in the Mediterranean to Suez is 1,030 miles from Brindisi, 1,206 miles from Naples, and 1,590 miles from Marseilles. The distance from San Francisco to Honolulu is 2,097 miles. (Distances taken from French bounty law tables giving 840,000 distances between ports computed by the most direct navigable route.) The following table shows the distances to Yokohama, Auckland, Shanghai, Sydney, Manila, and Hongkong from Honolulu, from San Francisco via Honolulu, from Victoria, B. C., from Brindisi, from Naples, and from Marseilles:

Steam navigation between the west coast of North America and the east coast of Asia and Australia is in its infancy. The steam tonnage entered and cleared in the United States from Asia and Australia and Oceanica for the year 1897 was only 853,216 tons, or barely 4 per cent of the steam tonnage entered and cleared in the United States from Europe. Its rapid growth is an absolute certainty of the near future. Foreseeing its importance, the British Government and British colonies have entered promptly upon the same policy successfully undertaken in the early days of steam navigation on the Atlantic. The latest report of the British postmaster-general (Appendix E) shows that the British post-office and admiralty and the Dominion of Canada together contribute £60,000 ($291,000) annually to the maintenance of the Canadian Pacific steamship line from Vancouver to Hongkong and other Asiatic ports. The amounts paid by colonial contracts for mail service between Australia and Vancouver and New Zealand and San Francisco are not stated, but they are not considerable. While these subsidies are in pursuit of British imperial policy (Report British Postmaster-General, Appendix E) rather than to promote British shipping, they can not be ignored in an examination of the conditions under which competition must be conducted. The table of distances above shows to a reasonable certainty that the opportunity for American competition with British shipping lies in the reservation of the Hawaiian trade. An all-British mail route from England across the

Atlantic, then via the Canadian Pacific to Vancouver, and thence to Asiatic ports has clear advantages in time over the Suez route. The failure to carry through the contract for a fast ocean mail line from England to Canada is only temporary, and British pride may be confidently expected not to rest long content under that failure. Once established, the inevitable corollary of such a line is a greatly improved and extended service from Vancouver to Asia and Australia, strongly supported by the Government. Such a line, so supported, will have advantages for trade with northern Asia which can only be offset by much more liberal support to American lines by the Government of the United States. In the matter of communication with the ports of central Asia and Australia, the coasting trade between the United States and Hawaii can and should be used as a contribution toward the maintenance of American trans-Pacific lines. There is nothing in our treaties, nothing in the comity of nations, nothing in a due regard to the abiding interests of Hawaii which suggests that we should set over toward the upbuilding of British and German shipping on the Pacific a commerce between American ports which by all our traditions belongs to ourselves.

During the fiscal year ended June 30, 1897, one German steamship of 1,504 tons entered the United States from the British East Indies, and one German steamship of 1,996 tons cleared from the United States for Japan. This was the entire extent of our dependence on German vessels for steam communication on the Pacific, and of the dependence of the countries, colonies, and islands washed by the Pacific upon Germany for steam communication with the United States. German foresight, however, has selected the Pacific as a domain, in which there is room for new maritime enterprises. On March 22, 1898, the Reichstag passed the bill adding 1,500,000 marks to the subsidy of 4,090,000 marks which the North German Lloyd Company has received annually for its lines to Asia and Australia. The report on which this additional bounty bill was passed (Appendix E) states the amounts spent for ocean mail contracts, and for such contracts to the east coast of Asia, as follows:

These figures were sufficient to induce the German Reichstag to vote 1,500,000 marks additional to the subsidy named, so that the North German Lloyd line from Naples, Italy, to Hongkong and Shanghai now receives a subsidy of $855,000. The figures in the last two columns apply only to navigation with the eastern coast of Asia. Besides these, Government support is furnished to British, German, and French lines to Australia and to lines to islands of the Pacific. The report of the British postmaster-general (Appendix E) shows that for the British fiscal year ended March 31, 1898, the Government payments to British steamship lines to Asia and Australia amounted to $2,444,392. Colo

nial contracts not stated would doubtless bring the total up to the round sum of $2,500,000. The French budget for 1897 contained appropriations of $1,838,594 for French mail steamers to Asia, Australia, and New Caledonia. German subsidies to German mail lines - to Asia and Australia for the current year amount to $1,397,500.

