would bear it. The additional cost of Brazilian coffee to American consumers would thus in time not be $5,400,000 in customs duties, but an amount less than that paid in increased freight charges to American carriers. There is obviously no satisfactory method of estimating what that increase would be.

Thus far the bill has been considered solely as a matter over which Congress has entire control. It has been assumed that that body can regulate international communication without regard to foreign nations. Such obviously is not the fact. The effect, indeed the avowed purpose, of the discriminating-duty bill will be to increase the price of Brazilian coffee in the United States through a duty of 10 per cent if carried in foreign vessels or through increased freight charges if carried in American vessels. Such an increase in price is obviously a limitation on the market of Brazilian coffee which can not be expected to escape the notice of the Government of Brazil, especially when it is recalled that in 1895 we imported $8,000,000 of coffee from Venezuela. The tonnage of American vessels entering with cargo that year from Venezuela was 74,374 and of foreign vessels only 5,407. Nearly all of the Venezuelan coffee imported thus came in American vessels. From the conditions of transportation it would result under the proposed discriminating-duty bill that Venezuelan coffee would be virtually exempt from duty, while, as stated, Brazilian coffee would be increased in price through the proposed tax or higher freight charges. The discriminating-duty bill must then become a cause for complaint on the part of the Brazilian Republic against the United States, tending to disturb friendly trade relations, even if not leading to retaliation. On the other hand, it will be recalled that in the past Brazil has been willing to contribute to the maintenance of an American line of steamships between her ports and the United States, and exempted them from port charges and custom-house dues (see R. S. 4232). If a choice is to be made between discriminating duties on the one hand and bounties and subsidies on the other, the choice is incontestibly in favor of the latter.

The policy of discriminating_duties thus involves a disturbance of trade relations with Brazil. It also involves a disturbance in our relations with those foreign nations whose shipping it proposes to drive out of trade between Brazil and this country. In the year named the tonnage of foreign vessels entering the United States from Brazil with cargo included 171,822 tons British, 34,962 Belgian, 20,051 German, and smaller tonnage of other countries. The spirit of humility does not so pervade business that we can expect nations whose commerce is thus attacked to fail to meet that attack with reprisals. The form of reprisal is not clear in advance, but presumably it will take the direction deemed most effective. As there is virtually no American shipping engaged in trade with Germany, we must expect retaliation to take the form of restrictions upon our agricultural, food, and mineral products, especially petroleum, in that country. One of the aims of certain public men in Great Britain to-day is the establishment of a Zollverein of British colonies to promote trade between Great Britain and her colonies, and the adoption of discriminating duties by the United States would doubtless give a strong impetus to that as yet nebulous movement. One branch of our only transatlantic line is engaged in trade with Antwerp, and it offers an easy mark for retaliation on the part of Belgium for interference with Belgian navigation between Brazil and the United States. That line, the International Navigation Company, it may be noted, presents another consideration

against the policy of discriminating duties. The capital controlling it and a considerable part of its employes are American, though its vessels are under the flags of the United States, Great Britain, and Belgium. The cargoes of its foreign-built vessels will be required to pay in this country the discriminating 10 per cent duty, while its vessels under the American flag will be subject to such reprisals in foreign ports as Great Britain and Belgium may see fit to enforce. While there is no means, of course, of computing the increased burdens which discrimination in American ports on the foreign-built vessels of this line and retaliation in foreign ports on the American-built vessels of this line would amount to, it is not improbable that it would equal the subsidy paid to the four mail steamers of the company, and thus undo all that has been accomplished under the acts of 1891 and 1892.

It may be argued by some that the additional 10 per cent discriminating duty will be paid by the foreign producer or exporter, at least on goods competing with products of the United States, and that foreign nations will thus be forced indirectly to aid in the upbuilding of our merchant marine. If such be the fact, and the discriminating duty bill contain an economic discovery, new to the maritime world, we can not expect long to remain alone in its use. Every other nation would promptly adopt it, and American vessels in foreign ports will find a discriminating duty of 10 per cent, more or less, as the efficiency of the programme of each foreign nation may suggest, imposed on their cargoes. The policy of discrimination fails to consider the fact that there are two termini of every foreign voyage to or from the United States, one under the control of the acts of Congress and the other under the control of a foreign lawmaking power. Any effort we may make to put foreign vessels at a disadvantage in our ports will naturally evoke efforts to put our vessels at a disadvantage in foreign ports. Such is the instinct of self-preservation. If we were to carry the policy of discriminating duties to its logical conclusion and prohibit foreign vessels from entering the United States, foreign nations would promptly retaliate by denying entry to American vessels in their ports. Such at least would be the policy of every nation possessing shipping. Nations possessing no shipping, but which aim to secure the cheapest transportation and the widest markets for their products, would find it for their interest to establish trade relations with those countries which offered transportation at the lowest rates instead of with the United States, which proposed to put an additional tax on the products of the country.

