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The Public Revenues are a Public Trust.
On the Senate amendments to the bill (H.R. 5887) making appropriations for the service of the Post-Office Department for the fiscal year ending June 30, 1887.
Mr. RIGGS said:
Mr. CHAIRMAN: In further discussing the sixth Senate amendment to this bill I may, necessarily, to some extent, repeat portions of what I have said before, but, so far as possible, I desire and intend to avoid repetition.
The first question I want to consider is, whether the amount of money — $800,000 — mentioned in the amendment if paid out during the next fiscal year for carrying our foreign mails to the countries enumerated in the amendment will constitute only adequate pay for the service rendered by the steamships, or whether it will in reality constitute a subsidy to the steamship companies.
The total cost of carrying the whole of our foreign mails on the seas in the fiscal year 1885 was $331,903.33. The estimates for this service for the ensuing fiscal year as first made, printed in the Department reports and submitted to Congress, put the sum necessary to be appropriated at $350,000 in the event we should pay steamships of American register the same rates they received in 1885, and $425,000 if we should conclude to pay them full sea and inland postage, which is the highest compensation that can be given under existing law.
The following is the estimate mentioned
The following amounts are estimated as required to be appropriated for the foreign-mail service for the fiscal year ending June 30, 1887:
"For the transportation of mails, including railway transit across the Isthmus of Panama, calculated at the rate heretofore paid for said service, $350,000."
If it should be decided to pay to vessels of United States register, for the transportation of mails to foreign countries, the whole amount of the postage collected on the mails conveyed (calculated at the Postal Union rates of postage, namely, 5 cents per Ë ounce, or $1.60 per pound, of letters and post-cards, and 1 cent per 2 ounces, or 8 cents per pound, of other articles), the above estimate for "the transportation of mails," &c., would be increased from $350,000 to $425,000."
A revision of the above estimate, made by the Department after the departmental reports had been forwarded to Congress and printed, convinced a majority of the House that $375,000 would be sufficient to pay American steamships the full amount of sea and inland postage, and sea postage to all other vessels carrying our foreign mails. And, therefore, in the bill as reported by the House committee and as it passed this body provision was made for the latter sum. The Senate added the sum of $800,000 by the amendment now under discussion, making a total of $1,175,000.
The amendment, however, provides that this additional sum may be expended only for carrying such of our foreign mails as may go to Brazil, the republics of Mexico, Central, and South America; the Sandwich, West India, and Windward Islands; New Caledonia, New Zealand, and the Australian colonies; China and Japan; and, further, that it shall only be paid for carrying such of our foreign mails to these countries as may be carried in American built and registered steamships.
In order to determine whether or not the expenditure during the next fiscal year of such a sum of money for carrying that portion of our foreign mails to the countries named in the amendment which may go in American-built and registered steamships would or would not amount to a subsidy it is necessary to ascertain as nearly as possible what it would be worth to carry them.
I am in favor of giving fair, adequate pay for all services rendered to our Government. We are amply able to pay a fair price for all we get, and nothing less than that can be right. If, upon business principles, it is really worth $800,000, then we ought to concur in the amendment and provide that sum of money for the purpose contemplated. But if it is not worth that sum, then the payment thereof to the steamship companies would be a subsidy to the extent of the excess over the actual worth of the services.
As already stated, the cost of carrying the whole of our sea-going foreign mails in the fiscal year 1885 was $331,903.33 — nearly $43,000 less than the sum provided in the bills as it passed the House, and nearly $843,000 less than will be provided if this Senate amendment shall be adopted. Either we paid a shamefully low price in 1885, or the advocates of this amendment propose to pay more than the services can be worth in the next fiscal year.
It is contended in argument that the fact that nearly all our American steamships refused to carry our mails after the compulsory feature of our statutes was repealed is evidence that the pay was not enough. For, say the advocates of this amendment, the American steamship-owners are, at least, ordinarily shrewd business men, and own and operate their vessels for the purpose of making money, and if the pay was adequate they would not have refused to carry the mails and thereby lost a service which was paying an adequate compensation. The inference drawn is not necessarily correct. By recurring to the history of our postal affairs we find that once before there was an attempt to force the Government into paying more for carrying our foreign mails than the Post-Office authorities or Congress deemed reasonable.
In 1862 Cornelius Vanderbilt, who was a large owner of American steamships, proposed to have more for carrying our foreign mails than the service was worth or not carry them. Supposing he had the power in his own hands, he notified the Post-Office Department that after the 21st of March, 1862, he would not take the South Pacific, or any other of our foreign mails. Thereupon the Postmaster-General asked Congress to provide by law for compelling our own common carriers on the ocean to take our mails, the result of which was the enactment of what have been known in this debate as "the compulsory" provisions of our statutes, the repeal of which took effect on the 1st of April last year. Those provisions of our statutes passed both Houses of Congress without opposition, and remained in force twenty-one years without serious question.
This is evidence to my mind that steamship owners, when they think they have the advantage, may ask more for a service than it is worth, and may even refuse a fairly paid service for the purpose of compelling payment of more than fair compensation.
We have heretofore paid and are now paying sailing vessels and steamships of foreign register the international rates of sea postage, which amount to about 1 Ë cents per letter and about 4 Ë cents per pound for newspapers. That is what we paid in 1885 to those vessels, and in most instances the same rates to steamships of American register. Since our American steamships refused to carry our mails last year the Department has been obtaining their carriage at those rates. And the present arrangements for carrying them seem to be satisfactory to our people, excepting the steamship owners and their friends. The cost of having them carried during the ensuing fiscal year, considering the relative quantities carried, will not be greater than it was in 1885. Now, looking at the carriage of our foreign mails only, and as a mere business proposition, if we can have the service performed next year for $375,000 will not the payment of $800,000 more than that be a subsidy to just that extent?
But for the purpose of determining further whether the sum proposed by this amendment will amount to a subsidy, I want to compare the freight rates and parcels-dispatch rates charged by American steamships with what the Government offers to pay them for carrying our foreign mails. The Department has offered them sea and inland postage for letters which amounts to $1.60 a pound, and 8 cents a pound for newspapers. By the bill as it passed the House we made provision for such payment. The Senate proposes to increase the provision more than threefold, giving the whole increase to American steamships plying between the ports of the United States and certain enumerated foreign countries. Let us compare the pay at sea and inland postage, provided for by the House, with freight and parcels-dispatch rates.
During this discussion I have already said
I remember the gentleman from Michigan on a former occasion said to the House — I came near saying curtly; he said it bluntly at all events — that those of us who chose to compare the money paid for carrying the United States mails with the amount paid for the parcels-dispatch and for freights could have no argument with him; and yet notwithstanding his longer experience, not withstanding the confidence with which he has made his statement, I am disposed to make a comparison of that very character. I do not intend to weary anybody else, or myself, with a long detail of figures here. It is sufficient for my purpose and for the purpose of this argument to state general results which the official figures will bear out.
You may take the "Red D" line, the United States and Brazil line, or any other line of steamers, take all of the lines, compare the rates paid on each by the Postmaster-General, or which he has offered to pay, and which they refused, with the rates paid for carrying freights, and it will be found that the Postmaster-General offered these American steamships, if they would carry our mails to such countries as they were sailing to (and impose upon them no other conditions than those that were imposed by the conditions of their ordinary traffic) — he offered them a rate that would pay them from forty to nearly one hundred times the amount that they were getting for carrying freight.
He offered them a rate which would pay them an average of four times as much for carrying the mails as they were receiving for carrying an equal weight of parcels at their dispatch rates. Now, is it fair to compare these payments? I think it is if we consider the duties and responsibilities, the labor and the expense attaching to parcel packages and freight and those attaching to the mails.
