Manual of Ship Subsidies Part 2

[Footnote AC: The _Princeton_, sloop-of-war fitted with the Ericsson screw, launched the same year.]

[Footnote AD: Lindsay, vol. IV, p. 198, _note_.]

[Footnote AE: John R. Spears, "The Story of the American Merchant Marine," pp. 254-255.]

[Footnote AF: William Wheelwright, of Newburyport, Ma.s.sachusetts, sometime American consul at Guayaquil.]

[Footnote AG: Winthrop L. Marvin, "The American Merchant Marine," p.

231; also Preble; and Lindsay, vol. IV, pp. 316-330.]

[Footnote AH: Marvin, p. 231.]

[Footnote AI: See p. 76, _post_.]

[Footnote AJ: Meeker.]

[Footnote AK: Lindsay, vol. IV, p. 198, _note_.]

[Footnote AL: Wells, p. 148.]

[Footnote AM: Bates, p. 87; also p. 130.]

[Footnote AN: Meeker.]

[Footnote AO: Meeker.]

[Footnote AP: See p. 77, _post_.]

[Footnote AQ: Meeker.]

[Footnote AR: Meeker.]

[Footnote AS: Parl. papers, 1867-68, 1868-69.]

[Footnote AT: See p. 20, _ante_.]

[Footnote AU: The American Steamship Co. of Phila., with 4 iron steamers built on the Delaware--the _Pennsylvania_, _Ohio_, _Indiana_, and _Illinois_.]

[Footnote AV: Meeker.]

[Footnote AW: Ultimately embracing the American, Red Star, White Star, Atlantic Transport, and Dominion Lines.]

[Footnote AX: For details of this contract see report of (U.S.) commissioner of navigation for 1903, pp. 48-52, and 224-268. The two steamships called for were the _Lusitania_, 31,550 gross tons, launched June 7, 1906; and the _Mauretania_, 31,937 gross tons, launched Sept.

19, 1906, both quadruple screw turbines, about 70,000 horsepower; the largest, fastest, and completest steamers afloat till the production in 1911 of the _Olympic_, 45,324 gross tons, of the International Mercantile Marine Co.'s White Star Line.]

[Footnote AY: U.S. consul, Charlottetown, P.E.I. in daily Con. Repts.

(Jan. 20) 1911, no. 16.]

[Footnote AZ: Consul General Small, Halifax, in Con. Repts. (Dec.) 1905, no. 303.]

[Footnote BA: The American Year Book, 1911.]

[Footnote BB: American Year Book, 1911.]

[Footnote BC: Lloyd's Register, 1910-11.]

CHAPTER III

FRANCE

France has been rightly termed the bounty-giving nation _par excellence_.[BD] She first adopted a policy of State protection of native shipping in the middle of the sixteenth century with the enactment (1560) of an exclusive Navigation Act, forbidding her subjects to freight foreign vessels in any port of the realm, and prohibiting foreign ships from carrying any kind of merchandise from French ports.[BE] This was followed up in the next century with the inst.i.tution of the direct bounty system to foster French-built ships.[BD]

In the reign of Louis XIV, Colbert, Louis's celebrated finance minister, perfected (about 1661) an elaborate system of navigation laws, evidently copied from the rigorous English code. This was directed primarily against the commerce of Holland and England, with the ultimate object of upbuilding the home merchant marine and the laying of a broad basis for a national navy.[BF] These acts included decrees giving French ships the monopoly of trade to and from the colonies of France; imposing tonnage duties on foreign shipping; awarding direct premiums on French-built ships. England retaliated immediately. Holland remonstrated first, then made reprisals. For a time under Colbert's energetic administration of the finances and the marine, "prosperity grew apace. At the end of twelve years everything was flourishing."[BG] Then came the six years'

war (1672-1678) with France and England combined against Holland, and at its end the French merchant marine lay sorely crippled.[BG]

Still the fundamental principles of the stringent navigation laws long remained. A decree in 1681, and subsequent ordinances, defined what should const.i.tute a French vessel; and corporal punishment was ordained against a captain for a second offence in navigating a vessel of alien ownership under the French flag.[BH] By later decrees, no alien was permitted to command a French vessel. An ordinance of 1727 further restricted alien command by shutting out even French subjects who had married aliens.[BH] It was required that every French vessel should be manned by a crew two-thirds of whom were French subjects.[BH] The system of regulations restricting the trade of the French colonies to French ships, and to the home market held till well into the nineteenth century.

