Part 1198

"The first symptoms of the decadence appeared in 1856, in the falling-off in the sales of American tonnage to foreigners; the reduction being from 65,000 in 1855 to 42,000 in 1856, to 26,000 in 1858, and to 17,000 in 1860. During the war, however, the transfers of American tonnage to foreign flags again increased very largely, and, for the years 1862 to 1865 inclusive, amounted to the large aggregate of 824,652 tons, or to more than one-fourth of all the registered tonnage (the tonnage engaged in foreign trade) of the United States in 1860. But these transfers, it is well understood, were not in the nature of ordinary business, but for the sake of obtaining a more complete immunity from destruction upon the high seas than the United States at that time was able to afford. The year 1856 also marks the time when the growth of our foreign steam-shipping was arrested, and a retrograde movement inaugurated; so that … our aggregate tonnage in this department was 1,000 tons less in 1862 than it was in 1855. The total tonnage of every description built in the United States also declined from 583,450 tons in 1855 (the largest amount ever built in any one year) to 469,393 in 1856, 378,804 in 1857, and 212,892 in 1860, a reduction of 68 per cent in five years. During the year 1855, American vessels carried 75.6 per cent of the value of the exports and imports of the United States. After 1855 this proportion steadily declined to 75.2 per cent in 1856, 70.5 in 1857, 66.9 in 1859, and 65.2 in 1861, the year of the outbreak of the war. … Of the enormous increase in the foreign commerce of the United States since 1860, as above noted, every maritime nation of any note, with the exception of the United States, has taken a share. American tonnage alone exhibits a decrease. Thus, comparing 1880 with 1856, the foreign tonnage entering the seaports of the United States increased nearly 11,000,000 of tons; whereas the American tonnage entered during the same period exhibits a decrease of over 65,000 tons. British tonnage increased its proportion from 935,000 tons in 1856 to 7,903,000 in 1880; Germany, during the same time, from 166,000 to 1,089,000; and Sweden and Norway from 20,662 to 1,234,000. Austria, limited to almost a single seaport, jumped up from 1,477 tons in 1856 to 206,000 tons in 1880, and had, in 1879, 179 large-class sailing-vessels engaged in the American trade. Sleepy Portugal increased during the same period from 4,727 tons to 24,449 tons. … How is it, that the United States, formerly a maritime power of the first class, has now no ships or steamers that can profitably compete for the carrying of even its own exports; not merely with the ships of our great commercial rival, England, but also with those of Italy, Sweden, Norway, Germany, Holland, Austria, and Portugal? … The facts already presented fully demonstrate that the war was not the cause, and did not mark the commencement, of the decadence of American shipping; although the contrary is often and perhaps generally assumed by those who have undertaken to discuss this subject. The war simply hastened a decay which had already commenced. … The primary cause was what may be termed a natural one, the result of the progress of the age and a higher degree of civilization; namely, the substitution of steam in place of wind as an agent for ship-propulsion, and the substitution of iron in the place of wood as a material for ship-construction. … The means and appliances for the construction of iron vessels did not then [in 1855] exist in the United States; while Great Britain, commencing even as far back as 1837 (when John Laird constructed his first iron steamers of any magnitude for steam navigation), and with eighteen years of experience, had become thoroughly equipped in 1855 for the prosecution of this great industry. The facilities for the construction of steam machinery adapted to the most economical propulsion of ocean vessels, furthermore, were also inferior in the United States to those existing in Great Britain; and, by reason of statute provisions, citizens of the United States interested in ocean commerce were absolutely prevented and forbidden from availing themselves of the results of British skill and superiority in the construction of vessels when such a recourse was the only policy which could have enabled them at the time to hold their position in the ocean carrying trade in competition with their foreign rivals. … The inability of the ships of the United States to do the work which trade and commerce required that they should do as well and cheaply as the ships of other nations having been demonstrated by experience, the decadence of American shipping commenced and was inevitable from the very hour when this fact was first recognized, which was about the year 1856. Here, then, we have the primary cause of the decay of the business of ship-building in the United States and of our commercial marine. … The question which next naturally presents itself in the order of this inquiry and discussion is, Why is it that the people of the United States have not been permitted to enjoy the privileges accorded to other maritime nations, of adjusting their shipping interests to the spirit and wants of the age? Why have they alone been debarred from using the best tools in an important department of commerce, when the using meant business retained, labor employed, and capital rewarded, and the non-using equally meant decay, paralysis, and impoverishment? The answer is, Because of our so-called navigation laws."

