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16. 'The hull is divided into seven water- tight compartments. The vessel is equipped with all "necessary machinery for light- ing, refrigeration and ventilation. Her main engines are of the vertical, double- acting, compound, surface condensing type. with Joy valve- gear and were built originally by the Fore River Ship Build- ing Co., Quincy, Mass. for the steam yacht Pilgrim: They are of 10 and 18 in. cylinder diameters by 14 in. stroke, and develop 100 H. P. each. Steam is furnished by two cylindrical Scotch boilers 9 ft. by 8 ft. 9 in., allowed 120 pounds pressure. The cost of construct- ing this floating hospital totaled $150,000. OSAKA SHOSEN KAISHA'S REPORT. The following address of Mr. Naka- hashi, president of the Osaka Shosen Kaisha is of great interest to American readers as revealing what can be done for merchant marine under governmental encouragement : You might wonder why we have not been able to make a better showing in earning with so much tonnage of steam- ers and with a fair amount of. traffic. In a word, this unfavorable result is due to the over-supply of tonnage as the re- sult of an increase made during the Russo-Japanese War. As you know from reports of newspapers and Government statistics, the Japanese tonnage increased from 600,000 tons in 1903 to nearly one million tons in 1906. During the period from 1896 to 1906, although there has been some fluctuations from time to time, the foreign commerce of Japan has been prosperous, and demanded an increase of shipping tonnage from 30,000 to 50,00 tons per annum. While the increase of some 300,000 tons needed some seven years, an increase of a similar amount was made in two years during the war. In 1904 a great demand was created by the war for the transportation of troops and ammunition and even those who had not been hitherto engaged in shipping business bought new tonnage, in order to lend it to the Government--hence, an _ almost instant increase of 300,000 tons. This increase' did not affect our earning during the war, for not only the newly added ships, but also a large part of those existing before the war were taken up for war purposes by the Government, leaving a shortage of tonnage to attend to the need of commerce. But no sooner had the war ended at the later part of 1905 than these ships were released by the Government, and, at the beginning of 1906 some 200,000 tons were put into the market competing for traffic. You can well imagine the result of such an enormous increase of tonnage in a limited sphere of trade of this small empire. THe Marine REVIEW Netarally the freight rates declined by 20 per cent or even 40 per cent in ex- treme cases. If we could make 10 to 15 per cent gross earnings: on freight we should have been able to declare a dividend nearly as good as in usual years. But with such a decline of rates on the one hand and the appréciation of price of commodities | on the other, the net profit fell short of making any divi- dend. Both foreign and domestic com- .. merce has fortunately increased notwith- standing the war, and there is every 'reason to expect a steady growth after the war; so had the increase of shipping tonnage been at the rate of 50,000 or 80,000 tons per annum, we must have been able to maintain freight rates at a profitable basis, Your directors took caution to curtail the expense of maintaining the service. With that view we held a conference of managers of branch offices twice each in 1905 and 1906; but we regret that al- though some decrease is seen in our expenditures it did not amount to as much as half of what we expected. It is hardly necessary to remark that the care and assiduity of the offices both on land and sea curtailed expense and in- creased traffic to a great extent, but the prosperity of the general market, after the war, has been such as to raise the price of general commodities since July, 1905, by 20 to 28 per cent, and neutral- ized our effort to cut down expenses. This decline of freight rates and the unprofitable condition of shipping busi- ness are not due to the small volume of the traffic movement or depression of commerce. It is only the depression of shipping trade. Except those companies which have ships peculiarly adopted to certain traffic in which no other owners can compete, all the shipowners have been affected by the over-supply of tonnage. I presume you know that other com- "panies could not realize the expected profits, and in that case if dividends were paid at all it was out of reserve funds, etc. Recently there has been talk of indi- vidual shipowners getting together to form a new shipping company under the name of Nihon Kisen Kaisha. The cause of the movement has. evidently been prompted by the over-supply of tonnage and the consequent demoralization of rates. So long as the shipping business was profitable on the competitive basis, no such scheme would have been started. The plan is to eliminate the competition and thereby maintain living rates by co- operation. This is one of the symptoms of deplorable condition of shipping trade, and at the same time one of the indica- tions pointing to a better prospect in future. How will this Over-supply of shipping turn out in coming years? In to suppose this forecast. - place, the progress of our domestic, and "my humble opinion, we have seen the worst in the later half of 1906, which we have just passed. I have several reasons In the first foreign commerce is remarkable. The. "movement of passengers and traffic has been rapidly increasing and has well di- gested the annual increase of tonnage of from 30,000 to 50,000. It is not wild to expect an increase of over 70,000 or 80, 000 tons will be needed each year to meet the growing demand of our com- merce. The increase of 300,000 tons dur- ing the war, sudden as it was, will be nearly equal to the increase of commerce by this time, as it is four years now since the out-break of war, thus making the average annual increase about 75,000 tons. Moreover, many of the ships which were added to our list during the war are the old vessels built in the early eighties, consequently their lease of life is counted. I gather from these facts, that the equil- ibrium of demand and' supply of tonnage will be reached during the year 1907. Granting for a moment that the tonnage is more than the need of our commerce, the competition will be very much less in coming years than it was last year. Having so many lines in different terri- tories your company had to meet compe- tition in several districts. But I am glad to report that as the result of this com- petition freight agreements were entered into with several owners and the work- ing has been satisfactory for the last few months. Except the agreement on the Okinawa Line, I am not in a position to make _other agreements public, but I shall be able to do so in next general meeting. The mail subsidy on Formosan and Tairon services will be continued. <A substantial increase of mail pay is ex- pected in another territory. - A. bill is now before the Congress, which will in- crease the mail pay on the. Japan sea coastal service from 140,000 to 300,000 yen. Though this service is not directly conducted by your Company, we have more than one-half of the interest in Oya Kisen Kaisha which perform the service. After China-Japanese war your com- pany invested a large sum of money in establishing a line to the ports of the Youngtsee river. This was in accord- ance with the wishes of the Government to have a regular line of Japanese steam- ers running up. the river to the interior So as to facilitate the development of our commerce with that fertile valley. Fortunately, the service has seen a steady growth until at present our foothold in that quarter is quite secure. At the same time, however, European nations were not slow in paying due attention to the growing trade of this territory, and a