During the Revolution a decree (May, 1791) prohibited acquisition of all vessels of foreign build. In 1793 (Sept.) it was ordained that no foreign commodities, productions, or merchandise should be imported into France, or into any of her colonies or possessions, except directly in French ships, or in ships belonging to the inhabitants of the countries in which the articles imported were produced, or from the ordinary ports of sale or exportation. All officers and three-fourths of the crew were required to be natives of the country of which the foreign vessel bore the flag, under penalty of confiscation of vessel and cargo, and a fine enforcible under pain of imprisonment. A tonnage tax was levied on foreign ships alone.

Despite this elaborate code designed for its benefit the domestic mercantile marine almost entirely disappeared during the wars of the Republic and the Empire; and after the Restoration its revival was so slow that for some time foreign ships were absolutely necessary for the supply of the French market.[BH] Still the underlying principles of the code were retained by the Restoration Government, modified in a few particulars. The modifications included the removal of the prohibition on indirect commerce--- the carrying trade between France and other countries:--yet advantage even in this commerce was held for the French flag through "flag surtaxes," added to the ordinary customs duties levied upon the merchandise imported into France in foreign bottoms, and by the tonnage charges.[BI] A law of March, 1822, renewed the prohibition against the importation of foreign-built ships.[BI]

Early under Napoleon III movements toward the adoption of an economic policy similar to that then established in England were begun, and shortly a succession of radical changes in the maritime code were inst.i.tuted.[BJ] In 1860 a commercial treaty with England was entered into. In 1861 freedom of access of foreign shipping to the French West Indies was permitted, subject to the payment of special duties varying according to the ports whence the goods were brought, or to which they were imported. Then at length, in 1866, numerous restrictions of the old code were swept away.[BJ] This law of 1866 (May) admitted duty-free all materials, raw or manufactured, including boilers and parts of engines necessary for the construction, rigging, and outfitting of iron or wooden ships; abolished a premium, or bounty, granted by a law of 1841 (May) on all steam engines manufactured in France intended for international navigation; admitted to registration foreign-built and fully equipped ships upon the payment of two francs a ton; abolished all tonnage duties on foreign ships, except such as had been or might be levied for the improvement of certain commercial harbors; abolished the flag surtaxes; opened colonial navigation to foreign ships. The monopoly of the coasting trade alone was retained for French ships.[BK]

Complaints against these new regulations were promptly raised by shipbuilders and ship-outfitters,[BK] and in 1870 a Parliamentary inquiry into their grievances was made. It appeared that shipbuilders, though enabled to import free such materials as they needed, were handicapped by numerous and extensive formalities; while the outfitters were embarra.s.sed by special burdens which the law laid upon them, and which their British compet.i.tors did not have to bear.[BL] In 1872 laws were pa.s.sed which reversed much of the act of 1866. A tax of from thirty to fifty francs a ton measurement was re-imposed on all foreign ships purchased for registration in France, together with a duty on marine engines; again a tonnage duty, of from fifty centimes to one franc, was imposed on ships of any flag coming from a foreign country or from the French colonies; and the provisions freeing materials for ship construction, and admitting foreign-built ships to French registration upon payment of the two-franc tax per ton, were repealed.[BM] In 1873 an extra-parliamentary commission took up the general question of the state of the commercial marine,[BN] and the outcome of this inquiry was the establishment of the system of direct bounties. This system was applied for the first time in the Merchant Marine Act pa.s.sed in January, 1881.

