The reasons which have impelled and which now impel the governments of other nations to promote by legislation their mercantile marine apply with equal force and in some instances with greater force to the United States. The one exception to this statement is that we have not the very large maritime population which compels Norway, Sweden, and Denmark to secure ships from any quarter, and we are so placed as to need a powerful home-built navy, which those nations do not require.

These reasons fall into two classes-political and commercial. Under the first class are those reasons which are based: First, on the relations to the navy of the merchant marine as an element in the national defense; second, on the relations of a merchant marine to insular territory; and third, on the relations of a merchant marine to new markets, as those of Asia and, to a less extent, Africa and South America. Commercial reasons are found, fourth, in the necessities of ocean mail communication; fifth, the relations of a national merchant marine to national exports and imports; sixth, the value of the carrying trade; and seventh, the promotion of shipbuilding and contributory industries.

First. The relations of the merchant marine, as an element of national defense, to the navy distinguish navigation and shipbuilding from all other industries, and give it a different and higher claim on legislative consideration.

(a) In our early history the merchant marine held the same position at sea toward the national defense that the militia held on the land. In the days of wooden vessels the conversion of a vessel of commerce into a vessel of war required little time and labor. Such conversion is not practicable at the present time. Large, high-powered steamships are, however, available as auxiliary cruisers, and, as was shown in our recent war with Spain, serve a most important function. With a navy equal to that of any other three powers combined, Great Britain still deems it necessary to maintain a fleet of 28 auxiliary cruisers, aggregating 186,380 gross tons. The government contribution to the main

tenance of these vessels in the form of admiralty subventions (£65,000) is only secondary to the more substantial contribution in the form of mail contracts. The German contracts with the North German Lloyd have the same end in view. The United States, with a much longer coast line, have greater need of such vessels than any other great power, except Great Britain.

(b) The merchant marine must be relied on to furnish the seamen (in the comprehensive sense including the fire-room force) needed in emergency to man war vessels. On her naval reserves, employed on merchant vessels, Great Britain expends annually about $1,250,000. French and German subsidies are avowedly voted for the purpose of creating and maintaining a reserve of seamen for the republican and imperial navies. The value of our naval militia is not underestimated, but it is not designed to and can not fill the places for which trained seamen are required when our entire naval fleet is put into commission. (c) Before, during, and since the war with Spain the country has been found deficient in the means of transporting our troops, by no means in very large numbers. We have been compelled to purchase transports abroad, and even to charter for temporary purposes transports under foreign flags and subject to foreign laws. In itself the incident was not important, but it is a significant revelation of an unsatisfactory condition that the steamship Tartar, a British vessel chartered to bring American troops home from Manila, was detained at Hongkong for the failure to observe certain British regulations and was then released, out of courtesy, at the request of our State Department. In the war with China, Japan transported by merchant vessels, under her own flag and manned by her own officers, larger bodies of troops than the United States has been called upon to move at any time during the past two years.

(d) Assistance rendered to the domestic construction of merchant vessels reacts in favor of a lower cost of construction of naval vessels. Such has been the experience of Germany, which for fifteen years encouraged the building of large steamships and thereby created the large plants which will carry out the extensive programme of naval construction upon which the Empire is entering. In the United States we have approached the subject from the other direction. Our large naval contracts since 1884 have undoubtedly created the plants and brought together the forces of skilled operatives that have rendered possible the building of large steel steamships for the foreign trade. Second. The obligation of a nation to furnish suitable means of mail and commercial communication between itself and its insular possessions is everywhere recognized regardless of the economic theory held by the Government. This recognition is one of the elements of strength of the British Empire. France, Germany, Italy, Holland, and Portugal unite by national steamship communications their colonies to the home country, and for many years Spain spent on the average $1,700,000 to maintain communication between the colonies and the Peninsula. Whatever may be the future form of government of the Philippines, Porto Rico, and Cuba, for the present at least, we are bound to supply to these former Spanish possessions means of communication by sea at least as good as those furnished by Spain.

Third. Our legitimate interests in the development of the markets of Asia are as great as those of any European power. Our geographical opportunities for sharing in those markets are superior to those of any European nation. For reasons which need not be considered in these pages, the development of trade with the East is more than a commercial matter. It has its pronounced and well-understood political phases.

