This was a very rosy view of the situation, the same hopeful view presented by the subsidy advocates of to-day. New ships are easily built upon paper, and it is easy to require shipbuilders to expend millions of money in the same way. But what have been the results? The following is a list of the eleven lines contracted with by John Wanamaker in 1892:

Three of the vaunted routes-San Francisco to Panama, San Francisco to Hongkong, and New York to Rio-went out of business in less than a year and were discontinued. The millions that these contractors were to expend did not materialize, nor were any new contracts made during that year. As to the eight remaining lines, we are not without information as to their value to the Government. Postmaster-General Bissell, in his report for 1893, said:

I am unable to ascertain that any positive advantages have accrued from either a mail or a commercial point of view by reason of the contracts thus far placed in operation by the act of March 3, 1891.

I believe the ocean mail service contract routes on which service is now being actually performed were in existence and were having performed on them the same service before the change in compensation took place, and it is probable that had the Department not executed contracts the steamship companies would still have found it desirable to continue their operation as at present. The gains in the expedition of the mails have not been material, and the advantages to be derived from the Government's control of the ships, other than first-class ships, do not seem to be sufficient to outweigh the additional cost involved and which becomes directly chargeable to the revenues of the PostOffice Department.

The increased cost by reason of these contracts for the conveyance of foreign mails from 1893 to 1896, both inclusive, was estimated by the Department to be $1,250,404.

Mr. Payne, Postmaster-General, in his report for 1902, stated that the contract for ocean mail service between New York and La Guaira expired on February 28, 1902, and was replaced by two contracts, one for route No. 36, from New York to Puerto Cabello, Venezuela, once every two weeks, in vessels of the third class, and the other route No. 37, from New York to Maracaibo, Venezuela, once every two weeks, in vessels of the fourth class; the new contracts being for a period of ten years from March 1, 1902.

Mr. Wynne, Postmaster-General, in his report for 1904, stated that the contracts previously executed continued in force, there being seven routes, with an annual expenditure of $1,475,138.

It will thus be seen that during the fifteen years these seven contracts have been in force $22,127,070 have been expended, or about $8,000,000 more than Mr. Wanamaker estimated that the contractors would be required to put into the service.

The route Galveston to La Guaira has been abandoned, and we have now left the following ocean mail service: Routes Nos. 36 and 37 to Puerto Cabello and Maracaibo; route No. 57; New York to Southampton; route No. 69, New York to Tuxpan; route No. 70, New York to Habana; route No. 74, Boston and Philadelphia to Port Antonio; route No. 75, San Francisco to Australia, and route No. 76, San Francisco to Tahiti, the latter being the only additional route of late years."

The subsidy of $4 a mile to route No. 57, New York to Southampton, 53 trips of 3,641 miles each, or 192,972 statute miles, is a pure gratuity of $771,892 per annum, or $9,262,604 for the twelve years of the contract's existence up to October of this year. No new ships have been built, nor can the line which carries the contract compete in average rapidity of sailing with other ships which would carry the mails consigned to this subsidized company at a much lower rate.

Mr. N. M. Brooks, superintendent of the division of foreign mails, in his report to the Postmaster-General in 1906, makes a comparison of the cost of route No. 57, New York to Southampton, at the subsidized rate of $4 a mile, with what the rate would have been on 449,194 pounds of letters and post cards and 2,397,901 pounds of other articles, sea and inland postage rates, and makes a difference in favor of the subsidized rate on route No. 57, the only route in which this difference is favorable to the subsidy, of $147,904. Mr. Brooks fails to make the same comparison with the 44 cent per pound rate which the Department could obtain from faster ships were the American-line contract out of the way. The comparison he makes is a $4 a mile flat subsidy, with $1.60 per pound rate, the full sea and inland postage rate, and not a comparison with the 44 cents per pound rate which the fastest ships in the world would carry the same mail for. A comparison upon this basis would reverse the Department's figures and show a large balance against the Government.

Notwithstanding the fact that for many years we have had subsidized mail lines running to Mexico, the West Indies, and Central and South America, the balance of trade with these countries has been all the time largely against us. This is true individually and in the aggregate, in spite of the fact that our relations have become more intimate with Mexico on account of greatly improved railway connections, and that as a result of our treaty with Cuba we have special trade advantages with that part of the West Indies.

