fiif!iii||||pi!j iiy lIliTiiiliHiltmi! ■ 111 AiviL -;;;„.j- ^^ li'rfii piftii I ii ' Hi r ,. HI'' v,m plllll. I'l « Jnililivu .j!,, i|lil'4iil!ww,..ij;jliiul"'fiillli. IIHIIl'^Hmiti I'l^ii'iiiiii "\ I ;'i t'i i ' '•• itPfi llilpfl' itnMitff Ill II m I, rill t-!, tir iiiti.f'i!:'! 'I' IWfftil lull IllfelH Hilifii intWIJif liJirLii ill lilBg-'" .1 ;emm'.i\:aaimraummmimimaiia«immuhHmmM,mMiwimmMiimiit iiiiiiiliiililll lllfllilti \^^3 Of\. (Snrtipll ICaui i^rlinnl IGtbtata Cornell University Library KF 2605.Z73 1923 Zlmmermann on ocean shipping / 3 1924 018 727 317 The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018727317 ZIMMERMANN ON OCEAN SHIPPING BY ERICH W. ZIMMERMANN, Ph.D. ASSOCIATE PROFESSOR OF ECONOMICS, UNIVERSITY OF NORTH CAROLINA 8* NEW YORK S PRENTICE-HALL, INC. I 1923 Copyright, 1921, by PRENTICE-HALL. Inc. All Rights Reserved To My Wife in appreciation of her devoted and unselfish assistance in the preparation of this volume. PREFACE A GREAT poet-philosopher said : "What you inherit from your fathers, Is not your own until you make it so." This is true of nations as well as of individuals. The War has left America a large fleet of merchant ships — a rich inheritance. Now America faces the task of making these ships her own, of assimilating them, of turning them into a great national asset — a glorious merchant marine. To ac- complish this, a whole nation, too long one-sidedly absorbed in its interior developments, must turn its face from moun- tains and prairies to the sea. A whole people must become "ship-minded." The hope of contributing his little share to this big end has inspired the writer throughout his task. Others have heard the call. Men of the caliber of Edward N. Hurley and Robert E. Annin — to mention but two prominent names among recent writers on the subject of ' Ocean Shipping — are devoting time and energy toward spreading light on the subject. Big financial institutions like the Bankers Trust Company are appropriating large sums toward the same end. Organizations such as the National Marine League and the National Merchant Marine Asso- ciation are working with redoubled vigor. Under these circumstances, a new book which should be not only an addition, but a contribution, must possess dis- tinct characteristics establishing its raison d'etre. What impresses upon this book the stamp of individuality is the emphasis placed upon the interdependence of shipping and vi PREFACE commerce. The carrier lives for and on the cargo. The origin, destination and character of the cargo determine the route and type of the carrier. The functions and features of world shipping are understood only when placed against the background of ocean commerce. Besides, the march of events in these after-war days is so rapid that an up.-to-date book is bound to contain a wealth of new material, sufficient in itself to warrant its appearance. It is hoped that the book will prove valuable both as a college text and as a handbook for business men. Erich W. Zimmeemann. May, 1921. CONTENTS PART I. THE OCEAN I. The Nature of Ocean Transportation . . 3 Early history — Economic significance of ocean transpor- tation — Cheapness of water transportation — Reasons for cheapness : buoyancy — Additional causes for cheap water transportation — Ocean haul longer than land haul — Ocean transportation requires less fixed capital — History of freedom of the seas — Essentials of economically free seas — British liberal policy explained — Freedom never complete; cabotage reserved to nationals — other restric- tions — Neo-Mercantile tendencies of to-day — Freedom of the seas inseparable from freedom of international trade — Petroleum a case in point — Bernard N. Baker's idea of the freedom of the seas — The fuel situation. II. O.CEAN Routes 20 The nature of ocean routes — The North-Atlantic lanes — Flexibility of ocean routes — Definition of an ocean route — Latitudinal character of present world trade — The coming significance of the tropics — The load index — Shipping Board statistics of ocean routes — Trade routes of the British Empire — Triangular voyages — Fuel cost and other expense items aflfect profitableness of routes — ^Great Circle route — Political aspects of ocean routes — Planetary winds and sailing routes — Winds af- fect steamer routes — Proper routing of world tonnage means great saving — The war has changed wprld trade routes — Shipping Board routes — New lanes of world commerce. III. Suez and Panama 44 Isthmian canals as milestones of progress— Early history of Suez Canal — Important happenings in the Canal's his- tory — Commercial significance of the Suez Canal — Com- petition between Suez Canal and Cape route-r-Early his- tory of Panama Canal — The United States completes the Canal — Suez and Panama compared— War cripples early traffic through Panama Canal — Panama Canal tolls— Eco- nomic significance of Panama Canal— The "Twilight vii CONTENTS Zone" served by both Suez and Panama— Reduction of distance means trade expansion — Shorter distances means larger tonnage supply — The "dawn of the Pacific age." PART II. PORTS AND TERMINALS IV. Ocean Terminals 65 Good terminals indispensable to efficient transportation — Port terminology — Different types of harbors — Rivers and tides — Functions of ports — Importance of physical contact between rail and ship — ^Harbor depth and draft of vessels— Other important physical requirements of ports— Bush Terminal, an ideal industrial port— Func- tions of the Bush Terminal Company — Store-door de- livery. V. Entrepot Centres and Free Ports .... 82 Nature of entrepot trade — History of entrepot trade — Volume of entrepot trade of different countries — Rela- tive decline and diffusion of entrepot trade — London's benefits derived from entrepot trade — Reasons for Lon- don's predominance — Applying European lessons to this country — History of Free Ports — Arguments against Free Zones — Advantages of Free Zones. VI. The World's Leading Ports, With Special Reference to the Port Situation in the United States 97 Difficulty of comparative statistics — The principal ports of the world — Types of ports — A comparison of London and Liverpool — ^Weight statistics — General aspects of the port_ situation in the United States — New York's pre- dominance — History of New York's ascendency — The port differential rate situation — War-time readjustment of railroad rates. PART III. THE OCEAN CARRIER VII. Size, Speed and Efficiency . . . . . 117 Rapid growth in the size of vessels during the nineteenth century — Economic justification of large size — .Advantages accruing from large size — Large vessels few but con- spicuous — Large vessels represent highest achievement — CONTENTS ix Limitations upon further growth of steamers — Large vessels necessitate big terminal outlay — Large size handicaps vessel operation — Increase in speed costly — The race for the "Blue Ribbon of the Ocean" — Increasing efficiency of fuel — Steamship efficiency — Port delays neutralize gains in efficiency. VIII. Motive Power: Wind, Steam and Internal Combustion 133 The Romance of the sailing vessel— Sail tonnage under American flag — Classification of sailing craft — Evolution of the sailing vessel — The clipper ship — Sailing vessel and steamship compared — The future of the sailer — Im- provements in steamship construction — Evolution of the marine engine — The coming of the turbine — Electricity's part in ship propulsion — The motor ship — American ex- perience with Diesel-driven ships — Oil more efficient than coal'— Advantages of the motor ship. IX. Recent Tendencies in the Development of THE Carrier 152 War emergency prompts invention — The economic back- ground of the standardized ship — Mr. Redfield proposes ship standardization — Engineering aspects of standardized ship construction — English psychology against standardi- zation — Fabricating methods explained by Mr. H. R. Sutphen — Many modifications and innovations necessary — Rail transportation of parts affects construction — The whole nation contributes to the work of the fabricating yards-7-The record of the fabricated ship — Drawbacks of ship fabrication — The rivetless ship — The Isherwood system — The Denman-Goethals controversy — The con- crete ship — Advantages of the concrete ship — The record of the "Faith" — Classification of the concrete ship- Special vessel types — The evolution of the tanker — Dif- ficulties of bulk transportation — Tank tonnage grows rapidly^ — Drawbacks of tank vessels — Coal and ore vessels — Refrigerator ships. X. The Bunkering Problem •177 The United States leads in the use of oil as marine fuel — War causes transition from coal to oil — American eman- cipation from British fuel control — British coal shortage — ^Rapid growth of oil-burning merchaiit fleet — The X CONTENTS "A.G.W.I." a conspicuous example — Great Britain a close second in ship use of oil — ^Advantages of oil over coal — Oil saves space — Oil reduces crew requirements — Oil gives better speed results — Oil extends cruising radius — ^A network of oil-bunkering stations encircles the globe — The Royal Dutch-Shell petroleum combination — The world's tank fleet — The essentials of world petroleum production — Phenomenal increase in the demand for oil — Shipping adds greatly to this demand — The world's petroleum reserves Indusfrfes put on oil basis-^ Possible substitutes for petroleum — America's future as a maritime nation requires our participation in world oil exploitation. PART IV. THE CARGO XL Cargo and Carrying Capacity 207 Weight of world's sea-borne trade — Comparison with other weight statistics — Weight of sea-borne Trade by countries — Tonnage required to haul sea-borne trade — Elements of ship measurement — Displacement tonnage — Deadweight carrying capacity — Registered tonnage — Gross and net registered tonnage — Various tonnage cal- culations — Cargo, weight, and measurement tons — Gen- eral classification of commodities — Tables of unit dis- placement of commodities — Stowage factors of some im- portant commodities. XII. Coal — the Key to the Carrying Trade . . 223 Coal a comer-stone of British maritime supremacy — British appreciation of the economic significance of coal exports — England's natural advantages as a coal export- ing country — England's merchant marine the greatest consumer of bunker coal — Growth of British coal exports — Geographical distribution of British coal exports — Distant markets emancipated from British coal supply — German competition — American competition — Growth of American coal exports — Doubtful value of part of pres- ent coal export business^-Distribution of American coal exports — Economic value of British and American coal exports compared — British coal Europe's greatest return cargo — Nature of American exports — Future competition between England and America. CONTENTS xi XIII. Cargo Handling and Stowage .... 244 Reasons for American neglect of seaport equipment — Re- cent changes in the situation — The effect of American vessel-ownership on the need of cargo handling equip- ment — The Seamen's Law accentuates this necessity — Opposition to mechanical installations — Economy sought by mechanical handling — Different cargoes require dif- ferent handling devices — Handling movements analyzed — Miscellaneous cargo offers greatest difficulty — Loading and unloading through side openings — Methods adapted to ocean-going vessels — The work of the ship's tackle — The equipment on land — Late adoption of cranes ex- plained — Cranes do not always pay — Types of cranes — Economies effected by cranes— Handling standard-pack- age freight — American efficiency in handling bulk com- modities — Loading coal and grain — Agencies in loading ships — The problem of stowing. PART V. SHIPPING SERVICES XIV. Steamship Services and Vessel Types . . 271 Classification of carriers on the basis of service — Tramps and liners ; their numefical relation — Service of tramp and liner compared — Peculiarities of tramp construction — British predominance in tramp shipping' — ^What tramps carry — Ek;onomies of the tramp — The tramp losing ground — The cargo liner — Special types of cargo steamers — Profit-earning capacity of cargo liners — A typical modem cargo liner. XV. Papers and Documents 286 Importance of charter party— Trip and time charter — Im- portant clauses explained — Terms used in the charter business — Cotton charters — The "Pixpinus"— Grain char- ters — The meaning of "range"— Example of a grain charter— Peculiarities of the fruit trade— Papers used in the line business— The indent— The shipping permit— The dock receipt— The bill of lading— "Straight" and "order" bills of lading— Shipper's export declaration- Shipper's manifest— Consular invoices and other docu- ments — Ship's papers. XVI. Passenger Service 320 Significance of liner tonnage— History of ocean travel and emigration— The effect of the war on tonnage supply The present construction program of leading companies xii CONTENTS — Ocean passenger service originally a by-product of freight service — Load index affects profitableness — Evo- lution of the express steamer — Different policies pursued by different companies — "Safety first" is slogan — Com- fort of modern liners— The floating town. XVII. Mail and Express Service 332 Prerequisites of mail and express service — ^Volume of mail traffic — "Consignee's mail" — Principles governing classification of mail — Different methods of paying for ocean mail service — Mail contracts under Law of 1891 — Basing payment on amount of postage — Policies of the United States Post Office Department — Sea post-offices — International parcel-post — England's excellent parcel- post connections— ^Atilerican mail-order houses handi- capped — Deficiencies of American system — Growth of American parcel-post shipments abroad — International express business. PART VI. MARINE INSURANCE XVIII. Classification and Registry of Shipping 353 Ship classification the basis of hull insurance — Beginning of Lloyd's — Shipbuilders abuse classification records — Mr. Plimsoll's load-line agitation creates a rival — The process of ship classification — The Annual Report of Lloyd's Register — History of the American Bureau of Shipping — Official recognition of the American Bureau — Cooperation with other agencies. 'XIX. History and Organization of Marine In- surance : 363 Importance of Marine Insurance — Economic services rendered by marine insurance — Early beginnings of marine insurance — The Rolls of Oleron — Marine Insur- ance compared with Transportation Insurance — Carrier's liability under the Harter Act — Contractual provisions of the bill of lading — Organization of marine insurance business — Lloyd's business methods — Lloyd's information service — America favors company plan — Extent of foreign control over American marine insurance — Re- awakening of American marine insurance — Recommenda- tions of the House Committee on Merchant Marine and Fisheries — American insurance pools — Reaction of Ameri- canization process on British interests — Self insurance — Reinsurance; definition and general purpose. CONTENTS xiii XX. Elements of Marine Insurance Practice . 389 Insurable interests and some important risks — Special Risks — Meaning of "all other perils" — Different , losses- Average adjustment — Factors affecting insurance rates'— Rate-making in marine insurance differs from other in- demnity calculations — Application for marine insurance — Types of insurance policies — Insurance certificates- Legal intricacies of insurance policy — Terms and clauses explained. '' PART VII. ORGANIZATION AND MANAGEMENT XXI. The History of Vessel Ownership and Management 405 Shipping trade in Mercantilist days — Free traders versus chartered companies — Smuggling, trafficking and Piracy — Functional division between shipping and trading — ^The Origin of berth and charter traffic — Timoud beginnings of line development — The Early "Packets" — The History of modern steamship lines — Development of berth traffic — The appearance, of the tramp — The revival of the private carrier — Summary of evolution. XXII. Organization of the Steamship Business 419 Three types of steamship organization — Liner organiza- tion — General features not unusual — The manager of operations and his department — The traffic man-r-Organi- zation of the traffic department — Passenger traffic de- partment — The organization of the tramp business — Organization of the charter market — Negotiating a char- ter — Methods of tramp operation — General steamship agents — Ship brokerage — Former functions of super- cargoes — Duties of supercargoes on Shipping Board vessels — Reasons for failure. XXIII. Concentration and Combination . ^ . 434 Aim of combination— Forces driving shipping to greater concentration— Growth of the single line— The "port- manteau company"— The "group"— The most important "groups" in British shipping— The Holding company-- The "I. M. M."— An anomalous situation— The Harn- man Combine — American Ship and Commerce Corpora- tion The "A- G. W. I." — Horizontal and vertical com- bination contrasted— Examples of shipyard control — Shipping assures fuel supply— Shipping branches into xiv CONTENTS financial "enterprises — Shipping absorbed by producing interests — The case of the steel industry — Other ex- amples — Railroad control over steamship lines — Foreign railroad steamship lines. XXIV. Pools, Agreements and Conferences . . 455 Network of agreements supplements combinations— Im- portant investigations — Absence of tramp organization — Effect of tramp competition on line organization — ^Liner co-operation more easily achieved — Costliness of rate ■ wars — Purpose and scope of agreements — Conferences and Pools Contrasted — Various kinds of pools — Agree- ments with freight brokers — Percentage of freight handled — ^Agreements between steamship companies and railroads — Advantages of conferences — Stability of rates — Less discrimination — Sounder rate policy — Need of effective control — Disadvantages of conferences — Monopolistic tendencies — Deferred rebates — America forbids deferred rebates and the use of "Fighting Ships" — Difficulties of American shippers — Congress Endeavours to aid — America's attitude towards existing conferences — Our efforts appreciated — Regulated com- bination versus wild competition. PART VIII. RATES AND FINANCES XXV. Theory of Rate-Making 483 Theory and practice of rate-making contrasted — Cost analysis of steamship operation — ^Vessel types and cost — Effect of age — Corporate finances and cost — Other factors influencing cost — How to calculate the profitable- ness of a service — The question of "laying up" — Traffic intensity — The significance of the load index — Statistical proof — Cost factor not generally felt — Competitive nature of ocean rates — Charging "what the traffic will bear'' — Absolute monopoly unlikely, therefore violent fluctuation of rates — Charter rates fluctuate most^ Effect of the war on rates — Effect of crops on rates. XXVI. Rate Practice and Rate Control . . . 502 Negotiating charter rates — Complexity of Rates in general cargo — Undesirable to base rates on cost — Actual rate based on four considerations — Rate Policy and stowage plan — A practical application — "Small stow- CONTENTS XV age" and dunnage — Exceptional circumstances afifect rates — Rate contracts — Economic advantages of rate contracts — The question of rate discrimination — Methods of quoting freight rates — Origin of ocean tariffs — Nature of a tariff — Oldest ocean tariffs know principles underlying tariffs — Structure — "Scales" dis- regard value — A modern tariff — Freight classification — Rate control regulation of charter rates — Relations with the railroad administration — Rate function of the divi- sion of regulation and division of operation distinguished — Carriers' conferences and contracts — Tariffs checked and analyzed — Charter filing regulation. XXVII. The Finances of Shipping Companies . 540 Unsteady character of steamship profits — Effect of fluctuating earnings on sales price of vessel — Book values and competition — Relation of stocks and bonds in ship- ping finance — Methods of acquiring capital — Wide distri- bution of British steamship securities holdings — Ameri- can methods — European Practice — Reforming the ship mortgage law — The experience of Great«Lakes Bankers — Income of American shipping PART IX. AMERICA'S MERCHANT MARINE XXVIII. History of the American Merchant Marine and Recent Legislation . . . 557 Early growth — Development of shipping checked — The clipper-ship era and its subsequent decline — Vain efforts to revive American ocean-shipping — Awakening interest — New conditions caused by the European war — The Ship Purchase Bill— The Seamen's Law— Some important pro- visions of the Act. XXIX. The Work of the United States Ship- ping Board 568 War problems displace peace conditions— Demand for ships — The question of government ownership and opera- tion—Creation of the Shipping Board— Organization of the Shipping Board— Ship construction; program and achievements— British and American shipbuilding records compared— The war's effect on world shipping— Shipping Board Finances— Agency yards- Hog Island; history and record— Expansion of American shipbuilding facili- xvi CONTENTS ties— The Shipping Board fleet— Problems of operation — Types of operating agreements — Recent changes — The Shipping Control Committee-^The Chartering Committee — Research work of the Division of Planning and Sta- tistics. XXX. The Merchant Marine Act of 1920 . . 593 Significance of the Jones Act — General characteristics of the Law — Current opinion on new shipping law — De- tailed provisions of the Act ; sections 1 and 2 introductory — Section 3 creates new Shipping Board — The new sales policy — Criticism of this policy — Sale of Shipping Board vessels to aliens made very difficult — Nation-wide inquiry into traffic conditions authorized — Aid to shipbuilding — The Board may issue "Orders in Council" — Against "de- ferred rebates" and "fighting ships" — Extension of coast- wise laws — Tax-exemption for American shipowners — American mail for American ships — American Bureau of Shipping recognized — Preferential railroad rates for goods carried in American bottoms — This provision at- tacked and de?f ended — Encouragement for American marine insurance companies — Ship mortgage reform — Seamen's Law upheld — The question of tariff discrimina- tion — Historical aspects — The wisdom of discrimination — Legal aspects — Conclusion. Appendices 617 PART I THE OCEAN CHAPTER I THE NATURE OF OCEAN TRANSPORTATION Early history. — "Navigare necesse" — navigate we must — was a Roman slogan which reveals the early signifi- cance of water transportation. But while the use of ships is as old as the ages, its beginnings reaching into pre- historic days, ocean navigation in its proper sense is an achievement of relatively recent times. If we disregard the isolated efforts of a few adventurers, ocean trans- portation is less than 500 years old. Not until the inven- tion of the compass and the astrolabe helped the early mariner to feel his way through the watery deserts, and not until a more seaworthy type of vessel than the Span- ish caravel or Venetian galley had been evolved, could the era of world shipping dawn upon the earth. Before that, shipping had confined itself to the use of streams — the potamic stage — or, if venturing upon the sea, had not dared to go out of sight of the coast — the thalassic stage. But when the spell was broken, the ocean, instead of being a barrier that "keeps lands apart," that serves na- tions "in the office of a moat," became a link binding dis- tant peoples together in commercial, intellectual and spiritual intercourse. This was bound to revolutionize the mental attitude as well as the political, social and economic life of mankind. Economic significance of ocean transportation. — To grasp the economic significance of ocean shipping we must understand the part that transportation in general 3 4 OCEAN SHIPPING plays in our life, and must consider the peculiarities that distinguish water, and, in particular, ocean transporta- tion from land transportation. To the economist who defines production as "the crea- tion of utilities," transportation is merely a phase of pro- duction. The ship, as the railway, is the servant of com- merce, and the function of commerce is — to use a phrase coined by J. J. Hill' — "to bring the goods from where they are to where they ought to be." To do so adds to their value; for the shift of place creates so-called place utili- ties, and, in most instances, also time utilities. So far there is no difference between land and water transportation. They serve the same purpose, but differ greatly in the efficiency and cost of the service they render. Cheapness of water transportation. — Generally speak- ing, water transportation is cheaper than land transporta- tion. When Vasco da Gama discovered the sea route to India around the Cape of Good Hope, he brought down- fall and decay to Venice and Genoa, the great mistresses of the Mediterranean Sea, and in their places he enthroned Portugal, Spain, Holland and England. Why? Because the life blood of the Mediterranean trade centres was the commerce with the Orient which travelled over the old caravan routes until it struck the Mediterranean. When opportunity offered to carry the same merchandise by water, though thousands of miles out of the way, the arteries of land transpprtation were bound to dry up, unable to compete with the cheaper water transportation. To come down to modern times, we reproduce the fol- lowing figures from Mulhall's Dictionary of Statistics.^ 1 1899 Edition, p. 301. THE NATURE OF OCEAN TRANSPORTATION S These figures i-epresent the average cost (calculated for all countries) of transporting one ton of commodities over a distance of 1000 nautical miles : By ocean 5 shillings By canal 20 shillings By railroad 100 shillings By turnpike 300 shillings An extreme case, illustrating the cheapness of water transportation, was that of a London merchant who in 1892 bought 200 tons of second-class flour in Liverpool. Sending it to London by rail was out of the question, although the London and Northwestern Railway rates for through carriage between the two places were so small as to do little more than pay the cost of move- ment'; and the local sea rate was such a trifle less than the land rate that it paid the buyer to ship the flour from Liverpool to New York, and then from New York direct to London, at through long-distance rates.* To be sure, other factors besides the intrinsic cheapness of water car- riage must have come into play to create this exceptional situation. It would be wrong to generalize from this spe- cific case. For in the course of time, improvements in the technique of transportation by land and water widen or shorten the spread between the respective costs of carrier per unit. Reasons for cheapness: buoyancy. — Among the rea- sons for the relative cheapness of water transportation, the physical property of water as compared with that of solid land is the most elementary and, at the same time, probably the most important. Experimentation has 2 Lyde, Commercial Geography, pp. 44, 45. 6 OCEAN SHIPPING shown that a horse which can draw a load of only one ton on a two-wheeled cart can draw a load of forty tons on a barge. The explanation is this; the water itself bears the burden so that only motive power is needed, while on land an additional amount of power has to be supplied to overcome friction due to weight. To be sure, science has reduced this friction to a minimum by the usie of steel rails, ball bearings; lubricants, etc. If we, there- fore, compare a modern railroad train with a modern steamship, we find that the relative efficiency of the lat- ter is by no means forty times the efficiency of the train. A scientific comparison of these two most important means of transportation of the present age is rendered problematic by the iriodifications necessitated by storms and currents, etc., on the one hand, and grades and curves, etc., on the other. The fuel consumption reflects the consumption of energy. _Statistics tell us that during 1916 the railroads of the United Stated consumed 0.066 pounds of fuel per ton mile while lake carriers consumed only 0.029. Corresponding figures for ocean carriers would be interesting but they do not seem to be available. Additional causes for cheap water transportation. — This difference in efficiency, however, is partly due to other causes besides the difference in the physical prop- erties of the two elements, water and land. In the first place, the locomotive designer is handicapped as com- pared with the builder of marine engines, because the dimensions of the engines are limited by the gauge of the track, the width of the tunnels, the strength of the bridges, the angle of curves, etc. In a similar way the manufacturer of railroad cars labors under difficulties as compared with the shipbuilder. The necessity of break- THE NATURE OF OCEAN TRANSPORTATION 1 ing up the space, which represents the carrying capacity of the train, into many independent units increases the deadweight or the tare far beyond the point with which a shipbuilder has to reckon. Here again the progress of science. which has led up to a type of railroad car with a carrying capacity of 110 tons — which is considerably more than the average ship in George Washington's day could carry — and the evolution of the modern steamship of gigantic proportions, have reduced the respective costs of carriage, without however, essentially affecting the spread between land and water transportation. Ocean haul longer than land haul. — The third factor which accounts for lower water transportation costs is the fact that the average haul on the ocean is so much longer than the average rail haul. The United States is a country of such dimensions and its natural resources are distributed in such a way that considerable quanti- ties of bulk commodities have to be moved over long dis- tances. Nevertheless, the average rail haul does not ex- ceed 260 miles. In the absence of statistical data regard- ing the average haul in ocean shipping, an exact com- parison is impossible. However, a glance at a map of the world which gives the distances separating the most important markets between which the bulk of the world's ocean-going tonnage plies, will convince the observer that the advantage again lies on the side of the steamship, and that this advantage is bound to be very considerable indeed. Without going into details of trade routes and merchandise currents, it will suffice to remember that the bulk of our cotton export crosses the Atlantic, that almost all of Australia's wool travels practically half-way around the world, and that the products of Argentina's 8 OCEAN SHIPPING fields and prairies and of Chile's mines cover from si^ to ten thousand miles before they reach their destina- tions. On the equator it is 10,000 miles across the Pacific Ocean; and in going from Vancouver to Hongkong, mail steamers cover a distance of 6,500 miles. Why do long hauls mean cheaper transportation than short ones? Everything else being equal, the terminal charges, that is, the expenses of handling the goods at either end of the voyage, are the same whether the cargo is carried ten miles or a thousand, but relatively speaking, they amount to so much less when spread over the longer haul as compared with the shorter. Ocean transportation requires less fixed capital. — With all these points enumerated in favor of the ship, perhaps the most important still remains to be mentioned ; name- ly, that before a train can pull out of New York to reach Yonkers, Chicago, or any other point, costly prepara- tions must be made to render the feat possible. The right of way has to be acquired, the road-bed built, the track laid, stations erected and signals and -safety devices in- stalled — efforts which in the United States represent an average per mile investment of not much less than $70,- 000. In England, the corresponding figure is not far from $250,000.