The act of 1881 granted both construction and navigation premiums, and was limited to ten years. The construction bounties, as was declared, were given "as compensation for the increased cost which the customs tariff imposed on shipbuilders" in consequence of the repeal of the law granting free import of materials by construction; the navigation bounties, "for the purpose of compensating the mercantile navy for the service it renders the country in the recruitment of the military navy."

The construction bounties, on gross tonnage, were as follows: for wooden ships of less than 200 tons, ten francs a ton; of more than 200 tons, twenty francs; for composite ships, that is, ships with iron or steel beams and wooden sides, forty francs a ton; for iron or steel ships, sixty francs; for engines placed on steamers, and for boilers and other auxiliary apparatus, twelve francs per 100 kilograms; for renewing boilers, eight francs per 100 kilograms of new material used; for any modification of a ship increasing its tonnage, the above rates on the net increase of tonnage.[BO] The navigation bounties were confined to ships engaged in the foreign trade, and were to be reduced annually during the ten years' term of the law.[BP] They were thus fixed: for French-built ships, one franc and fifty centimes a registered ton for every thousand sea miles sailed the first year, the rate to diminish each succeeding year of the term seven francs and fifty centimes on wooden ships, and five centimes on iron and steel ships; for foreign-built ships owned by Frenchmen admitted to registry, one-half the above rates; for French-built steamers constructed according to plans of the Navy Department, an increase of fifteen per cent above the ordinary rate.[BQ]

The first effect of this law was to stimulate the organization of a number of new steamship companies, and to occasion activity in various ship-yards, foreign (English) as well as home, in building steamships for their service.[BR] Most of the domestic-built iron and steam tonnage produced during the law's ten years' term was of steamers.[BS] The tonnage of steamships increased from 278,000 tons in 1880 to 500,000 tons in 1890. Of this increase more than three-fifths were represented by vessels bought in other countries.[BT] The results of the navigation bounties are shown in official statistics covering the years 1882-1890.

During this period iron or steel French-built ships earning these bounties increased from 159,714 tons to 190,831 tons, gross tonnage; while wooden or composite tonnage decreased from 150,233 tons to 57,068 gross. Foreign-built iron or steel tonnage earning the bounties increased from 43,787 tons to 91,170 tons, gross; and wooden or composite tonnage increased from 1,220 tons to 9,799 tons, gross.[BS] In 1891 the law which had then reached its limit of ten years was extended for two years. Doubting its renewal shipowners had sometime before ceased to increase their fleets.[BS]

These results were variously p.r.o.nounced unsatisfactory, and a revised or a new law was called for, with more and higher bounties. Owners of wooden sailing-ships were especially clamorous for larger benefits. They argued that sailing-ships being much slower than steamers should therefore receive higher mileage subsidies in order to compete on equal terms with steamships.[BU]

A new law was enacted in 1893 (January 30). This act cut off bounties to foreign-built ships, and granted increased construction premiums. The construction subsidies were again declared to be given as "compensation for the charges imposed on shipbuilders by the customs tariff"; the navigation bounties, "by way of compensation for the burden imposed on the merchant marine as an instrument for recruiting the military marine." The construction subsidies were not to be definitely earned till the ships were registered as French; and by ships built in France for foreign mercantile fleets, not till they had been delivered. The navigation bounties were accorded to French-built ships, of more than 80 tons for sailing-ships, and 100 tons gross for steamers, engaged in making long voyages and in international coasting; and were limited to ten years. They were based on gross tonnage per thousand sailed miles.

To merchant steamships built in accordance with plans approved by the Navy Department, the rate of fifteen per cent above the regular navigation bounty provided in the law of 1881, was increased to twenty-five per cent. All ships receiving the navigation bounty were subject to impressment in case of war.[BV]

The effect of this law appears to have been a division of the interests of shipowners and shipbuilders. The shipowners found the builders constantly increasing their prices until a point was reached where they were accused of absorbing both premiums for construction and navigation, by calculating the amount of bounty which proposed construction would demand, and adding that amount to their cost price.[BW] The increase of the bounty on sailing-ships was made in the expectation that it would check their falling off, which had been rapid since the development of steamship building; merchant sailing-ships were regarded as the best school for seamen, all of whom in French commerce, up to the age of forty-five, are subject at any time to draft into the national navy. It did this and more. There resulted the "strange phenomenon," as Professor Viallates puts it, "of a steady increase in the sailing-fleet, while the number of steam-ships remained stationary."[BX]

