Manual of Ship Subsidies Part 9

The cost to the Government of this first steamship subsidy venture, covering the thirteen years between 1845 and 1858, was approximately fourteen and a half million dollars.[GT]

Meanwhile, within this period, the American wooden sailing-ships continued to be the glory of the seas, and the American clippers reached their highest development. The appearance of steamships on the North Atlantic and the Pacific had inspired the producers of the "wonderful American sailing-ships" to greater efforts for their perfection; and the clipper, surpa.s.sing all other types of sailers in size, sea-qualities, and speed, was the result of the intensified rivalry of canvas and steam.[GU] The American clipper-ship era fairly opened with the advent of the Collins Steamship Line.[GV] Between 1850 and 1855 clipper-ships were built for nearly every trade,[GW] and they were on every sea. Some of the first were employed in the transatlantic packet service. More became engaged particularly in the "booming" trade to California, in the long-voyage traffic to China and India.[GX] "When John Bull came floating into San Francisco, or Sydney, or Melbourne, he used to find Uncle Sam sitting carelessly, with his legs dangling over the wharf, smoking his pipe, with his cargo sold and his pockets full of money."[GY] The Crimean War, 1853-56, opened a new and prosperous market for American fast sailing-ships, as transports. To meet the demand American ship-yards produced in 1855 more tonnage than they had ever built before.[GZ] The sailing-ship interests strenuously opposed the subsidy system. They denounced it as cla.s.s legislation unjustly favoring the few, and urged its abolishment.[HA] How strong this influence was in bringing about the change in policy is a mooted question.

No further move for fostering the American merchant marine with State aid directly or indirectly, was made till 1864. Then the steamship-subsidizing policy was revived, first with a proposition for the establishment of an American mail-line to Brazil. A subsidy of two hundred and fifty thousand dollars per year was proposed, one hundred and fifty thousand to be paid by the United States and one hundred thousand by the Brazilian Government. Congress endorsed the scheme. The act embodying it (May 28)[HB] authorized the postmaster-general to contract for a monthly service between the two countries, touching at St. Thomas, W.I., by first-cla.s.s American sea-going steamships of not less than 2000 tons. The steamers were to be built under naval inspection, and to be subject to taking for war service. Bids were to be openly advertised for. The contract was to run for ten years. Thus was established the pioneer American line between Philadelphia and Rio de Janeiro, which continued from 1865 to 1876, and was then abandoned.

In the same session of Congress a bill was introduced, authorizing an annual subsidy of five hundred thousand dollars for an ocean mail-steamship service to j.a.pan and China via Hawaii. This also received favorable consideration, and was pa.s.sed February 17, 1865. The service was to be monthly, performed by American-built ships of not less than 3000 tons, also constructed under naval inspection. Tenders for the contract were to be advertised for, but bids only from United States citizens were to be entertained. The contract was to run for ten years.

Only one bidder appeared (as was evidently expected)--the Pacific Mail Steamship Company. The contract went to that company, and under it, in 1867, their prosperous Asiatic service began. At the outset they were released from the obligation of stopping at Hawaii, and Congress voted another subsidy--seventy five thousand dollars per annum--for a distinct Hawaiian service.[HC] The contract for this service, also advertised for, went to the California, Oregon, and Mexican Line.

Thus far the granting of postal subsidies for the establishment of steamship lines alone had engaged the advocates of State aid to American shipping. Now was agitated the inst.i.tution of a general subsidy system as a means of fostering the rehabilitation of the merchant marine of all cla.s.ses in ocean service, sailing-ships as well as steamers. The situation had become acute. Through the great loss of tonnage in the Civil War, and through the steadily advancing change from wood to iron in ship construction and from sail to steam propulsion, the American merchant marine had been brought distressingly low. From 1861, when the United States was standing second in rank among the nations in the extent of her ocean tonnage, to 1866, this tonnage had declined from 2,642,648 to 1,492,926 tons: a loss of more than forty-three per cent; while England, the first in rank and chief compet.i.tor, had in the same period gained 986,715 tons, or more than forty per cent. Moreover, of this increase in English tonnage, a large percentage had been in steamers, one ton of which cla.s.s was estimated to be equal in efficiency to three tons of sailing-ships; while, by subst.i.tuting largely iron for wood, England had gained a still further advantage in her much larger cla.s.s of iron vessels, doubly as durable as those of wood.[HD]

The matter was brought up in Congress by a resolution of the House, March 22, 1869, calling for the appointment of a select committee, "to inquire into and report at the next session of Congress the causes of the great reduction of American tonnage engaged in the foreign carrying trade, and the great depression of the navigation interests of the country; and also to report what measures are necessary to increase our ocean tonnage, revive our navigation interests, and regain for our country the position it once had among the nations as a great maritime power." Of this committee Representative John Lynch of Maine was made chairman.

