PENSACOLA CHAMBER OF COMMERCE.

November 28, 1905.

Whereas upon the recommendation of President Roosevelt, a Commission was appointed by the last Congress which thoroughly investigated the condition of the American shipping, said Commission presenting a report, together with a bill to carry into effect its recommendations; and

Whereas the Commission found that but 9 per cent of our ocean carrying is done by American vessels, 91 per cent being carried by the subsidized and bountied shipping of other countries; that annually $200,000,000 are being paid to foreign ships, and this condition the Commission's bill would so remedy as to give to American ships a much larger and fairer share of our deep-sea carrying; and

Whereas the Commission's bill conforms in its provisions to the practices of other nations in dealing with their merchant shipping and is so designed as to not only give our shipowners the greatest share of our foreign carrying, but to create a demand for American materials and American labor in shipbuilding, as well as to afford employment for American ship officers and seamen, the ships and men being essential to the national defense for auxiliary naval purposes in the time of trouble: Therefore, be it

Resolved, That the Chamber of Commerce of Pensacola, Fla., recognizing the pressing importance of an American mercantile marine, warmly commends the work of the Congressional Merchant Marine Commission and expresses the earnest hope that its bill will receive the support of Florida's Senators and Representatives in Congress, to the end that we will have an effective and enduring American mercantile marine commensurate with out position as a great world power; and be it further

Resolved, That nothing in the foregoing resolutions shall effect State control of pilotage matters in the several States of the Union.

Resolved, That a copy of these resolutions be forwarded to the President of the Senate and the Speaker of the House of Representatives, and to the members of the Florida delegation in Congress.

RESOLUTIONS ASKING CONGRESS TO RESTORE THE MERCANTILE MARINE.

TRANSMISSISSIPPI COMMERCIAL CONGRESS.

Representing all the States and Territories west of the Mississippi River, including Hawaii and the Philippines, in anual meeting at Portland, Oreg.. August 19, 1905.

We unqualifiedly favor the progresive national policy on the part of the United States of fostering and building up an American merchant marine by every available means, and we respectfully urge upon the consideration of Congress the national importance of this question in the development of our foreign trade.

NATIONAL ASSOCIATION OF WHOLESALE DRUGGISTS.
October 5, 1905.

Whereas over 95 per cent of our exports, imports, passengers, and freight are carried under every flag except the Stars and Stripes, the National Association of Wholesale Druggists and its allied interests in convention assembled in one of the largest world seaports:

Resolved, That for our commerce in times of peace and our Army and Navy in times of war we ask Congress to restore to us an American merchant marine by passing an effective shipping bill.

APPENDIX C.

WHY A MAJORITY OF THE MERCHANT MARINE COMMISSION DID NOT RECOMMEND

DISCRIMINATING DUTIES.

[Presented by Mr. GALLINGER to the Senate February 21, 1905, and ordered to be printed.]

When the Merchant Marine Commission of five Senators and five Representatives was appointed by the President of the Senate and the Speaker of the House on April 28, 1904, it is probable that a majority of those members of the Commission who had positive views as to the best method of reviving the merchant marine in foreign trade favored a return to the historic policy of discriminating duties. It was with a distinct preference for this method and a hope that the inquiry would justify its adoption that the Commission entered upon the exhaustive series of hearings which covered every section of the country and were not concluded at Washington until the middle of December, 1904.

These hearings in the ports of the North and South Atlantic, the Great Lakes, the Pacific, and the Gulf of Mexico disclosed a very strong sentiment for the discriminating-duty plan, and also a considerable sentiment for some carefully guarded and equitable form of subsidy or subvention. Between these two plans the testimony of what may perhaps be called the "interested parties "—that is, the practical shipowners and shipbuilders with close personal knowledge of ocean trade-seemed to be rather evenly divided. Several shipowners and shipbuilders stated that they had formerly believed in subsidy or subvention, but had changed their minds and now preferred discriminating duties.

It can be said emphatically that it was not in anyway the evidence of these "interested parties" which caused the Commission to reach its final conclusions, for, as has been said, the testimony of shipowners and shipbuilders on the one side is evenly balanced on the other. This division of what may be regarded as the expert evidence left the Commission free to choose the policy which commended itself to its own judgment.

When the Commission assembled in Washington to consider the testimony, frame its recommendations, and prepare its report to Congress the policy of discriminating duties was the first thing that was taken up after a few points of general agreement, like the Panama Canal trade, the Cuban reciprocity trade, and the transport service, had been disposed of. The Commission discussed, first, the 30 commercial treaties with foreign governments which forbid discrimination in customs duties or tonnage duties. Notice of the abrogation of these treaties would have to be given a year in advance of the application of a discriminating-duty policy and, if possible, new treaties which did not prohibit such discrimination would have to be negotiated. As these treaties form the very groundwork of our modern commercial relations, it seemed to be the prevalent judgment of the Commission that to abrogate them and then to induce foreign governments to renew them on as good terms as before would be a formidable undertaking. However, this was not regarded as absolutely impossible.

