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Boston Steamship Company, operating the Lyra, Hyades, Pleiades, Shawmut, and Tremont. The following is a statement showing what class of vessel carried the flour for 1903:

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In order that no false impressions may be obtained from the shipments from the Pacific coast ports, we wish to state that the Japanese steamship line, operating from Seattle, has a contract with the Great Northern Railroad for the carrying of its oriental freight and in return it delivers its oriental freight to that road. The same is true of the port of Tacoma concerning the Boston Steamship Company and the Northern Pacific Railway and of the Northern Pacific Steamship Company, owned and operated by the Northern Pacific Railway and necessarily cooperating with it.

A trans-Pacific line operating out of Portland has a like connection with the Union Pacific, and the lines operating out of San Francisco a like connection with the Southern Pacific. For this reason the different lines secure from the railroads all the freight originating in the interior on that railroad line which they carry to the seaboard for transportation, and no other steamship line can get it. If it were not that the Southern Pacific at San Francisco and the Northern Pacific at Tacoma had made combination with American bottoms instead of with foreign, or if they delivered their freight at the seaboard open to delivery by any line, we doubt very much if any trans-Pacific line would now be operated under the American flag.

THE ONE AMERICAN LINE.

Excluding California, all trans-Pacific steamship lines plying to the Orient are foreign except only the Northern Pacific Steaniship Company (which sold its steamers a few months ago because they were too small for the business) and the Boston Steamship Company. As showing the interest Tacoma has in the matter under consideration we would state that the Boston Steamship Company brings its entire inward cargo to this port and takes from this port five-sixths of its outward cargo. Without any official knowledge on this subject, and repeating only current rumor, we would say that the Boston Steamship Company lost money in its first year's business and the foreign boats made money. Since the first year the Boston Steamship Company has probably come out even, but not much more, and this is perhaps due to the fact that they have a contract with the Government for the carrying of supplies and passengers to and from Manila. This contract not only furnishes a large amount of business itself, but puts the company in a good shape to carry cargoes from Manila and other oriental ports to this port.

In a word, we are fronted with the condition here, which, while more favorable to American bottoms than any other customs district, yet this condition is due to circumstances such as the contract with the

railway and the contract with the Government, which may change at any time, leaving the American bottoms in a position to lose money.

This is true, although the steamers operated by the Boston Steamship Company are excellent for the purpose (the Shawmut and Tremont perhaps being a little too large for the present business). Again, speaking without any official knowledge, we would state that the China Mutual Steamship Company and the Ocean Steamship Company, operating vessels which carry from eight to fifteen thousand tons, and which are splendidly adapted for the purpose both in size and equipment, and operating, so far as we know, without any railroad connections, are making money.

WHY FOREIGN SHIPS ARE MORE PROSPEROUS.

The reason the foreign bottoms are in a more prosperous condition than the American bottoms is due to two well-known reasons-the excessive cost of construction of the American vessels and the higher expense in operating them.

În considering a remedy which will enable the American bottoms to earn a fair return on their investment, it is impossible to adopt by direct legislation any method to reduce the cost of construction or to reduce the wages of the seamen, even if this method were advisable.

In time the excessive cost of building the ships would be undoubtedly overcome by reason of our greater experience, modern equipment, and appliances, and the superior adaptability of our mechanics. We have overcome the differences in the price of labor in many other lines, and if a system could be adopted which would double or treble the shipbuilding of this country, but a short time would elapse before we could make the finest kind of vessel as cheaply as anywhere. For the present, however, we are faced with the fact that there are obstacles to successful competition with other nations in the sea carrying trade without Government aid.

In considering the question of remedies, the present and increasing commerce of the Pacific Ocean is the largest and most important to our eyes. We sometimes feel that the mental vision of our national legislators extends no farther west than the Rocky Mountains. grow at a much faster rate commercially and industrially than other ports in the Union, those things which the Government does for communities should be done here according to the demands of business, and not because it comes our turn, and still less because we have fewer Representatives in Congress.