Great Britain, Germany, France, Russia, Italy, and Japan are not leaving to the individual enterprise of their citizens or subjects the development of this trade. The agencies of government are at work in promoting it. Among those agencies one of the most powerful is government support to shipping, which is granted to this trade to the extent of about $5,000,000 by the nations named. We spent last year $48,451! To a less marked degree the same considerations apply to the efforts to develop German trade with Africa, and the same line of argument would be applicable to any systematic effort to develop the trade of the United States with South America.

All of the matters which have been touched upon are entirely apart from and above those considerations which lead men or nations to adopt the doctrines of free trade or protection. These reasons for national navigation and shipbuilding are national rather than commercial. A proposition based on these reasons is not essentially a proposition of Government aid to private enterprise.

Fourth. The commercial reasons which lead other nations to develop their merchant shipping have as much force in this country as elsewhere. First, and most general among these is the desirability of carrying the nation's ocean mails in the nation's own vessels, a consideration which is controlling with Great Britain, Germany, and France. This consideration is controlling with those nations, for it can no longer be claimed that economy in time is the reason for most of the ocean mail contracts of those nations recently renewed. The principal foreign mail contracts are with the Peninsular and Oriental Steamship Company, the North German Lloyd Steamship Company, and the Messageries Maritimes for carrying the British, German, and French mails to China and Japan. Under its latest contract the Peninsular and Oriental Line contracts to carry the British mails from Brindisi, Italy, to Shanghai in seven hundred and thirty-six hours. The Peninsular and Oriental Brindisi express, with its Channel connections, carries the mail from London to Brindisi in forty-four hours, making the mail time from London to Shanghai seven hundred and eighty hours, or thirtyfive days. The best time made by the company is thirty-two or thirtythree days. Under its new contract the North German Lloyd undertakes to carry the mails from Berlin to Shanghai in thirty-two days. Mails are now brought across the Atlantic to New York in nine days from Berlin and eight days from Paris. Seven days is not a low limit at the present time for mail steamships from Liverpool to New York. The running time of our fast mail train from New York to San Francisco is now four days and three hours. Any letter ought to reach San Francisco from Berlin or Paris within thirteen and one-half days, and letters doubtless do cover that distance in shorter time. The distance from San Francisco to Shanghai by way of Yokohama is 5,709 nautical miles. A 17-knot steamship, such as the two Pacific Mail steamships now building at Newport News, can traverse this distance in fifteen days allowing for the change of time in mid-Pacific, which is a gain in one direction and a loss in the other. The establishment of a fortnightly American service from San Francisco to Shanghai will bring Berlin and Paris, not to mention British ports, within twentynine days of Shanghai, and under favorable, but not extraordinary conditions, within twenty-eight days, while the best British achievement and the best German promise by subsidized routes is now thirtytwo days, and the average is thirty-three or thirty-four.

The German mail contract for 900,000 marks, about to be increased to 1,200,000 marks, for the service to South Africa, is not to secure the most rapid transit for the mails, as the British Castle Mail and Union lines

furnish quicker and more regular communication. The British payments to the Cunard and White Star lines are not for the sole purpose of sending English mails as quickly as possible to the United States, for the American Line steamships in the winter, and the North German Lloyd in the summer average better time both east and west bound. Great Britain, Germany, and France have mail services under their own flags, liberally maintained, which bind those countries to Asia, Africa, and Australia, the relatively undeveloped parts of the world, and in the case of one or more of those powers to North and South America and the West Indies. These services, as shown, are not in every case, or indeed usually, to secure the quickest transit of letters. Apart from political reasons they are maintained, then, as trade agencies, and because the government which contributes to their support, deems the investment a judicious one, not for the benefit of shipbuilders or shipowners alone, but for the general benefit of the country. The mail service of the United States, under its own flag, comprises the four steamships of the American Line from New York to Southampton, the steamships of the New York and Cuba Mail Line to Cuba and Mexico, the two steamships of the Red "D" Line to Venezuela, three steamships of the Oceanic Line to Australia, and the four steamships of the Admiral Line to Jamaica.

