adaptability, and all-around skill are not needed by seamen as they were in the days of the supremacy of the American sailing ship.

The Americans were not only more capable but they did more and better work, and the foreigners who sailed in American ships easily became Americanized in this respect. Robert Louis Stevenson, in The Wrecker, has very cleverly sketched Nares, the typical Yankee sailor; yet Nares would die of ennui on board a modern freighter. The glories of the American sailor are in the past, and can never be revived.

A story of a forgotten American clipper may be of interest. The little chronicled and almost forgotten achievement of the clipper ship Tradewind, in sailing from San Francisco to New York, in 1853, in seventy-five days, was a remarkable feat of American seamanship.

Think of the ceaseless vigilance for seventy-five days of the forgotten captain of the Tradewind. It is substantially true that not a mile of distance was lost during this famous passage. Few in this generation are capable of appreciating the alertness, the watchfulness, and the seamanship required to make this passage by sail. By day or by night, if the leech of a topgallant sail was a few inches slack, up went the halyards. If the foot of the sail did not set like a board, out went the sheets. The braces were watched and tended with every varying wind. It behooved the helmsman to steer straight, or take the consequences. Every yard of canvas that she could carry was pressed on the ship, and if forced to take in sail the moderating wind was anticipated, and sails were again set at the first opportunity offered. A sailor alone can fully understand how sail was carried on in squalls and gales. Someone knew and trusted each spar, backstay, lanyard and sheet, halyard and brace. Constant and capable care and supervision were the price of speed. How the Tradewind hugged the dark and dismal rocks of Diego Ramires, as she went around the Horn in a southerly gale, may never be known. The chances the captain took, as the wind veered to the eastward in skirting the barren shores of the extreme of the South American continent, will never be recorded. It is fair to assume that he pressed his ship and trusted to his spars and canvas. Not twenty per cent of the steamers afloat to-day could make this passage around Cape Horn in seventy-five days.

But there is now no use for the sailors of the old school; nor is there anything in the present sea life to attract the same class of men. It should be remembered that the seafarers were well paid in proportion to other vocations at that period. The wealthy and prominent men in many of the old New England seaboard towns were merchants and master mariners, and a love of the sea did not debar a young man from making a financial success.

To-day the competitive ocean trade offers no such allurements. Young Americans who have brains, dash, and ability can find much better opportunities to exercise these qualities upon land, and this is not true of citizens of other countries.

III

We can never achieve commercial importance as a maritime nation until we can build ships as cheaply, operate them at as low a cost, and be content with the same return on the capital invested as our foreign competitors receive. And this cannot come about while we have such prosperity and opportunities as at present exist in our fortunate country. Our home industries are supposed to be protected sufficiently to enable them to earn profits in our own country—never to such an extent as to place them in a position to compete in the open markets of the world. And that would be necessary with a subsidized mercantile marine.

It would be much cheaper than our present policy to transfer existing foreign steamships to some European nation and pay it a small bonus to sail under our flag, if we have an irresistible desire to see Old Glory again on the ocean. In political speeches, ‘Trade follows the flag’; but this is true in actual business experience only if we have cheaper and better commodities to sell.

The large amount of money that we pay foreigners for carrying our products is a matter of common comment; but the truth is not generally appreciated. These products really belong to the foreigners, and are practically sold f.o.b., point of shipment. If, for example, a merchant in Bremen buys ten thousand bales of cotton in Charleston, he will get his cotton to Bremen by what he regards as the cheapest and most acceptable route. If we concede that American vessels cannot carry freight across the Atlantic cheaper than their foreign competitors can, it is obvious that the Bremen buyer would prefer to ship his purchases by any vessel carrying the flag of his own country — unless we should grant a lower rate. It is beyond the province of any American seller to dictate in any way what company the foreign buyer shall employ to transport his own property. Even on an equal basis, if the former buyer happens to be interested in German steamers, naturally it will be for his own interest to favor his own company. When an Englishman buys grain on the Atlantic seaboard it is surely his privilege to have it transported in his own vessels. The foreign buyer is under no obligation whatever to ship his merchandise in American vessels.

Every State that is washed by lake or ocean ought to give liberal support to marine reserve vessels, which should be further assisted and supervised by the United States Government. There are thousands of active, well-educated, adventurous young Americans who have a natural love for the sea, and who would be glad to enlist in the naval marine if their services were properly recognized, and if they were as honorably regarded as they deserve.

We have still remaining some fine sailors in command of our coastwise and foreign steamships, who are as competent and eligible for the Naval Reserve as the members of the Royal Naval Reserve of England. We should encourage our young men to enlist in our navy, and we should pay sufficient wages to compensate them for the services rendered.