The committee gave a series of hearings mainly in Atlantic seaboard cities, and submitted their report on February 17, 1870, accompanied by two bills recommended for pa.s.sage; the one, a bounty bill, the other, relative to tonnage duties. With these measures the history of years of effort to establish the principle of general ship-subsidies in the American economic system properly begins.

The Lynch bounty bill, ent.i.tled "An act to revive the navigation and commercial interests of the United States," made provision for the remission of duties upon the raw materials entering into the construction of sailing and steam-ships; for the taking in bond, free of duty, of all stores used in vessels in sailing to foreign ports; and for bounties, or subsidies, to American sailing and steam-ships engaged in foreign commerce, already built as well as to be built: the aid being extended to those already built because they had been sailed during the Civil War and since "at great disadvantage."[HE] The amount of duties to be remitted was to be equal to the amount per ton collected on the materials required for certain defined cla.s.ses of ships: on wooden vessels, eight dollars a ton; on iron, twelve dollars a ton; on composite vessels (vessels composed of iron frames and wooden planking), twelve dollars a ton; on iron steamers, fifteen dollars a ton. Where American materials were used in the construction of iron or composite vessels, allowance was to be made of an amount equivalent to the duties imposed on similar articles of foreign manufacture. The bounties were thus cla.s.sified: to owners of American registered ships engaging for more than six months in a year in the carrying trade between America and foreign ports, or between ports of foreign countries, a dollar and a half per ton upon a sailing-ship each year so engaged, and a dollar and a half upon a steamer running to and from the ports of the British North American provinces; four dollars upon a steamer running to and from any European port; and three dollars to and from all other foreign ports.[HF]

The intent of the second bill, "imposing tonnage duties and for other purposes," was the readjustment of the existing tax upon tonnage so that it should fall "more equitably upon the different cla.s.ses of vessels affected thereby."[HF] It removed all tonnage, harbor, pilotage, and other like taxes imposed upon shipping by State and munic.i.p.al authority (except wharf.a.ge, pierage, and dockage); and imposed a duty of thirty cents per ton on all ships, vessels, or steamers entered in the United States.

The committee's measures were ably advocated, but they finally went down in defeat.

In 1872 the Pacific Mail Steamship Company came forward with an offer to add another monthly mail-steamship service to j.a.pan and China, for an additional subsidy of a half million dollars a year. At the same session a project to establish a subsidized line to Australia was introduced; another, for a subsidized line from New Orleans to Cuba. These failed, while the scheme of the Pacific Mail won. A bill authorizing such contract was enacted June 1, that year, after prolonged and warm debates, and by close votes in House and Senate. Two years afterwards it was discovered that bribery had been employed in securing the pa.s.sage of that act; the charge being that a million dollars had been spent by a corrupt lobby in pushing the bill through.[HG] Upon these disclosures, and because the company had failed to fulfil its conditions, Congress, by act of March 3, 1875, abrogated the contract.[HH] In 1877 the first contract with the Pacific Mail for the j.a.pan and China service, expired.

During its ten years' term the company had received from the Government a total of $4,583,333.33.[HI]

With the Pacific Mail exposure the word subsidy became unsavory to the public taste, and for some years after no subsidy measure, however carefully guarded or respectably backed, could find favor in Congress. A second project for subsidizing a new line to Brazil, proposed by John Roach, the noted American shipbuilder, in 1879, was among those ventured, only to fail.

A decade later, in 1889, when conditions seemed to be growing more propitious, the subject was revived with vigor by the introduction of a navigation subsidy bill proposed by the American Shipping League.[HJ]

From this evolved in 1890 a tonnage bounty bill reported in the House by Representative James M. Farquhar of New York.[HK] The final outcome, indirectly, of these moves was the reestablishment of the postal subsidy system, abandoned in 1858, in the enactment March 3, 1891, of what is known as the Postal Aid Law.

This one ship-subsidy law now on the statutes was in its original draft one of two proposed measures, termed respectively the Mail Ship Bill and the Cargo Ship Bill, both reported in the Senate by Senator William P.

