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Home -> Orville Marcellus Powers -> Commerce and Finance -> Chapter XLVIX

Commerce and Finance - Chapter XLVIX

1. Chapter I

2. Chapter II

3. Chapter III

4. Chapter IV

5. Chapter V

6. Chapter VI

7. Chapter VII

8. Chapter VIII

9. Chapter IX

10. Chapter X

11. Chapter XI

12. Chapter XII

13. Chapter XIII

14. Chapter XIV

15. Chapter XV

16. Chapter XVI

17. Chapter XVII

18. Chapter XVIII

19. Chapter XIX

20. Chapter XX

21. Chapter XXI

22. Chapter XXII

23. Chapter XXIII

24. Chapter XXIV

25. Chapter XXV

26. Chapter XXVI

27. Chapter XXVII

28. Chapter XXVIII

29. Chapter XXIX

30. Chapter XXX

31. Chapter XXXI

32. Chapter XXXII

33. Chapter XXXIII

34. Chapter XXXIV

35. Chapter XXXV

36. Chapter XXXVI

37. Chapter XXXVII

38. Chapter XXXVIII

39. Chapter XXXIX

40. Chapter XL

41. Chapter XLI

42. Chapter XLII

43. Chapter XLIII

44. Chapter XLIV

45. Chapter XLV

46. Chapter XLVI

47. Chapter XLVII

48. Chapter XLVIII

49. Chapter XLVIX

50. Chapter L

51. Chapter LI

52. Chapter LII




We scarcely realize to what extent we are dependent upon
the products of distant countries and climes for the comforts
which we are constantly enjoying. The clothing which we
wear may be from wool grown in Australia or from silk grown
in France or Italy; the leather in our shoes may
lustrations have come from the plains of Uraguay or Argen-
tina; the furs that keep us warm are from the far
north; the rubber that protects us from rain was the sap of a
tree in Brazil; the coffee we drink was grown in Mexico or
South America and the sugar and spices which we consume
were grown under a tropical sun. Not only are we dependent
upon the world, but in turn we contribute to the world's demand.
A large portion of the beef supply of England is grown upon our
great western prairies; the wheat from Dakota becomes bread in
Europe; the cotton from the south clothes the peasantry of the
Old World; the oil from the wells of Pennsylvania is trans-
ported to distant lands and affords cheap and safe light to
those who have lived heretofore in semi-darkness, w T hile Ameri-
can agricultural implements, sewing machines, tram cars, clocks,
watches, typewriters, electrical apparatus and rubber goods
are furnished for world-wide consumption. Merchant ships
carrying the products of all nations are upon every sea. They
cross and re-cross, braving every danger in order that they may
distribute the products of factory, field, mine and forest.



The growth of business relations between the United States
and foreign countries has not been uniform during our history,

History of nor has ^ ^ e P* P ace witn our P r 8' ress in domestic

American affairs. We have been chiefly absorbed in the

development of home industries. Now and then,
under favorable conditions, such as navigation or tonnage laws
our foreign trade has advanced. The past thirty years has
witnessed a wonderful development in foreign commerce, and
our exports during this period have almost uniformly exceeded
the imports. This development has been owing to the increase
in the surplus of our food products, especially breadstuff s; to
the development of inventions and methods of transportation;
to the increase in the volume of our manufactures; and to the
policy of reciprocity which has been in force during a portion
of this time. Improved methods of transportation have enabled
the products of the west to reach the seaboard cities and from
thence European markets at such rates as to enter into com-
petition with similar products of other countries. Without
modern appliances the large export trade in fresh meats, butter
and fruits could not exist.

The foreign commerce of a nation is vitally affected by its
tariff policy. If it imposes duties upon imports it thus in a
measure discourages the importation of foreign merchandise in

order to stimulate home production. Or it may
uties impose duties upon exports in order to encourage

their home consumption.* Both import and export
duties tend to diminish the volume of foreign commerce. On
the contrary, the policy of free trade tends to encourage and
increase foreign commerce. England has been practically a free
trade country since 1850t and her foreign commerce far sur-

*Our constitution expressly prohibits the laying of duties upon exports.

fThe only duties now under English law are a small export duty on
coal imposed in 1901, and import duties on playing-cards, cocoa, coffee,
chicory, dried fruits, tea, tobacco, wine and beer, spirits, liquor, cordials,
and other articles manufactured of or containing spirits.


passes that of any other nation. It should be remembered,,
however, that England is an export country. The limited area
of the British islands compared to their manufacturing capacity,
offers but a small home market for an enormous output of manu-
factured products. Hence what England needs is cheap raw
materials brought in duty free, to be converted into finished
products for world-wide sale. The United States has pursued
the policy of a tariff upon imports, and has shaped this tariff not
with a view of fostering foreign trade, but as a protection to
home industries. The duties have been especially high upon
all classes of products which are produced within the United
States in order to prevent the competition of foreign countries.

The enlightened policy of reciprocity has been one means
of promoting foreign trade. Under this policy two nations
mutually agree to admit the products of each other into their
ports, either duty free, or at a reduction from the regular tariff.
Congress passed an Act in 1890 under which reciprocity agree-
ments were entered into with Cuba, Porto Eico
Reciprocity and several Central and South American countries,
the effect of which was to greatly stimulate trade
with those countries, but the law was abolished, and the agree-
ments terminated on Aug. 27, 1894, after which our trade with
those countries declined. We now have reciprocity treaties in
force with several European nations* and under their potent
influence our foreign trade with those nations is growing apace.

