STATE-OWNED SHIPPING

New Zealand Herald, Volume LXIV, Issue 19806, 29 November 1927, Page 9

STATE-OWNED SHIPPING

AMERICA'S EXPERIMENT. RUINOUS LOSSES INJURY TO PRIVATE OWNERS. AXICHIBALD EUIIR. . The chairman of the Committee of Commerce, elected by the Senate of the United States, recently asked the Maritime Association of the Fort of New York to give its opinion on the various problems associated with American shipping. The request, of course, involved an investigation of the policy pursued in respect to American State-owned shipping under the Shipping Board, and that body has, in due course, received a full measure of outspoken criticism, which may resuit in its being swept away. Private shipowners in the United States have no use for it and regard its doings with fierce antagonism, for it has brought misfortune to them, and it has involved in enormous losses the American taxpayers who consequently also deplore its activities.

The committee of the association, which undertook the inquiry, opens its report with a review of the circumstances in which the State-owned ships came to be built after the Americans intervened in the Great War. It. recalls that Congress, " awake to the urgent necessities of the occasion," generously appropriated an aggregate of over three billions of dollars for the purpose of constructing and operating ships needed in the emergency. It is admitted that only a very small percentage of the money so spent went into ships which actually saw service bofore the Armistice. The committee suggests that it would be unfair to charge this entire expenditure against the development of a peace-time merchant marine. " So," it remarks, " let us charge off 90 per cent, of this total expenditure to war emergency," leaving 1500 ships at a nominal cost of £60.000,000. It then proceeds to add to this sum an item of £46,500,000 as accrued deficits from ship operations. Demand For More Money. The committee is obviously Overgenerous in writing off 90 per cent, of the cost of the fleet as a " war emergency," as practically none of the vessels had any influence on the issue of the struggle. The expense of their construction should be added to the deficits incurred in operating them. The total loss has, in any event, been £650,000,000 That is what the taxpayers have paid. It is no small amount for even so rich a country as the United States to have spent on what is becoming a derelict fleet. The ships are about 10 years old; no provision has been made for their depreciation in past years or for their replacement by new ones. The Shipping Board is consequently appealing to Copgress for further funds for the construction of up-to-date ships. What, the committee asks, have the citizens of the United States got to show for the expenditure of their money ? "We are now told," they point out, " that the merchant marine is floundering, and that unless we embark upon another phase of this enterprise, involving the still further expenditure of more untold pillions in capital costs and in operating deficits, our merchant marine will perish. What assurance can the committee (of the Senate) give mis that this now orgy of spending is to result any more favourably than has that which has already endured for eight years ?" Competitive Services, Many Americans, who are not shipowners, also think the expenditure of further millions would be throwing good money after bad. That is the view Congress may take, for , the President is known to be opposed to such expenditure. What, as a matter of fact, is the present situation ? The committee has summed it up in these words: —"The Government at present operates about 3,000.000 tons of shipping, and the contention that this shipping is not in competition with pri-vately-owned tonnage is not borne cut by a fair consideration of the facts. Every American steamer qualified to go to sea is either an active or potential competitor. Specific instances might be cited of direct competition by the Government with privately-operated American lines. Furthermore, even in the case of privatelvowned ships purchased from the Shipping Board, competitive services are in several instances maintained by the Government, notably in the case of South American routes, where the Munson Steamship Company operates the expensive passenger and freight liners purchased from tho board, and in the case of the Dollar Lines to the Orient." Confusion ol Policy. Tho committee rakes the Shipping Board mercilously fore and aft for tho policy which it has pursued under a succession of chairmen; each ignorant of shipping economics and each with his own prescription for the ills of which American citizens have complained. These chairmen liave only made confusion worse confounded. In particular, the Shipping Board has injured privately-owned shipping, with the result, that the American mercantile marine, so far as foreign trading is concerned, is (making allowance for the increased wealth and increased man-power of the United States) worse off than it was. The committee is pitiless in driving home this point:— "Let us review the status and progress of private American shipping for the period of eight years. Prior to the war privately owned tonnage engaged in foreign commerce amounted to about 1,000,000 gross tons, with over 6,000,'000 tons in coastwise trade (nearly 3,000,000 tons in Great Lakes trade), or about 8.000,000 of tons in all. At the present time privately-owned American shipping in foreign trade amounts to about 2,500,000 tons, with about 7,000,000 tons in coastwise shipping (including 3.000.000 tons on the Great Lakes). Figures given for coastwise trade include those of the Great Lakes.

"We thus have roughly 10,000,000 tons of shipping under private control, for the maintenance of which taxpayers have been called upon to provide nothing, aside from a relatively small amount of mail compensation. On the contrary, these private owners have been "large taxpayers, helping to swell the Treasury funds. That private ownership and operation did not make more notable progress is largely due to the competition of non-tax-paying Government-operated fleets."

The members of the committee ask the Senate whether it considers it fair that the taxes paid by shipping privately controlled, should, in part at least, ba used by the Govern-

merit in bolstering up the Shipping Board, and thus embarrassing American private initiative. It controverts the repeated official: statement that it is essential that America should have a great American marine to push trade in overseas markets. It points out that England, Germarfy, France, Belgium, Holland and Italy need merchant marines because they must seek means of livelihood for their nationals. As the committee remarks, with truth, before the war British capital was available in ■unlimited' quantity for investment in marine enterprises, with an average return of little more than 4 per cent, per annum. American capital was not then, and is not now, satisfied with so small a return from an essentially hazardous form of enterprise. Americans could find better employment for their capital. It is added:—"There has been a great deal said in various quarters about the vital necessity of an American merchant marine, and it might be well, when a committee of Congress again sees proper to make investigations in the matter of ships, that, along with the other forms of inquiry suggested in the foregoing, a broad and scientific inquiry be made into the question of just how seriously America really needs a merchant marine and why." Ships and Overseas Trade.

The committee contends that a study of American trade movements overseas for a series of years proves that the talk about "essential services which must be maintained to facilitate the expansion of the foreign trade of the United States," is .nonsense. It shows conclusively tha4 in the ten-years period which ended in 1913, when the United States merchant marine in foreign trade was at its lowest ebb, American exports to all nations of the world, including South America (where the Americans had practically no American ships operating) were growing in faster ratio, in relation to the previous ten years of exports, than those of any other nation in the world. Never since the decade immediately preceding the Civil War has the United States had available for foreign commerce so large a fleet as since 1922, and yet American foreign commerce is showing a steady decline, while Great Britain and Germany are rapidly winning back their markets in South America, the Far East and elsewhere. The experiences of the Americans in regard to State-owned shipping are capable of .world-wide application. "The changes in international trade movements are evidently brought about by fundamental economic conditions and relative production costs, which have little ,ar- nothing to do with the availability of ships of a given nationality. The important thing is that there shall be ships to carry the cargoes offering, with freight rate schedules fixed in an open and uncontrolled market, as they have been in the main always determined."

Shipping is international in its functions and prospers best under energetic private management. Vessels go whereever cargoes are available and freights can be earned. It is in the interests of producers and consumers alike that cargoes should be carried at the cheapest rates available, without regard to tho nationality of the flag that flies over the vessel. That is the true doctrine of sea transport, and, as these American shipowners protest, the Shipping Board has been indulging in heresies at the heavy expense of the American taxpayers, who have become tired of paying the ruinous bill, and to the grave embarrassment of privately-owned shipping, which has been confronted with most unfair competition on the part of the subsidised State-owned vessels.