Frye of Maine. The Cargo Bill provided for navigation bounties to sailing-ships and steamers. The objects of these measures, as stated by the promoters, were "(1) to secure regular and quicker service to countries now reached; (2) to make new and direct commercial exchanges with countries not now reached; (3) to develop new and enlarge old markets in the interest of producers and consumers under the reciprocity treaties completed and under consideration; (4) to a.s.sist the promotion of a powerful naval reserve; (S) to establish a training-school for American seamen."[HL]

Both bills pa.s.sed the Senate, but the House rejected the Cargo Bill and pa.s.sed the Mail Bill only after amending it essentially. The subsidy rate was cut one-third on steamers of the first cla.s.s--the highest cla.s.s of ocean liners,[HM]--and was reduced on the second cla.s.s. The act as finally approved comprises the following features:

Empowering the postmaster-general to contract for terms of from five to ten years with American citizens for carrying the mails on American steamships between ports of the United States and ports in foreign countries, the Dominion of Canada excepted; the service on such lines "to be equitably distributed among the Atlantic, Mexican Gulf, and Pacific ports." Proposals to be invited by public advertis.e.m.e.nt three months before the letting of a contract; and the contract to go to the lowest responsible bidder. The steamships employed, to be American-built, owned and officered by American citizens; and the following proportion of the crews American citizens, to wit: "during the first two years of each contract, one-fourth thereof; during the next three succeeding years, one-third thereof; and during the remaining time of the continuance of such contract, at least one-half thereof." The subsidized steamships are ranked in four cla.s.ses: in the first cla.s.s, iron or steel screw steamships, capable of making a speed of twenty knots an hour at sea of ordinary weather, and of a gross tonnage of not less than 8,000 tons; second cla.s.s, iron or steel, speed of sixteen knots, 5,000 tons; third cla.s.s, iron or steel, fourteen knots, 2,500 tons; fourth cla.s.s, iron or steel, or wooden, twelve knots, 1,500 tons.

Only those of the first cla.s.s eligible to the contract service between the United States and Great Britain. All except the fourth cla.s.s to be constructed under the supervision of the Navy Department, with particular reference to prompt and economical conversion into auxiliary cruisers, of sufficient strength and stability to carry and sustain at least four effective rifled cannon of a calibre of not less than six inches; and to be of the highest rating known to maritime commerce.

The subsidy, or rate of compensation, as it is termed, for mail-carriage is thus fixed in each cla.s.s: first cla.s.s, not exceeding four dollars (in the original draft six dollars) a mile; second cla.s.s, two dollars a mile, by the shortest practicable route for each outward voyage; third cla.s.s, one dollar a mile; fourth cla.s.s, two-thirds of a dollar a mile for the actual number of miles required by the Post Office Department to be travelled on each outward bound voyage. Pro rata deductions from the compensations, and penalties, are imposed for omission of a voyage or voyages, and for delays or irregularities in service. No steamship in the contract service is to receive any other bounty or subsidy from the national treasury. Sanction is given to naval officers to volunteer for service on the contract mail steamships; and, while so employed, they are to receive furlough pay in addition to their steamship pay, provided they are required to perform such duties as appertain to the merchant service. The training-school for seamen is established by a provision requiring that the contract steamers "shall take cadets or apprentices, one American-born boy for each thousand tons gross register, and one for each majority fraction thereof, who shall be educated in the duties of seamanship, rank as petty officers, and receive such pay for their services as may be reasonable."[HN]

The first advertis.e.m.e.nts for proposals under this act resulted in contracts with eleven existing lines, of the third and fourth cla.s.ses.

No bids were received for the North Atlantic service calling for American-built steamships in the first cla.s.s. But an offer was made by the American Line[HO] to begin the performance of the service with two British-built liners--the _City of New York_ and the _City of Paris_--acquired from the Inman Line, if these steamers were admitted to American registry, the company agreeing immediately to order two similar ships from American shipyards and add these to their fleet. The proposition was accepted, and a supplementary act was pa.s.sed (May 10, 1892), legalizing such registry.[HP] The new American ships were promptly built,--the _St. Louis_ and the _St. Paul_, launched November, 1894, and April, 1895, respectively,--each 11,600 tons, "larger, swifter, safer, and more luxurious"[HQ] than the two British-built vessels: a perfection of workmanship deemed a matter for congratulation by patriotic Americans. To this extent at least the subsidy law was declared to have been beneficent.

