For the past ten years our average annual construction of ocean steamships has been only 21,000 gross tons, compared with the British average of 968,000 gross tons. Our greatest annual production was during the fiscal year just closed, June 30, 1899, when it amounted to 43,871 gross tons. Seagoing steamships are all at the present time constructed of steel. Steel merchant steam vessels during the past ten years have been built at only 13 ports on salt water in the United States. During the past ten years the largest annual output of steel merchant steam vessels at each of these ports (the year differing in different districts), was: Bath, 2,975 tons; Boston, 23 tons; New York, 3,189 tons; Newark, 1,255 tons; Philadelphia, 37,044 tons; Wilmington, Del., 9,308 tons; Baltimore, 3,229 tons; Newport News, 9,704 tons; Jacksonville, 82 tons; New Orleans, 69 tons; Los Angeles, 9 tons; San Francisco, 5,328 tons; Port Townsend, 2,504 tons; a total of 74,719 tons. It is within bounds to assert that the construction of 100,000 tons of ocean steel steamships (including those for the coasting trade), in addition to the naval contracts and contracts on other Government vessels on which they are engaged, would overtax the present annual capacity of our shipyards. By annual capacity is meant, of course, the capacity to launch and complete vessels. A larger tonnage might be in process of construction at any one time, but these figures necessarily deal with the finished product.

The average annual British output for ten years has thus been about ten times greater than our present maximum capacity, so that even with our yards in full operation we should be conducting the shipbuilding business on a small scale compared with Great Britain. The development of our iron and steel industries in the past few years, however, has created the opportunity for the expansion of our shipyards, which renders the present time propitious for legislation to convert the opportunity into realization. Our geographical necessities have compelled us to build railroads on a scale unknown to other civilized nations, and in consequence of the magnitude of these operations we can build locomotives, rolling stock, and steel bridges for foreign markets. An increase of our shipbuilding, through legislative effort and for public purposes, will at least enable us to produce the steamships we need for part of our foreign carrying trade.

The construction of 100,000 tons annually of ocean steamships will more than double the actual construction we have yet attained in any year. The bill almost provides in terms for that construction. Payments to 300,000 tons of American steamships in operation are conditioned on contracts within five years for 75,000 tons of new construction, and the admission of 300,000 tons of foreign-built steamships is condi

tioned on the construction of 300,000 tons of new vessels within ten years, or a total of 375,000 tons.

During the past decade, as shown, only 213,347 tons of seagoing steamships, including vessels for coast lines, have been built in the United States. The seagoing steamships of the United States engaged in foreign trade on June 30, 1899, which were built here during the past ten years, amount to only 92,468 gross tons.

TIME LIMITS.

The success or failure of this bill or any bill to develop our shipping interests depends as much on its stability, if enacted, as on any one provision or set of provisions it may contain. The construction of large steamships is a slow process, involving not only a large capital, an extensive plant, and expensive and exceptional machinery, but also a large force of trained mechanics. The cost of materials and the wages and efficiency of labor are not the only factors to be considered in the relative cost of shipbuilding here and abroad. The scale and steadiness of operations is of even more importance than either of these factors, and probably more than both combined. Shipbuilding materials are lower in the United States than in Great Britain, and wages of labor are lower in Germany than in Great Britain, yet Great Britain turns out steamships more cheaply than either country. Her success is due to the magnitude of her shipbuilding operations. The average time of construction is much less there than elsewhere, involving saving of interest to the purchaser and manifest economies to the builder. British yards reproduce a number of vessels from one set of plans, thus effecting a large saving. On the Atlantic coast of the United States occasionally "sister ships" have been built where one set of plans has served for two vessels, but except in the case of the four "Admiral" steamships the Bureau knows of no instances where more than two steamships for the foreign trade have been built in the United States from one set of plans. The money value of experience, of doing the third, fourth, or fifth time work which has been done once successfully, is recognized in every walk of industrial life. The continuity of work enables British shipbuilding plants to assemble and keep together their technical and skilled corps in various departments. In the United States, except on the Lakes, thus far our extensive naval construction alone has rendered these results practicable in some yards. In short, Great Britain's great advantage to-day over the United States and Germany lies in the fact that she conducts a wholesale instead of a retail shipbuilding business, and that except on the Pacific her shipowners are established in the trade.