What duty is imposed on a steamship carrying the United States mails that is not imposed on that steamship in carrying parcels at its dispatch rates? What responsibility is imposed that is not imposed in carrying parcels? The gentleman from Michigan [Mr. BURROWS], alluding I think to the United States and Brazil line, called attention to the fact that the steamship company is bound before its steamship leaves the port of New York to send to the post-office there and get the mails. He alluded to that fact in a way which impressed me as if he spoke of it because he believed that fact entitled that company to 50 cents per nautical mile for carrying the mails. What does it really cost them? Eight dollars and fifty cents; that is the amount as appears from their own statement as signed by their own manager. Their round trip is about 10,000 miles, and the mileage at 50 cents per nautical mile would be over $50,000 a trip. Is the outlay in the port of New York in sending for the mails and putting them on board a warrant for such a sum? It is an item, of course. If they pay out $8.50 they should have it repaid, and should be compensated fairly for carrying the mail.
But what duty do they perform in carrying the mails? They send to the post-office and get the mails; they are put up in closed bags; they convey them on
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board and lock them up in a small room 8 feet each way. That is the end of the attention the mails have until they reach the port of destination in South America. And then they were bound when they carried our mails to put these mails ashore as speedily as was practicable and deliver them to the postal authorities at the port of destination. That is the attention the mails have.
Now take the expense at one port of destination. At Pernambuco the United States and Brazil Company say they expend $30.80 on one trop in putting the mails ashore. I do not know whether they do or not. I sometimes doubt it, for the reason that other portions of the statement will not bear close inspection and analysis. But suppose they do expend $8.40 at New York and $30.80 at Pernambuco, these payments furnish no warrant for paying 50 cents a nautical mile, amounting to $5,000 a round trip, for carrying the mails.
They ought to get back the money they pay out and a fair amount for carrying the mails. But when they have put the mails on board, receiving them in closed pouches, locked them up in a small room, put them ashore at the port of destination, and delivered them to the postal authorities, then their duties are performed. Now, what is their duty as to parcels carried at their dispatch rates for which they get not one-fourth of what the Postmaster-General offered them, sea and inland postage, for carrying the mails? They receive them I suppose at some office in New York city and convey them to their vessels; they take just as good care of them as they do of the mails. They are sent at higher rates because the senders attach some special value to them; just as in our own country we send parcels by express and pay higher rates than freight rates because some special value attaches to the parcel. They take as good care of them as they do of the mails. At the port of destination they deliver them to some office just as they deliver the mails at the post-office. And so far as duty is concerned and so far as responsibility is concerned, the duties and responsibilities attaching to the carriage of these parcels are as great as those attaching to the carriage of the mails; and greater, because at least in some sense they become insurers of the parcels, while they are not insurers of the mail. Nobody ever heard of an attempt to hold a steamship company or the master or the owner of a vessel responsible for the loss of a mail or any injury to it. Such a thing has never occurred.
With regard to freights, of course most of the freights, except the highest class, are stowed in the hold of the vessel. They do not occupy as valuable space as the mails or the parcels carried; but the Postmaster-General offered to pay this special sum, one hundred times as much as they carry freights for. Is that not enough?
I reiterate these statements, and desire to re-enforce them by figures taken from official sources.
During the latest fiscal year for which we have reports (1885) the Pacific mail line from San Francisco to the Hawaiian Island, New Caledonia, and the Australian colonies employed three ships, made thirteen round trips, and carried 95,374 pounds of our foreign mails. The sea and inland postage on this amount of mail would have amounted to $41,018.65. Paid for at parcels-dispatch rates it would have yielded $9,536.80; at freight rates, $762.84. The mail pay on a given weight of mail during that fiscal year on this line, at sea and inland postage, would have amounted to nearly sixty times the pay at freight rates, and to more than four times the pay at parcels-express rates. It is proper to state that only one vessel of that line was of American register, and only that one could have received the full sea and inland postage. But the figures given illustrate the point I seek to make. However, let us take one vessel of that line; suppose that one of American register carried an average quantity of our foreign mails, and the figures would be as follows for each trip made by it during the year:
Pounds of mail, per trip ... 7,336
Sea and inland postage, per trip ... $3,155 28
Parcels-express rates, per trip ... 733 60
Freight rates, per trip ... 58 68
On the same company's line from San Francisco to Panama for the same year the figures are as follows:
Pounds of mail carried during year ... 14,000
Pay at sea and inland postage ... $3,496 18
Pay at parcels-dispatch rates ... 1,002 55
Pay at freight rates ... 71 69
Here is an instance where the mail paid for at the full sea and inland rate would have cost for its carriage $3,496.18, while the carriage of the same weight of freight would have cost only $71.69. Yet we are curtly told we can not have an argument if we seek to make these comparisons. On this line the figures per trip are as follows:
Pounds of mail, per trip ... 573
Pay at sea and inland postage, per trip ... $140 20
Pay at parcels-dispatch rates, per trip ... 40 12
Pay at freight rates, per trip ... 2 86
On the line from New York to Colon (same company) the figures are:
Pounds of mail carried during year ... 110,169
Pay at sea and inland postage ... $19,662 49
Pay at parcels-dispatch rates ... 7,712 10
Pay at freight rates ... 411 40
On this route the average figures per trip are as follows:
Average pounds of mail, per trip ... 2,899
Average pay at sea and inland postage rates, per trip ... $517 43
Average pay at parcels-dispatch rates, per trip ... 202 97
Average pay at freight weights, per trip ... 10 85
The same company's line from San Francisco to Yokohama, Hong Kong, and to United States consul at Shanghai:
Pounds of mail carried during year ... 37,584
Pay at sea and inland postage ... $10,125 72
Pay at parcels-dispatch rates ... 3,758 40
Pay at freight rates ... 226 08
The figures per trip are as follows:
Average pounds of mail per trip ... 2,088
Average pay at sea and inland postage ... $562 54
Average pay at parcels-dispatch rates ... 208 80
Average pay at freight rates ... 12 56
On the New York, Havana, and Mexican Mail Steamship Company's ships, from New York to Cuba, Porto Rico, St. Thomas, and Mexico, the following are the figures:
Pounds of mail carried during year ... 49,682
Pay at sea and inland postage ... $11,932 00
.Pay at parcels-dispatch rates ... 3,229 40
Pay at freight rates ... 129 00
And the following are the figures per trip:
Average pounds mail per trip ... 993
Average pay, per trip, at sea and inland postage ... $238 64
Average pay, per trip, at parcels-dispatch rates ... 64 58
Average pay, per trip, at freight rates ... 2 58
Red D line, New York to Venezuela and Curacao:
Pounds of mail carried during year ... 16,723
Pay at sea and inland postage ... $3,942 86
Pay at parcels-dispatch rates ... 1,555 01
Pay at freight rates ... 58 34
The trip figures are as follows:
Average pounds mail per trip ... 494
Average pay at sea and inland postage ... $115 01
Average pay at parcels-dispatch rates ... 33 93
Average pay at freight rates ... 1 74
Steamer San Pablo, of the Occidental and Oriental line, the only one of that line's steamers which is of American register:
Pounds of mail carried during year ... 7,441
Pay at sea and inland postage ... $1,793 88
Pay at parcels-dispatch rates ... 744 00
Pay at freight rates ... 44 65
The following figures show the trip results:
Average pounds of mail, per trip ... 1,488
Average pay at sea and inland postage ... $394 77
Average pay at parcels-dispatch rates ... 148 80
Average pay at freight rates ... 8 93
New York and Cuba mail line, Cuba, &c.:
Pounds of mail carried during year ... 29,306
Pay at sea and inland postage ... $8,039 33
Pay at parcels-dispatch rates ... 1,007 77
Pay at freight rates ... 71 71
The following are the trip figures on this line:
Average pounds of mail, per trip ... 413
Average pay at sea and inland postage ... $113 23
Average pay at parcels-dispatch rates ... 26 87
Average pay at freight rates ... 1 01
United States and Brazil Mail Steamship line, from New York to Brazil, &c.:
Pounds of mail carried during year ... 27,536
Pay at sea and inland postage ... $5,791 93
Pay at parcels-dispatch rates ... 1,789 84
Pay at freight rates ... 151 45
The following are the trip figures:
Average pounds of mail, per trip ... 2,118
Average pay at sea and inland postage ... $445 53
Average pay at parcels-dispatch rates ... 137 68
Average pay at freight rates ... 11 65
Clyde line to Hayti, San Domingo, and Turk's Island:
Pounds of mail carried during year ... 7,897
Pay at sea and inland postage ... $1,462 17
Pay at parcels-dispatch rates ... 552 64
Pay at freight rates ... 27 54
The trip figures are as follows:
Average pounds of mail, per trip ... 464
Average pay at sea and inland postage ... $86 01
Average pay at parcels-dispatch rates ... 32 52
Average pay at freight rates ... 1 62
American Steamship Company, from Philadelphia to Queenstown:
Pounds of mail carried during year ... 5,003
Pay at sea and inland postage ... $1,636 85
Pay at parcels-dispatch rates ... 162 45
Pay at freight rates ... 13 43
The following are the trip figures:
Average pounds of mail, per trip ... 263
Average pay at sea and inland postage ... $86 15
Average pay at parcels-dispatch rates ... 8 55
Average pay at freight rates ... 75
These are all the steamship lines, making regular sailings, that were entitled, under the law, to receive full sea and inland postage in the fiscal year 1885, and there are no other lines making regular sailings now that are entitled to that pay. An examination of the foregoing figures, taken from official sources, will disclose that the sea and inland postage will pay for carrying the mails from a little less than forty times to more than a hundred times as much as is charged for carrying the same quantity of freight. And yet it is proposed to expend hundreds of thousands of dollars more than we are expending now, under the pretense of paying for carrying our mails to certain enumerated countries.
