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The Commoner
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VOL. 15; NO. 8
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Secretary M'Adoo Shows Urgent
Need of Merchant Marine
The following Is from a copy of a letter writ
ten by Secretary of the Treasury William G.
McAdoo at North Haven, Maine, August 1, 1915,
addressed to Charles W. Gold, president of the
chamber of commerce of Greensboro, N. C, and
read at a banquet of that club, August 4, 1915:
"No section of our country should be more in
terested than the south in the expansion of our
trade and the strengthening of our influence in
Central and South America. Consider what this
means to the south in the matter of cotton alone.
The south produces annually more than twice
as much raw cotton as we consume or turn into
manufactured products at home. The south is
dependent, therefore, upon foreign markets for
more than half of her annual cotton crop. Any
interference with our foreign markets for cotton
reacts injuriously upon the south. Nothing could
more clearly demonstrate this than the ev.ents or.
the past year. The effects of the European war
have been felt nowhere so seriously as in the cot
ton producing states.
LESSONS FROM EUROPEAN WAR
"Wo must learn from the European war this
lesson; that wo must do everything in our power
to lesson our dependence upon foreign markets
for the sale of raw cotton. This can be done by
increasing our foreign markets for cotton fabrics
made in our own mills and factories. Then the
largest part of our cotton crop will be sold en
tirely to our own manufacturers, who will fab
ricate it upon our own soil, thus assuring a more
stable market for our raw cotton and at increas
ing prices. New and enlarged industries will be
created, giving employment to labor and bring
ing increased wealth and prosperity to the cot
ton states.
"The markets of Central and South America
at;e open to us today as they never were before.
If our cotton manufacturers were prepared now
to turn out the kind of cotton goods the people
of those countries want, we could undoubtedly
take and keep the vast amount of trade in cot
ton goods our foreign competitors have been
obliged to abandon. I asked a leading cotton
manufacturer of the south why he did not try
to capture the South American business. He
said he would be glad to do it, but that we had
no ships under the American flag upon which he
could depend for the transportation of his goods
to South America on regular sailings and at rea
sonable rates of freight; that he would have to
make a large capital expenditure to produce the
kind of goods the South American market re
quired, and that he would have to spend a large
amount of money to introduce these goods in
South America; that if he risked his capital in
such a venture and then found himself depend
ent upon ships of foreign flags which were more
interested in building up the cotton business of
European rivals than that of the American cot
ton manufacturer, he would find himself driven
out of the South American markets after peace
in Europe is restored; that foreign steamship
owners increase freight rates over night, without
notice; that these rates are frequently so pro
hibitive that the American manufacturer can
not compete with the .European manufacturer;
that foreign ships discriminate against American
trade, and that the sailings from American ports
to South America are irregular and slow and un
reliable. RELIABLE SHIP SERVICE NEEDED
"This manufacturer declared to me that if the
shipping bill had been passed by the last con
gress, so that reliable steamship service, under
the American flag, and backed by the United
States government, had been established, so that
he could depend upon reliable service, with reg
ular sailings and reasonable rates for freight,
he -would be willing to increase his plant in the
south, manufacture the goods required by Latin
'American countries and take a share of that val
uable trade. He said that other manufacturers
in the south would do the same thing, and that
lie was confident that, within a few years, there
-would be an enormous increase in cotton man
ufacturing in the south and a great accretion to
the wealth and prosperity of the southern .peo
ple. He said it was useless, however, to consid
er any such ventures unless ample ocean trans
portation facilities to South America are pro
Tided; that private capital could not be depended
upon for this service and that nothing but gov
ernment backing would give the necessary as
surance of a permanent and adequate steamship
service.
"This is, undoubtedly, a reasonable and sound
position for the cotton manufacturer to take. He
can not be expected to make a perilous invest
ment, nor can he command the necessary capital
to enlarge his business for South American trade,
unless he can have the assurance of reliable
ocean transportation, at reasonable rates.
"Is it not the intelligent and rational thing for
the government of the United States to provide
for the people of this country the steamship fa
cilities that are so imperatively demanded in the
interests of our trade and commerce, when pri
vate capital refuses to do. so? Is not this ques
tion especially vital to the south? Are we going
to be so unintelligent and so unenterprising as
to let our great opportunity escape?
"At the recent Pan-American financial confer
ence a resolution was unanimously adopted by
all of the foreign delegates present and by all
of the representative business men and bankers
of .the United States who were in attendance, de
claring that improved ocean transportation fa
cilities between the leading ports of the United
States and Central and South America is vital to
the extension of our trade and commerce. Mr.
Samuel Hale Pearson, the chairman of the Ar
gentine delegation, put the case forcibly when
he said: 'How can we trade with you unless we
can communicate with you?'
