CHAPTER XXXIX. POLICY OF THE UNITED STATES TOWARDS SHIPPING AND SHIP-BUILDING. Discriminating duties and shipping reciprocity, 295. Provisions of the acts of The shipping policy of a nation can be determined only by an examination of the attitude of the Government towards numerous questions relating to the construction and operation of ships. It seems wise to consider separately the various elements that make up this policy. While the earlier policies will be considered first, no strict chronological treatment can be given, although related elements will be considered in the sequence of their occurrence. The account will end with the correlation of the whole by pointing out the effect of the various governmental activities and laws. DISCRIMINATING DUTIES AND SHIPPING RECIPROCITY.1 Shipping questions were among the earliest problems to occupy the attention of the first Congress. The perils of war and the inability of the Government of the Confederation to regulate commerce had caused American shipping to fall "into decay and involved thousands in the utmost distress."2 Congress quickly responded to appeals for help. The first provisions in aid of shipping were contained in the tariff act of July 4, 1789, the second act passed by the first Congress, which provided for a discrimination against foreign shipping by giving a reduction in the duties on goods brought to the United States in American ships. The colonists had been accustomed to such legislation, for discriminating duties were authorized in most of the colonial charters, and such duties had been utilized even by one colony against another. The system was, moreover, in accord with the mercantile policy of European nations and was regarded as a matter of necessity. 'See also infra, chap. xli, in which this subject is discussed briefly by Dr. Huebner in connection with "Tariff Provisions for the Promotion of the Foreign Trade of the United States." 'American State Papers, Commerce and Navigation, I, 6. 'Renninger, Government Policy in aid of American Shipbuilding (A thesis, University of Pennsylvania, Philadelphia, 1911). 295 The tariff of 1789 provided a reduction of 10 per cent in the duties levied on imports, when the goods were brought in American ships, and this principle was retained as a constituent element of American shipping policy for a quarter century. In the tariff of 1794 the form, but not the nature, of the discrimination was changed, when the duties named in the tariff were made applicable to goods imported in American ships, while a 10 per cent increase was provided for commodities arriving in foreign bottoms. In this form, discriminating customs duties have been provided in almost all subsequent tariff laws, although, practically speaking, they have long since ceased to be operative. The discrimination given the import trade from the Orient was greater. Deprived of the opportunities of commerce with British colonies which they had theretofore enjoyed, American merchants turned to the Orient to trade unrestricted by navigation laws. The first tariff act encouraged this trade by making the duty upon tea (then the principal East India commodity imported into the United States), when brought direct from China or India in American ships, from 6 to 20 cents per pound, while the same tea imported in American ships *via Europe was required to pay from 8 to 26 cents and, if in foreign ships, from 15 to 45 cents. Upon all other Oriental products, imported in foreign ships, an ad valorem duty of 12.5 per cent was levied, which was almost double the rate on similar goods imported in American bottoms. These discriminations were sufficient to exclude foreign shipping from the Oriental import trade. Similar provisions were incorporated in tariff laws until as late as 1830. In 1832 teas brought directly from the Orient in American vessels were placed on the free list, and in 1842 a 10 per cent discrimination in the duties was provided against Oriental goods brought in foreign vessels. From 1862 to 1882 a 10 per cent additional duty was levied on eastern cargoes shipped from west of the Cape of Good Hope. Discrimination of another sort, proposed by James Madison and adopted July 20, 1789, in the third act of the first Congress, involved the tonnage duties levied upon ships arriving at the ports of the United States. A decided preference was given to American shipping, and a considerable preference also to vessels built in the United States but partly owned by foreigners. The tonnage duties were as follows: On vessels built and owned in America and on foreign-built vessels owned by Americans, on and after May 29, 1789, 6 cents; on vessels thereafter built in the United States but partly or wholly owned by foreigners, 30 cents; on all other vessels, 50 cents. Discriminating tonnage duties were continued by the tariff act of March 27, 1804, which placed foreign shipping at an even more serious disadvantage. A new duty, known as "light money," amounting to 50 cents per ton, was authorized to be charged on all foreign ships entering the ports of the United States. This doubled the previous tonnage tax levied on foreign vessels. Light money was collected, until 1830, since when the lighthouse service has been maintained from the Treasury funds without a specific tax. The net result of these discriminations was a tremendous growth of the American shipping industry. Both the foreign and coasting trade passed very largely into the hands of Americans, and there was an immediate and rapid growth in the merchant marine. The treaties which brought peace at the close of the war of 1812 ushered in a new policy which seemed to be a departure in shipping legislation. While it did not immediately result in a decline of shipping interests, it has been designated as a forerunner of the measures to which have been attributed the transfer of the foreign trade from American to foreign bottoms. This policy first appeared in the act of March 3, 1815, which removed discriminating duties, both tonnage and import, in favor of American vessels in the foreign trade, so far as concerned ships carrying goods from the country under whose flag they sailed. The repeal was to take effect with respect to any nation, when its discriminating or countervailing duties which operated to the disadvantage of American shipping had, to the satisfaction of the President, been abolished. The commercial convention of July 3, 1815, removed the restrictions upon the East India colonial trade, but permitted Great Britain to regulate the West India trade as it saw fit. Reciprocal trade with British countries in Europe was secured, the same tonnage duties on each other's vessels were to be charged, and no discriminating duties in favor of home shipping were to be permitted on imported goods. The treaty went beyond the terms of the act of March 3, 1815, and was a diplomatic victory for England. It permitted British ships to engage in the profitable triangular trade between England, the United States, and the West Indies, whereas American ships continued to be excluded from the British West Indies. Shipping