traveling merchants must not be lost sight of, and the comfort of the cabin works advantageous financial results. This must be remembered in the coming competition of the Siberian railroad. As proved by statistics, long delay between sailings works most disastrously to the postal service, especially in the carrying of first-class mail matter. Letters, whether of a private or commercial nature, are too important to wait four weeks for transmission. The consequence is that German firms in eastern Asia use the French and English postal service because these provide quicker and more regular service than the German mail has hitherto been able to furnish. If Germany wishes to hold its place creditably in the Asiatic postal service, it must establish regular fortnightly sailings.

The following table will show the time for letters to pass between Berlin and Hongkong, Shanghai and Yokohama, by the different routes, through the Suez Canal or via America, as well as the benefit to be derived from the adoption of the proposed law:

From this table it will be seen that passage to Japan via America is shorter; but it is not to be recommended, because the route via Vancouver only offers a sailing at intervals of three or four weeks, while the connections via San Francisco and Tacoma are quite irregular. The above table may lately have been changed without our being advised.

It is evident that the Suez route to Japan is the best, and it is proved by the statistics furnished in May, 1896, which show that 8,110 kilograms of postal packages were sent by this route, while only 3,750 kilograms were forwarded through America.

The proposed increase of our Government mail service would also be of assistance to the German navy in eastern waters. The principal maritime nations now provide that their large merchant steamships can be employed as auxiliary cruisers for war purposes, and the German navy needs similar additions. The new transoceanic steamships proposed to be built under the subsidy law will be available for this purpose. The existing contract would not meet this necessity. It is for the interest of national defense that this contract be revised. The greater the speed attainable by the Government ocean mail service the more useful would it be in the event of war.

In consideration of all these arguments the North German Lloyd Company has declared itself ready, on consideration of a renewal of the fifteen years' contract, to change its monthly sailings to Chinese ports to fortnightly sailings, and to have machinery capable of increasing its speed equal to that maintained by competing lines (the ships now in the service are of 14 knots speed for new vessels) while the contract lasts.

Further, the North German Lloyd engages to follow the instructions of the navy department in the construction and equipment of new ships; also, to use German material in fitting them out, and to restrict itself to the importation of such goods as will not compete with German agricultural interests.

There will be a direct fortnightly service to Hongkong, with fortnightly connections to Shanghai.

The management of the lines, according to the arrangements which have already been stated, is so contemplated that the steamers of the main line from Hongkong may be changeable, once going to Shanghai and another time to Japan, returning in the same manner. Under this proposition the steamers of the main line coming from there will have connection between Hongkong and Shanghai every four weeks by means of a branch steamship service, and the line to Japan, which has

hitherto been used, will be discontinued. Thus the fortnightly transportation with Hongkong would assume a more direct business arrangement. With Shanghai there will be a fortnightly communication, but changing, once direct and again indirectly, taking on freight at Hongkong. But with Japan, in place of a four weeks' indirect communication, a direct communication within the same time will be established. By this means there will be a furtherance of the ship service in the business with Japan as well as with China.

Particular stress will be laid on direct communication with Japan. Not only will the change of steamer at Hongkong, but the transmission of frail merchandise, such as glass, be avoided. The care taken in handling, so important in Japanese goods, will be facilitated by the direct route. The benefits to be derived by German subjects in foreign ports by the appearance of our first-class steamers is not to be overlooked, as is proved by the enthusiasm manifested in Australia by the appearance of the first-class mail steamer (10,000 registered tons) Barbarossa and the fast steamer of the German Lloyd line, Kaiser Wilhelm der Grosse, in New York.

In last year's sessions of the Reichstag the relative advantages of Antwerp and Rotterdam as places of export for the products of the Rhine country and Westphalia were discussed. Rotterdam claimed that its position made it the most direct route from the Rhenish provinces to the ocean, and that the traffic and insurance of goods would be cheaper than via Antwerp. It was also urged that the facility of shipping Belgian goods through the Government ocean mail service from Antwerp would be prejudicial to German competition. On the other side it was represented that Antwerp was the natural outlet for the industries of the left bank of the Rhine and Lorraine, and that it should not be deprived of them. At present Genoa does not offer much field for the Government ocean mail service. The industries of south Germany are transported there by rail, and those for China, East Asia, and Australia are shipped from Antwerp or Bremen. But it does not follow that in the future railroad competition it may not become a point of traffic importance.

If, as proposed, the speed of the German mail steamers on the main line between Europe and Asiatic ports be increased, the time of the voyages will be reduced as follows:

(a) From Naples to Shanghai, old vessels, from 32 days 21 hours, to 31 days 10 hours; and new vessels to 29 days 11 hours.

(b) From Port Said to Hongkong the old vessels will take 24 days 23 hours; the new vessels 22 days 8 hours.

Thus the German line will make 1 day and 14 hours better time than the French line.

The Peninsular and Oriental Line, which has hitherto taken 27 days and 14 hours for voyages from Port Said to Hongkong, will, under its new contract, reduce the voyage to 23 days and 17 hours. The German mail steamers, accordingly, will surpass this line also.

