report JO j c \ a» OF HON. J. G. CANNON OF ILLINOIS, FROM THE COMMITTEE ON THE POST-OFFICE AND POST-ROADS, MADE TO THE UNITED STATES HOUSE OF REPRESENTATIVES MARCH 1, 1878, AGAINST A n I Df'x™ EP0ETED BY THE maj ority of said committef to GR T J rN|. A n S |, l: l-r[ DY AGGEEGATING *3,130,000 IN AID OF A If Jf ™ MSHIPS FR0M NEW YORK AND NEW ORLEANS TO RIO DE JANEIRO IN BRAZIL effect. It would be awe^Tupo! legitimate commeroe ’| eneflcial in its' proposition, in effect, to give a bonusto »S ,ather than a benefit. It is a ships at a price greater than their value in N®f taln J’ e J sou |to make a sale of steara- would be an encouragement the lobby markets of the w »rld. Its passage “of Intot^theTe^iDmateAr ° f C °"/r, fcr ^ * «• indiistry, and economy make alegitLiie 8 aTemM “ of trade - a ” d V skill, ‘‘The keeps it in repair, wherever lie may be upon the globe 1 - we should ! t ! ^ P ro P ert .y ot the citizen houses and improve our harbors- we should at . the general expense, build light- nations. Then onr commerce on the ocean ‘tin??. c . 0 T ,u f ra al treaties with other left to private enterprise. ’ unfettered by legislation, can safely be t tabR." i0rity 0f the ~ a " d recom- J. G. CANNON. X>J* t, Mr. J. G. Cannon, from the Committee on the Post-Office and Post- Roads, to whom were referred bills II. R. Nos. 274,1123, 2578, 2637, and 2734, and for which a majority of the committee report a substitute and recommend its passage, dissents from the recommendation of the Major¬ ity, and asks leave to present his views: The substitute reported by the majority directs the Postmaster-Gen- eral to establish two lines of steamships, one from New York, and one from New Orleans, via Galveston, to Rio de Janeiro, in Brazil; each to run monthly; the Postmaster-General to advertise for the service; separate contracts for the two lines to be made; the maximum price for the service to be $30 per mile per annum for each line, aggregating, in round numbers, say $313,000 per annum, and to continue for ten years. The steamers to be built in the United States, and to be of not less than 3,000 tons each. In presenting my views to the House upon the legislation proposed by the committee, I concur with the majority that the same is not im¬ portant primarily for the mail service, but is recommended by the ma¬ jority for the purpose of promoting our foreign commerce, stimulating manufactures, by finding a market for the products of the United States, and for the further purpose of enabling our merchant marine to carry the freight on the ocean now carried by vessels sailing under foreign flags. Therefore I shall discuss the proposed legislation with reference to the effect it would have upon these objects, dealing with facts rather than theories ; and if I shall contribute anything which will assist the House in ascertaining the facts bearing upon these propositions, and in arriv¬ ing at a correct conclusion in their solution, I will have accomplished all I proposed. As the bill recommended is special in its provisions—for the estab¬ lishment of steamship lines between the United States and Brazil—I will first refer to OUR COMMERCE WITH BRAZIL, incidentally, however, treating of the propriety of general legislation touching the grant of subsidies for ocean steamship service; for the pro¬ posed legislation, if had, is only the entering-wedge for a number of propositions to make appropriations from the Treasury in aid of steam¬ ship lines to all parts of the globe. Our imports from Brazil for six years—1860 to 1865, inclusive—aver¬ aged per annum $14,528,533, while our exports for the same period aver¬ aged per annum $5,713,511, the exports being over one-third of the imports. During those six years there was no subsidy by our govern¬ ment to steam or sail vessels, and it will be noticed that this was during the late war, when one-half of the people of the United States were not importing or exporting. Under act of Congress of , 1865, aline of ocean steamers, American built, received a subsidy of $150,000 per annum for ten years, and made monthly trips between New York and Rio de Janeiro, in Brazil, from 1866 to 1875, inclusive. The total amount of the subsidy was a million and a half. During those ten years we bought of Brazil merchandise of the average annual value of $29,'463,405. Our purchases of Brazil were more than twice 2 OCEAN MAIL STEAMSHIP SERVICE \ tbe amount they were annually for the six years prior to the subsidy. Now, the object of the subsidy was to build up a market in Brazil for our surplus breadstuff's and manufactured articles, yet during the same ten years we sold to Brazil an annual average value of only $6,364,600. This was in a time of peace, when the whole country was exporting; that is to say, we paid a million and a half dollars subsidy, and the re¬ sult was we annually sold to Brazil for ten years only $651,089 more than we did before, while we bought of Brazil $14,934,872 per annum more than formerly. Such a transaction on the part of a private indi¬ vidual would end in bankruptcy, and, if repeated, would warrant the appointment of a conservator to take charge of his estate. Yet it is proposed to not only repeat the folly of the former experiment but to double it; that, too, in light of the fact that the moment the United States quit paying the subsidy the steamship line went out of business. Now, in the last two years, without a subsidy and without a steam¬ ship line, our average annual exports to Brazil were $7,463,596; in round numbers $1,100,000 annually more than with subsidies. In the year 1877, while our exports to Brazil amounted to only $7,580,813, yet we carried in American sailing-ships of our