payments are reduced five per cent each year, and are terminated at the end of fifteen years. The bounties paid on navigation increased rapidly, and reached their maximum in 1899, when they amounted to $2,020,000; after that year, however, the navigation bounties rapidly fell off, because the Japanese Government passed a law in 1899 which provided for the substitution of a larger number of special subventions by contract with particular companies, to take the place of most of the general navigation bounties obtainable under the law of 1896. In 1902 the general navigation bounties amounted to only $160,000.

The policy of depending more largely upon special subsidies was adopted by Japan in 1899, because the navigation bounties of the law of 1896, although imposing a heavy drain upon the treasury of the empire, were not enabling the Japanese steamship companies to succeed satisfactorily in competition with foreign lines. The policy of making special contracts for specified services by selected routes has proven highly successful. Contracts have been made with 7 large steamship companies for services to America, China, Korea, Australia, India, and Europe. The contracts with these companies authorize a maximum Government subvention of over $3,000,000 annually. The largest contracts are with the leading Japanese steamship company, the Nippon Yusen Kaisha, which is granted a maximum subvention of $1,364,000 a year for operating 12 fast steamers on the European service, $91,000 for a service to Bombay, $268,000 for a line to Melbourne, $333,500 for a line from Hongkong to Seattle via Japan, and $280,500 for mail services to places in China and Korea. The next largest contract is with the Toyo Kisen Kaisha, which may receive a maximum of $517,000 for running 3 high-class steamers between Hongkong and San Francisco.

The Government aid now given the Japanese merchant marine amounts to between $3,000,000 and $3,500,000 annually, most of this relatively large sum being paid in special subventions to particular companies to secure the ocean transportation service of greatest importance to the commercial development of Japan. The tonnage under the Japanese flag is increasing rapidly. In 1895 the steam tonnage amounted to 331,374 gross tons; in 1903, to 632,742 tons; moreover, there has been a large increase in the number and tonnage of large steel steamers of over 4,000 gross tons.

REFERENCES FOR FURTHER READING

Annual Reports of the Commissioner of Navigation. Report for 1894, Appendix K. Report for 1901, Appendix G. Report for 1903, Appendix P.

MEEKER, R. "History of Shipping Subsidies." 1905.

"Development of the American Merchant Marine and American

Commerce." Report of the Merchant Marine Commission, January 4, 1905. Senate Report No. 2755, 58th Congress, 3d Session.

CHAPTER XXII

THE MERCHANT MARINE QUESTION

BOUNTIES and subventions for the aid of navigation. are of two distinct kinds: general navigation bounties, such as France gives, and special subventions, such as France, Germany, the United Kingdom, and Japan grant to particular lines of steamers to secure special services. General navigation bounties are subsidies, pure and simple, while special subventions are in part subsidies and in part payments for special and extraordinary services desired by the Government for postal, naval, and commercial reasons. The two forms of Government aid stand upon a different footing.

In favor of the policy of granting general navigation bounties, it may be argued: (1) That since the primary purpose of the bounty is to offset the economic and other disadvantages to which the shipping to be aided is subject, as compared with the foreign shipping with which competition must be carried on, the natural and surest way to equalize conditions is to aid all ships in the national marine, and to give them all the same measure of assistance. (2) In this way, moreover, Government aid will, it may be claimed, most surely contribute toward a wellrounded development of shipping to an increase in passenger steamers, in cargo steamers, in sailing vessels, and in the fishing fleet. (3) A third argument for the general navigation bounty is that it does not

discriminate; it helps the weak as well as the strong; it treats all alike.

The Merchant Marine Commission of 1904 recommended both a general bounty on all shipping and special subventions to specified lines. The general bounty sug-. gested was "an annual subvention of $5 per gross registered ton for every vessel, steam or sail, engaged for twelve months in the foreign trade or deep-sea fisheries, $4 for nine months, and $2.50 for six months." Vessels receiving the bounty were to be required to carry the mails free of charge, if desired, were to have crews containing a stipulated proportion of naval volunteers, were to be kept up to designated "ratings (standards of excellence), were to be held subject to acquisition by the United States for naval purposes at any time upon payment to the owners of the "fair actual value," and were to make all ordinary repairs in the United States. In advocacy of this recommendation the commission stated: "It is to be noted that one even rate of subvention of $5 per gross ton is provided for all vessels, sail craft included. This is the fairest plan that possibly can be framed. It is simple and intelligible. It is proof against all charges of favoritism and discrimination."

There are, however, certain objections to general navigation bounties that weaken or overcome the arguments just advanced in their favor.

(1) In the first place, general bounties on navigation are subject to much the same criticism that was urged against construction bounties in a former chapter. The force of this criticism in the case of navigation bounties is weakened somewhat, it is true, by the fact that a large and prosperous merchant marine is of even greater importance than is a flourishing shipbuilding industry to the industrial, commercial, and military progress of a country.

(2) A country, with a relatively small shipbuilding industry, that is not able to compete with foreign shipyards in constructing merchant vessels for the world. market, may yet be able to supply the domestic shipping interests with highly efficient vessels, and also be able to construct war vessels of the highest type; but no country can become and remain a first-class naval power unless it has a large body of hardy seamen from which to draw its crews to man its war vessels; nor can a great commercial country, such as the United States has come to be, hope to extend its markets over the world in successful competition with its powerful commercial rivals, unless its merchants and producers are served by lines of mail and freight steamers connecting the United States with all the leading foreign centers of trade and production. This consideration, however, is rather an argument in favor of giving ocean navigation vigorous Government support than a justification of the policy of general bounties on all shipping.

(3) The third argument in favor of the general navigation bounty may be cited with equal force against that policy. From the standpoint of practical results, Government aid that does not discriminate between different kinds of shipping-that helps alike the weak and the strong-may well be criticised. The most certain method of increasing our merchant marine engaged in the international trade is to pick out the stronger lines of vessels and give them such assistance as will enable them to meet foreign competition successfully and to increase the tonnage of their fleets year by year. The way to get results is to strengthen the strong. Moreover, the weak are ultimately benefited by this policy—a fact well shown by what has taken place in Great Britain and Germany, where the plan of aiding a limited number of companies has prevailed. This fact is brought out by the Merchant