A bounty is a fee or percentage paid by the Government to
a manufacturer for products exported, as an encouragement to
Bount an industry. By means of this Government aid

Countervailing the manufacturer is enabled to sell his products in
a foreign market at a lower price, and thus com-
pete with foreign manufacturers. The opposite of a bounty
is a countervailing duty, levied upon imports in order to neutral-

*Under the Act of 1897, the United States made reciprocity agreements
with Germany, France, Italy and Portugal, which are still in force.


ize the effects of a bounty offered by the government from which
the goods were shipped. For example, Germany and several
other exporting nations of Europe pay a bounty to their manu-
facturers on all sugar exported. Such sugar when imported into
the United States has an advantage in our markets on account of
the bounty, over Cuban sugar or that from our own refineries.
To offset this advantage and protect other sugars in our markets,
our Government may levy a countervailing duty in addition to
the regular tariff.

Navigation and tonnage laws have at different periods been
resorted to by this and other countries as a means of foster-
ing shipping and encouraging foreign commerce. Soon after
our Constitution was adopted, the "United States passed a series
of tariff and tonnage Acts by which the duties were lower on
goods imported in American vessels entering our
P orts - About 185 both England and the United
States abandoned the policy of navigation laws
and since that date no effort has been made through legislation
to build up a merchant marine.* As a result our shipping in-
terests have steadily declined since 1857. At that time we
carried 75 per cent, of our foreign commerce in American ships.
In 1902 this percentage had fallen to a little less than 8 per

The term subsidy, as applied to shipping denotes the gift of a
sum of money, either annually or otherwise, by the Government
as an aid and encouragement to the extension and up-building
of marine interests. From 1846 to 1856, a period of ten

*A law was passed in 1792, and is still in force, requiring all ships
which carry the United States flag and are registered as belonging to the
United States, to be made in this country. Instead of stimulating ship-
building in this country, this law has had the effect in recent times of
causing large amounts of American capital to be invested in foreign-built
s ips, carrying foreign flags, since a steel ship could be built on the Clyde
from fifteen to twenty per cent, cheaper than in this country. The abolition
of this law is advocated by those who favor "free ships," so that American
capital can sail under our flag, without regard to where the ships are built.


years, our Government pursued the policy of subsidizing steam-
ship lines by paying large bounties for carrying the United
States mails. As a consequence the tonnage of our steamships
registered for deep-sea carrying, which in 1847 was 5,631 tons,
increased to 115,045 tons in 1855, and our Mer-
chant Marine reached its greatest height of
strength and glory. The Collins Line of mail
steamers was established between New York and Liverpool,
under a favorable contract for carrying the mails and success-
fully competed with the heavily subsidized Cunard Line of
England. Contracts were also entered into by our Government.,
with lines of steamers to the West Indies, Panama and Pacific
Coast ports. But in 1856 the law was modified and the sub-
sidies seriously reduced. In 1858 the subsidies were virtually
abolished and the actual postage rate on letters carried was sub-
stituted. This continued to be the policy of our Government
until the enactment of the Postal Aid Law of 1891, which in a
measure increased the compensation for carrying the mail.

England has encouraged shipping by liberal subsidies, and
through this means has built up lines of steamers to all parts
of the world. She has awarded liberal contracts to her ship-
yards for the construction of war ships and trans-
ports in order to encourage the extension of priv-
ate shipyards. Direct subsidies to shipbuilders
and shipowners who would build after plans furnished by the
Admiralty, and enormous indirect subsidies for carrying the
mails, supplies or troops have been bestowed, by the English
Government. France pays a bounty per ton on all ships built
in French shipyards of steel and a subsidy per ton for every
thousand miles sailed by French vessels.

A "tramp" steamer is one which has no regular sailing route,
is not subsidized and goes to any port where it can secure a
cargo. English and German tramp steamers are in all parts of
the world. Sometimes a period of one or two years elapses


before a tramp returns to its home port. Such ships have the
advantage over those of a regular line, in that they are not
obliged to sail on fixed dates and perhaps with insufficient cargo,
but may cruise from port to port until a cargo is secured. Sail-
ing ships aim to make direct voyages in which they can carry
cargo both ways.

One of the first conditions of foreign commerce is the pro-
tection of property and persons in what ever part of the earth
they may be. This can only be secured by a navy which shall
command respect in every sea and port. "Trade
follows the flag" is a commercial aphorism now
well recognized by the great nations. No nation
can hope to build up a large or prosperous foreign commerce
which has not a well-equipped navy* sufficiently large to enable
it to scatter ships to all quarters of the civilized world, within
protecting distance of the interests of its citizens. Ship cap-
tains in the absence of Consuls should be allowed a degree of
discretion in the settlement of questions requiring prompt action,
where the rights of American citizens are in jeopardy. English
ship captains have such discretion and may exact reparation for
wrongs inflicted upon a British subject in a foreign port with-
out waiting to communicate with their home Government.

As an important adjunct to our coastwise and foreign com-
merce the Government maintains over two thousand light houses
at all danger points along our coasts, besides several thousand
buoys, fog-horns and bells as guides to ships entering or leaving
our harbors. Harbor masters are appointed whose duties in-
clude the regulation of shipping within the har-
bors, licensing of pilots, inspection of ships, etc.
Although ships may "sail upon any sea it is cus-
tomary to require all vessels to be registered in some country.
Ships are then said to belong to the country in which they are

*The United States stands fourth among the great nations in the tonnage
of its navy, England being first, France second, and Russia third.
registered, and bear its flag. The ship carries papers stating the
facts concerning its registry., ownership,, inspection to secure
safety, the name of the port from which it last sailed, its destina-
tion and the nature of its cargo. The custom of carrying papers
originated in the attempts to suppress piracy, but is continued
to the present time, chiefly for the information which it fur-
nishes of a commercial nature.

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