exports and imports to and from that country (aggregating $51,000,000, as shown by official state¬ ments), $18,314,430, which is one and a half times more than our total exports to Brazil. If we had as good a carrying trade with all other nations in proportion to our exports thereto, our merchant marine would be superior to that of any other nation. The carrying in American bot¬ toms between Brazil and countries other than the United States I have no means of ascertaining, but am satisfied it was considerable. As a matter of general interest, as well as to show the correctness of above statements, I append to this report a table showing the total annual imports and exports between the United States and Brazil during the fiscal years ended June 30, 1860, to 1877, inclusive, prepared by Hon. Edward Young, Chief of Bureau of Statistics: Statement of imports and exports from and to Brazil during the fiscal years ended June 30, 1860, to 1877, inclusive. Merchandise. 1860 1861 1862 1863 1864 1865 1=66 1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 Fiscal years ended June 30— Imports. Domestic ex¬ ports. Foreign ex¬ ports. $21,204, 803 18.100, 456 12, 747,230 10, 945, 476 14, 388,889 9, 784, 312 16, 816, 803 19.100, 300 23, 595, 740 24, 837, 403 25,161, 219 30, 551, 324 30, 112, 384 38, 540, 376 43, 889, 647 42, 028, 863 45, 446, 381 43, 498, 041 $5,644, 040 4, 748, 202 3, 774, 249 7,454, 292 5, 252, 387 6,485, 872 5, 603, 817 4, 964, 308 5, 585, 465 5, 779, 559 5, 665, 098 5, 942,416 5,860, 755 7, 090, 987 7, 560, 502 7, 631, 865 7, 252, 218 7, 497, 118 $281, 089 192, 754 65, 647 185, 879 102, 368 94, 289 88, 042 135, 079 109, 839 77, 245 109, 225 71, 317 60, 592 106, 735 141, 654 110, 494 94, 162 83, 695 Bureau of Statistics, February 11,1878. Hon. Jos. G. Cannon, M. C. EDWAED YOUNG, Chief of Bureau. L OCEAN MAIL STEAMSHIP SERVICE. 3 In the year 1877 oar imports from Brazil were, free of duty, $40,205,- 874; dutiable, $3,292,167. Of this— Coffee amounted to.. $36,022,525 India rnbber. 2,598,347 Hides, skins, and furs (undressed).. . 1,138,819 Sugar.. 3,156,108 From proof before the committee, it appeared that when we removed the import-tax on coffee the Brazilian Government and its provinces placed an export-tax upon that article equal to the import-tax we re¬ moved. So we lost a large revenue from that source, without cheapen¬ ing the price to the consumer. As shown by the Commerce and Navi¬ gation Report, our exports to Brazil for 1877, of $7,580,813, consisted in part of— Flour. $3,781,008 Indian corn.. 1, 772 Other breadstuffs. 34,232 Common cotton goods.. 565,631 Codfish. 567,221 Turpentine.. 30,189 Lumber, boards, &c. 289,569 Oils. 904,129 Iron, steel, and all manufactures of same. 724,944 Notice flour was the principal export. It was in proof before the committee that the duty levied upon flour by the Brazilian Government and provinces was $2 per barrel. We cannot hope to increase the ex¬ port of thsTt article or other breadstuffs permanently to any consider¬ able extent, it being the policy of the Brazilian Empire to protect its own producers of wheat and corn, for the production of which a part of that empire is admirably fitted. The empire of Brazil extends from 5° 10' north latitude to 33° 46' 10" south latitude, and from 8° 21' 24" east longitude to 32° west longi¬ tude of Rio de Janeiro. It has many rivers navigable by steamers, vast prairies and forests, exceedingly fertile soils, and a variety ot climates, where tropical plants as well as those of temperate zones grow luxuriantly. It has a population of 12,000,000 souls. It is almost exclusively an agricultural country. I give a few extracts from a volume entitled u The Empire of Brazil at the Universal Exhibition of 1876 in Philadelphia,” furnished me in response to a request made for certain information of the Brazilian min¬ ister : The greater part of the population is employed in agriculture, which is the principal source of the national wealth. Nature appears to have destined Brazil to be one of the agricultural countries of the world. Large expanses of its soil are yet covered with majestic virgin forests, and still pre¬ serve their primitive fertility, which largely and generously compensates labor. Wheat and rye, which in Europe produce 20 for 1, and in Asia from 8 to 12, in various provinces yield from 20 to 60, and in some places—in the province of S. Pedro do Rio Grande do Sul—as much as 70 for 1. There are soils which, from 19.36 acres, yield any of the following products : cotton, from 329 to 918 kilograms ; coffee, 688.5 kilograms; manioc or cassava, 3,636 liters; maize, 1,818 liters. Maize, as a rule, yields an average of 150 for 1. It is not rare, however, to meet with soils which give from 250 to 300, and on the island of Fernando de Noronha 400 for have frequently been harvested. In the province of Parang thirty-six varieties of maize are planted. # # ##*#*# Maize is largely cultivated, especially in the southern provinces, where in the shape of bread, meal, and farina it constitutes a wholesome and nutritious food. It comes to market in a variety of forms. 