The entire capital stock of the North German Lloyd Company is 40,000,000 marks. The Government subsidy of 5,590,000 marks on its Pacific lines is thus over 13 per cent on the stock. The capital stock of the Peninsular and Oriental and the Orient Steamship companies together is £4,000,000. The Government subsidy of £430,771 on their Pacific lines is thus nearly 11 per cent on the stock. The capital stock of the Messageries Maritimes is 60,000,000 francs. The Government subsidy of 9,192,968 francs on its Pacific lines is thus over 15 per cent on its entire capital stock. From this statement the conclusion must not be deduced that the subsidy is all or nearly all profit. Based on a contract, the subsidy may entail profit or loss. The facts in regard to the workings for 1896 of the North German Lloyd contract for its Asiatic and Australian lines are thus set forth in the report on which the Reichstag increased the subsidy: Cost of operation, including wages, subsistence, coal, navigation charges, running repairs, and 6 per cent on the book value of the vessels, as selfinsurance, 13,800,567 marks; extraordinary repairs, 72,574 marks; administrative expenses, 212,908 marks; depreciation, 5 per cent on the cost of construction of the vessels and 20 per cent on the outfit, 1,506,300 marks; total expenditures, 15,592,349. Receipts: Passengers, freight, and miscellaneous, 11,373,879 marks; surplus of premiums on insurance above loss, 976,685 marks; total receipts, 12,350,564. Excess of expenses over receipts without Government subsidy, 3,241,785 marks; Government subsidy, 4,090,000 marks; profit, including Government subsidy, 848,214 marks. On this statement the Reichstag added 1,500,000 marks to the subsidy, coupled with requirements for an increased service. Whether the profits from these lines, including the subsidy, will equal 2,000,000 marks will not of course appear until the contract has been put into full operation. The North German Lloyd Company on its entire operations for the year declared an annual dividend of 2,000,000 marks, or 5 per cent on its whole capital stock.

Available information on the subject of Government aid to foreign shipping may be found in Appendix E. In the same appendix is published a statement in detail of the payments of the United States for ocean mail service. During the last fiscal year we paid only $24,765 to American steamships and $16,405 to foreign steamships crossing the Pacific to China and Japan. We paid $136,000 under postal contract to American steamships from San Francisco to Australia.

ACQUISITION OF THE PHILIPPINES.

The naval battle at Cavité on May 1, 1898, in its consequences has worked a more radical change in our relations to nations than did the Louisiana purchase. There seems no reason to doubt at this writing that the entire Philippine archipelago, with the small island of Guam in the Ladrones, is to become the permanent possession of the United States. If so, this country has stepped into the place held by Spain in the East, and with Great Britain, Germany, France, and the Netherlands has become responsible for the development of Asiatic territories and populations.

The first obligation, both to ourselves and to our new possessions, is to establish regular communication between the Pacific coast of the United States and the Philippines. Political and commercial necessities require this obligation to be met as soon as practicable. To accomplish this result, the assistance of the Government must be granted. Whatever views may be entertained concerning the economic theory of Government aid, direct or indirect, to private enterprises, the experience of other nations, placed as this country now is placed, leaves no room for doubt that direct Government support of means of colonial communication is a necessity. The British Parliament has frankly stated that to keep up such communication with the East as Great Britain requires, steamship contractors must set commercial principles at defiance, and, cost what it may, the nation must pay them for what they lose thereby, or forego communication. Up to the current report of the British post-office, this loss has been stated in pounds sterling under the head "Estimated British loss on the sea service." The early establishment of regular, frequent, and quick American steam communication between the Pacific coast of the United States and Honolulu, Manila, and Hongkong is a logical consequence of the events of the summer and autumn.

REVISION OF THE ACT OF 1891.