_D. A. Wells, Our Merchant Marine, chapters 2-3._

"Somewhat curtailed, the navigation laws may be summarized as follows: No American is allowed to import a foreign-built vessel in the sense of purchasing, acquiring a registry, or using her as his property; the only other imports, equally and forcibly prohibited, being counterfeit money and obscene goods. An American vessel ceases to be such if owned in the smallest degree by a naturalized citizen, who may, after acquiring the purchase, reside for more than one year in his native country, or for more than two years in any other foreign state. An American ship owned in part or in full by an American citizen who, without the expectation of relinquishing his citizenship, resides in any foreign country except as United States Consul, or as agent or partner in an exclusively American mercantile house, loses its register and its right to protection. A citizen obtaining a register for an American vessel must make oath that no foreigner is directly or indirectly interested in the profits thereof, whether as commander, officer, or owner. Foreign capital may build our railroads, work our mines, insure our property, and buy our bonds, but a single dollar invested in American ships so taints as to render it unworthy of the benefit of our laws. No foreign-built vessel can, under penalty of confiscation, enter our ports and then sail to another domestic port with any new cargo, or with any part of an original cargo, which has once been unladen previously, without touching at some port of some foreign country. {3723} This law is construed to include all direct traffic between the Atlantic and Pacific ports of the United States via Cape Horn, the Cape of Good Hope, or the Isthmus of Panama; and being a coasting trade, foreigners cannot compete. An American vessel once sold or transferred to a foreigner, can never again become American property, even if the transaction has been the result of capture and condemnation by a foreign power in time of war. Vessels under 30 tons cannot be used to import anything at any seaboard town. Cargoes from the eastward of the Cape of Good Hope are subject to a duty of 10 per cent. in addition to the direct importation duties. American vessels repaired in foreign ports must pay a duty on the repairs equal to one-half the cost of the foreign work or material, or pay 50 per cent. ad valorem, the master or owner making entry of such repairs as imports. This liberal provision, which dates from 1866, is made to include boats obtained at sea, from a passing foreign vessel, in order to assure the safety of our own seamen. … All other nations have the power of buying ships for foreign trade in the cheapest market, and the effort to protect our shipbuilders by the denial of this right forbids the return of commercial prosperity."

_J. D. J. Kelley, The Question of Ships, chapters 4-5._

COMMERCE: MODERN: The recent revolution in Commerce.

