The capital stock of the North German Lloyd Company for some years was 40,000,000 marks. The subsidy of the German Government from 1887 to 1892, inclusive, was, in round numbers, 4,400,000 marks a year, and from 1893 to 1898 it was 4,090,000 marks per year. During its past fiscal year the company has increased its capital stock to 80,000,000 marks, and, as already shown, the subsidy has been increased to 5,590,000 marks, or, in effect, a guaranty hereafter of 7 per cent on the entire capital stock of the company, that employed in operating its splendid line of steamships between New York, Germany, and the Mediterranean, as well as the Asiatic and Australian lines, for which ostensibly the subsidy was voted.

In the report in favor of the German subsidy bill (Appendix E), already referred to, it is stated:

All experts assert that without the influence (einwirkung) of the Imperial ocean mail service such a steamship as the Kaiser Wilhelm der Grosse could not have been built.

"Or would not be operated" might be added to round out the statement. The annual dividend declared April 25, 1899, was 7 per cent, or 4,200,000 marks, with a subsidy of 4,090,0 0 marks. It is thus evident that the corporation can conduct its business at cost prices, relying upon its Government support to furnish adequate attraction to capital or compensation for labor.

Unlike the principal steamship companies of Great Britain, France, Italy, and Austria, which are under government contracts, the reports of the North German Lloyd Company do not state the items of expenditure for coal, wages, navigation charges, etc. In view of the figures on these matters in British reports and the lower wages paid on German than on British steamships, the statement is safe that the 5,590,000 marks guaranteed to the North German Lloyd Company is quite enough to pay the entire wages of all the officers and crews of all its steamships. The company's reports do show, however, that on the subsidized Asiatic and Australian lines from 1886 to 1896, inclusive, the current receipts from freight, passengers, and regular traffic were 85,363,532 marks, while the Government contributed 44,306,518 marks more, ostensibly for "carrying the mails." So earnest an effort on the part of the Imperial Government to develop trade relations with the Orient deserves the great success which has followed it, and foreshadows results of the increased efforts which are to begin this month.

Again, the subsidy is to be 5,590,000 marks a year for fifteen years. In its argument the company stated that the cost of each of the four new steamships which it agreed to build in Germany would be 4,000,000 marks ($952,000). The Government has thus agreed to pay the entire cost of building a steamship of 15 knots, and over 6,000 tons annually, with a surplus of 1,590,000 marks, or almost 40 per cent on the first cost of the vessel, and to do this every year for fifteen years.

The document, already quoted, states that from 1886 to 1896 the German Government paid the North German Lloyd Company 44,306,548 marks, while the entire cost of the 13 Imperial mail steamships, aggregating 83,102 gross tons built in Germany for the company during this period was only 39,575,000 marks. The Government thus paid the equivalent of the entire cost of 13 steamships in ten years, with a balance more than enough to pay for a fourteenth vessel.

Or, again, the entire amount paid by the North German Lloyd to German shipbuilders during this decade was 95,000,000 marks, including the cost of the Kaiser Wilhelm der Grosse and its trans-Atlantic as well as Asiatic and Australian steamships. Toward this expendi

ture the Government contributed 44,306,548 marks. The "Asiatic mail pay" has thus been nearly enough to pay half the company's entire expenditures in German shipyards. Of the 41 steamships owned by the North German Lloyd in 1884-85, when it undertook the Asiatic contract, only 7 were built in Germany, and those of insignificant tonnage not adapted to trans-Atlantic voyages. "Among the branches of German industry," states the report, "most benefited by the estab lishment of the ocean mail service, shipbuilding must be mentioned, because it opened to that industry a new period of development." Of this there can be no doubt.

TONNAGE TAXES FOR THE YEAR.