Now, I put the question, does justice to these steamship companies demand the payment of more than we have offered and provided for? I think not; and I further think that the payment of the $800,000 provided in the Senate amendment to them will, if made, amount to giving them a gratuity out of the public Treasury.
In this discussion some of the friends of the amendment have compared the pay of the star-route service, railroad service, and steamboat service with the pay of steamships.
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Emphasis is placed upon the statement that in 1885 we paid for the star-route service $8,876,218, while for the same year we paid $331,903.33 for our whole foreign mail service, including what was paid to foreign vessels, which was much the larger portion of the outlay. Nothing is said, however, about the fact that the star-route carriers perform a greater amount of service both in quantity of mail and in miles of travel.
Our attention is called, also, to the fact that in 1885 we paid for our railroad service $13,735,204, and this sum has been compared with what is denominated the insignificant amount paid for carrying our sea mails, but care is exercised not to say anything about the fact that in weight of mails and miles traveled the railroad service is enormously greater than the ocean mail service.
We are also called on to consider the fact that we paid, in the same year, $511,669 for steamboat mail service, and a smaller sum for ocean service, but the different and more burdensome conditions imposed on steamboats are not mentioned.
With reference to the star-route service the fact should not be forgotten that in nearly every instance the person carrying the mails is invited by the Government to put upon the route the means and labor necessary to carry them, and no other kind of carriage is connected therewith, neither can it be, from which the carrier might derive some compensation and thereby cheapen the cost to the Government. It is different with steamships. The Government did not invite their owners to put them on the high seas for the sole purpose of carrying foreign mails, but they put tem there for the purpose of carrying freights, passengers, and whatever they could secure for carriage at remunerative rates. Being there, as common carriers, it is not unreasonable to ask that they carry our mails for fair pay.
As to the steamboats which carry inland and coastwise mails a fair comparison would note the fact that they must depart on schedule time and make schedule time on each trip, and that they are liable to fines and deductions if they fail either to depart or arrive on time. They can not wait for freight or passengers, but when schedule time arrives for the departure of the mails they must go, even if wholly without cargo. This is in no sense true of the ocean steamships. They arrange their own schedules and change them at pleasure. On the voyage they make such speed as they choose. They may wait as long as they please for cargo and choose their own rate of travel.
As we are asked to provide for paying these steamships by the mile, regardless of the great or small quantity of mails carried, it will not be unfair to reduce to mileage the pay of the other three branches of the mail-carrying service for the purposes of comparison. The following table, prepared by the Superintendent of Foreign Mails, exhibits the comparison on the mileage basis:
| Service. | Number of miles traveled. | Total compensation | Rate per mile. |
| Railways | 151,912,140 | $16,627,983 00 | cents 10.95 |
| Star routes | 83,027,321 | 5,414,804 00 | 6.52 |
| Steamboats and coastwise service | 3,540,607 | 563,002 00 | 15.9 |
| American steamships to foreign ports — outward — sea postage | 1,024,126 | 46,223 69 | 4.5 |
| If paid sea and inland postage | 11.9 | ||
| American steamships, eight principal lines — outward — sea postage | 810,829 | 43,492 48 | 5.3 |
| If paid sea and inland postage | 14.4 |
From which it appears that the railways received in 1885 nearly 11 cents per mile; star-route carriers received an average of a little over 6 Ë cents per mile; the steamboat and coastwise service nearly 16 cents per mile, while the steamships, at the rate provided for them by the House would have received nearly 12 cents per mile. This applies only to the eight principal American lines, there being no other pretending to make anything like regular sailings.
So, if we pay them sea and inland postage, which is proposed by the opponents of the Senate amendment, they will receive more per mile than the railroads, notwithstanding the fact that railroad transportation is universally more costly than water transportation. They will receive nearly twice as much per mile as is paid to the star-route carriers, and about two-thirds as much per mile as steamboats doing inland and coastwise carriage, and being compelled to sail and arrive on schedule time, cargo or no cargo.
The mails carried on the star routes and inland and coastwise steamboats are not weighed, so we can not compare them with steamships by the pay per pound, but railway and ocean mails are weighed, and the comparison on the basis of pay per pound may be made between the railroads and the steamships. The following table represents the cost per pound on nine of our railroad routes, and also across the continent, from New York city to San Francisco:
| Route. | Termini. | Distance. | Pay per annum. | Average daily weight. | Cost per pound one way. |
| 6011 | New York to Buffalo | Miles. 442 | $681,223 26 | Pounds. 99,901 | $0.0217 |
| 7004 | New York to Philadelphia | 90.89 | 181,771 81 | 136,401 | .00425 |
| 8001 | Philadelphia to Pittsburgh | 352.9 | 484,795 71 | 91,679 | .0168 |
| 21002 | Pittsburgh to Chicago | 468 | 195,431 51 | 23,003 | .0271 |
| 21095 | Buffalo to Chicago | 540.20 | 610,943 70 | 69,142 | .0282 |
| 23007 | Chicago to Burlington, Iowa | 206 | 193,071 60 | 54,621 | .0112 |
| 27005 | Burlington to Union Pacific transfer. | 291 | 179,268 00 | 37,031 | .0154 |
| 34001 | Union Pacific transfer to Ogden. | 1,034.08 | 447,438 15 | 23,990 | .0595 |
| 46001 | San Francisco to Ogden. | 834.03 | 319,642 86 | 18,754 | .0544 |
Cost per pound from New York to San Francisco, via Buffalo ... $0.1904
Cost per pound from New York to San Francisco, via Pittsburgh ... 0.1886
And the following statement, showing average price per pound for conveyance of foreign mails, except the transatlantic, at sea and inland postage (5 cents per half ounce of letters and 1 cent per 2 ounces of prints), during the fiscal year ended June 30, 1885, exhibits the pay to steamships carrying mails to the countries named in the Senate amendment:
| Cents. | |
| West Indian, Mexican, Central and South American service | 17.7 |
| Brazil service | 19.7 |
| Trans-Pacific service | 22.8 |
These tables were prepared, the first at the railway mail office, the second at the foreign mail office, and may be relied on as correct. I do not propose now to comment on all the items they contain. They speak for themselves, but not in favor of higher ocean mail pay.
