CHAPTER XXVIII

FOR "OLD GLORY" AND AN--APPROPRIATION

In 1891 Congress passed the Postal Subsidy law for paying a higher than the market rate of compensation to capitalists who would carry the mails in vessels built in America, of American materials, and manned by Americans. No contracts were made by the Post-office Department under the law for the mails between Europe and America, for there were no such capitalists and no such boats in that quarter.

In May of the next year, 1892, a bill was whizzed through Congress almost without debate, in which the forms of the principal beneficiaries-to-be of the law of 1891 loomed into view. The subsidy law gave its bonus only to vessels that could fly the American flag because American built and manned. This new act exempted from these conditions the two principal steamers of the Inman, now the International, line--the _City of New York_ and the _City of Paris_--provided the company built two other steamers that fulfilled the requirements of the subsidy law. The sequel disclosed that their owners had a well-laid plan to build more than two other steamers to get the rich rewards of the subsidy law. The steamers and the company were not named. That was not needed. The bill was drawn with such limitations as to size, speed, ownership, etc., that these were the only two vessels which could come under its provisions. The bill was introduced in the House by a prominent Democrat, and in the Senate by a prominent Republican. It was passed by both Houses regardless of party distinctions. The Secretary of the Navy urged the bill upon the naval committees of Congress. He had begun to do so in his first report to Congress and subsequent communications, in which he referred by name to the vessels which were masked in this legislation. The head of the line and other owners were members of the oil combination. The president of the steamship company has been the president of the pipe-line branch of the oil trust--its largest single interest--from the time of its organization in 1881.[575] This exemption from the law was engineered through the Senate by one who had hitherto always been conspicuously strenuous in refusing to abate his opposition to admitting to American registry any ship not built in America, of American materials, by American labor, but who now had suffered some sea change.

Ordinary citizens who want to get the profits of carrying the American mails must build their boats in American ship-yards; but the syndicate got members of Congress to grant them by law that which all others must earn.

The enactment of the Postal Subsidy law and the exemption of these steamers by special law were the first two parts of a progressive programme. The third step was the negotiation of contracts with the Postmaster-General for the prizes of subsidy. Immediately upon the passage of this special legislation the Postmaster-General went through the necessary but empty parade of advertising for bids for a service for which there could be only one possible bidder. The awarding of contracts to the steamship company so "fortunate in competing" was announced in the press in October, 1892.

The Postmaster-General dated the contracts 1895--three years ahead. They run for ten years from that time. An iron-clad, or, better than iron-clad, law-clad contract was thus secured, giving a complete monopoly of the mail business between America and Europe until A.D. 1905, five years into the twentieth century. The legislation of May contemplated the construction of two new boats. The contracts secured from the Postmaster-General showed that the line intended to build five, and obligated the government to pay subsidies to all of them, as well as to the two foreign-built steamers given by special legislation the right to fly the American flag. By these contracts the company, after the completion of its new steamers in about three years, will exclusively carry every bag of mail that leaves America for Europe. Meanwhile the mails are to be given to its two steamers now running, the _Paris_ and the _New York_, whenever they are in port. This has been frequently done in the past on account of their speed, but the compensation for this, under the law and the new contracts, has been made much greater than the price hitherto paid. With but one or two exceptions the mails on all the routes where subsidy is given--to South America, Havana, China, Europe--were carried before the subsidy law on the same ships as now. Except a very trifling saving in time, the only change the law has made here is that the gains of the carriers have been swelled at the cost of the taxpayers. The American shippers carrying the mails at the regular weight rates were making a profit. The Post-office, under the new deal, gets only what it has been getting--the carriage of the mails; but the steamship company gets a great deal more. This is the "pleasure of making it cheap" applied to the postal service.

By this procession of moves the company secured profitable contracts ten years ahead on present ships, the _Paris_ and the _New York_--although these had not yet done as much as fly the American flag in compliance with the special legislation in their behalf--and on future ships that were not yet built or contracted for. All was in the future--the American registry for the _Paris_ and the _New York_, the building of the new steamers required by the special legislation. But one thing was got in hand, and was not in the future tense--the contract with the American Post-office, binding it to pay millions a year. The privileges conferred by this legislation were so valuable that, as Senator Frye stated in debate, its recipients to gain them were to forfeit $105,000 due them from the British Government.