"All economists who have specially studied this matter are substantially agreed that, within the period named [1860-1885], man in general has attained to such a greater control over the forces of Nature, and has so compassed their use, that he has been able to do far more work in a given time, produce far more product, measured by quantity in ratio to a given amount of labor, and reduce the effort necessary to insure a comfortable subsistence in a far greater measure than it was possible for him to accomplish 20 or 30 years anterior to the time of the present writing (1889). In the absence of sufficiently complete data, it is not easy, and perhaps not possible, to estimate accurately, and specifically state the average saving in time and labor in the world's work of production and distribution that has been thus achieved. In a few departments of industrial effort the saving in both of these factors has certainly amounted to 70 or 80 per cent; in not a few to more than 50 per cent. … Out of such results as are definitely known and accepted have come tremendous industrial and social disturbances, the extent and effect of which—and more especially of the disturbances which have culminated, as it were, in later years—it is not easy to appreciate without the presentation and consideration of certain typical and specific examples. … Let us go back, in the first instance, to the year 1869, when an event occurred which was probably productive of more immediate and serious economic changes—industrial, commercial, and financial—than any other event of this century, a period of extensive war excepted. That was the opening of the Suez Canal. … The old transportation had been performed by ships, mainly sailing-vessels, fitted to go round the Cape, and as such ships were not adapted to the Suez Canal, an amount of tonnage, estimated by some authorities as high as two million tons, and representing an immense amount of wealth, was virtually destroyed. The voyage, in place of occupying from six to eight months, has been so greatly reduced that steamers adapted to the canal now make the voyage from London to Calcutta, or vice versa, in less than 30 days. The notable destruction or great impairment in the value of ships consequent upon the construction of the canal did not, furthermore, terminate with its immediate opening and use; for improvements in marine engines, diminishing the consumption of coal, and so enabling vessels to be not only sailed at less cost, but to carry also more cargo, were, in consequence of demand for quick and cheap service so rapidly effected, that the numerous and expensive steamer constructions of 1870-1873, being unable to compete with the constructions of the next two years, were nearly all displaced in 1875-1876, and sold for half, or less than half, of their original cost. And within another decade these same improved steamers of 1875-1876 have, in turn, been discarded and sold at small prices. … Again, with telegraphic communication between India and China, and the markets of the Western world, permitting the dealers and consumers of the latter to adjust to a nicety their supplies of commodities to varying demands, and with the reduction of the time of the voyage to 30 days or less, there was no longer any necessity of laying up great stores of Eastern commodities in Europe; and with the termination of this necessity, the India warehouse and distribution system of England, with all the labor and all the capital and banking incident to it, substantially passed away. Europe, and to some extent the United States, ceased to go to England for its supplies. … Importations of East Indian produce are also no longer confined in England and other countries to a special class of merchants; and so generally has this former large and special department of trade been broken up and dispersed, that extensive retail grocers in the larger cities of Europe and the United States are now reported as drawing their supplies direct from native dealers in both China and India. … In short, the construction of the Suez Canal completely revolutionized one of the greatest departments of the world's commerce and business; absolutely destroying an immense amount of what had previously been wealth, and displacing or changing the employment of millions of capital and thousands of men. … The deductions from the most recent tonnage statistics of Great Britain come properly next in order for consideration. During the ten years from 1870 to 1880, inclusive, the British mercantile marine increased its movement, in the matter of foreign entries and clearances alone, to the extent of 22,000,000 tons; or, to put it more simply, the British mercantile marine exclusively engaged in foreign trade did so much more work within the period named; and yet the number of men who were employed in effecting this great movement had decreased in 1880, as compared with 1870, to the extent of about 3,000 (2,990 exactly). What did it? The introduction of steam hoisting-machines and grain-elevators upon the wharves and docks, and the employment of steam-power upon the vessels for steering, raising the sails and anchors, pumping, and discharging the cargo; or, in other words, the ability, through the increased use of steam and improved machinery, to carry larger cargoes in a shorter time, with no increase—or, rather, an actual decrease—of the number of men employed in sailing or managing the vessels. … {3724} Prior to about the year 1875 ocean-steamships had not been formidable as freight-carriers. The marine engine was too heavy, occupied too much space, consumed too much coal. … The result of the construction and use of compound engines in economizing coal has been illustrated by Sir Lyon Playfair, by the statement that 'a small cake of coal, which would pass through a ring the size of a shilling, when burned in the compound engine of a modern steamboat would drive a ton of food and its proportion of the ship two miles on its way from a foreign port.' … Is it, therefore, to be wondered at, that the sailing-vessel is fast disappearing from the ocean? … Great, however, as has been the revolution in respect to economy and efficiency in the carrying-trade upon the ocean, the revolution in the carrying-trade upon land during the same period has been even greater and more remarkable. Taking the American railroads in general as representative of the railroad system of the world, the average charge for moving one ton of freight per mile has been reduced from about 2.5 cents in 1869 to 1.06 in 1887; or, taking the results on one of the standard roads of the United States the (New York Central), from 1.95 in 1869 to 0.68 in 1885. … One marked effect of the present railroad and steamship system of transportation has been to compel a uniformity of prices for all commodities that are essential to life. … For grain henceforth, therefore, the railroad and the steamship have decided that there shall be but one market—the world."

