AMERICAN SHIPS

Timaru Herald, Volume CXXXVIII, Issue 19952, 9 November 1934, Page 4

AMERICAN SHIPS

IMPORTANT INQUIRY IN WASHINGTON

COST OF MAIL CONTRACTS A Washington dispatch to the “San Francisco Chronicle” of October 5 reports evidence taken at an inquiry into the cost of subsidies to American shipping. Evidence that the Government would have saved 103,723,247 dollars through mail payments on a poundage basis instead of granting subsidies to steamship companies was presented at the investigation of ocean mail contracts. Mr John E. Lamiell, director of international postal service, submitted figures showing that the Post Office Department had paid 119.257,756 dollars to 44 contract holders under the subsidy law, whereas the cost for carrying the mail on a poundage basis would have been 15,534,509 dollars. Mr Lamiell also testified at the open ing of the Department’s investigations ordered by President Roosevelt to determine whether the contracts should be modified or cancelled as a means of effecting “substantial savings.” Shipping Companies’ Case Prominent shipping officials, including Mr R. Stanley Dollar, of the Dollar Steamship Line, were also present with a strong array of counsel to testify payments received by them from the Government were a means of developing the American merchant marine. Mr Lamiell said that a total of 118,837,403 dollars will have been paid before the ten-year contracts expire. Mr James Peacock, director of the Commerce Department’s shipping board bureau, said a tctal of 111,366,757 dollars was due to the Government from mail contractors for construction loans, reconditioning loans, ' and purchase of ships to carry the mail. The contractors, Peacock testified, have repaid 23,817,645 dollars on their obligations. The hearing on the first day was devoted chiefly to organising for weeks of testimony-taking. The ocean mail contracts were let under the 1928 Jones-White Merchant Marine Act, on condition that so many new vessels be built. The Senate Committee reported that in many cases the Government funds had not been used for new ships, but for high salaries and dividends. Post Office investigators, who likewise have been inquiring into the contractors’ books for months, reported that only 32 new ships had been built, and that more than 120,000,000 dollars of the 121,000,000 dollars they cost was borrowed from the Government. Depression is Blamed. The operators, states the “Chronicle,” contend that the depression and reduced foreign trade had made it impossible for them to expand their fleets or operate 'profitably. The Postmaster-General must report to the President by December 11, with his recommendations. Among the ocean mail contractors directed to appear and the approximate mail pay they would receive if their contracts run their course, are: Gulf Mail Steamship Company, Inc., 534,900 dollars; Oceanic Steamship Company, 6,955,487 dollars; Oceanic and Oriental Navigation Company, 9.930.698 dollars; Pacific Argentine Brazil Line, Inc., 3,129,791 dollars;

Tacoma Oriental Steamship Company, 3.771,030 dollars; Panama Mail Steamship Company, 8.822,897 dollars; United Fruit Company, 20,664,492 dollars; United States Lines, Inc., 28,460.744 dollars; Roosevelt Steamship Company, Inc., 12,450,132 dollars; Gulf Pacific Mail Line. Limited, 2.486.910 dollars; Dollar Steamship Line, 27.764,300 dollars; Admiral Oriental Line, 12,511,402 dollars. Necessity for Shipping. The President’s direct declaration I that ship subsidies are necessary to j main a deep-sea merchant fleet essen- ! tial to national defence ought to set the tone of this hearing, remarks the "San Francisco Chronicle.” The inquiry was ordered for the purpose of finding out whether or not the Government is paying too much for the carrying of its foreign mails. “That is a question probably impossible to answer under the present arrangements. No one knows or can find out how much the Government is paying the ships for carrying the mails for the simple reason that the amounts paid under the present contracts were intended to be and are paid as subsidies in support of an American merchant marine. To help out Midlde West Congressmen, the subsidies w .j disguised as payments for carrying the mail. In the lump sums, of course, are included compensation for carrying the mail, but how much this is no one knows. Service and Subsidy. “The President’s firm stand has altered the question. The inquiry comes now to determine how much the Government should pay for carrying the mails and how much ought to be paid as outright subsidy. The first is a matter of weight, bulk, miles and such like transportation factors. The second is an entirely different matter, to be determined on the sums necessary to keep our merchant marine on the seas in competition with lower foreign costs of shipbuilding and operation ; and foreign subsidies. “Mr Farley (Postmaster-General) ( expects a saving to the Post Office. That is right. The Post Office should ! pay only for carrying the mails. It | should not be saddled with the subsi- | dies, which are the business, not of a Department, but of the general Government. It is the President’s idea 1 that subsidies and pay for carrying the mails should be kept separate, and the subsidies paid frankly as such with no ; disguise. In this we think he is a right as he is in his stand for adequate subsidies to keep up an essential deepsea merchant marine. So. while Mr Farlev’s Post Office balance-sheet may be the gainer, this inquiry may cut nothing from Treasury expenditures, nor should it if the subsidies are not excessive. The result of the inquiry may even add to the general expense, for it may be found that not enough subsidies are being paid. “We must have an adequate American deep-sea fleet, for if war should fall on us in this uncertain world we would find it a dire necessity.”