The American registry would be a capital advertisement to catch the American tourist. Travelling, says Emerson, is a fool's paradise, and the shifting population of that paradise would never stop to think out the fraud in the appeal to their patriotism. Much was made in the sentimental Senate of the privilege the law would give Americans of going abroad in their own ships under their own flag. The press was used shrewdly and widely to gain the favor of the public for these incursions into their Treasury. Pages of advertising, in the dress of news-matter, were put into prominent journals, telling in glowing phrases what a great thing Congress, the Postmaster-General, and the steamship company were doing for the people. The same editorial on the promised restoration of American maritime supremacy would appear as original in journals thousands of miles apart. As the panorama of journalism moved along with its daily shift any observer could see the methodical and business-like way in which the syndicate "inspired" the press. Articles about the "great steamship line" appeared on the same date in the papers of different cities, giving the same facts in the same order, and nearly the same words, following "copy" evidently supplied from a common source. One day these chimes all sing the immeasurable superiority of Southampton over Liverpool as a port for Americans; another day the unspeakable sagacity of the Postmaster-General in giving this company the mails is the tune; and again the ding-dong tells how, but for the syndicate and its subsidy, the American flag--"Old Glory"--would be seen no more on the seas. The average citizen who reads "his" paper is no doubt duly impressed.

"Old Glory on the seas!" cried the excitable metropolitan editors. "The dear old flag!" "America again Queen of the seas!" "A new era is about to dawn on our long-neglected commerce!" Our long-absent flag is about to reappear, but not, as in the old days, as the symbol of a people's commerce. It signalizes the commerce of syndicates. The democratic idea of a chance for all has been abandoned for the aristocratic idea of the favored few. "Poor indeed in spirit must be the American," said the New York _Tribune_, "who will not hail with satisfaction and pride the early prospect of the reappearance of the flag in English, French, and Belgian ports." Poor, fortunately, it was replied, are many Americans in the spirit which taxes all the people out of an industry in which they once led the world, and then taxes them to give that same industry as an exclusive privilege to a syndicate--and such a syndicate!

There was a rapturous chorus from the press because American materials and American labor are to be employed in the construction and use of the new vessels to be built for subsidies. When American labor was free to employ itself and American materials with no subsidies, American boats did absolutely the whole packet business between England and America.[576]

Now American seamanship must remain content to be employed to such an extent and on such terms as may suit the interests of a few men, under whose captainship the once glorious expansion of our commerce on the seas is replaced by a system limited on every side. Limited by the expensiveness of entering the occupation: a special bill has to be passed through Congress in each case to confer the right to fly the American flag on ships bought abroad, and for this the merely legitimate expenses are heavy--trips to Washington, appearances before committees and departments, with expert representatives. Limited by their small number: instead of thousands building and running new ships, a score. Limited by their capital: great, it is still much less than the aggregate, if all had a chance. Limited by the narrowness of view and enterprise inevitable with a few, however capable: everybody knows more than anybody. Limited by the lack of diversity in opinion and interests: with many men of many minds, of varying forecasts and moods and gaits, the currents of industry are kept fuller and steadier than is possible under a clique rule. Limited by selfishness: the few will inevitably come to regard the ocean-carrying business as "belonging to us," like oil, and with their crushing wealth will treat as "black-mailers" intruders with new ships and new methods. Limited by the impossibility the subsidy system imposes upon the average citizen of competing against the government--against himself multiplied by all his fellow-citizens. Limited by corruption: when this subsidy bill was under discussion, Representative Blount, of Georgia,[577] called attention to the methods by which previous legislation of the same sort, "to build up the American merchant marine and increase the commerce of the country," had been sought from Congress. Quoting from the report made to Congress in 1874-75 by Representative Kasson, of Iowa, he showed that the Pacific Mail Company, to get a subsidy, had disbursed $703,000 among the members and officers of Congress and other persons influential in legislation. "Yankee maritime enterprise," this is called. The great captains, Bursley, Anthony, Delano, Dumaresq, Comstock, Eldridge, Nye, Marshall, Holdredge, Morgan, and other sturdy Americans who led the nautical world wherever speed, safety, and courage were called for, outsailing competition even from the land where "Blake and mighty Nelson fell"[578]--they had a manlier idea of enterprise than being supported at the public expense in floating poor-houses miscalled floating hotels.