* On the other hand, the ocean beckons to the ship and is ready for use without any effort on the part of the ship-owner. To be sure, the seas are charted and patrolled, coasts lighted, channels marked and improved, harbors deep- ened and piers and docks constructed, but usually at government expense. If we ignore the support given by * See Johnson and Van Metre, Principles of Railroad Trans- portation, pp. Ill, 112. THE NATURE OF OCEAN TRANSPORTATION 9 various governments during the early days of railroad history when generous land grants and other aids were proffered, no such contributions from public funds are available for the railroad owner in construct- ing his road; on the contrary, all equipment and im- provements rest upon private investment. In contrast, the ship-owner benefits by the nation's eagerness to gain its share of ocean commerce, and profits by the whole- some rivalry which prompts competing cities to outdo one another in the effort to attract steamships to their ports. This, however, holds true only to the extent that the cost of harbor works and other improvements is de- frayed by general taxation and not from pier leases, dues and other charges directly levied on the shipping busi- ness. This refers to terminal facilities. But the road- bed is furnished free. For so ample is the supply of water in the ocean, so wide its expanse, that the services rendered mankind by the sea in bearing the burden of its fleets, have remained a free good, free as the air that we breathe. History of the freedom of the seas. — This bring us to the second point of difference existing between land and ocean transportation : freedom of the seas versus national regulation of land transportation. There was a time when man extended the principle of territorial sover- eignty to his conquests on the watery deep. The Portu- guese who discovered the sea route to India regarded it as forming equally as concrete a part of their colonial empire as did Brazil. Anybody who dared to navigate these newly "acquired" waters was treated as an invader or looked upon as one who poaches upon the preserves of another. Even the enlightened Montesquieu held as 10 OCEAN SHIPPING late as the eighteenth century that a nation may cede a sea to another as it may cede a strip of land. To-day, such an idea is unthinkable; beyond the three-mile limit national sovereignty ceases and the law of nature pre- vails, limited only by a few more or less clearly defined, more or less well understood and more or less efficiently enforced principles of international law. Essentials of economically free seas. — While we leave it to the diplomats and the experts of international law to interpret, from the l,egal and political standpoint, the meaning of "the freedom of the seas," a phrase abused as often as it is used, an economic treatise on ocean shipping would be incomplete indeed if it left untouched the im- portant subject of the economic restrictions imposed on ocean shipping. Even those who are at loggerheads as to the political meaning of "the freedom of the seas" usually agree that, certainly in time of peace, the seas have been and are free in the fullest sense of the word. If "freedom of the seas" means the right of a ship to cruise aimlessly about the high sea we are willing to agree with this view. But such freedom would be of little practical value. Our conception is that "freedom of the seas" in time of peace involves the following essentials •} (1) General freedom of navigation, i. e., liberty to come with ships and cargoes to places in the territory of all nations. (2) National, i. e., equal, treatment as regards the sta- tioning, loading and unloading of vessels in ports, docks, roadsteads and harbors ; ^This enumeration follows in general the British interpretation as given in official documents. THE NATURE OF OCEAN TRANSPORTATION 11 (3) National treatment in regard to duties of tonnage, harbor pilotage, lighthouse, quarantine, or other ana- logous duties or charges levied for the profit of Govern- ment, public functionaries, private individuals, corpora- tions or establishments of any kind; (4) Prohibition of differential flag treatment. British liberal policy explained. — These essential con- ditions have never been generally accepted by all the maritime nations. To be sure, since the middle of the last century the navigation policy of Great Britain, the leading maritime nation of the world, has generally followed these lines. It is based upon the great ascendency of the British merchant marine and the widespread character of the trade of the Empire, which make protection both unnecessary and unde- sirable. The main object of this policy was to obtain free access to the ports and the trade of foreign countries. Privileged treatment at home would have meant little to the British merchant marine, but would have afforded foreign countries an excuse for similarly discriminating in favor of their own vessels. "In view of its great size, the British merchant marine stood to gain more from free access to foreign countries than foreign flags stood to gain from free access to British ports ; and conversely a policy of mutual restriction would for the same reason have caused more harm to British than to foreign shipping."* Under the influence of this British doctrine, and, furthermore, affected by the teachings of eighteenth cen- 1 Reports of the Departmental Committee appointed by the Board of Trade to consider the position of the Shipping and Shipbuilding Industries after the War. London, 1918, p. 106. 12 OCEAN SHIPPING tury liberalism, other countries, among them the United States, viewing the whole matter from a dollars and cents standpoint, allowed their carrying trade to pass under foreign, principally British, control. Freedom never complete: cabotage reserved to na- tionals. — But even during the height of this period of extreme liberalism, certain restrictions remained. In the first place, with the exception of Great Britain, every prominent maritime nation of the world has excluded foreign shipping from participating in its coastal trade. And "cabotage," as coastwise trade is called in the tech- nical language of shipping, is a wide term. A voyage from New York to Hawaii or from Riga to Vladivositok is considered a coastal trip, and is treated as such. Now the Australian Government wishes to extend that coun- try's coastwise shipping laws to the trade with the newly acquired insular possessions in the South Sea. French shipping interests would like to see foreign ships pro- hibited from carrying goods between France and Indo- China. Our own coastwise laws are to be extended to include the trade with the Philippine Islands.* It is not improbable that other countries will follow these examples and thus limit further and further the free areas of the sea. Instead of the seas being made free, one of the economic consequences of the war seems to be a constant diminution in the number of trade routes open to all nations. Other restrictions. — Besides this nationalization of "cabotage," numerous other cases of discrimination can be dted. A case in point is the French "Surtaxe > See Merchant Marine Act, 1920, discussed in Chapter XXX. THE NATURE OF OCEAN TRANSPORTATION 13 d'Entrepot," which is a special duty imposed on all goods not imported into France direct from .the country of origin. This duty is a remnant of mercantilist days and represents an indirect discrimination against foreign shipping. France furthermore requires that foreign ships employ a special class of brokers whose fees amount to a substantial tax on shipping and overseas trade. France is not the only country to discriminate in favor of her nationals. Portuguese ships in Portuguese ports pay only one-half of the dues paid by foreign shipping.^ Neo-Mercantile tendencies of to-day. — These ex- amples show that entire freedom of navigation has not existed, and does not exist to-day. As we have seen in the case of the coastwise shipping laws, the tendency of to-day is toward further restriction, toward wider dis- crimination in favor of national shipping. Even in Eng- land, voices are raised in favor of flag discrimination. But our own case is a better example of the trend of the times. The Merchant Marine Act of 1920 in several of its provisions reminds us of the mercantilism of the Naviga- tion Laws. We live in an age of neo-mercantilism, when national commercial policies are accepted or rejected on the basis of their respective bearing upon national power, on imperial aggrandizement — the League of Nations not- withstanding. There is a certain danger of overstepping the proper limits in legislating in favor of national shipping. If all maritime nations were to insist that all their foreign trade should be carried in their own ships, we would have the amusing spectacle of seeing these ships meet in mid- ocean and exchange their cargoes. The best that the. 1 See Board of the Trade Reports, cited above, pp. 107-109. 14 OCEAN SHIPPING advocates of a national merchant marine can hope and work for is that the ships of their nation should carry approximately half the imports and exports of their own country/ and share in the sea-borne trade of non-mari- time nations to an extent in keeping with the commercial and political place their country holds among the nations of the" world. Freedom of the seas inseparable from freedom of inter- national trade. — But this question of the "freedom of the seas" has a deeper meaning. It is inextricably linked with the wider problem of the freedom of international trade. For a ship, when viewed apart from the cargo it carries, is but a useless thing. What attracts it to a port is the paying cargo awaiting it there or an open market which welcomes the goods which it carries. Withhold the cargo and a port is closed to a ship as effectively as by a direct law forbidding it to enter. Ship- ping is but the instrument of trade and, on the whole, whatever limitations are placed upon trade have the tendency eventually to react upon shipping. Exceptions can be cited and the connection between cause and effect may often be blurred. But "the tendency is there, never- theless. In a deeper sense, therefore, there can be no real free- dom of the seas as long as there are colonial empires and protectionist countries — in short, as long as there is no freedom of international trade. There \& no more reliable way of testing the liberality or exclusiveness of colonial and commercial policies than by analyzing their results. ^"Even England, whose vessels formerly carried 24 per cent of the international trade of nations outside the British Empire, carried at the same time only 52 per cent of her own trade."— E. N. Hurley, The New Merchant Marine, p. 274. THE NATURE OF OCEAN TRANSPORTATION IS France has openly pursued the policy of reserving the trade with her colonies for her own nationals and hei shipping has followed the lead, but England has always prided herself upon her unselfish policies in admitting all to the exploitation and development of her colonial em- pire. Nevertheless, we find that the bulk of the trade, and even to a larger extent the bulk of the shipping, be- tween and with parts of the British Empire have been in British hands. This state of affairs is certainly not due to the unwillingness of outsiders to participate. A care- ful analysis of the treaties, laws, rules and regulations relating to iriter-imperial trade and shipping, will reveal enough handicaps placed upon non-Britishers to account for their comparative lack of success in cutting England's lead. In saying this we by no means wish to imply that British success on the.seas has been simply the outcome of discrimination, past or present, in favor of British ship- ping and trade. We do not wish to detract one iota from the merits of Britain's great mariners and merchant princes. On the contrary, we have great respect for English acumen and perseverance and we sincerely wish that this country might take a leaf out of the book of England's experience and learn from the "Mistress of the Seas" the secrets of her success. If we refer in our illustration of limited sea freedom to acts or laws of Great Britain more frequently than to those of other countries, this is only natural in view of England's exceptional position as the leading maritime nation of the world. Petroleum a case in point. — In order to illustrate what we mean by trade advantages which react upon shipping and thus limit the freedom, of the seas, we may take the oil situation as a case in point. For rea- 16 OCEAN SHIPPING sons inherent in the nature of the business, petroleum is usually carried by those interests which control produc- tion or refining, or both. What is the situation with re- gard to the oil resources of the British Empire? Is the exploitation open to all ? No. We quote from a report by Mr. Van H. Manning, Director of the Bureau of Mines, to the Secretary of the Interior, on "International Policies Affecting the World Petroleum Resources": "American oil companies are expressly excluded from do- ing business in Burma and a blanket concession of 99 years was given to the Burma Oil Company (Ltd.) in 1889, protecting this company from foreign competition. It is reported that recent legislation has limited the own- ership of oil properties in India to British subjects. None but British oil companies are operating in India." It may be noted that Burma is the most, important oil yielding region in British India. To quote further: "There is a decided national and nationalistic policy throughout the British Empire to favor and encourage British oil com- panies." "The development of a strong nationalistic sentiment among British oil companies is illustrated by the resolution recently adopted by the Lobitos Oil-fields (Ltd.), which produces in Peru, and has recently ac- quired oil lands in Ecuador, to prevent the transfer of more than 20 per cent of the capital to foreigners." In this connection the following extract from a recent speech of Mr. W. A. Harriman, President of the American Ship and Commerce Corporation which he made, before the Manufacturers' Export Association is of value : "We are operating a service from New York to Alexan- dria and the Levant. . . . One of the important com- modities which is imported from Alexandria is Egyptian THE NATURE OF OCEAN TRANSPORTATION 17 cotton. This country consumes about one-third of the Egyptian crop. All the Egyptian cotton brought to this country is to-day carried in foreign bottoms and is shipped to us through European ports. Although we have been operating the service for eighteen months, it has been impossible for us to obtain a single pound of Egyptian cotton for our bottoms. The shipment of the entire crop is controlled by a British Conference in which a number of British shipowners participate. The British Confer- ence make a contract once a year with the Alexandria cotton merchants by which they agree to sell cotton only c. i. f., and to^ route all their shipments over the Confer- ence lines and the rate is fixed for the season. . . . Our consumer is not allowed to go into Alexandria and buy his cotton f. o. b. and ship at the lowest rate he can obtain. Our efforts to obtain a share of this business by working both in London and in Alexandria has so far been unsuccessful. The only result of our efforts last spring was that the contract for this year's crop was made five months earlier than it had been made the year before." There does not seem to be much left of the old spirit of liberalism. For what is true of petroleum and cotton is true of many other basic raw materials, particularly those that are used in the so-called key-industries. The only dif- ference is that the causal nexus between the control over the raw material — in other words, the cargo which ships may carry — and over the ships themselves is not always as direct and open as in the case of petroleum and of Egyp- tian cotton. Bernard N. Baker's idea of the "freedom of the seas." — One could go a step further and say with Bernard N. Baker, the late "Dean of American Shipping," that without 18 OCEAN SHIPPING a fair distribution of the merchant tonnage of the wt)rld among the commercial nations, on the basis of their need, real freedom of the seas is unthinkable.* While it is easy to exaggerate the importance of national control over the facilities for carrying exports and imports, there is no denying that the lack of ocean tonnage is a serious handi- cap in the international struggle for raw materials and markets. The fuel situation. — There is one more economic aspect of the freedom of the seas. We refer to the limi- tations put upon this freedom by the one-sided control on the part of a few nations, particularly Great Britain, over the bunker supply, the coaling stations of the world, and in general over the way stations at which ships must stop for supplies on long-distance voyages. This control does not necessarily mean a limitation of the freedom of the sea. But it might. It is potential. It became an actuality during the war. British Black Lists were en- forced by rendering obedience to British dictatipn a prerequisite ito the supply of bunker coal. Viscount Grey wrote to the United States Ambassador:^ "What legal objection can be taken to this course? It is British coal; why should it be used to transport the goods of those who are actively assisting our enemies?" But he added: "There is indeed one preoccupation in regard to t!ie use of coaling advantages by His Majesty's Govern- ment which, nc doubt, is present in the minds of neu- trals, and which I recognize. I refer to the apprehen- ^ Atlantic Monthly, January, 1919. ^ White Paper entitled "Further Correspondence with the United States Ambassador respecting the 'Trading with the Enemy (Extension of Powers) Act, 1915'." THE NATURE OF OCEAN TRANSPORTATION 19 sion that the potential control over means of transpor- tation thus possessed by one nation might be used for the disruption of the trade of the world in the selfish interests of that nation." Viscount Grey goes on to say that England has always used her naval power as a trust and that it has exercised this trust in the interest of freedom. With this statement some historians will agree and others will disagree, ac- cording to their viewpoints. But all will welcome the fact that the prominent part which oil is coming to play as a motive power and the control which this country has — at least as yet — over the world's oil resources will by force of circumstances lead to a fairer distribution of indirect control over international shipping and will thus put the freedom of the seas on a broader if not a safer basis. REFERENCES Baker, Bernard N. The Freedom of the Seas in Atlantic Monthly, February, 1919. Hough, B. O. Ocean Traffic and Trade, chap. I (1915). MuRKEN, E. Die Grundlagen der Seeschiffahrt. (Berlin, 1904.) National Foreign Trade Council. Ocean Shipping. The basic principles of marine transportation with particular reference to foreign trade of the United States, 2d ed. (House Doc. No. 2112, 64th Cong., 2nd sess., March, 1917). OciLViE, P. M. International Waterways, Part I. The Evolution of the Principle of International Waterways (1920). Smith, J. R. Industrial and Commercial Geography, Part H, chap. n. (1913). United Kingdom. Board of Trade. Reports of the Departmental Committee appointed to consider the position of the Shipping and Shipbuilding Industries after the war. (London, 1918.) CHAPTER II OCEAN ROUTES The Nature of ocean routes. — There was a time when the ocean was "the trackless deep," a "waste of water," but seldom visited even by the daring seafarer who bartered his tiny cargo for the riches of far-away lands. But where once the pioneer slowly felt his way, to-day whole fleets are scur- rying to and fro, moving more cargo in a day than all the ships of former times could carry in a year. The "trackless 'deep" has been covered with a network of shipping routes — highways and by-ways, trunk lines and branches, tributaries and distributaries. To be sure, these routes are mere ab- stractions, only imaginary lines connecting the oversea mar- kets of the world. But so steady has become the stream of ocean carriers, so constant the flow of commodities along certain lanes that, except for the lacking track of steel and the absent road-bed of stone, we have come to view the ways of the sea in much the same way as the roads on land, — equally as fixed and permanent. They are marked on the map as definite lines, as concretely drawn as the spur of the railroad or the turnpike and highway. The North-Atlantic lanes. — But such a comparison may easily lead us to an exaggerated impression of the fixity and permanency of shipping routes. Perhaps the North Atlantic route, connecting the two most important traffic producing centers of the world, northwestern Europe and northeastern America, is the only one whose nature approaches that of the railroad. Conditions here are altogether exceptional. Here the liner with her fixed route and regulated sailing 20 OCEAN ROUTES 21 schedule, carries a larger share of the traffic than is the case in other parts. "It is the busiest of the seven seas: it is where new developments and revolutionary inventions in- variably receive their ocean-going commercial baptism: where luxury and elegance have been carried to a supreme degree; where the ingenuity and skill of the engineer are revealed most strikingly; and finally, it is the arena in which the struggle for supremacy between the various mari- time nations is contested most keenly and enterprisingly."* The result is first of all, that a large number of the ships used in this service are of such size and value that physical as well as economic considerations render their removal from this route as difficult as the removal of a railroad track. Secondly, the density of the traffic on this route has led to such a careful and exact demarkation of the paths which the giant greyhounds may follow as is found nowhere else on the ocean. The slower traffic of the sea is everywhere as free as is the street traffic of a small town. But the North. Atlantic resembles the crowded streets of a metropolis, and the interest of all concerned has led to as stringent regulations as those which control the traffic of our large cities. "Keep to the right" is the rule, and means in this case keep 50 miles to port side. The honor belongs to a brilliant officer of the United States Navy, M. F. Maury, of having worked out an acceptable system of tracks for the North Atlantic express service. He first proposed the mat- ter in 1855, but it was not until 1891 that the first group of steamship owners agreed to follow Maury's routes, and not until 1898 that their general adoption was assured by a writ- ten agreement, signed by all the large transatlantic steam- ship companies. The Titanic disaster caused a radical re- 1 F. A. Talbot, "Steamship Conquest of the World" Preface. 22 OCEAN SHIPPING vision of the summer route. The lanes to be followed differ to a marked degree from the Great Circle (the shortest route). But the greater safety from ice, drifting derelicts, etc., cannot be bought too dearly by any loss of time. Flexibility of ocean routes. — The North Atlantic route is, however, an exception to the rule, for ocean routes are seldom fixed or even clearly defined. As we shall see, the bulk of the world's sea-borne commerce is moved by tramps, and they are free to go wherever the prospect of profitable cargo calls. Their movements are heavier along certain ocean lanes than along others, but these movements shift from season to season and from year to year. Even line traffic does not form a rigid system of routes ; new branches are added, new lines are opened, old ones discontinued, etc., as the kaleidoscopic changes of world market con- ditions demand. Definition of an ocean route. — It is therefore difficult even to define an ocean route. Is regular line service that once in a great while calls at a lonesome island in the South Sea, a trade route? Shall we call a trade route a movement of tramps that reaches an enormous volume at the height of the season and dies down to nothing for the rest of the year? We agree with Professor A. J. Sargent, of the University of London, whose answer is this: "If a consider- able number of ships, during an appreciable period of time, follow the same track, for similar purposes, we are justified in marking the track as a trade route."^ But even that at best is vague. What, then, determines the position and direction of ocean routes? Shipping is but the handmaiden of commerce. 1 Seaways of the Empire. Notes on the Geography of Trans- port, p. 23. OCEAN ROUTES 23 Without available cargo, ships swing idle at anchor, destroy- ing value, not creating it. Trade, therefore, determines the direction and volume of ocean routes and with it also their character and profitableness. Sea-borne trade in turn, de- pends upon traffic-producing factors in oversea markets. Hence, the elements ultimately determining the course of shipping are the geographical conditions in one part of the earth in relation to the conditions in other parts. Of course, it is also true that "facilities beget trade." Or, as ex-President Wilson expressed the same thought: "It may seem a reversal of the natural order of things, but it is true that the routes of trade must be actually opened — ^by many ships and regular sailings and moderate charges— before streams of merchandise will flow freely and profitably through them."^ In a way, therefore, shipping and trade are mutually dependent. A word should be said about the elements of the geo- graphy of commerce. The most striking feature is the con- • centration of the world's energetic population in the north temperate zone. The corresponding belt of the southern hemisphere is gaining, but the tropics and sub-tropics, equal in area to about 24,000,000 square miles, and with a popula- tion of 800 million people as against 900 million in the two temperate zones, supply but 1/6 (in value) of the merchan- dise now entering international trade; i. e., 3 billion dollars out of a total of ISj^ billions.^ Latitudinal character of present vrorld trade. — At pres- ent, therefore, an overwhelming proportion of the world's trade moves from one area of the north temperate zone to another. We may say it follows the latitudes. The reason 1 Address before Congress, Dec. 8, 1914, 2 The Americas, June, 1918, p. 26. 24 OCEAN SHIPPING for this is simple. As yet, trade is largely the result of different stages in the economic development and not so much prompted by natural differences. The signs of the times tell us that America is rapidly reaching Europe's stage of industrialization, which will reduce the relative significance of this now all important latitudinal trade. But already the southern temperate zone has strongly come to the fore. Enormous volumes of commodities move up the longitude — though seldom in a straight northerly or southerly course. But countries like South Africa, Australia and Argentina also have an industrial future. They, too, will some day turn their own raw materials into manu- factured products. The future importance of the tropics. — This leaves the trade with the tropics as the trade of the future, which nature creates because it is the trade between geographical zones of different climatic conditions, inherently interdepend- ent. The trade of the future will follow the longitudes rather than the latitudes. This development does not belong ■ to so distant a future as some may think. During the period from 1900 to 1919 the value of tropical imports into the United States increased from only $350,000,000 to over two billion dollars. The rapid growth of the population of the temperate zone will necessarily bring to light the dormant treasures of the tropics and sub-tropics, and technical pro- gress will accelerate the process. The aeroplane will carry the explorer over pathless swamps and forests, the tractor will help to draw out of the virgin soil what is denied the beast of burden, and the motor truck will furnish the neces- sary transport facilities until the railroad supplements or supplants it. These revolutionary changes will affect the shipping OCEAN ROUTES 25 routes profoundly. While the North Atlantic route will hardly lose in absolute importance, yet its relative significance will be impaired by the development which the trade with the tropics is about to experience. The load-index. — The conditions which have been discussed so far, account for the location of the termini of ocean routes, the points of origin and of destination. The ideal trade route would consist of two commodity streams of equal volume flowing in opposite directions. Such a route does not exist, but the more closely conditions approach this ideal the greater is its profitableness. This balance between the two opposite streams of commodities of a given route largely determines the "load-index" of the vessels employed on it. The "load-index shows the average degree to which the available carrying capacity of the tonnage employed is profitably utilized. To be sure, other considerations come into play, such as the necessity for regular and frequent sailings regardless of cargo available, and the nature of the commodity carried. But the ratio of outward to return freight is the biggest single factor affecting the "load- index" and thereby the profitableness — in absence of arti- ficial rate control— of a shipping route. Shipping Board statistics of ocean routes. — Until re- cently, no reliable data have been available for the respective tonnage requirements of given trade routes. The Division of Planning and Statistics of the United States Shipping Board has rendered a valuable service by compiling and pub- lishing a series of studies of "The Trade of the United States with the Principal Regions of the World in 1914 and 1918, showing Imports and Exports in Long Tons and Deadweight Tons of Shipping Required." 26 OCEAN SHIPPING We will let the authors of this valuable publication speak for themselves : "With this Bulletin the Shipping Board inaugurates a service which it is hoped will meet one of the greatest needs of the shipping industry. The purposes of this service are to assist ship operators in gauging the tonnage requirements of the trade regions in which they are interested; to indi- cate avenues for the profitable employment of the American Merchant Marine ; to assist in securing an equitable distribu- tion of American tonnage; and to place at the disposal of the shipping industry facts which are ordinarily gathered either through years of experience or at an expense prohib- itive to individual companies. The scope of this publica- tion is threefold: (1) To translate the foreign trade of the United States into terms of ships and cargoes — ^that is, to reduce the total trade with the various regions to the common denominator of long tons and then to compute the amount of deadweight tonnage required in continuous service to move this vol- ume of ocean-borne trafHc. (2) To show the seasonal fluctuations in the move- ment of commodities; and (3) To indicate the probable movement of commod- ities to and from the various trade regions during current calendar year. "As this service is for the shipping industry, the statis- tics of imports and exports are given in weight (long tons and deadweight tons) and not in values. The values of imported and exported commodities may be ascertained by consulting publications of the Department of Commerce OCEAN ROUTES 27 through whose courtesy and cooperation the basic figures for reducing the foreign trade of the United States to terms of long tons and deadweight tons have been obtained." The results of these studies which form the contents of a series of Bulletins, may be summed up in the follow- ing table : TRADE VOLUME AND TONNAGE REQUIREMENT AMERICAN TRADE ROUTES ON REGION OP SHIPMENT OR DESTINATION ' Totals North American: Canadian, Atlantic and Pacific Regions , Alaskan Region Hawaiian Region Middle American: West Indian Region Porto Rico Eastern and Western Caribbean Region Mexican Region: Overseas Overland •. . . . South American: Amazon and East Brazilian Regions •_• River Plate Region Central and North Chilean. . Peruvian Region. .... ... ... ■ North European and Mediter- ranean; Europe and Mediter- ranean Africa Greenland Region ■West and South Africa: . West and South African Re- gions Indian Ocean: British Indian Region East Indian Region : - - -v,' ' East African and Arabian Re- gion East Asian: East Asian Region ■Philippine Region Australian Import Movement to the United States 1918 (Fiscal Year) Long Tons 29,676,223 Deadweight Tons 5,212,457 Export Movement from the United States Long Tons Deadweight Tons 62,790,329 10,642,918 9,098,218 187,556 613,454 4,001,746 434,027 1,360,070 5,063,357 651,009 897,795 658,731 1,810,613 185,377 1,939,076 5,151 139,462 463,011 4?5,637 34,125 958,524 427,445 311,839 12,629 88,056 408,194 44,783 318,323 448,520 415,260 549,833 55,485 827,325 1,949 77,301 383,308 317,630 22,019 492,999 224,340 164,604 28,883,806 345,215 538,455 3,455,153 424,797 1,427,907 713,437 421,865 999,165 1,018,410 790,185 233,242 20,458,358 15,144 217,104 255,600 179,332 40,925 1,764,567 151,210 456,452 87,660 26,848 89,221 398,258 46,594 184,391 93,583 401,331 575,050 317,699 75,464 6,810,710 6,475 123,370 191,050 132,978 34,059 740,866 76,963 230,348 28 OCEAN SHIPPING Trade routes of the British Empire. — Professor A. J. Sargent has made a similar study of the trade between ports of the United Kingdom and oversea markets. The following is a compilation of his findings^ which in view of the enormous importance of British trade and ship- ping represent a valuable contribution to the study of world shipping. APPROXIMATE AVERAGE LOAD-INDEX OF IMPORTANT BRITISH SHIPPING ROUTES : Out Home United Kingdom— South Africa 30* 20* —Australia 50* 60* —New Zealand 45* • 75 —Indian Ocean 70 100 —Far East 75 55* —United States 25* 60* —Canada 25* 65* —River Plate 90** 100 —Brazil ....100** 35 * Considerable passenger travel affects load-index. ** Almost exclusively coal. Professor Sargent's calculations are based upon 1912 figures. In what manner and to what extent the war has affected these relationships appears clearly from the chart on page 29. On the whole, we might say these dislocations have been rather quantitative than qualitative. The amounts have changed, but the intrinsic features of the trade have 1 Seaways of the Empire. Notes on the Geography of Transport. OCEAN ROUTES TRADE DISLOCATIONS DUE TO WAR 29 \ ( ' ■" — ■ H ALf-< < Sflflfi*. 1 \ t 1 .1 i=^' '\ UNfT£L ; lt\ SfXU rcf*S S£4L ^/A^a K .,\ ^■■, \ 5-f^ -WW K V- \ 4 'Of^TH f=>i/SSt '~\ ->^ > - "^ .\ K\ ^^ Noma ( v^ \ \ ^^ V ia,»ee > \ .\ \ \\ ^'•-.^ ' V- ."^ ^ jf/ r^MA ^ \'^-- ^ s~»ja,«x \ V ''» *' lADOa (jm reffSTA •«^ ■-..^ ^ ""^^i' ^<»a a ■ '■^^ *■ *iaaa '~-v. AUSTfi wS *Otlff, \ ',' 4o ^rrr^ ^- > ^ Ch '■ ::^ ^ >. ^ 2->?s&; -::::^ ^ ^ IMO At 7£NT7i A.< ^ <5^ B 3, Sqooo \ L — m «■ a^»o Reproduced by permission of Carnegie Endowment for International Peaco, from InAuence of the Great War upon Shipping, by J. Russell Smith, New York, Oxford University Press, American Branch, 1919. 