4 OCEAN MAIL STEAMSHIP SERVICE. From all which it appears our market for cotton, corn, wheat, and pro¬ visions will not be found in Brazil, but, in the future as in the past, will be found in the old and thickly-settled countries of Europe, which market, amounting to many hundreds of millions annually (the great bulk of our exports) I will speak of further on in this report. I submit, if the people of Brazil become valuable customers of the United States, it must be for our manufactured products ; and before they will become extensive pur¬ chasers of those articles two things must occur; first, they must consume; secondly, we must sell to them at the same price like articles can be pur¬ chased elsewhere. And what is true as to Brazil is true as to every other country in the world, and as to all our products. The cotton- grower of the South must sell his cotton in the markets of the world (quality considered) as cheaply as it can be furnished from India or else¬ where. The agriculturist of the West must sell flour, wheat, Indian corn, and provisions as cheaply as they can be furnished from the Black Sea provinces, or he will go without a market. Commerce knows no country; self-interest prompts everybody everywhere to buy in the cheapest and sell in the dearest markets. If the cotton-grower of the South or the corn-producer of the West does not furnish his product as cheaply as his competitor elsewhere in the world no subsidy to aid him in transportation or to compete with cheaper labor in foreign countries can make him an enduring, profitable market; and so far as a subsidy would make him a temporary market, it would be a tax upon other indus¬ tries of the country, taking from one industry which is self-supporting to give to another which is not. And what is true as to the great sta pies of the country is true as to the manufactured articles for which we seek a market in foreign countries. Unless they can be furnished by us to foreign markets as cheaply as they can be procured from other sources we caunot successfully compete for the trade, and if we attempt so to do by making grants from the Treasury to steamship lines to carry such products, the steamships will run if we grant them sufficient subsidies only so long as the same are continued; and as in the past, when the subsidy ceases the steamship-line will cease to be operated. As I recollect, most of the gentlemen who appeared before the com¬ mittee favoring the subsidy stated that the manufacturers of cheap cotton goods in the United States are underselling the English manu¬ facturers. We exported last 3 r ear from the United States to Great Brit¬ ain cheap cottons to the value of two millions of dollars, and to Brazil to the value of over five hundred thousand dollars. These facts show that whenever we have anything to sell which is cheap it will find a market, for that matter, in Brazil, although there is no subsidized line of steamers to that coantry. Labor in the United States, by protection or otherwise, engaged iu producing, is better compensated than in Great Britain, France, and most other countries. I refer to the compensation of labor in the United States as a fact bearing upon our ability to sell manufactured articles in foreign countries. We are supreme within our own bounda¬ ries. We can prohibit the importation of goods manufactured abroad, or levy such duties upon them as, in addition to their cost, will enable our manufacturers to receive for like goods made and sold in this coun¬ try a sum equal to the cost of similar articles abroad with the freight, commission, and tax on importation added. But we cannot prohibit- competition outside our borders. The only way we can take our higher- priced goods and sell them abroad, and compete with the cheaper labor of other countries engaged in manufacturing like articles, is not to sub¬ sidize steamship lines only to carry the goods (we tried that, as before OCEAN MAIL STEAMSHIP SERVICE. 5 shown, for ten years to Brazil and failed), but, in addition, to appropri¬ ate sufficient money from the Treasury to make up the loss the dealer sustains when he comes to dispose of his wares, bought in the United States, in competition with other dealers who bought the same articles abroad for less money—a proposition to extend protection to a degree that no saue man ought to advocate, or advocating, if he presents the question fairly, would have no prospect of success. OCEAN TRANSPORTATION AND ITS EFFECT ON EXPORTATION. To show that the question as to who carries the goods on the ocean, i. e ., whether under an American or foreign flag, has but little effect on the amount of the products we actually sell abroad, I refer to our trade with Cuba, lying as it does right at our doors, with lines of mail-steam ers plying between New York, New Orleans, and Havana, and with a great many sailing vessels in the same trade. The Commerce and Nav¬ igation Beport shows that we imported from that island last year mer¬ chandise to the value of $65,828,395, while our domestic exports to Cuba were only $12,709,000, our sales being less than one-fifth of our pur¬ chases. Yet of the total $78,500,000 carried, $65,446,433 was carried in American vessels. Notice that our exports to Cuba are no larger than our exports to Brazil in proportion to the imports from the two countries, respectively. Whatever theories may be advanced as to proper legislation, experi¬ ence and practical results after all are the best guides. I therefore call attention to the effect of the subsidy to the Pacific Mail Company in aid of commerce between San Francisco and China. The Congress of the United States in 1865, to encourage this trade, granted a subsidy for establishing a steamship line, thereby hoping to find a market in China and Japan for our products. China especially—China, that wonderful and enduring empire of pre historic origin, w 7 ith its swarm of four hundred millions of inhabitants—was to be made tributary to our commerce and to consume our products; and all this through the establishment of a line of steamers, to run monthly from San Fran¬ cisco to that empire by the way of Japan. So a grant w r as made from the Treasury of $500,000 a year for ten years, aggregating $5,000,000. The service commenced in 1866. The steamers were built in the United States under the provisions of the law, although the cost was at least 25 per cent, greater than they could be built for elsewhere. Now let us note the result. I give a statement made by the Chief of the Bureau of Statistics, showing our imports from and exports to China, Hong- Kong, and Japan (merchandise only), during the fiscal years ended June 30, 1856 to 1877, inclusive, as follows: H. Bep. 346-2 OCEAN MAIL STEAMSHIP SERVICE. 