The few men who are the beneficiaries of taxes paid by the many will be powerful and shrewd enough to get other dispensations or benefits, post-office contracts, naval contracts, or modifications of the strict terms of their agreement, and with this help from the taxpayer they can do business at a figure which, though very remunerative to themselves, will drive the unaided citizen competitor out of the business. Honest citizens cannot ask for such favors. Poor men could not get them.

It was the old spirit of rebate which sought and gave the preference. Nothing could make such legislation respectable but the extension of its benefits to all Americans owning such ships. But no such extension was contemplated. The law gave a privilege not to the American flag, but to the owners of the American flags of these two steamers. "There is little probability," Senator Frye was reported as saying, December 22, 1892, in the New York _Tribune_, friendly to him and to the policy of subsidy, "of the passage of any more laws giving the privilege of an American registry to vessels upon the building of which no American labor has been expended. The twin steamers _City of New York_ and _City of Paris_ have set a fashion of which they will be the only exponents."

There is a pool of the steamers between America and Europe called the North Atlantic Steamship Association. At its meeting in December, 1892, this association discussed plans for reducing the number of trips, increasing passenger rates, withdrawing excursion rates to the World's Fair, and discontinuing the steerage traffic. This was duly followed by the announcement in March, 1893, for which it was presumably a preparation, that steerage traffic was renewed, but at an increase of rates. Passenger rates of the higher class have also been raised. Agreements to restrict the number of ships; pools to put up rates; steamship wars to destroy competitors; the use of "pull" to procure from the admiralty, sanitary, naval, immigration, and other governmental bureaus, here and abroad, regulations ostensibly for public convenience, really to make business, as nearly as can be, impossible for others; lobbies to buy legislation for private interests--all these may be expected to replace the magnificent and manly rivalries of the days when the unbribed flag floated on its own breath in every sea.

Under the policy of subsidy--the policy of aristocracy, exclusion, scarcity, corruption, war, and loss of liberty--the contest for maritime and commercial supremacy becomes a contest between the subsidy lobbies in Washington and at Westminster, Paris, and Berlin. If the duke who is at the head of one of the great English steamship lines obtains an increase of subsidy, the maritime dukes in America will call on Congress not to shame itself by doing less for Americans than Parliament has done for Englishmen. If all the English and American lines pass under one ducal yoke--following the internationalization of other syndicated businesses of Great Britain and America--one hidden hand will manage for one purse the make-believe duel between Parliament and Congress, while the uninitiated people glare across the ocean at each other, and each inspired press calls on its government not to allow its commercial supremacy to be destroyed by vulgar and unpatriotic economy. In advocacy of subsidy--breeder of sea-dogs, naval contractors, of war, and of treasury-suckled syndicates to fan its flames--the Secretary of the Navy wrote to the Chairman of the Senate Committee on Commerce in this case, "A fleet of such cruisers would sweep an enemy's commerce from the ocean." All through the press, from New York to Texas and the Pacific coast, every possible change of phrase is rung to fire the American heart with "jingo" exhortations to subsidize private steamers so as to increase our fighting kennel.

The "American idea" is that individuals as well as corporations, poor men as well as rich ones, small towns as well as large ones, one maritime State as well as another, should be encouraged to follow the sea. The old woman who thanked God, upon her first sight of the sea, that at last she had seen something there was enough of, lived before subsidies were invented and the sea shrank to be too small for all the people.

The contracts made with the International Company bind the government to pay it $4.00 a mile for fifty-two trips a year (3162 miles each) between New York and Southampton for the ten years (1895-1905)--$657,696 a year, and $6,576,960 for the ten years; and the same rate a mile for the same number of trips a year (of 3350 miles each) between New York and Antwerp for ten years--$696,800 a year, and $6,968,000 for the ten years. This makes an income from the mails alone of $1,354,496 a year on the not-to-exceed $10,000,000 which the company will have invested. At the end of the ten years it will have received from these government contracts alone its whole investment, and more than one-third in addition. The American taxpayer will receive for his share the profit and pleasure of being forbidden to send his letters to Europe by faster and cheaper boats, when these appear, as they have already begun to do. The trial trips of new steamers of other lines show them to be faster than the vessels we have bound ourselves to. "The American principle" used to be to send all mails by the fastest ships. Now, to develop the "American merchant marine," we relieve it from all necessity of competing in speed, or anything else, with the foreign marine.