We

Commercially we have accomplished in ten years what it took the Atlantic coast forty years to achieve. This being so, there are pressing public demands for more harbor improvements, light-houses, public buildings, dredging rivers, and other things which the Government has undertaken to do. So it is with the commerce of the Pacific. have made leaps and bounds in our trans-Pacific commerce and upon its prospects we wish to diverge a moment. There are now about three and one-half million people on the Pacific coast and about five million west of the Rocky Mountains.

THE PACIFIC'S PECULIAR NEEDS.

Every resource of nature is known to exist in this area, and in time every want of mankind can be supplied. The Pacific coast is capable

of sustaining a much denser population than now exists in New England. The vast area between the Coast Range and the Rocky Mountains will in time, by reason of the systems of irrigation already formulated, sustain an agricultural population three times as dense as the most thickly populated region of the Mississippi Valley. When this great area responds to the labor and ingenuity of man, we will have an immense surplus of every kind of manufactured and agricultural products, which will seek a market through the Pacific. Our only possible market is the Orient. In a generation the Japanese have jumped from an insignificant and half-civilized country to one of the leading nations of the world, and have become a large consumer of Pacific coast products. If the Chinese make similar progress, as they now bid fair to do, it will tax this whole region to its utmost to supply them. We therefore urge strenuously, whatever remedies be adopted for the upbuilding of the American merchant marine, the present and prospective commerce of the Pacific Ocean be given just consideration.

A bill introduced in Congress a few years ago was an excellent thing for the swift Atlantic liners and for the large sailing vessels plying to and from the Atlantic coast. In its inception it had no provision which would assist the slower freight boats and smaller sailing vessels of the Pacific. The steamers that will carry the freights of the Pacific coast in the immediate future are those that carry from eight to fifteen thousand tons of freight, and steam at from 12 to 16 knots per hour. The sailing vessels, particularly those engaged in the lumber trade, will be more numerous under 1,200 tons than over. Unless the Government aid applies to vessels of this class, it will be of little benefit to the commmerce of the Pacific Ocean. In this connection we suggest that it is easier to secure trade as it grows rather than to take it from some nation after they have acquired it.

FOR A LONG PERIOD.

You have doubtless heard discussed to the limit of your patience methods to be employed to assist the American merchant marine. We suggest that whatever aid is extended it be distributed over a long period of years rather than pay large amounts for a short period. The latter method would lead to the establishment of lines to obtain the subsidies only and possibly to their abandonment when the subsidy ceases. The subsidy recently granted by France, by the terms of which they pay bonuses to the ships built in France and a subsidy, according to the distances carried, upon the cargo, has led to this unfortunate result: An immense number of French ships were built on account of the subsidy; they cut rates so low as to practically drive other ships out of business; but the French shipowners, now that the end of the subsidy period is approaching, have already asked the large ship-operating firms on the Continent to join them in the maintenance. of a scale which is at least as high or higher than that which existed prior to the time their subsidy went into effect. If this subsidy had provided for the same total amount to be paid in a period of twenty years instead of five years, the benefit might have been obtained without the evil consequences.

Provision might be made for the payment of a bonus for the building of ships in American yards. We are satisfied that in a short time the superior skill and adaptability of the American workingman would bring about a condition by which we would build ships as cheaply as

they are built abroad and then the subsidy could cease. The Government can borrow money at 2 per cent. A loan by the Government to shipbuilding concerns at 2 or 3 per cent, the Government taking proper security, might also remedy the shipbuilding evil. The Government could then contract for the right to use the vessels in time of necessity. One of the reasons we can not build ships as cheaply 'as they are built abroad is that we pay a higher rate of interest for money and our investors require a larger dividend than any other nation. The loan of money at a low rate of interest would overcome this condition.

COMPLICATIONS TO BE AVOIDED.

If provision is made for the payment of subsidies for carrying inward cargoes to United States ports, we wish to call your attention to the following condition which exists on the Pacific coast:

We ship immense quantities of lumber and coal. About 65 per cent of our lumber cut is what is denominated as rough, and will not stand shipment by rail to the East, nor to foreign markets. California is our chief market for this grade of lumber. They take 20 per cent of the total cut of the State of Washington, all of which is furnished by the tide-water mills. The better grades of lumber are easily marketed in the East or abroad, but without a market for the rough our mills could not operate.