The collections of tonnage taxes during the fiscal year ended June 30, 1899, amounted to $834,087.81 compared with $846,771 for the previous fiscal year. Details concerning the collection of these taxes and the law regulating it may be found in Appendix H. As a result of the examination referred to in the last report the exemption from tonnage taxes of vessels from Trinidad and Tobago was discontinued on March 14, 1899. The proclamations of the President on this subject are printed in Appendix H.

The report of the Bureau for 1898 reviewed the history of our tonnage-tax legislation, and recommended substantial modifications of the law. The same views are still entertained, and last year's statement, accordingly, is here reproduced. The tax is now imposed as follows:

First. Vessels entering the United States from foreign ports in North America, Central America, the West Indies, the Bahamas, Bermudas, the coast of South America bordering on the Caribbean Sea, Newfoundland, and Hawaii are required to pay 3 cents per net ton, not to exceed five times a year, making the maximum annual charge 15 cents per ton.

Second. Vessels from all other foreign ports are required to pay 6 cents per net ton, not to exceed five times a year, making the maximum annual charge 30 cents per ton.

Third. Vessels from foreign ports or countries in which no tonnage or equivalent taxes are imposed on American vessels are exempt from tonnage taxes. Under this provision vessels from the Netherlands, Copenhagen, the Province of Ontario, the ports of Panama and Colon in Colombia, and a few minor islands and ports in the West Indies and the Dutch East Indies are exempt from tonnage taxes.

Fourth. Vessels in the coasting trade of the United States are exempt. Fifth. In a few exceptional cases an additional penal or retaliatory tonnage tax, in some instances 50 cents and in other instances $1, is levied. In what follows this tax and the coasting exemption are not considered, as they are not pertinent to the discussion. It is also assumed that the toanage tax is paid by the vessel on which it is levied, though in the last analysis it is paid in part at least by the producers and consumers of exports and imports here and abroad. It is also assumed that the flag of a vessel truly represents the nationality of the capital which operates it, although a considerable number of steamships under British, Belgian, and Hawaiian flags are owned and operated by American capital, while vessels under Norwegian and Spanish flags are owned in Great Britain."

The history of tonnage-tax legislation in this country, briefly recited, will be in itself an argument for the revision of the existing law. For a long period of years up to the civil war when the necessities of Government compelled a resort to new measures of taxation, tonnage taxes were not imposed by the United States. This exemption of vessels from tonnage taxation was based on a careful regard for the interests of American navigation. For many years two-thirds of the combined entries and clearances of vessels in the foreign trade at ports of the United States were of American vessels, and only one-third of foreign vessels. Thus, in 1860, the combined entries and clearances of American vessels in the foreign trade at ports of the United States amounted to 12,087,209 tons, and of foreign vessels to only 4,977,916 tons. Fully 70 per cent of any taxes which at that time might have been levied on the entries of vessels would have been charged against American vessels, and an entire exemption from such taxation was a reasonable policy to promote American shipping.

By the act of July 14, 1862, "Increasing temporarily the duties on imports and for other purposes," Congress imposed a tonnage tax of 10 cents per ton on each entry of a vessel from a foreign port. Vessels engaged in the coasting trade, the fisheries, or trade with Mexico, the British provinces of North America or the West Indies were required to pay this tax only once a year. By the act of March 3, 1865, Congress increased this tax to 30 cents, preserving the difference in charges between trades established by the act of 1862. This second act was distinctively a warrevenue measure. The difference between rates recognized the fact that, while the war and Confederate privateering had driven our flag from the high seas, in the near-by trade with the rest of North America American tonnage retained its preponderance. For the fiscal year ended June 30, 1864, the tonnage of combined entries and clearances at ports of the United States of vessels engaged in the foreign trade was 6,157,382 tons American and 7,212,350 tons foreign. There was some reason to hope that with the return of peace American vessels might regain the position lost during four years of civil strife. Accordingly, by the acts of July 13 1866, and of March 2, 1867, Congress prescribed that the tonnage tax of 30 cents on vessels engaged in oversea foreign trade should be levied only once a year, as in the case of the coasting and near-by foreign trade. Previous to this last act Congress by the act of July 28, 1866, had included the Sandwich or Hawaiian islands in the near-by foreign trade, in which the tax was levied but once a year.