On railroad route 34001, a distance of 1,034 miles, the pay per pound in 1885 was within a small fraction of 6 cents. This route is more than one-third the length of the average distance traveled by the steamships carrying our foreign mails to the West Indian, Mexican, Central and South American countries, but it receives only a very small fraction over one-third the pay per pound.
The cost per pound across the continent by rail, about 3,000 miles, is, in round figures, 19 cents. The pay for the Brazilian service, at sea and inland postage, by steamship, amounts to a little over 19 cents per pound. These are interesting facts when we remember that a railroad built and equipped to carry a certain weight costs incomparably more than steamships built and equipped to carry the same weight the same distance. In one instance, the road-bed must be provided and maintained at enormous cost. In the other instance, Providence has furnished and maintains the road-bed. In short, water transportation is cheaper, the world over, than railway transportation.
None of these comparisons indicate that more than sea and inland postage is due to steamships for carrying our foreign mails. On the contrary all of them show that a greater rate of pay would be more than adequate. Our experience in the past shows that we can have all our foreign mail service by sea performed during the ensuing fiscal year for the sum of $375,000 and pay all our American steamships full sea and inland postage.
The President in his annual message to Congress says this is adequate pay. This is his language:
The rate of sea and inland postage, which was proffered under another statute, clearly appears to be a fair compensation for the desired service, being three times the price necessary to secure transportation by other vessels upon any route, and much beyond the charges made to private persons for services not less burdensome.
And the Postmaster-General is also clearly of the same opinion. In his annual report he says:
The general conclusion seems sustained by the facts that, except special circumstances should require a greater, the rate of sea postage is remunerative for the service of carrying the mails.
The statute authorizes the entire sea and inland postage to be paid to American steamships, although but sea postage may be allowed to foreign vessels — a proof of the legislative judgment that the latter rate is sufficiently remunerative to command the service, as the fact is.
This statute appeared to afford power to make abundant compensation for all the service necessary until the next session of Congress.
The accompanying tables, prepared in the foreign-mails office, show that this would have yielded to the following American companies, on the basis of last year's business, respectively:
To the Pacific Mail Steamship Company, on its New York and Colon line, $19,275.82 as against $7,501.78 at sea postage, and $7679.49 at its parcels-dispatch rates, and $411.40 at its freight rates, for nearly 55 tons of total mail; an average of $507.26 per trip for 2,899 pounds of matter, which it would have carried for $10.82 at freight rates and $202.09 at parcels-dispatch rates.
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On its San Francisco and Panama line, $3,496.18 for about 7 tons, against $1,238.44 at sea postage, $71.69 at freight, and $1,002.55 at parcels-dispatch rates.
On its San Francisco and Yokohama line, $10,125.80 for about 48 tons, against $13,565.29 at the special rates paid heretofore, $762.93 at freight rates, and $9,537.40 at parcels-dispatch rates; an average per trip of $3,155.28 for 7,336 pounds, nearly fifty-four times its freight rates, over four times its parcels-dispatch prices, and a better average price per trip than the average paid across the Atlantic by $2,505.92.
To the Venezuelan Red D line, $3,942.86 for about 8 tons of mail, against $1,392.95 at sea postage, $58.34 at its freight rates, and $1,155.01 at its parcels-dispatch rates.
To the New York and Cuba line, $5,203.48 for about 12 tons, against $2,271.94 at sea postage, $61.63 at freight rates, and $1,548.17 at its parcels-dispatch rates.
To the New York, Havana, and Mexican line, $11,932.11 for about 25 tons, against $4,134.13 at sea postage, $129.17 at freight rates, and $3,229.33 at parcels-dispatch rates.
These facts seem to prove that the total sea and inland postage is an abundant recompense for the proposed service; and, without further recapitulation, reference to the tables will show the amounts to the other lines a proportionate compensation. If this be correct judgment no more could be rightfully expended of the appropriation unless other objects were to be sought than the care of the postal service.
For years the law has limited the Post-Office Department to not exceeding sea and inland postage to American steamships, showing the legislative judgment for a long period of time to have been that such pay is adequate in all cases. The facts and figures show it to be adequate. The President says it is adequate. The Postmaster-General, who has given the matter much thoughtful consideration, says it is adequate. For many years we have had, and are now having, our foreign mails carried in an expeditious and satisfactory manner for less than sea and inland postage.
Then why provide $800,000 more and limit its expenditure to our steamships sailing to the countries named in the amendment? Mr. Chairman, only about 8 per cent. of our foreign mails in 1885 went to those countries. Over 91 per cent. of it was transatlantic and went to countries not named therein. The proportions will be about the same next year. We will secure the carriage of the 91 per cent. to transatlantic countries for about $300,000 — probably for a little less than that sum. Then is it necessary to provide $800,000 to pay for the carriage of only a little over 8 per cent.? All the facts, fully examined and candidly considered, show that sea and inland postage would furnish fair and adequate pay to American steamships for carrying our foreign mails, and for that the bill provides, without the $800,000 sought to be appropriated by the Senate amendment.
This being true, and it seems to me there is no answer to the facts I have mentioned, what shall we call the proposition contained in the Senate amendment? It is simply a proposition to pay subsidies to our steamship companies under pretense of paying compensation for carrying mails. It appears to me there is no escape from this conclusion. The more candid friends of the amendment frankly say it is a proposition to pay subsidies. Having determined that the amendment is merely a provision for paying subsidies, the next question I want to consider is whether it is right and desirable to adopt such a policy?
I do not think it is ever right to take money from the public Treasury and pay it to a private individual for nothing. To do so is to violate one of the fundamental principles of our law. If the Government, through its law-making power, may take $800,000 of the people's money and give it to the millionaires who own American steamships as a mere gratuity, then it may take ten times that sum, or any other amount, and thus the means of the many who contribute to the Treasury may all be taken and given to the few. It is not a correct principle to pay gratuities. The Government should pay fairly for what it gets; it should give nothing as a subsidy.
Those friends of the amendment who are frank enough to admit that it is a subsidy scheme justify it and insist the policy is desirable on the ground that it will build up our languishing carrying trade and enlarge our commerce, especially with the South American countries. Will it do this? I insist it will not to any degree that will justify us in entering on such a policy — a policy which when once adopted will be difficult to abandon, because when those possessing great wealth once intrench themselves in the national Treasury they usually find the means of maintaining their vantage-ground, at least until the wrong becomes so palpable and enormous that public sentiment absolutely revolts and drives them out.
But how can the payment of subsidies secure to us the sale to South American countries of our products, especially our manufactured products? How can such a policy enable our manufacturers to compete in South America with those of Europe?
The gentlemen who support this amendment are the same gentlemen who support the protective policy. They tell us that protection by means of a high tariff, often amounting to a prohibition on imports, is absolutely essential to the welfare of this country, and it has usually been assigned as a reason that we can not compete in our home markets with the manufactures of Great Britain, Germany, and other European countries.
How many times has it been asserted on this floor that a reduction of our tariff taxes will close our factories, because they can not compete with the cheaply-made goods of our transatlantic neighbors? The protection theory grew out of and is based on the fact that other people can manufacture most of the articles we manufacture cheaper than we can. Now, if our manufacturers can not sell their products at home, at their own shop-doors, in competition with other nations who must pay the expense of transporting their goods across the ocean, how can it be expected that our same manufacturers will transport the same manufactured products 3,000 miles to Venezuela, or 5,000 miles to Brazil, and there compete with the products of other countries?
To take money from the people's Treasury and put it into the coffers of the American steamship-owners will not reduce the cost of making cutlery in Connecticut, or cotton goods in Massachusetts, or earthenware in New Jersey. To pay subsidies to the steamships can not by possibility render the cost of manufacturing cheaper in this country. And whether we do or do not secure a trade with the Central and South American countries depends on whether we can furnish them what they want at as cheap or cheaper rates than others.