In 1891 Congress passed an act for the establishment of ocean mail lines. Its inadequacy was understood at the time, and subsequent years have proved that inadequacy. That act, with the supplementary act of 1892, permitted the establishment of our only trans-Atlantic line on conditions less favorable than it had enjoyed under a British mail contract, the extension of which was refused on national grounds. Only one new line has been established under its provisions, a line of fruit steamships to Jamaica, and to offset that line the British Government is about to subsidize on almost equal terms a British line from Jamaica to Great Britain. The act of 1891 is not only inadequate, but it is unscientific as well. The rates of compensation it allows for small and slow steamships are higher even than for large and fast vessels, much more expensive, and less profitable to operate. Under that act, for example, the City of Washington, a 14-knot steamship of 2,683 gross tons, built in 1877, is paid at the rate of 2.14 cents per gross ton per 100 miles, while the St. Louis, of 21 knots, 11,629 gross tons, built in 1895, is paid at the rate of 1.99 cents. By giving relatively higher pay to smaller and slower steamships that act has, as was anticipated, failed to promote the class of steamships needed for ocean mails, and since it was passed there has been practically no construction under its provisions. The exceptions are the two new steamships of the New York and Cuba Mail and the four steamships of the Admiral line, built since the close of the war with Spain, and owing their existence almost as much to new political relations created by the war as to the act of 1891, and the St. Louis and St. Paul, built under the act of 1892. The act of 1891 provides payment at the rate of $2 per statute mile for a 16-knot steamship of 5,000 tons or upward. This rate is considerably below that allowed by Great Britain, Germany, France, and Japan to their mail steamships in the Pacific. That eight steamships are now under construction for the Pacific trade is due to the expectation that at its coming session Congress will pass the bill which at the last session passed the House unanimously, applying to Hawaii the coasting laws of the United States.

Fifth. The remarkable growth of the export trade of the United States, in spite of the fact that we have very few vessels adapted for

the over-sea trade, has naturally made Americans skeptical as to the truth of the somewhat vague phrase "Trade follows the flag." If trade had not preceded the flag, our exports to Asia, Australia, Africa, and South America would now be insignificant. In the sense that improved means of transportation, under government encouragement, promote a nation's export trade, the words do not admit of question. The acknowledgments in the reports of the great foreign steamship lines of a purpose to promote national trade are frank and creditable. No more explicit statement could be asked for than the declaration of the president of the Peninsular and Oriental Company at the annual meeting two years ago:

Our policy is that of a British company which is keenly alive to British interests, and I believe in this respect we represent the general feeling of the shipowners of the country.

This single extract from the last annual report of the same company will serve to show that the assistance afforded by foreign governments to their steamships is not without interest to the producers of the interior States of our Union:

The export season in India has been on the whole a satisfactory one, extensive shipments of grain and seed having taken place owing to the excellence of the harvest and the condition of markets on this side [Great Britain]. Shipments of cotton, however, diminished in consequence of the large crops and low price of the American staple.

VALUE OF THE CARRYING TRADE.

Sixth. The value of the ocean-carrying trade of the United States need not be stated in exaggerated figures to demonstrate its importance. The sum of $175,000,000 may be taken as a reasonable approximation of the cost paid for transporting by salt water exports and imports, passengers and mails, from and to the United States during twelve months at the present time. Some have made higher and some lower estimates than this figure, but the evidence points to the approximation stated.

The most important recent contribution to the discussion on the subject is an address, delivered by Sir Robert Giffen, the well-known British statistician, to the Royal Statistical Society last January. Liberal extracts from this address are reproduced in Appendix P. He estimates the value of the gross earnings of British steamships at about £78,000,000 ($380,000,000). Assuming the accuracy of this estimate, it is not difficult to apply the figures to the carrying trade of the United States. The British Board of Trade reports that during 1898 the British steam tonnage engaged in trade between the United Kingdom and foreign countries and British colonies amounted to 6,064,506 net tons. In the coasting trade of the British Isles 700,000 net tons of steam tonnage were engaged, the earnings of which were not included in the estimate of $380,000,000, while the earnings of part at least of the 600,000 net tons of steam vessels registered in the British colonies should be included. The total steam tonnage registered under the British flag, including colonial vessels, amounted in 1898 to 7,110,213 net tons, of which, as stated, 6,064,506 net tons were engaged in the foreign or colonial trade of the Un.ted Kingdom. At least six-sevenths of the total earnings of British steam vessels engaged in foreign or colonial trade, it is thus fair to assume, went to British vessels which entered or cleared at least once during 1898 from the United Kingdom. Six-sevenths of $380,000,000 are in round numbers $325,000,000. The total entries and clearances of British steam vessels (including repeated voyages) at