3 •s . § 2 •i.1 *lj 'll £§? =: s A a ! * • W ■■smmmm llsligllslsSs .1 mMmimiii 20 ■2 SilsslSSIllsl I* — r-Tci" ©f n n in « £-' «T t-' it? rf 4 - 'SUES SSSS3 -O .2 Hiss .a •8 s mis fills' I IslEllSSllillSitllSP s’ § g §’ s' S’ s’ 1 1 s $ s s ’& s ’ s ' v iisiiisiisissirfiisiii g g g I s s S i’ g s S i’s i i s I f i i I -VMno'^WWnwWrforfWWrT r-TOV^ llllSSISIssl!iSIisS!SI o" 00 o' o' m" f-* —' o' in o of — ~n © © o' ao co ©j'-O lillliiiliiSilisSIsSss 00 X «* o x -r o g| I < O M O O H* China, including Hong-Kong. t China, including Hong-Kong and Japan. OCEAN MAIL STEAMSHIP SERVICE. 7 From which it appears that oar total imports from China and Houg- Kong, for the eleven years, 1856 to 1866, inclusive, were $103,357,620; while for the eleven years, 1867 to 1877, inclusive, they were $183,691,940, showing an increase of our purchases from China and Hong-Kong, for the last eleven years, of $75,337,330. That is a preiw good showing for China. Now let us look at the showing for the United States. For the eleven years, 1856 to 1866, inclusive, we sold of mer¬ chandise to China and Hong-Kong, $35,735,673, while for the eleven years, 1867 to 1877, inclusive, we exported merchandise to China and Hong-Kong to the value of $41,813,052; showing an increase for the last eleven years of our sales to China of $6,077,379. Now let us take an account of stock and see what we have made. First, we have paid a subsidy out of the Treasury of five millions of dollars, and bought seventy-five millions of dollars extra of the products of the Chinese; and in return the Chinese, in eleven years, have bought six millions of dollars extra of our goods. I wish some worthy brother legislator, who is in favor of a subsidy, the old flag, and an appropriation, would tell us how long it would take us at this rate to become the wealthiest nation in the world? We started out to take the Chinese. Result: the Chinese have taken us, and the Pacific Mail Steamship Company has taken the five millions of dollars. But this is not all. The trade with Japan was to be secured by this subsidy. That trade has been entirely built up in the last 43 years. The result is we have purchased of the Japanese in that time merchan¬ dise to the value of $76,595,647, and have sold to them only $11,126,305. Thus it will be seen that the five millions of dollars levied upon the industries of the country to pay this subsidy, so far as benefiting the country was concerned, was absolutely thrown away. FORMER SUBSIDIES PAID BY THE UNITED STATES. The proposed legislation is by no means a new experiment in this couutry. My colleague on the committee, Mr. Freeman, addressed a letter to the Postmaster-General touching prior legislation and received an answer as follows : Post-Office Department, Office of Foreign Mails, Washington, D. C., February 20, 1878. Sir: I have the honor to inform you, in answer to your letter of this date, that the following is the statement of subsidies j)aid to different steamship lines since the year 1847, for translating the United States mails to and from foreign ports under the pro¬ visions of special acts of Congress, which was furnished to the Hon. T. W. Ferry, chair¬ man, &c., under date of the 15th instant. 1. A monthly service between New York and Bremerhaven, Germany, via Southamp¬ ton, England (distance 3,700 miles), at an annual pay of $200,000, agreeably to act of March 3, 1845. 2. A semi-monthly service between Charleston, S. C., and Havana, Cuba, via Savan¬ nah, Ga., and Key West, Fla. (distance 669 miles), at an annual pay of $50,000, agree¬ ably to acts of March 3, 1847, and July 10, 1848. 3. A semi-monthly service between New York and Aspinwall, New Granada, direct (distance 2,000 miles); between New York and New Orleans via Havana (distance 2,000 miles); and betweeu Havana and Aspinwall (distance 1,200 miles), at an annual pay of $290,000, agreeably to acts of March 3, 1847, and March 3, 1851. 4. A semi-monthly service between Astoria, Oregon, and Panama, New Granada, via San Francisco, Cal. (distance 4,200 miles), at an annual pay of $348,250, agreeably to acts of March 3, 1847, and March 3, 1851. 5. For 26 round-trips a year between New York and Liverpool, England, Collins line (distance 3,100 miles), at an annual pay of $858,000, agreeably to acts of March 3. 1847, and July 21, 1852. 8 OCEAN MAIL STEAMSHIP SERVICE. 6. A monthly service between New York and Havre, France, via Cowes, England (distance 3,270 miles), at an annual pay of $150,000, agreeably to act of March 3, 1847. 7. A monthly service between New York and Rio de Janeiro, Brazil, touching at Para, Pernambuco, and Bahia, Brazil (distance not stated), at an annual pay of $150,000, agreeably to act of May 28, 1864. 8. A monthlv service between San Francisco and Honolulu, Hawaiian Islands (dis¬ tance not stated), at an annual pay of $75,000, agreeably to act of March 2, 1867. 