United States has none worth her notice: therefore her subjects have done just what might have been expected when we paid Russia for her property-set up a claim, founded on our naval disability, to every seal that they can catch off the rocks, where they must breed, or become extinct. As we are unprepared to fight, we must therefore "arbitrate;" that is to say, submit to the best terms attainable, since arbitration means compromise, and not justice. Were we prepared, as England is, for a naval war, and dared to assert and maintain our rights, there would have been no cause for diplomacy and arbitration. Now we can assert nothing and defend nothing without the fear of a desolating war, a fact showing that we have to deal with a warlike nation, whose instinct was well expressed by its great Admiral Monk in 1665:

"What matters this or that reason? What we want is more of the trade which the Dutch now have."

CHAPTER II.

THE NATIONAL ECONOMY OF SHIPPING OF OUR own.

THE question of an American marine includes many prob lems of national interest and concern. To carry our own commerce, and to have a commerce of our own to carry, is of scarcely less consequence than to possess the means of maritime defense; since ships and merchants of our own, besides increasing wealth, insure safety in our foreign trade. In other words, there is a National Economy in the use of shipping of our own, by our own citizens. This science is simple and easily comprehended, though one might think, from the inattention prevalent, that it must needs be complicated or obscure, if it exists at all.

In the study of economic science, American scholars are heavily handicapped. This branch of knowledge has been taught so generally, not only from an English point of view, but from English data of fifty to one hundred years ago, that modern conditions are quite ignored, and sound, practical thought turned aside and withstood. It is not at all surprising that literary men, journalists, and politicians, unfamiliar with actual transactions and the practical ways of trade; having, as to the building and use of ships, neither special interest nor special knowledge; gathering what they think they know from books, whose authors had no experience for their guide, sometimes distinguish themselves in the perpetration of errors in the discussion of shipping questions. A general mistake is this one: that navigation is transportation, and being so, is nonproduction, and therefore not to be encouraged. While there is neither sense nor science in such reasoning, it is not seen that shipping in the foreign trade differs at all, in its national economy, from shipping in the domestic trade, and yet there is an important distinction to be made between them.

The shipping business in the domestic trade is a valuable in

dustry deserving of cultivation and protection. It is protected, and consequently well developed. On the other hand, transportation in the foreign trade is not only an industry worthy of national regard, the same as its sister business, but it is a ready and commanding means of regulating the balance of trade abroad. Surely, it is not for this serviceable function that it is unprotected, neglected, and cast off as a burden. One reason for its disfavor is, undoubtedly, a general misconception of its utility and importance.

Advantages of Shipping. Since the rule of Cromwell there has been no need of dissertations to the British people on the usefulness of merchant fleets. While their pedants teach, as political economy, that navigation is a private interest, holding no relation to and in no way serving the public good, their rulers are careful to practice government on a different principle. In fact, they all believe in history, and the wisdom of national effort to monopolize the commerce of the world. In 1651 Parliament passed an act that no goods should be imported into England, or exported abroad, except in vessels belonging to British owners, that were built by British builders. An English historian has made this record:

"The result of that act far transcends the wildest dream of Lombard and Venetian avarice, or the grandest schemes of Spanish and Portuguese conquest. It not only secured to the people who enacted it the greatest share of the world's carryingtrade, but the trade also knew its master, and followed at once with becoming servility."

From the time of the enactment of the navigation laws, Great Britain has planned and actively worked to advance her shipping interests, and contrived to keep in her own hand the building and sailing of her own ships. To this end she has fought bloody wars, broken up weaker powers, entrapped her rivals into treaties, spent millions of money to support steam lines, and hundreds of millions more to keep up an enormous navy. Has all this been done for private interest? Was this policy started to benefit a few greedy shipowners? Or is private interest the public concern in British government? How absurd to teach, that what is national in England must be private in the United States!

The historic fact is, that British navigation has been, is now,

and always will be, treated as an enterprise of national utility and not a business of individual concern. Thus established and cared for, navigation is not an object of solicitude with British economists, and their thought is mainly given to trade and manufacture. It is thus that partial views of science become the study of American scholars. With shipping set aside, agriculture must be overrated and manufactures overvalued. In the balancing of foreign trade, the great part played by British shipping, if seen or heard of by a student, is treated as a piece of luck. It is never shown as an advantage that gains the day for trade, or a public service that often saves all overstrained pursuits. The fact that ocean transportation is on a cash basis, and always so conducted, uniting in one business many trades, and requiring much labor in building, repairing, loading, running, and discharging, is proof of the best kind that a large marine acts like a balance-wheel to all other industries.

Ocean transportation of freightage to foreign countries, by vessels of our own, is itself an export; but, done by foreign flags it is an import, or the equivalent of these transactions in settling the balance of trade abroad. From foreign countries, freightage is an equivalent of an import by foreign vessels, but an export by our own. In other words freightage, transportation, carriage, freight-money, whatever the name given, is a product, -the production of vessels, of shipping, of a merchant marine. When we ship a cargo abroad under a foreign flag, the merchandise goes to our credit, but the freightage, being a foreign product, goes to foreign credit. When, how ever, we ship under our own flag, both the merchandise and the freightage go to our credit. On the other hand, when we import cargoes by foreign ships, we import also the freightage, and must pay abroad for both merchandise and carriage; whereas, if we import by our own ships we only pay abroad for the merchandise, and may earn part of the money for that by our vessels' work. In our early West India trade in lumber, first opened by North Carolina and Georgia, the vessels engaged earned from ten to twenty-five per cent. more than the mills. So they do now in Puget Sound trade.

A Sample of Economic Misteaching. To illustrate the current economic science, here is an extract from an editorial writer:

"It is difficult to comprehend at a glance the full extent of the changes in our industrial and commercial conditions, which are involved in a serious diminution of our agricultural exports. Probably no economic law is more rigid than that a nation's imports must, in the long run, be paid for by its exports. If its exports of goods fall short, it must make up the deficiency by its export of gold and silver. If these are continuously exported, the consequent scarcity of gold and silver money will produce poverty and depression of prices, until the import of goods is checked and the outflow of merchandise is enlarged."

While this sounds like science, it cannot be accepted for it, because the writer overlooks an important, and sometimes controlling element of international trade, — ocean transportation. The inclusion of this element with the others is essential to correct calculations of foreign-trade balances, as every shipping merchant knows. The writer quoted goes on to anticipate the working of our tariff system, to increase prosperity and thereby enlarge our import of luxuries and articles on the free list, causing our country to "still have a steadily growing volume of imports to pay for," and he inquires:

"Where, then, may we look for a larger volume of exports, and to make up for the prospective decrease of agricultural exports? A survey of our resources indicates that the only way (?) within our power to offset our imports, and prevent the impoverishment that would follow continuous exports of precious metals, is by the extension of our manufactures. During the past decade these exports have more than doubled, while agricultural exports have remained stationary."

On reading these quotations, which have been chosen as fair samples of economic misteaching, the thought that springs to the practical mind is this: Here is a student, perhaps a professor, of political economy, who has never heard of shipping; or, if he has and knows its use in transportation, then he is unaware of its productive function, of its weight in foreign trade balancing, and of the power it exerts for national good or evil, according as we may hire foreign tonnage, or have it in supply of our own in the foreign trade. Here is a simple problem that will illustrate the functions of a ship employed in foreign traffic:

The National Use of Merchant Shipping. There are two