These advantages can not be offset by short-lived efforts. Whatever system is adopted by the United States must be pursued uninterruptedly for some years. For this reason it is provided by Senate bill 5590 that the Secretary of the Treasury shall make navigation contracts, each to last for a period of twenty years. Twenty years is reckoned the ordinary lifetime of a modern steel steamship. The North German Lloyd contract of 1898 with the German Government is for fifteen years, the contract of the French Government with the Messageries Maritime is for seventeen years, and with the Compagnie Transatlantique is for fourteen years. The British contract with the Peninsular and Oriental Steamship Company is for seven years. All these foreign contracts, however, assure the contractors a stated sum for the period of the contract. The successful operation of Senate bill 5590, on the other hand, will involve, after five, six, or seven years, a regular annual

reduction in the rates to be paid to the American contractors. The contracts made in the beginning therefore will, in effect, be equivalent at the rates proposed to contracts for perhaps eleven, twelve, thirteen, or fourteen years. Contracts made in later years will be at gradually lower rates, if, as anticipated, shipbuilding shall increase rapidly, involving reduction in the cost of construction through that factor, magnitude of operations, which is at the bottom of Great Britain's cheapness of construction.

The power to make these contracts will cease at the end of ten years. Under this provision of the bill a vessel built in 1910 will receive the assistance of the Government, though at much lower rates than those fixed in the bill, while a vessel built in 1911 will receive no such assistance. The objection to this feature is evident, but it is inseparable from any legislation to which a time limit is imposed. The objection can, of course, be met by eliminating the limit of ten years, leaving to future Congressional action the modification of the legislation, as the course of events at home and abroad may suggest. Such modification or repeal of the ten-year limit, however, is possible by Congress at any time, and the limit serves the purpose of fixing the maximum expenditures proposed by the bill. The bill contains in itself the mechanism for a steady reduction in the rates of assistance, and it is clearly as impossible in shipping as in other forms of legislation to predict industrial conditions a decade in advance.

REGISTRY OF FOREIGN-BUILT VESSELS.

The only legislation in many years which has had a signal effect on the development of American shipping in foreign trade has been the act of May 10, 1892, by which the Paris and New York were admitted to American registry on condition that the St. Louis and St. Paul should be built in the United States, the four steamships to be operated under the postal subsidy or ocean-mail act of March 31, 1891. No progress was made under the act of 1891 in establishing a trans-Atlantic mail line until the act of 1892 was passed. Indeed, the only new lines established under the act of 1891 are the American transatlantic Line and the Admiral Line, established in 1898. The three other lines under the act already existed, and the act enabled them to continue to exist.

It is proposed by sections 7, 8, and 9 of Senate bill 5590 (Appendix A) to extend the method of the acts of 1891 and 1892. Steamships owned under foreign flags by, or now being built in foreign yards for, American citizens are to be admitted to American registry on condition that the owners will build in the United States equal tonnage for the foreign trade. Under the acts of 1891 and 1892 the two foreign-built steamships were paid for mail service at the same rates as the two steamships built at home. Senate bill 5590 provides that the foreign-built steamships admitted to American register shall receive only half the pay awarded to the corresponding steamships built in the United States. These sections provide for the admission of virtually all foreign-built vessels owned in fact but not in name by American citizens. A list printed in Appendix O shows about 300,000 gross tons of steamships so owned. American capital owns very few sail vessels under foreign

flags.

It has been demonstrated that under existing law the owners of these vessels do not care to put them under the American flag, owing to disadvantages which from time to time are noted in this report. To offset these disadvantages it is proposed that such vessels shall receive one

half the rates of pay proposed for American vessels; and to bind these owners to promote the domestic industry, that pay is not to be awarded until they have built in American yards an equivalent tonnage.

The effect of these provisions will be an early increase in American shipping in foreign trade and a corresponding reduction in foreign shipping of about 300,000 tons. Such a result can not be effected in any other way at the present time, except by opening our coasting trade to foreign-built vessels, a proposition involving destructive results to domestic shipbuilding. This proposition, in its consideration of the combined national interests of shipowning and shipbuilding is more equitable than any recently submitted to Congress. It involves an early increase of 300,000 tons, an early construction of 300,000 tons, and a reduction of 300,000 tons under foreign flags, or a gain of 900,000 tons in the relative position of our shipping in foreign trade compared with that of other flags.

COST OF CONSTRUCTION.