9. A monthly service between San Francisco and Hong-Kong, China, via Yokohama, Japan (distance 7,050 miles), at an annual pay of $500,000, agreeably to acts of Feb¬ ruary 17, 1865, and February 18, 1867. At present all the United States ocean mail steamship service is being performed under the provisions of the general law, which allows, as full compensation for the service, the amount of sea-postage on the mail conveyed. I am, very respectfully, your obedient servant, D. M. KEY, Postmaster-General. Hon. Chapman Freeman, House of Representatives. From which it appears that subsidies for the promotion of ocean com¬ merce were larger and more frequently granted while the Democratic party was in power, although the example was followed while the Re¬ publican party was in power; but from the beginning to the present these grants have not resulted in the permanent establishment of steam¬ ship service, but were a burthen upon the tax payer without any ade¬ quate return. OUR TRADE WITH FOREIGN COUNTRIES; ITS AMOUNT, WITH WHAT COUNTRIES, AND OF WHAT IT CONSISTS. Having inquired why Brazil, Japan, and China are not good custom¬ ers for the manufactured articles of the United States, I will state briefly the amount of our trade with other foreign countries and of what it consists. The following statement made by the Chief of the Bureau of Statistics shows the imports from and the gross exports of merchan¬ dise to foreign countries for the year ending June 30,1877, by countries and their dependencies, grouped together. OCEAN MAIL STEAMSHIP SERVICE, 9 Statement showing the imports from and the gross exports of merchandise to foreign coun¬ tries, with the excess of exports, for the year ended June 3i^ 1877. Countries. Austria. Belgium.. Chili. Denmark and dependencies: Denmark, Greenland, Iceland, and.the Faroe Islands. Danish West Indies. France and dependencies: Miquelon, Langley, and St. Pierre Islands. French Possessions, all other, including, &c. Germany. Great Britain and dependencies : England. Scotland. Ireland. Gibraltar . Nova Scotia, New Brunswick, and Prince Edward Island .. Quebec, Ontario, Manitoba, &c. British Columbia. Newfoundland and Labrador. British Possessions in Africa and adjacent islands. British Possessions in Australasia. Hayti.. Italy. Liberia. Mexico. . Netherlands and dependencies: Netherlands. Dutch West Indies and Dutch Guiana. Portugal and dependencies : Portugal. Azore, Madeira, and Cape Verde Islands. Portugal Possessions in Africa. Russia on the Baltic. San Domingo. Spain and dependencies: Spain. Sweden and Norway. Turkey and dependencies: Turkey in Europe. . Turkey in Asia. Turkey in Africa . All other countries in Africa... All other islands and ports, not elsewhere specified. Total. Imports from. Domestic and foreign exports to. Excess of exports over im¬ ports. Gold values. $414, 020 5, 079,149 689, 368 Mixed values. $2, 668, 546 18, 832, 059 2, 227, 551 $2, 254, 526 13, 752,910 1, 538,183 146,618 284, 480 3, 329, 725 750, 256 3,183, 207 465, 776 90 167, 392 32, 509, 365 304, 526 672, 086 58,107, 433 304, 436 504, 694 25, 598, 068 104, 912, 296 7, 771, 694 1, 050, 268 46, 934 ! 3, 701, 381 19, 728, 652 734, 722 112, 623 1, 016, 542 1,476,238 ] * 2, 779, 410 j 7,105, 230 57, 470 5, 204, 264 288, 269, 637 21, 103, 262 36, 588,156 2, 566, 446 6, 562, 571 29, 612, 710 1,243, 034 1.955, 865 1, 398, 361 5, 885, 467 3, 879, 230 8, 494, 668 124, 680 5, 893, 494 183, 357, 341 13, 331, 568 35, 537, 888 2, 519, 512 2, 861,190 9, 884, 058 508, 312 • 1, 843,242 381,819 4, 409,229 1, 099, 820 1, 389, 438 67, 210 689, 230 2, 547,119 690, 694 10, 568, 335 984, 630 8, 021,216 293, 936 524, 826 78, 514 2, 380, 764 415, 275 37, 640 4, 258, 344 687, 244 1, 855, 938 336, 761 37, 640 3, 848,147 168, 078 410, 197 519, 166 3, 280, 836 243, 562 10, 473, 476 3, 056, 769 7,192, 640 2, 813, 207 46, 714 235, 882 146, 421 378, 264 8, 344, 522 516, 330 477, 649 832, 024 71,713 8, 297, 808 280, 448 331, 228 453, 760 71, 713 204, 090, 301 543, 574, 478 339, 484, 177 10 OCEAN MAIL STEAMSHIP SERVICE. Statement showing merchandise imports from and gross merchandise exports to foreign coun¬ tries, ivith excess of imports, for the year ended June 30,1877. Countries. Argentine Eepublic. Brazil. Central American States. China. France and dependencies: France. French West Indies.. Great Britain and dependencies: British West Indies. British Honduras, and British Guiana. Hong-Kong and British East Indies. British Possessions, all other, not elsewhere specified. Greece. Hawaiian Islands ... Japan . Netherlands and dependencies: Dutch East Indies. Peru. Bussia on the Black Sea and Asiatic Eussia. Spain and dependencies: Cuba. Porto Bico. Spanish Possessions in Africa. Spanish Possessions, all other, not elsewhere specified. United States of Colombia. Uruguay. Venezuela. All other countries in South America,not elsewhere specified Total. Imports from. D om estic and foreign exports to. Excess of imports over ex¬ ports. Gold values. $3, 449, 309 43, 498, 041 2, 678, 672 11,130, 495 Mixed values. $1, 22tf, 782 7, 581, 813 960, 730 1, 707, 872 $2, 222, 527 35, 916, 228 1, 717. 942 9, 422, 623 47, 556,292 2, 322, 653 45,139, 918 1, 407, 578 2, 416, 374 915, 075 9, 729, 987 11, 896, 808 103, 297 523,128 2, 550, 335 13, 687, 061 9, 603, 035 4, 095, 474 52, 909 196, 628 1, 272, 949 1, 252, 346 126, 95a 7, 801, 334 50, 388 326, 500 1,277, 386 12, 434, 715 4, 511,214 1, 479, 511 208, 337 2, 667, 893 1, 300, 552 166, 086 1, 843, 321 178, 959 42, 251 65, 828, 395 4, 405, 752 184,573 7, 182, 284 5, 023, 326 2,195, 278 7, 000, 801 87. 276 13, 371, 578 2, 089, 585 107,193 74, 828 4, 020, 909 1, 100, 387 2,814, 041 286 52, 456, 817 2, 316,167 77, 380 7,107, 456 1,002, 417 1, 094, 891 4,186, 760 86, 990- 247, 232, 825 102,211,372 145, 021, 453 Bureau of Statistics, February 18,1878. EDWABD YOUNG. Chief -of Bureau of Statistics. From which it appears that we bought for the year 1877— Of foreign countries merchandise to the value of. $451, 323,12& And we sold to foreign countries merchandise to the value of. 045, 785, 850 Showing that we sold more than we bought (merchandise). 