The act of March 2, 1867, imposed a uniform tonnage tax of 30 cents per net ton a year on all vessels in the foreign or domestic trade. This system obviously bore heavily on American shipping in the coasting trade, and by the act of July 14, 1870, "To reduce internal taxation and for other purposes," Congress abolished tonnage taxes on vessels engaged in the coasting trade or the fisheries, trades confined to American vessels.

The legislation thus far considered was guided by enlightened self-interest, modified by the varying requirements of the revenue. If there be an exception to this statement, it may be found in the failure of the acts of July 18, 1866, and March 2, 1867, to differentiate between the tonnage taxes imposed on the trade with near-by foreign ports and the trade with oversea ports. The tonnage-tax provisions of the act of July 14, 1870, remained in operation until July 1, 1884, when the act of June 26, 1884, went into effect. The collections for the last year in operation of the act of 1870-the year ended June 30, 1884-were $1,295,772.

By the act of 1884 Congress returned to the principles of the acts of 1862 and 1865. It restored the difference in rates between vessels from remote and neighboring ports. It provided that the payment of tonnage taxes should be distributed over several entries instead of being made in an annual lump sum on the first entry of a vessel. The distinction in tonnage or equivalent taxes between vessels making voyages from foreign ports near home and those remote from home is drawn by practically all maritime nations. It rests on two considerations: First, vessels making short voyages are, as a rule, of light draft compared with oversea vessels. In the improvement of harbors they entail much less expense on the Government making such improvements, and where tonnage contributes to the expenses of improvements of navigation their contribution should be relatively less than that of deepdraft vessels. Second, the trade of nations with near-by foreign ports usually closely resembles coasting trade, and it is the practice of maritime nations to assimilate it in respect to charges and in other respects to the coasting trade. Thus, the phrase "home trade in British laws applies to the trade between ports of the United Kingdom and of the Continent of Europe between the river Elbe and Brest, inclusive, as well as to the strictly coasting trade of the United Kingdom. Congress, in 1884, undoubtedly had these considerations in view when it provided that the former uniform tonnage rate of 30 cents per annum should be superseded by a maximum annual charge of 30 cents on vessels engaged in oversea navigation, while the maximum charge on vessels engaged in what corresponds to the French term "cabotage international" should be only 15 cents. During the year ended June 30, 1884, the tonnage of vessels which entered the United States from the more remote foreign ports was: American, 810,999 tons; foreign, 7,676,616; while the tonnage entered from near-by foreign ports was: American, 2,391,294 tons; foreign, 4,189,919 tons. The act of 1884, by this provision, thus held in view the interests of American shipping, while at the same time conforming strictly to the customs of maritime nations. The proposition to impose one uniform rate of tonnage taxes on vessels from all foreign ports is delusive in the argument that treaties coutemplate it, and in practice would be oppressive to our national interests.

The acts of 1862 and 1865 imposed tonnage taxes at each entry of a vessel from a foreign port, thus making the charge in a measure the equivalent of the extent to which the vessel used a port, its improvements, and safeguards. This is the practice of substantially all the maritime nations. By the acts of 1867 and 1870 vessels were required to pay at the first entry a tonnage tax of 30 cents, and thereafter were exempt for the rest of the year, regardless of whether one or many entries were made. The harshness of this rule is evident. The imposition of the entire