With such legislation and contracts in hand, any syndicate could go to the banks and borrow at the lowest rates every cent of the millions it needed to carry out its plans. It need not invest a dollar of its own. Good enough "collateral" for borrowing would be this privilege--practically a capital of millions got from the government for nothing. Done for favored citizens, this is "the development of our national resources"; done for the whole people, it would be "socialism" or something more dreadful. Thus guaranteed dividends by the forced contributions of the American people, this company, if threatened with competition by other lines, old or new, can lower freights and fares to rates at which others cannot live. The subsidies are a reserve fund on which it can subsist while doing other business below cost. The vision of this will deter other capitalists from building vessels, as they have been frightened out of building tank-cars. The company can, by a war of rates, force the sale to it of such vessels as it wants out of the present Atlantic fleet. The scheme, which has progressed so smoothly through the various stages of the Postal Subsidy law--the exemption by special legislation of the two steamers from their foreign disabilities, the negotiation of the contracts for subsidies until A.D. 1905 for steamers yet unborn--is an entering wedge, the broad end of which may easily grow to be a monopoly of the transatlantic--and why not transpacific?--traffic and travel.

And in future legislation, tariffs, and contracts, what bulwark of the people would avail against the Washington lobby of these combined syndicates of oil, natural gas, illuminating gas, coal, lead, linseed-oil, railroads, street-railroads, banks, ocean and lake steamships and whalebacks, iron and copper mines, steel mills, etc.? These beggars on horseback--the poor we will always have with us as long as we give such alms--are forever at the elbows of the secretaries, representatives, senators. The people who pay are at work in their fields, out of sight, scattered over thousands of miles.

Having evaded, by the complaisance of Congress, the requirements of the subsidy law in the case of its two non-American steamers, the company sought to be relieved by the Secretary of the Treasury from the necessity of manning its boats with Americans, as stipulated by the law. It was unwilling to sacrifice the foreign captains in its employ, as the despatches said, "for the untried men of American citizenship," regardless that one of the strongest promises of the subsidy givers and takers was to recall to the sea the American citizenship banished thence. The company had already driven its foreign-built boats through the law, why not its foreign captains? It applied to the Treasury Department for permission to retain them. To furnish a ground for such a ruling, the foreign captains had given notice of their "intention" to become citizens. They could not become citizens for five years, and the courts hold that such a declaration does not meet the requirements of the law that the officers of United States vessels shall be citizens of the United States. The ruling asked for was refused by Assistant Secretary of the Treasury Nettleton. The question was not dropped. Some months later (December 2, 1892) the Washington despatches of the Philadelphia _Ledger_ and the New York _Herald_ reported that "Secretary Foster of the Treasury is disposed to accede to the wishes of the company, if it can possibly be done within the law," and in the New York _Tribune_ we read that "he is inclined to the view that an exception might safely be made in this case."

The raising of the American flag on these steamers--one at New York and the other at Southampton--in the spring of 1893, was made a state ceremony in both countries. The President of the United States came on specially from the capital to honor the occasion, though this had never been done before when the American flag was raised on vessels admitted to foreign registry. The American minister left the embassy at London to officiate at Southampton. The vessels were announced to be under American captains transferred from other ships owned by the same men. But the Society of American Marine Engineers and the Brotherhood of Steamboat Pilots discovered that other officers--the foreign engineers of the vessels--had been retained, though they were foreigners. The former began an agitation for the protection of their legal rights. Remonstrances from every important branch of the two societies from San Francisco to New York were forwarded to the President of the United States and the Secretary of the Treasury of the new administration which had just gone into office. Counsel were employed to present their case. It was found that one of the last official acts of the out-going Secretary of the Treasury had been the order authorizing the issue of licenses to foreign engineers. Attempts to procure a copy of this order from the department have failed. Engineers have always been considered to be officers. If they are such, this exemption was a violation of the statutes of the United States which require that officers shall be American. It reversed all the decisions which hold that declaration of an intention to become a citizen does not make one legally a citizen, for that would give foreigners, as in this case, the advantages of citizenship without its duties; and indefinitely, for the intention might never be executed. The order of the Secretary makes a precedent upon which foreign captains may be employed--the objection being the same in either case--and their reappearance may therefore be confidently looked for. The appropriation once got, "Old Glory" is hauled down.