194,462,724 Of this we sold— To Great Britain and her dependencies merchandise to the value of. $403,164,183 And we bought of Great Britain and her dependencies. 162,281, 44£ Showing a balance of trade in our favor with that government and its dependencies alone of. 240,882,741 Largely more than two-thirds of our total sales were to Great Britain, while only slightly over one-third of our purchases were made from that country. Our sales to her consisted principally of cotton, breadstuff's, and provisions, that which we produced at a profit and without subsidy. And here let me remark that a great many lines of steamers ply between the United States and Great Britain; but while the contrary is fre¬ quently stated, Great Britain does not pay one cent of subsidy, directly or indirectly, to any ship plying between the United States and that country. This trade is purely for the reason that it is to her interest to buy our cotton, breadstuff's, and provisions, which we can sell cheaper than she can buy elsewhere. Our trade for same year w T as, in round numbers, with— Germany: Exports.,.$58, 000, 000 Imports. 32, 000, 000 Balance in our favor. 26, 000,000 OCEAN MAIL STEAMSHIP SERVICE. 11 Belgium: Exports. $19, 000, 000 Imports.-. 5, U00, 000 Balance in our favor. 14, 000,000 France: Imports.-. 50, 000, 000 Exports. 46,500, 000 Balance agaiDst us. 3,500, 000 Notice the large trade between the United States and Great Britain, notwithstanding neither one of the governments is paying subsidies to ocean steam or sail service between the two countries ; and the small trade in comparison we have with France, while that nation pays a sub¬ sidy to a line of steamers plying between Havre and the United States of $729,000 per annum. As I am discussing the proposition to subsidize steamship lines from the United States to Brazil, it is proper for me to state— THE SUBSIDIES BESTOWED BY OTHER GOVERNMENTS UPON STEAM¬ SHIP LINES TO BRAZIL AND ELSEWHERE. I do so because of the many glaring errors touching the same in the report of the majority of the committee. The committee, members of Congress, and the country have been deluged with pamphlets, ex-parte statements, &c., purporting to give data and facts touching these mat¬ ters, which are not only full of errors, but in many instances totally unreliable, and I am driven to the conclusion that the majority of the committee, without thorough investigation, have relied to a great degree upon such statements for information. On the 28th day of January last, in compliance with a resolution of the House, which I had the honor to introduce, the Postmaster-General transmitted to the House a tabular statement of the ocean mail-steamship service of foreign countries, compiled from official data in the office of foreign mails of his department, which was printed by the order of the House as Ex. Doc. No. 38, and which document, so far as it is necessary to this report, I annex as an appendix, marked A. Desiring to utilize the same so it could be determined at a glance the amount of subsidies paid the companies therein specified for each mile of service performed by them respectively, I referred it to the Secretary of the Navy, with a request that he give me the distances between ports and countries therein mentioned, with other information indicated. His reply I make a part of this report, as Appendix B, from which it appears that the only country in the world that now subsidizes a steamship line to Brazil is Belgium. Belgium pays ten cents a mile the round trip from Antwerp to Brazil and La Plata, tri-monthly service. France pays no subsidy to Brazil, but does pay $1.61 a mile for round- trip monthly service from Bordeaux to Buenos Ayres direct, while Great Britain and Germany pay sea postages only for mail service, and but slightly in excess of the amount the United States pays to American vessels for mail service, while Italy, for service monthly from Genoa to Buenos Ayres, pays less sea-postage than we do to American vessels. Yet, in the face of this official information, the majority of the commit¬ tee, by their report, inform the House, to quote from it literally, that “ England pays her lines about three dollars per mile, and France pays hers over seven dollars per mile, for every mile traveled for trans- 12 OCEAN MAIL STEAMSHIP SERVICE. porting tbe mail to Brazil.” The official data upon the one hand and the assertion upon the other require no comment. The majority place great stress upon the subsidies paid by Great Britain to her steamship service, yet the official data shows that the total amount of subsidies, other than ordinary sea-postages, paid aunu- ally by her at this time is $2,694,000, and over $2,000,000 of this is for service on the Mediterranean and to her East Indian possessions, and where she pays subsidies she does not pay sea-postages. The majority of the committee state that “ Europe has 200 steamships running to and from the United States.” Yet the official data shows that all these steamers only receive ordinary sea postages for mail serv¬ ice, except from Belgium, which pays thirty cents a mile the round trip for service between Antwerp and New York and Philadelphia (only four steamers required). And France pays to one line—Havre to New York— $2.80 per mile, only six steamers required; the other 190 steamers are operated without subsidy. I give the total amount of subsidies paid by different countries, other than sea-postage for mail service : Austria, annually, not to exceed. $340, G67 Belgium, total, not to exceed. 175, 000 Denmark, total. 18,495 France... 4, 677,778 Great Britain... 