DISCRIMINATING DUTIES AND WAR

VERAND HALL

Two similar bills in favor of discriminating duties await Congressional action. They are alike, in proposing to charge five per cent less duty on dutiable imports. brought in American ships and in placing a duty of two per cent on non-dutiable merchandise imported in foreign ships.

The principal objections to these bills have been that their enactment into law would necessitate the abrogation of many treaties and that the law proposed would provoke retaliation. Another danger to be considered is that of war.

Our imports in 1910, about ninety per cent of which came in foreign ships, amounted to $1,556,947,000. What sun the combined five per cent and two per cent of discri nination might reach in the course of a few years is conjectural; but it would eventually mean a huge sum for our ships in the foreign carrying trade and a corresponding loss to the shipping interests of our rivals. Since these rivals resort to subsidies, they would have no ground for complaint if we distributed any sum, no matter how great, in a similar manner; but discriminating duties will, on account of our treaty obligations, afford a pretext to any nation or group of nations that is not

averse to war.

It is well known that our foreign carrying trade is in the control of an international monopoly in which, so far as shipping is concerned, we have no part. Our once. proud merchant marine no longer competes, and our importers as well as our producers and manufacturers are paying monopoly prices for ocean carriage. Not only are our wheat, cotton, and other farm products unduly taxed before they arrive in foreign markets, but our overcharged manufactures reach South America or Asia consigned to merchants of the nations that do our carrying who are hostile to our competition in the local market. We pay extravagantly for our sea transportation; our shipping merchants are beaten and discouraged; our seamen are underpaid afloat or are among the ranks of the unskilled ashore, and thousands of our mechanics who might be employed in mills or shipyards are idle; yet, because our legislators are more eager to vindicate traditional party policies than to revive our sea carrying trade, nothing is done to provide a remedy. If only discriminating duties will give us back our merchant marine, by all means let us have them, regardless of consequences.

But let us first make sure that no safer path leads to the same goal; that partisan reasons for adopting a policy which was successful a century ago are not influencing us; and, lastly, that we have considered the possible consequences with the utmost care. Let us look before we leap.

American merchants now pay more than three hundred million dollars a year in freight money to foreign ship owners.— Governor Foss to the Massachusetts Legislature, January, 1912.

The cost estimated by the present Commission for completing the Canal is $325,201,000, which includes $20,053,000 for sanitation and $7,382,000 for civil administration. "The Panama Canal," World Almanac, 1912.

If we accept the accuracy of these statements, the United States is each year paying to the foreign shipping monopoly the price of a Panama Canal.

Those who doubt that our sea carrying trade is being extortionately taxed by a foreign combination capable of making trouble if its special privilege is threatened by discriminating duties, should study the foreign news items for a month or two.

In February, the press of one European nation freely denounced America and American statesmen because of proposed Panama Canal tolls. A firm of New York coffee importers have recently appealed to our courts because of the refusal of a foreign steamship syndicate to fetch their coffee from Brazil unless they submitted to an agreement to ship none by independent - of course, outside foreign-lines. The Hamburg-American Steamship Company, which spent $7,500,000 last year in augmenting its fleet and declared a dividend of nine per cent, proposes this year to increase its capital by $6,250,000. It would be unfair to quote the following extract from the widely circulated Philadelphia "Saturday Evening Post," without stating that a qualifying portion of the editorial is omitted:

There is pending at Washington at this writing [January 15] a joint resolution for a congressional investigation into what is alleged to be a world-wide Shipping Trust. More than ninety per cent of our overseas commerce is carried in foreign ships; and virtually all these ships, it appears, belong to various cartels, pools, traffic agreements, conferences, and combinations, the acknowledged object of which is to maintain rates and prevent competition. There are British, German, Dutch, French, Italian, Portuguese, and Japanese shipping combinations in restraint of trade, hemming our shores, so to speak, from Maine to Florida, from San Diego to Seattle, and devouring us on every hand. Moreover, it is undeniable that some foreign governments themselves are at least tacitly-parties to these pools and combines whose object is to suppress competition in overseas carrying.