It had become evident, however, that the law was not fostering the establishment of new American-owned and American-built steamship lines as its promoters had hoped. In 1893 the contract service had been reduced by the discontinuance of three of the routes. In 1894 only three contracts were in operation. Up to 1898 no lines had been established on the Pacific under the law.

In the judgment of the subsidy advocates the law's failure to produce the antic.i.p.ated results only proved its inadequacy in not providing enough subsidy. Accordingly, further measures were proposed affording a more generous supply.

In December, 1898, Senator Mark Hanna, of Ohio, brought forward a bill providing liberal navigation and speed bounties to all American vessels engaged in the foreign trade. This measure, as defined by its t.i.tle, proposed "to promote the commerce and increase the foreign trade of the United States, and to promote auxiliary cruisers, transports, and seamen for Government use when necessary." The subsidy was again termed "compensation." It was to be payable on gross tonnage for mileage sailed both outward and homeward bound, according to speed. The rate to steamships showing on trial test a speed above fourteen knots was to increase proportionately; sailing-ships and steamers of less trial speed than fourteen knots, were to receive the lowest rate. This was fixed at one dollar and fifteen cents per gross ton for each hundred of the first fifteen hundred miles sailed both outward and homeward bound, and one cent per gross ton for each hundred miles over one hundred miles both ways. The additional speed bounties ranged from one cent per gross ton for steamers of 1,500 tons and speeding fourteen knots, to 3.2 cents for those over 10,000 tons and showing twenty-three knots. The act was to be in force for a term of twenty years, and no contracts were to be made under it after ten years.

The Hanna bill met strong opposition, and was finally dropped. A subst.i.tute measure, drawn by Senator Frye, of Maine, took its place.

This also was lost with the adjournment of the Fifty-seventh Congress.

At the opening of the next Congress, in December, 1901, Senator Frye introduced his bill in an amended form. This offered subsidies to contract mail-steamships based upon tonnage and speed, and practically restored the rates of the original Postal Aid Bill. It further provided a fixed subsidy upon tonnage to other American steamers and sailing-ships, registered, and to be built in the United States. The bill pa.s.sed the Senate, but failed with the House.

In 1903 the matter was taken up with greater vigor, by President Roosevelt. In his annual message to Congress December 7, the President, "deeply concerned at the decline of our ocean fleet and the loss of skilled officers and seamen," recommended the appointment by Congress of a joint commission to investigate and report at the next session, "what legislation is desirable or necessary for the development of the American merchant marine and American commerce, and, incidentally, of a national ocean mail service of adequate auxiliary naval cruisers and naval reserves."

In response Congress by act of April 28, 1904, created the Merchant Marine Commission with power to make the broadest kind of an inquiry.

This body was composed of five Senators and five Representatives, two of the Senators and two of the Representatives members of the minority party. Senator Jacob H. Gallinger of New Hampshire was chairman. Eight months between the adjournment and rea.s.sembling of Congress was devoted to its appointed task. All the larger ports of the country were visited, its itinerary embracing the princ.i.p.al cities on the North Atlantic seaboard, on the Great Lakes, on the Pacific coast, and on the southern coast and Gulf of Mexico. Hearings were given in all these places to hundreds of citizens: commercial bodies, shipbuilders, shipowners, shipping merchants, merchants in general trade, manufacturers, bankers, lawyers, editors, doctrinaires. So wide indeed was the investigation, and so liberal the "open door" rule, admitting for consideration any "intelligent suggestion offered in good faith," that "alien agents" of foreign steamships were heard with the rest.[HR] While differences of opinion as to methods and policies naturally were encountered, the commission declared that it found public sentiment, as this was sounded throughout the United States, "practically unanimous not in merely desiring, but in demanding an American ocean fleet, built, owned, officered, and so far as may be, manned by our own people." This sentiment was "just as earnest on the Great Lakes ... as on either ocean."[HR]

The results of the investigation were embodied in an elaborate report, comprising majority and minority reports of the commission, and the ma.s.s of testimony taken at the hearings: the whole filling three large pamphlet volumes, in all of nearly two thousand pages.[HS]

