COMMONWEALTH SHIPS.

New Zealand Herald, Volume LXV, Issue 19940, 8 May 1928, Page 6

COMMONWEALTH SHIPS.

SALE OF THE VESSELS. ILL-STARRED STATE VENTURE. STORY OF HEAVY LOSSES. A PROBABLE ELECTION ISSUE. [from our own CORRESPONDENT. J SYDNEY, May 3. The Commonwealth Government Line of steamers has ceased to exist leaving in its trail a history of financial losses. While the fact remains that the Common wealth has suffered almost gigantic loss, there are many who believe that ihe history of the venture should not be recorded wholly on the debit side of the ledger, and they point to the hugs savings which the producers of Australia have been able to show through the operations of ihe line, directly and indirectly. It is claimed that the line was able to keep down freights, and that it was able to ensure an adequate service at all times.

The line was inaugurated in 1916 by Mr. Hughes, now no longer the power in politics he was then. Originally it consisted of fifteen " Austral " steamers. The line was later strengthened by th.j acquisition of 17 ex-enemy steamers, six "D" class and 11 "E" class steamers built in Australia, and the five "Bay" liners built in England. The two "Dale" steamers and two more "E" class steamers, also of Australian construction, were commissioned after the line had passed under the control of the Shipping Board. Gradually the line dwindled by the sale of vessels during the regime of Mr. Bruce, and when the board took over the control of the line in 1923. it was decided to retain only the five "Bay" steamers and the two "Dale" vessels, which were then building, these being the only vessels that could reasonably be expected to pay any thing in excess of voyage disbursements These steamers, which cost £7,527.6?? were then valued .at £3,400,000. Details of the Losses. A profit on the trading of the line was shown up to the year ended June, 1921, but from then on heavy losses were in curred. Even with the elimination of un suitable tonnage, the line continued to show a loss, without taking into account depreciation and interest. To bridge the gap caused by losses it was necessary to use as working capital the proceeds ol the sale of 47 vessels, which, by the way. had returned only a fraction of theii original cost. When the ships were handed over to the Shipping Board their valur was written down by £8,000,000. In 1926-27 the voyage losses wert £130,789, administrative charges £6500 while interest and other capital charge? were £99.000, making a total loss oi approximately £595,000. For the yeat ended March 31, 1928, the voyage lossej were £86,000, administrative charge: £62,000 and interest, depreciation an* other charges £410,000, making a total lo>of approximately £558,975. The presei assets of the board are set down £2,976,900. The White Star Line's ten; of £1,900,000 for the ships has bofr cepted by the Government. Criticism of the Sale. If Mtr. Bruce cares anything for j<u opinion—and what politician does not a doubt has arisen whether he adjudfi it aright when he decided to sell the shij There is certainly a very strong sectio apart from adherents to the Labour Part which would have preferred to see tl line retain&i, and it is considered in son quarters that Mr. Bruce, in openly defying those views ran a grave risk, especiall as the sale is likely to be made an electio issue. The contract does not need th approval of the Federal Parliament. I is final, but the issue is bound to b raised on the formal motion that th papers connected with the sale be printed

In meeting the criticism of his actio! Mr Bruce has been able to point ou' that there is an undertaking that th. ships will remain on the British Registe for a period of at least ten years, an< that they will be employed between Enp land and Australia. Indeed the Whit' Star Line hopes to augment the servic with other vessels of approximately aqua; speed to the "Bay" liners. He als> points to a clause in the agreement dealing with rates of freight and safe-guarding the interests of Australian importers an) exporters. It has been promised as fai as possible to continue the policy of thi Commonwealth Line, and in any case tho- • will be no exploitation. Threat by Maritime Unions. To the argument that the sale was am . at a bargain price, Mr. Bruce replie: that the price represented approximate I v £300,000 each for the "Bay" ships ami £200,000 for each of the 'Dale" ships. The latter cost nearly £BOO,OOO to construct but that was in Australia where construe tion costs are notoriously in excess c! those in England or on the Continent. The Orient liner Ormuz, a vessel o--14,500 tons was recently sold fcr £275,000, while two Italian ships of 9700 tons wensold recently for £190,000 each. These are the nearest comparisons it has been possible to make. Mr. Bruce is not greatly perturbed at the threat of the maritime unions to declare the vessels black now that they are sold. Such open defiance of Government action, he said, would not be tolerated. The Government would utilise its ful! powers to deal with any such position that might arise, and if those powers were not sufficient they would be extended.