a
4
NOVEMBER, 1915
The Commoner
1TADOO ON THE SHIP PURCHASE
BILL
(Continued from Pago 20.)
increase or shipyard facilities and
give employment to many of our
workmen during the winter months
in those parts of the country where
they would otherwise bo idle.
The shipping hoard should have
power to reform our navigation rules
and regulations; to study shipping
problems and recommend to the con
gress the necessary legislation to
encourage and develop a great mer
chant marine under tho American
flag.
The time has come when the con
gress should consider tho creation
of some instrumentality for the reg
ulation of merchant marine com
panies. As it stands today, no ocean
transportation company is subject
to the least regulation or control by
the government. Marino companies
operate their ships, change their sail
ings, or discontinue the operation of
their ships when and as they please,
and regardless of the rights of ship
pers. They fix rates and change rates
without notice, arbitrarily and in to
tal disregard of tho rights of ship
pers. They determine what cargo
they will or will not carry and disr
criminate in favor of one shipper
against another.
When we consider the effective
laws which have been passed by the
national government and the various
states to regulate common carriers,
it is amazing that tho steamship
companies which are common car
riers on the high seas have been al
lowed to go all these years without
regulation or control. What could
argue more strongly in favor of gov
ernmental regulation of ocean car
riers than the recent action of the
Pacific Mail steamship company?
Here 4s a company which has oper
ated a service between San Francisco
and the Orient for many years. Our
business men, manufacturers, and
producers, have built up great trade
interests with the Orient upon the
faith of this service. All of a sudden,
and without adequate notice, and
with utter indifference to the in
juries that might bo done to shippers
and the interests of this country, the
Pacific Mail steamship sells its ships
and announces that it will discontinue
its service. Suppose that the direct
ors of the Union Pacific railroad com
pany should decide that they could
make more money for their stock
holders by tearing up the rails of
their tracks and selling them and
their locomotives and cars to some
belligerent government, because that
government is willing in time of war
to pay fabulous prices therefor, what
do you suppose the .indignant people
along the line o? thi railroad would
do to the officers and directors of
that company? No common carrier
on land would be permitted to do
such, an arbitrary and injurious thing
as our common carriers on the high
seas may at any time do with im
punity. The Pacific Mail people claim that
tho passage of the Seamen's bill
forced them to discontinue business.
I am told that the Seamen's bill was
not the mainspring for the transfer
of the Pacific Mail vessels. The
Panama Canal act, which denied
railroads owning competitive steam
ship lines the right to operate them
through the canal, and the fact
that present abnormal rates for car
go space on tho Atlantic, which made
it possible for the Pacific Mail to sell
its ships at more than their real
value, was, I understand, tho true
cause of their sale.
In attributing the transfer to the
Seamen?s bill, the Pacific Mail people
had an opportunity to excuse them
selves in the eyea of the public for
an action whioh otherwise would have
been strongly denounced. But .if
21
m .gover,nmcnt "as Passed laws
..".w Uittn.u i. unprontabio for them
to operate their ships in tho Pacific,
they might properly say that they
can not and ought not to bo com
pelled to maintain their servico at a
loss. Let us grant that. It is cer
tain, however, thax. adequate steam
ship facilities between the Pacific
coast and tho Orient are vital to tho
interests of our country. Suppose
they can not be maintained except at
a loss. Must wo, then do without
these facilities? I say no. In those
circumstances such servico should
bo provided under our flag, and if
private capital can not afford to pro
vido it because it involves a loss, then
the government should provide it and
tako tho loss for tho general welfare
of all tho people and for tho protec
tion of our trade and prosperity, es
pecially when tho vessels for such
servico become a part of tho naval
auxiliaries essential to the national
defense. If tho shipping bill had
been passed in the last congress tho
Pacific Mail ships would not have
been transferred to tho Atlantic. Tho
shipping board would undoubtedly
have bought thoso ships and kept
them in tho Pacific trade where they
are needed, and tho interests of the
Pacific coast would have been saved
from injury.
