Mr. POWELL. You mean the shipbuilders only?

Mr. NICHOLLS. The workmen.

Mr. POWELL. Do you mean the shipbuilders' yards only, or do you mean all down the line of these subcontractors?

Mr. NICHOLLS. I mean all the laborers and mechanics under this bill who do this $100,000,000 worth of work that you mention.

Mr. POWELL. Everywhere; I think that would be altogether too difficult a question to answer on a moment's notice.

Mr. NICHOLLS. I would not blame you for not answering, but I thought you might be able to give us some rough estimate.

Mr. POWELL. No; I have not traced back along these lines sufficiently for to give any estimate of that sort.

The fourth topic was the question of the effect of this bill on the men. As I said, a few minutes back, Mr. Mull, our superintendent, will be able to handle this topic very much better than I can myself, as he is very much more closely in touch with the mechanics and the laborers in the yard, but our experience has been, without exception, that our men were only too glad to get work as long as they could get it at a straight hourly rate, and at overtime rates for overtime, in order to make extra money. We believe that if this bill were passed, it would be very unacceptable to the workingmen in our yard-to the big majority of the workingmen in our yard, and that they would most heartily agree with us in protesting against its

passage.

In general, as showing the general condition of the shipbuilding interests in this country, I would like to quote from the annual report of the Commissioner of Navigation for 1907. At page 15, under the "profits of shipbuilding," the following paragraph occurs:

Census Bulletin 81, issued in July, 1907, contains important statistics concerning the shipbuilding industry of the United States. The figures concerning steel shipbuilding are of special interest, and dispel any impression that this industry is highly profitable by virtue of the coasting laws, which restrict, except for Government purposes, trade between American ports to vessels built in the United States. The following figures are drawn from the bulletin named:

Expenditures and Profits in Shipbuilding Industry, 1900 and 1905.

The figures for 1905 cover the calendar year 1904, a year of some depression in the industry, particularly on the Great Lakes, where the greater part of our steel tonnage is built. The figures for 1900 cover mainly operations for the calendar year 1899. Obviously the increase in capital is out of proportion to the increase in the value of product, attributable, as already indicated, to the fact that plants were not as fully employed in the census year 1905 as in the census year 1900. The cost of labor, materials, and other expenses entering into cost of construction in 1905 aggregated $54,723,649, and the value of the products was $58,433,314, a difference of only $3,709,665. In other words the finished product exceeded by only 63 per cent the cost of labor, materials, etc.

And I would like to call your attention here, gentlemen, to a factthat any plant that did not set aside a sum for keeping up the plant and maintenance would certainly not last long.

Mr. DAVENPORT. Would that apply to Government work also?

Mr. POWELL. I understand that this includes all of the shipbuilding business in this country.

Mr. PAYSON. Is there not another matter to be considered, of great importance, too, in connection with Government work-that in taking a contract for an ordinary battle ship at a round figure of, say, $4,000,000, the contractor has to take the chances of the ups and downs for the three and a half or four years that his contract runs, and hence necessitating, from a business standpoint, a larger profit than is indicated there in order to protect himself as against contingencies?

Mr. POWELL. That is very true; if a contractor figures on his material at a certain price, if he meets a rising market, it may increase the cost of his vessel 2 or 3 per cent quite easily; if he is fortunate enough to meet a falling market, he will be benefited by a corresponding amount, but it must cover the possibility of the increase if he is going to make out.

Mr. PAYSON. Before leaving that, is it not true that the average time given under Government contracts for the construction of battle ships runs from thirty-two to forty-six months?

Mr. POWELL. I do not remember any case where the contract time for a first-class battle ship has been less than thirty-four months, and I think forty-two months has been the upper limit.

Mr. PAYSON. Thirty-six and forty-two is what it is.

Mr. POWELL. As a matter of fact, the actual time of construction. has run up as high as six years.

Mr. PAYSON. But I am talking about the contract which the man faces when he signs his contract.

Mr. HOLDER. May I ask there, concerning the Nebraska, which was built by the Morans, out on the Pacific coast, was not that four years under construction? It was obsolete at the time it was completed. Mr. POWELL. I think you are a little optimistic; I think it was

seven years.

Mr. HOLDER. I am glad that I was within a conservative basis. Was there a time limit on that?

Mr. POWELL. Yes; those ships were contracted to be built in thirty-six months.

Mr. HOLDER. Then did they violate the contract and have to suffer the penalty? Could you answer?

