AMERICAN SHIPPING

Evening Post, Volume CXXIV, Issue 25, 29 July 1937, Page 8

AMERICAN SHIPPING

THE NEW SUBSIDIES

DIRECT SYSTEM ESTABLISHED

(From "The Post's" Representative.) NEW YOKK, July 1.

Commencing today, the United States Government inaugurates a system o£ direct shipping subsidies, to replace what has become known as the "disguised" subsidy system, which cost up to £6,000,000 a year. Claims against the Government totalling £15,000,000 by the holders of mail contracts have beer, settled for £150,000. Agreements for the ensuing six months have been reached with 23 companies, owning 151 ships, for an operating subsidy of a little more than £900,000, in place of mail contracts which would have cost the Government £1,500,000 in that time. Five companies are still holding out. The new subsidies are designed to make it possible for American lines to compete with British and foreign lines on a uniform basis. In the agreement is included provision under which the companies undertake to pay to the Government all profits above 12 per cent, until the subsidies have been recovered. Tentative projects are under way for the building of 28 new ships by the contracting lines, as a start on a programme calling for the construction of 100 fast ocean-going vessels in the next five years, for which President Koosevelt has asked Congress for an appropriation of £30,000,000. The operating subsidy plan under the contracts has been worked out on a percentage basis, so that American companies, competing with the lines of several different nations, could strike a balance, based upon such operating costs as overhead, wages, and the manning of vessels of each country with which they are competing. The weighted average differential percentages granted to American ship operators vary, as to wages, from 30 to 62£ per cent, of American cost; as to maintenance, from 20 to 50 per cent; repairs, 33 1-3. to 60 per cent.; crew's subsistence, from 20 to 50 per cent, of American cost. ; WAGES AND CONDITIONS. The labour problem is acknowledged by a clause in the contracts, requiring operators to comply with the manning and wage scales and working conditions, as determined by the Federal Maritime Commission. The agreements were,reached only after the disposal of scores of claims and counter-claims, covering a wide range. The lines, in addition to claims for damages arising from the reduction in mail subsidies,' disputes over the speed of. ships and milage, sought damages connected with the of vessels, ports of call, and sailings, in addition to the mail contract schedule, interest, purchase, construction and reconstruction of ships, freight, chartering, technical services, and the lease of piers and offices. The six months' tenure was ■ devised in. order, the more, equitably, to calculate the subsidy for the long-term contracts. During that period, certain lines will be required to revise their financial structure and to divorce themselves from operations .under foreign flags. It was thought that the United Fruit Company, which has huge operations on the Atlantic and Pacific Coasts, in the Caribbean and. West Indies, and which claimed £4 000,000 damages and did not seek a subsidy, might transfer "to the British flag. Although it has not yet signed the agreement, it is hoped at Washington that it will continue as an American concern. __