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REPORT

OF THE

COMMISSIONER OF NAVIGATION

REPORT

OF THE

COMMISSIONER OF NAVIGATION.

DEPARTMENT OF COMMERCE AND LABOR,

BUREAU OF NAVIGATION, Washington, November 18, 1911.

SIR: I have the honor to submit herewith my annual report. The statistical information required by law may be found in the appendixes and statistical tables.1

It is the province and duty of the Department of Commerce and Labor, under the statute creating it, to foster, promote, and develop the foreign and domestic commerce, the shipping and fishery industries, and the transportation facilities of the United States. Congress has directed the Commissioner of Navigation to investigate the operation of the laws relative to navigation and to report annually to the Secretary of Commerce and Labor such particulars as may, in his judgment, admit of improvement or may require amendment. Under this mandate these reports present annually statements of facts with suggestions concerning legislation of more or less scope and deemed to be more or less useful. Some such amendments are considered in the later pages of this report.

PANAMA CANAL TOLLS.

At the coming session of Congress doubtless the policy of the United States with reference to Panama Canal tolls will be settled. The date when the canal will be opened to trade is drawing so near and the time required to prepare for the full use of the canal is growing so short that action can not well be delayed without detriment to all concerned-to the people of the United States who are investing nearly $400,000,000 in the enterprise, as well as to those who are to furnish the ships and the cargoes to pass through the canal. The interest charge alone on the capital invested in the canal will be about $30,000 a day-to state one fixed and certain item in the costand to provide for the use of the canal to the fullest practicable extent from the day it will be open to trade is the duty of all those charged with the obligations of trustees.

The policy with reference to canal tolls which Congress may adopt at the coming session is more important to American navigation than any change in the navigation laws which has been seriously considered in a generation. Of late years subsidies to shipping, free ships for foreign trade, and even discriminating duties have had more or less consideration in the Senate and the House of Representatives. All of these propositions look to the extension of American shipping and

1 Appendixes and statistical tables not printed in this volume. See note on p. 699.

the growth of American foreign trade. The decision which shall be reached after discussion of the Panama Canal toll problem may penetrate to the heart of American shipbuilding. A conclusion upon that question which shall be consistent with our own traditions and precedents and with the policy which we may be sure any other maritime nation under similar conditions would adopt will mean the beginning of a period of satisfactory American maritime growth. On the other hand, a deliberate conclusion to tax directly American shipping to pay for the maintenance of that canal when no tolls are imposed on vessels, American or foreign, for the use of our other improved waterways will be well-nigh inexplicable save as the definite surrender of the ocean to others by the United States except as we may use its waters from time to time for the maneuvers of our war fleets.

Almost within a generation American shipping has been withdrawn with gradually increasing rapidity from foreign ports until at the present time we carry but an insignificant portion of our exports and imports. If need be, we could convoy every American passenger steamship crossing either ocean on every voyage with two battleships, an Army transport, and a small flotilla of cruisers, destroyers, and torpedo boats. Whether the fact be attributed to natural causes, to our own or foreign legislation, or to the lack of legislation, American navigation is confined to our own coasts, including Alaska, Hawaii, and Porto Rico, and to the Gulf of Mexico and the Caribbean Sea, and even in these near-by foreign waters relatively our shipping slowly recedes. Upon the opening of the Panama Canal there will be demand for a number of new and large ocean steamships of moderate speed to carry on commerce between the Atlantic and Pacific coasts of the United States. The number to be required is conjectural at present, and each individual's conjecture will vary with his estimate of the part which the canal will take in our general scheme of domestic transportation.

Our traditional method of raising revenue handicaps our shipping, as compared with foreign shipping. Conditions are necessarily such that the incidence of a high protective tariff rests more on American shipbuilding and American navigation than on other industries. The effect of the tariff in this respect has been exaggerated at times; but the statement is true to the extent that no American tariff has ever been framed from which American navigation, from its very nature, could derive any positive benefit, while every tariff, to a greater or less extent, indirectly has put some burdens on the industry.

It is not questioned that the traffic of the Panama Canal should supply revenue for its maintenance and possibly in time for the partial amortization of the expense incurred in construction. Toward this revenue we must ourselves contribute in some way, for even if our treaty obligations will permit us to impose upon foreign nations the entire burden of paying for the canal, not for an instant would there be the disposition to adopt so ungracious a policy or, in fact, could it be commercially feasible.

What form shall American contributions to the maintenance of the canal assume? It seems quite safe to predict that Congress will not consider a proposition to levy tolls on the lumber of the States of Washington and Georgia and the fruits of California, the cotton of

Texas and South Carolina and the naval stores of North Carolina, the iron of Alabama, the coal of Pennsylvania and West Virginia, and the manufactures of New York, New Jersey, and New England which will doubtless pass through the canal en route for our ports on either ocean, respectively. Yet in fact or in theory-according to the views one holds upon the tariff, rather than according to his party's nameall of these products are benefited by the tariff, while beyond dispute a tariff is to some degree a burden on American shipping. If American shipping be asked to help pay the cost of maintaining the canal, the one industry already handicapped by revenue legislation and by the industrial conditions which such legislation is generally believed to create in this country will be asked alone, in form at least, to pay. In fact, of course, the American ship will not and can not pay the tolls. Those tolls, like the wages of the crew and the cost of the coal or oil used for steaming, will go into the cost of the ship's operation, which must be met by the freights charged.

The statute enacted may declare that a toll shall be paid on the cubical contents of the American steamer en route from New Orleans to San Francisco, but the toll will filter down and be paid, whether he knows it or not, by the cotton planter, the coal and iron miner, the fruit grower and farmer, and the manufacturer. The burden will not be lessened by its statutory disguise.

The cost of operating an American steamer from coast to coast will continue to be greater than the cost of operating a foreign steamer over the same route. Our scale of wages is higher, and our coal passers are no more efficient than others. Thus far American shipowners and shipbuilders have made no general preparations for canal navigation. Until the rates of canal tolls are fixed within approximate limits, the shipping of the world is in the dark as to the extent to which the canal will affect existing water transportation routes. American maritime interests are even more uncertain. If they are named as the sole American direct contributor to the cost of the canal, the conclusion will be inevitable that Congress has decided definitely for some years to come that shipping must shift for itself, regardless of consideration which may be shown to other industries, for a tariff can not be framed without intentional or unintentional favors.

COASTWISE RESERVATION.

The present statutory reservation of the coasting trade between Atlantic and Pacific ports to American vessels will not alone suffice to create the shipping needed for the coasting trade through the canal, for that reservation could not be regarded as longer secure in the face of a decision by Congress to select American navigation alone to bear the direct burden of supporting a canal, military in its first great purpose, and for the general welfare in its second. Only the most venturesome capital would trust itself to shipbuilding and shipowning for canal purposes. This hesitation is already noticeable, compared with foreign preparations for the use of the canal. If it shall continue, the canal will open to business confronted with insufficient American shipping to carry any large volume of miscellaneous trade between our Atlantic and Pacific coasts, except between New York and San Francisco and Hawaii. Unless American ships, from the time the canal is open to trade, are forthcoming in adequate

26321°c & L 1911-40

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