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226 the figures given by Mr.. Hurley-- nor would the use of the fund in the way he suggests really be of per- "manent benefit to the lines assisted as the assistance would really be only a loan to be repaid just as soon as the lines began to be profitable. While provision should be made for federal incorporation of steamship companies engaged in foreign and in- terstate commerce, I cannot see the necessity for forming a new corpora- tion by each purchaser. This would seem to shut out all the companies as at present organized because Mr. Hurley's plan limits the stock to be issued to the actual money value paid in on the vessel property. Furthermore, such limited capital- ization would leave the companies without working capital and with the ships mortgaged to the government. I cannot see what they would have as a basis for other financial assist- ance of which he speaks as likely to be accorded them. There could be, I think, no ob- jection to a minority interest being held by aliens provided officers and directors were citizens. ' The idea of a government director in each corporation does not appeal to me as a practical one. With 1891 ships to sell, and an average of 10 ships to a corporation at an average price of $700,000 each, it would mean 189 corporations with an average cash capital of 25 per cent of $7,000,000 or $1,750,000. On the board of each of these would be a government director, 189 of them, to serve without compensation except fees for attending meetings-- and his thought is because they draw no salary it "automatically insures that no great number. of them will be men whose interests are centered in the steamship business." I con- fess I cannot follow his reasoning. He also says that the provision that "the government shall: name them insures that they will be men of stand- ing, sympathetic with American in- terests, and alive to the public-serv- ice character of the steamship busi- ness." J cannot see that this neces- sarily follows. These directors, without expenses being paid (at least that is not sug- gested nor the size of the fee named), beside attending the meetings of the corporation board are expected to at- tend quarterly meetings at Washing- ton accompanied by members of the operating companies' boards--form a permanent organization and establish permanent offices. They are to handle through committees the questions of _ trade routes, freight rates, éte:;, and yet Mr. Hurley says also that the ships should "be sold to and Operat- THE MARINE REVIEW ed by the purchasers under no other restrictions than the terms of the bill of sale and the fixation of maxi- mum freight rates." It seems to me that the thing to do is to remove every restriction pos- sible and let the purchasers go ahead and hustle for their business. No at- tempt should be made to dictate to them as to where they shall send their ships or fix rates. The demand for tonnage will satisfactorily take care of both these points. Of course, for the establishment of regular lines of passenger, mail and freight carriers to countries in which we have what we consider a para- mount interest, and to our dependen- cies, special arrangements must be made, but it is doubtful whether any of the ships now built or building will be suitable for these trades, and if not--inducement must be of- fered for the construction and opera- tion of vessels in every way equal to or surpassing the foreign vessels now in that trade, and even then the business has to be coaxed away from the: old line. That, however, is: a separate problem and can well be handled independently of the other one. The proposed merchant marine de- velopment fund, as I said before, may be good in theory, but. I do not think it will work out practically (1) Because I doubt it will reach any such figure as given. (2) Because the assistance pro- posed is merely a loan and piles up debt in addition to the mortgage against the ship or the corporation. (3) Because the method of handling the fund through the associated gov- ernment directors of steamship cor- porations, an unwieldy body of men selected because of their having no interests in steamships, would mean in all probability a series of disas- trous and expensive experiments and a continual interference with the man- agement of the ships by their owners from men without financial interest in them and therefore without incen- tive to make them successful. Let the purchasers run their ships where and as_ they please (except ships on special routes above referred to). and if they can be Operated on an equal basis with their foreign com- petitors they will succeed. If, how- ever, the cost of operation of ships under the American flag is higher than the cost of Operation of similar ships in the same trade under foreign flags, it requires no arguments to prove that either one of two things must be done (1) have the govern- ment pay the owner or operator the amount of that excess cost of opera- tion, if) there be any, which can be readily ascertained by the shipping board or some other governmental agency, and thus start the American May, 1919 ship and the foreign ship in the race from the same line and carrying the same load, or (2) have no mer- chant marine under our flag, and go back to the same position (or worse if possible) that we were in before the war began. . The foregoing comments refer only to Mr. Hurley's suggestions--but if his plan is to be considered as a complete one then it is necessary to -call attention to several features as. - to which he makes no reference what- ever and which are of great impor- tance in the successful operation of our merchant marine--such as dispo- sition of the wooden ships and any steel ships not sold, provision for manning the ships with American officers and crew, and the revision of our navigation and inspection laws. and the regulations under them so that. all. handicaps, 1£ any. exist as is continually asserted by' owners of American vessels, shall be removed. ) Fears J ap Competition (Special Wire to the editor of Tue Marine REVIEW) > By James J. Fagan Vice President of the Crocker National' Bank, San Francisco AM in entire accord with Mr. Hur-. ley's suggestion of the policy of sell- ing the vessels and allowing them to be run by American citizens. I can- not help pointing out, however, that,. at the price the British government re- cently made to British shipowners, the: selling price of the American merchant fleet of steel steamers will amount to: one and one-quarter billion dollars. At Mr. Hurley's suggestion, it would re- quire three hundred million dollars cash to make the first payment, although, of course, the steamers would not be: all finished at once, nor would all the sales be made at once. This is no- mean financial problem. Moreover, will Mr. Hurley's project: be attractive to buyers if he puts om the sales the restrictions that he has. suggested, such as control of the routes, control of the freights, control of in- surance and other-details? I think there: should be no restrictions by the -gov- ernment, except as to sale to foreign- ers, and as to trade routes only where: the government assists, as proposed by Mr. Hurley. In addition to all this, Mr. Hurley seems to have entirely overlooked the Asiatic problem in which we on the Pacific coast are very much interested. Does he realize that the Japanese and' Chinese are building ships? Does he realize that one of his 10,000-ton dead- weight steamers will, even at the Brit- ish price which. is much below our pres- ent cost, cost. an American buyer one: