The decline in American shipbuilding set in sharply after the Civil War, and, in spite of the continued growth of our domestic marine, the tonnage constructed by American builders steadily declined until 1886, when only 95,453 tons were built. The causes of this decline have been stated in what has been said regarding the substitution of iron and steel vessels for wooden. The period of decline seems now to be safely passed, for we are annually building over 200,000 tons on an average, and every indication points to rapid progress in the near future.
What is more indicative of progress than the increase in the tonnage constructed is the growth in the percentage of steamers and iron and steel ships built, as compared with the wooden sailing ships turned out. During the decade 1872–81, we built 800,000 tons of steamers and 224,000 tons of iron and steel ships; in the decade following, we constructed 1,200,000 steam tons and 485,000 tons of iron and steel vessels; and from 1891 to 1898 our yards turned out 730,432 tons of steamships and 543,850 tons of iron and steel vessels. As these figures indicate, the reconstruction of our merchant marine is progressing with a fair degree of rapidity. At the present time one half our tonnage consists of steamers; but our percentage of iron and steel is still small as compared with other countries. Over seven tenths of our tonnage consists of wooden ships, whereas our chief commercial rival has practically no wooden vessels whatever. Only 7 per cent of the French marine consists of wooden ships, and in the case of Germany less than 5 per cent.
The outlook for iron and steel shipbuilding is so promising that a rapid increase in iron and steel tonnage is certain to come. Largely through the influence of the reconstruction of our navy, numerous large plants for the construction of steel ships have been established at Bath, Philadelphia, Wilmington, Baltimore, Newport News, San Francisco, and other seaports. Cities on the Mississippi River, and especially those on the Great Lakes, are engaged in building ships of iron and steel. There are several steel plants in the Lake ports, and in them we have built the larger part of our steel tonnage. Our iron ships have been built chiefly in the seaboard yards. During the present year, 1899, the American yards are busy constructing vessels both for the navy and for our merchant fleet, and new yards are being established. Having begun selling crude and structural iron and steel and various classes of machinery in Europe, even in Great Britain, we shall ere long be selling iron and steel ships. The excellence of our navy has brought us orders for war ships, and the skill and invention of our shipbuilders will bring us foreign orders for merchantmen.
The commercial progress of the nineteenth century, the salient phases of which have been depicted in the foregoing pages, has been the result of three sets of causes, economic, political, and social.
The economic causes of most importance are the improvements in transportation, the reorganization of industry on a large scale, the accumulation of capital, together with the growth of corporations and credit institutions whereby the utility of capital has been enhanced, and the discovery of large stores of gold.
Transportation is the handmaid of trade. Whatever enables this handmaid to do her work cheaper and quicker enlarges the scope and volume of the world’s commerce. When one considers that it cost nearly four times as much in 1875 to ship wheat from New York to Liverpool as it did twenty years later, and fully three times as much from Chicago to Liverpool, one can readily understand how transportation has removed hindrances to commerce.
Cheap and rapid transportation has made an extensive commerce possible, but it has been the organization of industry on a large scale that has created the chief demand for commerce. Industry at the present time is, to a large extent, so organized as best to promote the territorial and international division of labor; and each large producer regards the whole world as his market. The amount of commerce required increases with the concentration and specialization of industry, and with every widening of the producer’s market.
It has been the accumulation of capital and its increased availability for purposes of production that have made possible the organization of industry on its present basis, and enabled men to construct the highly developed transportation system by means of which commerce is accomplished. The material progress of the past century is unprecedented. Industry has created wealth as with the touch of a magic wand; and this rapidly growing wealth has been made available capital through the instrumentality of the corporation which, by means of stocks and bonds, has gathered into giant organizations the property of hundreds and even thousands of individuals. The industrial corporations have been greatly assisted in their work of concentrating and applying capital, by the banks and other institutions that have enlarged credit and made a given amount of property capable of performing a much larger work. The expansion of industrial credits, furthermore, has been greatly facilitated by the issue of government bonds in large amounts during the century. These state obligations constitute excellent business securities, of which banks, other corporations, and individuals make extensive use. Such are some of the factors that have promoted the accumulation of capital and increased the volume of commerce.
Money is not capital, but an adequate supply of a sound and stable medium of exchange is essential to industrial and commercial progress. Twice in the history of the world the discovery of large supplies of the precious metals has given a great impetus to industry and trade: once, in the sixteenth century, when the Spanish galleys brought to Europe rich treasure from the silver mines of America; and again, in the middle of the nineteenth century, when the rich finds of gold were made in Australia and California. The very rapid increase in the commerce of the United States and of the world at large, which began about 1850, was in no small degree the result of the rising prices which followed the discoveries of gold. The closing decade of the century is witnessing a similar occurrence. For many years prices declined rapidly; the demands made upon the world’s gold supply were rapidly increased at a time when the annual output was declining. From 1850 to 1870 the annual output of gold averaged over $130,000,000; it then declined so rapidly that it amounted to only a little over $100,000,000 a year, in 1885 and 1886. It was only $118,848,700 in 1890; but the present annual production is nearly $300,000,000, and the fall in prices has been cheeked for a while at least. The very rapid enlargement in commerce during the past two years must have been facilitated by the recent increase in the annual production of gold.
