the amount that would be spent in our shipyards if our own people supplied all the ships our foreign commerce employs.

Having our own ships we could obtain and expand new foreign markets for our ever-increasing surplus products. If we could double our exports, the prosperous conditions now prevailing all over the country would be still more augmented. We can do it 'with our own ships. We cannot do it without them.

Appeals have been made to prejudices by the widespread distribution and extended publication of the assertion that wealthy corporations would get the lion's share of the compensation. This is untrue. The man who builds the most ships gets the most money. The man who builds the most ships best serves the naval, economic and commercial interests of the country. Whoever gets the most under this bill must do the most. It is equitable in every sentence. No ships can receive compensation unless they carry cargoes from the United States. No ship can be profitably run for the government aid alone, as in no case does this compensation exceed one-fifth of the actual expense of the ship in operation.

REASONABLE PROFITS MUST BE ASSURED

It takes money to build, to own and to run ships. It takes millions to build and run lines of ships. Only men of large means of their own, or who are able to command what they require or may profitably invest, can do large things as shipowners. Such men do not deserve censure and ridicule. They do not deserve sneers. They deserve fair treatment--only that. We cannot ask them to invest their money at a loss.

If, for the nation's best welfare, for the nation's auxiliary naval needs, for our commercial expansion, we desire to induce our citizens to invest their money in ships built, owned, officered and manned by our own citizens, they must be assured a reasonable profit or they will invest their money where a reasonable profit is assured. Capital need not care whether this bill passes or not. Labor should care. The nation does care.

President Arthur T. Hadley of Yale University takes the stand that in the past, the subsidizing of steamship lines have been a failure, and that advantages claimed for the principle will not be found as claimed. He says in a recent article:

The United States has in two instances tried the policy of steamship subsidies on a large scale-with the Collins line in 18501858 and with the Pacific Mail in 1865-1875. In neither case was the result satisfactory.

The subsidy to the Collins line was in large measure due to the efforts of Mr. King, of Georgia, for some time chairman of the House Committee on Naval Affairs. As early as 1841, only two years after the first contract of the English Government with Samuel Cunard, he urged the United States to follow the example of England, The first act of Congress on the subject was passed in 1845; the amounts devoted to the payment of steamship lines were gradually increased until 1852, when they amounted to nearly $2,000,000 annually. At the close of that year there were American steamship lines running from New York to Liverpool, Havre and Bremen also from various American ports to the West Indies and the Isthmus of Panama, with connections thence to Oregon.

DANGERS OF THE SUBSIDY SYSTEM

Much the most important of these enterprises was the Collins line, which made fortnightly trips from New York to Liverpool, for which it received a subsidy of $858,000. The history of this line is an instructive one, because it shows clearly the dangers of the subsidy system even under the most favorable circumstances. The boats were designed, built, and managed by thoroughly competent men. They were the finest specimens of steamship construction then existing; they were probably the best sea-going wooden steamships which have ever been built. They were much more comfortable and much faster than the English boats with which they came into competition; and though the Cunard line was forced by the influence of their American rivals to build newer and better boats than they had before, they were far from equaling the Collins line

in speed or comfort. Nor was the American line dishonestly managed. Mr. Collins was largely influenced by patriotic motives. So far from making any money out of his connection with this enterprise, it ultimately caused his financial ruin.

But the fact that there was no intentional dishonesty makes the absence of good economy all the more apparent. The The managers believed that they had the public treasury to fall back upon. They indulged in all sorts of expenditures, necessary and unnecessary. Changes were made while the vessels were in process of construction which greatly increased their cost, in many cases without corresponding advantage. The capital stock was insufficient. The company was heavily in debt from the first. The care in management which was the only thing that could have enabled them to carry this load of debt was altogether wanting. If any one desired an illustration of the danger of paralyzing individual thrift by government aid, he could hardly find a better one than the early history of the Collins line. Under such circumstances the apparent prosperity of the business could not last long. The rage for making fast passages rather than safe ones occasioned the loss of two steamers; a change of feeling in Congress caused the subsidy to be withdrawn, and the company was found to have nothing left to stand on.