When we can furnish them as cheap as others we may expect to secure a fair portion of their custom; when we can supply them cheaper than others we may expect, if we choose, to monopolize their custom. It is a question of price. And upon this point I want to quote from the testimony given before the commission we recently sent to Central and South America. Mr. W. G. Boulton, one of the owners of the Red D line of steamships engaged in the trade to Venezuela, whose firm has had an experience of forty years, speaking of the South American trade, said:
The question of foreign trade is one of price, and if in this country they can not obtain manufactured articles at the same prices that they can obtain them in Europe, very naturally this country will not obtain the trade.
And again, in speaking of the Europeans and the fact that we must compete with them if we get South American trade, he says:
You have got to compete with these people, you have got to put the prices down to compete with the Manchester prices for the dry goods, or you can not get the trade.
This gentleman is one of those to be bounded by the payment of the proposed subsidy, and his firm has taken a deep interest in the success of the proposed amendment. His testimony on this point is really against his personal interest, and therefore is deserving of more consideration.
Not a great while ago our State Department sent instructions to some of our consuls and consular agents in Europe asking them to furnish information relative to the shipping interests of France, Germany, Great Britain, and Italy, with a view of profiting by the experience of those nations. The consular officers made reports, and Worthington C. Ford, chief of the bureau of statistics in the State Department, prepared a report upon the matter based on the reports of those officers. His report and the reports of the consular officers have been transmitted to this House, and may be found in Executive Document 172. The present Secretary of State, who has long served his country with distinction, accompanied that document with a letter of transmission, which is as follows:
I have the honor to transmit herewith the replies of consular officers of the United States in France, Germany, Great Britain, and Italy to a circular prepared in this Department relative to the shipping interests of these nations.
This subject has of late assumed great importance through the efforts of certain of the leading commercial nations of Europe to stimulate by direct and indirect aid their mercantile marine, and thus to give it an energy which was considered unattainable without such aid. France, Germany, and Italy are paying bounties in various forms, with a view to stimulating the construction of vessels, to encouraging their navigation, and to placing their shipping in a more favorable position for securing a larger share in the carrying trade of the world than they would under natural conditions and with free competition obtain.
Had this policy been confined to a single nation, that nation might have derived some benefit; though the conclusions reached in Mr. Ford's report would seem to show that in France, where liberal bounties for the construction and navigation of vessels have been paid since 1881, the results have in no respect fulfilled the expectations of those who favored the policy. But when other nations enter the list and meet privilege with privilege and bounty with bounty, no advantage is gained, and the conditions of competition are changed. That nation which bids highest, which grants bounties and subsidies most liberally, holds the position of vantage, but only until other nations are willing to pay the same. Whatever advantages France has secured in the last four years will, in a measure, be neutralized by the bounty policy of Germany and Italy. This policy may lead to the construction of a certain amount of new tonnage, but it is an open question whether there is a legitimate demand for this additional tonnage.
The indications are at present that there is a carrying capacity in excess of the world's needs; and if this is a fact every ton constructed beyond what is required to repair loss and waste is only so much the more added to the dead weight of surplus tonnage, which, to be profitable, must depend upon the bounty of Government, and this bounty is nothing more than a tax imposed upon productive industry for the benefit of an unnecessary and therefore unprofitable industry. The returns upon such a costly policy as the bounty system of France are small, and are due entirely to artificial conditions. Judging by the experience of the past these conditions must be continued to insure a maintenance to the shipping they have stimulated into existence.
To a nation possessed of large commercial interests, the bounties of other nations may give an advantage in the form of cheaper rates of freight — the result of increased competition. It may well be doubted whether it will be politic to sacrifice this advantage and impose an additional burden upon productive industry by the adoption of a system of bounties.
Respectfully submitted.
T. F. BAYARD.
DEPARTMENT OF STATE, April 9, 1886.
From which it appears this judgment is against the payment of subsidies. That judgment, considering his long experience in public
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affairs and his distinguished ability, ought to have weight, at any rate on this side of the House.Being the head of the State Department, and one of the official advisers of the President, it is not improper to conclude the Chief Executive is also against the policy. At least the President is opposed to paying subsidies to steamships, through the Post-Office Department, under the pretense of paying for carrying the mails.
The Post-Office appropriation bill for the current fiscal year has a provision in it, placed there by a Senate amendment, concurred in by the House at the last moment to prevent an extra session, under which the Postmaster-General was authorized to pay American steamships $400,000 for carrying mails, which the President regarded as a subsidy and to which he was opposed. In his message to Congress he alluded to the failure of the Postmaster-General to expend that sum of money, and among other things said:
Whatever may be thought of the policy of subsidizing any line of public conveyance or travel, I am satisfied that it should not be done under cover of an expenditure incident to the administration of a Department, nor should there be any uncertainty as to the recipients of the subsidy, or any discretion left to an executive officer as to its distribution. If such gifts of the public money are to be made for the purpose of aiding any enterprise, in the supposed interest of the public, I can not but think that the amount to be paid, and the beneficiary, might better be determined by Congress than in any other way.
He calls that provision to pay $400,000 "a subsidy," "a gift," and opposes such a policy, especially when carried out through the Post-Office Department under the pretense of paying for carrying the foreign mails.
That the Postmaster-General was opposed to such a policy is sufficiently established by the fact that, exercising the discretion vested in him by the law, he refused to expend the $400,000 placed at his disposal. The whole Executive Department of the Government is evidently opposed to such a scheme. And we have here the spectacle of a Republican Senate attempting to force on a Democratic administration a policy to which it is thoroughly opposed. The question is, will this Democratic House permit such a thing?
And now I want to return to the consular reports and to the report of Mr. Ford.
Mr. Sutton, our consular agent at the port of St. Nazaire, in France, where subsidies have been paid both to ship-builders and ship-owners for some years, says in his report:
The general opinion on the bounty question is that it has failed to produce the effect of serving the shipping trade, and has only resulted in creating a few large steamship companies, who have monopolized the whole of the carrying trade to the exclusion of sailing vessels.
Here we are officially informed that in France, where subsidies have been paid, the policy is a failure. The example of that country has been cited and often commended to us by the friends of the subsidy policy on this floor. I commend to them the above official information as to the results of that policy in France, where it has been in operation for several years.
I also commend to them the official statement of Mr. Roosevelt, our consul at Bordeaux. He says:
At the present time the shipping interests of the direction can be best described by the evidence unanimously given by the owners of ship-yards; they say "it is deplorable." The results of the ship-building for two years past have been literally nil. Out of a half-dozen or more yards only one remains that can be said to be on its legs.
Shipping matters proper, that is, the navigation of vessels, does not present a much brighter prospect. The companies declare that their dividends at times are trifling, often merely nominal. Now, whether this condition exists for the reason that a similar state of things exists in nearly all of the principal nations, such undoubtedly being the reports, can not and need not be determined here. At all events, it is true, and that in spite of the existence of a considerable aid advanced directly by the General Government, both to ship-building and private or public lines of vessels.
And also the following official statements of Consul Dufais, of Havre
Of the ocean-going steamships belonging to this port thirty-eight are not laid up for want of profitable business. Twelve sailing vessels belonging to Marseilles, fifteen under the Italian flag and twelve of Austrian nationality, are likewise tied up in this port awaiting the return of more prosperous times.
So, then, for the last two years there has been very little ship-building in France, and at the present time there is almost nothing doing. The four large boats building for the Transatlantic Company, above-mentioned, and costing about 8,000,000 of francs, or over $1,500,000, apiece, had to be constructed on account of their contract with the government to carry the mails with the requisite speed, not because they were wanted in the trade.
In regard to the dividends, it can only be said that the lines of ships which were called into existence by reason of this bounty law are paying nothing; most of them are in a state of bankruptcy, in liquidation, or going into liquidation. Those lines that have been subsidized by government, though being lines which had already an established business and doing the regular trade, are paying either no dividends or only small ones.