Mr. POWELL. I can not. Continuing, this report reads:

Again, this difference is only a trifle over 3 per cent on the capital invested, $101.528,251. It will be obvious to any business man that a manufacturing industry in this country can not be conducted for any length of time on the narrow margin indicated by either of these figures. Furthermore, the figures are for the entire country, and where the average excess of value over cost is so small evidently some concerns were operated at an actual loss. In the same manner the figures for the census year 1900 show that the difference between cost of labor, materials, etc., and the value of the finished products was $6.496 326. This sum is nearly 15 per cent of the cost of labor, materials, etc., and nearly 11 per cent on the capital invested. The profit indicated is not in excess of that which an American manufacturing industry must expect, if it is to prosper and increase. If the average for the two years be taken, the profits of the industry of steel shipbuilding are manifestly sufficient only to maintain its existence, even under the prohibition of foreign competition by the coastingtrade law.

I should like to take exception to the conclusion of the gentleman who wrote that last paragraph, because the average of those two rates of earnings would not permit the shipbuilding business to exist as it is to-day. It would unquestionably mean that enough firms would have to go out of business to increase the business and profits of those who were able to survive.

Mr. HOLDER. Does not that cover the period, Mr. Powell, of the United States Shipbuilding Company that there was some notoriety about, that makes the percentage on its earnings appear to be so low? Mr. POWELL. In 1905 the United States Shipbuilding Company, I think I am correct in saying, had been dissolved.

Mr. HAYDEN. You are correct.

Mr. POWELL. I thought it had passed out of existence.

Mr. HOLDER. Yes; but this covers the period from 1900 to 1905. Mr. POWELL. This is the year 1905.

Mr. HOLDER. Just for one year?

Mr. POWELL. Yes; and I think that the United States Shipbuilding Company did not figure in any way in that report. There is another question that is directly affected by this bill, and that is our present standing as a maritime power, and the report of the Secretary of Commerce and Labor for 1907, on page 39, contains three paragraphs that are extremely pertinent. This report reads:

By comparison with our rank in any other of the great divisions of industrial and commercial endeavor, the position of the United States as an ocean-carrying power is insignificant. It is humble by comparison with the commercial sea power of other leading nations with which in nearly every other respect we are classed. Even in the discharge of ordinary functions of government we have put ourselves under the protection of foreign flags. Not many months ago it became necessary to dispatch a small force of American troops to Cuba; they were sent under the British flag. More recently it was decided to transfer a powerful fleet of warships from the Atlantic to the Pacific, and the coal for this fleet is under the shelter of foreign flags, a situation which could not be afforded in actual warfare. Our mails to the republics of South America are carried almost entirely in foreign steamers, and to Australia and New Zealand they are now entirely so carried. I have alluded to the fact that in the performance of its plain duties the Federal Government had to resort to foreign agencies and foreign protection. There is not to-day another first-class power in a similar position. There is not another, I believe, which if it found itself in that position would allow such conditions to continue longer than until by sufficient expenditure they could be corrected in the shortest possible time. Such expenditures would be as clearly for public purposes as appropriations for the Army, the Navy, the Panama Canal, or the postal system.

From the messages of their Presidents and the reports of their heads of Departments for many years past the American people have become familiar with the trifling share of American vessels in our own foreign carrying trade, and with the fact that an American steamship is almost never seen in the world's seaports outside of the Caribbean and the Gulf of Mexico. Last year, for example, only 10.6 per cent of our combined exports and imports were carried in American ships; our vessels registered for foreign trade aggregated only 871,146 gross tons, a fleet equaled in tonnage and greatly exceeded in efficiency by the fleet of one great foreign shipping corporation, while any one of several foreign corporations owns more ocean-going foreign steam tonnage than the entire amount of such tonnage registered under the American flag. The situation is not satisfactory, and for some years past it has been the subject of discussion, which unfortunately has not ended in action. For many years it was entirely true that the energies of the country were so absorbed in its internal development that there was no surplus to devote to expansion of national trade and influence outside our coast lines. It is equally true that such is no longer the fact. The acquisition of insular territory, the construction of a powerful navy, and the investment of American capital abroad are all tokens of a tendency in national growth which will compel our country to become again a sea power, as it was when the Republic was only a fringe of States along the Atlantic seaboard.

Our laws relating to the merchant marine differ in two important respects from the laws of other nations. Practically without exception the laws of other nations permit

their subjects or citizens to buy ships in any market, put them under the national ensign, and employ them at least in the foreign trade. Our law restricts American registry and the American flag to vessels built in the United States. That this law is now useless as a measure of protection to American shipbuilders, so far as vessels for the foreign trade are concerned, is amply demonstrated by the fact that for years we have built practically no such vessels under that law. Millions of American capital have been invested in steamships under foreign flags engaged in trade with the United States.