Finally, it will be held by some that the increased tax of $59,000,000 at the outset, proposed to be imposed on trade in foreign vessels between the United States and foreign countries, will be paid in large part by the foreign vessels through the form of reduced freight charges on cargoes imported into the United States. Our total ocean freight bill on imports and exports combined has been estimated as stated at $116,000,000 by one authority and at $52,000,000 by another authority. At the present time the profits of the ocean-carrying trade are so moderate that if ocean freights on our imports could be reduced by nearly the sum involved in the discriminating-duty bill, vessels could not navigate except by heavy increases in the freight rates on our exports by sea. Even waiving for the time all consideration of the retaliatory policies which foreign nations in one form or another will adopt, this certain rise in ocean freights on exports is an insuperable obstacle in the way of the adoption of the policy of discriminating

duties. Any such rise in ocean freights will deal a heavy blow to all our export interests, to the wheat and flour interests of the Northwest, the beef and pork interests of the central West, the oil producers of Pennsylvania, Ohio, and New York, the cotton planters of the South, and the export manufacturers and farmers of the whole country. If the policy is designed to check import cargoes, by the extent to which it might succeed, it would be bound to increase ocean freights on exports, for the profits of a voyage depend on both the outgoing and the return trip. The expenses of a vessel navigating in ballast are nearly as heavy as the expenses when a full cargo is carried, and a discriminating duty, virtually prohibitory, on the cargoes of imports in foreign vessels can be met by them only through increased charges on cargoes of exports.

Greater than any or all of these considerations, however, is the fact that the policy of discrimination always has been and always will be thwarted by retaliation. Even if our people were willing to make all the sacrifices involved in duties on goods now free, in higher ocean freights on export cargoes, and in the general disturbance of trade relations, all would be in vain so far as any benefit to our shipping is concerned. Every legal obstacle we put in the way of the entry of foreign vessels to our own ports as compared with the entry of domestic vessels will be met by the placing of corresponding obstacles to the entry of American vessels to foreign ports as compared with foreign vessels. What we hope to gain at the end of the voyage under control of Congress will be lost at the other end, controlled by a foreign lawmaking power. The lion in the path can not be made a lamb until the religious injunction to "turn the other cheek also" has become so embedded in the ordinary business transactions of mankind as to lead nations to assent to obviously unequal bargains. experience of nations, which has led them almost without exception to abandon discriminating duties as a means of developing navigation under the national flag, can not be met and overcome by even the greatest pluck and courage.

The

The so-called argument from our own history in favor of discriminating duties is altogether illusory in its conclusions and unsound in its facts. Discriminating duties were resorted to at the beginning of government in this country for the purposes of retaliation. The words of Representative Benjamin Goodhue, of Massachusetts, the introducer of all our early navigation laws, are conclusive on this point. Mr. Goodhue said (Annals of Congress, Vol. I, p. 184, April 21, 1789):

There would be no occasion to lay additional duties on ships owned by foreigners if our own vessels were not subjected to charges in foreign ports over and above what the natives pay. It is the operation of this unequal burthen that renders it necessary for us to discriminate.

The spirit of this utterance pervades all the early debates on the subject in Congress, though no one else put the idea so tersely and clearly. The comparison of the percentage of exports and imports carried from and to the United States in American vessels before and after the repeal of discriminating duties is without value unless considered with the opportunities for trade between foreign ports opened to American vessels by that repeal. So long as they are engaged in profitable business it is of little consequence whether American vessels are engaged in trade between American and foreign ports or between two or more foreign ports. For the purposes of men engaged in shipbuilding and ship owning, the fact that the percentage of exports and imports carried by American vessels from and to the United States

[Insert at page 17 Report Commissioner Navigation, 1896.]

CAMBRIDGE MASS

From the

U. S. Government.

II. DISCRIMINATING DUTIES.

The purpose of the United States in the early years of their existence in imposing discriminating duties, was to retaliate against foreign nations which imposed discriminating duties on vessels of the United States. This purpose is clearly indicated by debates in Congress, by reports of the Secretary of State, of our envoys to Great Britain authorized to secure reciprocity, by the report of a House Committee on the subject of our commercial relations, and more particularly and more fully by the mes-sage of President John Quincy Adams in 1828.