The difficulties in the way of estimating the difference in the cost of construction of seagoing steel steamships for foreign trade in the United States and in Great Britain or Germany are almost insuperable, because so few such vessels have been built in the United States. Practically the only vessels available for purposes of comparison are the St. Louis and the St. Paul, built in 1895; the Havana and Mexico, just completed this year; the four "Admirals," built last year, and the Peru, built in 1892. We have built but one slow cargo steamer, the Winifred, of the class usually called tramps, and that vessel cost about $70 per gross ton.

As fair a comparison as at this time appears to be practicable is that afforded by the two steamships now being built at Newport News for the Pacific Mail Steamship Company and the last two fast steamships built for the Peninsular and Oriental Steamship Company of Great Britain. The two steamships under construction at Newport News are to be each of 11,300 gross tons, the largest vessels ever built for the Pacific trade. The speed is to be 18 knots, and the cost of each $1,813,600, or $160 per gross ton. The contracts for these vessels were made some months ago, and the material was ordered before the recent rapid rise in the price of structural steel and plates. The Newport News Shipbuilding Company and the Pacific Mail Steamship Company have some large business interests in common, and the shipbuilding plant has the further advantage of being employed on large contracts for naval vessels. These conditions all indicate that the contract is on most favorable terms for the steamship company, and doubtless it is the cheapest marine construction on a large scale ever undertaken in the United States. The St. Louis and St. Paul, of about the same tonnage, built in 1895, when steel was lower, cost $220 per gross ton. These latter vessels, however, are 21-knot steamships, and the cost of construction increases rapidly with the increase of speed. In Great Britain at the same time, according to the president of the International Navigation Company, corresponding vessels could have been built at $172 per gross ton.

The Egypt and Arabia, built at Greenock, Scotland, in 1897 and 1898, for the Peninsular and Oriental Company, together cost $2,318,000, and aggregate 15,815 gross tons, making the cost per gross ton $147. They are the largest and fastest vessels in Great Britain built for the Asiatic trade. These steamships, however, are nearly 19-knot vessels,

almost a knot faster than the two Pacific Mail steamships referred to, and this difference, of course, enhanced the cost appreciably. Had the vessels been 18-knot steamships the cost presumably would not have exceeded, if indeed it had reached, $140 per gross ton.

The relative cost, $160 per gross ton, in the United States, as compared with $140 per gross ton in Great Britain for an 18-knot passenger steamship, or $20 per gross ton, certainly does not overstate the difference in cost of construction a year ago. The absolute cost in both instances to-day would be appreciably higher owing to the rise in steel and wages. Before the Senate Committee on Commerce last winter evidence was adduced showing that the actual cost of the 10-knot British-built steamship Masconomo, of 4,200 gross tons, was $53 per ton, while the lowest American bid on the same plans was at the rate of $80 per gross ton. The fleet of steamships built and building for the "Manchester Lines" company in Great Britain, which are equipped with the most improved refrigerating appliances, are costing $73 per gross ton.

If it be accepted that $160 and $140 per gross ton are fair statements of the cost of construction in the United States and Great Britain, respectively, of an 18-knot steamship, the part that this initial difference will play in the annual cost of operation can be readily ascertained. The three important annual items based on first cost are insurance, depreciation, and interest. Six per cent is the usual rate allowed for insurance, which on $160 and $140, respectively, would amount to $9.60, and $8.40 a year. The ordinary allowance for depreciation is 5 per cent; thus at the end of twenty years removing the vessel from the company's books as an asset. This rate applied to $160 and $140, respectively, would amount to $8 and $7. Interest on bonds at 5 per cent is a lower rate than capital at present in the United States would probably be willing to accept for investment in shipping, while 4 per cent is more than is obtained on much capital invested in British shipping. These rates, however, on the bases named, produce $8 and $5.60, respectively. These items may be summarized as follows:

By this method of computation the annual difference in the cost of operation, based on difference in cost of construction, of an American and British 18 knot passenger steamship would appear to be at the present time $4.60 per gross ton. The actual difference is probably larger than this amount, and is doubtless over $5 per gross ton. In the case of slower and cheaper steamships this difference, for obvious reasons, will decrease if the industry should be established in the United States, and in the case of sailing vessels with comparatively little machinery it will be even less, while in the case of the very limited class of steamships making over 18 knots it will doubtless be enhanced.

WAGES IN THE STOKEHOLD OF STEAMSHIPS.

The largest single factor in the cost of operating a steamship, except coal, is wages. The general subject of wages is considered more in detail on other pages. In this place it is proposed to consider only one