30 OCEAN SHIPPING undergone little change. The one important exception to this rule is the virtual termination of British coal ex- ports to South America. That matter will be discussed in a later chapter. Triangular voyages. — Of all the valuable . information conveyed by the Shipping Board's figures and' by Professor Sargent's tabulation, that which here in- terests us rnost is the frequent discrepancy between outward freight and return cargo and the result- ing effect upon ship movements throughout the world. If a ship carries coal from Cardiff to Brazil, where no return cargo is found, she does not return in ballast to get more coal, but every effort is made to reduce the ballast voyage to a minimum by calling at the nearest port that does offer freight. To use a technical term, the ship makes a triangular voyage. It is easy to read from our tables the directions in which such round- about voyages are apt to be made. Take, for instance, "Europe and Mediterranean Africa" on the Shipping Board table. We note that almost 7,000,000 D. W. tons had to be allocated to this route in 1918 for exports from the United States, while less than one million sufficed to carry the trade moving in the opposite direction. On the other hand, Hawaii offers a good example of a well- balanced trade movement. Even steamship lines operating over regular routes, sometimes have to resort to triangular voyages. "As an instance of the lengths to which it is sometimes neces- sary to go in order to operate at a profit, a steel cor- poration, in order to put its service to Vancouver on a paying basis, was obliged to sail its vessels from Van- couver to France before returning to New York. Four OCEAN ROUTES 31 complete changes of cargo were required, the itinerary- being : From New York to Vancouver with steel ; Vancouver to the Gulf of California with coal or lumber; Gulf of California to Dunkirk, France with copper matte ; Dunkirk to New York with French chalk." ^ Examples of typical triangular tramp voyages are the following : TYPICAL TRIANGULAR TRAMP VOYAGES CARDIFF ;v LIVERPOOL NEWCASTLE^ LONDON CANARY I %\ BALLAST ^^^^ <^ COAU ^^^ NEWPORT NEWS. SAVANNAH 1 Shipping's Share in Foreign Trade, Guaranty Trust Company of New York; pp. 18-19. ' 32 OCEAN SHIPPING The middle link does not necessarily represent a bal- . last voyage ; it may be possible to pick a little "way freight" to reduce the expense. In reality the shipping situation does not appear as schematic as the foregoing tables might lead one to be- lieve. The peculiarities of the passenger business, the employment of special types of vessels such as tankers, molasses ships, refrigerator ships, — the different uses to which tramps and liners are put — all of these special fac- tors reduce the value of general averages and necessi- tate modifications of the general conclusions which one may draw from the relation of outward cargo to return freight. But these disturbing factors will be taken up in their proper place. Fuel cost and other expense items affect profitableness of route. — So far we have investigated cargo movements as the determining factor in the routing of shipping. The cargo is the source of income of the shipowner, and as such deserves first and, foremost attention. But prof- itableness depends on net income, that is, gross earnings minus operating expenses. Therefore, anything that af- fects expense items aflFects the profitableness, and in con- sequence, the desirability, of a route. With most vessels, fuel cost is the biggest single item of operating expense. The price at which fuel, that is, coal or oil, may be had along a trade route is therefore a vital consideration. This question is crucial for a vessel with a very limited steaming radius. Suppose a steamer engaged on a 6,000- mile voyage finds one single coaling station midway. It means she has to bunker for 3,000 miles at a time. If an alternative route is open, offering coal every 1,500 miles, but half the bunker space, tvill be required, with a OCEAN ROUTES 33 corresponding increase in the space available for cargo. Unless the loss in time counts too much the second route would be preferred. A low fuel price, coupled with frequent fuelling oppor- tunities, renders an ocean route attractive. Much of the competition between the Panama and Suez Canals will be a matter of dollars and cents payable by the ship- owner for coal or oil on either route. Undoubtedly the improvement of the marine engine, resulting in a fuller utilization of every ounce of coal burned under the boiler, thus lengthening the steaming radius obtained from a given quantity of fuel, and to an even greater extent, the wholesale transition from coal to oil, have greatly reduced the value of frequent fuelling opportunities. As a result of the greater efificiency of the modern marine engine it is no longer necessary to make as frequent circuits to out-of-the-way coaling sta- tions as formerly. The greater the steaming radius, the more. closely can the steamer follow the shortest route to her destination, owing to the spherical shape of the earth, the arc of the Great Circle passing through the two points in question. Great Circle routes. — We are so used to the axiom that a straight line is the shortest distance between two points and so prone to forgot the limitations of the ordi- nary map of the world on Mercator's projection that it is hard, at first, to fully realize the meaning of the state- ment that, on a globe, the arc of a circle is the shortest connection between two points. But a glance at the globe quickly dispels all doubts. Then we readily un- derstand why the shortest route from New York to the English Channel, for instance, skirts the Grand Bank, or 34 OCEAN SHIPPING why the San Francisco- Yokohama line, via the Great Circle, curves northward to the Aleutian Islands, thereby- saving almost a day's steaming. The vessel with the greatest steaming radius can take the fullest advantage of the Great Circle route. But the shortest route is not necessarily the most de- sirable one. As we have seen, the fuel question necessi- tates frequent deviations. The chance to pick up way- cargoes invites them. In the case of passenger ships, regard for safety leads to important modifications, and as the Atlantic situation illustrates, greater safety is re- flected in lower insurance rates. The proximity of other vessels works the same way. Climatic conditions influ- ence the routing, especially of passenger vessels. The respective climates of the Red Sea and the waters ad- jacent to the Panama Canal will be another important factor in deciding the outcome of the competition be- tween .the two great waterways. Political aspects of ocean routes. — Where political ex- pediency demands the establishment of regular services, such as the various subsidized mail and express lines connecting oversea possessions with the mother land, the various economic considerations, while not arbitrarily ignored, are often subordinated. The "all-red" ocean routes of the British Empire are the most prominent ex- amples of this kind. Planetary winds and sailing routes. — So far we have confined our attention to the steamer. But the sailing vessel has not yet altogether disappeared. Its impor- tance is still sufficient to justify a few words on the geography of the winds. In the following diagram an actually complicated situation is reduced to its simplest OCEAN ROUTES 3S elements. We note four distinct zones of regular air cur- rents of which the sailing ship tries to take the fullest advantage, seeking the favorable and shunning the ad- verse. As the heat equator shifts with the change of seasons the entire system of air currents likewise moves north or south. SCHEMATIC PRESENTATION SHOWING PLANETARY WINDS There is one important exception which deserves men- tion, that is, the northern portion of the Indian Ocean. Here the large land mass of Asia in summer becomes so much hotter than the ocean to the south of it that during that season there is a strong southwestern air 36 OCEAN SHIPPING current, the monsoon, blowing from the Equator to the arid land mass lying to the north, a reversal of the other- wise prevailing trade wind. In winter the situation here is normal. These wind conditions explain the fact that for the sailing vessel the distance in nautical miles^ is relatively unimportant. Her captain figures the voyage in days, not miles, for the route long in miles is often shorter in days. Thus the trip across the Atlantic from Europe to the United States is either a wide circuit to the south of «the latitude of the Westerly or to the north, according to the season. This roundabout route is not necessary when going in the opposite direction, for, as Franklin correctly stated, "it is down hill to England." The Wes- terlies also explain the fact that ordinarily sailing vessels "round the Cape" to Australia but "double the Horn" on their way back. Winds afFect steamer routes. — Even steamers are af- fected by the winds, especially by the North East Trades of the North Atlantic and the brave west winds of the "Roaring Forties." While the modern steamer can fight her way against these winds, either a reduction of speed or a larger coal bill reflects the increased eflFort. This is best illustrated in the South Pacific trade. Most freighters go to New Zealand around the Cape but re- turn by the Horn. Likewise those which for some rea- son have to return by the Cape do not head for Cape- town but for Durban, because a more northerly, though longer, course traverses a zone of better weather and avoids the Westerly where it blows the strongest. It is probable that cheap bunker coal at Durban also has a 1 Nautical mile = 6,080 ft. OCEAN ROUTES 37 bearing on this question. Thus even a modern marine engine, the latest product of engineering science, is not fully emancipated from the hindrances imposed by the forces of nature which so absolutely control the move- ments of sailing vessels. Proper routing of world tonnage means great saving, — The European War, with its consequent shortage of ton~ nage, has done much to impress upon the business world the value of proper routing. Much has been learned, and more will be, as a result of that costly lesson. It is now fully realized that a shortage can be remedied just as effectively by a fuller and more economical utiliza- tion of the existing supply as by increasing that supply. "Cris's-cross Trade" is just as wasteful on the ocean as on land. Striking examples are quoted by Professor J. Russell Smith, in "Influence of the Great War Upon Shipping" :^ "In ten months in 1917 the United States imported 274,000,000 pounds of rice, and exported 201,000,000 pounds. Some of it went to Greece, yet the main source of supply of rice for the world's export is Burma, beyond Suez. Despite the fact that Europe wails for food, we imported in that ten months 96,500,000 pounds of maca- roni from Europe. We exported 12,000,000 pounds of pea- nuts, and imported 48,000,000 pounds, enough to have kept a 5,000-ton steamer busy for a year. It sounds unbelievable, but the tonnage busy carrying corn from Argentina to the United States in 1917 (the greatest corn producer in the world) would carry 2,000,000 bushels of wheat a year to the army in France. The list might be extended, but the point is certainly proved." ipp. 111-112. 38 OCEAN SHIPPING The farther a market is away from the purchasing port the more ships it needs for adequate service. If, there- fore, a nearer market can supply the same commodity, ships are saved by substituting the nearer for the distant one. Therefore, the elimination of an entrepot trading centre,^ unless it happens to be situated on the direct j-oute from producing to consuming market, which is bound to be the exception rather than the rule, means an increase in tonnage available. Such shipping econ- omies were actually introduced under the irresistible pressure of war emergency. They will not all be per- manent in their entirety; indeed, some are unreasonable except as war measures. But the direct routing- to this country of large quantities of goods, such as rubber, Sumatra tobacco, tin, etc., formerly routed via Europe, especially through London, is likely to continue. The war has changed world trade routes. — More- over, changes in territorial sovereignty will revolutionize routing in those parts of the earth so affected. Much of Germany's entrepot trade with the Baltic will remain a lasting heritage of the Scandinavian ports into whose lap it was thrown by the hand of Mars. The greater dependence of Europe on the supplies of this hemisphere — foodstuffs, raw materials and fuel — which is apt to con- tinue for some time to come, adds to the significance of the trade routes leading to and from the Americas. This is further accentuated by the rise of production cost in Europe, which renders profitable, at least for the time being, a considerable trade in coal from this country to Europe, in competition with English coal, as well as many other movements of goods which formerly were 1 For definition see Chapter V, OCEAN ROUTES 39 pq Q « > O u o ^ M 9> o §! ^' H CM O HI I-* .§£: H CO (^ O o H W 40 OCEAN SHIPPING considered contrary to the elementary law of trade. To What extent the foreign exchange situation will over- come these abnormal conditions remains to be seen. Shipping Board routes. — The war also completely re- vised the division of ownership of the world's merchant marine among the sea-faring nations. This also will affect routing. Thus American ships are plying to-day on routes where before the war the Stars and Stripes were never seen. We reproduce here a chart which shows the network of steamship trade routes covered by Ship- ping Board vessels : But if the free play of competition is allowed to replace governmental control, the ships of the future, as of the past, will seek the best paying employment regardless of the flag they fly, subsidized vessels excepted. New lanes of world commerce. — Finally, the war has brought into the realm of probability the realization of long-hoped-for plans, such as a tunnel under the English Channel, under Gibraltar, and under the. Bosphorus. Moreover, it has given new significance to such arteries of land transportation as the Cape-Cairo Railroad, or that running from Constantinople to the very gate of India. -The map^ on page 41 shows the world's most important transportation lines: A project which is being widely discussed at present and which, if completed, is bound vitally to affect the routing of world shipping, is the plan of deepening the St. Lawrence river to permit its use by vessels drawing 25 feet or more. The project is being energetically pushed by an organization known as the "Great Lakes- iprom "The Americas" (National City Bank of New York). Vol. S, No. 7, April, 1919, p. 22. OCEAN ROUTES 41 s lb. §• S § (3 ffl. a n ^ T H S t»H o fe: ~l ro «^ i s ^i n. S' i^ ^ R> ^ s to o a eg w o CO H ? fel hta 3 42 OCEAN SHIPPING . St. Lawrence Tidewater Association" with headquarters in Chicago and executive offices in Duluth. "The Canadian government has spent money freely in the past upon the St. Lawrence route and is committed to large expenditures in the future. It is now engaged in reconstructing the Welland Canal, to give it a depth of 25 feet, which will cost $75,000,000 to $100,000,000. That work is about one-third done, and it will be of small service unless the St. Lawrence is made navigable at a similar depth. From the foot of Lake Ontario to tidewater at or near Montreal is 181 miles by the river, of which 113 is international boundary. It is said that expenditures required to make the river navigable would be confined to 46 miles of the 181, or a distance of about the length of the Panama Canal. Argument for the feasibility of the improvement centers largely upon the claim that the improvement of a comparatively short stretch of river will connect large bodies of navigable water." ^ It is estimated that improvements which would make the river navigable would at the same time produce ap- proximately 4,000,000 horse-power between Lake On- tario and Montreal, the income from which would pay interest on the entire expenditure. Estimates on the re- quired improvements are from $250,000,000 to $300,- 000,000. Effective competition between land and water carriers will follow these accomplishments. In business, the man who wins is he who looks ahead a little farther than others. It is the same among nations. 1 See Monthly Letter of National City Bank of New York. October, 1920. OCEAN ROUTES 43 REFERENCES Gregory, Keller, and Bishop. Physical and Commercial Geography, Chaps. XI and XII (1910). Guaranty Trust Company of New York. Shipping's Share in Foreign Trade; Fundamentals of Ocean Transportation. (1919). Hough, B. O. Ocean Traffic and Trade, chap. V (1915). Johnson and Huebner. Principles of Ocean Transportation, Chap. V. (1919). KiRKALDY, A. W. British Shipping; Its History, Organisation and Importance, Book II. (London, 1914). National Bank of Commerce in New York. America and the New World Trade Routes in Commerce Monthly, Nov. 1919. Sargent, A. J. Seaways of the Empire; Notes on the Geography of Transport. (London, 1918). Smith, J. R. The Ocean Carrier, Chap. III. (1908). Industrial and Commercial Geography, Part II. Chap. III-XI. (1913). Talbot, F. A. Steamship Conquest of the Sea, Chap. XI. (London, 1912). United States Shipping Board, Division of Planning and Statis- tics. Trade and Shipping between the United States and the Principal Regions of the World in 1914 and 1918. (1919). Relative Desirability of Ships Operating in four Trade Routes. (1919). CHAPTER III SUEZ AND PANAMA Isthmian canals as milestones of progress. — Man's con- quest of space, generally spteaking, is a hard struggle; progress is slow, and nature's obstacles are only gradu- ally overcome. But there have been great moments in the history of transportation, moments when the rate of progress has been phenomenally accelerated; such as came when the waters of the Red Sea met and mingled with the blue depths of the Mediterranean in the Suez Canal; and again when the Isthmus of Panama was pierced. Nature had challenged man's ingenuity and perseverance by blocking the entrance into the Indian Ocean from the northwest and into the Pacific from the east, by two amazingly narrow strips of land, thus forc- ing the bafifled mariner around dangerous capes thou- sands of miles out of his way. Man took up the chal- lenge and won. He battered down both doors leading into those vast and almost deserted waters, and now we are free to speculate which is the back and which the front door — Panama or Suez. An inter-oceanic canal, as such, is only an opportunity; the intended advantages remain potential until trade and shipping experiences translate them into actual facts. Therefore the changes wrought by new routes do not become apparent in a day. For business is conservative ; its inertia is surprising. It often clings to established customs and arrangements long after the superiority of new methods has been established. Early history of Suez Canal.-^A striking example is the 44 SUEZ AND PANAMA 45 Suez Canal. When this work of the great French engi- neer and promoter, Ferdinand de Lesseps, was opened in 1869, steam navigation was still in its infancy and the prevailing type of ocean vessel was wind-propelled. But because of weather conditions, particularly those found in the Red Sea, the Suez Canal Route was practically closed to sailing craft. No wonder, therefore, that the op- position to the new route was strong -among shipowners and that the full benefit of the great short-cut was not felt until, encouraged by it, steamships began to replace their older rivals, sailing vessels. Likewise English mer- chants, especially those of London, did not view with complete equanimity the realignment which of necessity followed in the wake of this new trade route. They did not like to see Marseilles, Genoa, Venice, Trieste and other Mediterranean cities partly regain their place of old and import directly from India and the Far East a goodly share of the rice, cotton, etc., that crowded London's warehouses and formed her entrepot trade. Important happenings in the Canal's history. — There is no change that does not harm some one and to attempt resistance is but natural. But when the first period of adjustment has passed, any proposition of real merit has an assured future in spite of inevitable hindrances. Thus in the early history of the Suez Canal, many dif- ficulties had to be solved. There was the delicate ques- tion of what constituted the proper basis of toll charges : gross ton, net ton, displacement ton, deadweight ton, or actual cargo carried. After much blundering, and not until an international conference at Constantinople in 1873 had threshed out the matter, a net ton of the Suez Canal Company's own calculation was decided upon. 46 OCEAN SHIPPING Then there were delays, due partly to purely technical causes, partly to the rapid growth of the traffic. A single ship with a clear course would effect the eighty-mile transit in from twelve to fifteen hours. That was the rule in the early days shortly after the opening of the Canal, but by 1883 the time lost in passing had increased the average journey to 50 hours, while cases of three days were not unknown. But all those difficulties could be, and were, overcome most successfully. Since about 1882, when the company was stirred by a protest from the business world, it has followed a liberal policy of steady improvements and gradual reduction of rates. The latter dropped from 13 fr. in 1876, per net ton reg- istered, to 6.25 fr. in 1913 ;* while, encouraged thereby, the traffic rose as follows '? Net tonnage Number of Mean net Year Suez Canal vessels tonnage 1870 0.4 million 486 898 1880 3.1 " 2,026 1,509 1890 6.9 " 3,389 2,033 1900 9.7 " 3,441 2,830 1910 16.6 " 4,533 3,658 1913 20.0 " 5,085 3,939 1914 19.4 " 4,802 4,042 1915 15.3 " 3,708 4.118 1916 12.3 " 3,110 3,963 1917 8.4 " 2,353 3,981! 1918 9.3 " 2,522 3,669 1919 16.0 " 3,986 1920 17.6 " 4,009 — * At the time of this writing rates are fixed at 8.50 fr. See Janu- ary, 1920, edition of Reglement de Navigation of the Suez Canal Company. ^ See Le Canal de Suez, Bulletin Decadaire de la Compagnie Uni- verselle du Canal de Suez, 1921. SUEZ AND PANAMA 47 We note that both the number and the size of the ves- sels going through the Canal increased rapidly until the European War disorganized shipping. These cold fig- ures calmly sum up the result of long tireless eflFort. Before this stage was reached canal builder and ship- builder vied with each other in a close contest. No sooner had the Canal been deepened in 1908 from its initial depth of 26 ft. to 33 ft. than commerce clamored for larger ships with greater draft. By 1914, 36 ft. were available through the greater part of the Canal, allow- ing ships of 30 ft. draft to pass. Naturally, the other dimensions had to go hand-in-hand with the depth. Fur- thermore, the introduction of electric lighting, in 1887, permitting night navigation, materially increased the utility of the Canal. Commercial significance of Suez CanaL — ^What has the Suez Canal accomplished? Has it satisfied the hopes which its promoters and builders had placed in it? There are many angles from which this question may be approached. But invariably the answer will be an emphatic "yes." There is the purely financial aspect, the aspect of the stockholders. Surely they are satisfied with the return on their investment of about 135 million dollars, which sum includes all im- provements paid for up to 1915. There is furthermore the viewpoint of the statesman and the soldier to be con- sidered. In the canal they see a vital link in the British Empire's most important line of communication and defense. We pass over the idealistic value which accrues from the fact that Orient and Occident were drawn doser together by thousands of miles. A few figures will illustrate this reduction of distances : 48 OCEAN SHIPPING Distances from Liverpool and New York via Cape Town and via the Suez Canal to Selected Ports: To From Bombay Batavia Hongkong Sydney Liverpool via: Cape Town 10,730 11,205 13,19Si 12,626 Suez Canal 6,189 8,516 9,785 12,235^ Distance Saved. 4,541 2,689 3,410 391 New York via: Cape Town3 11,511 11,986 13,966 13,306 Suez Canal 8,102 10,429 11,673 13,5122 Distance Saved. 3.409 1,557 2,293 —206 1 Via Singapore. 2 Via Columbo and Melbourne, 3 Including call at St. Vincent. We may single out the commercial advantages which the world enjoys, since merchant vessels no longer need to circumnavigate the Dark Continent on their way to the East. Leaving aside the temporary oversupply of tonnage which of necessity goes with any shortening of trade routes and which disappears as soon as com- merce has grown enough to a'bsorb the surplus, we find that better transportation facilities traveling over a shorter route have brought down the cost of Eastern produce. European prices of special Eastern products fell from 25 to 35 per cent within fifteen years after the opening of the Canal. This increased the demand for these goods and stimulated their production, thereby materially adding to the prosperity of the Asiatic coun- tries. Indeed all parties concerned were benefited ; there was hardly a country that did not share in this boom. SUEZ AND PANAMA 49 But not all parts of the world were affected in the same way or to the same degree. Up io the time when the Panama Canal was opened, the entire continent of Asia, as far as it is tributary to the Pacific Ocean, was served by the Suez Canal. This will continue to be the case for 4:he bulk of the trade because the Panama Canal primarily taps only the Far East. The big traffic-produc- ing centers of Southern Asia with their exports of wheat, jute, rice, tin, rubber, tobacco, etc., are India, Ceylon, Burma and Malaya, and they clearly lie within the sphere best reached by the Suez Canal. Competition between Suez Canal and Cape route. The Australian situation is very different. Here the Cape route continues as a big factor, successfully com- peting with the Canal. As we have seen from the chart on the preceding page, the saving in distance is less than 400 miles for a 12,000-mile voyage. That is insignificant at best, but even 'this small advantage is furthermore offset by the expense of the Canal dues, the delay in passing through the Canal, and sometimes by the higher coal prices on the Canal route when compared with those prevalent on a trip around the Cape. Three phases may be distinguished in the competition between these two routes. In the days of the sailing vessel, the Cape route was the only feasible one; then as the steamer came to the fore, all steam traffic was diverted through the Canal, because South African coal was not yet marketed and the cost of sea-borne Wales coal Was prohibitive at Cape- town or Durban. But this situation, as has just been pointed out, was reversed when Natal- coal was offered at low prices in the South African market. Moreover, the progress made in the construction of marine engines so OCEAN SHIPPING was such that the stormy weather on the Cape route, which had originally proved so forbidding to the steam- ers, now lost its terror. The weather situation is espe- cially important on the voyage from Australia to Europe, since the steamer there must contend with the prevailing Westerlies, a force against which a weak engine is no match. Finally, the size of the steamer, because of the ensuing economies, tends to exceed the maximum capac- ity of the Suez Canal. Mr. Lincoln Hutchinson in his book "Panama Canal and International Trade Competi- tion" (p. 27) points out that for a typical cargo carrier operating under normal conditions total expenses via Suez will exceed those incurred on the voyage around the Cape by almost 30 percent. Thus, all these forces are simultaneously at work to direct the steam traffic between Australia and Europe or North America, away from the Suez Canal route to that around the Cape. Early history of Panama Canal. — The financial success of the Suez Canal encouraged its founder, de Lesseps, to try his hand at a more ambitious undertaking, that of cutting a canal through ihe Isthmus of Panama. The idea of such a short cut from the Atlantic into the Pa- cific had for centuries been almost a world obsession. Its accomplishment meant, as a great geographer has expressed it, "to shorten the circumference of the earth by one-fourth." It eliminated the longest and most hazardous voyage known to navigators. Thus when de Lesseps, in 1879, formed his Panama Company he only undertook to carry out a long cher- ished scheme of others. From time to time interest in the project had been aroused by the increasing trade growing up between the Atlantic and Pacific coasts of SUEZ AND PANAMA 51 the Americ.as as well as by such events as the Mexican war, the Oregon country dispute and particularly by the "gold rush" of 1848. Since about 1840, the big powers who, because of maritime or other interests were most vitally concerned in the scheme, had begun to manoeuvre for points of vantage, fortifying them by numerous treaties. The ob- ject of these treaties, as far as this country was con- cerned, was primarily to secure the sole right to build an isthmian canal, guaranteeing at the same time equal treatment to all who would use it. Special mention should be made of the Clayton-Bulwer Treaity of 1850, and its revised form, the Hay-Pauncefort Treaty of 1901. This was a mutual agreement between the United States and Great Britain, guaranteeing that neither party would build and operate a Nicaragua Canal independently of the other. De Lesseps failed, not so much because of engineering difficulties, though a sea level canal was possibly too ambitious an undertaking for the stage of engineering technique then reached, but largely because the signifi- cance of sanitation was not sufficiently realized, and even more because of the criminal waste with which two- thirds of the building funds were squandered in France in bribing the press and the electors and elected alike. Actual building had been going on from 1883 to 1889 and was resumed for a short time five years later by a reorganized French company. It failed likewise, shar- ing its fate with an American syndicate which had strug- gled in vain from 1885 to 1893 to construct a canal across the Nicaragua route. United States completes Panama Canal. — The final 52 OCEAN SHIPPING curtain rose on the last act of this great world drama when, in 1902, the United States decided upon the com- pletion of the project. From this time on events fol- lowed each other in rapid succession : the purchase from the French company of its concessions and property for $40,000,000, the revolution in North Colombia, resulting in the secession of the Republic of Panama, with 300,000 inhabitants, and finally the treaty of November 18, 1903, in which the new state ceded, or literally leased, the Panama Canal Zone to the United States for a period of one hundred years. Actual work could now begin. Where yellow and malarial fevers formerly had raged unchecked (22,000 people had died during the de Les- seps work), sanitary conditions were now established, spreading the fame of Colonel Gorgas throughout the world. After careful consideration, the plans for a lock canal were finally accepted in preference to the sea-level canal favored by European experts; and under General Goethals' ingenious leadership the world's greatest en- gineering feat was accomplished in a relatively short time. In 1914, the canal was opened to commerce. Suez and Panama compared. — The physical features of the waterway have been described so often that we would only retrace the steps of others if we were to give a detailed account of them. It may suffice to give a few data comparing the Suez Canal with its new rival. Panama Canal Suez Canal Cost $400,000,000 $100,000,000 Length SO miles 100 miles Min. depth 41 feet 36 feet Min. bottom width 300 feet 100 feet Dues $1.20 8.50 fr. Time consumed in passing 10-15 hours 15-20 hours SUEZ AND PANAMA S3 It was unfortunate in many ways that the opening of the Panama Canal should have almost coincided with the outbreak of the European War. For sentimental reasons it is regrettable that one of man's proudest achievements was opened 'to traffic almost unheralded. But few noted the event when, on the 15th of August, 1914, the first commercial vessel, the American steam- ship Ancona, passed through the Canal. War cripples Panama Canal traffic. — But the war did more than merely to dim the glory of an auspicious open- ing. It threw a dark shadow over the first years of its operation. It practically tied up the entire tonnage of the Central Powers; it caused an unprecedented concen- tration of shipping in the Atlantic, virtually eliminating all long distance routes which otherwise would partly have used the canal. By causing an unparalleled tonnage shortage, it directed towards the railroads those goods coming from or going to the East and Australia, which otherwise would have passed through the canal. Thus, generally, by hindering the free development of inter- national trade intercourse and by reducing the world's tonnage, the war adversely affected the -canal's oppor- tunities. Therefore, it is not surprising that anticipa- tions were not fulfilled. In spite of these facts, some abnormal and therefore temporary, traffic accrued to the canal, for instance, much of the nitrate shipment for Chile, which was purely war trade. The table on page 54 shows the growth of traffic* Panama Canal tolls. — A word should be said about the tolls which vessels using the canal are required to pay. After an exhaustive investigation by Professor E. R. * Panama Canal Record. 54 OCEAN SHIPPING Number of Panama Canal ships Net tons Cargo tons 1915 1,171 3,948,480 4,966,560 1916 1,278 3,929,014 4,931,911 1917 2,081 6,362,387 7,557,712 1918 2,233 6,484,604 7,334,510 1919 2,394 7,128,497 7,702,748 1920 2,814 10,378,000 11,236,000 Johnson, the toll was fixed by a presidential order at $1.20 per net ton for ships carrying cargo or passengers, while a reduction of 40 per cent is granted to ships going through in ballast. War vessels pay 50 cents per ton of actual displacement. Since Congress, in June, 1914, repealed the law which exempted American coastwise ships from the payment of the toll, there have been no exceptions to this rule, if we overlook the insignificant fact that the government ships of Panama have the privilege of free passage.^ The statutory maximum of tolls that can be charged is $1.25 per net ton (national measurement rules of U. S. A.). Efforts are being made to have this law changed. On October 1st, 1919, the House of Representatives passed a bill (H. R. 7015) — it is now in the hands of the Senate for consideration — the purpose of which is to make the Panama Canal rules of measurement govern in determining the tolls to be paid. As it is, except for vessels transiting in ballast, the Pan- ama Canal rules of measurement figure only in the statis- tical record. The reason is both simple and interesting. From the first, the rate of tolls established at $1.20 per net '•As this book is going to press, signs are multiplying that the whole question of toll exemption for American vessels engaged in coastwise traffic will be reopened. The outcome of the 1920 Presidential elec- tion may have a bearing upon the outcome of the struggle which would ensue. SUEZ AND PANAMA 55 vessel ton of actual earning capacity, as determined by Panama Canal rules was higher than a rate of $1.25 per ton of net capacity as determined by United States na- tional rule, simply because the ratio of net tonnage by national rule of any country to actual earning capacity is substantially less than the ratio of 120 to 125. The result has been that for loaded vessels using the canal, the legal maximum of $1.25 per net ton national measurement rules acted as a peg preventing the application of the $1.20 toll charge per net ton Panama Canal rule. The purpose of the bill which Mr. Esch introduced on July 12, 1919, is to remove this peg, incidentally permitting thereby a raise in the Canal toll receipts.^ Economic significance of Panama Canal. — The chief value of the Panama, as of the Suez Canal, lies in the fact that it reduces the distance to and from important world markets. TABLE SHOWING REDUCTION IN NAUTICAL MILES AFFECTED BY THE PANAMA CANAL 2 FROM TO New York Savannah New Orleans Liverpool San Franciscoi 7,873 8,276 8,868 5,666 Honoltilui 6,610 7,004 7,605 4,403 Valpatiaisoi 3,747 4,141 4,742 1,540 Yokohama^ 3,768 4,649 5,705 -694^ Shanghai^ 1,876 2,757 3,813 -^,852' Hongkong!! -18» 863 1,919 -4,172= Sydney* 3,932 4,598 5,444 —ISO' Wellington^ 2,493 2,887 3,488 1,564^ 1. Difference between Panama and Magellan routes. 