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ey Se RE RE Ree en tea EAT Ty May; 1919 THE MARINE REVIEW Hlurley's Merchant Marine Policy That the ships should be sold to and operated by American citizens under no restrictions other than the terms of the bill of sale and the fixation of maximum freight rates, either as provided in Sec- tion 18 of the act approved Sept. 7, 1916, or as may: be agreed by the government and the operator in Specific instances. The ships should be sold at a price which fairly reflects the current world market for similar ton- nage. Twenty-five per cent of the purchase price of each ship should be paid down, the remainder falling due and payable in graded annual installments over a period not exceeding 10 years. The government should take and hold a mortgage for the unpaid balance, charging interest thereon at the customary commercial rate of 5 per cent. One-fifth of this interest, representing the difference between the customary government interest of 4 per cent and the customary commercial rate, should be paid into a merchant marine development fund to be described hereafter. The purchaser should be required to agree to insure and keep insured with an American marine insurance company, his equity in the vessel, and because the American marine insurance market has not at present sufficient resources to underwrite all the vessels the government has to sell, the govern- ment should carry in its own fund, as at present, but for purchaser's account, hull and machinery insurance covering that part of the vessel for which payment has not been made. Our experience in operation shows that the government can carry this insurance for at least 1 per cent less than the open market rate. However, it is proposed that the open market rate be charged, and that the difference be paid into the merchant marine development fund. It is understood that no transfer of a vessel to foreign registry should be permitted without express permission of the government. Each purchaser who wishes to operate in the _ foreign trade should be obliged to incorporate un- der federal charter, the necessary legislation for which should be passed by congress without delay. - Such a charter should provide that no stock shall be issued in excess of the money value actually | paid in on vessel property, and that no stock can be issued or transferred to an alien. It should also provide that one. member of the board of directors for each company shall be named by the government. This director should draw no salary, either from the steamship corporation or from the government. He should receive only the customary directors fee for each meeting he attends. : : The same legislation should provide for period- ical meetings of these government-named directors, in the city of Washington, where they will consti- tute an official body which will confer with and advise the shipping board, or other designated gov- ernment agency, upon problems arising in, or ques- tions affecting the welfare of, the American mer- chant marine, including the administration of the Merchant Marine Development Fund. This fund, drawn from the sources previously indicated, should be used to relieve such financial difficulties as may be encountered in the develop- ment of an adequate and well-balanced American merchant marine. For instance: It is foreseen that a number of trade routes important to the immediate or future welfare of American commerce must be established and de- veloped. Some of these routes may not yield steamship operating profits until their existence shall have attracted an increased volume or better balance of trade. Revenue derived from the car- riage of mail, and possible fees for the training of seamen and cadet-officers, may partly compen- sate losses incurred on these routes. Still, in cases where the government sells a ship upon condition that it be operated in a route which may not prove profitable at once, it will be necessary to provide for the payment of defaulted interest from the Merchant Marine Development Fund, in the discre- tion of the shipping board or other government "agency, upon recommendation of the board of gov- ernment directors, until such time as the route may 'begin to yield profit. When the ships in the route earn their annual interest rate and a profit, one-half the profit earned each year should be paid into the Merchant Marine Development Fund until all moneys drawn from the fund on account of the vessel in question shall have been replaced. The other half should go annually to the steamship stockholders. Such vessels cruising in routes which fail to prove susceptible of profitable development and which do not serve any purpose of the government of the United States, may be transferred by the govern- ment to other routes. However, should the gov- ernment become convinced that any vessel has failed to' make expenses solely or chiefly because of incapable management, it may foreclose its mort- gage on that vessel. On the basis of one billion dollars worth of ships, the Merchant Marine Development Fund would be $15,000,000. This amount, investigation convinces me, would be more than sufficient to care for all deficiencies likely to develop during this period. Until sold under the terms just stated, all vessels should remain the property of, and should be oper- ated by, the government of the United States. 229 Stop Shipbuilding . By E. M. Bull | Vice President, A. H. Bull Steamship Co. BELIEVE that private ownership is the right policy, and think that, Mr. Hurley's policies in certain ways are all right. However, I do think that he should have dwelt more upon the ship- building features of his plan. His pol- icies tend to make a declining market. In four years the market will be glut- ted with ships, unless the United States, England, Italy, France and other coun- tries change their building piogram. - ' I don't believe that the public will stand for the losses that are bound to accrue, if ships, built at the enormous- ly high war prices for the shipping board, are sold later to private buyers at prevailing world market quotations. It seems to me that it would be far more sensible to cancel contracts for protected vessels still unbuilt, or at least to govern the building by the ex- tent of the development of the foreign trade and the needs for tonnage, At present it is true that there is a scarcity of ships, but the demands are artificial. When war conditions pass I think there will be too many vessels. Mr. Hurley's general idea is a good one, the terms of sale are "liberal" and the shipowners and the public now have something definite to consider which is worthy of thought and discussion. Insurance is Problem By Frank C. Munson President of the Munson Line T pleases one immensely to see Mr. Hurley come out for private own- ership. The thing now is to make an arrangement so that the operators can be assured of a fair return. The mer- chant marine deserves every encour- agement the country can give. Mr.