A second general cause accounting for the world’s progress in commerce is political—the commercial policy followed by the leading nations of the world. Up to the nineteenth century, practically every country strove to promote its trade, navigation interests, and its power as a nation by means of the mercantile system,—a system of strict and detailed regulation of foreign trade by means of tariffs and navigation laws. Each country strove to determine the nature of its international trade, and endeavored to carry on its commerce in its own ships. In the case of one country, at least, the mercantile system was eminently successful. Great Britain entered the great Napoleonic wars with a powerful naval and merchant marine, and emerged from that struggle the unquestioned mistress of the ocean. Her industries also, as well as her ships, were stronger than those of other countries; and she soon concluded that both her foreign trade and her shipping would profit by doing away with the restrictions of the mercantile system, and adopting the policy of entire commercial freedom. She made no mistake, for her industries and commerce have wonderfully prospered.
The success of free trade and freedom of commerce in the United Kingdom had much influence upon other countries, and, during the third quarter of the nineteenth century, several countries began to move cautiously in the direction that the United Kingdom had taken. They soon found, however, that for them free trade and shipping meant British trade and shipping, because of their inability to compete successfully with their powerful rival; and, during the last quarter of the century, the dominant commercial and maritime policy outside of the British Isles has been one providing for the regulation of trade by tariffs, and for the promotion of the mercantile marine by postal payments and bounties. At the present time, the two most powerful commercial rivals of the United Kingdom are the United States and Germany; and their trade policy is one of regulation instead of freedom. It would seem, therefore, judging by results, that both the United Kingdom and her competitors have acted wisely, and that in both cases the means adopted were such as conditions demanded.
The third cause of the world’s commercial progress during the past century has been colonial expansion. Germany, France, and other countries, influenced by the great success of the United Kingdom, have established colonies in different parts of the world, and assumed control over uncivilized peoples, until there are now 125 colonies, protectorates, and dependencies. These 125 regions comprise two fifths of the land surface of the globe, and contain one third of its population. These colonies and protectorates import annually over $1,500,000,000 worth of commodities, and of this large sum more than forty per cent is bought from mother countries. The last nation to adopt the policy of colonial expansion is the United States, her principal colony, the Philippine Islands, having been made a part of her possessions because of our desire to secure a larger share of the trade of the Orient.
The world is entering upon the twentieth century with the nations of the earth bound to each other by much closer relations than existed a hundred years ago, and chief among the forces that draw the countries of the world together is commerce. It is commerce, more than anything else, that has brought about the existing organization of industry in which each nation is dependent upon every other.
The nations of the world are mutually dependent, but their interests are not identical. In the future, as they have done in the past, nations will compete with each other, each striving to secure for itself a maximum of economic advantage; and this competition will continue to take the form of commercial rivalry. The great international struggles of the present day are being carried on to secure trade advantages; and at no time in the past have those contests been more earnest than they now are. The conflicts of the twentieth century will be commercial struggles, and they will be intense.
In the centuries when Phœnicia, Greece, Carthage, Rome, and Venice were successively powerful, the Mediterranean was the theatre of commercial activity and international rivalry. The navigators and explorers, whose exploits closed the mediæval period and inaugurated the modern era, carried the world’s commerce from the Mediterranean to the Atlantic and transferred the centres of national greatness from the southern to the western and northern nations of Europe. The great industrial countries of the present are those of Europe and America adjacent to the North Atlantic. These countries originate the larger part of the world’s commerce; and the main streams of international trade are those which connect these countries with each other and with those regions of the earth less highly developed industrially.
The Isthmus of Suez, just north of the Tropic of Cancer, and the Isthmus of Panama, a short distance south of that line, were the only barriers which nature placed across an otherwise continuous water route around the earth in the northern hemisphere. These barriers diverted the lines which the world’s largest volume of traffic tends to follow far to the south around Africa and South America, or did so until 1869, when Europe overcame the barrier of most consequence to her by the construction of the Suez Canal. Since the opening of that waterway Europe has enjoyed advantages for international trade superior to those enjoyed by our country. Our regions most highly developed industrially are tributary to the Atlantic and Gulf of Mexico. To the east of us lies Europe, a region of great industrial advancement, demanding little more than our surplus food products and raw materials; to the south are the countries of the South Atlantic lying along the line of the world’s secondary commercial routes; countries, moreover, whose trade we can secure only in direct competition with Europe, which has already forestalled us at many points. In pushing their trade westward the industrial States of the United States—and they are found in the eastern half of our country—find that the possibilities of a traffic by land are restricted within narrow bounds by the heavy costs of a long haul over the elevated Cordilleran Mountain ranges, while shipments by water have to take the circuitous and expensive route around South America. Until an isthmian canal is constructed the United States will be handicapped in its competition with Europe for the trade of all countries bordering the Pacific Ocean.
The United States looks forward to the coming century, confident of sharing largely in the world’s commerce. With an enormous and rapidly growing foreign trade, and with her industries sending their wares into all quarters of the globe, the future of her trade is certain. Shall we also become a great maritime nation? Shall we be as successful in the age of steel steamships as we were in the days when our clipper-ships, “those strong-winged gulls in timber, put swift girdles around the earth?” Unquestionably, yes! The commercial advantages which our rivals have possessed for half a century have nearly all disappeared. Our maritime instincts are not dead; and when we again turn our attention in earnest to the work of international navigation, we shall “win anew the wide-reaching seas our sires loved and occupied so well.”