2. Difference between Panama and Suez routes. 3. Distances less via Suez route. 4. Difference between Panama and Good Hope route. IFor additional details see House Document No. 126 66th Con- gress, 1st Session, Panama Canal Tolls, Letter from the Secretary ° 2 Johnson and Huebner, Principles of Ocean Transportation, p. 86. 56 OCEAN SHIPPING These reductions in the length of voyages result in saving of time and money. They reduce the price of transportation and force down the price of commodities brought from distant markets, thereby increasing their salability and helping the producing as well as the consuming countries. To be sure, part of these gains, for the time being, are used to help defray the expenses of operation and maintenance of the waterway, not to mention the interest on and the amortization of the enormous capital invested. The countries most directly benefited in this manner are those of the Western Hemisphere. The coastwise trade of the United States can now reach the Pacific through the Canal, whereas it formerly had to go around the Horn or else transship at Gulf ports into various transcontinental or trans-isthmian railroads and out again. From 7,000 to 9,000 miles are now saved, ac- cording to the respective location of the ports served, as well as the expensive and wasteful transshipment, to say nothing of the reduced expenses due to cheap fuel at Panama as compared with the Straits of Magellan. These improvements are not without their beneficial effects upon shipping, commerce, and even upon trans- continental all-rail routes. To preserve a sound com- petition between the water traffic through the Canal and the transcontinental railroads. Congress forbids railroad-owned vessels the use of the Canal in coastwise traffic. The trade between the Atlantic coast of North America and the Pacific coast of South America and vice-versa is being similarly affected. To a lesser degree the commercial relations between Europe and the west coast of North and South America SUEZ AND PANAMA 57 on the one hand, and between eastern Asia and Aus- tralia, on the other hand, come under the influence of the Panama Canal. It is true that the saving in time grows relatively less important the farther the point of origin or destination of shipment is removed from the shores of this continent. But the absolute figures in these instances are still such as to give the Canal route the prefierence in all but a few exceptional cases. The "Twilight" Zone," served by both Suez and Panama. — However, a different situation arises in the case of movements from eastern Asia and Australia to Europe and vice-versa, or of shipments from the Atlantic coast of' North America to points in the Indian Ocean. Here thie "twilight zone," that is, the competitive area served by both the Suez and Panama Canals, is reached. To determine the boundary line, wWch divides the respective spheres tributary to the two great inter- oceanic canals, it would not do simply to go 180° east or west from New York or Liverpool and call the entire territory lying in one-half of the globe Suez territory and the other Panama territory. Steamship lines are not air lines and do not follow the latitudes. The lay of the land, coaling stations, etc., make the actual steam- ship lines appear much longer than they are. There- fore, only a careful study of actual distances covered by steamships to and from various points leads to the proper location of the lines of demarkation that form "the great divide" between the two traffic zones. Such a study may be made from the accompanying chart.* iFrom Hearings before House Committee on Merchant Marine and Fisheries on Interoceanic Canals.' 58 OCEAN SHIPPING COMPARATIVE SEA ROUTES FOR FULL-POWERED VESSELS - - r — •W*''*Sf" 1 "-i ffi I pis- -S3-' I !■ inri "^ii •ssf-3Srr t M fll We find that the true equidistant line for Liver- pool lies just east of Australia and of Yokohama, while the line for New York lies west of the Philippine Islands and takes in almost all of Australia. The map on page 59, which appeared in a recent issue of the "Panama Canal Record," makes the situation clearer. It is expected that much of the traffic plying to and from this "twilight zone" will patronize both canals, in which case trips around the world will become no uncommon feat of world-wide shipping. Yokohama used to be the terminus of- Far Eastern trade and home- SUEZ AND PANAMA 59 HOW TIME IS SAVED BY USE OF PANAMA CANAL From Panama Canal Record, bound steamers used to trace back their courses. Now traffic conditions will extend the route across the Pacific to pick up the increasing freight from the west coast of North America to Europe and will then complete the circle.^ Reduction of distance means trade expansion. — But reduction of distance is only a means to an end. The end is trade expansion through increased salability resulting from reduced transportation costs. Economically, there- fore, the most important effect of the opening of the Panama Canal will probably prove to be the fact that the great industrial centres of the northeastern United States, stretching from New England as far south as Charleston, are brought nearer to many important markets, such as Siberia, Japan, China, Australia, New Zealand, Chile, Peru, etc. It will expand the field in w 15.00 6.00 21.00 South Atlantic Baltimore, Md 35.00 1.00 36.00 Brunswick, Ga 21.50 7.00 28.50 Cape Charles, Va 12.00 2.50 14.50 Charleston, S. C 28.00 5.00 33.00 Jacksonville, Fla =24.50 0.80-4.50 25.30-29.00 Newport News, Va 35.00 2.50 37.50 Norfolk, Va 35.00 2.75 37.75 Richmond, Va 18.00 2.50-4.00 20.50-22.00 Savannah, Ga 26.00 6.10-6.50 32.10-32.50 Washington, D. C 24.00 3.00 27.00 Wilmington, N. C 26.00 2.50 28.50 *From Grosvenor M. Jones, Ports of the United States. De- partment of Commerce, 1916. OCEAN TERMINALS 73 Guilf of Mexico Galveston, Tex 30.00 1.25 31.25 Houston, Tex 25.00 25.00 Mobile, Ala 26.00 1.50 27.50 New Orleans, La 31.00 31.00 Pensacola, Fla 31.00 («) (e) Port Arthur, Tex 26.00 26.00 Tampa, Pla 24.00 2.50 26.50 Texas Gty, Tex 25.00 25.00 Pacific Los Angeles, Cal 30.00 5.00 35.00 Oakland, Cal 23.70 4.50 28.20 Portland, Oreg. <:28.00 7.00 35.00 Port San Luis, Cal 20.00 3.75 23.75 Sacramento, Cal 7.00 7.00 San Diego, Cal 30.00 5.00 35.00 San Francisco, Cal f 40.00 3.75 43.75 Seattle, Wash (=) (e) Stockton, Cal 6.00 3.00 9.00 Tacoma, Wash («) 13.00 (•) a As reported by the Coast and Geodetic Survey. b Being dredged to 35 feet. c Being dredged to 30 feet. d Being dredged to 21 feet. e Deep enough for any draft. f In north channel around the bar and from 30 to 60 feet witHn the harbor. Great Britain is less favorably situated. This was brought out in an investigation carried on by the Domin- ions Royal Commission. This commission recom- mended, along with many other proposals: "The establishment by government ownership or sub- sidy, of several great lines of steamships connecting the ports of the Empire, and an inter-imperial scheme of deep-harbor development to accommodate the ships, 660 ft. long with 38 ft. draft, calculated to have the ultimate ^^ OCEAN SHIPPING practical economies of freight transportation which wtould make tariff discrimination unessential in imperial preference." * It was found that of England's ports, only London, Liverpool and Southampton are able to take these deep- keeled vessels now, at high water. Other British deep harbors are Singapore and Hongkong in the Far East; Melbourne, Sydney and Hobart in Australia; Capetown and Durban in South Africa (these last two would need minor improvements) ; Halifax, Quebec, Vancouver and Prince Rupert in Canada; and Bermuda and Tahiti on the Panama route from the United Kingdom to Aus- tralia. But it should be understood that vessels of 38 feet draft are as yet rare exceptions. A port that pos- sesses a 25-foot channel satisfies the prdinary shipping demands. Other important physical requirem,ents of ports. — The latest data on the controlling depth of water at United States ports were compiled by the Secretary of the Ports and Harbors Facilities Commission of the United States Shipping Board, and were published in 1919 at the re- quest of the Senate Committee on Commerce. This report is based principally on the answers received to a questionnaire which was sent out to 27 leading ports. These answers cover the important physical require- ments of a modern port and may therefore be used as a basis of discussion. The list of items covered is as follows; (1) Controlling Depth of Water. (2) Berthing Capacity in Linear Feet. ^ See The Americas, February, 1918, p. 2, OCEAN TERMINALS 75 (3) Names of Railroad Lines Serving the Port. (4) Dry Docking Facilities. (5) Anchorage Area Available within Harbor. (6) Fresh Water for Boiler and Drinking Purposes. (7) Quantity and Characteristics of Electric Cur- rent Available. (8) Coaling Facilities. (9) Fuel Oil Facilities. (10) Crane and 'Derrick Facilities. (11) Steamship Lines at Present Using the Port Regularly.' (12) Grain Elevators and Storage Facilities. Of course, the facilities of the port of New York, which is in a class by itself, could hardly be satisfactorily cov- ered under these headings. On the other hand, many smaller ports do not possess all of the enumerated facili- ties. But the list serves to show the essential ' pre- requisites. In a comprehensive government report^ we read : "In general there are four fundamental requirements of all- water terminals: (a) good wharves, (b) warehouses and storage facilities, (c) mechanical appliances for trans- shipment of freight, (d) (this is highly important, though not always practicable) belt-line railway connections with adjacent railroads and industrial concerns so as to co-ordinate water and rail transportation and connect with local production and distribution." "Good wharves" 1 Report of Commissioner of Corporations on Transportation by Water, Part III, Water Terminals, 1910. 76 OCEAN SHIPPING is taken here in the general sense of good landing fa- cilities and ought to include piers, wharves, docks, and dolphins.* The importance of warehouses and storage facilities, i.e., primarily, transit sheds, arises from the impossibility of moulding commerce into a constant stream of uniform volume. Space must be provided which can hold the overflow when the influx of goods into a port overtaxes the outgoing transportation facili- ties and exceeds the local demand. The abuse of rail- road cars for storage purposes is one of the defects of badly co-ordinated ports. The question of cargo- handling equipment will be taken up at length in an- other chapter. Bush Terminal, an ideal industrial port. — ^An ideal industrial port is the famous Bush Terminal in South Brooklyn, New York.^ A detailed description of this extraordinary mechanism reveals fully and clearly what a scientifically organized and mechanically perfect ter- minal can do in the line of facilitating the exchange of commodities, thus fostering -industrial growth. The Bush Terminal is a city in itself. It is an indus- trial community with, at present, about 300 manufac- turers and jobbers as tenants, located in model loft buildings. Through this terminal city passes one-fifth to one-fourth of New York's foreign trade to-day, esti- mated for the Bush Terminal alone at one billion dol- lars in value. The equipment includes eight piers ac- commodating not less than 25 steamship lines. Its ware- 1 Dolphins are mid-basin mooring posts, the use of which grfeatly enhances the berthing capacity of docks. 2 The following paragraphs are based upon material supplied by the Bush Terminal Company. OCEAN TERMINALS 77 houses serve above 2,000 customers annually and hold a good percentage of New York's raw material imports : Egyptian and Indian cotton, copra, hides, sugar, jute, sisal, coflFee, palm-oil, etc. Ocean carriers, warehouses and factories are thus brought into the closest possible physical contact. But that is not all. The Bush Terminafl Railroad with yardage space for over 1,000 standard freight cars, 30 miles of railroad track, train trackage to every build- ing and every pier, and the Bush fleet of tugs, floats and lighters connect with any pier or ship in New York harbor. The Bush equipment of horse and motor trucks maintain a regular collection and delivery service throughout New York and Brooklyn. Functions of the Bush Terminal Company. — More- over, the Bush Terminal is terminal agent for aH rail- roads entering New York. Except in a few instances, the flat New York rate (the same that applies to all stations in Manhattan) applies to freight received or delivered at the Terminal. Under this system the tenant shipper of L. C. L. freight delivers his goods to the freight elevator that stops at his floor and gets from the terminal company a bill of lading to destination. The Bush Terminal Company receives this small ship- ment along with hundreds of others from other manu- facturers or warehousing tenants from steamships dock- ing at its piers, from Brooklynites who use the public freight station it maintains, and consolidates all this traffic into through cars either on the individual ship- ping platform or at a transfer which is maintained for that purpose. The insistent demand on the part of the tenants prompted the Terminal Company to erect a 7S OCEAN SHIPPING modern cold-storage plant witliin the precincts of the Terminal City, enabling the company to extend ter- . minal services and facilities to a large number of ship- pers of perishables, who, previously, had not been able to take advantage of them. Since the return of the Terminal to private commer- cial use, after having served the United States Govern- ment as its main domestic supply and shipping base during the war, a new service has been instituted in a new service building in South Brooklyn. Here 'the Ter- minal company is prepared to act at the same time in the capacity of a railroad terminal agent, seaboard broker, warehouseman, forwarding agent and carter, though the carting is largely eliminated. Even collec- tions are handled if it is so desired. This service is for non-resident manufacturers who wish representatives in New York for their domestic business in that im- portant market of 20,000,000 buyers (within 2,200 miles of City Hall), or for their exports, or for both. The best illustration that can be given of this point is that of the Holeproof Hosiery Company. The distribution of the products of this company was undertaken, which involved the receipt of the manufactured wares in cases containing many dozens, the placing in stock, the re- packing by sizes and colors into individual packages of varying amounts, the filling of small merchandizing orders, the packing and shipping, the stock account- ing, etc. The Bush plan is the successful application of the co-operative principle to manufacturing and shipping. It reduces the manufacturing overhead as well as the -shipping expense to a minimum by rendering possible OCEAN TERMINALS 79 ■ the fullest use of the available facilities. It is, as yet, the last word in terminal development.^ Store-door delivery. — The best proof of the merits of the case is found in the widespread application of this principle outside of the Terminal City. The powerful movement for store-door delivery is nothing but co- operative carting. That particular field of terminal operation — carting — is probably the most airchaic and wasteful of any. Dray delivery is a necessary evil and should be reduced to the minimum. It is most wasteful where a "laissez-faire" policy is pursued and draying is performed by a number of private concerns freely competing with each other. The waste is due less to the inefficiency of the vehicle itself than to the loss from idle time — ^while waiting in .traffic congestion, or to be loaded or unloaded or from idle space, owing to under- loading and to criss-cross carting. All of these evils are fully realized and manifold suggestions are under discussion to alleviate them. The waste increases with the size of the city and therefore New York and Chi- cago are the worst sufferers and at the same time are most desperate in trying to find a remedy for the situa- tion. Chicago is working out a union terminal system of substations by which, through a reduction of hauling distances, the drayage expense would be cut in half. The same principle applied to New York would mean a system of union car float substations distributed at convenient points about the harbor, such as suggested by Mr. Irving T. Bush. On land the saving could be brought about by the 1 The latest news about Bush Service tells of the erection of a large Terminal Building in London. 80 OCEAN SHIPPING Store-door delivery system, which means that the dray- age is to be* absorbed by the carriers and that all con- signments of C. L. or L. C. L. freight are to be handled immediately upon arrival and delivered to the store- door of the consignee. During the war, the Federal Railroad Administration worked out the details of the scheme. A drayage director was to organize the entire process on the basis of efficiency and elimination of waste. Elaborate rules had been worked out covering the details of the plan, based largely on the suggestions of a Committee of the Public Service Commission and approved by Mr. McAdoo as Director-General of the Railroads. The idea of store-door delivery is by no means a new one. In 1909 the Pennsylvania Railroad inaugurated, at its own expense, a system of direct consignment in Baltimore as a means of meeting water competition. A similar system had been in operation in Washington for many years. But the Inter-State Commerce Com- mission ruled that the railroad had no right to discrimi- nate in favor of some cities against others. The ab- normal congestion at the port of New York, due to immense war traffic, especially during the winter of 1917-1918, resulted in an effort to clear the piers and rolling stock for purely transit purposes, by abolishing the abuse of treating them as part of the port's ware- housing facilities. Formerly a few days' time was al- lowed to save the necessity of actually storing goods' which could not be immediately placed on ships or re- moved. But such warehousing on piers and sidings is an obvious misuse of facilities meant for an entirely different purpose and cannot ibe tolerated when the trans- OCEAN TERMINALS 81 ference of goods requires every spare foot of available space. An extension of warehouse facilities would be necessary if the scheme were put into operation. The arrriistice came before the plans were put into opera- tion and, although much congestion continues to .exist, there seems no immediate prospect of seeing the scheme of store-door delivery adopted in New York. REFERENCES Bush Terminal Company. Various Publications. Gregory, Keller and Bishop. Physical and Commercial Geography. Chap. I. (1910). GooDE, J. P. The Development of Commercial Ports. (1908). Hough, B. O. Ocean Traffic and Trade. Chap.' IV. (1915). Johnson and Huebner. Principles of Ocean Transportation. Chap. X. (1919). KiRKALL.-, A. W. British Shipping, Book IV. (1914). Mac El wee, R. S. Ports and Terminal Facilities. (1918). Owen, D. Ocean Trade and Shipping. Chap. I. (1914). Smith, A. R. Port of New York Annual, Second Edition (1921). Smith, J. R. The Organisation of Ocean Commerce. Chap. XIII. (1905). Industrial and Commercial Geography. Part II. Chap. XIII. (1913). United States. Acting Secretary of War. Water Terminals and Transfer Facilities (House Doc. No. 226, 63 Cong. 1 Sess., 1913). Bureau of Foreign and Domestic Commerce. Ports of the United States. (Miscellaneous Series No. ZZ, 1916). Commissioner of Corporations. Report on Transportation by Water in the United States, Part III, Water Terminals. (1910). Shipping Board, Port afld Harbor Facilities Commission. Twenty- seven Ports of the United States. (1919). CHAPTER V ENTREPOT CENTRES AND FREE PORTS Nature of entrepot trade. — ^According to the definition given in the preceding chapter, the third function of seaports is to distribute foreign goods to foreign coun- tries. That phase of commerce is known as entrepot or intermediary trade. The port handling this trade is interposed between a producing and a consuming country just as a middleman stands between seller and buyer. Such trade is supplementary to that which falls to a city because of its own consuming power and its relation to a -strong hinterland. Thus London, the greatest consuming centre of Europe, is, at the same time, the greatest entrepot of the world, although the war has deducted much from her former influence. As the capital of the British Empire, she for decades pos- sessed the most complete net of connections throughout the world, which is the first prerequisite of a great entrepot. History of entrepot trade. — In days gone by entrepot trade played a relatively more important part than it does to-day. The commerce of Venice, Bruges, Lisbon, Antwerp and Amsterdam during the height of their power was primarily of this type. Several reasons ac- count for this fact. In the first place, the political map was cut up into innumerable small units, so that much trade appeared as entrepot, which would not be counted as such to-day. In those days entrepot' trade was monopo- listic and the monopoly was backed by force of arms. The entrepot center known as "the staple" owed much 82 ENTREPOT CENTRES AND FREE PORTS 83 of its prominence to royal "fiat." Moreover, the foreign trade of that period was confined to the exchange of goods between the Orient and the Occident and con- sisted of just such commodities as are best adapted to this kind of trading— non-perishable valuables of small volume. Entrepot trade, being indirect in most cases, involves circuitous routing and detours which are too expensive when cheap bulk goods are carried. The small quantities of spice, silk, tea and curios which filled the holds of the small sailing craft could well stand an extra trip of a few days. This counts less the longer the entire voyage. Therefore, the more remote the origin and destination of the traffic, the stronger is the hold upon the trade of the entrepot. Finally, the demand for Oriental products was very limited and few locali- ties could absorb whole shiploads at a time. Hence these intermediary distributing centres sprang up, which became central markets for as wide a territory as their prowess could hold tributary. Volume of entrepot trade of different countries. — It is estimated that more than $4,000,000,000 worth a year of all the commodities that move around the world in commerce is handled at least twice, going from the place of production to some of the great merchandising ports of another.country, to be there resold and exported again to the country where they are consumed. The bulk of the merchandising trade is carried on in the few ports grouped around the British Channel, with London as the leader. The entrepot trade of this country has assumed large proportions only in recent years, partly owing to the temporary dislocation of merchandising commerce hitherto established. 84 OCEAN SHIPPING The following data, which are taken from The Americas/ March, 1915, referring to the last years before the war, give an interesting comparison of English, German and American re-export trade: "England's total foreign commerce, including its import and re-export of foreign and colonial goods, averaged $6,121,499,319 a year from 1909 to 1913, and $5,036,973,264 from 1904 to 1908. The average of re-exports was $498,431,527 from 1909 to 1913, and $393,827,376 from 1904 to 1908. Exports of English prod- ucts averaged $2,220,763,559 and $1,760,406,839. The re-export commerce, counting the value of goods only once, grew from 9.2 per cent, of the total of all the other commerce to 9.7 per cent., and from 22.3 per cent, of the value of exports of English products to 22.5 per cent. "Of the goods moving seaward out of London during the five years ended with 1912, re-exports averaged $243,635,267 yearly against $380,202,981 worth of English exports. In the previous five years it was $202,222,106 worth of traded products against $316,207,925 of the produce of English industry. The statistics of the port of Liverpool show an annual average of $127,395,810 in re-exports against $682,599,168 of English products in the latter five-year period and $98,526,556 in re-exports against $692,964,494 direct exports in the p«-eceding five-year period. London's re-exports rose in value from 63.9 per cent to 64.1 per cent of the exports. Liverpool's rose from 14.2 per cent to 18.6 per cent. "The trade figures of the German Empire do not give such details as do the British statistics. But the "special" exports are ordinarily subtracted from the general to give German re-exports. There are also special imports. German sta- tistics for 1907-1911 show average yearly re-export trade of $153,672,832, against general exports of $1,841,373,792 and a total commerce of $4,086,820,058. In the 1902-6 period it was * This publication of the National City Bank of New Yoft through various articles has contributed to the literature on this subject and throughout this discussion we have freely drawn from this valuable source. ENTREPOT CENTRES AND FREE PORTS 85 $90,812,757 against general exports of $1,383,285,763, and a gen- eral commerce of $3,052,527,378. Thus Germany's entrepot trade grew from 6.5 per cent, of the exports to 8.3 per cent., and from 2.9 per cent, of the whole commerce to 3.7 per cent. "These statistics of England and Germany show that this kind of commerce is growing with and a bit faster than their direct exchange of products. It should be remembered that for years they haye had highly developed banking facilities and merchant navies providing the world with direct lines of transportation to them. "The re-export trade of the United States is now exceedingly small. In 1913 it aggregated $37,377,791, only V/z per cent, of all exports and 7/i per cent, of all the country's commerce. A large part of it was "trade" only to the extent of passing across the country in transportation. It has been actually decreasing in proportion to the whole trade. The largest single class of products re-exported was fruits and nuts, aggregating $4,800,000. There was $4^291,410 worth of chemicals and $4,476,379 worth of rubber re-exported. In 1909 we re-exported $1,145,229 worth of coflfee, but this trade had dwindled to less than $500,000 in 1913." This trade has grown in value during the five years from 1914 to 1918 from $35,000,000 to $81,000,000. How- ever, when compared with the increase of total exports from two billion dollars in foreign merchandise exported in 1914 to the five billion dollars iri 1918, we see that the relative importance of the American re-export trade has by no means increased, but more likely decreased. Relative decline and diffusion of entrepot trade. — Rela- tively speaking, entrepot trade is on the wane and the day of the world entrepot has passed. The explana- tion for this phenomenon is a simple conclusion drawn from the foregoing. In the first place,' monopolies en- forced at the point of a gun are no longer in vogue. The nature of trade has also changed. Instead of small 86 OCEAN SHIPPING cargoes of luxuries the fleets of to-day are filled with heavy bulk, material. It was stated that roundabout routes, involved in entrepot trade, counted little in for- mer times because, compared with the value of the cargo, the cost of transportation was relatively small. That is so no longer. The rapid growth of population in many countries has scattered the demand, with the result that /nore and more trading centres have become independent of the entrepot. We saw how Marseilles, Genoa, Trieste, etc., emancipated themselves from Lon- don's influence as a result of the opening of the Suez Canal. The improvement of means of communication has also contributed to this process of diffusion. Not only did London, as the foremost entrepot centre, have to lose some of her entrepot trade because it was replaced by direct trade, but she also had to give up part of her merchandising commerce to rival entrepot centres such as Hamburg, Antwerp, Amsterdam, Copen-. hagen and others. It now seems that the Scandinavian cities will become important entrepot centres for the Baltic and Russian trade, much of which was controlled by Hamburg before the war. The war, compelling short- cuts wherever possible, has accelerated the relative de- cline of entrepot trade. Emphasis should be placed upon the fact that the decrease of this trade is relative only. The absolute figures are probably greater to-day than ever before be- cause of the greater value and volume of the world trade altogether. London's benefits derived from entrepot trade. — To estimate the significance of entrepot trade, it is best to study what it has done for London, the greatest world ENTREPOT CENTRES AND FREE PORTS 87 entrepot centre of modern times. That it has greatly added to the total volume of foreign business transacted in London is sufficiently proved by the foregoing statis- tics. This additional business means additional profits to the many branches of the great merchant community and, indirectly, to the city-at-large, thus providing a living for a goodly proportion of London's vast popula- tion. It adds to the profits of the merchant as well as to those of the bargeman, warehouseman, banker, indem- nity broker and speculator, to name but a few of the long list of those who, in some way or other, directly participate in the community exchange. The indirect advantages are, if possible, still greater. Without the re-export trade the system of ocean lines focusing in London could not be so complete, the sail- ings not so frequent, the ships not so full. The accu- mulation of raw material in the markets and warehouses attracts the feeder lines which take a part to their for- eign destination. The ships which bring the silk, wool, linen, etc., from distant ports take coal out and keep up the supply at the valuable strategic coaling stations which add so much to British naval and mercantile prowess. But the vast accumulation of raw material from al- most every port of the world is also of the greatest value to domestic industry. While the foreign manu- facturer has to send his representatives to inspect the goods in bond or else rely on the judgment of far-away foreign agents, the British manufacturer has a most wonderful assortment of hides, ores, rubber, etc., at his door. He can inspect and select himself. The contact with large quantities and innumerable varieties of com- 88 OCEAN SHIPPING modities builds up in London a fund oi expert knowledge such as is found in no other single market for an equally- large number of commodities. The trade connections established through the physical exchange of commodi- ties leads to another branch of intermediary trading, a- purely brokerage trade, which, while directed from Lx)n- don, financed from London and tributary to London, never physically touches British soil. On the other hand large quantities of goods are shipped or "con- signed" to London without definite arrangements as to who will purchase them. The far-away producer knows that nowhere are there better facilities for handling or better chances for selling than in London. This accounts for the large consignment market of London. Another by-product of this trade is the concentrated information of men and commodities which forms the basis of the acceptance business. Finally, re-export trade is an important adjunct to a successful foreign trade policy. Oftentimes the exports of a country do not go to the places from which the imports originate. Re- exporting, in that case, permits the all-important proper balancing of cargo movements. Reasons for London's predominance. — But all these advantages did not fall into London's lap. To be sure, much of the trade is London's legacy, left to her by England's century-old liberalism in foreign trade. Prob- ably more is London's heritage as capital of the British Empire. The following figures show to what extent colonial products made up the re-exported articles. Dur- ing the four years from 1913 to 1916 Great Britain — and London's is the lion share of this merchant trade — bought for reselling, in millions : ENTREPOT CENTRES AND FREE PORTS 89 From From Colonies other countries Total 1913 $272.9 $259.2 $532.1 1914 242.1 221.5 463.6 1915 275.9 205.2 481.2 1916 261.3 212.5 473.7 Then there is England's geographical position, favor- able to entrepot trade with northern Europe, practically lying at anchor, as it were, at the very gateway to the North Sea. But much trade flows to London only because of the financial control which London bankers and promoters have over foreign producing enterprises. In rubber plan- tations alone England, that is, chiefly London, has in- vested upwards of $350,000,000. This accounts for much of the rubber re-export trade of London, to give only one example. But apart from these major factors, a number of "institutions" of the London market were built up in the course of centuries, all of which form an essential part of the complex mechanism. These "insti- tutions" are the following:* "The 'institutions' that make this possible are: first, the sys- tem of warehousing, with its certificates or warrants that give absolute title to property and are easily negotiable; second, the organized facilities in connection with these warehouses and the markets by which raw commodities are received and either graded as they are, or separated and mixed with others to form standard blends readily marketable, this with rigid integrity and ex- pertness that the whole world trusts absolutely; third, London's speculative community, which has unlimited money and bank- ing credit ready to buy at a concession in price almost any marketable commodity; fourth, the organized markets or peri- 1 See The Americas, April, 1916, p. 2. 