As further bearing on the subject of the committee's investigation I may say that at the present time the shipbuilding business in this country is probably in as bad condition, both as to the amount of work and as to the prices obtained, as at any time in its history. This falling off of business has really not been parallel at all with the general decline in commercial business in other commercial businesses. For practically two years there have been almost no orders for new ships, aside from the Government work. It has been noticeably a fact that the prices for Government vessels, which are accessible to all, have very materially decreased, simply because the various yards have had to obtain a certain amount of work to keep from going to the wall. It therefore seems especially inadvisable, in the face of such conditions, to put the further burden upon this industry which would result from the enactment of House resolution 15651. I think that covers everything.

Mr. HAYDEN. You spoke of the working hours in British yards. Have you made any inquiries about the hours prevailing in German yards?

Mr. POWELL. I have never personally visited any of the German yards, but when in Great Britain I found that the British shipbuilders were very much distressed over the competition that they were meeting from the various large German yards, and I was told by various British builders that one of the reasons why the German competition was so severe was that they not only paid less wages, but that they worked longer hours. I can not make a definite statement as to what the exact length of the day's work in Germany is in the shipyards.

Mr. HAYDEN. Just before you close will you please tell the committee what experience you have had in naval construction, where you obtained your information, about your service in the Navy, and how long you have been connected with the Cramp company.

Mr. POWELL. My preliminary education was at the Naval Academy; I graduated from there in the class of 1897; then took a twoyear postgraduate course at the Naval Academy, after which I graduated from the University of Glasgow in the spring of 1900. Then I served under Admiral Bowles and Admiral Capps at the New York Navy-Yard for two years and a half, and for four years was at the William Cramp & Sons as acting superintending constructor.

Mr. PAYSON. Under the Government?

Mr. POWELL. Under the Government, in connection with the construction of three battle ships and three armored cruisers at various times. About a year and a half ago I left the Navy to accept my present position with the Cramp company, and in that time I have been intimately associated with the various business policies, costs, and estimates of that company.

Mr. HAYDEN. Your office is assistant to the president?
Mr. POWELL. Assistant to the president.

Mr. PAYSON. I would like to ask you a question or two. How many shipyards are there now in the Union, commencing with the Bath Iron Works in Maine, which do this larger class or do any class of Government work, commencing there?

Mr. POWELL. At present there are only five yards in which Government work is under construction.

Mr. PAYSON. Just name them, please.

Mr. POWELL. They are the Bath Iron Works, Bath, Me.; the Fore River Ship and Engine Building Company, Quincy, Mass.; the New York Shipbuilding Company, at Camden, N. J.; the Newport News Shipbuilding Company, Newport News, Va., and the William Cramp & Sons Ship and Engine Building Company, Philadelphia.

Mr. PAYSON. May I add to that as bidders for that sort of work, but who do not get much of it, the Maryland Steel Company, at Sparrows Point, in Maryland?

Mr. POWELL. Yes; there are a number of other concerns who are capable of constructing the largest class of Government work, like the Maryland Steel Company, Sparrows Point, Md.; the Union Iron Works, San Francisco, Cal.; the Moran Brothers Company, of Seattle, Wash. Also there are a considerable number of smaller yards which build the smaller vessels.

Mr. PAYSON. Commencing with the Moran Brothers, as a matter of fact, their operations with the Government have been in a way unsuccessful, have they not? That is to say, the only large work they have ever attempted was the Nebraska, and they were short three or four years in the performance of the contract on that?

Mr. POWELL. I do not like to criticise our competitors.

Mr. PAYSON. I am not asking you to criticise them, but as a matter of history and as you understand it.

Mr. POWELL. As a matter of history, I should say that the contract, from the Government standpoint, must have been most unsatisfactory.

Mr. PAYSON. In the Union Iron Works at San Francisco, is it not true, as a matter of common knowledge, that they have practically abandoned any further attempt at doing Government work?

Mr. HAYDEN. That is not really the case.

Mr. PAYSON. I had it secondhand from Mr. Frick. What do you know about it?

Mr. HAYDEN. I had it direct that the company is now embarrassed by the labor conditions prevailing in San Francisco and can not do any work that is obtainable, but it intends to proceed with Government work if it is offered any at living figures in the future.

Mr. POWELL. It might be stated that the Union Iron Works have not bid on Government work since 1902 or 1903.

Mr. PAYSON. How many people are employed in your plant, big and little?

Mr. POWELL. At the present time there are about thirty-nine hundred employees. This varies from this lower limit-I hope it is the lower limit-up to 7,000 or more.

Mr. PAYSON. One expression which you used not very far back, speaking of the close competition as to Government work, I wish you would be a little more explicit as to that, when you say you have to bid closely and take it pretty near cost or go to the wall; just what do you mean by that?