_D. A. Wells, Recent Economic Changes, pages. 27-47._

A recent English writer says: "Formerly we [the English] were the great manufacturers of the world; the great distributors and the great warehousemen of the world. Our country was the point on which the great passenger traffic impinged from America and from our Colonies, and from which passengers distributed themselves over the continent of Europe. The products of the world as a general rule came to English ports, and from English ports were distributed to their various markets. All this has much changed. Probably the alteration is more marked in our distributing trade than in that of our manufacturing trade or in any other direction. About twenty years ago all the silk that was manufactured or consumed in Europe was brought to England from the East, mostly in a raw state, and was thence distributed to continental mills. Notwithstanding the increased consumption in Europe, silk now coming to England for distribution is only about one-eighth of the quantity that came here some twelve years ago. This is one single example of an Oriental product. The same diversion of our distributing trade can be traced in almost every other commodity. Many people believe that the opening of the Suez Canal has caused this diminution of our distributing trade, and it cannot be denied that the Suez Canal has done much to divert Oriental trade from this country, and to send goods direct through the Canal to the continental ports, where they are consumed, or where they can be placed on railways and be forwarded without break of bulk to their destinations. But whatever the Suez Canal may have done to divert trade in Oriental goods such as tea or silk, it cannot account for the diversion of the trade coming from America. Yet we find the same diversion of American products which formerly came to England for distribution. With cotton the same result is found, and with coffee from the Brazil. Nor does the diversion of these articles merely demonstrate that our distributing trade is being lost to us: it also shows that the manufacturers of England now permit the raw material of their industries to be sent straight to the factories of their competitors on the Continent. It shows that the great manufactures of the world are being transferred from England to Belgium, France, Germany, and even to Portugal and Spain. In the train of these manufactures are rapidly following all the complex and complicated businesses which are the hand-maidens of commerce. For instance, the financial business which used to centre in London is being transferred to Paris, Antwerp, and Germany, mainly because the goods to which this business relates are now consigned to continental countries instead of as formerly being brought to England to be distributed therefrom. … The loss of our distributing trade is to my mind in a great measure due to the fact that goods consigned to continental ports can be there put upon railways and sent straight to their destination; while goods sent to English ports must be put upon a railway, taken to our coast, there taken out of the railway, put on board a vessel, taken across to the Continent, there unloaded, then put on the railway and sent off to their ultimate destination. These transhipments from railway to vessel and from vessel to railway are always costly, always involve time, and in the case of some perishable articles render the transaction almost prohibitive. To get over this difficulty and to retain our distributing trade, there appears to me to be only one course open, and that is in some way to obtain direct railway-communication from Liverpool, from London, from Bristol, from Hull, from Glasgow, and from Dundee, to the continental markets where the goods landed at those ports are consumed."

_H. M. Hozier, England's Real Peril (Macmillan's Magazine, July, 1888)._

COMMERCE: MODERN: Waterways and Railways in modern inland commerce.

"There are three great epochs in the modern history of canal navigation, each marked by characteristics peculiar to itself, and sufficiently unlike those of either of the others to enable it to be readily differentiated. They may be thus described:

1. The era of waterways, designed at once to facilitate the transport of heavy traffic from inland centres to the seaboard, and to supersede the then existing systems of locomotion—the wagon and the pack-horse. This era commenced with the construction of the Bridgewater Canal between 1766 and 1770, and terminated with the installation of the railway system in 1830.

2. The era of interoceanic canals, which was inaugurated by the completion of the Suez Canal in 1869, and is still in progress.

3. The era of ship-canals intended to afford to cities and towns remote from the sea, all the advantages of a seaboard, and especially that of removing and dispatching merchandise without the necessity of breaking bulk.

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