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Senator SIMMONS. Who did you think ought to pay the toll?

Mr. CHAMBERLAIN. A toll paid by a levy on the whole people—a tax, a subsidy, if you want to express it so.

Senator SIMMONS. Your position, then, is that the Government ought to pay that toll?

Mr. CHAMBERLAIN. Merchant ships as well as war vessels.

Senator SIMMONS. What would that be? Would that be in effect a subsidy, if the Government did it?

Mr. CHAMBERLAIN. That is a matter of the use of words.

Senator SIMMONS. You can answer that. That is a plain question. I ask you if it would not, if the Government should pay the tolls of these vessels-charge tolls and then pay the tolls of the vesselswould it not be a subsidy?

Mr. CHAMBERLAIN. So far as vessels in the foreign trade are concerned.

Senator SIMMONS. I am not talking about the foreign trade.

Mr. CHAMBERLAIN. May I answer the question? So far as vessels in the foreign trade are concerned, I should say it should be a subsidy; so far as vessels in a coastwise trade are concerned, where there is no competition, I should not think it could be so much regarded as a subsidy as an effort on the part of Congress to maintain as to the coastwise trade through the canal the rule that now obtains through all other coastwise trade, namely, free waterways. Senator SIMMONS. All our domestic waterways?

Mr. CHAMBERLAIN. Our domestic waterways. I should saySenator BRISTOW. That is, you see no reason for treating the canal any differently than any other domestic waterways?

Mr. CHAMBERLAIN. So far as the payment of tolls by coastwise ships, no. When you come to the foreign ships there is a wide difference, because one is under a treaty and the other is not.

Senator BRISTOW. The treaty we will discuss on other lines.

Senator SIMMONS. Do you regard this as a domestic waterway or as an international waterway?

Mr. CHAMBERLAIN. It is a waterway with no less than three distinct and perfectly clear characteristics. In the first place it is a waterway which connects foreign countries with one another, which traffic through it will not affect us in the slightest one way or the other. For example, to cite an offhand instance, the trade that will arise between the west coast of South America and the whole continent of Europe. That is a distinct branch of trade. Another distinct branch of trade will be the foreign trade that will go through the canal between our ports, United States ports, and other foreign countries on either side, on either ocean, the Atlantic or the Pacific, New York to Valparaiso and San Francisco to Habana, for example. Then there is the third equally sharply defined line of trade, the purely domestic, coastwise trade, the trade between San Francisco and New Orleans and New York and Puget Sound, or anything of that kind. There are thus three totally distinct classes of trade. Now the economic rules which should govern may well be different.

Senator SIMMONS. I understand you to say, Mr. Chamberlain, that in the foreign trade if this Government should pay the tolls on its own ships that would be a subsidy and that would tend to bring about a parity in freight rates between the ships of this country and of other countries. Did I understand you to say that in substance?

Mr. CHAMBERLAIN. Well, you have gone a little further than I want, because my theory of a subsidy has not been as a commercial proposition at all. It never has been.

Senator SIMMONS. But you wanted the Government to pay these tolls for our foreign ships engaged in foreign trade in order to enable them the better to compete with foreign vessels, did you not?

Mr. CHAMBERLAIN. No, sir; the justification for the subsidy, the honest and sufficient justification for any reasonable subsidy in my mind, now and always, has been that a mercantile marine-I do not mean schooners or anything of that kind-but a suitable merchant marine is an essential factor in national defense and has been proved to be time and time again, and probably will continue to be so.

The CHAIRMAN. You regard it as an auxiliary to our naval forces? Mr. CHAMBERLAIN. (f course, and, as far as I know, there has never been any real, fundamental division of parties on that subject from the beginning of history. We had, as all you gentlemen know, as I take it, right from the early years of the Republic, 1791 and 1792, I think I have forgotten just when-but we had a system of fishing bounties-bounties to boats and fishermen- and those were voted by Congress year in and year out, from the early years of the Republic down to the close of the Civil War, and there never was any dispute about it of which I ever heard. Those bounties were not voted because we were short of fish; or because we wanted to get fish even, or anything of that kind; they were not voted to keep these fishing boats; they were voted because the fishing men were recognized everywhere throughout the country by all parties as a necessary element of national defense, and they had always proved themselves to be such, and the bounty was not a commercial bounty in any sense of the word at all. It was just as much a military contribution as the money that is voted any year here at the Capitol for the Naval Academy. That is the real basis in this country of any national movement for subsidies. I did not mean to branch off in that way. Senator SIMMONS. Let us get back to the question that I was asking you. You said that the foreign vessels could be built for less and could be operated for less and for that reason you thought that our vessels engaged in foreign trade going through the canal ought to be allowed to go through without having to pay toll, the Government paying the toll for them. Did you say that? Did you not give that

as a reason?