90 OCEAN SHIPPING odical auctions which speculation and final purchase together support; fifth, London's banks, which, relying upon the abso- lute surety of the standardization of commodities and upon the readiness of the speculative community behind London's markets, can without hesitation loan the ready money that the far-away shipper is relying upon in conducting his business.'' Applying European lessons to this country. — ^The opening of the Panama Canal and the shifts of world trade caused by the war have given new importance to America in this branch of international merchandise ex- change; and the strong movement on foot for "greater prosperity through foreign trade," naturally directs at- tention to Europe's achievements. In applying the les- son of London to America one vital difference between the two countries has to be borne in mind. England is as yet, at least nominally, a free trade country and America has a highly protective tariff. That means ease of importation and re-exportation for the one country, and abundance of red tape and impediments for the other. The device by which such protectionist countries as are vitally concerned in re-exportation have over- come this handicap is generally known as the "free port," now more correctly termed "the free zone" in ports, or "the foreign trade zone." It is a "free trade island within a country that maintains a customs tariff." ^ As such it is considered by the customs authorities as for- eign territory. To be more explicit, "a free port or free zone is a place, limited in extent, that differs from adja- cent territory in being exempt from the customs laws as affecting goods destined for re-export; it means simply that as regards customs duties there is freedom unless *E. J. Clapp, The Free Port as an Instrument of World Trade, American Problems of Reconstruction, pp.245^. ' ENTREPOT CENTRES AND FREE PORTS 91 and until the imported goods enter the domestic market." ^ History of free ports. — A few words may be said about the history of "free zones." The prototype is the free port of Hamburg, although such trading centres as .Hongkong and Singapore offer similar advantages and are older. When Bismarck tried to win the representa- tives of the free city of Hamburg over to the Empire, serious objections were raised, prompted by the fear that the entry into the German customs system would sound the death-knell for the wonderful merchant trade of that city, so laboriously built up by generation after genera- tion. A compromise was reached whereby the "free port," an area of sufficient size to offer ample space and facilities for re-export trade, was created, while the rest of the city entered the customs union. This was in 1882. The success of the plan was such that other cities adopted the scheme. Copenhagen opened a free zone in the early nineties. Its business grew so rapidly that continual enlargements were necessary. For more recent developments we quote :^ "Spain, in 1914, authorized a free zone at Cadiz. Barcelona secured the same privilege in 1916, Bilbao and Santander in 1918. There has been a temporary setback in improving the zones under the privilege, owing to the fact that the Spanish govern- ment reserved the right to a revocation at any time and did not offer the security of a term grant. "In the case of Barcelona this condition has now been satis- factorily overcome and funds have been appropriated and plans ' 1 United States Tariff Commission, Information Concerning Free Zones in Ports of the United States. 2 United States Tariff Commission, Information Concerning Free Zones in Ports of the United States, 1919, p. 20. 92 OCEAN SHIPPING approved for the early establishment of the free zone in that port. The privilege has been granted, though not yet acted upon, to Bilbao, Santander, Vigo, and Coruna under similar conditions. "Sweden, anxious to share in the transit trade of the Baltic, opened a free zone at Stockholm on June 1, 1919, and is pre- paring to establish free zones at Gothenburg and Malmo. "Norway is shown by our consular reports to be interested in establishing a free port at Christiania, Bergen, Christiansand and Trondhjem. "Portugal has authorized ithe privilege by law and the latest in- formation was to the effect that establishment was being made at. Lisbon." Low tariff countries, such as Holland and Belgium, are not in such need of exemptions as the others. Arguments against free zones. — While there is a strong movement on foot in favor of the installation of free zones in this country — a National Free Zone Association has been formed — and while the United States Tariff Com- mission "after an exhaustive study of foreign institutions, and careful investigation of American conditions and mercantile opinion," has endorsed the enactment of en- abling legislation for the establishment and operation of free zones, the opposition is no less powerful. The argu- ments of the negative, in the main, follow, four lines of reasoning : (1) The constitutionality of "free zones" has been questioned upon the basis of the "preference" and the "uniformity" clauses of the Constitution.^ But it is argued that a Congress which can make one port a "port of entry" and withhold the privilege from others, can also pass enabling legislation which permits all ports 1 Article 1, Section VIII, Qause 1; and Article I, Section IX, Clause 6. ENTREPOT CENTRES AND FREE PORTS 93 to install free zones, though not all may take advantage of this privilege. (2) Free zones are a violation of the protectionist principle which is the corner-stone of the fiscal policy of this country. Theoretically, it may be argued that to make trade in foreign commodities easier, reduces the chance of domestic trade. But practical experiences of other countries seem to dispute that, even if a slight increase in competition along some lines resulted, the ensuing advantage would more than counterbalance this possible loss. And after all, there are some Democrats and more free traders left! (3) The geographical position of the principal ports of this country is different from that of those ports of the wlorld w'hich have become the leading entrepots, such as London, Antwerp and Rotterdam at the entrance to the North Sea, Hamburg in a strategic position for the Baltic trade, Singapore at the gateway to 'the im- portant Eastern markets, and Hongkong, an island at the miouth of a big river offering a natural gateway inito China. In reply to this, one may point to the fact that the opening of the Panama Canal means a partial re- alignment of the world's trade routes, and that this- coun- try will be the main beneficiary of this change. Further- more, in view of the increasing importance of the Far- Eastern trade and that of the West Coast of South America, the position of this country, situated as it were, in the strategic center from which it can distribute to one continent tlie goods collected from the other, is not without its potentialities. (4) It is argued that the existing facilities of bonded warehouses, 'bonded manufacturing warehouses and 94 OCEAN SHIPPING drawbacks . are sufficient. But the consensus of opinion of almost all the interested parties who testified at the hearings held by the Tariff Commission in various cities of the United States was to the contrary. It was said, in the first place, that the present system resulted in the useless tying-up of considerable amounts of working capital during the period that goods are held in bond. While the law allows the refunding of 99 per cent of the import duty paid on re-exported goods, the merchant cannot use this amount during the time intervening be- tween importation and exportation. There are also nu- merous other factors to be considered which have to do with the practical operations of re-exporting, and which arise largely out of the intricacies of the present system. So complicated is the procedure in making claims for the drawback and in proving the identity of the re-ex- ported goods that for this reason alone many producers do not find it worth while to apply for drawback at all, while large-scale industries find it necessary to go to the expense of employing experts permanently to look after their drawback interests. It can hardly be said under such circumstances that the present system is apt to aid in the building up of a large American re-export trade in competition with that carried on from Euro- pean free port or free trade, or quasi-free trade countries. Advantages of free zones. — The superiority of a sys- tem of free zones is furthermore emphasized by its posi- tive advantages, none of Which can be claimed for the present system. Entry and clearance of vessels bringing or fetching entrepot trade are simplified by the elimina- tion of the endless red tape which is necessitated by the enforcement of the customs laws. To be exempt from ENTREPOT CENTRES AND FREE PORTS 95 these would be in itself a strong stimulus to trade. That "time is money" has never been so true as to-day in view of the present cost figures for ship operation and high prices in general. Secondly, re-export trade moves both in and out; in that way it provides employment to ships in both direc- tions. It tends to equalize inbound and outbound traf- fic and by doing so remedies one of the most serious defects of our present foreign shipping situation, the lack of the proper balance of cargo movements to and from most parts of the world. With Europe we have an export surplus, with South America an import sur- plus, etc., — lin each case, a situation which interferes with the most economical operation of shipping. In so far as free ports or free zones create or encourage re-export- ing they contribute to a better equalization of import and export cargoes. The free zone also offers better facilities for such operations as mixing, sorting, cleaning, repacking, etc., than does the bonded warehouse, and this again aids in building up re-export business. Furthermore, some manufacturing processes, such as the making of fer- tilizers for export out of raw materials gathered from different corners of the globe, would likewise be stimu- lated by the establishment of free zones. Finally, the re-export trade would be rendered immune from the handicaps which arise out of a fluctuating tariff policy. Minor advantages are: a reduction in the cost of dray- age, opportunity for displays of goods, greater value of warehouse receipts, etc. Surely, enough has been said in defense, or rather on behalf of free zones to prove the advisability of their 96 OCEAN SHIPPING establishment in this country at a time when every en- couragement should be given to help establish our newly created merchant marine and to assist our export trade, the employer of our ships, to safely weather this difficult period of readjustment. REFERENCES Clapp, E. J. The Free Fort as an Instrument of World Trade in American Problems of Reconstruction, edited by E. M. Friedman. (1918). The Port of Hamburg. Chap. III. (1911). Mac Elwee, R. S. Forts and Terminal Facilities. Chap. XVII. (1918). Merchants' Association of New York. Comparative Study of Economic, Industrial and Commercial Conditions in the Free Ports of Europe and the Port of New York, by P. B. Kennedy. (1914). , National City Bank of New York. The Coming of the Mechani- cally Perfect "Free Port," and other articles in The Americas. Ross, P. H. W. The Western Gate, 1911. Smith, A. R. Port of New York Annual, Second Edition (1921). Smith, J. R. Industrial and Commercial Geography, Part II. Chap. XIII. 1913. United States. Senate Committee on Commerce. Free Zones in Ports. Hearings before Subcommittees on S. 3170, Oct. 1919. House Committee on Ways and Means. "Foreign Trade Zones." Hearings on H. R. 9778, Oct. 1919. Tariff Commission. Information Concerning Free Zones in Ports of the United States, (1919). CHAPTER VI THE WORLD'S LEADING PORTS WITH SPECIAL REFER- ENCE TO THE PORT SITUATION IN THE UNITED STATES Difficulty of comparative statistics. — Comparative port statistics is a precarious subject. Together with all in- ternational comparative statistics it shares the difficul- ties which arise from the lack of a satisfactory common denominator. If we make value the basis, comparison becomes vague because of exchange fluctuation, and if we try to base our comparison on the weight of cargo handled we either find no data at all for most countries, because of the manifest difficulties of obtaining such totals, or else we discover that a ton in our country weighs more than a ton in other countries. In the table appearing in the Statistical Abstract of the United States, giving the vessel itonnage movement in the foreign trade of the principal ports of the world, due warning is given. We read: "The figures are not comparable." Authori- ties state that if the same vessel were measured accord- ing to the laws of the various countries the tonnage results would vary at least 30 per cent. Moreover, there are several kinds of tons to choose from: gross regis- tered tons, net registered tons, and dead-weight tons. Some countries differentiate tonnage with cargo from tonnage in ballast; others do not. Some countries count the same ship at each port on the same voyage; others do not. We see that the variations are plentiful and 97 98 OCEAN SHIPPING that all these difficulties are accentuated to-day. The war has thrown foreign exchange into a chaotic condi- tion; it has dislocated — partly temporarily, partly per- manently — the trade of the world, pushing new ports to the fore and blotting out others. Large sections of the world are in a state of economic upheaval and are for the time 'being "hors de concours." While these consid- erations detract much from the value of the table on page 99, nevertheless, it may not be without interest. The figures are taken from a table given in the Statistical Abstract of the United States, which, in turn, is com- piled from the official reports of the respective countries. Types of ports. — A glance at these figures will show us that ports may be divided into three classes, thus: 1. Ports with fairly well balanced trade, such as Kobe, Singapore, Shanghai and Glasgow. 2. Ports with excess of imports over exports, such as . Liverpool, London and Manchester. 3. Ports with excess of exports over imports, such as New York, Montreal; Philadelphia, New Orleans, Buenos Aires and Sydney. In the first group we find great entrepots like Ham- burg, Antwerp and Singapore. Before the war the "un- favorable trade balance" of the ports in the second group reflected the position of the various countries as creditor nations. During the war the excess of imports con- tinued, though for entirely different but well-known rea- sons. In the third group we find the New World ports with their heavy exports of grain from Montreal and Buenos Aires, of cotton from New Orleans, and of manu- factured products and all else from New York. THE WORLD'S LEADING PORTS .^ VALUE OF FOREIGN COMMERCE OF PRINCIPAL PORTS OF THE WORLD ARRANGED BY COUNTRIES (The data are based on the latest official information available in this country) VALUE IN MILLIONS OF DOLLARS LOCATION Calendar Year Imports Exports Total Commerce United States Seaports: (customs districts) New York. New Orleans Philadelphia Massachusetts (Boston and others) Washington (Seattle and others) Galveston San Francisco Maryland (Baltimore and others) Virginia (Newport News, Norfolk and others) United Kingdom Ports Liverpool London Manchester Glasgow Hull Bristol ' Southampton Cardiff Other Ports Montreal (Canada) Buenos Aires (Argentina) Havana (Cuba) Rio de Janeiro (Brazil) Santos (Brazil) Valparaiso (Chile) Yokohama (Japan) Kobe (Japan) Osaka (Japan) Singapore (British Empire) Calcutta' (British Empire) Bombay' (British Empire) Alexandria (British Empire) Sydney' (British Empire) Melbourne' (British Empire) Shanghai (China) 1919 1919 1919 1919 1919 1919 1919 1919 1919 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1918 1917 1918 1918 1918 1918 1918 1918 2,064.7 177.3 153.8 299.4 195.9 17.7 238.0 38.9 4.9 2,357.6 1,873.5 380.5 342.7 368.4 224.0 143.5 72.5 186.1 415.0 213.3 119.4 66,9 87.7 25S.3 390.6 68.5 276.3 188.1 184.3 165.8 135.9 100.2 256.4 1,456.3 663.1 519.6 334.5 292.3 467.7 240.5 353.7 175.0 966 763 140 127 71 4 49.8 92.4 397.0 402.1 88.6 65.4 97.4 28.8 406.9 268.6 202.1 264.3 273.8 247.0 201,6 175.8 85.9 240.1 5,521.0 740.4 673.4 633.9 488.2 485.4 478.6 392.6 179.9 3,323.8 2,637.2 621.1 469.8 439.9 228.2 193.3 164.8 583.1 817.1 300.8 184.8 164.3 116.5 665.2 659. 2 270.6 530.6 461.9 431.4 367.4 311.6 186.2 496.5 ' Year ending March 31. ' Year ending June 30. In comparing these figures the rapid decrease in the purchasing power of money between 1912 and 1918 should be borne m mmd. In this table we miss many well-known names such as Antwerp, Hamburg, Marseilles Genoa, and so on. In the case of these ports the latest available data are either too old to be of any value for purposes of comparison or else they merely reflect the unfortunate results of the war. We therefore omit statistics of the trade of the ports of the continent of Europe. According to latest reports! Antwerp has become the leading port of Europe and the second port of the world. 100 OCEAN SHIPPING A comparison of London and Liverpool. — We see that in 1918 New York excelled her nearest rival, Liverpool, by almost a billion, and London, by almost a billion and a half. For decades London had held first rank until about 1910, when New York overtook her. The victory of Liverpool over London^ is largely the fruit of war conditions. The war concentrated an abnormal mass of shipping on the North Atlantic route, and for that traffic Liverpool is the natural European terminus. Further- more, all ships invading the Thames during Germany's submarine campaign were exposed to grave risk of loss, not to speak of the military consideration which com- pelled shipmasters to follow usual channels marked out by the admiralty. Moreover, Liverpool has a more com- pactly built port than London, enjoyed unified port con- trol more than fifty years before the latter, while the Mersey is a wider stream than the Thames. Liverpool's trade is more in the nature of through traffic. London was the biggest ervtrepot centre of the world, and rela- tively speaking, entrepot trade is on the wane. The re- turn to normal miay reduce Liverpool's lead, but it is doubtful whether Liverpool will have to part with the honor of being England's leading port. The following figures show the gradual change in the relative position of the two. VALUE OF TOTAL TRADE (IN MILLIONS OF DOLLARS) London Liverpool ' 1913 $1,997.2 $ 798.3 1914 1,921.5 1,640.4 1915 2,409.6 1,906.9 1916 -. 2,655.0 2,309.5 5917 2,4532 2,895.2 1918 2.637.2 3,323.8 1 See The Americas, July, 1919, p. 29— "A Comparison of London and Liverpool." THE WORLD'S LEADING PORTS 101 Weight statistics. — So far all statistics have been given in dollar value. That, however, does by no means in- dicate the relative importance of different ports to ship- ping. The great coal ports, such as Cardifif, Newcastle and Las Palmas (Canary Islands) mean much more to shipping than the money value of these imports and ex- ports would reveal. Thus, to give one example: in one y€ar the net registered tonnage entering and clearing at Cardifif amounted to twelve million tons as against four- teen million at Liverpool; but the value of Liverpool's trade was almost twenty times that of Cardiff. Between thtse extreme instances, every form of difference may be found. Another matter to be considered is the fact that different commodities require different types of steamers. Thus Liverpool is a great liner port while normally Car- diff is the greatest rendezvous for tramps in the world. General aspects of the port situation in the United States. — We now turn to the port situation in the United States. Following the lead of the government statistics we may divide seaports into four classes: Atlantic Coast Ports. Gulf Coast Ports. Mexican Border Ports. Pacific Ports. TJie third group, however, consists only of the relatively unimportant port of San Antonio, so that, in the main, we deal only with three groups. The table^ on page 102, shows the net tonnage of the vessels which entered at and cleared fiom these ports: 1 Statistical Abstract of the United States (fiscal year ending June, 1919). 102 OCEAN SHIPPING VESSELS ENTERED AT AND CLEARED FROM SEACOAST CUSTOMS DISTRICTS OF THE UNITED STATES FROM AND FOR FOREIGN COUNTRIES Tonnage, Yeass Ended Dec. 31, 1918 and 1919 (The "net tons" equals 100 cubic feet of carrying capacity, exclusive of de- ductions for space occupied by cabins, machinery, etc.) CUSTOMS DISTRICT 1918 Entered. Net tons. Cleared. Net tons. 1919 Entered. Net tons. Cleared. Net Ions. Atlantic Coast: Connecticut Georgia Maine and New Hampshire.. Maryland Massachusetts New York. North Carolina Philadelphia Porto Rico Rhode Island South Carohna Virginia Gulf Coast: Florida Galveston Mobile New Orleans Sabine Mexican border: San Antonio Pacific Coast: Alaska Hawaii Oregon San Francisco Southern California Washington Total seaports Recapitulation. Atlantic Coast Gulf Coast Mexican border Pacific coast 13,087 264,949 640,317 .682,236 ,366,917 ,381,027 26,674 ,021,794 360,108 86,827 84,766 897,760 ,333,707 965,090 342,745 215,036 ,074,189 90,538 221,405 446,474 22,135 ,063,763 68,960 ,329,294 314 184,829 676,141 1,470,793 1,060,955 11,057,530 8,194 2,043,841 361,854 74,906 27,107 2,338,229 1,289,782 1,010,694 346,311 2,921,505 1,258,648 89,398 232,864 158,341 99,917 1,288,727 181,297 3,423,541 6,769 351,360 809,154 1,984,099 1,771,603 13,974,752 33,531 2,790,532 430,613 164,008 141,016 1,378,957 1,547,874 1,182,919 494,797 3,141,405 1,143,805 51,235 175,359 501,941 20,734 1,199,697 179,388 2,905,715 235 576,052 959,246 2,634,923 1,283,781 14,427,129 39,598 3,315,597 456,423 152,518 126,041 2,910,796 1,547,969 1,420,575 711,298 3,469,673 1,450,045 52,230 182,419 144,175 137,805 1,353,087 284,342 3,115,486 30,999,797 18,826,461 6,930,767 90,538 5,152,031 31,605,718 19.304,693 6,826,940 89,398 5,684,687 36,381,263 23,836,394 7,610,800 51,235 4,982,834 40,750,444 26,881.341 8,599,560 52,230 5,217.313 ' The most important ports of the first group are, for the North Atlantic : Portland, Boston, New York, Phila- delphia and Baltimore, besides Norfolk and Newport THE WORLD'S LEADING PORTS 103 News. Of these. New York is in a class by itself. To use a phrase of Professor E. J. Clapp : "There are two sorts of seaports along the Atlantic Coast, New York and all others." ^ The "others" are known as "outports." New York's predominance. — The predominance of New York is illustrated by the following tabk which sihows that through this port has passed, during the last fifty years, from one-half to two-thirds of the entire foreign trade of the country. Only of late a drop in New York's percemtage was caused by increasing trafifi'c congestion in its harbor and was, as we shall see, ac- centuated by the railway and shipping policy of the administration. TABLE SHOWING POSITION OF NEW YORK IN THE FOREIGN TRADE OF THE UNITED STATES Fiscal years ending June 30 (in millions of dollars). New York (Customs District) United States New York's per cent of whole Imports Exports Imports Exports Imports Exports 1870 281 460 516 537 936 931 1,192 1,338 1,251 1,433 2,905 196 393 349 519 652 1,194 2,332 3,053 2,613 3,203 3,384 436 668 789 850 1,557 1,674 2,198 2,659 2,946 3,096 5,115 393 835 858 1,394 1,745 2,769 4,339 6,290 5,920 7,232 8,198 64.4 68.8 65,4 63.2 60.1 S5.6 54.2 50.32 42.5 46.0 56.8 50.0 1880 46.9 1890 40.6 1900..., 37.2 1910 37.3 1915 43.1 1916 53.8 1917 48.53 1918 44.1 1919 44.3 1920* 41.4 • The World Almanac and Encyclopedia, 1921. 1 E. J. Oapp, Port of Boston, p. 25. 104 OCEAN SHIPPING It is interesting to place New York against the back- ground of world trade. The Wall Street Journal esti- mates that in 1920 one-eleventh of the world's sea-borne commerce passed through New York. But we have stated that the value of the trade of a port does not reveal its relative significance as a ship- ping centre and, in fact, a study of the following table will show that the percentage of shipping using the port never even approximated the larger percentage of the value table. TONNAGE OF VESSELS IN FOREIGN TRADE ENTERED AT LEADING UNITED STATES PORTS (NET TONS) YEAH New York, N.Y. Philadelphia, Pa. Boston, Mass. New Orleans, La. Baltimore, Md. Galveston, Tei. Entered Per cent. Entered Per cent. Entered Per cent. Entered Per cent. Entered Per cent. Entered Per cent. 1830 305,000 648,000 1,145,000 1,974,000 3,093,000 7,611,000 6,182,000 7,242,000 10,517,000 12,579,000 13,461,000 12,913,000 10,943,000 27.7 23.9 30.5 39.4 49.0 49.9 46.5 38.3 38.8 35.9 35.8 35.1 35.1 77,000 39,000 132,000 182,000 300,000 1,391,000 1,094,000 1,567,000 2,112,000 1,939,000 2,408,000 2,540,000 1,966,000 7.0 1.7 3.6 3.6 4.8 9.1 8.0 8.3 7.8 B.2 6.4 6.9 6.3 113,000 291,000 479,000 719,000 794,000 1,347,000 1,327,000 1,816,000 2,761,000 2,464,000 2,461,000 2,012,000 1,487,000 10.3 12.8 12.8 14.3 12.6 8.8 9.8 9.6 10.1 6.1 6.6 5.5 4.7 61,000 90,000 100,000 186,000 272,000 1,503,000 744,000 1,115,000 1,377,000 2,043,000 2,528,000 2,665,000 1,798,000 5.5 3.9 2.7 3.7 4.3 9.8 5.5 5.9 5.0 7.3 6.9 7.1 5.0 1850 1860 1870 1880 1881-1890 (average) 1891-1900 (average) 1901-1910 (average) 1915 1916 1917 1918 350,000 632,000 458,000 761,000 759,000 1,224,000 1,789,000 3,064,000 2,804,000 2,833,000 3,019,000 9.3 12.6 7.3 5.0 5.6 6.4 6.6 8.6 7.4 7.7 9.0 3,000 32,000 32,000 118,000 135,000 475,000 868,000 1,562,000 1,137,000 1,096,000 925,000 0.008 0.06 0.05 0.07 0.1 2.5 3.2 5,6 2.'7" 3.0 The reason for this is to be found in the fact that New York is primarily a liner port and that liners have a relatively low net tonnage. The Mauretania, for in- stance, has a smaller net tonnage than many a tramp. If figures for the volume of trade at the different sea- ports were available, New York's share of this country's THE WORLD'S LEADING PORTS 105 total trade would be nearer the tonnage percentage than the value percentage. History of New York's ascendency. — New York's pre- dominance dates back to the opening of the Erie Canal, which made that city the gateway for western produce destined for Europe, and agricultural products formed the bulk of our exports for the better portion of the nineteenth century. When the Railway Age came, New York's lead was so pronounced that the railroads found it wise to adjust themselves to the situation, with the result that as it was said of old, "All roads lead to Rome," to-day all roads, i.e., all trunk lines, lead to New York. New York has three through routes of its own to Chicago — the Erie and two New York Central lines. In addition. New York has two roads to Buffalo — the Delaware, Lackawanna & Western, and the Lehigh Valley. ,At Buffalo these two connect with such lines as the Grand Trunk, the Wabash, and the Michi- gan Central, all leading to the West. Besides these roads of its own. New York has direct connections— by land or by water — with all railroads that serve its competitors in the North Atlantic group. The Baltimore & Ohio and the Pennsylvania run into New York, if not over tracks at least by carfloat ; the Norfolk & West- ern a;id the Chesapeake & Ohio connect with New York through the Old Dominion Steamboat Company in which they are part owners. With this unique position as a railroad centre. New York would have still further encroached upon the rights of its qutport competitors had not the Interstate Com- merce Commission adjusted the rates in such a way as to give the southern ports at least a fighting chance. 106 OCEAN SHIPPING The Port differential rate situation. — The early severe competition between the North Atlantic ports from Baltimore to New York, inclusive, for grain, which for decades was by far the most important item in the ex- port trade of the country, resulted in a set of "port dif- ferentials" on all grain from grain-producing States of the Middle West. These port differentials for the export of grain form the nucleus of a complicated export and import rate structure, which while originally applying only to the ports from Boston to Baltimore, inclusive, was later extended to include the Canadian ports, Montreal, St. John and Halifax, in the north, and the most important South Atlantic and Gulf ports to the south. This exten- sion or geographical expansion duly considered the peculiarities of local traffic conditions which necessitated various modifications. The guiding thought was simply to create a rate structure which included all the routes leading to and from the great middle western grain belt and to establish a sound balance of power among the rival railroads. A clear grasp of this rate situation is indispensable to a clear understanding of the whole matter of port competition in the United States. It is therefore worthwhile to give a concise account of its origin and development.^ Two elementary facts must be clearly borne in mind. First of all, as late as 1881 the export tonnage of grain alone represented as much as 73 per cent, of .the total east-bound tonnage carried by the trunk lines to the four great Atlantic ports of Boston, New York, Phila- delphia and Baltimore. Secondly, that in those days, 'The historical part of the following discussion of the port dif- ferential situation follows in general the outline of Chapters VIII and IX of E. J. Qapp's Railway Traffic, THE WORLD'S LEADING PORTS 107 each trunk line had its own ocean terminal; the Balti- more & Ohio, Baltimore; the Pennsylvania, Philadel- phia; the New York Central and ihe Erie, New York. This meant that during the period, 1870-1880, railroad competition was identical with port competition. The struggle proved so disastrous that an arbitration com- mission was appointed to put an end to this cut-throat competition. The decision which was reached in 1882 became the basis of future port competition. Baltimore was given the differential of 3 cents under New York and Philadelphia of 2 cents, and Boston put on a par with New York as to all export trade. On imports, Baltimore and Philadelphia were allowed the^ following deductions from the New York rate: CENTS PER 100 POUNDS Class Commodity 12 3 4 5 6 Baltimore 8 8 3 3 3 3 3 Philadelphia 6 6 2 2 2 2 2 When domestic trade became important these export and import rates were applied to east and westbound domestic traffic respectively. The justification for these differentials is based upon the cost and distance prin- ciple. The southern ports are nearer to that part of the west which they serve and therefore transportation tends to be cheaper. But another factor was possibly even more important to that extent. Average ocean rates from Philadelphia and Baltimore were found to be higher by 2 and 3 cents, respectively, than via New York and Bos- ton, owing to longer ocean distance and because of poorer 108 OCEAN SHIPPING port conditions in the southern cities. New York also offered the advantage of greater frequency of sailings and of direct connections with a larger number of markets. Therefore, practically no through shipments were booked via the southern ports unless the charge for the rail haul was so reduced as to neutralize the handicap of the higher ocean carriage. In the meantime, New Orleans appeared upon the scene. In the years from 1882 to 1898 three railroads had reached that port and its channel to the sea had been considerably deepened. Furthermore, Norfolk and Newport News claimed a share of the grain export traf- fic and got it on an even basis with Baltimore, i. e., on a rate basis below New York. Some American grain began to flow via Canadian ports, so railroads serving these ports could not remain outside of the rate structure. This meant increasing competition for New York, which felt unduly handicapped iby this rate structure. In 1898, it appealed to the Interstate Commerce Com- mission, which, however, let matters remain unchanged. But, in the meantime, the ocean rate situation had changed. Charter rates had become the same for the whole "North Atlantic Range." Only for "berth rates," i.e., parcel lots carried by liners, had New York re- tained its advantage. On the ground that the grain movements were about evenly divided between tramps and liners, the railroads voluntarily reduced the differ- entials from 3 cents to lyi cents for Baltimore, and from 2 cents to 1 cent for Philadelphia. It would have been impossible to abolish the differentials for cargo lots and retain them in full for parcel lots, because, frequently, the method of ocean transportation, whether by liner or THE WORLD'S LEADING PORTS 109 by tramp, is not determined until long after the grain has reached tide-water. The admission of New Orleans and Montreal into the rate structure, which we just mentioned, took this form. These two ports offered exceedingly low rail rates to the interior on all imports, which they needed badly to balance their heavy exports of cotton and grain re- spectively. Momtreal took a 59-cent import scale, or a first-class differential under New York of 16 cents. New Orleans accepted the Todd and Knott (1907) arbitration which ruled that as to Cincinnati and practically all ter- ritory west of and including Louisville, Indianapolis and Chicago, the import rate from New Orleans and other Gulf ports should be less than the New York rates by the following amounts : CENTS PER 100 POUNDS Class Commodities 12 7 4 16 Diflferentials 18 18 12 8 6 6 6 These diflferentials, up to the war, regulated the import traffic via the Gulf. The peculiar feature of the Gulf export situation is that export rates are the same to any Gulf port, from Galveston to Penascola. War-time readjustment of railroad rates. — Theoreti- cally much of the rate structure just described is still in force to-day. But the war has brought a number of such far-reaching changes that to-day theory and practice are far apart. In the first place, the railroads being admin- istered as a whole by the Government, the national view- point somewhat replaced the local interest of the individ- ual railroads. This, coupled with the fact that the war 110 OCEAN SHIPPING taxed the railroad facilities to the breaking point, led to an endeavor to avoid, as far as possible, unnecessary criss- cross movements. The Port Facilities Commission of the United States Shipping Board has investigated the excess rail transportation of Brazilian coffee imported into New Orleans and New York, by tracing the re- spective imports of the two cities to their final destina- tion and calculating the unnecessary haul in each case. The result of this investigation is given in the chart on page 111. Two additional factors complicated the situation. There was, in the first place, the wonderful growth of American tonnage which put into the hands of the Gov- ernment the opportunity to develop new trade routes wherever facilities seemed lacking or trade expansion called for new ones. In an indirect way the establish- ment of new trade routes was aided by the second factor, the congestion of the North Atlantic ports. New York in particular. The Shipping Board and the Railroad Administration worked hand in hand, the former allo- cating ships as they were turned out by the Emergency Fleet Corporation, to ports and trade routes, the Rail- road Administration revising rates to direct the trade into the new channels. The work of the latter in this respect is summed up as follows in the Annual Report of the Director General of the Railroads. (Division of Traffic, 1919, p. 5.) "The restoration of more nearly normal commercial conditions, the larger number of American ships available for foreign trade, and the continued congestion at many ports soon demonstrated the necessity of equalizing the rate bases to and from certain! terri- tories and ports so as to distribute the movement of the traffic for THE WORLD'S LEADING PORTS 111 '51 I i:?