tax at the first entry deprived the shipowner of interest on the sum thus paid for nearly a year, while its payment from voyage to voyage would materially ease the burden. Again, the inequality of levying a tax of 30 cents per ton at one entry of a ship making the voyage from an Asiatic port to an Atlantic port of the United States, where only one round voyage a year is practicable, and of levying the same amount on a trans-Atlantic steamship making four, five, or more entries in a year, is evident. Making six voyages, the steamship would pay practically only 5 cents at each entry, and making twelve voyages, as is now done, she would pay only 2 cents at each entry, compared with 30 cents tax imposed on the single possible entry of the ship. The act of 1884 partially remedied these inequalities. It distributed the maximum annual tax over five voyages and divided in the same manner the payment of the tax of 15 cents on vessels entering from near-by foreign ports. Thus the rate at each entry was fixed at 6 cents or 3 cents per net ton, according to the foreign port of clearance. The rates imposed by that act are those now in force in the United States. The receipts from tonnage dues during the fiscal year ended June 30, 1885— the first year of the new act-were $390,875, compared with $1,295,772 of the year ended June 30, 1884.

The act of 1884, as amended by the act of 1886, requires amendment in several particulars. The rates of tonnage tax imposed by the United States are very much lower than corresponding taxes imposed by other maritime nations. The aggregate contribution of shipping in the foreign trade toward the maritime expenditures of the United States is wholly inadequate when regarded from the point of view of similar contributions toward the maritime expenditures of foreign nations or of the extent and nature of our national expenditures for the improvement and safety of salt-water navigation.

In the annual report of the Secretary of the Treasury for 1897 it was stated: "In view of our large expenditures for the benefit of navigation, amounting to about $20,000,000 a year, and of the fact that about 75 per cent of the tonnage engaged in our foreign trade is composed of foreign shipping, Congress may well consider whether there should not be a readjustment of tonnage taxation."

The British Government levies light dues, corresponding to our tonnage taxes, ostensibly to maintain its light-house establishment, but in fact the receipts from this source are in excess of the expenditures for lighting the coast and are applied to other purposes. For the British fiscal year ended March 31, 1898, the amount collected for light dues was £603,000, or, in round numbers, $3,000,000. In response to inquiry through the customary official channels, the British Board of Trade has furnished a table of the general and local light dues charged on a vessel from New York and entering and clearing at eight of the principal seaports of the United Kingdom (Appendix I). It shows that on a voyage from New York a vessel to Liverpool pays 9 cents per net ton, to London 10 cents, to Southampton 6 cents plus, to Cardiff 8 cents plus, to Bristol 8 cents, to Swansea 7 cents, to Belfast 8 cents, and to Greenock nearly 10 cents. The uniform tonnage tax levied at ports of the United States is 6 cents on vessels from the British ports named. The British rate is uniformly higher than the American rate. Furthermore, the American tax is imposed only five times during a year, the maximum annual charge being 30 cents, while the British charge is imposed at each entry and clearance. During a year twelve trans-Atlantic round trips are frequently made by express steamships between New York and Liverpool or Southampton, and fourteen voyages ave been made. A steamship making twelve voyages would thus pay annually 30 cents in tonnage taxes at New York, and annually in light dues $1.08 at Liverpool, $1.26 at London, and 74 cents at Southampton.

On April 1, 1899, the British Government put into operation a law which materially reduced light dues on vessels entering British ports. It is in some respects a reproduction of the law of the United States. It provides that the light dues on a steamship in foreign trade shall be 5 cents, and shall be payable not to exceed six times a year, making the maximum annual charge 33 cents, compared with 30 cents in the United States. To the British figures, however, must be added local light dues, imposed at certain British ports. At Southampton these dues amount to a fraction under one cent at each entry, or about ten cents annually. As was stated in last year's report.