Thomas Jefferson, Secretary of State, in his report to President Washington in 1791, said: "Our commerce is certainly of a character to entitle it to favor in most countries. The commodities we offer are either necessaries of life, or material for manufacture, or convenient subjects of revenue; and we take in exchange either manufactures, when they have received the last finish of art and industry, or mere luxuries. Such customers may reasonably expect welcome and friendly treatment at every market-customers, too, whose demands, increasing with their wealth and population, must very shortly give full employment to the whole industry of any nation whatever, in any line of supply they may get into the habit of calling for from it.

* * *

"Were the ocean, which is the common property of all, open to the industry of all, so that every person and vessel should be free to take employment wherever it could be found, the United States would certainly not set the example of appropriating to themselves exclusively any portion of the common stock of occupation. They would rely on the enterprise and activity of their citizens for a due participation of the benefits of the seafaring business, and for keeping the marine class of citizens equal to their object. But, if particular nations grasp at undue shares, and, more especially, if they seize on the means of the United States to convert them into aliment for their own strength, and withdraw them entirely from the support of those to whom they belong, defensive and protecting measures become necessary on the part of the nation whose marine resources are thus invaded, or it will be disarmed of its defense; its productions will be at the mercy of the nation which has possessed itself exclusively of the means of carrying them, and its politics may be influenced by those who command its commerce. The carriage of our own commodities, if once established in another channel, can not be resumed at the moment we may desire. If we lose the seamen and artists whom it now occupies, we lose the present means of marine defence, and time will be requisite to raise up others, when disgrace or losses shall bring home to our feelings the error of having abandoned them. The materials for maintaining our due share of navigation are ours in abundance; and as to the mode of using them, we have only to adopt the principles of those who thus put us on the defensive, or others equivalent and better fitted to our circumstances.” (American State Papers, 1791, vol. 11, p. 642.)

Henry Clay and Albert Gallatin, commissioners appointed to nego

2

tiate the commercial treaty with Great Britain in 1815, said: "In regard to the discriminating duties, we remarked that a proposition to abolish them first came from Great Britain, and a provision to that effect was inserted in the unratified treaty of 1806. Congress had taken up the matter at their last session, and passed an act, which we explained. We thought it desirable that they should be abolished, in order to prevent those collisions and that system of commercial warfare in which the two countries would probably be involved by an adherence to them. As an example, we mentioned the great extra duty to which, as we understood, the article of cotton was liable by the British laws, when imported in foreign vessels, and which, if persisted in, would certainly be met by some countervailing regulations." (Annals of Congress, 1815, 1816, p. 1482.

The above statement is important as indicating that even at this period of our history the foremost statesmen recognized that discriminating duties involve a system of commercial warfare, and that retaliation is not confined to shipping, but is likely to include heavy customs penalties on our principal exports-cotton being cited in this particular case.

The report of the house committee on commerce favoring the laying of discriminating duties on vessels from France and the British colonies, made necessary to countervail the restrictive systems of Great Britain (colonies) and France, at the same time reaffirms the traditional doctrine of the United States in favor of reciprocity in shipping:

"Resolved, That the act concerning navigation, passed the 18th of April, 1818, and the act supplementary to the act concerning navigation, passed the 15th of May, 1820, and also the act laying tonnage duty on French vessels, passed the 15th of May, 1820, made necessary to countervail the restrictive systems of Great Britain and France, and for the protection of the navigation and commerce of the United States from injuries, are still, and, as long as those adversary systems shall continue, must be necessary to protect from injuries the same great interest, and ought not to be repealed.

"Resolved, That the Government of the United States, having uniformly declared and avowed its attachment to the principles of free commerce, and having, in the treaties which it has formed and agreed to with foreign nations, and in its legislative acts, adhered to them, should be the last to abandon them, and especially at a time when every just and enlightened nation is conforming its commercial policy to an accordance with those principles." (American State Papers, March 15, 1822, Vol. II, p. 646.)

Finally, the extract from the message of President John Quincy Adams, December 2, 1828, who, in the words of Mr. Fish, "beyond any other statesman of the time in this country, had the knowledge and experience, both European and American, the comprehension of thought and purpose and the moral convictions which peculiarly fitted him to lay the foundation of an American policy," sets forth in broad terms the theory on which our shipping relations with the rest of the world had been conducted from the beginning of the Government, modified from 1789 to 1815, in part by the necessity of meeting discriminations against the United States, still further modified from 1815 to 1828 to meet continuing discriminations, but since then accepted not only by the United States but by practically all maritime powers:

"Our commercial relations with Great Britain will deserve the serious consideration of Congress, and the exercise of a conciliatory and forbearing spirit in the policy of both governments. The state of them has been