Here it appears that in France where liberal subsidies are paid many ships are lying idle in their harbors, and ship-owning is unprofitable. Will it be wise for us to follow the example of that nation and by giving away the public revenues in large sums stimulate the building of ships simply to have them tied up in harbor or run without profit?
The French law inaugurating the bounty or subsidy policy, which has been so often and so earnestly commended to our consideration in the course of this discussion, went into effect in 1881. Prior to that subsidies were not paid. The subsidy policy of Germany, whose example has also been cited on the other side of the House, has not yet gone into effect, and heretofore no subsidies have been paid by that government.
Bearing these facts in mind, the following from the report of Mr. Ford relative to the shipping interests of Germany, France, and Italy is interesting and significant
The number and tonnage of steam vessels were as follows:
| Year. | France. | Germany. | Italy. | |||
| No. | Tons. | No. | Tons. | No. | Tons. | |
| 1873 | 516 | 185,165 | 253 | 167,633 | 133 | 48,573 |
| 1874 | 522 | 194,556 | 299 | 189,998 | 138 | 52,370 |
| 1875 | 537 | 205,420 | 319 | 183,569 | 141 | 57,147 |
| 1876 | 546 | 218,549 | 318 | 180,946 | 142 | 57,881 |
| 1877 | 565 | 260,804 | 336 | 183,379 | 151 | 58,319 |
| 1878 | 588 | 245,808 | 351 | 179,662 | 152 | 63,020 |
| 1879 | 599 | 255,959 | 374 | 196,343 | 151 | 72,666 |
| 1880 | 652 | 277,759 | 414 | 215,758 | 158 | 77,050 |
| 1881 | 735 | 311,779 | 458 | 251,648 | 176 | 93,698 |
| 1882 | 832 | 416,228 | 515 | 311,204 | 192 | 104,719 |
| 1883 | 895 | 467,488 | 603 | 374,699 | 201 | 107,452 |
| 1884 | 938 | 511,072 | 650 | 413,943 | 215 | 122,297 |
This table is very instructive as showing the continued increase of steam shipping throughout the entire period, bounty or no bounty. In only a single year in Italy was there a set-back, in 1879, when the number of ships was decreased by one, while the tonnage was increased by more than 9,600 tons; and in Germany, for a series of years, the tonnage decreased or fluctuated to recover, however, and advance in later years. It also raises the question wherein was the need of subsidies for French shipping. In the period of 1873-'80 the number of steam vessels increased in France 136, or 26.3 per cent.; in Germany, 161, or 63.6 per cent.; and in Italy, 25, or 18.8 per cent. The advantage thus appears to lie with Germany. The tonnage shows a different result. In France, it increased 92,594 tons, or 50 per cent.; in Germany, 48,125 tons, or 28.7 per cent.; and in Italy, 28,477 tons, or 58.6 per cent. While Italy shows the highest relative increase, it can not be compared with that of France. So that in the eight years prior to 1880 the French shipping was increased much faster in its most valuable branch, steam vessels, than either of its continental competitors.
The years 1880-'83 show still more remarkable results. The number of steam vessels in France increased 243, or 37.3 per cent.; in Germany, 189, or 45.6 per cent.; and in Italy, 43, or 27.2 per cent. The tonnage increased during the same period, in France, 189,729 tons, or 68.7 per cent.; in Germany, 158,941 tons, or 73.6 per cent.; and in Italy, 30,402 tons, or 39.4 per cent. The increase in Germany, where no bounties were paid, was relatively greater both in number and tonnage of vessels than in France, where large bounties were in force after 1881.
And so it appears that during the period France has been paying liberal bounties the shipping interests of Germany have been more prosperous, although no bounties were paid thereto. No doubt the growth of those interests in Germany were natural and demanded by the trade, while in France an artificial activity in those interests, produced by the stimulus of subsidies, induced the construction or purchase of more vessels than were needed for her commerce, and resulted in ships lying idle or running without profit.
It appears, too, that the carrying trade of France increased more rapidly before 1880, when their subsidy law was enacted, than it did afterward. Mr. Ford makes a comparison between Germany and France during the period from 1873 to 1883, and says:
The tendency has been the same in either case, and the showing is largely in favor of France, but not since the bounty system was inaugurated. The French carrying trade increased more rapidly before 1880 than after 1880, even allowing for the longer interval; and the German, while falling away in the previous years, more than regained what it had lost and increased at a higher rate than did the French.
After collating the facts and figures furnished by the consular officers and carefully reviewing the whole matter, Mr. Ford concludes his report as follows:
The bounties have succeeded in infusing life into neither ship-building nor ship navigation. France finds it cheaper to have her iron vessels built in Great Britain and a large share of her wooden ships in other countries. The lines of ships that were called into being through the liberal offers of the government are represented as being in a state of bankruptcy, and existing lines that participate in the bounties are either paying no dividends or very small amounts. The exports of France, reflecting as they did the slight reaction which ensued in 1879, have since declined and are still declining in value, and the decrease can not be explained by a fall in the prices of commodities, but rather by an absolute decrease in the foreign commerce of the nation. In fact, it may be asserted that the bounty policy of France, intended to bridge over a temporary depression, has aggravated the situation, and has proved itself to be a source of mischief and not of cure.
Now, in the light of all this, will a Democratic House concur in the amendment and thereby inaugurate a policy which has not been availing abroad, and to which the Democratic administration is opposed? Until it be accomplished I will not believe that this House will do such a preposterous thing.
But, Mr. Chairman, some of the advocates of the subsidy policy have contended that if the amendment be adopted the whole matter will be left in the discretion of a Democratic Postmaster-General so far as making contracts and expending the money are concerned; that he may make contracts with the steamships and expend the money, or he may not, at his discretion. Nobody ought to be deceived by this contention. If the amendment be concurred in by the House, the Postmaster-General will have little or no discretion in the matter, and it was not intended he should have any.
It has, in my judgment, been written carefully, with the design of depriving him of his discretion.
As already mentioned, the Post-Office appropriation bill for the current year contained a provision, inserted by the Senate, and reluctantly concurred in by the House during the very last hours of the Forty-eighth Congress, under which the Postmaster-General was authorized
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to pay American steamships $400,000 for carrying our foreign mails this year. The provision is as follows:Office of Superintendent of Foreign Mails: For transportation of foreign mails, including transit across the Isthmus of Panama, $800,000; and the Postmaster-General is hereby authorized to enter into contracts for the transportation of any part of said foreign mails, after legal advertisement, with the lowest responsible bidder, at a rate not exceeding 50 cents a nautical mile on the trip each way actually traveled between the terminal points: Provided, That the mails so contracted shall be carried on American steamships, and that the aggregate of such contracts shall not exceed one-half of the sum hereby appropriated.
That provision was clearly directory and vested the Postmaster-General with a discretion. He exercised his discretion, no doubt honestly, and declined to pay out the money. And for doing so the steamship men, through marine and shipping journals and through a partisan press, have earnestly and persistently denounced him. He has been severely criticised and satirized on the floor of this House for exercising his best judgment, according to law. The language of the provision, it seems to me, could not be fairly construed otherwise than as merely directory. But if any doubt existed when looking at the words alone, none could remain after looking into the debates which occurred in the Senate and House when that provision was under consideration.
In the Senate on the 23d of February, 1885, Mr. PLUMB said
I am willing to say to the Postmaster-General, and one not of my political faith, "I will give you discretion for this year," because this amendment of the Senator from Maine only applies to this year. * * * I am willing to say to the incoming Democratic Postmaster-General or to any Postmaster-General, * * * "you shall during these twelve months exercise a reasonable discretion as to what is proper for the service to be rendered."
And in the same body, on the same day, Mr. SAULSBURY said:
In reference to the merits of this proposition of amendment, the Senator from Maine simply proposes to vest in the Postmaster-General discretion to enter into contracts to pay the owners of American ships for carrying foreign mails such amount as he may deem proper.