Next, the Commission passed on to consider the element of retaliation by these foreign governments if we were to discriminate in favor of our shipping. It seemed to be the general opinion that such retaliation would be directed not against American shipping alone, but against American export trade in general, wherever it could be most seriously affected. In this connection the chairman of the Commission presented an important remonstrance against discriminating duties, which had been received from commercial associations of the Central West. This remonstrance was so ably and cogently expressed and came from such an influential section of the country that it produced

immediately a deep impression upon the Commission and had an important part in shaping the final judgment of the majority.

It was, moreover, pointed out by some of the members of the Commission that when a century ago the discriminating-duty policy was so effective and successful the United States imported much more than it exported, but that now that the country exports much more than it imports we have become exceedingly vulnerable to foreign retaliation directed at our export commerce. Next in order the Commission considered the relation of a discriminatingduty policy to the tariff in view of the fact that 43 per cent in value (47 per cent in the fiscal year 1904) and 60 or 70 per cent in bulk of our imports were on the free list in the fiscal year 1903. In the old days of discriminating duties the free list was relatively unimportant; a duty-not a large one-was levied on almost everything. Now, however, such important food articles of tropical production as tea, coffee, cocoa, spices, and such important crude materials as rubber, jute, and many other fibers, and great quantities of drugs and chemicals that enter into domestic manufacturing are and long have been free of all customs duties in the ports of the United States. As the Commission looked more and more closely into this question it became more and more manifest that in order to give really broad and effective encouragement to our ocean shipping through discriminating duties the free list would have to be abolished.

For it was discovered on analysis that no less than 98 per cent of our imports from Brazil, 96 per cent of those from Chile, 81 per cent from Colombia, 80 per cent from Venezuela, 82 per cent from Ecuador, 77 per cent from Bolivia and Paraguay, or 82 per cent of our imports from all South America and 94 per cent of our imports from all Central America are nondutiable. Moreover, 64 per cent of our imports from Japan, 50 per cent of our imports from China, and 69 per cent of our imports from India are now nondutiable.

On the other hand, it is true that only 28 per cent of our imports from Europe and only 17 per cent of our imports from the West Indies (such imports being chiefly raw sugar and tobacco) are nondutiable. To the trade with Europe, conveyed largely in relatively fast, high-cost vessels, and to the trade with the West Indies discriminating duties could, undoubtedly, be applied with benefit to American shipping, even though the free list were not reduced. But everywhere in the country the testimony before the Commission has laid especial emphasis upon the importance of establishing American shipping lines to South America and Asia, where the present transportation facilities for American goods are most inadequate and where American ships and the American mercantile houses that would naturally accompany them are most urgently required for the extension of our foreign markets. A bill to encourage American shipping which gave such encouragement chiefly to ships running to Europe and the West Indies and not to ships running to South America and Asia would, plainly, never meet with the approval of the American people.

But when the issue came up in concrete form not one member of the Commission was willing to abolish the free list, or even to reduce it temporarily in order to make discriminating duties effective for the restoration of American shipping. A relatively small duty on these articles now free, if imported in foreign ships, would undoubtedly suffice to give American ships the preference. But all the American ships now in existence that are registered for and engaged in foreign trade are able to carry only 10 per cent of our total imports and exports. It would require several years of unremitting activity on the part of all the shipyards of the United States to build a registered fleet of capacity equal to that which we now possess, so that the American portion of our carrying trade would be doubled to 20 per cent. For several years, therefore, the imposition of even a low duty on free goods if imported in foreign vessels would mean the actual collection of such a duty on these goods, or most of them, there not being enough American vessels in existence to bring them in free. These free articles, as a rule, are articles the like of which is not produced in the United States that is, they are, as a rule, noncompetitive products peculiar to the Tropics. The imposition of a duty, even a small duty, on them would therefore almost inevitably lead to an increase in price, which would be likely to be resented by American consumers.

Yet, unless this duty is put on articles now free-in other words, unless the free list is abolished-discriminating duties can not be made effective for the upbuilding of American shipping of the useful, general-cargo type in the very trades to South America and the Orient-where all thoughtful observers agres that American ships are most necessary and most valuable. There are manifest

political as well as commercial reasons why there should be many American vessels constantly plying between our ports and South America and the Orient. Yet, unless the discriminating principle is applied to the free list, American vessels would find in just these important trades the least and not the greatest measure of encouragement.

Moreover, the particular form of discriminating duties most favored has been discrimination in the so-called indirect trade-that is, discrimination in duties against foreign vessels bringing merchandise from countries other than their own. This would affect not a British vessel bringing British goods or a German vessel bringing German goods, but a British vessel bringing Brazilian goods or a German vessel with a cargo from China or India. It has been contended with great force that the operation of such a policy, while provoking the minimum of retaliation, would be to gain for American ships control of the trade with nonshipowning countries, like those of Central and South America and many of the countries of the Orient. But inasmuch as most of the imports from these very nonshipowning countries are free of duty, this hope would inevitably prove futile unless the free list were abolished.