I

Mr. CHAMBERLAIN. I did not give that as a reason; I beg pardon. gave a military reason.

Senator SIMMONS. You said, speaking with reference to foreign trade, that you thought the Government ought to pay the tolls. Now, why do you think it ought to pay it with reference to the foreign trade if it is not because the English and German vessels take freight at a less rate?

Mr. CHAMBERLAIN. I tried a moment ago to explain why I thought it should be done, Senator, as a military proposition; to have the kind of ships for military purposes.

Senator SIMMONS. In that answer you are referring altogether to its effect upon our military operations, not to its effect upon our commercial operations or our rates of transportation?

Mr. CHAMBERLAIN. I have never considered subsidies or any of those propositions as a commercial transaction at all; they never appealed so to me. I do not think there is any force in the proposition and I am sure I have never given it as a reason.

Senator SIMMONS. A foreign vessel can not engage in our coastwise trade. That trade must be carried on in our own bottoms, therefore there is no competition in that trade between vessels of this country and vessels of foreign countries. Our coastwise shipping would not need the benefit of free tolls for the purpose of competition with foreign vessels, as our foreign trade might need it?

The CHAIRMAN. No, sir.

Senator SIMMONS. Will you please tell us, if you can-I do not know whether you can or not, but I hope you can-will you please tell us what are the charges, the usual charges, for transportation of coastwise traffic as compared with the usual ocean rates?

Mr. CHAMBERLAIN. No; I can not say anything about ocean freight rates. I do not know anything about them. They fluctuate.

Senator SIMMONS. Do you not know, as a matter of fact, that the rates charged by our vessels engaged in coastwise trade for the same distance are very much in excess of the rates charged by vessels engaged in foreign trade?

Mr. CHAMBERLAIN. I should not be surprised if that were the fact, but I can not say that I know it, because I have had no recent occasion to look it up.

The CHAIRMAN. Is that not, Mr. Chamberlain, because of the control heretofore exercised by the railroads of the country over the shipping that they have put up the rates? Is that not the condition that was sought to be cured by this act?

Mr. CHAMBERLAIN. I can not say, because that is a line I never had to look into; I never looked into matters of that kind.

The CHAIRMAN. I only direct your attention to a matter of public record in the House here. As I stated a little while ago, it is found that 92 per cent of the present coastwise trade of the country is under the railroad monopolies of the country, and while those conditions lasted of course they ran rates up to a prohibitive point, and it is hoped by the provisions of the Panama Canal act that the independent shipping, which is sought to be encouraged by the act, will lead to fair and open competition. Let me ask you a question which is suggested by a remark you made a moment ago. In time of war the naval forces of the United States must be aided by some auxiliary shipping. Is that not so?

Mr. CHAMBERLAIN. That has been our uniform experience.

The CHAIRMAN. We need colliers and transports. Can you say, in a general way, how many of those we needed during the Spanish War

and where we obtained them?

Mr. CHAMBERLAIN. That is all a part of the records.

The CHAIRMAN. Of course it is. We should like to have it for the record now.

Mr. CHAMBERLAIN. I know we used a number of British ships that way; acquired them.

The CHAIRMAN. We did not have ships under the American flag available for that very necessary purpose in time of war? Mr. CHAMBERLAIN. Oh, no.

The CHAIRMAN. Have we ships now available, if we were engaged in a war with foreign powers, as transports and as hospital ships and as colliers?

Mr. CHAMBERLAIN. Not a war of any magnitude.

The CHAIRMAN. And supplementing your observation of a moment ago, these things that you conduct under private enterprise for a time are really necessary, so far as the Government is concerned, as a part of its auxiliary naval force to be employed in time of war? Is not that the principle which has been pursued by Great Britain?

Mr. CHAMBERLAIN. Yes, sir.

The CHAIRMAN. And by every foreign nation?

Mr. CHAMBERLAIN. Yes; and by Germany, France, and Japan. May I just finish that? You will excuse me for dwelling on the subject, but that is really the reason. That is the reason, and has been the reason for 60 years. That is the real reason for subsidies since they are paid by other nations. It is not the idea you have to have your own ships to carry your own cargoes. The familiar figure you see spoken of so often is of the department store having somebody else's wagon to deliver their goods, but that is not the reason for subsidies. You will find that if you take the trouble to take their contracts up one by one and look at them. The reason is a military reason in almost every instance.