The discharge of our new duties on the Pacific as well as the recent increase in speed of trans-Atlantic mail steamships require an early revision by Congress of the act of March 3, 1891, to provide ocean mail service between the United States and foreign ports and to promote commerce. That act divides American ocean mail steamships into four classes as to tonnage, speed, and compensation, as follows:

The intention of the act was doubtless to secure the largest and quickest steamships in the world for mail service under the American flag, and when it was passed in 1891, the New York and Paris, of 10,670 gross tons and 20 knots speed, filled this description. This year, however, the Kaiser Wilhelm der Grosse, of 14,349 tons, has crossed the Atlantic at over 22 knots and an average on all voyages over 21 knots. The act of 1891 did not provide for the increase in speed and tonnage of vessels on the Atlantic. Its requirements on the Pacific, on the other hand, far exceeded at the time the possibilities of steam navigation on that ocean, and are beyond the requirements even now generally imposed on lines to the East supported by foreign governments. No effort has been made to apply the provisions of the act of 1891 to Pacific mail carriage, and probably none would succeed, if attempted, for some time to come. There are not to-day, and are not likely to be for several years, unless the United States decide at once to take the lead, any steamships of over 8,000 gross tons on the Pacific capable of maintaining a speed of 20 knots. The Arabia, of 7,900 tons, built during 1898, the latest great addition to the fleet of the Peninsular and Oriental Steamship Company,

is a vessel of 18 knots. The addition of a knot and a half speed to this rate means a heavy increase in coal consumption or some new discovery in the mechanism of propulsion. The German subsidy law of last spring, already referred to, requires that new steamships on the route to Asia shall maintain an average speed of 14 knots, and older vessels employed not less than 13 knots. The average highest speed on the line of the Messageries Maritimes to Asia is 14 knots, and while the Peninsular and Oriental line has seven steamers over 6,800 tons each, capable of 18 knots, its average speed, up to last year, was considerably below 16 knots. There will be no dissent from the proposition that within a year there should be an American steamship line, with vessels of 5,000 or 6,000 gross tons and good speed, from our Pacific coast to Honolulu, Manila, and Hongkong. The speed requirement of 16 knots in the second class of vessels under the act of 1891 is 2 knots above the requirements of recent German and French government contracts for their Asiatic mail service. The cost of coal to produce 16 knots is to the cost of coal to produce 14 knots as 190 is to 125.

American mail steamships, under the act of 1891, receive compensation for mileage on the outward voyage only. On an equivalent basis, or for each nautical mile outward bound, the compensation paid to foreign mail steamers to Asia via the Suez Canal is: By the German Government to the North German Lloyd line, $2.54 for steamships of 14 knots; by the French Government to the Messageries Maritimes, $3.98 for steamships of 14 knots, and $2.82 by the British Government to the Peninsular and Oriental Steamship Company for steamships, some of which are capable of a speed of 18 knots, the average speed, however, being up to this year only a trifle above the German and French rates. The act of 1891 provides a rate of $2 a mile (equivalent by construction of the Attorney-General to $2.30 a nautical mile) for American steamships, required to make 16 knots, to attain which a consumption of over 50 per cent more coal is necessary than is burned by the foreign steamships referred to. The figures of the Canadian Pacific Mail Line from Vancouver to Hongkong via Yokohama are even more significant. The line comprises the three Empress steel steamships, each of 5,905 gross tons, built in 1891, of a speed of 163 knots. The distance between Vancouver and Hongkong via Yokohama is 5,775 nautical miles, and the company has monthly sailings, making fifteen voyages a year, or a total mileage of 170,000 miles. For this service it receives an annual subsidy of £60,000, toward which Canada contributes £14,450 and the Admiralty £7,300. This rate is equivalent to over $3.40 per nautical mile on the outward voyage, or, allowing for the half knot extra speed and the 900 extra tons of the British vessels, nearly double the $2 rate which alone is practicable for the Pacific under our act of 1891 as it stands. It is close to the rate we pay for our transatlantic mail steamships of 11,000 tons and 20 knots speed. Obviously, either the speed requirements in the second class of American mail steamships established by the act of 1891 must be reduced or the rate of compensation must be increased if in a reasonable time the necessary American lines on the Pacific are to be established.

If necessary it could be shown that the third class under the act fails to meet the present situation in its requirements of tonnage, speed, and compensation in so far as vessels for the service with the West Indies and South America are concerned. The situation also has been materially changed by the events of the calendar year. The NAV 98-3