In the House on the 3d of March, 1885, Mr. TOWNSHEND, who had the bill in charge, said:
But, sir, we are met by the argument by gentlemen that as we have put the domestic mail service upon the basis of compensation for service rendered, and have intrusted to the Postmaster-General the discretionary power of making such contracts as he may in his judgment deem necessary for the interest of the public, that we could also, with equal safety, intrust to him the power to make contracts for mail service to foreign countries. * * * Why, if you allow the Postmaster-General to exercise discretion in making contracts for the coastwise and inland steamboat service, should there be any great apprehension of abuse of power in allowing him to exercise equal discretion in making contracts for carrying mails to foreign countries?
By these gentlemen the discussion was directed, in part, to the propriety of vesting the Postmaster-General with the discretion of making such contracts as were provided in the clause which I have quoted, there being no question, apparently, in the mind of any one as to the point that the power to be conferred was merely a discretionary one.
In the House on the 10th of February, 1885, Mr. DINGLEY, speaking of the same provision, said:
It is to be observed that there is nothing in the measure proposed which requires the Postmaster-General to pay a single dollar to an American line of steamers. He may invite proposals for carrying the mails by American steamers to any country that he regards it proper to do so, and when he has received bids for this service he may reject any and all proposals which in his judgment it is not for the public interest to accept. If he can not obtain a proposal satisfactory to him he may send our mails by foreign competing steamers or by way of England. The absolute discretion vested in him in the foreign as in the domestic mail service, limited, however, in the case of the foreign service to the maximum sum of 50 cents per mile and the aggregate of $600,000, would make the Postmaster-General master of the situation in the case of the adoption of the measures proposed.
And on the 3d of March, in the House, Mr. Horr, who led the discussion in favor of the proposition, expressly declared that it conferred discretionary power on the head of the Department. In the course of his remarks the following colloquy occurred:
Mr. HORR. This bill simply says that the incoming Democratic Postmaster-General may make such contracts with American vessels for carrying our foreign mails as he may now make with our coastwise vessels for carrying the mails on the coast.
Mr. BINGHAM. For one year only?
Mr. HORR. For one year only.
Mr. MORSE. Will the gentleman let me ask him a question?
Mr. HORR. Certainly.
Mr. MORSE. Does this apply to any particular line in this country?
Mr. HORR. Certainly not.
Mr. MORSE. Then it is entirely optional with the Postmaster-General to use the appropriation or not as he may see proper.
Mr. HORR. Every dollar of it is left subject to his judgment. If he does not think that the service demands that a contract should be made with any vessel or route he need not make it.
And, instead of my friend from Indiana arraigning Democrats here for voting on this thing, I say to you, when you vote against this proposition you vote a lack of confidence in your own Postmaster-General, which does not come with good grace from you.
All this leaves no shadow of doubt that, under the provision I have quoted from the bill for the current year, discretion was vested in the Postmaster-General to pay the money to the steamship-owners or refuse to pay it, as he deemed best. Congress appropriated $800,000 for the foreign-mail service, providing that not more than one-half of it should be paid to American steamships, and said to the Postmaster-General:
"Take this money and pay it over to the steamships if in your judgment you think it wise and best; if you think otherwise do otherwise." He exercised the discretion vested in him, consulting the interests of the foreign postal service and of the whole people, instead of the private interests of the American steamship-owners; and, as I have already said, has been roundly abused for doing it, both in the partisan newspapers and on this floor. On the 27th of March this year the gentleman from Michigan [Mr. BURROWS] speaking of this matter said:
It is known to the country and conceded by all that this provision of the law remains unexecuted, and the will of Congress in this regard is entirely nullified. The law seems plain. There is nothing in it obscure or mysterious; but the Postmaster-General in this instance, in order to nullify the law, goes outside of its plain provisions to find reasons for making it a dead letter. Read the law and it seems easy of comprehension. What does it require? First, a contract with American steamships for carrying any portion of the foreign mails; second, after legal advertisement; third, to the lowest responsible bidder; fourth, at a rate not exceeding 50 cents a nautical mile each way actually traveled; and, fifth, $400,000 is hereby appropriated to carry out contracts so made. Is there anything obscure in this statute? Certainly nothing. And yet no portion of this law has been executed. Nay, more, the Postmaster-General has never taken a step in the direction of its execution.
But suppose Congress should determine, as it did at its last session, to pay more for carrying the mails than for carrying hides. Is the Postmaster-General in that event to be heard to say, "I will not execute this law, because in my judgment it is paying too much." The question is two preposterous for debate. It seems to me that matter is no part of the business of the Postmaster-General; it is none of his concern. Congress determines the rate of compensation to be paid for this service; and when it determined to let this service to the lowest responsible bidder at a rate not exceeding 50 cents per nautical mile, it was the business of the Postmaster-General to at least make an effort to execute that law, instead of refusing to take any steps toward its execution, and then offering to Congress so trifling an apology.
How true it is sometimes that man —
* * * * *
Plays such fantastic tricks before high heaven
As make the angels weep.
Mr. Chairman, I have not called attention to this matter for the purpose of making a defense of the Postmaster-General. In his annual report he has presented the subject fully, and has in an unanswerable manner shown that the discretion vested in him was properly and wisely exercised — exercised in the interests of economy and therefore in the interests of the people.
In doing this he had the approval of the President. The latter officer so states in his annual message in the following unequivocal words
It was decided, with my approbation, after a sufficient examination, to be inexpedient for the Post-Office Department to contract for carrying our foreign mails under the additional authority given by the last Congress.
But I called attention to this branch of the subject for the purpose of putting a question and if possible finding a correct answer to it. The owners of American steamships tested the discretion of the Postmaster-General under the provision for the present year, and have abused him all over the country and in this House because he did not ignore the right and exercise that discretion solely in their private interests. Are those same men anxious to test his discretion again? Having once done so and found him opposed to paying the people's revenue to a few steamship owners as a gratuity, why should they desire to repeat the experiment? Merely for amusement?
It is not amusement they are seeking. They are after the contents of the Treasury, and will be satisfied with nothing less than a goodly portion thereof. Mr. A. Foster Higgins, of New York, one of the leading advocates of the subsidy schemes of the steamship owners, and who has recently been before a committee of this House and made an argument in favor of the same, at a recent meeting held in Boston for the consideration of our shipping interests, in a speech, says
We want subsidies, and there should be no quibbling over it.
Other speakers at the same meeting expressed the same sentiments. It is evident they are not merely seeking an opportunity to repeat the experiment of testing the Postmaster-General's discretion again on the subsidy question. That is not what they want. They want cash, and a liberal supply of it. The gentleman from Michigan [Mr. BURROWS], in a question he puts in the quotation I have already made from one of his speeches, sounds the keynote of their song:
But suppose Congress should determine, as it did at its last session, to pay more for carrying the mails than for carrying hides. Is the Postmaster-General in that event to be heard to say, "I will not execute this law, because, in my judgment, it is paying too much."
It is plain what answer the gentleman and the American steamship owners would give to his question had they the full power to furnish the answer. Very quickly and unmistakably they would say, "No, he shall not again have the discretion in this matter which was vested in him under the bill for the current year." And in the adroitly drawn Senate amendment, now under discussion, that answer has been embodied. The amendment is so framed as to deprive the Postmaster-General of all choice and vest the whole discretion in the steamship owners. They do not understand that any discretion will be left to him if this amendment becomes law; and I fully agree with them on that point. The first clause of the amendment reads as follows:
For the transportation of foreign mails by American built and registered steamships, to secure the greater frequency and regularity in dispatch, and a greater speed in the carriage of such mails to Brazil; the Republics of Mexico, Central and South America; the Sandwich, West India, and Windward Islands; New Caledonia, New Zealand, and the Australian colonies; China and Japan, $800,000; and the Postmaster-General is authorized to make, after due advertisement for proposals, such contract or contracts with the owners of such American steamships for a term of not less than three years nor more than five years, and at a rate of compensation not exceeding 50 cents a nautical mile on the trip each
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way actually traveled between the terminal points, in the most direct and feasible sailing course between the terminal points, as shall be found expedient and desirable to secure the ends above set forth.