Since it is not improbable that foreign lines of greater speed may be established, thus coming into injurious competition with the traffic of German steamships, it is of high importance that means be provided to obviate any possible disadvantage from this source. Two methods offer themselves.

It might be stipulated in the proposed law that during the life of the contract its terms might be temporarily suspended, during which time the clause relating to speed might be revised; or, there might be a provision relative to the increase of speed necessary to compete with foreign lines. This latter suggestion was adopted in the contract with the North German Line.

It was understood, in the discussion over the bill, that inasmuch as English and French mail steamers are not bound by their contracts with their Governments, under subsidy, to an increase of speed, the business interests of German lines would necessitate a speed equivalent, at least, to that of foreign lines.

If the foreign lines should bind themselves by contract to increase the speed of their steamers, through subsidies or other assistance from their respective governments, it would be necessary for German lines to enter into a similar arrangement with the Imperial Government to the end that they may be able to hold their own against their competitors.

THE MEANS OF CARRYING OUT THE PROPOSED CHANGES.

As Government aid to carry out the increased demands the North German Lloyd asks for an increase of 1,500,000 marks in the subsidy of 4,090,000 marks and a renewal of the fifteen years' contract. The experience of the Government ocean mail service makes this demand seem reasonable.

[For the exhibit of the financial operations see table at end of this document.] NAV 98-10

According to section 11 of the law of April 6, 1885, the Government must be secured a profit from the undertaking if a surplus of more than 5 per cent remain to the contractor over expenses. This last item gave the impression that the personal profit to the line of 5 per cent of the book value of the vessel was an incentive to the Government to facilitate a yearly surplus. According to business rules between the contractor and the State this interest could be reckoned as expenses. The books, including the subsidy, show a steady loss from 1885 during the first half of the existence of the contract. In 1887, loss 1,388,034 marks; in 1890, loss 1,937,604 marks. From that period there appears to have been a small profit. Thus far the North German Lloyd has not only made no profit from its contract to carry the German mails, but rather has lost 5,258,563 marks.

In order to judge whether the increase of the subsidy by 1,500,000 marks and the extension of the contract for fifteen years is justified the results of the last three years should be taken into account. During this period the profit on the contract has amounted on the average to 507,636 marks a year, equivalent to 2.6 per cent of the book value of the vessels, or 2 per cent of their cost. By a further continuance on the same lines of the contract, all circumstances concurring, it is not unlikely that the profits may be greater from the item of passenger traffic, but their freight facilities have reached their limit. But it must be borne in mind that in case of the extension of the contract we can not estimate that the vessels on the East Asiatic line during the first years of their operation by doubling their voyages will also double their freight and passenger trade. If the rate of speed is increased it can only be done at a more than proportionate increase of expense by reason of increased coal consumption (a vessel making 12 knots an hour which uses 80 tons of coal a day, will use 100 tons in making 13 knots, 125 in making 14 knots, 155 in making 15 knots, and 190 in making 16 knots). Increased receipts, therefore, will be offset in a great degree by cost of increased speed. Voyages thus far undertaken can only be kept up under an extension in time of the subsidy contract, but the new voyages proposed on the Asiatic line require increased subsidy.

In order to increase the yearly sailings to Eastern Asia to thirteen would require at least four new ships. In order that these ships might meet the requirements of competition, particularly in the matter of speed, they must be of large dimension and have the most powerful engines, making an average of 14 knots, so that according to the present cost of construction these vessels would cost 4,000,000 marks each, or 16,000,000 marks in all, compared with 13,000,000 marks expended on vessels of 13 knots.

On an average for the three years 1894 to 1896, inclusive, our loss without the subsidy on the thirteen round voyages would have amounted to 1,318,114 marks. On the new voyages proposed larger vessels with more carrying capacity will increase our income, but will at the same time involve considerable increase in the general cost of operation. The increase of the subsidy by 1,500,000 marks for the new part of the contract may be estimated to give us a yearly surplus of 181,886 marks, or a trifle over 1 per cent on the working capital of 16,000,000 marks. But it must also be considered that the loss on operations without the subsidy would amount yearly to 1,000,000 marks, so that practically the increased subsidy of 1,500,000 marks amounts merely to a profit of 500,000 marks, or a trifle over 3 per cent.

Should the service on the East Asiatic line on the proposed plan and the subsidy be increased 1,500,000, the compensation for 645,164 nautical miles between Bremen and Shanghai during a year would be 5.30 marks per mile, while now it is 5.57 marks per nautical mile. The subsidy to foreign lines pays at the rate of 5.87 marks per mile to the Peninsular and Oriental Steam Navigation Company on their new contract and 8.30 marks to the French Compagnie des Messageries Maritimes. The sum which the State is asked to subsidize the Asiatic connection would still fall 3,420,000 marks behind what England and France pay. The contract for the extension of the Asiatic line by the German Lloyd would be for fifteen years. This obliges the contractor to furnish at least four new ships at an expense of 16,000,000 marks, which at 5 per cent annual depreciation would require twenty years to be redeemed-some years after the expiration of the contract. The State would, no doubt, follow the example of the French Government, which, in support of the Messageries Maritimes in 1894, made a new contract with the company for fifteen years, although the existing contract with the company would not have expired until 1903. Such an extension of contract would be not only for the Asiatic line, but would also embrace the Australian line.