An "American Seaman" wrote the New York _World_ that when he offered himself for employment on the boat which had just replaced with so much pomp the British flag with the American he was almost laughed at, and was told there had been ninety men on board that morning on the same errand. All got the same answer, "We don't want you. We employ all our hands on the other side." The articles circulated throughout the country to create public opinion in favor of these subsidies dwell much on the "glory" and advantage of having Americans in command of these vessels with a full American force under them. But the subsidy secured, we see these American vessels, which may be called upon to take part in a war with Great Britain, are manned by British engineers and British seamen. The lower compensation they are accustomed to will help keep down the cost of manning the other vessels to be built for the line.

The secretary by whom this was done was he who, as president of a subordinate corporation of the oil combination, had been the commanding officer at the front in the great battle with Toledo.[579] When he was nominated for Secretary of the Treasury, Senator Payne made himself conspicuous by soliciting support among the Democrats for the confirmation of this Republican. "He could not be chosen to the Toledo Council from any ward to-day," said the New York _Times_, February 23, 1891, "so bitter is the feeling against him," and the same paper declared that his defeat in Ohio as a candidate for Congress in 1890 was entirely due to his connection with the oil combination. But though of so little political power that he could not command a majority of the votes in his own Congressional district, there was influence behind him which could get the head of his party and the government to put him in the seat illustrious with the memory of such men as Alexander Hamilton and Salmon P. Chase. "The objection to Governor Foster as Secretary of the Treasury, that he was an associate in business of the members of the great oil trust," said the New York _Press_, "President Harrison did not regard as serious enough to have any weight." It was pointed out by the Buffalo _Courier_ editorially, February 23, 1891, and other papers, that the oil trust, which Mr. Foster had been serving, "is not only a heavy exporter but a heavy importer, especially of tin plate, and is an extensive claimant for rebates of duty on the tin of cans in which oil is exported."

An item of Associated Press news in December, 1892, says that the Secretary of the Treasury has just decided that the oil combination shall be paid by the Treasury a drawback of the duties it has paid on imported steel hoops for barrels in which it exports oil. "It isn't pleasant," said the New York _World_, editorially, February 23, 1891, "to have a Secretary of the Treasury who holds intimate relations with the oil trust." It is through the Secretary of the Treasury that the company receives the mail subsidies of millions a year. All the statistics and official publications with regard to the "decline of American shipping" and "foreign competition with American oil," and about the tariff, as on oil, coal, steel, tin, etc., and many other financial and commercial matters of pecuniary concern to them, are under the charge of the Secretary of the Treasury. The Treasury Department's Commissioner of Navigation, in 1892, sends circulars to the boards of trade and chambers of commerce all over the country, calling attention to the small amount of money paid by our government to American steamers for the mails, and advocating the establishment of a merchant marine and naval reserve on the principle adopted by Great Britain--_i.e._, the payment of subsidies.