The Imperial Government imposes no charges on shipping in ports of the German Empire, such charges being levied by the authorities of the several maritime states of the Empire. In Appendix I may be found the laws governing the imposition of tonnage taxes at Hamburg and Bremen, the two ports of the German Empire with which we have communication. The taxes imposed at Hamburg are 12 pfennigs (2.9 cents) per cubic meter (1 ton=2.8 cubic meters) or a fraction over 8 cents per

ton. The light dues imposed at Bremen are 11 pfennigs per cubic meter, or a fraction under 8 cents per ton. (The United States consul reports these charges as 9.8 cents on steamships at Bremerhaven.) These charges are imposed at every entry of a vessel. An express steamship to Hamburg or Bremen making 10 voyages a year would thus average 80 cents per ton at the German port of entry, compared with 30 cents at New York. From January 26, 1888, to January 2, 1897, vessels from Germany were wholly exempt from tonnage taxes in American ports, this exemption being equivalent in effect to an average annual subsidy of over $50,000 (210,000 marks) by the United States to the two principal German steamship lines. The so-called reciprocal exemption feature of our tonnage-tax law is considered on a later page.

The French law imposing taxes on tonnage, which went into effect December 29, 1897, may be found in Appendix I. French taxes on the entry and clearance of vessels are of two classes: First, the "droits du quai" or wharf charges, levied by the central Government under the act referred to, and corresponding generally to our tonnage taxes; and second, "taxes locales," which are collected at the customhouses and turned over to the chambers of commerce, or other local institutions, to be expended by them on deepening channels and other harbor improvements. These taxes, of course, vary at different ports and at different times. Thus at Havre the "droits du quai," or tonnage dues, under the general law, are 1 franc (19.3 cents per ton), and the "taxes locales" 40 centimes (73 cents) additional, while at Marseilles the tax is only 1 franc under the general law. The relationship is doubtless accidental, but it is worth noting that the taxes levied on vessels entering French ports, more than half of which are foreign, produce a sum sufficient to pay the general construction and navigation bounties of France (not including mail contracts). Indirectly French vessels are thus repaid their general and local tonnage taxes, and a considerable surplus remains for bounties. The following table, showing the taxes levied on all shipping and bounties paid to French shipping, illustrates the statement:

The Italian law of July 23, 1896, imposing anchorage taxes, may be found in Appendix I. Its principal section imposes an anchorage tax of 1.40 lire per net ton, equivalent to 27 cents, on a steamship entering an Italian port from beyond the Straits of Gibraltar. This tax is imposed at each entry, but may be commuted for a year on payment of three times the tax, or 81 cents. During 1896 the tonnage of steam vessels entering Italian ports in foreign trade was 1,539,806 tons Italian and 5,347,469 tons foreign. For the same year the receipts from anchorage taxes were 6,138,987 lire. For the first six months of the new act the bounties to Italian shipping (not including mail contracts amounting to about 9,000,000 lire) were 2,123,698 lire, indicating an annual expenditure of about 4,500,000 lire. The same coincidence is apparent in the Italian as in the French statistics, receipts from anchorage taxes, chiefly from foreign vessels, producing a sum more than sufficient to pay the general navigation and construction bounties paid by the Government to Italian shipping. It is also worth noting that the anchorage tax was increased from 1 lira to 1.4 lire by the act of July 23, 1896, the principal provisions of which increased the bounties to Italian shipping.

The Norwegian law has not been translated; but a recognized authority on port charges (Urquhart's Dues and Charges on Shipping in Foreign Ports, London, 1897, p. 336) states that the tonnage and light dues in Norway are 80 öre inward and 50 öre outward per ton on vessels with cargo, or 130 öre on entry and clearance combined, equivalent to 35 cents per net ton. This charge, however, is imposed only on that portion of the vessel's net tonnage which is actually filled with cargo, and is thus a variable charge at each entry.

The vessels of the five nations-Great Britain, Germany, France, Italy, and Norway-whose laws have been considered, constitute over 90 per cent of the foreign tonnage entering American ports in foreign trade.

From the statements made above and an examination of the laws and figures in Appendix H, it is safe to make the following general deductions:

(1) The rates of tonnage taxes-light dues or charges equivalent to our tonnage taxes-are without exception higher in the ports of the five principal foreign maritime nations than they are in ports of the United States.