to American ships engaged in the foreign trade, no matter what the ownership might be, when they approved of the resolution which apparently applies solely to railroadowned ships operating through the canal in the coastwise trade.

It does not seem possible to me that the business interests of San Francisco would sustain the contention that it would be better to have no American ships at all operating in the foreign trade, if, perchance, there is any capital invested that has any connection or affiliation, directly or indirectly, with those interested in railroad operation. It is estimated that these new ships will cost $12,000,000; it will probably cost $1,500,000 more to alter the four ships already in operation, every dollar of which will be spent in American shipyards. These ships, designed and adapted absolutely to the foreign trade, would, under no circumstances, pay their salt in the coastwise trade; yet we claim for these ships this advantage, and I believe that the claim, from an American standpoint, is fundamentally sound: If one of these ships is loading in New York for the Orient or discharging freight in San Francisco from the Orient, and oriental freight is light from New York to the Orient or freight from the Orient to New York is light, these ships, being American ships, and passengers and freight are offering in New York for San Pedro and San Francisco, or in San Francisco and San Pedro for New York, they would have the right to take any freight or passengers to or from such points, a privilege which a foreign ship in competition with them could not have. It does not seem conceivable to me that any business man, interested in the welfare of his port, would consider for a moment that tonnage taken under these conditions, or passengers moved under these conditions, in only eight ships, could in any possible way control the Isthmus Canal, either in the question of rates or in the monopoly of traffic, expecially when it is a known fact that the AmericanHawaiian Line will be prepared to operate at the opening of the canal 28 cargo steamers, measuring on the average 10,000 tons of freight space, adapted solely to the coastwise trade.

Nevertheless, with all these representations to the effect that we propose this line purely and simply as an oriental line, taking no coastwise freight in either direction, provided we can fill with oriental freight, but taking passengers and freight at all ports at all times to the full capacity of the ships, it is argued that we should be del arred from the right of American enterprise and the right of operating on the high seas and the use of the canal. On the other hand, German bankers with German railroad affiliations, or British bankers with British railroad affiliations, can build American ships and operate them through the canal under exactly the same conditions. The proposed law, as advocated by Mr. Wheeler, would not discriminate against such lines or their owner hip.

You must know that it is not an easy thing to raise $12,000,000 for such an uncertain venture in this country, and if it is egotism for me to say so, I believe that the hard work which I have put in and the persuasion necessary to raise this money should merit me a vote of thanks from the San Francisco Chamber of Commerce, and not the condemnation of Mr. Wheeler. Please do not think that I am making a special attack upon Mr. Wheeler, for he is a special pleader in a call for true sea-level rates, and I believe his zeal sometimes carries him beyond the bounds of good, hard common sense. If it be that the trustees of the San Francisco Chamber of Commerce intend that their resolution shall cover American ships in the foreign trade, as suggested above, then we must take our chances with legislation, but if they do not intend that their resolution should go so far, it seems to me that they should instruct their Representative here accordingly, so that the matter might be set straight before the Members of Congress as to how far they wish their resolution to be considered:

I have written you a very lengthy letter, but it is a subject so dear to my heart that I could keep on writing volumes; and if it impresses itself upon you, I should be glad if you would talk it over with some of your friends and sound the true intention of the trustees. It is true, but unfortunate, that the present committee of the Chamber of Commerce is composed of practically every man interested in water transportation except a representative of the Pacific Mail Steamship, and I suppose there is a reason for it. But is sectional feeling and past history-those things which have gone over the dam-to be the primary cause for destroying the last vestige of American ships on the ocean, for I am sure if legislation prevents the building of these ships it means withdrawal of the present ships from the Pacific coast and the turning over of its highways absolutely to Japanese subsidized lines, a supremacy for which they have fought and paid liberally for in the past 10 years.

There is no yard in the country to-day that is prepared to build ships of the magnitude we propose without alterations, and the earliest possible time we could expect delivery of these ships would be 28 months from the date of the signing of the contract, one ship to be delivered each four or five months after delivery of the first. Of course it is eminently essential to get these ships in operation during the exposition, if they are to be operated at all, and therefore you will see the necessity for immediate action.

The Panama Canal bill is now pending before Congress, and will soon be reported out of committee. Therefore, if this question appeals to you (time being the essence of my position) and you are at all interested, it is necessary, if any action is to be taken by the Chamber of Commerce, it must be taken at once.

Sincerely, yours,

R. P. SCHWERIN.

[Telegram.]

R. P. SCHWERIN,

New Willard Hotel, Washington, D. C.:

SAN FRANCISCO, March 11, 1912.

Board of directors San Francisco Chamber of Commerce to-day after careful consideration unanimously passed following resolution:

"Resolved, That this chamber is unalterably opposed to the operation through the Panama Canal of any railroad owned or controlled ship engaging wholly or partly in coastwise traffic. We also reiterate our position formerly expressed that we favor and strongly urge upon Congress the enactment of laws that will exempt from canal tolls all ships sailing under the American flag engaged in coastwise traffic."