When Senator Hoar, speaking of the oil combination in the debate on the Payne case,[580] asked, sharply: "Is it represented in the Cabinet at this moment?" he referred to the Secretary of the Navy. Subsidy had not then insinuated itself into the policy of the government; but when that came, the uses of a Secretary of the Navy were clear enough. It was by the influence of the Secretary of the Navy that the subsidies for these steamships of the oil trust were got through Congress. It is the Secretary of the Navy who passes upon the speed of the ships receiving subsidies; and his findings are binding upon the Post-office Department which awards the contracts and upon the Treasury Department which pays. In the rush of the closing hours of the session of 1889-90 of the Fifty-first Congress, upon the urgent recommendation, made in person to the Naval Committee, of the same Secretary of the Navy who had pushed through the subsidy special legislation we have described, $1,000,000 was appropriated for the purchase of nickel ore. It is an emergency, said the senator who spoke for the Naval Committee to the Senate. The nickel was to be bought by the Secretary of the Navy; when and where was at his discretion. The ore was to be used for alloying steel in the manufacture of armor plate. The same Congress took off the duty of hundreds of dollars a ton on nickel imported. The only nickel mine of importance in America was then at Sudbury, Canada. In pressing the appropriation through Congress it was stated that the mine, like the steamship company subsidized later, was owned by "our citizens." After investigation in Cleveland, New York, Washington, and Canada, the _Daily News_ of Chicago declared that the appropriation of $1,000,000 and the abolition of the duty were done in the interest of members of the oil combination; that they were "our citizens" who were the owners of the nickel mine at Sudbury; that they had sent an able lobbyist to Washington to secure the legislation; and that, in anticipation of his success, the product of the mine had been withheld for a year from the market, until ore to the value of millions had accumulated. It was said that by April 1, 1890, there were 5000 tons on the dump, the duty on which, at the old rate, would have been $1,500,000. Whether these statements were correct or not--and in the absence of official investigation it is impossible to tell--the narrative answers fully the purpose of giving the uninitiated public an idea of the relations that may exist between public departments and private syndicates with great profit--but not to the department. The appropriation was passed September 29, 1890. The books of the Navy Department show that the Secretary thereupon made contracts with the Canadian Copper Company, by which, up to June 15th following, it sold the government $321,321.86 worth of nickel. A litigation arising among its stockholders in the spring of 1893 disclosed among them no less close a connection of the oil trust than the senator from Ohio who had served it in Congress from 1876 to 1891.

The message of a Republican President in 1892 commended the special legislation in favor of the two steamers, and urged Congress not to fail to appropriate money to pay them their subsidies. The Democratic Postmaster-General, who now stands between the United States and these carriers of the foreign mails, is one of the firm of distinguished counsel who defended the interests of some of the owners of this steamship line in the conspiracy trial at Buffalo.[581] He is to give them the vouchers upon which the millions a year of subsidies are to be paid, and he may be called upon to consider new contracts. In the Presidential campaign of 1892 the head of the oil trust was prominent on one side figuring among the officers of great political mass-meetings in New York, while the associate referred to by Senator Hoar was the active manager of the political fortunes of the other party. This is not a solitary instance. The great man who testified twenty-one years ago that he was a Republican in Republican districts, a Democrat in Democratic districts, but everywhere an Erie man, has now an army of imitators. The people had this authoritatively explained to them while they were dazedly watching the speculation in sugar-trust stock in Wall Street and the Senate rise and fall with the manipulation of the sugar tariff in committee. The president of the sugar-trust, before a special committee of the United States Senate, testified that this "politics of business" was the custom of "every individual and corporation and firm, trust, or whatever you call it."[582] Asked if he contributed to the State campaign funds, he said: "We always do that.... In the State of New York, where the Democratic majority is between 40,000 and 50,000, we throw it their way. In the State of Massachusetts, where the Republican party is doubtful, they probably have the call.... Wherever there is a dominant party, wherever the majority is very large, that is the party that gets the contribution, because that is the party which controls the local matters"--which include the elections to Congress and the Presidential election.[583] Federal judges find the sugar trust not subject to the anti-trust law.[584] The Attorney-General has not got decisions in the suits against it for refusal to answer Census questions. Congress forces the people to buy sugar of it only, and at its price. The Secretary of the Treasury drafts for a committee of Congress a tariff like that the trust needs. Our President is the head of the "dominant party that gets the contribution," and he joins the sugar lobby by recommending, unofficially, legislation in its favor.[585]

By what law gives it, and by what law does not take from it, the sugar trust can issue $85,000,000 of securities on $10,000,000 of property, and collect $28,000,000[586] a year of profits. Control of government, with its Presidents, Congress, Federal Judges, Attorney-Generals, and Cabinet Secretaries, would be a great prize. Probably none of the trust's "raw material" would be so cheaply bought as this if it could be purchased by campaign contributions of a few hundred thousand dollars. In an interview in the New York _Herald_ of March 25, 1894, the debonair president of the trust, to shame the objections of picayune souls, cries, "Who cares for a quarter of a cent a pound?" The answer is not far to seek. He does.