MAIL CONTRACTS

Evening Post, Volume CXIX, Issue 94, 22 April 1935, Page 5

MAIL CONTRACTS

AMERICAN SUBSIDIES

A CHANGE FORECAST

(From "The Post's" Representative.) NEW YORK, March 27.

President Roosevelt has asked Congress to pass legislation under which the ocean mail contracts, signed under the Jones Act of 1928, will be terminated when their ten-year period expires. He desires what he terms their "disguise" removed, and that poundage for carrying mails be kept apart from actual shipping subsidies.

The appropriations under the Jones Act will have totalled at least three times as much as was anticipated. The system has been variously attacked before the Senate Committee. Apart from the cost, the objection is raised that the ideal of the Jones Act—the creation of an American merchant marine —has not been realised. Virtually the ships now being operated under the mail contracts will fail to meet the standards of an up-to-date merchant fleet at the end of the contract period.

The President recommends a t6tal subsidy to cover, first, the difference in cost of building ships in the United States, as compared, with abroad, and second, the difference in cost of American ships, as compared with foreign vessels. He advocates also that, in assessing the subsidy for American ships, the "liberal" subsidies paid by foreign Governments to their lines should be considered.

The Jones Act fixed ,'the maximum rates fop the carriage of ocean mails. These rates range from 6s a nautical mile, for vessels not less than 2500 gross tons, capable of ten knots an hour, to £2 8s a mile in the case of 24----knot vessels of not less than 20,000 tons. Practically all the 45 mail contracts were let at the maximum rates. Some provided for construction of a specified number of new ships, while others provided for reconstruction. On June 30, 1934, £19,000,000 remained unpaid on these loans. The experience cf the Jones Act indicates how lavishly it has been interpreted in the matter of expenditure. The House Committee which reported the Act, before its passage, estimated that the total increased outlay for carrying ocean mails. in the first year would be no more than £1,400,000, and that at no time in the future would it exceed £2,000,000. At the end of the first year, the cost, under the 1928 Act, was £1,860,000. If the mail carried had been paid for on the United States poundage rate, tha cost would have been £337,000. In other words, the "subsidy" for that year was £1,523,000, . ' In each subsequent year, the subsidies have increased with the granting of new contracts. For the 1933-34 financial year, the cost was £5,400,000. If the present method continues, there will have been paid approximately £61,600,000 by the Government when the contracts have expired. Of that amount, £53,600,000 will have represented subsidy.