^;BuS^F&^«'-=i r *i»aro*r»i*tMnio«>oov^*Hw«^»^v*wn^ I.II,..IP s 1 : :;-™.!-S 1 |i :'ii 112 OCEAN SHIPPING the advantage of all interests. Among the changes or revisions made are: "The revision of both import and export rates via Pacific Coast ports more nearly to equalize the shipping routes via the Atlantic and Gulf ports. "The publication of revised export rates from points in central territory to the South Atlantic and Gulf Ports better to distribute ■ export traffic. "The revision of rules covering port and handling charges on the Pacific coast under which steamship lines assume liability for demurrage charges resulting from their failure to take the goods when delivered in time for scheduled saiHngs." The revision of low export rates to the Gulf ports' is the most important item. It has stirred up a great deal of commotion, the Eastern trunk lines violently protesting and the business interests of the Midwest, Gulf and South Atlantic territory applauding with equal vigor. The situation was further aggravated by several horizontal rate increases. During the war, the United States administration authorized a blanket rate increase of 25 per cent., and later on the Transportation Act of 1920 accorded the railroads a further increase of 33 1/3 per cent, for inter-territorial, and 40 per cent, for intra- territorial traffic. The increases threw the old differential rate system completely out of gear, emphasizing and widening the effects of previous changes. Horizontal rate increases are unscientific, as they do not affect low rates and high rates alike. A 40 per cent, increase on a SO-cent rate adds only 20 cents, but on $1 rate it adds 40 cents, and in business, absolute amounts and not percentual relations count. As it is, the rate increases mean an addi- tional stimulus to divert traffic from the trunk lines to the railroads serving Gulf and South Atlantic ports. It is THE WORLD'S LEADING PORTS 113 Stated by reliable authorities that as the rates stand now, practically no all-rail grain shipments from the middle western territory could go to North Atlantic ports, and the only export grain that would reach New York would be that moving by the Great Lakes and the New York Barge Canal. No wonder that we find the trunk lines preparing for a battle royal, by which they hope to bring about a revision of the present rate situation. The Shipping Board did their share to accelerate the readjustment. Admiral Benson, Chairman of the Board, is strongly in favor of a policy of directing exports through the ports which are nearest to the production centres of the articles concerned, and of attracting im- ports to the ports closest to the teritory in which the imported commodities are to be consumed. He an- nounced his desire "to break up the monopoly hereto- fore held by New York" by allocating tonnage to trade routes leading to and from other ports of the country. The Evening Post^ (New York) commented upon this plan as follows : "From the economic standpoint it is perfectly clear that it would be easier on the railroads of the country to have their traffic spread out along the Atlantic Coast; equally clear is it that there would be a very substantial saving in time and expense and that it would increase the capacity of the country as a whole for export trade if certain ports of the country could specialize in their equipment, their railroad connections, etc., on coal and other bulk commodities, other ports on general merchandise freight, and so on through the list. Beyond any question of a doubt such organization of the railroads and of the ports of the United States for foreign trade would benefit the whole country in general and each individual port in particular, but it would require years, if not generations, to 1 July 24, 1920. 114 OCEAN SHIPPING thoroughly accomplish such reorganization and development with- out, in the meantime doing serious injury to current business. Cer- tainly it would not be accomplished by mere formation of a few regulations by the Shipping Board diverting ships from points where they are needed and can be profitably operated to points where they are not needed and would incur only expense to their owners or operators. As long as New York is the financial and insurance center of the country in foreign as well as domestic commerce and as long as its other facilities maintain their present ratio in relation to similar facilities in other American ports it will continue by force of circumstances to hold its present supremacy (whether or not that supremacy is a monopoly does not affect the matter) in the export and import trade of the United States." The present rate situation as it affects port competition is the result of measures dictated under the pressure of war emergencies. Its retention is unjustified in these times of peace. The present rates, therefore, should be looked upon as transitory and the near future will disclose what permanent readjustment will be made. REFERENCES Bankers' Trust Company of New York. Americans Merchant Marine. Chap. XX. (1920). Clapp, E. J. The Port of Hamburg. (1911). The Port of Boston; a Survey of North Atlantic Ports. (1916). Railway Traffic. Chap. VIII. (1917). Report on Charleston, S. C.(1921). Daish, J. B. The Atlantic Port Differentials. (1918). Dominions' Royal Commission. Final Report. (London, 1918). KiRKALDY, A. W. British supping. Book IV. (1914). Mac Elwee, R. S. Ports and Terminal Facilities. Chaps. II. and IV. (1919). Rush, T. E. The Port of New York. (1920). Smith, A. R. Port of New York Annual, Second Edition (1921). Smith, J. R, Industrial and Commercial Geography. Part II. Chap. VI. (1913). United States. Department of Commerce. Statistical Abstract. (Annual). PART III THE OCEAN CARRIER 115 CHAPTER VII SIZE, SPEED, AND EFFIQENCY Rapid growth in size of vessel during the nineteenth century. — There are few works of man which illustrate the advance of civilization and the victory over the forces of nature more strikingly than ships : "They are grander things than all the art of towns ; their tests are tempests and the sea that drowns. . . . They mark our passage as a race of men."^ The ship of to-day is sixty times bigger and many times faster and better than its prototype of George Washing- ton's time. On the even basis of ton for ton, the shipping of the present is five or six times more efficient than that of the early days of this nation. This is largely the result of the substitution of coal and oil for sails as motive power, and of iron and siteel for wood as material of con- struction. When we compare the leviathans of to-day, with their gross register tonnage of 50,000 tons and more with the 400-ton ships which were the pride of Salem a century ago, we must indeed marvel ait the prog- ress of m^ankind upon the sea. Economic justification of large size. — The enlargement of ships was rendered profitable by the vast increase in the volume of trade during the last century, which wit- nessed the transition from intermittent luxury trade to continuous world-wide exchange of bulky necessities. This growth was stimulated by the keen competition existing among rival steamship lines, which only in re- ijohn Masefield. 117 118 OCEAN SHtPPtNQ cent years came to satisfactory agreements with one another, and was made possible by the development in the art of shipbuilding particularly in regard to the marine engine. The explanation for this continuous growth in the size of ships is to be found in the fact that increase in size is the most valuable resource of the naval architect, as it is directly conducive to the attainment of his great aims : safety, comfort, speed and economy. Advantages accruing from large size. — Increase in size gives comfort in the form of more deck space, greater height above water and less disturbances due to wave motion. It assures greater speed because the greater the length of a vessel in proportion to her total weight the smaller becomes the power required to propel a given displacement at a given speed. Finally, under normal conditions, a ship's earning capacities, depending on space and displacement, are increased at a greater ratio than the cost factors, hence the economy of larger ves- sels. This is true both in the case of increased length and of increased draft. We quote the following con- crete example illustrative of this principle. The case chosen is that of a cargo vessel having a speed of l3 knots at sea on a 2000 mile voyage. "On a length of 400 feet we can construct a vessel weighing 3,700 tons which would carry 4,000 tons of cargo and consume SOO tons of coal. Each 100 tons of cargo, therefore, involves 92J^ tons of constructive material and 12j^ tons oif coal per voyage. A vessel SOO feet in length would weigh 6,750 tons, would carry 8,700 tons of cargo and consume 700 tons of coal. Each 100 tons of cargo in this case requires only 77]^ tons of vessel and 8 tons of fuel." i 1 See Alexander Gracie, Twenty Years Progress in Marine Con- struction, p. 687 (Smithsonian Institution Report). SIZE, SPEED AND EFFICIENCY 119 That refers to the length. The importance of increase in draft is illustrated in the following statement : "The conclusion that unrestricted draft is necessary for economic transport can be arrived at from first principles. A vesseil constructed of a depth sufficient to go to say 40 feet draught does not cost so very much more than a vessel of a depth constructed to go to 29 feet draft, whereas the increase in weight of cargo is the difference between the extreme draft of the vessel and the draft the vessel must have in order to float her hull, and machinery, and coal, and stores. "Supposing two ships are constructed, 'the one of 29 feet draft and the other of 40, and in each case the draft necessary to float hull, machinery, etc., before paying cargo can be put in, is 23 feet. In the one case there is only 6 feet of draft available for paying cargo whereas in the other case there is . 17 feet. The weight of hull for the restricted draft vessel in- creases much more rapidly than the displacement. The beam cannot be increased in the same ratio as the length, or the sta- bility conditions will be interfered with. Before a great l&ngth is reached the dead-weight that can be carried no longer in- creases as the length of vessel increases, but begins to de- crease. Farther, the excessive proportion of breadth to draft in the large vessel of restricted draft is bad from the point of view of resistance and therefore the running costs, which depend on the power of the machinery, are considerably increased. "Following out this principle. Sir John Biles supplied vari- ous practical and very striking illustrations. He found that if draft were unrestricted the cosit of trans'port steadily decreased with increase of length; thus a vessel 700 feet long, with pro- portionate draft, could transport goods on a 3,000-mile voyage at a speed of 14 knots, 13 per cent cheaper than a smaller vessel of 490 feet in length, while further increase in speed in the larger vessel would be less costly. He also found that increases in length is uneconomical unless accompanied by adequate draft; thus, with draft restricted to 23 feet 3 inches, the cost of transport per ton for a voyage of 3,000 miles by a vessel 700 feet in length would be SO per cent greater than if the same vessel had its full proportionate draft; in fact, in- 120 OCEAN SHIPPING crease of length without proportionaite increase of draft not only does not diminish the cost of transport, but actually in- creases it." 1 Large vessels few, but conspicuous. — Because one hears so much of the few very large ships, such as the Leviathan, Aquitania, Olympic, etc., it is easy to gain a wrong impression of the average size of modern ocean- going vessels. It can not be emphasized too much that the bulk of the world's ocean-going tonnage consists of relatively small vessels. Lloyd's Register for 1919-1920 gives the total gross tonnage of steam and motor vessels of the world as 47,897,407, and the number as 24,386; this gives an average size for steam and motor vessels (of 100 tons and more) of slightly less than 2,000 tons. If we include sailing ships in our calculations, the aver- age is reduced to less than 1,700 tons. A more complete picture is gained frorri the following table, taken from the same source : NUMBER OF STEAMERS OWNED BY PRINCIPAL MARI- TIME COUNTRIES, ACCORDING TO CERTAIN DIVISIONS OF GROSS TONNAGE Tonnage Number Tonnage Number 100 & under 200 4,648 5,000 & under 6,000 1,213 200 " 500 5,269 6,000 " tt 8,000 1,174 500 " 1,000 2,604 8,000 " (1 10,000 289 1,000 " 1,500 1,877 10,000 " n 15,000 185 1,500 " 2,000 1,374 15,000 " (1 20,000 31 2,000 " • 3,000 2,671 20,000 " « 25,000 13 3,000 " • 4,000 1,675 25,000 and above 9 4,000 " 5,000 1,354 In studying this table it must be borne in mind that the present day tonnage is largely a heritage dating back ^ Th? Americas^ February, 1918, pp. 3, 4, SIZE, SPEED AND EFFICIENCY 121 many years. A better idea of the development of ship size is gained from figures which register annual con- struction. For this purpose we reproduce a table compiled by the United States Shipping Board (Port and Harbor Facili- ties Commission), which shows the number of Steam and sailing vessels, by classes of tonnage (500 tons gross and over) built during each quinquennial period, from 1879 to 1919, also indicating, in per cent, the relative impor- tance of each group. CROSS MSaSE «««-»«» 1 — ib5I; ^=m i«sn 1 — woil im—l 1TO9 1913 1 9aAT rarent Peicrac Kidbtr Fnent llmtor Peretut »»«■ fnnat Knlnr y«wl« tawBt fnr.1 i.to6 m .^r 12 .' i » 20 . .s 36 't 3,000 to 3,vn U.0 *11 17.0 «ai u.« sat 3U^ IIS U.0 no U.l ni l».l nt 11,S tat 4U U.S ffioa u !,»» U MO.0 n^ ^-«» -*- 100.0 100.0 -* ^j^ To supplement these figures the following data per- taining Jio earlier periods might be of interest for the sake of comparison : 1769: 389 vessels of an aggregate tonnage of 20-000 were built giving an average of less than 52 tons. 1800: A 300-ton vessel was considered very large. 1825: 400 tons represented the maximum of vessels in the East Indian trade. 1840: Double decked ships of 1,000 tons sailed in the North Atlantic trade. 1850-1860: Many 1,500-ton ships were afloat; the largest vessel measured approximately 2,500 tons. 122 OCEAN SHIPPING Large vessels represent highest achievement. — Al- though all the ships of more than 15,000 tons built during the twenty years from 1899 to 1918 (before that time no such sizes were reached) number only fifty-six, and al- though their production during none of the quinquennial periods given reached 1 per cent of the total ship produc- tion in number, they represent the highest achievements in naval architecture, combining in themselves all- the advances made in that art and industry, and embodying so much national pride in their creation that no book on world shipping can be complete without devoting some space to their history and construction. The following is a list of six steamers, each of which held the world's record for size during the quinquentxial period during which it was built. Name of Period when Vessel Constructed Camipaaia 1889-93 Cymric 1894-98 Cedric 1899-03 Mauretania . . 1904-08 Imiperator 1909-13 Bismarck 1914-18 In thirty years the gross tonnage grew more than fourfold. It should be noticed that all of these ships — with the exception of the last named, which though launched just before the war is still awaiting its com- pletion, ply on the North Atlantic route, where alone such large ships are warranted by the trafific require- ments. Deep osis Ton- Load nage Length Width Draft feet feet feet 12,884 601.0 65.2 29.0 13,370 585.5 64.3 31.0 21,040 680.9 75.3 36.9 32,508 790.0 88.0 38. 51,969 882.9 98.3 37.0 56,000 912.0 100. 41.3 SIZE, SPEED AND EFFICIENCY 123 Limitations upon further growth of steamers. — There has been much discussion of the wisdom of going to such extremes in building large ships. Some people view the matter purely in the light of international rivalry or vainglorious efforts on the part of shipowners to get the advertisement which goes with the title to the larg- est ship afloat. There are no ships of excessive size being, planned at present, if we discount the rumor of 1,000 ft. steamers to be built in this country to wrest the blue ribbon of the ocean from the Mauretania simul- taneously depriving the Leviathan of the glory of being the biggest ship afloat. We are passing through an era of retrenchment and moderation. The White Star Line has abandoned the plan of building the Homeric of 38,000 tons gross and has substituted a 16,000-ton boat to be known as the Doric. The motto of the Cunard Line also is "smaller and safer." The question of the sizie of ships cannot 'be properly viewed from the shipbuilder's viewpoint alone. In the first place, the matter of insurance becomes increasingly difficult as the size of the ship grows. Secondly, the economies which may be achieved in the operation of a vessel by a relative reduction of the "tare," i. e., the weight of the carrier compared to the weight of the cargo carried, may result in other expenditures which should be deducted from the purely shipping economies, to measure their real worth. Large vessels necessitate big terminal outlay. — These expenditures comprise, chiefly, the money spent for harbor improvements, deepening of channels, dredging, pier-extension, etc. Some harbors are formed by nature so that they can welcome the deep-draft vessels with- 124 OCEAN SHIPPING out great outlay; but more ports, if they wish to keep in the race for international trade, must provide artificial facilities. Improvements are often progressively costly; the work of dredging and keeping clear each extra foot of depth of the channel becomes increasingly expensive. Somebody has to foot the bill; whether the expense is shown directly in the form of harbor dues imposed on entering ships or whether it is absorbed by inclusion into the general tax accounts of a country, is of no im- portance. In the end the trade of the country pays. Large size handicaps vessel operation. — Another fac- tor has to be considered: the bigger the ship the fewer the ports open to it, in spite of all dredging and other improvements. That means increased specialization and reduced flexibility for the ship and frequently necessi- tates heavy transshipments of cargo from the few fa- vored ports to the large number of smaller ones. That also involves expense and a loss of time. Therefore, to sum up, we may quote A. J. Sargent:^ "The tendency towards great size, the narrow ship- builder's point of view, without reference to other ele- ments in the cost of transport, may, like the increase in speed, result in a higher total delivery-cost for the goods. Speed has its advantages. Which must be paid for, but even these advantages can be bought at too high a rate. Apart from possibilities of economical working, size is of no great advantage, except perhaps for advertisement or national boasting; it is a luxury, and the next generation is not likdy to have too .much capital to spare for the provision of luxuries such as steamers of forty-foot draught and upwards. Not many * See Seaways of the Empire, pp. 42, 43, I SIZE. SPEED AND EFFICIENCY 125 port authorities are likely to be in a position to endorse the statement of the engineer of one of the great ports of the Southern Hemisphere : 'We intend to be an up- to-date port, whether it pays or not 1' " Increase in speed costly. — Hand in hand with the in- crease in size there went an increase in speed, though this was less phenomenal. The two factors are subject to opposite laws ; size is governed by the law of in- creasing return, in the sense that, other things being equal, each unit added contributes to the earning capac- ity more than it does to the initial cost. Increase in speed, on the other hand, is bought at an increasing cost per unit. Thus a given steamer, 680 feet in .length, crossing the Atlantic at a speed of 16 knots an hour, would consume 2,000 tons of coal during the voyage and carry 12,000 tons of cargo. To raise the speed to 22 knots would involve a threefold sacrifice. First, the coal consumption would rise to 3,500 -tons, the cargo carried would be reduced to one-fourth, or 3,000 tons, and the initial cost would be raised by 25 per cent.^ A comparison of the Imperator with the Bismjarck will show a similar result. The former ship was built for comfort, therefore the ocean speed was limited to 22yi knots, which is obtained by turbines of 62,000'horse power. The Bismarck, which is less than 10 per cent larger, to gain a speed increase over the Imperator of but 3 knots an hour, was planned with a machinery to develop 90,000 horse power, or almost 50 per cent more than the smaller steamer. The high cost of speed is furthermore illustrated by the subsidies granted by many governments for the carriage of mails at a stipulated 1 Alexander Gracie, op. cit., p. 690. 126 OCEAN SHIPPING speed. Speed is a vital factor for passenger vessels. It is perhaps the strongest drawing card a passenger liner possesses and if luxury and size are added, the fast boat when run in the right service, is sure of full bookings, a large number of travellers gladly paying the extra fare charged. The history of passenger business on the Atlantic is like a long row of speed contests, one com- pany vying with the other, one country competing against the other for the much coveted blue ribbon of the Atlantic. The race for "the Blue Ribbon of the Ocean."— The race started far back in 1838, when the Sirius and the Great Western crossed the Atlantic in seventeen and fifteen days respectively, the former leaving Liverpool, while the other started from Bristol. Then followed the famous race between the Collins liners and the Cunard flyers. The latter had been in undisputed control of the speed record, but lost it to their American rival in 1850. Four years later the British line came to the fore again. For the next forty years the speed record was held by various British lines until, in 1897, Germany won the honor, which she held for ten years. Some interesting details are given in the table shown on page 127. Increasing efficiency of fuel. — The cost of speed is best illustrated by the fact that the Great Western consumed 28 tons of coal a day as against the 1,000 of the Maure- tania. But considering the enormous size of the latter, this increase is not so great as one might expect. Re- markable improvements in the construction of the hull and the marine engines have increased the efficiency of SIZE, SPEED AND EFFICIENCY 127 TABLE SHOWING THE EVOLUTION OF THE ATLANTIC LINER 1 NAME Gross Tonnage Length (feet) I. Horse Power Speed Knots (per hour) Fuel Con- sump- tion Tons (per Day) Fropulsias Engine Ma- terial Date Royal William., Sinus Great Western. , Britannia Great Britain. . . America Baltic Asia Persia Great Eastern. . Java ' OceaniC; Britannic City of Berlin. Umbria City of Paris. Teutonic Campania Kaiser Wilhelmll. Celtic Mauretania. . Olympic.. . Aquitania. . Imperator. . Leviathan.. Bismarck.. 700 1,340 1,156 3,270 1,825 3,000 2,226 3,300 18,9U 2,697 2,950 3,808 5,004 5,490 7,391 8,127 10,669 9,984 12,500 19,361 20,904 31,938 46,000 47,000 52,000 54,282 56,000 176 208 236 207 302>i 251 282 266 376 337 358 420 455 488>i 515 500 527K 565?i 600 678 6805i 762 901 911 912 180 320 440 740 1,000 1,400 800 2,400 3,600 6,600 2,650 3,100 3,000 5,500 4,799 9,900 14,500 18,000 16,000 26,000 45,000 70,000 50,000 60,000 61,000 90,666 7,S 9 28 8.5 35-'5b 10.25 60 12.5 13.8 ISO 13.5 280 14 14.4 90 14.75 16 7,5 16 120 16.7 200 19.5 10 328 21 22 23.5' 22 485 700 1,160 1,150 1,200 Paddle. Screw Paddle, Screw and Paddle. . Screw Twin Screws. Quadruple Screws Triple Screws Quadruple Screws . . Steam. Compound Triple Expansion Quadruple Expansion Turbines. Wood. Iron. . Wood. Iron. Steel. 1833 1838 1838 1840 1843 1848 1850 1850 1855 1858 1865 1867 1871 1874 1875 1881 1884 1888 1888 1893 1901 1901 1907 1910 1914 1913 1911 each ton of coal burned. The same amount of coal propels to-day approximately eight times as much dis- placement tonnage as was the case seventy years ago. Sir James McKechnie, at a recent launching, remarked that while in 1875 seventeen pounds of coal were con- sumed in conveying 100 tons of cargo one mile on ocean 1 Adapted from Kirkaldy, British Shipping (Appendix). 128 OCEAN SHIPPING voyages, to-day four pounds accomplish the same result.* The speedy liner foregoes much or all of the direct monetary advantages gained by this improvement, but not so the tramp, the purely cargo carrying vessel. The speed of the average tramp has remained practically constant, at 11 knots, for twenty or thirty years. But if we compare two typical tramp vessels built twenty years apart we note that the tramp owner reaped the benefit of the improvements in greater earnings: Deadweight Indicated Coal Con- Knots Year Ton Horse-'power sumed Daily perhr. 189S 6,400 1,400 24 tons 11 1915 9,600 2,300 32 " 11 Fifty per cent more deadweight is carried and 64 per cent more power developed, but only 33 per cent has been added to the coal account. Steamship efficiency. — Size and speed are vital factors of vessel efficiency but other elements contribute to the result. The transition from wood to iron and later to steel is of vital importance. Every improvement in the quality of material, every advance in the better distribu- tion of those materials is a step forward toward greater efficiency. The introduction of iron about the year 1820, and of steel about 1870, were milestones of progress in the history of steam navigation. An interesting estimate of the increasing carrying capacity was made by Sir Norman Hill, Secretary of the Liverpool Steamship Owners' Asso- ciation, in a valuable report published in 1909. He as- sumes that : 1 Nautical Gazette, April 24, 1920, p. 637, SIZE, SPEED AND EFFICIENCY 129 "A steam vessel (iron' or steel) built prior to 1888 carries 2 times its net tonnage. A steam vesseil (steel) built be- tween 1888 and 1898 carries 2% (times its net tonnage. A steam vessel (steel) built be- tween 1898 and 1906 carries.. . .2^ times its net tonnage. A steam vessel (steel) built be- tween 1906 and 1908 carries. .. .2.7 its net tonnage. To the increased speed and greater carrying capacity per unit of cubical contents must be added the effect of improvements in loading and unloading. Rapid loading and discharge of cargo are of vital importance to all ves- sels; to the expensive liner because of the amount of interest and depreciation charged against it every hour of the day, to the cheaper tramp because of the relatively larger amount of cargo carried. Cargo can be handled the more rapidly the less it has to be moved horizontally along the holds and between the decks before coming under the hatchways. The tendency, therefore, is towards increased hatches, so much so that some of the modern tramps have almost continuous hatches, in breadth nearly equal to half the vessel's beam. Hold pillars, which inter- fered with rapid cargo handling, have almost disappeared. Also the winches have been greatly improved so as to assure greater dispatch. Port delays neutralize gains in efficiency. — But all the benefits to be derived from these improvements in ship construction, — better marine engines, novel loading and unloading devices, — may be annulled by neutralizing forces. To Sir Frederick Lewis, Chairman of Furness, Withy & Co., is attributed the interesting statement that despite the increase in the registered tonnage during 130 OCEAN SHIPPING the five years from 1914 to 1919 by 6 per cent, the cargo moving capacity of the world's merchant marine had been reduced by one-third. The explanation given for this anomalous situation is that strikes, inadequate port facilities and shortened virorking hours of longshoremen have so crippled the efficiency of the world's nierchant marine that the time of the ships at sea has fallen from 75 per cent before the war to 48 per cent in 1919. This means that on the average, more than half of the world's tonnage is held in port, moored to piers, waiting to be loaded or to discharge cargo more often than actually loading or unloading. The captain of one of the largest ships under the American flag was reported as saying that the discharging and loading of his cargo took about as many days as hours in pre-war times. The American International Corporation kept a log of the performances of the first 2>7 ships delivered to the Shipping Board and allocated by that Board to various steamship companies : "A faithful record showed that on eighty voyages to one hundred different ports the thirty-seven vessels steamed 427,814 miles, carrying 600,000 tons of cargo. Althougih the ships are equipped with the most improved machinery for expediting loading and unloading, the log details that the fleet was at sea only 48 per cent of the time. Only five of the ships were detained for any con- siderable period of time for repairs. The log of the ships for August and September cites some of the delays with which shipping is having to contend. It follows: Seven ships at Liverpool unable to move on account of strikes and congestion. Held for period of days — 40, 43, 45, 19, 19, 55, and 22. Three ships in Havre, 25, 30, and 27 days — strike. One ship in! London 29 days — congestion. One ship in Cardiff, 28 days — coal strike. SIZE, SPEED AND EFFICIENCY 131 One ship in New York, 22 days — strike. Two ships in Marseilles 29 and 27 days — congestion."^ The Port Facilities Commission of the United States Shipping Board in a very valuable report on "Econo- mies effected by the more rapid turn-around of vessels in United States Ports" (prepared by X. W. Cleworth) arrives at the following interesting conclusions. The figures refer to an average size, steel, coal-burning vessel of 6,450 deadweight tons, which handles both cargo and passengers. The average daily expense in port is calcu- lated at almost $4,000, so that a reduction of the stay in port from 15 to 5 days means a saving of $40,000, or more than 5 per cent of the capitalization of the ves- sel, which is put at less than $800,000. The following table gives the additional steaming radius gained by shorter turn-around. Days in Port Additional Steaming Distance 14 264 13 528 12 792 n 1.0S6 la 1.320 9 1,584 S 1,848 7 . 2,172 6 2,376 The question of the commercial efficiency of a cargo carrier thus practically resolves itself into a ratio of the time spent at sea, when the vessel is performing useful work and earning money, to the time spent in port when loading or discharging, or idly waiting for its turn. 1 See Annalist, Nov. 3, 1919, p. 349. 132 OCEAN SHIPPING * ^ REFERENCES Abbot, W. J. American Merchant Ships and Sailors. (1902). Annin, R.. E. Ocean Shipping; Elements of Practical Steamship Operation. Chaps. VIII.-X. (1920.) Bank of the Manhattan Company. Ships and Shipping of Old New York. (1915). Dominions' Royal Commission. Final Report. (London, 1918). Gracie, Alexander. . Twenty Years Progress in Marine Construction. From the Smithsonian Report for 1913, pages 687-707. (1914.) Hough, B. O. Ocean Traffic and Trade. Chap. II. (1915.) Johnson and Huebner. Principles of Ocean Transportation. Chaps. I.-IV. (1919.) KiRKALDY, A. W. British Shipping. Book I. (1914.) Marvin, W. L. The American Merchant Marine. Its History and Romance from 1620-1902. (1902.) National Foreign Trade Council. Ocean Shipping. (19170 Riegel, R. Merchant Vessels (1921). Smith, J. R. The Ocean Carrier. (1908.) State Street Trust Company, Boston. Old Shipping Days in Boston. (1918.) Talbot, F. A. Steamship Conquest of the Sea. Chap; I. (1912). United States. Commissioner of Corporations. Transportation by Water in the United States. Part I, Chap. II. (1909). Commissioner of Navigation. Annual Report. House Committee on the Merchant Marine and Fisheries. Ex- hibits published as an adjmict to Part I of the Hearings on Inquiry into the operations of the United States Shipping Board on July 24, 25, 29, 30, 31, 1919 (1919). Shipping Board, Port and Harbor Facilities Commission. Economies effected by the more rapid turn-around of vessels in United States PorU.— Prepared by T. W. Cleworth. (1919.) CHAPTER VIII ■ MOTIVE POWER The romance of the sailing vessel. — On the basis of motive power ships may be divided into many classes, provided we include ships of all sizes and all ages. The muscular strength of man and beast, used to this day to move canal boats in many parts of the world, the power of river currents, which carried the primitive Coracle,^ and other forces must be mentioned. But in modern ocean transportation we rely on three forces only: wind, steam, and gas explosion. In each case we have a great variety of systems and devices by which these forces are harnessed and utilized. Although the hisitory of the sailing ship reaches far back into dim antiquity, the greatest progress in its de- velopment was made during the latter part of the nineteenth century. Strange to say, the sailing ship reached the height of its perfection at the very time when the demonstrated advantages of the steamer pro- nounced the doom of that picturesque and romantic type. The present generation is so accustomed to look upon the steamer as the only ocean carrier, that it is hard to believe that but thirty years ago the sailing vessel not only outnumbered the steamier but provided as well the larger tonnage. We note from the table given on page 134 1 A primitive vessel used on the Severn, made of skins sewed over wooden ribs ; cf . in modern technology, skin of a steel ship, seams of wooden or steel ships, etc. 1.33 134 OCEAN SHIPPING that the sailing vessel reached the height of its evolu- tion after 1850 and did not begin to decline until after 1880. As late as' 1890 sailing vessels 'had the advantage over steamers in regard to tonnage, and as late as 1896 in regard to numbers. TONNAGE OF VESSELS OF OVER 100 TONS (Thousands of net tons) Sail Steam Sail Tonnage per cent of total 1800 4,026 .. 