Senator CRAWFORD. Why have they not said so? Why put it all the time on the ground we are carrying our over-seas trade in foreign bottoms and not floating the American flag, and putting it on commercial grounds, when the real reason is that we need these transports in time of war?

Mr. CHAMBERLAIN. I think those who have given more attention to the subject have given that reason.

Senator CRAWFORD. That is not in the popular mind at all?
Mr. CHAMBERLAIN. I can not answer for that.

Senator CRAWFORD. That is one reason why it has not taken hold, I suppose?

Mr. CHAMBERLAIN. I think if you will allow me to quote a gentleman who is dead, I think that in most of his speeches on that point Senator Frye dealt on that point, and it is the obvious situation. Senator SIMMONS. Referring to the question asked you by the chairman of the committee in reference to the percentage of coastwise trade controlled by the railroads. My recollection is that the reports the chairman referred to estimated there was 92 or 94, I do not remember which, per cent of these vessels controlled entirely by railroads or by combinations. Now under this act, the canal act, they would be prohibited from going through the canal and that would reduce the number, as you said a little while ago, that might go through the canal to 45; reduce the number from 360 to 45?

Mr. CHAMBERLAIN. Senator O'Gorman said 45. I did not figure it. Senator SIMMONS. I assume, Mr. Chamberlain, that when the canal is opened all of these vessels controlled by the railroads or by illegal combinations (every combination is not an illegal combination), but by illegal combinations, all of them that want to go through it would qualify themselves and continue in that trade?

Mr. CHAMBERLAIN. Purge themselves of whatever the objection

was.

Senator SIMMONS. And if they should not do it I assume there would be no trouble about private enterprise in this country building sufficient vessels to engage in the coastwise trade, seeing that in the coastwise trade there is no foreign competition; that all this immense number of vessels that you have spoken about, owned and operated by foreign Governments, would be absolutely excluded from competition with them and they would have a monopoly, notwithstanding this canal act, notwithstanding the breaking up of these railroad combinations and other shipowning combinations, they would still have a monopoly so far as foreign competition is concerned, would they not?

Mr. CHAMBERLAIN. Oh, yes. Only American ships under the existing law can carry between American ports.

Senator SIMMONS. You have no apprehension whatever about their being a sufficient number of ships to engage in this trade to accomodate the commerce, have you?

Mr. CHAMBERLAIN. Yes; I do not think it is sure. I am not sure in my own mind; I am frank to say I am not sure, and particularly after an examination of this list. I have not had occasion to pay any attention to this subject for upward of two years until Senator O'Gorman, the chairman, and yourself asked me to get this list; I have not done it. I am sorry I have only one copy of it. It is not a large list, only 363 vessels. It is a very small list. It is a very small list not only in numbers, but it is a small list not merely from the point of view of these railroad matters and trust matters and all those things, which I take it in the course of time will be threshed out in some way or other, but the quality of ships, the kind of trade, that fleet is not large enough for the very large canal trade; it undoubtedly is not.

Senator SIMMONS. Heretofore our coastwise trade has been confined largely to up and down one coast or the other?

Mr. CHAMBERLAIN. Yes, sir.

Senator SIMMONS. This canal will inject another element into the situation, and that will be from-coast-to-coast coastwise trade, and I assume, and I ask you if that assumption is not reasonably correct, that if there is not a sufficient number of ships in the coastwise trade to accommodate these different conditions, this enlargement of the coastwise trade, if you do not think they will be built?

Mr. CHAMBERLAIN. It will depend to a great extent on the rapidity of the development of the trade itself. For example, if there should not prove to be ships available-of course the great line will be this American-Hawaiian line, which has ships enough, and there are enough tonnage

Senator SIMMONS. They ship to a point on the Pacific coast, and then transfer across the continent to a point on the Atlantic coast and have the ships over there to meet them? They break bulk? Mr. CHAMBERLAIN. Yes.

The CHAIRMAN. They do that now?
Senator SIMMONS. Yes; they do that now.

help the canal route?

Mr. CHAMBERLAIN. I should think probably.

That probably would

Senator SIMMONS. But at any rate all the ships that are engaged in American coastwise trade would be upon an equal footing whether

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