and ship-building activities experienced a setback which aroused Congress to action. British ships sailing from ports from which American ships were excluded were sent out of American ports, but it was only after a prolonged struggle that Great Britain was induced to grant real reciprocity of trade. The policy introduced by the act of 1815 was continued in that of March 1, 1817, prohibiting the importation into the United States of goods in vessels other than those of the United States and of the producing country, or the country through which they were first shipped; but these restrictions were to apply only to those countries pursuing a similar policy toward the United States. This law, it will be noticed, did not offer reciprocity for the indirect trade, but merely prevented participation in it, even with a payment of discriminating duties, by those nations which applied similar restrictions to the United States. The reciprocity policy reached its final extension in the act of 1828, providing that all foreign nations that would grant a similar privilege to the United States should be allowed participation in the indirect trade. British ships might, henceforth, carry French goods to the United States without the payment of discriminating duties, providing American ships were allowed the same privilege as between France and England. The policy of maritime reciprocity was introduced by treaty and by proclamation as well, “upon satisfactory evidence being given to the President of the United States by the government of any foreign nation, that no discriminating duties of tonnage or import are imposed or levied in the ports of the said nation, upon vessels wholly belonging to citizens of the United States, or upon the produce, manufactures or merchandise, imported in the same from the United States, or from any foreign country." Among the different jurisdictions which, between 1816 and 1829, accepted partial reciprocity were Great Britain, Norway-Sweden, France, Holland, Prussia, Hamburg and other German cities, Russia, Algiers, Brazil, and Central America. The policy of complete reciprocity has had only temporary suspensions, designed either to favor particular nations or to secure the removal of restrictions placed upon American vessels. The real result of the introduction of shipping reciprocity has been a debatable question. The friends of the measure have insisted that what American ships lost of their own carrying trade they gained of the commerce of other nations. While the percentage of the American foreign trade carried in American ships declined from 92.5 in 1826 to 66.5 in 1860, it is nevertheless true that 1860 marks the year of the largest tonnage of American vessels which entered and cleared in the foreign trade of the United States until 1900. The foreign tonnage engaged in this trade jumped from 10 per cent of the total entrances and clearances in 1821 to 23 per cent in 1831. In 1832 it was 29 per cent, which was likewise the figure for 1860. It was not until after the Civil War that the decline in American shipping engaged in foreign trade took place, and although participation in the foreign trade of the United States was allowed to the vessels of other nations, the American shipping industry was by no means demoralized. Many modern writers, however, criticize the assurance of the early lawmakers which led them to believe that the skill and experience of American ship-builders and seamen would enable the United States, after having abolished all discriminating duties, to induce European powers to do the same. Those who regard the reciprocity policy as a real cause of the decline of the American foreign carrying trade still urge a return to the policy of the early days of the Republic. The effort to reestablish the discriminations which were a heritage from the days of the Cromwellian "Navigation Laws" has, however, been fruitless. Long before the development of the spirit of international comity, practically all nations had adopted shipping reciprocity, which is looked upon as one of the contributions of American statesmen to the present commercial system of the world. When the possibility of reprisals and the necessity of abrogating all commercial treaties now in force are considered, it is apparent that, as Mr. E. T. Chamberlain, Commissioner of Navigation,' says, a readoption of the old policy of discriminating duties is "hopelesssly impracticable." The wisdom of his judgment is substantiated by recent experience. The tariff of 1913 attempted a return to the earliest form of discrimination by providing a 5 per cent discount of the duties established, if goods were imported in ships of American registry. It was stipulated, however, that nothing in this provision was to "be so construed as to abrogate or in any manner impair or affect the provisions" of any existing treaty. Upon the advice of the Attorney-General, the Treasury Department ruled that this provision was inoperative, because the discount could not be given without impairing the treaty rights of other nations. While tonnage taxes, like customs duties, are now levied on the same basis upon ships of all nations engaged in the foreign trade, they have been so modified as to encourage foreign commerce. The act of May 31, 1830, had repealed these taxes, not only as to American ships, but also as to the vessels of all nations which the President was satisfied had abolished their discriminating or countervailing duties with respect to the United States. The need of revenue caused a reestablishment of tonnage taxes on all vessels in 1862. Changes were made in the rates from time to time, and in 1870 they were removed as to vessels in the American coasting trade and fisheries. In 1884 and 1886 the existing rate of 30 cents per ton net register per year, levied on all vessels in the foreign trade, was changed to 6 cents for each entry, with a maximum payment of 30 cents per ton per year. In the nearby foreign trade-from North America, Central America, the West Indies, the Bahamas, and the Caribbean coast of South Americathe rate was to be 3 cents per ton, with a maximum of 15 cents per year. American sailing-vessels had been discriminated against under the old law because they paid the same tax as steamships, although they were not able to make so many trips annually as steamships. The tariff of 1909 granted further relief to the nearby foreign trade by reducing the rate to 2 cents per ton per entry, with a maximum of 10 cents per year. The law of 1884 contained a reciprocity clause which is a further indication of the liberal international policy of the United States. The President was authorized to "suspend the collection of so much of the duty herein imposed, on vessels entered from any foreign port, as may be in excess of the tonnage and lighthouse duties, or other equivalent tax or taxes, imposed in said port on American vessels by the government of the foreign country in which such port is situated." This clause bore little fruit, vessels from the Netherlands, the Dutch East 1Report of U. S. Commissioner of Navigation, 1909, p. 65. |