The company agrees as follows in view of the increased subsidy:

The smallest ship instead of 3,000 to be 5,300 registered tons, and in case of new vessels 6,000 registered tons.

2. The speed instead of 11 knots for the distance between European and Australian ports to be 12.2 and for new vessels 13 knots.

3. The new vessels must be capable of conversion into cruisers in case of war and the mail steamships are to be constructed and manned according to regulations of the navy.

IMPORTANCE OF PROMPT ACTION.

The increase of the service of the Eastern Asiatic line requires, as before said, four additional ships having all the improvements of the day for speed and comfort and first-class postal and passenger accommodations. The ships must, according to the act of April 6, 1885, be built in German yards. Even if the building of the ships be undertaken immediately on the passing of the law they would require at least a year and a half to complete, so that they would not be finished before the spring of 1899, and the increased traffic could not begin before then, if it depends on the procuring of new ships. Such a delay would be in the highest degree prejudicial to all interests concerned. For success in international competition it is desirable to lose no time, and especially as the recent acquisition by Germany of Chinese territory at Kiaotschau necessitates quicker postal connection with Asia. This makes it essential that the North German Lloyd be in condition with ships ready, fully equipped, especially built for speed and comfort, to undertake to supply fortnightly communication with Eastern Asia as soon as the contract is closed. Under these circumstances the increase of 1,500,000 marks in subsidy should be made payable within the year 1898.

FRANCE.

9. ACT OF JANUARY 30, 1893, CONCERNING THE MERCHANT MARINE.

TITLE I.—Definitions.

ARTICLE 1. Commercial navigation is divided into deep-sea navigation (au long cours), international coasting, and French coasting.

Deep-sea voyages are those which go beyond the following limits: South, 30° north latitude; north, 72° north latitude; west, 15° longitude from the meridian of Paris; east, 44° longitude from the meridian of Paris.

International coasting voyages are those which are made inside the limits fixed above, if they are between French ports, including those of Algiers and foreign ports, and also between one foreign port, and another.

French coasting voyages are those between French ports, including ports of Algiers.

TITLE II.-Maritime construction.

ART. 2. As compensation for the customs duties which the tariff imposes on French shipbuilders they shall receive the following construction bounties per ton: For steam or sail vessels, iron or steel, 65 francs; for wooden vessels of 150 tons or over, 40 francs; for wooden vessels of less than 150 tons, 30 francs.

ART. 3. As compensation for tariff duties mentioned above, marine engines and boilers shall receive the following bounties:

For engines, motive apparatus, and auxiliary engines, such as steam pumps, motors, dynamos, boilers, etc., built new and placed on board sailing vessels, as well as steam vessels, 15 francs per 100 kilograms.

This bounty shall also be extended to new parts of engines which are undergoing conversion or repairs during the life of the ship.

When boilers are changed the bounties shall be 15 francs per 100 kilograms for new boilers of French construction.

ART. 4. Bounties established by articles 2 and 3 will not be finally earned until the vessel has been registered.

Vessels built in France for the merchant marine of foreign nations will not be entitled to bounty until the vessel has begun a voyage.

TITLE III.--Navigation bounties.

ART. 5. To compensate the merchant marine for the duties imposed upon it in the line of furnishing men and service for the Navy, there shall be a navigation bounty for all sail vessels of French build of over 80 gross tons and steam vessels of over 100 gross tons.

This bounty shall be given for ten years, and shall be given exclusively to vessels engaged in deep-sea voyages and those in the international coasting trade. Vessels engaged in the French coasting trade, the fisheries, in subsidized mail lines, and yachts are not entitled to bounty.

The following are also excluded from bounty:

Vessels engaged in the French coasting trade which touch at foreign ports without unlading or lading cargo equivalent in tons avoirdupois to at least one-third of their net tonnage, and also vessels engaged in trade between a French and foreign port less than 120 miles apart.

Vessels admitted by treaty to participation in the coasting trade of foreign nations shall receive the same bounty as that given to vessels in the international coasting trade.

ART. 6. There shall be no bounty to foreign-built vessels.

The bounty prescribed by article 5 shall be based on gross tonnage and for each 1,000 miles traversed by French vessels at the following rates:

One franc and 10 centimes for steam vessels, with an annual reduction, beginning from their year of build, of 6 centimes in the case of wooden vessels and 4 centimes in the case of iron or steel vessels.

The bounty for sailing vessels shall be 1 franc and 70 centimes, with an annual decrease of 8 centimes in the case of wooden vessels and 6 centimes in the case of iron or steel vessels.

Foreign-built vessels admitted to French register before the act of January 29. 1881, and before the 1st of January, 1893, shall receive half the bounties above prescribed.

Vessels engaged in international coasting trade shall receive two-thirds of the bounties above prescribed.