DISCONTINUANCE OF THE EARLIER SUBSIDIES IN 1858

The Pacific Mail had a much longer life; but its history was in many respects worse than that of the Collins line. It was less harmed by the discontinuance of the earlier subsidies in 1858 than by the renewal of the policy in 1865. The $500,000 a year which was paid them for their China service by the contract of 1865' proved but a poor compensation for the unsound methods which were introduced into the management-in part, apparently, as the result of that contract. Up to 1865 the Pacific Mail had been a sound concern. Its shares stood above par. After that it fell into the hands of speculators; it lost nine vessels in as many years; its shares dropped below fourty. An additional subsidy of another

$500,000 was voted in 1872. But the company was unable to get the new vessels ready for service within the time stipulated; and while the government was hesitating what to do, a series of disclosures showed that the contract of 1872 had been obtained by wholesale corruption. Public opinion was strongly aroused against the system. The contracts of 1865 were allowed to expire and were not renewed. It was felt that the trade which had been encouraged had not been that of merchants in China, but of speculators and lobbyists at home.

Such facts as these furnish a strong argument against the attempt to build up and American steam marine by means of subsidies. But there are special circumstances which render the lesson doubly important at the present time.

TRADITION THAT TRADE FOLLOWS THE FLAG

then compete on But this is not all.

In the first place, the difficulties of building up an American carrying trade in this manner to-day are exceptionally great. The cost of ships in America is greater than it is elsewhere. No foreignbuilt ship is allowed to carry the American flag. Our ship owners are thus compelled to buy in a dear market and even terms with those whose plant is cheaper. Even if we were allowed, by a change in the navigation laws, to buy our ships wherever we pleased, we should not be on an equality with our competitors in this matter. In order that American capital may be attracted into the foreign carrying trade, it is necessary that the rate of interest obtainable in that business should be about as high as that which can be had in other lines of business which offer chances for investment. That is not the case at the present time. Shipping profits have been cut down by large investments of European capital, artificially stimulated by subsidies. They have been so much cut down that there has been for two or three years practically no money to be made in the business.

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There is a tradition that "trade follows the flag;" that where our ships run we shall develop a trade. This may have been true before the invention of the telegraph, when the cargo was so often

a matter of private enterprise on the part of the ship owner. But there can be no doubt that it is every day less and less true; and it is probably furthest from the truth on those lines of communication where subsidized steamships would be likely to run. The notion that such lines would act as drummers for New York houses has very little basis in fact.

If, under this condition of things, we are asked to grant steamship subsidies as a patiotic way of getting rid of the surplus, the presumption is strongly against the wisdom of any such policy. In all the affairs of life, whether public or private, it is a dangerous thing to spend money simply because you have it. It is almost certain that such money will be unwisely spent. This is conspicuously true of the government expenditures. The really wise ones have not been made where an overflowing public treasury was used to help individual enterprise, but where some specific need was felt, and the Government set about to have that need met in the most efficient way.

A MATTER OF BUSSINESS

England has at times given large steamship subsidies, but she has done it on business principles. It was a political necesssity for her to have communication with her colonies, and to have steamships which could furnish her with a naval reserve and a transport service in case of war. In order to do this she had to pay for it. She tried to pay as little as she could for the service rendered; but she could not, without political suicide, dispense with such service. She had the same reasons for subsidizing steamships that we have for maintaining postal communication on lines which do not pay. It was the same reason which has led Germany and Russia to build military railroads or which led us to grant liberal aid to the Union Pacific in 1862 and 1864. In all these cases it was a matter of business for the government to secure its end. The fact that the returns could not all be measured in dollars and cents did not prevent its being sound business policy. In fact, it furnished a strong reason why the government might properly make the expenditure,