We should not attempt to delude the American people into the idea that they are really reviving American shipping. I am not attempting to urge the advantages or disadvantages of subsidizing a few steamers for naval purposes, but I wish to state, in the most positive manner, that we cannot rehabilitate by Government assistance an American mercantile marine worthy of the name.

There are many factors that militate against the profitable operations of an American mercantile marine. The carrying of passengers from many ports of Europe to South America and Australia is very remunerative. Thousands of laborers leave Europe each year for the Argentine. Many of them return regularly after the harvest season. They naturally patronize European in preference to American steamers. Latin South-Americans almost without exception prefer to travel on foreign steamers — particularly the wealthy classes, who seek Paris as a Mecca for artistic, educational, or pleasure purposes. Our people do not emigrate — they have no temptation to leave their great and prosperous country. This fact tends to reduce materially our revenue from steamers.

Our Eighteenth Amendment is not attractive to South Americans, who, like their ancestors for many centuries, have been accustomed to using light wines with their meals. The horrible depravity of having a glass of wine with dinner is well recognized by the virtuous Americans, but many of the foreigners are unregenerate. Comparatively few business men in South America have any business in the United States — many have in Europe.

Chile and Argentina sell large quantities of copper, nitrates, wheat, mutton, wool, hides, and flax to Great Britain and the Continent. This large quantity of heavy freight would, naturally, be carried in foreign bottoms. The English, German, French, and Italians would not be likely to patronize American steamers in preference to the vessels of their own country. It is usual to buy where you sell. A merchant in Buenos Aires, selling his produce in London, is likely to go there to see his customers. It is easy and reciprocal for him to buy whatever he needs in England — incidentally increasing the freight carried by English vessels. Our imports from important buying countries are relatively small, and foreigners are not likely to buy much where they can sell so little. Fortunately we are so favorably situated that we are not compelled to import our wheat, meat, food products, nor much of our raw materials.

Our present tariff is framed on the theory that duties are levied to equalize the cost of an article produced in the United States with the cost of the same article produced in Europe. Now assuming that our duties are equitably levied, please read one of our complete tariff-schedules and see how few articles we can hope to export profitably. It can hardly be expected that the generous foreign buyer will pay for an American article five to one hundred per cent more than the price for which he can purchase the same article in Europe — and sell some of his own products practically as part of the trade. Here again the natural business conditions favor the foreign steamers by increasing the quantity of the freight carried.

We should be grateful that our country is so independent of exports and imports. In order to reduce cost of goods for exports we must reduce wages and decrease the standard of living of our American workmen. Surely it is not desirable to increase export tonnage merely to pay for an unprofitable adventure in shipping.

We are greatly interested in the rehabilitation of Europe. We are sympathetic and our material assistance is frequently asked for and advocated; but our efforts to build up a mercantile marine at an annual sacrifice of many millions of dollars have injured the foreign steamship companies, and in some cases our competition has made their shipping operations unprofitable. Our futile efforts to compete for the open carrying trade of the world, in view of our great material resources, remind me of the covetous rich man in the Scriptures who wanted the widow’s one ewe Iamb.

The Germans are popular in South America. Their economy and efficiency are generally recognized. When Germany has been restored to normality, it is evident that her people will build and operate steamships, and make a handsome profit, while we are showing serious losses.

IV

My observations and illustrations shall not be all theoretical. I am the president of a company owning a factory in Belgium. We were shipping plate glass by foreign steamers in November 1923, from Antwerp to San Francisco, for eight dollars per ton. The present rate from Baltimore to San Francisco, by American steamers, is nineteen dollars per ton, after we have shipped from our Eastern factory to Baltimore by rail. Is this a practical manifestation of our competitive ability?

Shortly after the World War the largest window-glass importer on our Pacific Coast, influenced by the enthusiasm rife at that time, with commendable patriotism ordered that all the window-glass his company bought in Belgium should be shipped in American bottoms. After several shipments he was compelled to countermand these instructions, and all glass was shipped by foreign vessels. This was not due so much to lower freight rates as to the excessive breakage on glass. The crews of the Danish steamers were much more careful in loading and unloading, and, when the glass was discharged, it was found that there was a minimum breakage. The Danes valued their job. The Danish sailor was obliged by force of necessity to be careful, or his record suffered — possibly he was discharged, and he was well paid compared with the same class of employees in Denmark. Necessity is a great stimulator. The Danish sailor feels its urge; the American sailor does not. American sailors can usually find a job, due to a legitimate demand for their services, or the influence of the Seamen’s Union. If they cannot, and are able-bodied and ready to work, they can readily find on shore as remunerative a position as that of a sailor on an American vessel. Our sailors care little if half a cargo of glass is broken. It means nothing to them; and if the Government deficit is increased a few thousand dollars why should they worry! The Danish sailor realizes what a loss of profit means to his owners, and may mean to him. One reason why our so-called American seamen cannot compete with many foreign seamen is because they do not have to.