Thus, like its predecessor, unsatisfactory, the law of 1893 was succeeded by another act further enlarging the bounty system. This law was promulgated in 1902 (April 7). It provided three cla.s.ses of bounty: construction and navigation as before, and "commission compensation" or "shipping premiums." The construction bounty remained as in previous law. The navigation bounty, now introduced as awarded "as a general compensation for the charges imposed on the merchant navy, and for the excessive cost of vessels built in France," was increased.[BY] It was payable to all French-built sea-going ships, steam and sailing, of over 100 tons gross, and less than fifteen years old, and was limited to twelve years. To stimulate speed development, only ships showing a trial speed of at least twelve knots with half load were to receive the full navigation bounty; to those making less than twelve knots the bounty was diminished by five per cent; to those making less than eleven, by ten per cent. The shipping bounty was declared to be granted "as compensation for the charges imposed on the mercantile marine" by making merchant vessels practically schools for seamen. It was a "chartered allowance" made to foreign-built iron or steel steamers manned under the French flag for long voyages or for international coastwise trade, of more than 100 gross tons, belonging to French private persons or joint-stock or other companies, the latter having on their boards a majority of French citizens, and the chairman and managers being French.

This allowance was reckoned on the gross tonnage, and per day while the steamer was in actual commission (three hundred days the maximum number in any one year).[BX] The rate varied according to the tonnage. Up to 2000 tons gross, it was fixed at five centimes per ton; from 2000 to 3000 tons, at four centimes; 3000 to 4000, three centimes; above 4000, two centimes; over 7000, the same grant as 7000. The creation of this "chartered allowance," as Professor Viallates explains, was to prevent the navigation bounty from becoming to the same extent as under the previous law merely another form of bounty upon shipbuilding. It could so become, he points out, only to the extent of which it exceeded the owner's bounty.[BZ]

Not all of the shipping and navigation bounties were to go to shipowners. Five per cent was to be retained for sailors' insurance "with a view to reducing the deductions imposed on them for the purpose of that insurance"; and six per cent to be reserved for distribution for the benefit of marines, as follows: "two-thirds to the provident fund, with a view to diminishing the deductions on mariners' pay and to increasing the funds for a.s.sisting the victims of shipwreck and other accidents, or their families; one-third to the invalids' fund, with a view to granting subventions to the chambers of commerce or public inst.i.tutions for the creation and support of sailors' homes in French ports, intended to a.s.sist the nautical population, or of any other inst.i.tutions likely to be of use to them, especially schools for seamen." The requirement in the old law of 1793 as to the composition of the crews of French merchant ships was modified, reducing the proportion of sailors who must be Frenchmen.

French-built ships were privileged to chose between the shipping and the navigation bounties. To obtain the shipping bounty for the maximum of three hundred days steamers must make during the year a minimum of thirty-five thousand miles if engaged in the overseas trade, or twenty-five thousand if in "_cabotage international_."[CA] Shipowners agreeing to maintain on routes not served by the subsidized main steamers a regular line, performing a fixed minimum of journeys per year, with vessels of a certain age and tonnage, were permitted to claim, in lieu of the regular bounties, a fixed subsidy during the term of their agreement, equal to the average of the bounties to which the vessels in commission would be ent.i.tled for the whole of the journeys performed. The new tonnage to be admitted to the benefit of the law was limited to three hundred thousand gross tons of steamers and one hundred thousand gross tons of sailing-ships; of which new tonnage freight-built ships could form two-fifths. The appropriation for the payment of the bounties was also limited, to guard against a too heavy burden upon the national treasury. This was fixed at two hundred million francs: one hundred and fifty million for the shipping and navigation bounties and fifty million for the construction bounties.[CB]