Until the friends of mail subsidies can show us better results in the way of increase in commerce and growth of our merchant marine as the product of such legislation, they must excuse us for not being willing to accept their glowing statement as to what the future may hold in store for us.

WHY AMERICAN SHIPS COST MORE.

Having briefly presented some of the objections to the pending bill, we wish in a few words to answer one of the stock arguments for the necessity of this kind of legislation. All advocates of any sort of subsidy to shipping revert to the fact that there are not enough vessels flying the American flag in over-sea trade to carry our commerce, which is, unfortunately, true. In accounting for this condition one of their pet theories is that it costs more to build ships in American

yards than it does in foreign. If this is true, why? In the first place it is not necessarily a fact. It is well established that on the Great Lakes ships are built as cheaply as anywhere in the world. We produce more of the material which enters into the construction of ships than any other country. Our inventive genius has brought to our aid the best machinery and tools known to the shipbuilding art and our workmen are not excelled by any people on earth. Then why should it cost more to build ships at home than abroad? There need be but two answers to this question. One is that American capital finds more profitable employment on shore than in maritime pursuits. The result of this is that the demand for ships at present prices is not great enough to keep our yards busy. The policy of subsidy advocates is to hire men to engage in what would otherwise be an unprofitable business. To this the American people righteously object.

The other answer is that by virtue of the unjust protection given to the producers of materials which enter into the building of ships the trust and combines are enabled to sell and do sell their products in foreign lands at prices below those charged to domestic purchasers. That this is true has been long and well established. Though it has been denounced as an outrage by some of the strongest protectionists and even advocates of ship subsidy, no effort has been made by those in authority to change the conditions.

OTHER PRODUCTS COMPETE IN FOREIGN MARKETS.

It is worthy of note that notwithstanding these unfavorable conditions our manufacturers of other steel and iron products are able to compete successfully in foreign markets with those of any other country. If we can pay ocean freight and sell steam engines, steel bridges, sewing machines, and many other articles to foreign purchases, why can not we build ships? If we can not, then there never was a better time than now to return to the free-ship policy, under which every other nation with a merchant marine has built it up. Under our antiquated navigation laws, an American citizen can not invest his money in a foreign-built ship and sail her under the American flag. This restrictive policy has driven millions of dollars of our money to find investment in shipping under foreign flags. It is estimated that there are not less than 200,000 tons engaged in foreign commerce under foreign flags owned in this country and expatriated by these repressive laws. And yet they prate about the absence of the American flag on the high seas and in the ports of the world. The only remedy offered by the subsidy grabbers to restore our flag to the seas is to tax all the people in every vocation in life to give to shipbuilders and shipowners bounties sufficient to enable them to more successfully prosecute their private business enterprises and overcome the evil effects of hostile legislation. If the conditions in this country are such that it does not pay to build and operate ships without hiring men to do so by direct tax upon all other industries and interests, then either change the condition or let some one else do the business.

SUBSIDY MUST BE PERPETUAL.

Is any man so simple as to believe that when we inaugurate the policy of giving subsidies they can be withdrawn without a col

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lapse of the subsidized interests? It has been the history of every such undertaking that when the bounty is stopped the ship ceases to run. The fate of the great Collins Line is a striking example of this. Commencing about 1850, this line consisting of a fleet of the finest ships then afloat, received a subsidy of $850,000 a year for several years, and as soon as this was withdrawn the line went to pieces.

HOW SHALL WE CREATE A MERCHANT MARINE?

When this bill shall have met a deserved death at the hands of the representatives of the people it is to be hoped that legislation will be had that will deal with conditions now paralyzing our merchant marine, and not attempt to pay avoidable losses in a naturally profitable business out of the Public Treasury. Divorce shipowning from the legislative union with shipbuilding. Let the American buy his ship where he will, and give him the same right to his country's flag for this property as for any other property he may own. The shipbuilders will still have the complete monopoly in building the ships used in the coastwise trade. It may be that at first he will go to a foreign market for his ships, but let this natural right be enjoyed under conditions that permit real trade by America with the nations of the earth; trade that means buying as well as selling. Let the tariff bars be put down, so that commerce is no longer shackled and American ships can have an incoming as well as outgoing cargo, and the marine will so grow and expand that shipbuilders, freed from extortion in prices of material used in construction, can specialize, and the shipyards of America will dominate the shipbuilding industry as of old. What idle folly to put the shipowner in an artificial market of prices for all he must buy, hamper his carrying trade by a wall of exclusion against all imports, and then turn him loose for what little trade is left to the world's competition on the high seas. How long will the selfish interests of subsidized manufacturers strangle the calling of a race naturally bred to the sea? The whole case is well stated in the following extract from an editorial of the Washington Herald of January 25, which we submit to the consideration of the real friends of an American merchant marine:

Our foreign commerce would be greatly encouraged by the removal of obstructive tariffs, and there would be hundreds of American steamers engaged in the carrying trade if only American citizens were permitted to buy foreignbuilt vessels and fly the Stars and Stripes over them. What objection to this alternative method is there, save only that it flies in the face, not of sound economic theory and actual commercial experience, but of the stand-pat doctrine of protection to American industry?

We forbid the flying of an American flag over any but home-built craft; we impose heavy and almost prohibitive tariffs upon the materials used in ship construction; we make it possible for the steel trust to sell abroad at lower prices than at home and to exact monopoly prices from home consumers; we restrict commerce by tariffs intended to prevent foreigners from selling to us; we refuse to admit to our markets even the commodities our colonial subjects have to sell, and then we propose to subsidize lines of communication to the colonies and to the countries against which we have raised the almost impassable barriers of the Dingley tariff! And Secretary Root tells us, with creditable frankness, that we do all this because the protective tariff makes it impossible to do otherwise!

That is the nub of the whole matter. The same influences that have maintained the high-tariff policy are behind the ship-subsidy scheme; the same selfish interests are promoting it, and the saddest part of it is that patriotic

and high-minded men are convinced that its promotion is in the public interest and will redound to national glory. We are tangled up in the meshes of the protective policy, they say, and, instead of getting out, we are going to tangle ourselves up still more. And so we find a President who would limit swollen fortunes committed to a project which, if it accomplishes anything, will develop more swollen fortunes, advocating state aid to steamship lines as a part of our commercial system, and using his great influence to bring about an artificial policy of Government exploitation of foreign commerce, in order to avert the dire necessity of revising the tariff in conformity with the natural laws of trade.

If we would accomplish real and permanent good, let us repeal some and modify other existing laws, and if need be return to the policy of discriminating duties which was so eminently successful in the early life of the Republic. Above all things let us get away from the idea of subsidies and quit encouraging men to believe that they can not do anything without Government aid and teach them lessons of self-reliance.

In the consideration of this very question in 1816, Daniel Webster said:

How, sir, do shipowners and navigators accomplish this? How is it that they are able to meet and in some measure to overcome universal competition? Not, sir, by protection and bounties, but by unwearied exertion, by extreme economy, by unshaken perseverance, by that manly and resolute spirit which relies on itself to protect itself.

These wise, strong words of one of America's greatest statesmen may not commend themselves to the greedy spirit of this age of paternalism, but they will meet a ready response and a hearty approval in the minds of the great masses of the people who bear the burdens of Government.

THOS. SPIGHT.

J. A. GOULDEN.
H. L. MAYNARD.
SWAGAR SHERLEY.
G. B. PATTERSON.

APPENDIX.

Report of the president to annual convention of American Federation of Labor on the ship-subsidy bill, November, 1906.

SHIP SUBSIDY-COMPULSORY NAVAL SERVICE.

With the legislative committee and the representative of the Seamen's Union, Mr. Andrew Furuseth, I appeared before the House Committee on Merchant Marine and Fisheries on several occasions, conveying the Federation's protest against the passage of the so-called ship-subsidy bill, particularly upon the ground that it contained provisions which practically made conscription (compulsory naval service of seamen) a condition precedent to their employment on privately owned vessels.

It may be necessary here to call attention to the fact that the advocates of the bill questioned the accuracy of our contention on this latter point and asserted that the naval service required is of a voluntary character.

It is true that the language employed in the bill gives the superficial appearance that such service, if undertaken, would be voluntary, but upon an examination of the language and its practical application there is no escape from the conclusion that it means, and is intended to mean, compulsory naval service in