The coal used in California is furnished, one-third from Puget Sound, one-third from British Columbia, and one-third from foreign ports. The British Columbia mines are operated largely by Chinamen, and the cost for labor is therefore less. In shipping lumber and coal to San Francisco British Columbia use foreign bottoms, which are in a position to give lower rates than American bottoms, while we are compelled by our coasting laws to use American bottoms. If, now, a subsidy bill would give the bonus to American bottoms for the carrying of lumber and coal from British Columbia to California it would work an injustice to us and nullify the tariff provisions on lumber and coal, by virtue of which only we now hold this market. A like condition may exist on the North Atlantic coast in regard to the coal and lumber of eastern Canada and perhaps on the Gulf coast as to products in nearby countries. A general statement that the countries immediately contiguous to us have like commodities to ship is probably true, and in order to prevent a condition which, in effect, would give a decided advantage to our next-door neighbor to compete with our own industries for our home markets the subsidy should only be applicable to cargoes originating four or five hundred miles from our seaboard.

THE COST OF LABOR.

Another condition that is peculiar to the Pacific coast is the cost of labor. Most of the Atlantic vessels are manned by Europeans and most of the Pacific vessels are manned by Asiatics, who get even less wages than the Europeans. If, therefore, it is the intention of a subsidy bill to man American ships with American crews from top to bottom, which would be very desirable, making good the difference between American and foreign labor, provision should be made for the wider difference in the labor employed on the Pacific

coast boats.

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We believe, also, that the subsidy should give full consideration to the distance the cargoes are carried. The cargoes to and from the Pacific coast are carried more than twice the distance those originating on the Atlantic and Gulf coasts are. It is also true that for a long time the commerce of the Pacific will be carried in freight boats that steam from 12 to 16 knots per hour. A subsidy to swift-going mail steamers would be of little benefit to us.

The conclusions of the writer are that a subsidy to ships built in American yards, paying a stated amount per ton of freight carried, increasing with the distance carried, regardless of the speed or size of the boat and extending over a long period of years applying to sailing vessels as well as to steamships, and if the subsidy is in the shape of a mail contract, the speed required to not exceed 16 or 17 knots per hour, would be of greatest benefit to the present and prospective commerce of the Pacific Ocean.

STATEMENT OF JOHN J. DONOVAN.

Senator FOSTER. We have a gentleman with us here from the city of Bellingham, a city in the northwest corner of this State of about 25,000 people. He comes here as the representative of the Bellingham Chamber of Commerce. He was born in New Hampshire. We would like to hear from Mr. Donovan.

The CHAIRMAN. The Commission will be pleased to hear from Mr. Donovan.

John J. Donovan appeared before the Commission.

The CHAIRMAN. Mr. Donovan, in what line of business are you engaged?

Mr. DONOVAN. I am general superintendent of the Bellingham Bay Improvement Company and of the Bellingham Bay and British Columbia Railroad Company. I have not a dollar's interest in any vessel, and I speak in this matter as an American citizen and as manager of these companies.

The CHAIRMAN. Proceed, Mr. Donovan.

Mr. DONOVAN. Mr. Chairman and gentlemen of the Marine Commisson, I read in the Seattle Post-Intelligencer with a great deal of interest the very complete statement of Mr. Meikle, the secretary of the Seattle Chamber of Commerce, in which he apparently proved that the commerce of Puget Sound is done practically entirely over the wharves of Seattle. I have listened with a great deal of interest to my friend Mr. Whitehouse, the secretary of this Chamber of Commerce, in which he has shown that considerably more than half of the commerce of Puget Sound is carried on over the wharves which you visited this morning.

Our Chamber of Commerce, with some 400 members, in the city which Senator Foster has so kindly mentioned, feared that in the good-natured rivalry existing between Seattle and Tacoma we might be forgotten, and that while Mr. Humphrey, Senator Foster, and Mr. Cushman are now in Congress and would know just where we are and just how much we amount to, you gentlemen east of the Mississippi River might forget all about us, and when we might want a lighthouse or an excavation in the harbor, or something of that kind, you would wonder why it was that this Commission, which is one of the most important, in my judgment, ever appointed by the Congress of

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