Here is the most powerful reason why the discriminating-duty policy has not been recommended to Congress by the Merchant Marine Commission, a probable majority of whose members preferred this policy when they were appointed and preferred it until they had given eight months of earnest and impartial study to the question and become convinced that to make discriminating duties honestly effective for the encouragement of American shipping where American shipping is most needed the free list would have to be eliminated.

Those three members of the Commission who sign the minority report and recommend discriminating duties as a substitute for sections two, three, and four of the Commission bill are no more in favor of abolishing the free list than are the majority. They say, frankly, in their minority report:

"But we are not willing, nor do we think it is necessary, to commit ourselves to the proposition that anything now upon the free list' should be made 'dutiable.' We prefer to take the chances of aiding our merchant marine by discriminating duties upon the 60 per cent of imports now on the 'dutiable' list." This dutiable list in the fiscal year 1903 included not 60 per cent in value but 57 per cent of the entire imports. In the fiscal year 1904 the free imports were 47 per cent of the total imports, so that instead of 60 per cent 53 per cent of the total imports are dutiable and available for the encouragement of American shipping.

But this is 53 per cent in value. Now, it happens that most of the 47 per cent in value of the articles on the free list are from their nature very bulky, being chiefly foods and crude materials. It is estimated that the 47 per cent in value really represents 60 to 70 per cent in sheer bulk of our imports. A freight ship must, if possible, fill her holds with merchandise to insure the most economical rate of carrying; that is, she needs bulk as well as value of cargo to utilize her space to the best advantage and make her most seaworthy.

It is an important fact, therefore, as bearing on this problem of the mercantile marine, that only from 30 to 35 per cent of the total bulk of our imports are available to give encouragement to American ships, in case the policy is applied only to dutiable goods, and not to the enormous quantity of merchandise now on the free list.

This means, in effect, that the discriminating-duty policy, as proposed by the minority report, would encourage only about 1 ton out of every 3 tons of American shipping engaged in foreign trade, or only one ship out of every three ships, on the basis of actual bulk of cargo carried. On the other hand, the plan of the majority of the Commission would apply equitably to every ship that employed its quota of naval volunteers and complied with the other Government requirements.

Discriminating duties in the indirect trade, with the treaties abrogated, as can be done with notice of a year, would undoubtedly benefit American steamships in the trade with Europe, and American steamships and sailing vessels in the trade with the West Indies, especially with Cuba. But it is unmistakable and undeniable that discriminating duties limited to artcles now dutiable would not encourage American shipping appreciably in the trade with Brazil, whence 98 per cent of our imports are free; or in the trade with Chile, whence 96 per cent of our imports are free; or in the trade with Central America, whence 94 per cent of our imports are free. And while the effect of discriminating duties on dutiable goods only would be greater, it would still not be adequate in the trade with Japan, whence 64 per cent of our imports are free; or in the trade

with China, whence 50 per cent of our imports are free; or in the trade with India, whence 69 per cent of our imports are free.

The plan proposed by the majority of the Commission would, however, not confine its benefits chiefly to steamship lines to Europe or to Cuba. It would give certain, and what is believed to be adequate, encouragement to every American cargo carrier-steam, "tramp," or sail vessels-that engages in the important trade to South America and the Orient. The minority report apparently does not dissent from those sections of the bill that offer mail subventions to relatively fast passenger and cargo lines to South America, Asia, and the Philippines. But the minority report does appear to leave without, or almost without, encouragement in these trades the humble but useful and, indeed, indispensable cargo carriers-the steam "tramps" and the sailing vessels.

In other words, the minority report neglects almost altogether in the BrazilCentral America trade and in more than one-half of our oriental trade the rough-and-ready freighters which, though slower, less expensive, and less imposing than the regular mail liners, are still an invaluable adjunct of commerce and an essential part of any great and prosperous mercantile marine. These cargo carriers can not be adequately encouraged in certain important trades by any discriminating-duty plan unless the free list is eliminated. Congress is unwilling to undertake this, the only effective mode of encouraging cargo carriers pure and simple in the South, Central American, and oriental trades is by some such carefully guarded method as that which the majority of the Commission has adopted.

If

This is a form of naval subvention, payable to both ships and men in foreign trade, and modeled closely after an old American policy initiated on information furnished by Thomas Jefferson, as Secretary of State, in 1791, and maintained substantially the same until 1866 through all the changes of party control and the shifting of national administrations. This is not a mere commercial bounty or subsidy, but a provision for the national defense through a sea militia after the fashion of Jefferson's deep-sea fishermen, and also a provision for the encouragement of shipping, without which an adequate sea militia is impossible.