The majority reported a bill. This was presented as merely an extension of the principles of the Postal Aid Act of 1891, involving "no new departure from the established practice of the Government." Its ocean mail sections were intended "simply to strengthen the existing act on lines where it has happened to prove inadequate." The subsidies which it granted were termed, inoffensively, "subventions," and its promoters protested that these "subventions" were "not in any opprobrious sense a subsidy or bounty." They were "not bounties outright, or mere commercial subsidies such as many of our contemporaries give." They were "granted frankly in compensation for public services rendered and to be rendered."[HT]

The proposed measure, however, was more than an extension of the act of 1891. Its scope was indicated by its t.i.tle: "To promote the national defence, to create a force of naval volunteers, to establish American ocean mail lines to foreign markets, to promote commerce, and to provide revenue from tonnage." The subsidies offered comprised mail subventions to steamships; subventions to general cargo carriers and deep-sea fishing-ships, both steam and sail; and retainers to officers and men of American merchant ships and deep-sea fishing vessels enrolling as naval volunteers. It opened with provisions for the establishment of a naval reserve.

The new mail subsidies provided for ten specified lines of "steamships of the United States" of sixteen, fourteen, thirteen, and twelve knots speed, to the greater countries of South America, to Central America, to Africa, and to the Orient, with a total maximum subsidy for the ten lines of $2,665,000 a year. In all contracts it was to be specified that the steamships must carry in their own crews a certain increasing proportion, up to one-fourth, of men enrolled as naval volunteers. The subventions to American general cargo carriers, or the "tramp" type of ships, and deep-sea fishing-vessels, steam or sail, were fixed at these rates: those engaged in the foreign trade for a full year, five dollars per gross ton; so engaged for nine months and less than a year, four dollars; for six months, two dollars. These subsidies were conditioned upon these requirements: the employment in the crews of a certain proportion of naval volunteers; one-sixth of the crews to be citizens of the United States or "men who have declared their intentions to become citizens;" ships to carry the mails when required free of charge; all ordinary repairs to be made in the United States; the ships to be in readiness for Government taking for naval service in time of need. The payments in this cla.s.s were to be made on contracts for a year at a time, renewable from year to year; and no vessel was to receive them for a longer period than ten years. The retainers to officers and men of the merchant marine and deep-sea fishing-ships as inducements to enroll as naval volunteers, were fixed at rates ranging from a hundred dollars a year for the master or chief engineer of a large steamship to twenty-five dollars for a sailor or fireman, and fifteen dollars for a boy, these retainers being independent of their regular pay. The provisions relating to tonnage revenue increased the tonnage taxes on all vessels, American and foreign, entering American ports, with a rebate of eighty per cent of the tonnage duties allowed to American ships carrying American boys as apprentices and training them in seamanship or engineering for the merchant service and naval reserve.[HU]

The minority report, signed by three of the four Democratic members of the commission, although outlining measures of relief which, in the judgment of the signers, would "accomplish substantial and permanent good without injustice to any other American interest and without doing violence to any fundamental principle of right or of organic law,"

proposed no bill. While the minority "saw objections to the entire bill"

recommended by the majority, they were disposed to withhold any opposition except to the sections providing for direct subsidies. These they declared to be "so obnoxious to Democratic principles and to the economic sense of the country" that they were compelled to enter their "earnest protest against their enactment into law." Instead of subsidies, the remedial legislation which they outlined included: a return to the discriminating-duty policy; and the putting on the free list of all materials which enter into the construction of ships no matter whether intended for foreign or domestic trade,--thus admitting ships built from foreign materials, in whole or in part, to the coastwise trade, from which they are now excluded. The minority held also that it would probably "be necessary to remove the duties not only for materials but from all materials sold cheaper abroad than at home,"

meaning steel and iron products. "In this way, and in this way only, will our shipbuilders be enabled to obtain our materials at the prices at which they are sold to foreign shipbuilders."[HV]

The report of the commission was submitted to the Fifty-eighth Congress, third session, January 4, 1905.[HW] No action was had on the bill in that Congress. It was referred to the committee on commerce; reported back to the Senate with sundry amendments and a minority report against it;[HX] was debated tentatively; and finally pa.s.sed over at the request of its sponsor, Senator Gallinger, who expressed himself as satisfied that the bill could not receive the consideration it deserved at that session. Meanwhile both Houses had directed a continuance of the commission's inquiry. In May the chairman, Senator Gallinger, held conferences in New York with several representatives of the shipping interests who had not been heard; and later sessions were held in Washington, at which other statements were received and considered.