This was done after consideration of your recent letter to me. We regret that you were of the impression that our attitude as expressed by our former resolutions or as maintained by our representatives in Washington called for any amendment of the law prohibiting railroads from owning or controlling ships engaged in trade through the canal other than coastwise trade. Our objection all along has been and still is only to allowing railroad owned or controlled ships engaged wholly or partly in coastwise trade from passing through the canal. Our position on this subject rests upon a matter of principle and in no way upon any hostility to any particular steamship company. M. H. ROBBINS, Jr.,

President San Francisco Chamber of Commerce.

Gentlemen, we called this meeting originally at the suggestion of Senator Thornton who thought that some of his constituents of New Orleans wished to appear. Later he received information from them that owing to the flood conditions that prevailed there in the Mississippi and around the Mississippi, they could not conveniently appear at this time, but would appear later.

There are other gentlemen that had arranged to appear even if these New Orleans people did appear, so they may go right on. First in order is the Newport News Shipbuilding Co. Who appears for them?

Mr. FERGUSON. I would ask that Admiral Bowles, the president of the Fore River Shipbuilding Co., be permitted to speak first. The CHAIRMAN. It makes no difference to the committee.

Senator JOHNSTON. I would ask to have inserted in the record a telegram from Mr. R. V. Tavlor of the Mobile & Ohio Railroad in regard to the matters testified to by Mr. Turner as to ocean mail and freight steamers, and he desires to have an opportunity to be heard before the committee.

The CHAIRMAN. The telegram will be inserted.

The telegram is as follows:

JOSEPH F. JOHNSTON,

United States Senate, Washington, D. C.:

MOBILE, ALA., May 7, 1912.

Your wire advising that committee meets on the 8th. It is difficult to explain position of road in telegram. Have wired special counsel, R. Walton Moore, Colorado Building, to call on you and explain fully position of this company. Trouble is that Turner is trying to have inaugurated at Mobile a system that will work at a port like Galveston, where tonnage is seeking the ship and not ships seeking the tonnage. Galveston handles about 3,000,000 bales of cotton per year, New Orleans about 1,800,000, and Mobile less than half a million. There is at Galveston enough to divide and still get good steamship service. At Mobile unless we agree to work only with one line to a particular foreign port it is impossible to get a first-class line to inaugurate a service. As a matter of fact the roads entering New Orleans do not now issue bills of lading

J

indiscriminately with all lines and it was only last year that they even pretended to do so, it being thought that at that time New Orleans commerce had increased sufficiently to warrant it. If the Mobile & Ohio Railroad books freight 60 days in advance, as is the case, to go via a certain steamer line and the freight is brought to the port and the steamer is not a responsible one and fails to have a steamer here, the railroad is liable and in many other cases there is liability, the contracts we have put Mobile on a competitive ocean rate basis with New Orleans and Galveston. We afford the shipper one available through route, which is all that should be asked. If it came to the point of issuing no through lading or issuing with all I should advise this company to cease issuing through bills. This company does 75 per cent of the export and import business through Mobile and it would be suicidal for it to advocate anything that would destroy the commerce in order to get a steamer line from here to Buenos Aires for coffee. We, with Southern Railway, have just completed at enormous cost a pier which we furnish free to vessels contracting to furnish the steamer service. Turner can not furnish this free wharfage and dockage, as that is his only income. The railroad can, as its income is from the rail haul. I urge upon you the great importance of this matter.

R. V. TAYLOR.

STATEMENT OF MR. FRANCIS T. BOWLES, OF BOSTON, MASS., SHIPBUILDER AND PRESIDENT OF THE FORE RIVER SHIPBUILDING CO., LOCATED IN BOSTON HARBOR, AT QUINCY, MASS.

The CHAIRMAN. Were you formerly an officer of the American Navy?

Mr. BOWLES. I have been over 30 years in the shipbuilding business, 23 years of which time I served in the Construction Corps of the Navy, resigning from the position of chief constructor to go into commercial shipbuilding between 8 and 9 years ago.

The Fore River Shipbuilding Co. is a corporation organized under the laws of Massachusetts and has a capital of $4,800,000 and a plant of which the main shipyard covers about 50 acres, and we are employing at the present time about 3,500 men and are engaged wholly in new construction work. We do almost no repair work. So far as I know at the present time we are not engaged in the construction of any vessels intended for service through the Panama Canal.

am here this morning to make a few remarks upon the Panama Canal bill as now before the House of Representatives and with special reference to section 11 of that bill.

The CHAIRMAN. May I ask you there if you have appeared before the House Committee on Interstate and Foreign Commerce in relation to that bill?