This clause, I grant, is directory only, and if left standing alone would vest the Postmaster-General with the same discretion which he had under the provision in the bill for the current year, except that he would be confined, in the event he chose to expend the money, to American steamships running from our country to those countries specifically named. But the author of the amendment did not propose to leave it in that condition, and added the following clause:
And if he shall be unable to make such contracts for any of such respective services, he shall, so far as possible, cause the mails of the united States to be carried to and from said places, respectively, in the best and most expeditious manner practicable, in American vessels, and for a reasonable compensation, not exceeding the rate aforementioned.
This deprives the Postmaster-General of all discretion. That, in my judgment, will be the effect if it becomes the law. And I have no doubt that was the intention of those who originated it.
Under the first clause he is "authorized" to advertise, receive bids, and make contracts. That is directory, vesting the executive officer with a discretionary power. But the latter clause says to him if you can not make contracts under the previous clause, then you "shall" cause the mails to be carried in American vessels, so far as possible, for compensation not exceeding the rate aforementioned. Now, who has discretion under this clause?
The steamship companies, by concert of action, may refuse to bid when the Department advertises for proposals under the first clause, and then the second clause says to the head of the Department, You "shall" cause these mails to be carried on American vessels if possible to be done for not exceeding 50 cents a nautical mile each way for every trip. This latter clause is mandatory, and if no bids should be made when advertised for under the first clause then the Postmaster-General would be bound to apply to the steamship companies under the latter clause and employ them to carry the mails at their own price, not exceeding 50 cents a nautical mile. Is there any escape from this conclusion? It seems to me there is none. I believe the construction I have placed upon the amendment is the correct one and the result inevitable.
Will it be wise for us to place the Post-Office Department in the power of the steamship companies? If it be suggested that there is no danger of any combination among the owners of American steamships it is a sufficient answer to call attention to the fact that every day combinations are being made, "poolings" effected among the great corporations and monopolies which do our carrying trade. They combine, "pool their issues," as against the people generally, and why will they not do so as against the Government if so good and profitable opportunity occurs as would be afforded by enacting this amendment into law.
Why, one of these very steamship companies, the most powerful one, which would receive about one-half of the sum provided by this amendment if it were paid out at 50 cents a mile, has a pooling arrangement now with the Union Pacific Railroad Company, made for the purpose of keeping up the rates of freight and passenger tariffs, and under which the railway company pays the steamship company a round sum each year not to do certain classes of carrying trade. The railway company calls it a subsidy, and is expecting trouble with the government on account of the arrangement.
The directors of the company in their last annual report, speaking of the subject, say
The attention of the Government directors of the company has also repeatedly been drawn to this arrangement, and it was, and is, understood by them and approved as a business necessity. It is an arrangement in no way unusual between lines of water and land transportation. At a reasonable, sustained rate of fares and freight both passengers and merchandise would invariably take the land route. Nevertheless, it was in the power of the water route at any time to so demoralize the business by competitive rates as to make it valueless to all concerned in it. Under these circumstances one of two courses only was lossible. The parties concerned in the traffic could either enter upon an endless competitive warfare, ruinous to themselves and destructive to the business interests of the country — such as during the past season has taken place between the West Shore Railroad Company and the New York Central and Hudson River Railroad Company, or such as the transcontinental routes themselves have more recently been involved in — or they could meet and agree upon a division of traffic. If such a contest as that suggested were entered upon it would practically result in the destruction and consequent withdrawal from the traffic of one of the parties to it or in an amicable division. That either party to the traffic would be compelled to withdraw from it wholly was improbable.
The railroad companies certainly could not cease to operate their roads. They might operate them at a loss, or at best without profit — taking the through business at rates which would be out of the question for local business, thus causing the worst form of discrimination to exist — or they could withdraw entirely from through business, allowing it to go by water. But it was to do the transcontinental business that the Pacific roads were built, and it was not possible for them to submit to be driven out of it by a rival water line. On the other hand, that the steamship company would withdraw from the business was most improbably, as their through traffic was but an incident to their local traffic — the profits derived from which last would not in their case be affected by a discriminating rate on through traffic sufficiently low to demoralize all transcontinental rates. Under these circumstances, after incurring large losses through competition, the several companies interested — that is, the Union Pacific Railroad Company, the Central Pacific Railroad Company, and the Pacific Mail Steamship Company — met together in 1877, and through their representatives agreed upon a plan of adjustment. A certain portion of the business, roughly calculated at about 10 per cent. of the whole, was allowed to the steamship company. The proportion was satisfactory to it. The value of this tenth part of the business thus set off to the steamship company was then estimated in money, and called a "subsidy." It was nothing more than the usual well-understood division of competitive traffic, the amount allotted to one party being commuted into cash payments.
The railway company has "subsidized" this steamship company, and now the Government is asked to do likewise to the extent of hundreds of thousands annually. If we do so we will have an interesting spectacle. In the first instance the Government subsidized the railway company by giving it millions of acres of the public domain. It is asked to subsidize the Pacific Mail Steamship Company by paying it large annual sums of money to enable it to transport the people's merchandise cheaply, as is alleged; and if the Government does so, then the subsidized railway company will subsidize the subsidized steamship company in consideration that the latter will not carry the peoples' merchandise at all and leave the railway without competition. No doubt that kind of a complex subsidy would be eminently satisfactory and advantageous to the millionaires who own the stock of the steamship company, but it would be nothing less than a gross outrage on the people of this country. Is it unfair to suppose that those who will enter into such a combination as above shown will, if the Senate amendment prevails, combine and force the Postmaster-General to pay their own price, not exceeding 50 cents a mile, for carrying the mails?
In my judgment, just so sure as the amendment becomes law that will be the result.
There is a little item of Congressional history which indicates the length to which this steamship company will go when seeking to appropriate the contents of the Federal Treasury. A few years ago an attempt was made to secure the passage of a steamship-subsidy law, and it having afterward leaked out that this same company had probably employed improper means in prosecuting the scheme here, an investigation was ordered by the House of the Forty-fourth Congress. Hon. John A. Kasson made the report of the results of the investigation, from which I quote the following:
The results of the evidence are, that about $900,000 was disbursed upon the allegation that it was used in aid of the passage of the act now under investigation; that about $565,000 appears to have been paid to the exclusive use of persons having no official connection with such legislation; and that the disposition of the remaining $335,000 remains in doubt upon the evidence presented, but without any testimony showing that it was a reward paid to any person at that time a member of either House or Congress; and that the uncertainty attending the disposition of this latter sum is owing to the refusal of William S. King to testify the truth, and to the failure or refusal of John G. Schumaker to present all the facts to which the committee believe it was in his power to give.
The enormous evil attending the existence of an unregulated lobby with license to appear before committees and urge measures upon members upon fraudulent pretense that they are acting for the public interests when they are privately retained by interested parties, calls for further legislation. The committee deem it necessary for the protection of Congress against future transactions as discreditable as those they have now brought under review, that a law should be passed requiring every person appearing and advocating measures for a private interest to appear in his true capacity as a retained attorney or agent.
Nine hundred thousand dollars paid by this company in an attempt to get into the public Treasury! Are such people peculiarly the proper objects of munificent governmental bounty? It is idle to tell me that those who will expend money thus in an attempt to secure legislation enabling them to appropriate the public revenues will not combine, if given the power, and compel the Postmaster-General to submit to their will. That is what they hope to accomplish by this amendment. I am opposed to it. I am opposed to all subsidy schemes. The public revenues are a public trust. They should be carefully guarded and expended only for the good of the public. They are raised largely by taking the necessaries of life. They should not be given away. I do not believe a Democratic House, pledged to economy and reform, will concur in this amendment, and thereby stultify itself and wrong the people.