Discriminating duties would hurt the shipping trade of Great Britain, Germany, Japan, France, Italy, Austria, Holland, and Norway; but, except in the event of a coalition, only the first three need be considered.

Japan, the least powerful, would not be likely to war over the issue, unless European allies could be found to detain our fleet on the Atlantic Coast.

England, with the lion's share of the profits at stake, would be loth to destroy our fleet; it is not so much that we hold Canada as a hostage which would deter her from attacking us, as the conviction of her statesmen that the two great English speaking nations are necessary to each other for mutual protection against continental Europe. There is, however, danger that the resentment aroused by her threatened financial interests might tie her hands should another nation, or a coalition of nations, declare

war on us.

There remains Germany, where railroads and shipping are intimately associated with the government, and Germany has recently taken a rather firm stand with us in several disputes, such as the potash question and our right to regulate our own affairs on the railroads within our borders when the business of the shipping monopoly is concerned. Since the Germans are not a notably patient people, and since carrying our goods has grown to be a cherished source of their wealth, it is worth while to consider what might happen should our adoption of discriminating duties provoke them to enter upon a war where the chances of success were in their favor.

The German Navy is referred to statistically as equal to ours and as increasing twice as rapidly, and Germany is invulnerable to our attack, because any fleet we might send would first have to encounter a horde of destroyers, in foggy, narrow waters. With us the case is different. Our trained soldiers are few and our unfortified coastline is long. A German fleet strong enough to defeat ours could seize bases at a score of points between Maine and Texas, and her huge merchant liners could pour in troops to hold them. While other than a transient occupation of any portion of this country is unworthy of serious consideration, a temporary invasion would clog the wheels of com nerce and produce a financial panic. Our fleet crippled, the Panama Canal and Porto Rico could be taken over, while a demonstration against our seaboard cities, backed by the clamor of our partly alien population, might force us into paying more than the milliards of 1870. And, should our navy prove the weaker, there is danger in another quarter. While we have only the shadows of an army and a merchant marine, Ger

navy

many could easily convoy troops to South America, where a colony, once planted under the German flag, might never be dislodged. It is not improbable that the of Great Britain has of late years been a more potent factor in preserving South and Central America from the throttling grasp of European nations than the Monroe Doctrine. If we, with our wealth and population, ever prove too feeble to enforce our famous Doctrine, future historians will moralize over our decadent stupidity.

For half a century our politicians have played party politics at the expense of our merchant marine. In 1810, with seven millions of people, our registered tonnage in the foreign trade was 981,000; in 1860, with thirty-one millions, it was 2,379,000; in 1910, with ninety-two millions, it was 783,000. At the beginning of this year, Lloyd's figure for British tonnage under construction was 1,519,000, or twice that of our whole tonnage in the foreign carrying trade.

It is doubtful if there is a prominent statesman in America to-day who is not on record as in favor of reviving our merchant marine, or if anyone who has given thought to the subject can be found who is opposed to it; yet for half a century misrepresented political issues have prevented action. It is time that patriots, regardless of partisanship and foreign influences secretly at work in this country, united to give us competitive standing in the ocean carriage of our own goods.

A discriminating duty, while a dangerous expedient for accomplishing a desirable purpose by avoiding the use of a hateful word, is practically only a subsidy turned upside down and relabeled. Its merit lies in its automatic fairness; but the non-provocative subsidy has built up the merchant fleets of our trade rivals, and in this period of watchfulness and progression there is small chance for a dishonest subsidy. However, if the leaders in Congress can but get together and unite upon subsidies, discriminating duties, free ships, or any combination of methods that will give the nation a merchant marine and release us, even at the risk of war, from the foreign thraldom, there is every reason to believe that they will find the people prepared to give them intelligent support.

We are now the world power most favorably situated for the production as well as the transportation of merchandise, and we should again advertise the nation by flying the stars and stripes in every seaport. A flourishing merchant marine would save to the nation the cost of a navy, while at the same time it would add one-third to the navy's efficiency in the event of war.