Now I am not unpatriotic, not pessimistic, not hopeless. I consider our mercantile marine from the point of view of a practical business man, who has traveled much, and had command of an American vessel in foreign waters for several years, and as one who has always been interested in our maritime affairs; and I have clear and decided views on this subject, which I present for what they may be worth.

V

Our Navy Department should be consulted, and we should own and operate whatever amount of tonnage it advises would be required to serve as a necessary adjunct to the navy in any emergency that could reasonably be contemplated, having in mind the sentiment and treaties that tend to limit the size of navies, and remembering that only once in one hundred and fifty years have we found it necessary to interfere in European affairs to the extent of sending our troops to Europe.

We need a strong, modern navy for our own protection, and every American has good reason to feel proud of the naval history of our country. I would not be adverse to a more intimate relationship between our navy and our mercantile marine. One of the most successful steamship managers that I know of is an ex-naval officer and an Annapolis graduate. We have lost the services of many competent officers who were in our navy during the late war, who should have been recognized and rewarded by good positions in our merchant steamers.

After providing for all steamers that are essential to our naval operations, I would employ them, and some of our remaining vessels, on a few of the great traveled routes between the United States and the more important foreign countries, where we are best able to compete and most likely to develop future trade. If the four fine steamers that we now have on the North Atlantic become popular and selfsupporting, it would seem to be advisable to increase the number of steamers on that route. It would be futile to attempt to operate regularly steamers to Spain, Italy, and Mediterranean ports. We should give up routes that have been proved very unprofitable. It may be desirable to operate a few steamers for what I might term advertising purposes.

I wish to emphasize that while I consider it desirable — nay, essential — to have a fine limited mercantile navy, gradually increased on lines that may prove profitable, it is foolish and futile to believe that we can compete successfully in the open carrying trade of the world. We have been carried away by sentiment, oratory, and desire, and have built many more vessels than were needed and wasted many millions of dollars. Let us recognize the situation.

Any large important business that is successful has grown gradually, aided by experience and competent management. Business does not spring, like Minerva from the head of Jupiter, fullarmed and equipped. The shipping business has been closely competitive, and the foreign shipowners have great advantages over American lines by reason of their competency, their experience, and their established connections and clientele of many years’ standing. Can we not ultimately compete? Try it, and report progress when made; but do not rush in without capable, experienced men, and some knowledge of competitive conditions; and do not build two ships where only one is needed. Could the United States compete with the Standard Oil Company, the United States Steel Company, or any other well-managed corporation by making an initial expenditure of two or three billion dollars and attempting to operate as our Shipping Board has been operated? The successful foreign steamship companies have keener competition than the Standard Oil Company has. Their development has been gradual, and their profits the result of hard work, energy, economy, efficiency, and enterprise — aided by the alertness that can be had only by the severe strain of close competition.

Such vessels as we do not need, and those which show us the greatest losses in operation, should be sold for what they are worth, or chartered to some Chinese steamship company on easy terms. Until final payment had been made the contracts for sale could provide that in time of war these vessels should be restored to us on short notice, by the payment of a small premium if we so desired.

Under our present consular regulations these vessels would be permitted to fly our flag and to retain our protection.¹ We could even insist on having American officers and engineers on these vessels until they were paid for, as was the case in many of the vessels of the Chinese Merchant Steamship Company fifty years ago.

In years gone by we had many native craft on the coast of China under the Stars and Stripes. The Chinese are good sailors — quiet, and amenable to discipline. These vessels could be operated as economically as any in the world, and far more cheaply than any European steamers. A ChineseAmerican Company, organized to operate our salable surplus stock of steamers, would pay good dividends. They could meet any competition, and be a safe, sound investment. To be sure they could not trade to an American port, unless we enacted special legislation, which would probably be opposed by the labor unions, but the seven seas would offer the field for their operations, and they should secure a large share of the business on the coast of China and in the Far East. Indeed we could advantageously open our own ports to these steamers for the life of the vessels we sell. I do not refer to the coast trade, which we have always protected, and I think wisely, as there are many advantages in this policy; but there is no good object in protecting our shipping to such an extent as to enable our vessels to carry rice from India to Cuba, or grain from Argentina to Liverpool.

The Chinese merchants are capable business men. Give them our flag for these steamers, and assist them in part with our capital, which would be a good investment. In addition it would be desirable, and I think feasible, to organize a Chinese-American Company that would save the United States from further losses. Thus we should assist a friendly nation, and have these vessels for a reserve supply of shipping for several years.

My suggestion to sell to the Chinese is because they are the most likely buyers; their mercantile marine is small; China has quite a large commerce, and the Chinese have decided advantages in operating. I believe that we could have sold many ships to a Chinese or an American-Chinese Company three years ago and saved many millions of dollars.