The shipping board should also
have the power, acting in conjunction
with the interstate commerce com
mission, to arrange for tho issuance
of through bills of lading between
our railroad lines and steamship
lines, operating under the American
flag in the foreign trade, and to pro
vide tho means whereby special
through rates can bo made between
our railroads and steamship lines to
enable them to meet the competition
of foreign carriers Jn the open mar
kets of the world. I am sure that
plans and regulations of this char
acter, if properly worked out, would
give our shippers and business men
tho opportunity of largely increas
ing their business in foreign markets
by putting them in better position to
meet competition.
Is there anything unreasonable in
this plan? On the contrary, is it not
a practical pla . which promises to
give early results? Up to tho pres
ent time our antagonists have offered
nothing but criticism. They roundly
denounced the plan proposed at the
last congress for the creation of a
merchant marine, but they never of
fered a single practical or construc
tive suggestion as a substitute for
that plan. The! country is not sat
isfied with mere criticisms of a prac
tical plan. It demands that this im
portant pioblem be solved in the in
terest of the nation, and expects that
those who criticise will present a
practical substitute if they want a
hearing. Let our opponents present
constructive suggestions!
The shipping bill introduced in the
last congress is different in some de
tails from the plan here suggested,
but the bill was introduced in Sep
tember, 1914, just after tho great
European war had begun, when it
was necessary to move swiftly for the
protection of American business in
terests. Even that measure would
have been of inestimable service to
the country, had it passed, because
there was a superabundance of pur
chaseable ship tonnage which could
have been bought at that time and
used with immense benefit to Amer
ican commerce during the past year.
American business has paid dearly
for the defeat of that measure. I am
sure that the increased and extor
tionate ocan freight rates paid by
our defenseless producers and ship
pers in the past twelve months have
exceeded several times the $40,000,
000 which the .hipping bill author
ized the government to expend on
merchant vessels. But this is only
?all part of the injury. Grave
losses havo been sustained by our
business men becauso they could not
ship at all. Tako lumber and manu
factures of wool as an example. For
tho fiscal year 1914 our export of
theso products were, in round num
bers $99,000,000; for the fiscal year
1915, they woro, U round numbers,
$48,000,000, a decline of $51,000,
000. This was duo almost ontlrnlv to
tho lack of ships and prohibitory
ocean rates. Tako coal as another
instance. In tho face of tho most
extraordinary domand for our coal
from Spain, Italy, Franco, Argentina
and South America, our total exports
of coal for tho fiscal year 1915 wore,
in round numbors, $50,000,000,
against $60,000,000 for 1914 show
ing a decline of $4,000,000 in tho
face of tho greatest domand in our
history for our coal for foreign con
sumption. Franco nlono needs 40,
000,000 tons of coal the next year.
Wo could supply it if wo had the ves
sels. Think of tho stimulus to our
coal and lumber industries and tho
profitable employment it would give
to labor if wo had supplied tho ships
to secure this foreign trade for our
producers. I could multiply in
stances, but it is unnecessary.
In 1907, Mr. Gallingcr, the dis
tinguished senator from New Hamp
shire, and leader of tho republican
party in the last senate, said:
"Wo need American ocean mail
lines to South America and other
distant markets, and wo shall have
them. We shall have an American
merchant marine and a naval re
serve. We shall not go on forever,
as we are going now, payinp $200,
000,000 every year in freight, mail
and passenger money to the ship
owners of foreign nations, our rivals
in trade and possible enemies in
war."
How much more imperative and
vital now is the need which Senator
Gallingor so eloquently and accurate
ly described eight years ago!
A vigorous and porsiatont attempt
has been made to prejudice the coun
try against a practical measure for
the establishment of a merchant ma
rine on the ground that it would
put the government In tho shipping
business; that it is socialistic, etc.
The proposition was not to put the
government directly in the shipping
business, but to let it take stock in a
corporation which was to engage in
the shipping business.
The first congress which convened
after tho adoption of the federal con
stitution, recognized the right of the
government to subscribe stock in a
private corporation when its business
Is impressed with a public service.