100. 1820 5,814 20 100. 1830 7,100 111 98.5 1840 9,012 368 96. 1850 11,470 864 93. 1860 14,890 1,710 89. 1870 12,900 3,040 80.9 1880 ;.. 14,400 5,880 71. 1890 9,166 8,295 52.5 1900 6,674 13,857 32.S 1910 4,624 22,046 17.3 1918-19191 4,120 2 27,019 13.2 The rapid advance of steam is all the more pronounced when we consider that because of greater speed and regularity, the working capacity of the steamer is esti- mated to be four times as great as that of the sailing vessel — ton for ton. According to Lloyd's Register published October 13, 1920, of the world's total tonnage of 100 tons and upwards, re- corded by Lloyd's, 76 per cent use coal as fuel; 16.3 per cent are fitted to use oil as fuel for boilers; 1.7' use oil in internal combustion engines, and 6 per cent have sail power only. . ,,• .-../,,_ , : . iFrom Repertoire Gineral du Bureau Verit{vs,\9\&, 1919. • 2 SO tons and upward. MOTIVE POWER 135 Sail-tonnage under American flag. — Shipping under the American flag still contains a larger proportion of sail- tonnage than is the case of the merchant fleets of most countries. This is due to the fact that the American coastwise trade is restricted by law to American ves- sels only. The elimination of competition is responsible for the fact that a type of vessel, which in other fields of ocean shipping cannot withstand the modern steamer, still retains a certain portion of its former exclusive do- main. But in the United States also the sailing vessel is losing ground, the total steam tonnage having gtown from 1,837,200 tons in 1890 to 10,313,300 in 1919, while the corresponding sail tonnage decreased from 2,501,300 in 1890 to 2,465,500 in 1919. Though the sailing ship is losing ground rapidly, it is as yet no "quantite negligeable" over which one may pass in silence. The least one should know about this fascinating craft are the general principles of classifica- tion by which the innumerable types, so bewildering to the landsman, are distinguished, and. the main features of the evolution which led to the adoption of these types. Classification of sailing craft. — There are three main criteria of distinction. One is the method of rigging the sails to the masts, the second the number of masts, and the third the number of yards on each mast. If the yards or beams to which the sails are attached are horizontally fastened at their center to the masts so that the two halves extend equal distances on each side, the ves- sel is called "square-rigged." In the "fore-and-aft rig," however, the yardarms touch the mast with one end, thus extending full length from the mast. If we sym- bolize a square-rigged mast by J2 and a fore-and-aft by 136 OCEAN SHIPPING Y we may give an elucidating classification of sailing vessels as follows: SYMBOLIZED CLASSIFICATION OF SAILING VESSEL TYPES TypeoFSailingVessel Square riqged Masts Fore-and-aPt rigged Masls. Lugger -- tt Ketch* -)- -- Brig "^ "f~ Ship -|- 4- 4- ir ^ ^ 4=- 4^ 'Bark +■ ■+- Y Brigantine 4- Y Barkentinc -|- YY Sloop X Schooner ( also Sharpie, BucK-eye,ietc) -Ljf. U P TO Schooner YY YYYYY 1 In some ketches, fore-and-aft rig is used. Further modifications are possible by a combination of square-rigged and fore-and-aft rigged yards on the MOTIVE POWER 137 same mast and by other minor changes. The early American schooner represented such a compromise be- tween the two methods of rigging. Evolution of the SEiiling vessel. — If we view these dif- ferent classes historically, the development is naturally from the simple to the complex, from the small 'type to the larger one, and since 1850, from the square-rigged to the fore-and-aft rigged. Thus different types pre- vailed at different times, changes being brought about by new requirements. The hull of the sailing vessel also underwent a con- siderable change. The high cabin structure above the deck aft, and the high forecastles which characterized the caravel type of the Columbus days had disappeared in the early part of the seventeenth century. For centuries hull construction followed the old theoiry that it did not matter how roughly a vessel entered the water as long as she left it smoothly behind her. The Baltimore clipper with her full round bows, practically flat forward floor and narrow stern typified this long-cherished idea. This old-fashioned design was boldly attacked in 1841 by a young New York draftsmian, John Willis Grififiths, who "proposed a model of a knifelike, concave entrance, melt- ing into an easy run to the midship section, where in- stead of forward, he located the extreme breadth of beams. Thence this fullness or breadth melted again into the after-end in lines almost as fine as those for- ward. In place of the codfish underbody he gave his innovation a dead rise amidships that marked him at once in the estimation of the shipbuilding fraternity as hardly less than a lunatic. A vessel of that sharpness 138 OCEAN SHIPPING could not possibly stand up alongside a pier, let alone under sail." * The clipper ship. — After a healted controversy had raged for two years, the "Rainbow," constructed after Griffith's revolutionary design, was launched in the East River, New York, January, 1845. With that, a new era in shipbuilding had begun. The clipper ship was born, the ship that was to make the United States, temporarily, the mistress of the sea. The "Rainbow" was the first of "a fleet which was to make a starred banner the talis- man of the whole world's commerce." The clipper ship was designed for speed while the builders of the earlier type of sailing vessel had put carrying capacity uppermost. Speed became vital be- cause the potential competition of the steamer loomed up high as a threatening danger, especially in the North Atlantic traffic. Then, also, speed was vital in the long- distance trade with the Far East, where the younger merchant marine of America had to outdo its foreign rival. When gold was discovered in California a new incentive to speed was given. Later on, the Crimean War and the discovery of gold in Australia gave new employment to the builders and owners of 'lipper ships. It was during this era which was to last but a decade and a half, that a shipbuilding output was reached by American yards which remained unrivalled until the European war gave new life to that long neglected in- dustry. In 1855 no less than 583,450 gross tons of ship- ping were launched. The clipper ship represented the acme in the develop- ment of the square-rigged vessel. The schooner, the ^William Brown Meloney, The Heritage of Tyre, p. 52. MOTIVE POWER 139 must distinctive American vessel type, survived because of greater economy and efficiency. The sailing vesisels built in the United States have almost all been schooner rigged. With the use of steel hulls the sailing vessels reached a maximum development in the Thomas W. Lawson, a seven-m'asted schooner. Compared with the earlier types this was a monster vessel. "It had seven masts and measured 5,218 tons gross and 4,914 tons net. It could carry from 7,000 to 8,000 tons of cargo. The length over all was 375 ft., the beam 50 ft., the draft loaded 26 ft. The masits were 195 ft. high, the first 135 ft. being steel and the top 60 ft. wood. The maximum possible spread of sail was 43,000 square fit.,* an area about equal to an acre. Dummy engines were employed to handle the sails, to work the rudder, to load and unload the cargo, and for numerous other purposes. The vessel was as up-to-date in its appointments as is the most modern freight steamer, about the only differ- ence between the two vessels being in the motive power employed." ^ Sailing vessel and steamship compared. — The sailing ship possesses advantages in its free motive power and its relatively small, crew requirements. But these are more than offset by slow speed and uncertainty as to the time of delivery of the cargo. These two qualities of speed and regularity have become more and more important. The international exchange of goods is based on contracts made before the departure of the vessel. 1 The German sailing craft "Preussen" had a maximum possible spread of 60,000 square feet according to J. Russell Smith, The Ocean Carrier. 2 Johnson and Huebner, Principles of Ocean Transportation, p. 13. 140 OCEAN SHIPPING Though the sailing vessel is being outclassed steadily by its more efficient rival, it is not to be assumed that it will vanish altogether. In two distinct services, its use- fulness will probably continue; in the coasting trade, which for some districts and some products is irregular and can not easily be organized into steamer service, and in the skirmish work of international trade, which must precede the establishment of new steamer connec- tions. But the long-cherished theory that the sailing vessel will remain the exclusive carrier of certain classes of bulky commodities on long voyages, such as the nitrate cargo from Chile to Europe, will have to be dismissed in the face of 'the recent development in these trades. The future of the sailer. — ^The future life of the sailing vessel will be prolonged by the use of auxiliary motors. The Literary Digest for April 10, 1920, published an in- teresting article which discussed this important subject in a novel and surprising manner. We giye the essence of the article by quoting a few paragraphs : "The sailing ship is to have a new lease of life. She held the seas until the late 70's, in competition with the ocean steamer, in- vented more than half a century earlier. Then came the day of lowered prices of fuel and machinery, and the sail began to vanish from the oceans. She has nearly gone, but now she is coming back. Steam is expensive; fuel is high; but the winds of heaven blow as of old. C. O. Liljegren, of Goteborg, Sweden, who makes this prediction in The Pacific Marine Review (San Francisco), tells us, however, that our present typt of auxiliary sailing ship is not a success. She needs more power and more sails. He sketches what he believes will prove to be the commercial carrier of the near future, which he names the "motor clipper." She will be half as fast again as the old clipper-ship and will carry twice as much; MOTIVE POWER 141 while, in comparison with our present sailing-vessels, she will be thrice as fast and carry twenty-five per cent more. Her gross rev- enue should be no less than five times as great. "The reader may wonder why we should bother about the sail- ing ship when steamers and motor-ships are plentiful and more efficient than ever? Because, Mr. Liljegren tells us, coal and fuel are needed by industry, by land transportation, and by passenger- ships, and because statistics show that the day of the wind-driven ship is coming again. He explains : "The profit derived from a given ship is dependent on two widely different fundamental conditions : the size, form and effici- ency of the ship with its motor and propeller, and the general price-level. Part of the first condition has been indicated herein; it is the sphere where the skill of the designer and builder of the ship is paramount. But in the general price level, or state of the market, the action of man is practically excluded, at least as re- gards the individual. Only the concerted action of nations, as in great wars, has any effect on the price-level. "Now the general question — ^wind-driven versus machine-driven ships — is clearly decided by the price of fuel and machinery.' If coal and machinery were cheap enough, no sailing ship could exist; on the other hand, high price-level means high cost of fuel and machinery. At a certain point, machine-driven ships must be oper- ated at a loss and laid up, unless freight-rates rise too. And just here is the chance of the sailing ship— of the right kind." Improvements in steamship construction. — The rapid- ity with which the steamship has conquered the field is largely due. to the continuous process of perfection going on in the construction of the hull as well as of the marine engine. The former owes its development largely to the scientific study of the strength problem by means of the "girder theory," and to the labors of the classification societies which have shown how to combine strength wlith lightness. When the experimental tank method of research was put forward we obtained a definite means 142 OCEAN SHIPPING of designing form and propellers, thus assuring a mini- mum waste of power and maximum useful application of the same. Evolution of the marine engine. — As to the marine engine, it was mentioned that the energy obtained from each pound of coal burned has been multiplied within a few decades. The story of this achievement is worth recounting briefly. Up to 1854, which year marks the successful introduction of the compound engine, the progress made was confined largely to such improve- ments which would assure higher steam pressure and to modifications necessitated by the transition from paddle wheel to screw propulsion, around 1840. In 1881 the introduction of the triple expansion type of engine meant another step forward. Its particular variation, known as the three-crank design — proved so successful that it has survived unchanged in all essen- tials to this day. Compared with this advance the adop- tion of the quadruple expansion engine since 1894 is of minor importance. On account of its greater running smoothness the quadruple engine has now superseded the triple expansion type for ships trading on long voy- ages and m'ore especially for passenger ships. In the case of cargo carriers, the triple expansion engine is still the rule. The coming of the turbine, — The difficulties of con- struction and management of very large units of recipro- cating engines, together with lessened prospects of fur- ther improvement in steam consumption led to the adoption of the steam turbine. Two types have been J most prominent in marine construction : the de Layal turbine of Swedish origin, and the English Parsons MOTIVE POWER 143 type. The former was invented in 1883, the latter in 1884. The turbine entered the Atlantic lists in 1905 and was firmly established by the phenomenal success of the Lusitania and Mauretania in 1907. A further im- provement was accomplished in the next year by the combined use of the reciprocating steam engine and the turbine, which retained the low speed of revolution of the reciprocating engine, with its accompanying favorable propeller efficiency, while at the same time effectively utilizing the expansion of the steam and the condenser pressure. In describing the machinery of the Britannic, the huge White Star liner lost during the war, its com- pany states: "The result (pi using the two types to- gether) is very much higher economy than is possible with the reciprocating engine only." To increase the steam efficiency in turbines, the same principle that marked the evolution of the reciprocating engine was applied ; namely, the compounding of several turbines together in such a way that the steam passes from one to the other. Several ships with a three series type have been put into service. Electricity's part in ship propulsion. — The usefulness of the steam turbine for marine propulsion has been jjreatly increased by the introduction of electric, hy- draulic and gear-wheel transmission. The outstanding difficulty in applying the turbine to ship propulsion has been that, while high speed rotation is necessary to ob- tain the maximum turbine efficiency, the propellers are most efficient at a very much lower speed. The trans- mission represents the bridge between the high speed turbine and the slow-running propeller. The progress 144 OCEAN SHIPPING of the geared turbine ship is demonstrated by the follow- ing figures: Ships equipped with geared turbines, classed by Lloyds : 1916-1917 23 new vessels of 153,805 tons. 1917-1918 72 new vessels of 367,960 tons. 1918-1919 183 new vessels of 1,051,302 tons. While the electric transmission^ is used on one or two of the largest units of the United States battle fleet, there are only four commercial vessels equipped with a turbo- electric plant, according to the latest Lloyds' Register, the largest of which is the Wulsty Castle of 3,566 tons capable of carrying 6,000 tons of cargo. In October 1920, the steamship Eclipse, the first American electrically driven general cargo earner was completed and delivered to the Shipping Board for charter to the American Line. She is of almost 12,000 dead weight tons, 440 feet long and has a beam of 56 feet. The old Powhatan, now the Cuba, has the honor of being the first electrically driven passenger liner. She is in the service of the Coast Steamship Com- pany. She makes about 175^ knots, running between Jack- sonville and Havana. The motor ship. — Before the turbine has reached the full limit of its potentialities, a new type of marine pro- pulsion is gaining in importance with almost incredible rapidity, i. e., the internal combustion engine, especially that of the Diesel type : "This type of engine was invented by Dr. Rudolf Diesel, a Bavarian engineer. The difference between an automobile engine iSee W. L. R. Emmet, "The Electric Propulsion of Ships," in The Electric Ship, General Electric Company, January, 1^0. MOTIVE POWER 145 -and a Diesel engine is, generally, that all the fuel in an automobile engine is burned at once, while in a Diesel engine it is burned gradually, and so gives power more like the steam engine. Air is compressed in Diesel cylinders under great pressure, and then the fuel, consisting of crude petroleum or other heavy oils, is forced into the compressed air by greater outside pressure. This raises the temperature for the air in the cylinder and turns the oil into a gas." 1 The fuel used by Dieseled ships is heavy oil. But oil can also be used and is increasingly being used in steam- ers, both in connection with the turbine and reciprocat- ing engines. The application of the internal combustion engine to marine propulsion is no new development, small engines for the purpose having been constructed thirty years ago. Especially since 1910, good progress has been made, and the following table of typical vessels shows the ad- vance in the size of motor ships: TYPICAL MOTOR SHIPS CONSTRUCTED DURING 1910-1918 Vessel Year Tons Screws Cylinders Vulcanus 1910 1.179 single 6 Selandia 1912 4,950 twin 16 Siam 1913 5,296 Fionia 1914 5,219 Panama 1915 5,239 Glenamoy 1916 7,269 denary 1917 5,075 Glenapp 1918 7,314 16 12 12 12 12 16 There are two reasons why the development of the motor ship is at present very rapid, particularly in Eu- rope. In the first place, the apparent success of such lines as the Asiatic Company, the Glen Line and the North 1 See Edward Hurley, When Coal Oil Johnny Goes to Sea, p. 65, 146 OCEAN SHIPPING Star Company, which may be considered pioneers in the field, is attracting the attention of shipowners and in- vites emulation. Secondly, the increasing cost of coal, particularly in European ports, and the world-wide labor unrest, which causes delay in bunkering and unfavorably affects the operation of steamers, in general strongly emphasize the advantages of oil. Motorship, in a re- cent issue, reported on good authority that there are ap- proximately 130 seagoing motor ships, aggregating up- ward of 800,000 deadweight tons, now being built in Europe. Early 1921 reports to Lloyd's Register of shipping show that 454,000 gross tons of motorships are being built in the world at present. During 1920 there were launched in the world 190,000 gross tons of vessels fitted with in- ternal combustion engines. Most of these vessels are of the larger liner class. Perhaps the most remarkable feature of the new development is the whole-hearted way in which Great Britain has taken up the construction of this new type of vessel. Until recently the Scandinavian countries, stimulated by their well-known lack of coal, led in this new phase of marine construction. But now we read that not only has the greait Belfast ship-building firm of Harland and Wolf opened a new yard on the Clyde, de- signed for motor ships to the exclusion of others, but also that such firms as the Sir W. G. Armstrong and Whitworth Company of Newcastle, the Vickers Fetters Ltd. of Ipswich, and many others, are building motor ships. There are about twenty Diesel engine ships building in Great Britain, mostly of 10,000 tons dead- weight, but including four 13,000 ton ships for the Glen Line. The British Admiralty likewise seems fully aware of the possibilities of the Diesel engine. The late Lord Fisher, in a ■MOTIVE POWER 147 letter to the Times, September 1919, wrote : "Half the navy wants scrapping and the other half will be equally useless in a very few years, because of the internal combustion engine and oil," and a little further on he said: "The hearts of the Admiralty should be filled with the internal combustion engine." It is interesting to compare this recent staitement with the following words of another great English naval authority, Mr. "Winston Churchill: "Coal will continue to be the main basis of motive power in the line of battle for the present." And that was writ- ten fifteen years ago. American experience with Diesel-driven ships. — ^As far as this country is concerned, the adoption of the new engine during the war was considered inadvisjfble in view of the lack of workmen and engineers experienced in the building of such an intricate mechanism as the latest marine types of Diesel engines. Also the problem of finding the necessary number of skilled engineers capable of operating them was a handicap. However, since then a change has been brought about. The Bethle- hem Steel Corporation has developed a new type of marine Diesel engine .especially adapted to the peculiarities of the American situation. The following statement of Charles M. Schwab made in the New York Times of August 28, 1920, speaks for itself : "It is a great pleasure for me to announce that the Beth- lehem Steel Corporation and the Bethlehem Shipbuilding Corporation, Ltd., have perfected a new two-cycle fuel- saving marine Diesel engine especially designed- for Ameri- can operating conditions and adapted to land use as well as cargo vessels of any size. In the science and practice of marine engineering this new engine represents a far greater advance over the oil-burning steamship than the latter is 148 OCEAN SHIPPING over the coal-fired steamship. It is also regarded as a signal triumph for American engineering skill in a field hitherto dominated entirely by Europeans. "The development of the new Bethlehem fuel-saving Diesel engine represents two distinctive phases of advance in marine engineering. "1. For the first time an internal combustion heavy oil engine for either marine or land uses has been perfected which is not only designed and built by Americans but is built especially for Americans and is adapted to American operating conditions. "2. For the first time a two-cycle internal combustion heavy oil engine has been perfected which produces the same horse-power as a four-cycle engine practically twice its size and is at the same time adapted to large cargo ships, while saving two-thirds in fuel cost alone, as compared with steam-driven oil-fired vessels. "Neither of these developments is theoretically a new idea. For years Europeans have successfully operated large ships with Diesel engines. The achievement of Arthur West, the Bethlehem designer, who is at the head of our power department, is in the adaptation of the two-cycle engine to American operation and in its perfection for prac- tical use in cargo vessels of any size. "The success of this engine has already been demon- strated in two ways. It was installed and operated for ten months as part of the power plant of the Bethlehem Steel Corporation at Bethlehem, Pa. It was then installed in our new ore-carrying vessel, the Cubore, which today completed on regular schedule time its first voyage to Cuba and return." It is to be hoped that this initial success augurs well for the future of Diesel engine construction in America. MOTIVE POWER 149 Oil more efficient than coal, — Many of the advantages which the motor ship possesses accrue from the use of oil instead of coal. But that substitution is not charac- teristic of the motor ship alone, since oil is now used on many steamers under the boilers. We therefore refer to the next chapter in which these advantages are fully discussed. It should be borne in mind, however, that the motor ship emphasizes these savings to a consider- able degree as the following diagram shows: LBS. OF FUEL CONSUMED pen MORse-poweR-Houn Courtesy of Tidewater Oil Company. Advantages of the motor ship. — But there are features peculiar to motor ships. Above all, they dispense with the boiler, and therefore the carrying capacity is in- creased by the space and weight of that bulky piece of equipment, besides the weight of the water in the boilers. As far as the latter is concerned, it should be mentioned that modern steamers carry their own condensers, which reduces the quantity of fresh water which has to be ISO OCEAN SHIPPING carried. On the other hand, the motor ship needs a certain quantity of water to cool the engines. Also the Diesel engines are somewhat larger than the turbines or reciprocating engines, so that not all the space saved by the absence of boilers is net gain. There are also some minor advantages, such as the saving in the racing of propellers in heavy weather, the constant readiness of the ship to start and the possibility of very rapid manoeuvring, with full ahead to full astern accomplished in a few seconds. There can be little doubt that the motor ship has suc- cessfully passed the experimental stage and has come to stay. President W. C. Teagle, of the Standard Oil Com- pany of New Jersey, writes of the Diesel engine : "Its future is reasonably secure. Within a few years we should see this type of internal combustion engine consuming low grade oil, driving large vessels across the seas with wonderful economy in both operating force and fuel consumption." Also, to quote Mr. Edward N. Hurley : "With the motor ship we can have an entirely new era in ocean transportation. It calls for skill and effects economies that will yield good wages; and its flexibility and speed S'hould facilitate rearrangement of the world's shipping routes, so the seaman may get home more fre- quently and have a home worth getting to. "The motor ship is here. But it still needs develop- ment and application. Thus far it has been built chiefly in small tonnage freighters running at moderate speed. These have been highly successful economically; but there are still certain shortcomings in machinery and organization to be dealt with. "The Diesel engine must be freed of some defects that MOTIVE POWER ISl have appeared under the stress of ocean voyages, and must also be built in larger units to furnish greater horse-power for bigger ships running at higher speed. The problems now are entirely questions of engineer- ing, and American ingenuity should prove adequate to develop the fast motor liner for passenger traffic." * 1 E. N. Hurley, When Coal Oil Johnny Goes to Sea, p. 6. REFERENCES Clark, A. H. The Clipper Ship Era, 1&43-1%9. (1911). General Electric Company. The Electric Ship. (1919) Hurley, E. N. The New Merchant Marine. Chap. XV. (1920). When Coal Oil Johnny goes to sea. (1918). Johnson and Huebner. Principles of Ocean Transportation. Chap. I-IV. (1919). KiRKALDY, A. W. British Shipping. Book I. (1914). Meloney, W. B. The Heritage of Tyre. (1917). ScHOLZ W. Die Stellung der Segelschiffahrt zur Weltschiffahrt und Technik. (1910). Standard Oil Company of New Jersey. Fuel oil Installations. Tide Water Oil Company. Fuel Oil. (1919). CHAPTER IX RECENT TENDENCIES IN THE DEVELOPMENT OF THE CARRIER War emergency prompts invention. — "Necessity is the mother of invention," and never was there a direr ne- cessity pressing upon the shoulders of mankind than that which the Great War brought in its train. For a time the greatest need . seemed to be men, then it was guns, then shells, but probably the loudest cry went up for ships and more ships. Ordinary means proved in- adequate to satisfy the extraordinary demand. So the war necessity set the inventive genius of man to work to produce new means. Nowhere was progress in ship construction more rapid than in this country, where existing shipbuilding facili- ties were as inadequate as potential expansion was enor- mous, and where the lack of the former could be filled from the surplus of resources with which this country is blessed. The pressing need of ships affected shipbuilding in two ways. It led to new methods of construction and it stimulated experimentation with and application of new materials and prompted a wider use of materials formerly known but despised. The economic background of the standardized ship. — The magnitude of the emergency construction task, — that is, of the task of providing tonnage to move mil- lions of soldiers, their equipment, food, etc., and to re- place the enormous war losses, — was such that existing 152 TENDENCIES IN CARRIER DEVELOPMENT 1S3 expedients were utterly insufficient. Existing yards, though enlarged, were crowded with work for the navy — mainly destroyers, submarine chasers, etc., — and with private orders. The shortage of trained shipworkers was such that when a Pacific yard had just succeeded in getting a train-load of riveters, etc., out to the coast, Atlantic yards would fetch them all the way across the continent to do their work. Moreover, the output of ship steel for many months in advance had been allotted to the existing yards for merchant work then under way, and for naval requirements. To the shortage of labor and material should be added the limitation of experience in shipbuilding, organization, etc. In the face of this, the United States was called upon to furnish an amount of tonnage, such as no country, not even Eng- land, had ever built in its record year. The overburdened condition of the shipbuilding in- dustry was in sharp contrast to the condition prevailing in other quarters. Owing to the standstill in the build- ing industry, and because of the cutting off of their material, many steel shops for structural and bridge work were idle. If a way could be devised whereby they could be set to work to build parts of ships, to be trans- ported by rail to great assembling shipyards, two dif- ficulties could be overcome at one time. And that is what happened. The "fabricated" ship, also called the structural sited standardized cargo vessel, was the solu- tion which saved the situation. Mr. Redfield proposes ship standardization. — In a let- ter written by the Shipping Board to the Senate Com- mittee of Commerce, May 5, 1917, credit is given to Ex-Secretary of Commerce Redfield, for having first proposed the scheme. We quote: 154 OCEAN SHIPPING "A reasonably careful investigation among the steel manufacturers has proved the feasibility of the scheme proposed by the Secretary of Commerce several years ago for the fabricatiop of the greater portion of the ma- terial entering into steel vessels at the many great fab- ricating plants of the country, and their assembling into the structure of the vessel at the seaboard or on the Great Lakes. A great bridge-building corporation, which has successfully met the competition of the entire world in a number of its enterprises, has seriously proposed to us to "build 100 ships of over 3,500 tons dead-weight carrying capacity, the first to be delivered within six months and one ship a day thereafter. They plan the utilization of Secretary Redfield's scheme of standard- ized fabricating and assembling the parts thereafter at the shipyard." Engineering aspects of standardized ship construction. — In May, 1916, the Department of Commerce issued a booklet entitled, Standardization in the Construction of Freight Ships, written by E. Piatt Stratton, a consult- ing engineer for the New York Board of Underwriters and formerly Supervisor of the American Bureau of Shipping. We quote the opening paragraph, as it sums up the general argument: "Signs multiply of a disposition in the United States so to standardize the construction of cargo types of steamships as to greatly reduce their cost. This ten- dency is to be encouraged in every way possible, since its successful development will go a long way toward making the United States entirely independent of other countries in the construction of ships for its foreign carrying, as the country always has been independent of foreign countries in the construction of ships for its TENDENCIES IN CARRIER DEVELOPMENT ISS domestic carrying." The pamphlet concludes with an excerpt from the Marine Engineer and Naval Architect of London, April, 1916, which shows that in England also naval builders were aware of the possibility as well' as of the advantages of this plan. English psychology against ship standardization. — But in those days the main argument was cheapness. This, however, was superseded in 1917 by the crying need for speed and quantity production. Prompted by these forces the Governments both of the United King- dom and the United States adopted standardized con- struction as the ofificial method. But in England con- ditions were very much less favorable to the plan than in the United States. The British mind is individualistic and abhors standardization. Fairplay voiced this horror as follows: "The principle "of standardization is a deadening, soul- destroying thing. It crushes individuality of design in production, just as it kills out individuality of perform- ance among workmen." * And' again, Walter Runciman, a British shipowner, said: "Put an end to the fandango moonshine of standard- ized ships, which nine-tenths of the people who use the phrase imagine to be an up-to-date, progressive inven- tion, whereas the type is wholly reactionary." ' Nevertheless, the British Government went ahead with its program, convinced that time, labor and material could be saved in this way. But the plan reached much larger proportions in the United States, where fabricat- i Fairplay, Sept. 13, 1917, p. 448. 2 Glasgow Herald, Dec. 29, 1917, p. 36. 