Mr. BOWLES. I did not, Mr. Chairman. I perhaps may explain why I did not. For some 20 years past the shipbuilders and shipowners of the United States have been appearing before committees of Congress from time to time seeking to obtain legislation in fulfillment of the promises of both parties for the development of the merchant marine. I have taken part in those campaigns during the last 10 years and, being a shipbuilder, was ready to assist and advocate almost any method which seemed to have an opportunity of obtaining favor. All those efforts have been unsuccessful. Nothing has been accomplished, and after that experience I gave a very careful study of the subject of the merchant marine, as to its economic value and its historical aspect, and without reference to my own business I came to the conclusion that a method of encouragement to the merchant marine based upon discriminating duties was the most economic and the most fair from all points of view. I took great pains to set that

before the authorities, but have met with no encouragement whatever. So I came to the conclusion that it was hopeless to seek for any action from Congress tending to encourage the merchant marine, believing that the people of the United States would only appreciate the economic value of traffic under their own flag as the result of some great commercial disaster which, I firmly believe, is sure to come and to which the loss of the Titanic is a mere circumstance. And that disaster will undoubtedly come from a disturbance of trade due to some foreign war.

Now, however, the preparation of this Panama Canal bill, and the insertion of section 11 after the hearings in the House had been completed, makes it necessary for me as a shipbuilder to appear here to protest against a serious interference, a serious discrimination in our business.

Senator JOHNSTON. To which one of the bills, Admiral, are you referring?

Mr. BOWLES. I am referring to the bill 21969, the one that is now on the Union Calendar.

Senator JOHNSTON. Yes.

Mr. BOWLES. I feel very much disturbed about this condition, and I feel justified in taking the most emphatic ground in defense of the shipyards. I conscientiously believe that the shipyards of the United States are of more value to the American people than gunpowder, and I believe that it is just as important to encourage the shipyards of the United States as it is to manufacture here in this country powder and shot for the Navy and the Army. I feel that the value of the shipyards to the American people is not only a military question of great importance, but an economic question, because I am convinced that you can never have a real merchant marine serving the commercial interests of this country unless the ships are built here by our own materials and our own labor, and under our own conditions.

The shipbuilders have felt that the opening of the Panama Canal was to be an undoubted source of an increase in their business. The traffic is there, undoubtedly, and it stands to reason, as we thought, that ships would be built adapted to that traffic. So far as we know ships for it so far have been undertaken by but one company. You must realize that we make it our business to study the movement of traffic, and where people do not come to us with inquiries for ships, we go to them and point out to them that such and such types of vessels are suitable for such traffic. We make it our business to know what it costs to operate vessels in all departments relating to ships in order that we may be able to inform people who are willing to make such investments exactly where they ought to come out. My own experience is that we have had a very few inquiries on this matter, and those that we have had have felt that it was with a considerable risk that they could undertake to build such ships while such adverse legislation was pending and under serious consideration in Congress, and section 11 of this bill would be a serious detriment to the shipbuilding business for orders which are in the market to-day. If it prevails that ships owned or operated by a railroad company are not to be permitted to operate through the canal or elsewhere where they are in competition with the railroad lines, an order which is now pending can not be executed. That order is one of the largest and most important the shipbuilders have ever had under consideration.

But the provisions of the bill go much further than affecting our business by this specific order which we have before us, because if carried out in the future it would forever take away from us valued, important, and practically our best customers-the railroads. So that this section 11 we consider, and I personally consider, an exceedingly vital matter to the shipbuilding industry. For the particular reason that I consider it vital to us apart from the removal of a valued customer is this: I see that the possibility of getting into foreign trade with the American flag depends upon the development of the coastwise traffic, and I see that is coming in various directions. The most important feature leading to it will be the construction of vessels suitable for the canal traffic. Vessels which are adapted to the canal traffic and to making the voyage from New York to San Francisco are vessels which are in their way capable of engaging in the foreign trade. And they are a type of which we have a very few in the coastwise trade.

There are other tendencies showing that we shall get into the foreign trade through the means of the coastwise in this way: I am building at the present time a vessel for an American corporation which is to go into the foreign trade, and the reason that they can afford to build an American ship at a considerably higher price is that their domestic trade is of such importance and that any failure of their present transportation would be so disastrous to them that it is worth. their while to build this vessel and put it in the foreign trade as a reserve against their domestic trade.

The recent coal strike in Great Britain is going to have a marked effect upon our commerce and a growing one. The increased cost of English coal will increase the cost of British construction and operation, and it will create and has already created a demand for American coal abroad. It is going to be possible for vessels engaged in coastwise trade and the transportation of coal to consider and to take part in that foreign trade from time to time, and so extend their business. Those opportunities are continually increasing.

The possibility of the American shipbuilders producing vessels as cheaply as they are on the other side will come through the tendencies that I have indicated and also through the development of the quantity of our business. Very few people realize that the American shipbuilders have had an entirely insufficient amount of work to do to enable them to organize their labor to a state of efficiency. We have alternated from almost nothing to moderate activity. Sometimes one yard is moderately active when another one is doing almost nothing. The consequence is that our labor is nomadic. It is impossible for us to create a community adapted to shipbuilding labor, and possibly the committee will permit me to say that the construction of a vessel is absolutely the most complex and the inclusive construction which is carried on in the arts, because it involves the highest skill in the design and actual construction in practically all the mechanical arts. The shipbuilder's skill comes in the intelligent assembling of all these materials in order to produce a ship complete at a given time. That requires a high degree of organization which can only be produced by experience.

I feel that it is right for me to point out to you that in the course of my efforts to get business, and these studies of channels of trade, I