and when the question of foreign credits is settled and commerce begins to move, as it must very shortly, there will be a positive famine in ships, as over 5,000,000 tons of German and Austrian shipping are completely out of commission, to say nothing of the large number of British, French, and Russian merchant ships which have been taken over by their respective Governments for transports and naval auxiliaries. There are, all told, considerably less than 100 American ships in the foreign trade in the whole world, including all of the ships which have just taken American registry to secure the protection of the flag on account of the war. None of these ships are idle. Therefore, even though there were hundreds of idle ships in every American harbor, it would not alter the necessity for passing the shipping bill now before Congress, as all such ships would be foreign ships, and the object of this bill is to establish an American merchant marine. (2) Opponents to the bill say that if the Government will not enter the shipping business private capital will provide an American merchant marine. This is rather inconsistent with their statement that the harbors are full of idle ships, for, if that is true, private capital will find no attraction in the shipping business. What likelihood is there to obtain private capital for this new business, especially to the amount contemplated by the shipping bill, $40,000,000, when long-established, going concerns find it impossible to obtain money except at heavy rates. When the city of New York must pay 7 per cent, including bankers' commissions, for a loan of $100,000,000; when the State of Tennessee found it most difficult to obtain a loan of $1,400,000, it is quite certain that private capital will be unable to provide an American merchant marine, especially as it did nothing in the matter while the opportunity was open during the past 50 years. (3) Opponents to the bill say that the Government will lose much money in this business. This argument has been their favorite one. The bugaboo of increased taxes, "loss of the initial investment every three years," and much more of the same nature has been circulated in an effort to defeat the bill. The shipping business is one of the most profitable in the world. Special Diplomatic and Consular Reports, page 39, says: The White Star Line, in 1910, earned a net profit of £540,000 sterling on a capital of £750,000 sterling after writing off £370,016 sterling for depreciation. A dividend of 30 per cent was paid in that year. The Holland Amerika Line earned about 50 per cent net on its capital during the first fiscal year of 1913. The Hamburg-American Line earned about 30 per cent net during its fiscal year of 1913. These are only a few specific instances of steamship-line earnings. They are not at all unusual, but are the regular thing in the shipping business. F. E. Dixon & Co., of London, who own and operate a large fleet of "tramp" freighters, showed earnings of about 50 per cent net last year, which proves that steamship earnings are large in the irregular services as well as in the regular lines. In fact, the profits in the steamship business are so large that frequently the entire cost of a ship is earned in two years. The question will arise, Why have not Americans gone into such profitable business? The answer is, For the same reason that Americans have neglected the vast foreign export trade; they have been. too busy with their industries at home. But, unlike the export trade, which each manufacturer can work up individually, to establish an adequate merchant marine is so large an undertaking at this time and involves so large an amount of money, that if it is to be done at all, it must be done by the Government. (4) Opponents to the bill say that there will be danger of the United States violating neutrality if it operates merchant ships at this time. The report of the Committee on the Merchant Marine says: * We have rights as neutrals as well as duties to be observed. The President will have the State Department to advise him on all questions affecting our rights and duties as neutrals. * We should assume that the President and shipping board, in the exercise of any powers granted or duties imposed by this bill, will keep well within our rights as neutrals. On this point the Secretary of the Treasury, McAdoo, also says: The board proposed in this bill consists really of the President of the United States and certain Cabinet officers therein mentioned. I think there is no more punctilious citizen of the United States with respect to the neutrality of this country than the President of the United States. I think you may safely depend on it, if this bill is passed and this board is vested with power to act, that that power will be exercised in such a way that the neutrality of this country will be preserved. (5) Opponents to the bill make an alternative proposition that we should build up an American merchant marine by granting subsidies. Subsidy seekers have managed to create a belief that the merchant marines of European countries, especially the merchant marines of the two greatest maritime countries in the world, Great Britain and Germany, have been built up by granting subsidies to its shipping. Neither of these countries grant subsidies