156 OCEAN SHIPPING ing yards were created whose annual building capacity exceeded the maximum annual output of any nation. Fabricating methods explained by Mr. H. R. Sutphen. ^-The substitution of fabricating methods for regular shipbuilding practice involves important changes in con- struction. Without going into technical details we con- tent ourselves with quoting a statement of Mr. Henry R. Sutphen, the Vice-President of the Submarine Boat Corporation, read at the twenty-sixth general meeting of the Society of Naval Architects and Marine Engi- neers, held in Philadelphia, November 14 and 15, 1918: "Our problem was . first to use commercial structural shapes and plates that could be had in large quantities, and design the ships so that these could be assembled with a minimum of alteration through bending, and next, that the plans should be so developed that the bridge- builder and the structural shops should have no diffi- culty in reading the drawings and adapting their ex- perience and equipment to the fabrication of parts for ship construction. The naval architect had to speak and draw in terms familiar to the great army of struc- tural steel workers, requiring some radical modifications in the matter of classification details, and imposing rather pronounced departures from the ordinary ship- shaped models, in order that the materials at hand might be incorporated in the most efficient manner for maxi- mum production and accuracy of fit. In brief, this ne- cessitated the elimination of curves and the substitution of straight lines and angles wherever possible. Many modificaitions and innovations necessary. — "The decks are without camber and generally without sheer, the sides throughout the length of the parallel body are perpendicular, the bottom is flat, and is merged with the TENDENCIES IN CARRIER DEVELOPMENT 157 sides 'by a short and abrupt curved bilge. By eliminat- ing the deadrise characteristics of the vessel it was pos- sible to adopt a uniform size of floor throughout the parallel body and to have recourse to longitudinals which would all be of the same height. Forward and aft of the parallel body the model subscribes with reasonable closeness to that of the accepted design of ocean-going carriers. "So far as the straight parts of the parallel middle body, flat tank tops and flat decks were concerned, it was an easy matter. It was simply a case of making detail drawings exactly as they would be made for a railroad bridge, giving definite location by dimension of every hole, rivet, and each piece of steel. In all, some 330 drawings were made of details of ihuU fabri- cation. From these drawings all the steel was ordered from the mills exactly to the length required. In the molded portion of the ship, however, the problem be- came more complicated to the bridge engineer, as this section of the shell could not be mathematically de- veloped. Such plates and shapes were developed full size on the mold-loft floor, reproduced on template paper, having all rivet holes punched in them on proper gauge lines and for a matter of record carefully measured up and detailed to dimension on individual drawings. Even with complete drawings it was difficult for the fabricat- ing shops to reproduce the plates on account of the edges and gauge lines being curved. These lines could only be located by dimensioning a series of points on the curves. "As we could not count upon two men springing a batten and getting the same shape between two points, we overcame this phase of the problem by sending tern- 1S8 OCEAN SHIPPING plates of the shell plates in the molded sections to the fabricating companies. These templates, made on tem- plate paper approximately 1/32 inch thick, were direct copies of the original template developed on the mold- loft floor. A difficulty was experienced in the shrinkage and expansion of these templates, and to insure the change of shape of the templates, causing no miisfits, each template was marked before being sent out with certain dimensions. To begin with, the paper used is fairly heavy fabroid material, which has a rather low coefficient of expansion. It was then marked and cut in accordance with the development on the scrive board, and rivet-holes, etc., were laid out upon the paper, spaced and dimensioned with great accuracy." Rail transportation of parts affects construction. — But that was not all. Rail transportation had to be con- sidered also. Thus smoke-stacks, if they were to be manufactured .in inland structural shops, had to be so designed that their maximum diameter came within the width of an ordinary gondola car. The size of tunnels was another factor for which allowances had to be made. Nevertheless, in the case of the boats of the Submarine Company, 96 per cent, of the total weight of the hull was fabricated at outlying establishments, while 100,000 of the 4,270,000 rivets, were driven in at inland factories, where the work was done on a more economical basis. Chairman Hurley stated before the Senate Committee on Commerce, on December 21, 1917: "In the case of a fabricated ship, they lay the keel in a^ shipyard, and the old way was to bring all the plates there and drive the rivets on the framework. This plan is to have forty or fifty outside shops put two plates together and drive the rivets and TENDENCIES IN CARRIER DEVELOPMENT 159 bring the plates to the shipyard and put the plates on; and 50 per cent, of the riveting is done outside." The whole nation contributes to work of the fabricat- ing yard. — Twenty-eight steel mills supplied material to fifty-six fabricating plants, not to mention the contribut- ing labors of two hundred foundries, machine, pipe, joiner and equipment shops. We reproduce here a map which shows the various plants which contributed parts to the Hog Island yard. This map, better than a long story, reveals the gigantic task which those who organized and coordinated this work had to face. And Hog Island was only the biggest of several shipyards which worked along the same principle. The American International ship- building Company yard at Hog Island, the Subma- rine Boat Corporation yard at Newark Bay and the Mer- chant Shipbuilding Company yard at Bristol, Pa. (near Trenton, N. J.), were the three great establishments where fabricated ships were built for the United States Shipping Board Emergency Fleet Corporation. The map on page 160 shows the routes of steel from mills to fabricators and from fabricators to Hog Island. The record of the fabricated ships. — The important question now is : how do these ships compare in regard to operating economy and efficiency with the regular type of ship? This question is hard to answer in view of contradictory statements in contemporary literature. However, the facts that both Lloyd's and the American Bureau of Shipping gave these ships the highest rating, and that the Submarine Boat Corporation, according to re- cent reports, is willing to risk its money in continuing on its own account the building program which the United States Shipping Board cancelled, seem to indicate that they ought to be useful additions to the world mercantile fleet. The 160 OCEAN SHIPPING TENDENCIES IN CARRIER DEVELOPMENT 161 tests made at the Government Model Experimental Sta- tion disclosed that the ships are raither economical in their propulsion requirements. Many are oil-burners and carry their fuel in double bottoms. It seems cer- tain that standardization, quantity production, and con- tinuous process principles must lead to economies through reduced overhead, greater efficiency of special- ized working crews, large scale purchases of material, and above all through the influence of repetition in the production of parts, unless they are ofifset by drawbacks such as the following: Drawbacks of ship fabrication. — Drawbacks * of fab- ricating vs. building ships. (1) Operations to allow large scale production tend to grow too big, necessitating much red tape and excessive checking up. (2) High cost of transportation in assembling parts owing to : (a) long freight hauls from widely scattered mills. (b) high freight charges on set-up ship parts as compared with ship plate. (3) Waste, owing to necessity of installing" large warehouses where materials are apt to become jumbled. (4) Inefficiency of fabricators. (5) Difficulty of adjustment. (6) Idle capital tied up owing to impossibility of con- tinuous process. 1 Based largely on a statement given out by Charles M. Schwab, of the Bethlehem Steel Corporation, for a time in charge of the Emergency Fleet Corporation. (See Nautical Gazette, March 13, 1920.) 162 • OCEAN SHIPPING On the whole, modern tendencies in ship construction seem to call for such specialization of construction that the place for the standardized ship is undoubtedly limited. This is also the conclusion voiced by one of the leading shipbuilders of Europe, Dr. E. Foerster of Hamburg, in his valuable paper on "Wirtschaftliche Konstruktionsfragen im kiinftigen Schiffbau" (November 1919). The rivetless ship. — The efforts to speed up ship pro- duction have led to another innovation in shipbuilding, the introduction of the rivetless or welded ship. For ship repairs, thermit welding had the official approval of both Lloyds and American Bureau of Shipping; but it remained for the war need to lead to the attempt at dispensing with the riveter, or at least partly so. This new type of vessel is claimed to be: (1) lighter, because the weight of the rivet head is saved; the necessity of heavy buttressing to off- set the weakening: due to the rivet holes is ob- viated. (2) stronger, because the danger of tearing asunder along the row of rivet holes is eliminated. (3) more water-tight. Lord Pirrie, British Controller-General of Merchant Shipbuilding during the war, is reported as satisfied with the feasibility of this new system of building. The United States Shipping Board has been in close touch with experimental work and is making arrangements for the building of a number of 10,000-ton standard ships in which the use of rivets will be reduced to about 2j4 per cent, of the number usually used {Scientific Ameri- TENDENCIES IN CAkRlER DEVELOPMENT \6i can, September 28, 1918). In the second annual report of the Shipping Board we read the following: "In order to eliminate as far as possible the laborious process of riveting, the possibilities of electric welding have been carefully studied by a committee of experts, and this work has been so far developed that it is now possible to weld many of the steel parts of a ship. A notable saving in the weight of the ship is thus made possible, as well as the cheapening and hastening of production." The Isherwood System. — Anothef system of construc- tion, the "Isherwood" or longitudinal system, wihile not a result of the war, was more generally adopted because of its increased efficiency and of its economy of material and of labor during construction. The advantages of this system which, as the name implies, lays stress upon the longitudinal line and sets the transverse frames and beams at widely spaced in- tervals, generally twelve feet, are summed up as follows : "In summing up, therefore, it is quite evident that in the 'Isherwood' system is to "be found a method of constructing ships which, compared with the transverse system, provides, without extra cost to the owner, a much stronger and more scientifically constructed ves- sel, which carries a considerably increased deadweight on the same draught, eliminates wear and tear due to vibration, reduces the cost of maintenance, and presents a greater resistance to damage, besides possessing many more advantages of which the foregoing are but a few." * The following statistics show the extent to which this 1 See Fairplay, February 1, 1917. 164 OCEAN SHIPPING longitudinal system' of ship construction has progressed and the number of ships ordered during each particular year : Year No. of Ships Deadweight Capacity 1908 6 31,608 tons 1909 30 1^1,384 tons 1910 40 271,760 tons 1911 64 474,043 tons 1912 100 818,553 tons 1913 30 215,686 tons 1914 41 358,288 tons 1915 157 1,196,899 tons 1916 152 1,117,779 tons 1917 180 1,655,693 tons 1918 250 2,364,778 tons 1919 ". . 210 1,887,079 tons Totals 1,260 10,573,550 tons The Denman-Goethals Controversy. — The rush to get ships, coupled with the enormous strain upon the steel industry of the country due to the war needs not only of the United States, but also of the allied countries, prompted shipbuilders ^o turn from steel to other mate- rials as far as possible. In the first place we witnessed the temporary revival of the wooden shipbuilding indus- try, which became so notorious through the unfortunate controversy between Chairman Denman and General Goethals. When the storm of that discussion had sub- sided, it was found that while the steel ship is undoubt- edly far superior, the shortage of tonnage existing up to the armistice was such as to justify the building of wooden ships wherever this could be done without in- terfering, through division of capital, labor and manage- rial talent, with the steel ship program. As far as labor is concerned, wood shipbuilding, on the whole, draws upon sources of supply different from those used in steel ship construction. TENDENCIES IN CARRIER DEVELOPMENT 165 For a while, much was heard about composite ships, i.e., vessels with steel frames and wooden sheathing. Their career, however, was short-lived, as it was found that they cost almost as much as the all-steel ships with- out possessing many of their advantages. Experiments were also made with cast-iron ships. The concrete ship. — The war, furthermore, lent consider- able impetus to the construction of concrete vessels. Experiments with "ships of stone" had been made as early as 1849, when a Frenchman built and patented a concrete row-boat.^ But until comparatively recent times, few people knew of the consideration that had been given to the building of concrete boats, barges, ships and other floating constructions. It was again the ship shortage, caused by the war, which put the concrete ship on the map, that is to say, assured, it of world-wide attention and earnest consideration by the various governments. In the Second Annual Report of the United States Ship- ping Board we read that contracts for forty-two con- crete ship hulls were let, out of a total tonnage of approximately 300,000 tons. The reason which the Ship- ping Board gave for limiting the program to this figure was not fear of failure — it stated expressly that "the practicability of the concrete ship as an emergency agency has been established by investigation and experi- mentation" — but the fact that the hull-producing capac- ity of the country in steel and wood ships was in excess of what may be termed the power and equipment pro- ducing capacity for fitting out these ships. Much of the recent advance is due to the success of the concrete experts in working out a concrete aggrega- tion which is so light that it floats on water and yet has ^Scientific American, August 31, 1918, p. 165. 166 OCEAN SHIPPING Strength and toughness greater than that of the gravel or stone which is generally used. Advantages of concrete ships. — The advantages claimed for the concrete ship have been summarized as follows: "Concrete ships are fireproof. Wood-boring worms cannot attack the hull. Concrete ships are rat-proof. Concrete ships require practically no maintenance. 'Construction methods are economical and the cost is low. Concrete ships can be built quickly. Concrete ships will neither rot nor rust. Calking, painting, and similar maintenance of the hull is un- necessary. Concrete ships will withstand very rough usage. Materials required may be obtained readily anywhere at low cost. Less labor is required and cheaper labor may be employed. There is no likelihood that the hull of a properly constructed concrete ship will buckle. Because of the smooth surface and the absence of angular pro- jections, skin friction is greatly reduced. Concrete vessels may be floated before completion. ■Concrete vessels are lighter than similar ones of wood. Barnacles and other sea growths find conditions unfavorable to their growth." ^ It may be borne in mind that this compilation was made by the Portland Cement Company, a body by no means disinterested in the wide adoption of this scheme. The record of the "Faith." — The largest concrete ship built is the "Faith," launched in March, 1918, by the San Francisco Shipbuilding Company. The following description covers the most important details :^ 1 Concrete Ships, a Possible Solution of the Shipping Problem, published by the Portland Cement Association, December, 1917. 2 J. R. Smith, Influence of the Great War upon Shipping, p. 235. TENDENCIES IN CARRIER DEVELOPMENT 167 "It is ten times larger than any concrete vessel on record in the United States. The vessel is 320 feet long, 44yi feet vi^ide, 30 feet deep and draws when loaded 24 feet. The floor has a thickness of 4j4 inches and the walls of 4 inches. She weighs 600 tons more than a steel vessel of similar capacity. The six bulkheads and the deck are also made of concrete. The bottom of the vessel is covered with a wooden water-tight floor. Dis- placement is 7,900 tons; carrying capacity, 5,000 tons. Five hundred and forty tons of steel reinforcing in the form of bars and a basket work of steel mesh were used. The bars were welded together, thus reducing to a mini- mum the quantity of steel required by avoiding laps that otherwise would have been necessary. The engines are oil-burners of 1,750 horse-power. The speed of the vessel is 10-11 knots, 160 barrels of oil a day being con- sumed. In the designing of the vessel no provision was made for water ballast, as the designers believed that the heavy concrete floor would make the vessel ride evenly. The vessel was launched on March 14, exactly as previously announced, and just six weeks after the con- crete was poured. She was fully equipped by May 1, passed her trial trips satisfactorily and went to work early in May. The cost of the vessel was $750,000, a large part of which is due to the fact that it was a first attempt." Classification of concrete ships. — On the basis of con- struction two main types are distinguished, the mono- lithic and the unital ship. The former is moulded and when finished appears as one piece of concrete. In the case of the latter, different parts are moulded independ- ently and afterwards put together. 168 OCEAN SHIPPING An important measure of the success of the new method of ship construction is the rating given to it by the great classification societies, principally Lloyds. This conservative and authoritative body gave the highest rating to a number of reinforced concrete ships, although placing them in an experimental class which involves the necessity of renewing the rating at the end of a year or voyage, as the case may be. If the fact that the Shipping Board Emergency Fleet Corporation cancelled all those contracts for concrete ships wihich could be given up without incurring too great a loss, is to be taken as a criterion for the perman- ency of the concrete ship's success, its immediate future is not overbright. However, further improvements in producing the material itself and in applying it to ship construction, coupled with the abnormal rise in the price of steel, could turn the tables to the new comer's ad- vantage. Special vessel types. — There is another phase of de- velopment to be considered here which did not receive its stimulus from ship shortage but which is a con- comitant of the general progress in ship construction, and a response to the more exacting demands of com- merce. We refer to the increasing use of ships built for specific trades, ships equipped with special installa- tions to enhance their usefulness by reduced turn-around, better utilization of cargo space, and greater attention given to the handling of cargo. The most conspicuous of these specialty ships is the oil tanker. We had occasion to mention the enormous increase of this type of carrier during the war. In view of the extraordinary importance of the tank steamer of to-day, its history is interesting. TENDENCIES IN CARRIER DEVELOPMENT 169 The evolution of the tanker. — The early method of shipping oil in forty-gallon barrels was dangerous and not economical, — dangerous because in cases where stor- age was faulty the barrel "got a roll on it" ; — not econ- omical because of the lost space, amounting to practically half the loading capacity of the ship. The four-gallon tin cases, twos or fours packed in wooden cases, effected a more economical stowage. Steamers were especially de- signed for the transport of oil in cases. But the loading and unloading of barrels and cases alike was a tedious and expensive factor ; expensive not merely because of the labor cost, but perhaps more so on account of the vessel's time wasted. To discharge a vessel loaded with 10,000 barrels of oil required at least four days. Difficulties of bulk transportation. — The carrying of oil in bulk proved to be the solution, but not until num- erous difficulties had been overcome. Petroleum ex- pands easily under the influence of rising temperature, approximately at the rate of 1 per cent per 20 degrees Fahrenheit. On a sea voyage variations in temperature of from 40 to 50 degrees are not unusual, which would more than suffice to burst open the fully loaded and sealed tanks. "To provide for the expansion of oil due to increase in temperature and to prevent explosion due to the form- ing of gases, each tank is also fitted with an expansion trunk. Some tank vessels are very large, having numer- ous deep oil tanks, additional 'summer tanks' between the main and afterdecks for tihe stowage of oil during the warmer seasons, and a cargo hold as well as addi- tional spaces below the 'shelter deck' for the transporta- tion of miscellaneous freight cargoes other than oil." ^ ^Johnson and Huebner, op. cit., p. 44. 170 OCEAN SHIPPING On the other hand, contraction would create empty spaces, equally dangerous in rough weather. The in- flammability of petrol, and the ease with which it pene- trates tihe least opening, severely tested the builders' skill. The danger from the explosion of the very vol- atile gas which remains long after the petroleum has been removed, was another obstacle to be conquered. Even to-day many problems of the tanker await their solution; thus the greater movement of liquid cargo ofifers many unpleasant surprises to those who have to navigate the ship. Tank tonnage grows rapidly. — All the more remark- able is the rapid evolution which began in 1886 ^, when the first specially constructed tank steamer "Gliickauf" was built in Newcastle-on-Tyrie, for Mr. Riiedmann of Geestemtinde, Germany, who is the pioneer in this field. It is amusing to compare the 2,600 tons of oil which this prototype could carry, with the latest tankers, ordered by the Standard Oil Company, which are to have a dead- weight capacity of 20,500 tons, enabling them to carry 140,000 barrels of petroleum, or with the largest tanker afloat at this time, the "San Fernando" of the Eagle Oil Transport Company of London, which has a dead- weight capacity of 18,000 tons. At the end of 1920, the world's tanker fleet, according to Lloyd's Register, consisted of 709 power driven vessels and 124 sailing ships with an aggregate gross tonnage of 3,500,000 tons. 89 per cent of this fleet is owned by the United States and England. 1 Mention might be made of the fact that in 1873 two vessels in the Philadelphia-Antwerp service were equipped with tanks for bulk oil but the danger to the passenger service caused the disuse of the tank feature. See S. Fry, History of North Atlantic Steam Navi- gation, TENDENCIES IN CARRIER DEVELOPMENT 171 About 250 additional tank vessels are building to-day and when the tankers now under contruction are completed the tanker fleet of this country will total 390 vessels, while that of England will embrace 315 ships.^ There are other tank vessels besides those carrying petrol. Thus, to quote one example, the American Sugar Refining Company at present owns a steel tanker with a capacity of 750,000 gallons of bulk molasses, which operates between the West Indies and the United States. The same company has under construction a steel tank- er with a capacity of, approximately 1,250,000 gallons. This vessel deserves particular attention because it is intended to be a combination tanker and cargo steamer. We quote the following details from the Nautical Gazette of April 10, 1920: "This vessel will be of 6,300 tons deadweight, her dimensions being as follows : Length, between perpendiculars, 360 feet. ; breadth, SO ft. ; and depth, 29 feet. The specifications call for a single screw steamship with straight stem and elliptical stern, constructed on the longitudinal system of framing. The machinery will be located in the after end of the ship, pro- vision being made for separate engine and boiler rooms, aft of the pump room. The section of the vessel's double bottom directly beneath the machinery is to be divided into compartments for the carrying ot feed water. The hold will be divided into six tanks for the carrying of oil or molasses in bulk or general cargo, the fuel tank being located between tanks, numbers 3 and 4. The center line bulkhead extending to the upper deck will divide the tanks into port and starboard compartments, while the wing spaces between the main and upper decks will be divided into four summer tanks. The vessel will be constructed with large hatch openings, and equipped with two steel Sampson posts for the' expeditious handling of cargo." 1 See Nautical Gazette, February 5, 1921. p. 179. 172 OCEAN SHIPPING This utilization of a tanker for the triansportation of general cargo is of special interest. But, as yet, this is an exceptional case. It is an experiment. Among the most interesting innovations in the line of tank vessels are the combination oil and ore vessels which the Bethlehem Steel Corporation is said to be constructing for the Chile service of the Ore Steamship Company, a Bethlehem subsidiary. The new steamers, illustrated on page 173, have the following characteristics : length over-all, 571 feet, 6 inches ; length between perpendiculars, 550 feet ; breadth moulded, 72 feet; depth moulded, 44 feet; draft loaded designed, 32 feet 4 inches ; draft light estimated, 10 feet, 9 inches; block coefficient, 0.817; midsection coefficient, 0.989; longitudinal coefficient, 0.826; speed knots loaded, Uy2; cruising radius knots, 13,000; framing longitudinal; class A-1 American Bureau of Shipping; deadweight capa- city, 20,500 tons; displacement, 28,830 tons; complement, officers and crew, 53.* The plan is to utilize the full dead- weight capacity both ways by oil on the voyage to Chile and by ore when coming back. Drawbacks of tank vessels. — The great drawback of the tank vessel is its exclusive usefulness, i. e., it is limited to the one liquid bulk commodity for which it is constructed. (Only in the rarest cases is the carry- ing capacity utilized' in both directions of a voyage). Only occasionally a cargo of pig-iron or of similar nature is picked up. Whether experiments in the carrying of cocoanut oil on the return voyage will lead to a complete success is so far questionable. But exactly in this one- sided employment lies the secret of the success of the specialty ship. The idea is to build an ideal ship for 1 Marine Review, April, 1921, p. 161. TENDENCIES IN CARRIER DEVELOPMENT 173 COMBINATION OIL AND ORE VESSEL •"" <^' >..>^r..«..i MIDSHIP I SECTION J Courtesy Marine Review. NEW CARRIER SHOWS RADICAL HULL DESIGN Combined freighter-tanker for steelmaking interests departs widely from accepted ship designs. Either bulk or liquid freight will orovide full deadweight cargo 174 OCEAN SHIPPING one particular cargo and turn it around so fast by means of mechanical loading and unloadijig devices — ^pumps in the case of tank vessels — that the net result is better than could be achieved by the old fashioned tramp, which was built to suit the greatest number of tasks imagin- able. Coal and ore vessels. — This modern tendency to em- ploy specialty type is spreading. Many years ago it in- vaded the British coal trade, especially the Eastern coal trade, with near-by continental poi*ts. Self trimming colliers with mechanical loading and unloading devices made their appearance and successfully competed with the old-fashioned tramp. The Ore Steamship Company, a Bethlehem Steel subsidiary, with its fleet of "cubore" ships, is making the round trip between Cuba and Balti- more in twelve days, carrying over 11,000 tons of ore on each trip, and is another example of this tendency. In this particular case it is simply an application to ocean shipping of a practice well established on the Great Lakes, though here a return cargo of coal is usually taken in the opposite direction of the ore stream. Also in the lumber trade a special type of vessel has been developed, — the sea sdiooner. ' Refrigerator ships. — ^There remains for discussion an- other important group of specialty types, those built to carry perishables. The first trade in which they were employed was the meat-carrying business. We read that in 1880, the first shipment from Australia, consisting of 400 carcasses of mutton, was landed in London. * Twenty years later the importation of sheep and lambs had in- creased to over 7 million carcasses; by 1910, the number * Johnson and Huebner, op. cit., p. 44. 2 Kirkaldy, The British Shipping Industry, p. 114, TENDENCIES IN CARRIER DEVELOPMENT 175 had increased to 13 million, to which must be added, over 4 million carcasses of beef. Charles Tellier, of Paris, is given credit for having built the first refrigerator ship, the "Frigorifique," which carried fresh meat at 32 degrees for three months.'^ A modern refrigerator ship is equipped with miles of cooling coils — one is described as having 73,000 linear feet, or over 13 miles of pipe,^ which are kept cool either by the older ammonia process or the more recent ethyl- chloride method. "The method adopted is to line the ship's side with wooden board- ing, leaving a space of about twelve inches width between the wood and the plating of the ship's side and deck. This space is filled up with either charcoal or silicate cotton, for the purpose of keeping the heat out and the cold in. Thus considerable cargo space is sacrificed, and if there be no meat available, and the vessel has to load other forms of cargo, there is a loss. Moreover, if wool be stored in an insulated hold, it is impossible to use screws for stowing purposes, for though- by screwing the wool the quantity carried is increased, there is a danger of damaging the insulation; hence again there is a loss. It would be unwise, too, to carry heavy dead-weight cargo, such as ore or rails, in an insulated hold, owing to the possibility of damaging the insulation." ^ The largest fleet of refrigerator ships is probably the Blue Star Line, recently acquired by the Union Cold Storage Company (the British Beef Trust) consisting of fifteen steamers with an aggregate capacity of over '120,000 deadweight tons.* Much meat is also carried by combination passenger-freight ships which have portions of the cargo space equipped with cooling installations. I Newland, Romance of Modern Commerce, p. 190. ^Marine Review, Sept., 1919. s Kirkaldy, op. cit., p. 118. * Shipbuilding and Shipping Review, November 20, 1919. 176 OCEAN SHIPPING Similar facilities are found on fruit steamers, such as the banana carriers of the United Fruit Company. This fruit requires a constant temperature of 53 degrees to preserve it on the trip from the tropics.^ Reference to this type of carrier will be made in a later chapter. ' AdatQS, The Conquest of the Tropics, p. 124. REFERENCES FoERSTER, E. "Technik der Weltschiffahrt" in Nautische Bibliothek. Vol. 6 and 7. (Berlin, 1909). Hurley, E. N. The New Merchant Marine. Chaps. V., VI. and VIII. (1920). Johnson and Huebner. Principles of Ocean Transportation. Chap. IV. (1919). KiRKALDY, A. W. British Shipping. Book I. Chaps. IX.-XIII. (1914). . Portland Cement Association, Chicago. Various publications deal- ing with the subject of concrete ships. Riegel, R. Merchant Vessels (1921). Smith, J. R. The Effect of the Great War upon Shipping. No. 9 of Preliminary Economic Studies of the War. Published by the Carnegie Endowment for International Peace. (1919). SuTPHEN, H. R. Structural Steel Standardised Cargo Vessels. Paper read before the 26th General meeting of Society of Naval Architects and Marine Engineers. Philadelphia (1918). United States. Department of Commerce. Standardisation in the Construction of Freight Ships. By E. P. Stratton. (1916), Senate Committee on Commerce. Hearings pursuant to S. Res. •170 on United States Shipping Board Emergency Fleet Corpora- tion. Part VIII. (1919), CHAPTER X THE BUNKERING PROBLEM The United States leads in use of oil as marine fuel. — The outstanding feature of the present phase in the evolution of ocean transportation is the increasing use of fuel oil. The rapid rise of the motor ship with its oil'burning Diesel engine was outlined in a previous chapter, but besides this, an increasing percentage of the world's steam 'tonnage is being put on an oil-burn- ing basis. New ships are constructed to burn oil, old ones are being converted into oil-burners. The United States, whose newly acquired merchant marine, Because of its youth, reflects this tendency more strongly than the commercial fleets of other nations, has been foremost in the movement. "Eighty per cent, of the sea-going ships flying the American flag are, or soon will be, oil-burners. Less than 10 per cent, of ships flying foreign flags are oil-burners."* That America should lead seems quite natural, for this country at present produces more than 60 per cent, of the world's oil. From this it appears that this country can afford the transition more easily than those less favored. Many have foreseen the growing importance of oil as a marine fuel, but few would have dared to predict so rapid a transition from coal to oil as has actually taken place. Less than twenty years ago a British Royal commission found that the dawn of the oil age existed 1 Edward N. Hurley, The New Merchant Marine^ p. 194, 177 178 OCEAN SHIPPING only in the minds of dreamers gifted with too vivid an imagination. They could not foresee the war, however ; and it was the war emergency which accelerated a slow process so as to turn an evolution into a revolution. War causes transition from coal to oil. — Two main causes, originating in war conditions, were responsible for this remarkable change. In the first place the war caused an extraordinary labor shortage. The United States was called upon to build, almost overnight, a merchant marine numbering millions of tons. The dif- ficulty of finding shipbuilders was great; but the task of recruiting the sailors, stokers, engineers, etc., to man the fleet, seemed desperate. Consequently anything which limited the number of men required to run the ships was eager