My illustrious predecessor, Alexan
der Hamilton, proposed the organ
ization of tho first United States bank
with a capital of $10,000,000, In
1791, tho congress authorized it and
subscribed $2,000,000, or 20 per cent
of tho capital stock. Federalists and
republicans alike voted for it, and
President Washington approved it.
When tho second United States bank
was incorporated in 1816, democrats
and federalists alike voted for it, and
President Madison approved it. The
second bank had a capital of $35,
000,000, and tho United States sub
scribed $7,000,000, or 20 per cent of
its capital stock.
The next notable instance of the
government subscribing to tho cap
ital stock of a corporation is that of
the Panama Railroad company, which
also operates the Panama Steamship
line between New York and Panama.
Here again is a corporation whose
business is impressed with a public
service. Republican senators and
congressmen voted almost solidly
for this measure, and President
Roosevelt approved. The government
of the United States owns every dol
lar of the Panama Railroad company
stock. The Panama Railroad and
steamships have been operated for
tho past thirteen years by this jri
vato corporation In which tho United
States la solo stockholder, under the
supervision of tho war department,
and tho ships havo always been op
erated at a profit. Political influ
ences or activity havo never inter
fered with tho conduct of that com
pany's business. Senators Burton,
Gallingcr and Lodge, and many oth
ers who have opposed tho govorn-
ment taking stock in a steamship
company, voted for tho purchase of
tho stock of tho Panama Railroad
company and steamship lines. It ta
somowhat amusing to hear republic-
an senators strongly denouncing the
idea of tho government engaging In
in "any business that will interfere
with privato enterprise," in tho face
of tho record they havo made in con
gress. Who put tho United States
in tho express business and almost
destroyed all of tho privato express
companies in tho country? The re
publican party. It was during Mr.
Taft's administration that the repub
licans championed tho parcels poet
It is truo that tho democrats helped
them put it through, but it docs not
lio in tho mouths of tho republicans
to say that they aro opposed to the
government engaging in private busi
ness in tho light of this record. It
was the republicans, also, during Mr.
Taft's administration, who put the
government in the savings bank busi
ness, by establishing tho postal sav
ings bank. I remember when bank
ers throughout tho country were
strenuously opposing tho postal sav
ings bill becauso they urged that the
government would become a com
petitor in tho savings bank field.
Let me instance also the the feder
al reserve act. There is nop!ece of
legislation In half a century which
has produced already such pro
nounced benefits to tho American
pcoplo as this great measure. Bank
ers and politicians throughout the
country opposed this bill because
they said it put tho government in
the banking business; that it is "so
cialistic." The American Bankers
association, at its annual meeting in
Boston in Octobor, 1913, about two
months bofore this bill was passed,
formally denounced it by resolution
as socialistic, etc. Do you know why
tho federal reserve system was suc
cessfully established? It was be
cause of a provision in tho bill which
authorized the United States to take
all tho stock in federal reserve banks
which the national banks failed to
take. Doubtless you will recall that
many banks threatened, whilo the
federal reserve act was under dI-
cussion, to withdraw from the na
tional banking system If it became
a law. It is quite likely that If the
government had not protected Itself
by providing that the United States
might subscribe to the stock of the
federal reserve banks, a formidable
movement among the national banks
of tho country to withdraw from the
system might havo been successfully
carried out. In that event we would
havo had no federal reserve system.
But the fact that the government
would, if necessary, provide the cap
ital to establish tho federal reserve
banks made tho banks realize the
futility of further opposition. As a
result we havo today twelve federal
reserve banks which have consoli
dated and organized our credit sys
tem and resources on such a basis
that we are the strongest nation fi
nancially upon the face of the earth.
I believe that there is no intelli
gent banker, business man, or citizen
of this country, who understands the
federal reserve system and its work
ings, who does not thank God for. the
great law which created that sys
tem, whether it bo socialistic or
whether it puts tho government into
tho banking business or not,
Since the beginning of the repub
(Continued on Page 30.)
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