CHAPTER XXX

CONDITION OF THE AMERICAN MERCHANT MARINE IN THE FOREIGN TRADE

Statistics of past and present ocean tonnage of the United States, 447. Diagram of documented merchant marine, 448. Proportion of foreign trade carried in American vessels, 449. Causes of decline of merchant marine in foreign trade, 450. Substitution of steamers for sailing vessels and of iron for wooden hulls, 450. Advantage of Great Britain in ship construction, 451. Restrictions on vessel registry, 451. Withdrawal of subsides in 1858, 451. Effect of the Civil War, 452. Policy of government after Civil War, 452. Neglect of American navy, 452. Government aid in foreign countries, 453. Higher operating costs, 454. Effect of economic causes, 458. Present condition and future prospects of American shipping, 459. Future prospects improving, 459. References, 460.

THE decline in the tonnage of shipping engaged under the American flag in the foreign trade of the United States and other countries prior to the war in Europe is so well known that it will be necessary, in this connection, to present only a brief review of the facts and figures regarding the past and present status of our deep-sea merchant marine. The tonnage of American vessels engaged in the foreign trade-our registered tonnage as contrasted with the "enrolled" shipping engaged in the domestic trade-reached its maximum in 1861, when a total of 2,496,894 tons gross register was reached. At the close of the Civil War the total was nearly 1,000,000 tons less than at the opening of that great struggle. Until 1880 the figures averaged about 1,500,000 tons; but in 1880 a decline began that continued with but occasional interruption until 1898, when the minimum of only 726,213 tons was reached. The Spanish-American War of that year, and the demands of our increased commerce, brought the figures above 800,

TONS

000 the next year, and the subsequent increase raised the total of 1905 to 943,750. The increase, however, proved to be but temporary; by 1910 the registered tonnage had again fallen to 782,517. Another advance then occurred, 1,066,288 tons being registered under the United States flag in the foreign trade on June 30, 1914. Just before the outbreak of the war

in Europe the registered merchant tonnage engaged in the foreign trade was but two-fifths as large as it had been fiftyfour years earlier.

While the registered tonnage was falling off, the enrolled shipping of the United States steadily increased. The documented gross tonnage of the merchant marine enrolled and licensed for the coastwise and Great Lakes trade has since 1831 permanently exceeded the registered tonnage engaged

in the foreign trade. In 1861 when the tonnage engaged in the foreign trade was at its highest point, the coastwise and Great Lakes marine exceeded it by 207,650 tons gross, and instead of declining during the Civil War it advanced from 2,704,544 tons gross in 1861 to 3,381,522 in 1865. Thereafter it fluctuated, but gradually rose to 4,286,516 tons gross in 1900 and to 6,668,966 in 1910. It reached its highest point in 1914 with a gross tonnage of 6,818,363. It then declined to 6,244,550 in 1916 because the profitable ocean freight charges occasioned by the war caused numerous coastwise vessels to be registered for the foreign trade.

The total documented merchant marine increased from 5,539,813 tons gross in 1861 to 7,928,688 in 1914, the United States ranking second only to Great Britain as a maritime country even before war was declared in Europe. Indeed, the entire merchant tonnage of the United States is larger than these figures indicate because there are many barges, harbor craft, and other unrigged vessels that are not regularly documented with the United States Commissioner of Navigation. The United States Census Office in 1906 reported an undocumented tonnage of over six and a half million tons gross and an aggregate merchant tonnage of 12,893,429. The registered merchant marine of the United States in the foreign trade, the enrolled and licensed tonnage, and the entire documented tonnage of the United States since 1800 are graphically shown in the accompanying diagram.

The decline in the tonnage engaged in the foreign trade after 1861 was rapid. Although, before the Civil War, American vessels conducted a large international carrying trade for foreign countries as well as for the United States, they came in time to carry but a small part of the country's foreign trade. In 1861, 65.2 per cent of the value of the foreign trade of the United States was still being carried in American vessels, but the proportion fell to 27.7 per cent in 1865; 35.6 per cent in 1870; and to 8.7 per cent in 1910, rising slightly to 9.7 per cent in 1914. The American vessels account for a larger proportion of the total vessel entrances

and clearances in the foreign trade of the United States because ships make frequent trips in the short-distance foreign trade, but the percentage for entrances and clearances also declined from 70 per cent in 1861 to 26 per cent in 1914. In that part of American commerce that is open to ships under foreign flags, American vessels have not been able to hold their own in competition with their foreign rivals; what progress American shipping made before the European War was in the carrying trade of which it has had an exclusive monopoly.

CAUSES OF DECLINE OF MERCHANT MARINE IN THE FOREIGN TRADE

The decline in the tonnage of the American marine engaged in international trade is easily explained, and is fully accounted for by the following eight causes:

1. The gradual but steady substitution of steamers for sailing vessels, and of iron for wooden hulls after 1850, transferred to the United Kingdom the superiority which the United States had possessed up to that time in the construction of ships. The iron industries of Great Britain in 1850 were 25 to 30 years in advance of those in the United States, and American manufacturers were unable to compete with the British either in the production of iron for hulls or of machinery for motive power. The construction of iron ships in the United States did not begin much before 1870, and then in but a small way. As was shown in the preceding chap

1"The early statistics of iron shipbuilding in the United States have never been fully compiled. The tables of the Bureau of Navigation in the Treasury Department begin in 1869, with an iron tonnage built of 4,584 tons out of a total tonnage built of 275,230 tons, or 1.6 per cent. We know that iron vessels were built before this date in this countryseveral, in fact, before the war-but they were isolated cases, and probably in no previous year was the proportion as great as at the time when the records begin. In 1870 this proportion was three per cent, as against eighty-two per cent, in England." (J. R. Soley, p. 603 of The United States, edited by N. S. Shaler.)

ter, the cost of constructing iron and steel vessels in the United States has normally been greater than in foreign countries. This was important in the shipping industry because the registry laws of the United States, until 1912 and 1914, with certain exceptions, restricted registry for the foreign tradeunder the American flag to American-built vessels. Great Britain was prepared to change from wood to iron, and from sail to steam, and the United States was not; the result was that Great Britain secured a long lead over the United States not only in building but also in operating ships.

The advantage to Great Britain occasioned by the shift from wood to iron and steel was promptly recognized in British marine insurance circles. While the marine insurance business in the United States declined, British underwriters discriminated against wooden vessels. They quoted favorable premiums on iron and steel vessels, of which but few were operated under the American flag until the eighties.

The lead of Great Britain in deep-sea shipping was maintained even after steel shipyards had been developed in the United States, in part because the higher construction costs burdened the American registered merchant marine with capital costs substantially above those of vessels operating under foreign flags. These costs made the initial investment greater, the interest charges higher, and the outlay for depreciation, insurance and taxes greater.

2. While the shift from wood to iron and steel and from sailing vessels to steamers was causing a revolution in the business of shipbuilding and navigation, two unfortunate causes tended to weaken the power of the American maritime interests to compete with those in Great Britain. One cause was the withdrawal in 1858 of the support which the Federal Government had given shipping under the laws of 1845 and subsequent years. The withdrawal of these subsidies came at a time when the merchant marine especially needed support in meeting the competition of foreign-built iron vessels. The three small and short-lived contracts entered into immediately after the close of the Civil War were