"Not only are ships under the American flag
needed to carry our trade into Central and South
America, but they are imperatively demanded for
the protection of our commerce with the nations
of Europe. I firmly believe that, if we had an
ample supply of American ships to carry our cot
ton to Europe, at the rates of freight which pre
vailed prior to the European war, it would mean
an increase of one to two cents per pound over
what it will be possible to get for raw cotton un
der present conditions. Before the European
war, it used to cost from $1.25 to $2.50 per bale
to transport cotton to the leading European
ports. Now it costs from $5 to $15 per bale to
transport cotton between the same ports. The
present ocean freight rates mean a charge of
from one to three per cent per pound for carry
ing cotton to Europe. This is an enormous tax
and, of course, it adversely affects the price
which the farmer gets for his cotton, because the
higher the cost of transporting any commodity to
market, the lower the price realized by the pro
ducer. THE SHIP PURCHASE BILL
"The administration at Washington foreseeing
the serious injury that the cotton producers and
the other producers of our country would suffer
"because of the lack of American ships and the
extortionate rates for freight charged by foreign
ship owners since the European war broke out,
submitted to the last session of congress a bill
for the creation of an American merchant ma
rine. The government of the United States owns
today, and has owned since 1902, the entire cap
ital stock of the Panama Railroad company
which railroad company owns and operates a line
of steamships from New York to Panama The
republican party, with the aid of democratic
votes, put the government in this steamship busi
ness. These ships have been operated at a profit
during all the years the government has owned
them, and since the European war broke out the
service has been maintained and there has been
no increase in the rates for passengers or
freight. This service has been of incafculaWe
benefit to the American people and to the people
of that part of Central and South America who
are accommodated by it. In the last congress
the administration proposed to carry the nrin
cple a little further by organizing another
steamship company, in which the government
was to be the sole stockholder, and which steam
sh p company was to buy, build, and I operate
ships under the American flag to South AmeS
and to other places where the interests of Amer
ican commercerequired.This steampshipcommnv
was also to be authorized to lease . BhSJ ttthSv
could not be bought or btfilt in time, and to on
erate such leased ships in the interest of Ame"
ican commerce. The bill also provided foi-th a '
creation of a shipping board, which was to
pervise the operations of the itwHoTO
and see that its business was conducted in tha
interest of the American people.
"Had this bill been promptly passed, there is
no doubt that a very considerable number of
ships could have been bought at that time that
others could have been chartered, and the com
pany would have been ready by this time to be
gin rendering a substantial service to American
commerce. Orders for other ships could have
been placed in our ship yards and a large num
ber of ships would already have been under con
struction. But, if ships could not have been
bought promptly, the company had authority to
lease ships, as before stated, and, undoubtedly a
very considerable fleet of vessels could have been
assembled by this time to carry our cotton and
other American products upon the high seas at
reasonable rates of freight and with correspond
ing benefit to all of the American people. The
rapacity of foreign steamship owners would have
been checked. The competition by the government-owned
corporation would have compelled
them to carry cargoes at reasonable rates, and
an immense amount of money would have been
saved to the American farmer and the American
manufacturer who ship their goods to foreign
markets.
FACE EXTRAORDINARY CONDITIONS
"There was no more important bill for the best
interests of the south and southern people than
this shipping bill. It was filibustered to death
in the last senate of the United
States by the republican party, aided,
I regret to say, by some democratic senators, sev
eral of whom are from the south.. It is time, not
only for the southern people but for the Amer
ican people, to look this momentous shipping
problem squarely in the face. These are times
when conditions are extraordinary, and we must
resort to extraordinary measures, if necessary, to
meet them. Why should the American people
allow their interests to suffer merely because
some are too timid to act, or too unintelligent to
act, or afraid to utilize the great powers and re
sources of our government to rescue us from a
situation where private capital refuses to act?
The paramount duty of. the hour is to protect
American rights and American interests, through
the strong arm of our government, which is the
only reliable agency upon which the people may
depend to solve national problems of such mag
nitude as those which now confront us.
A democratic congress, under the leadership
of a democratic president, passed a currency bill,
known as the federal reserve act, which is the
greatest thing that has been done for this coun
try in a half century. For the first time in our
history, the American people 4ire in position to
become the leading financial power of the world,
but the federal reserve act will perform in part
only the great service of which it Is capable un
less we supplement it with the creation of an
American merchant marine which will sail to all
quarters of the globe, carrying our commerce
under the protection of the Stars and Stripes into
the open markets of all the world, and giving to
our people their just part of the world's trade.
"We must protect American rights and Amer
ican interests with firmness, with justice, with
courage, and with enterprise. We can not do this
unless we have our own ships. We can not long
er be dependent upon foreign flags. It is not
safe to do so. We need American ships, not only
for the expansion" of our commerce, but we im
peratively require them as auxiliaries for our
navy. Our nayy is today sorely handicapped be
cause there are not enough American ships of
suitable tonnage and character to form an ef
fective naval auxiliary in time of war. A mod
ern navy without adequate and suitable naval
auxiliaries is rendered helpless for offensive op
erations at any considerable distance from its
home base. We would be justified today in
spending fifty to sixty million dollars for the cre
ation of an adequate fleet of naval auxiliaries.
These auxiliaries could be used in time of peace
for the training and education of the American
seamen upon whose courage and valor and
knowledge we should have to depend in the
event of war, while, in time of peace, they could
be used in the fruitful pursuit of trade with en
during benefit to the commerce, the industry,
and the prosperity of our country.
SHIP SUBSIDY UNDESIRABLE
"It is simply fatuous to hope that private cap
ital will provide these ships. Private capital will
not provide them, even if the navigation laws,
about which there is so much irresponsible talk,
should be changed as private capital demands.
I have never found even two capitalists who
agree as to whart changes should be made in our
navigation laws I have yet to find any man
vho, although arguing that the only thing need-
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