except to a very limited extent and for very special service. The Hamburg-American Line, the largest and perhaps the most successful steamship company in the world, has never received a subsidy. A moderate subsidy was granted by Great Britain to the Cunard Co. in connection with the steamers Mauretania and Lusitania, but that was chiefly to keep the Cunard Co. from selling out to the International Mercantile Marine, the combination organized by J. P. Morgan & Co. Over 90 per cent of the total tonnage of Great Britain does not receive a farthing of subsidy. It will surprise many to know that the United States pays a larger subsidy to four American ships owned by the International Mercantile Marine, namely, the New York, Philadelphia, St. Paul, and St. Louis, than is paid by any foreign nation for similar service. This country pays to these ships an annual subsidy of about $735,000, and obtains practically nothing in return for this except the carrying of the mails on these steamers, which, at regular rates, would amount to only a trifling fraction of the amount of the subsidy. As a matter of fact, most of our mail goes forward on foreign ships, as they are much faster and they sail more frequently, the subsidized American ships being among the smallest and most out-of-date steamers in the North Atlantic trade. The extraordinary large profits in the steamship business show that steamships can be operated profitably under the American flag without a subsidy, in spite of the somewhat higher wages and better living requirements of American seamen; therefore it will be wellnigh impossible to obtain a subsidy simply to make up the extra profits possible under foreign flags. For the same reason we will never have an American merchant marine unless it is established by the Government, because such private capital as may go into the foreign shipping business will operate under foreign flags to get the benefit of cheaper operation when the dangers of war are passed. The present war has made it possible to secure, at most favorable prices, an excellent choice of modern, up-to-date steamers of different nationalities, also many steamers not yet out of the builders' hands, hence not yet nationalized, at less than the contract price. Also, as a result of the war, the financial success of the enterprise is more fully assured, as we will not have the competition of the warring nations to the same extent that we would have in times of peace. The $40,000,000 called for by the shipping bill will not be an expense, as the bill's opponents are pleased to call it, but it will be an investment of the first class without considering the enormous advantage to the whole people of the United States in having an American merchant marine under Government control and the great reduction in rates that will be possible, as the Government will not desire net earnings of from 30 to 50 per cent on its investment, but will be content with only a fair return. It would be little short of a political and economic crime if we did not avail ourselves of the present almost unbelievable opportunity to do in a most practical manner that which Congress was endeavoring to do before the commencement of the war as best it could by means of the Weeks bill. ROCKEFELLER AND CARNEGIE FOUNDATIONS. LETTER FROM THE ACTING SECRETARY OF THE INTERIOR, TRANSMITTING, IN RESPONSE TO A SENATE RESOLUTION OF AUGUST 5, 1914, INFORMATION RELATIVE TO EMPLOYEES OF THE DEPARTMENT WHOSE SALARIES ARE PAID IN WHOLE OR IN PART FROM FUNDS CONTRIBUTED BY THE ROCKEFELLER OR THE CARNEGIE FOUNDATION. OCTOBER 8 (calendar day, OCTOBER 16), 1914.-Ordered to lie on the table and to be printed. DEPARTMENT OF THE INTERIOR, The PRESIDENT OF THE SENATE. SIR: I am in receipt for report of Senate resolution 437, as follows: Resolved, That the Secretary of State, the Secretary of the Treasury, the Secretary of War, the Attorney General, the Postmaster General, the Secretary of the Navy, the Secretary of the Interior, the Secretary of Commerce, and the Secretary of Labor each is hereby requested and directed to furnish to the Senate the following information: The relation, if any, of the organizations known as the General Education Board of the Rockefeller Foundation and the Carnegie Foundation to the work of their respective departments; a statement showing the names and positions of all employees, if any, of the department whose salaries are paid in whole or in part with funds contributed by the Rockefeller Foundation or the Carnegie Foundation; the names and positions of all administrative officers, if any, of the department who are in any way connected with the work of the General Education Board of the Rockefeller Foundation or the Carnegie Foundation, and the salaries, if any, received by them from the said Rockefeller Foundation or Carnegie Foundation. In response I have to say that there are no employees of this department or of its various bureaus and offices whose salaries are in whole or in part paid from funds contributed by the Rockefeller Foundation or the Carnegie Foundation. Delay in reporting on the resolution was caused by the fact that it was necessary for the Bureau of Indian Affairs to communicate with its various field officers in order to obtain the information desired. Respectfully, BO SWEENEY, O |