At the opening of the Fifty-ninth Congress, December 4, 1905, Senator Gallinger submitted a supplementary report of the commission, and with it introduced a new bill--the previous bill in a new draft.[HY] At the same time Representative Charles H. Grosvenor, of Ohio, the first House member of the commission, introduced the bill to the House.

This draft added several new features to the original bill. The most important were provisions for increasing the subsidies payable under the law of 1891 to the single American contract line to Europe, and to the Oceanic Line from San Francisco to Auckland and Sydney. These provisions added two hundred and fifty thousand dollars to the former's subsidy of seven hundred and fifty thousand, and two hundred and seventeen thousand to the latter's of two hundred and eighty-three thousand. The reasons given for these increases were: in the case of the American Line, because this line "meets the fiercest compet.i.tion of the State-aided corporations of Europe, soon to be intensified by the new subvention of one million one hundred thousand dollars granted to the Cunard Company by the British Government, on terms so liberal as to make it equivalent to one and a half million dollars a year"; and in the case of the Australasia Line, because it "operates in Pacific waters where cost of fuel, labor, etc., is considerably greater than at Atlantic ports; ...

is required to maintain a very high speed; ... employs exclusively white crews instead of the Asiatics utilized by many other Pacific companies."

Another provision, as a special encouragement for American shipowners to enter the Philippine trade, added a subvention of thirty per cent above the regular rate, or six and a half dollars a ton. The naval volunteer retainers were extended to seamen of the Great Lakes and coastwise trade.[HZ]

In the Senate the bill fared well as a whole. Like the original bill it came back from the committee on commerce amended, though slightly, and with a minority report against it: the minority again emphasizing their "unqualified opposition to this renewed effort to donate to certain favored interests moneys collected by the Government for public purposes under its power of taxation."[IA] It was closely fought by the opposition in debate, opened with Senator Gallinger's argument in its behalf on January 8, 1906. But it successfully ran the gauntlet. Further amended in several particulars, but unscathed in its essential parts, it pa.s.sed the Senate, February 14, by a vote of 38 to 27, five Republican Senators and all the Democrats voting in the negative.[IB]

In the House its progress was less prosperous. It lay with the committee on merchant marine and fisheries into the second session of this Congress; and more hearings were given. Reframed after the enacting clause, but practically the same in principle, it was reported back January 19 (1907) by Mr. Grosvenor, accompanied by an explanatory report of the majority of the committee;[IC] and bill and report were referred to the whole House on the state of the Union. Later the views of the minority were filed.[IC] On January 23 a message from President Roosevelt in behalf of the measure was received. The president particularly urged the "great desirability of enacting legislation to help American shipping and American trade by encouraging the building and running of lines of large and swift steamers to South America and the Orient." As striking evidence of the "urgent need of our country's making an effort to do something like its share of its own carrying trade on the ocean," he directed attention to the address of Secretary Root before the Trans-Mississippi Commercial Congress at Kansas City, Mo., the previous November, giving the results of the secretary's experiences on his recent South American tour. The proposed law, Mr.

Roosevelt repeated, was in no sense experimental. It was "based on the best and most successful precedents, as for instance on the recent Cunard contract with the British Government." So far as South America was concerned, its aim was to "provide from the Atlantic and Pacific coasts better American lines to the great ports of South America than the present European lines." Under it "our trade friendship" would "be made evident to the South American Republics."[ID]

Backed by the explanatory report and this message, the friends of the measure opened the debate, February 25, Mr. Grosvenor leading. It was a great debate, long and hot. Numerous amendments were put in; some changing the proposed routes, others adding new ones. At length on March 1, three days before the end of this Congress, the much amended bill was pa.s.sed, and went back to the Senate for concurrence.[IE]

As it now stood it was shorn of the provisions for lines from the Pacific coast to j.a.pan, China, the Philippines, and Australasia. The new subsidized lines were all to run to South America. Two of these were to run from the Atlantic coast to Brazil and Argentina, respectively; one, from the Pacific coast to Peru and Chile; and one from the Gulf of Mexico to Brazil. On all four lines sixteen-knot steamers were required, with speed on the average above the European mail lines to South America. The subsidies were reserved exclusively to ships to be built in the United States, so that the mail service could not be performed by existing steamers; thus a wholly new ocean-mail fleet was guaranteed.[IF]

The bill was reached in the Senate March 2, and strenuous efforts were made by Senator Gallinger and others to push it through. But it failed in the closing hours of the session to reach a vote. So this measure fell.[IG]