2, 694,000 Italy, not to exceed... 1, 564,505 Japan, total. 250,000 Netherlands, total. 44,800 Portugal. 100. 000 Germauy, for service on the Baltic. 54,000 These subsidies are paid only to a few lines. The great bulk of the steamship service of the world is wholly without subsidy, and I am glad to state that other countries are rapidly adopting the present prac¬ tice of the United States, i. e., paying a reasonable sea-postage for the mails actually carried and no more : for all cost of production, including transportation, has in the end to be paid by the consumer, and it is much better to let all persons compete for the ocean-trade upon equal footing than at the general expense to give the favorite or importunate few a bonus that either destroys fair competition or places in their pock¬ ets money without an equivalent. EXPENSE OF CARRYING OUR FOREIGN MAILS. The majority of the committee in their report tell us that it is estimated that the United States now pays foreign ship-owners yearly for carry¬ ing passengers, goods, and mails about $50,000,000. The report of the majority is admirably drawn, abounds in beautiful imagery and magnificent assertion, but its chief merit is its beauty. Certainly, its statement of fact aud correctness of conclusion cannot be relied upon. The Chief of Bureau of Statistics informs me that our total exports and imports from the United States last year amounted to $1,096,000,000. He estimates that the freight on this amount would be 6 per cent., or, $66,000,000. We cannot hope under the most favorable circumstances to carry more than one-half of the total exports and imports, aud one-half would have yielded freight money to amount of $33,000,000. We carried, in fact, in American vessels, freight, $14,500,000 ; balance we should have carried to place our merchant marine on equal footiug OCEAN MAIL STEAMSHIP SERVICE. 13 with the rest of the world, $18,500; so the majority of the committee in fixing it at $50,000,000, only miss it by $31,500,000. Another proof that the beautilul is not always true. And as to the amount it costs this government to carry the mails to Europe, I will quote from the Postmaster-GeneraPs Report for 1877 as follows, .page 10: The total weights of the mails dispatched from the United Stales to the postal- union countries during the year were as follows: Letters, 91,401,230 grams, equal to 3,224,427 ounces; printed matter and samples, 377,260,364 grams, equal to 13,308,887 ounces; being an increased w eight over 1876 of 74,518 ounces of letters, and 1,209,205 ounces of priuted matter and samples. A statement is appended of the weight of mails dispatched to each postal-union country. The cost of the United States transatlantic mail-steamship service for the year 1877 was $159,742.47, being a reduction of $12,600.61 from the cost of the same service for the year 1876. And the same report shows that the mails were transported for this sum for 514 trips from ports in this country to principal ports iu Europe. It is also true that the government collected more postage on the mail carried than it paid for the carriage. It is claimed that liberal subsidies to ocean steamship service would enable citizens of the United States to earn ocean-freights, thereby contributing to the general prosperity, and having the money earned come to the Unfted States instead of go to other countries. If the freight amount to as much as it costs to earn it, the business would give employment to a number of our citizens; but I have before shown that the wages for labor in this country is higher than in Europe, and we cannot protect labor beyond our own borders, as it comes in contact with cheaper labor from abroad. It was in proof before the committee that it costs 25 per cent, more for labor to man an American than it does a foreign steamer; so, if we subsidize at all, the subsidy, to be effective, must equal that given to the foreign steamer and the 25 per cent, greater wage our sailors receive over the wage of sailors employed in the for¬ eign steamer with which theycompete for business—a proposition to tax the many for the benefit of the few that cannot receive my approval. The Chief of the Bureau of Statistics estimates the indebtedness of the United States held abroad, national, State, municipal, and corporative at $1,200,000,000, the annual interest on which is $60,000,000, which large sum goes abroad annually. At least, let us first get rid of this debt abroad, which is a constant drain upon the resources of the coun¬ try and its citizens before gentlemen grow furious to tax the very people who are bearing this great burden to pay a bonus for the purposes indi¬ cated. It appeared from the statement of Mr. Welsh, president of the Amer¬ ican Steamship Company, which operates a weekly line from Philadel¬ phia to Liverpool, that his company commenced the service five years ago, which has been performed by four steamers of 3,000 tons each, American built, under the American flag, and two foreign-built steam¬ ers, under the British flag; that the American steamers cost 25 per cent, more, amounting to, say, $600,000, than like steamers could have been purchased for abroad. Under the law of the United States, no ship can have an American register unless it was built in this country. The American Steamship Company has to compete for trade on the ocean with the foreign-built cheaper ships and cheaper navigators, and for this reason the company, to make its weekly service, used two for¬ eign-built ships. Is it strange that under these circumstances the American Steamship Company lost money, especially when it ap¬ pears from statements before the committee that the competition 14 OCEAN MAIL STEAMSHIP SERVICE. has been so great for the ocean-carrying trade for some years past that all steamship lines in the trade between the United States and Europe have lost money? Mr. Welsh was of opiuion that an an¬ nual subsidy of $325,000 for ten years would enable his company to continue the service, and be permanently established; others not so sanguine thought it would require that annual amount for twenty years. Mr. Welsh also stated that marine risks on his ships cost 8 per cent, premium in American insurance companies, while the premium was 5 per cent, in English companies, and the reason assigned for the differ¬ ence in premium was that in Great Britain the accumulations of capital were much larger and the rates of interest much smaller than in the United States, therefore, British companies could afford to take risks at a less premium. I submit that all arguments which apply to the subsidization of steam¬ ship lines apply to the subsidization of insurance companies engaged in taking marine risks, yet who is bold enough to advocate a grant of sub¬ sidy to an insurance company? In justice to Mr. Roach who appeared before the the committee, I state that he claims, quality considered, he can build steamships on the Dela¬ ware as cheaply as they can be built on the Clyde. I am satisfied he is too sanguine. If correct, why does he not build them ? For the American ship builder has an exclusive market in the United States and free sale in all other markets of the world. Again, if he is correct, why does the proposition to give an American register to foreign-built ships meet with such a storm of opposition whenever it is suggested ? In conclusion, I submit the bill recommended by the majority of the committee should not pass. Mr. Roach informed the committee that he is under contract with the Brazilian Government to run a monthly line of steamers of the kind specified in the bill for ten years between New York and Rio de Janeiro. It is fair to state, however, that he claimed, while he would commence the service, that he could not con¬ tinue it without the subsidy recommended by the majority of the com¬ mittee. If the bill passes, it is practically giving the subsidy to him for the service he is already under contract to perform, for no other person is in condition to furnish the American-built steamers by the time the contract is to commence. If there is not carrying sufficient to support one steamship line without a subsidy from New York to Rio, will some one skilled in mathematics and finances explain how an additional line from New Orleans to Rio can be operated at a profit? Is it just or politic to drive from the Brazilian trade the less expensive and more cheaply-navigated sailing-vessels which are doing a profitable business, and tax them in common with all the rest of the country to pay a sub¬ sidy for their own destruction ? If a line of steamers is to be subsidized at all, only one line should be subsidized to Brazil, at least until that line is self-sustaining. The bill is artfully conceived to get votes from the East and North on account of the line from New York to Rio, and from the South and. West on account of the line from New Orleans to Rio, and from Texas by a provision that the New Orleans line shall go out of its way and touch at Galveston both going and coming, notwithstanding the steam¬ ers provided by the bill draw 20 feet, and at the entrance to the port of Galveston there is only 14 feet of water. Still I do not believe the House, on discussion, will pass the bill, or that the country will approve it. In my opinion this legislation would be pernicious rather than bene¬ ficial in its effect. It would be a weight upon legitimate commerce rather than a benefit. It is a proposition, in effect, to give a bonus to OCEAN MAIL STEAMSHIP SERVICE. 15 assist certain persons to make a sale of steamships at a price greater than their value in the markets of the world. Its passage would be an encouragement to the lobby. It would encourage individuals to knock at the doors of Congress for profit at the general expense instead of entering the legitimate avenues of trade, and by skill, industry, and economy make a legitimate profit. The Almighty has furnished the great highway for nations and keeps it in repair. The United States should afford protection to the person and property of the citizen wherever lie may be upon the globe; we should, at the general expense, build light-houses and improve our harbors ; we should make wise commercial treaties with other nations. Then our commerce on the ocean, if unfettered by legislation, can safely be left to private enterprise. I dissent from the recommendations of the majority of the committee, and recommend that the bill reported do lie upon the table. J. G. CANMXTU APPENDIX A. OCEAN MAIL STEAMSHIP SERVICE OF FOREIGN COUNTRIES. Letter from the Postmaster-General, in compliance with a resolution of the House of Representatives, transmitting a tabular statement of the ocean mail steamship serv¬ ice of foreign countries. Post-Office Department, Washington, D. C., January *29, 1878. Sir: I have the honor to transmit herewith, in compliance with the resolution of the House of Representatives of the 25th instant, a tabular statement of the ocean mail steamship services of foreigu countries, compiled from official data in the Office of For¬ eign Mails of this department, which comprises all the information in the possession of this department relating to the organized ocean mail steamship services maintained by foreign governments. I am, very respectfully, your obedient servant, , D. M. KEY, Postmaster-General. Hon. Samuel J. Randall, Speaker of the House of Representatives. o r*