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December, 1920 THE MARINE REVIEW 631 SHIP starting on a voyage will sail through. a_ district ander jurisdiction of one group of shipping board auditors and other officials. That ship will take on supplies or will require service. The accounting of her expense will, after a@ period of weeks, reach the district office from various ports. Meantime the ship has saiied through other districts controlled by various other auditors and ship- ping board offictals, and her ex- penses imcurred in those districts will be accounted by those district officials without any knowledge of any expense she incurred in some other porls. These accounts after Ship May Finish Trip Weeks Before Accounts Aes Properly Audited weeks will reach that district office. Meantime the ship has sailed for a foreign port. There she incurs stul more expense. The officials at foreign ports have no knowledge of the expenses incurred by the ship at American ports. These accounts are months in reaching the home office. Finally, many weeks after the ship has, completed her round irip voyage, and after her expenses ut each district or at each port have been paid, the managing und/or operating company, which has paid out of the funds of the shipping board, held in trust by the manag- ing and/or operating company, all of these bills, and after master or required entirely too much repair, - board otner officers have left the service of the ship and the managing and/or operating company, it is discovered that the ship was heavily overstocked with supplies, or _ had or the prices had been excessive. Duc to lapse of time it is im- possible in most cases to get the testimony of the officers or crew to determine what ithe actual causes of this expense were, and finally the managing and/or operating con- pany takes refuge from censure behind the plea that the bills were approved by the district shipping oficials---From report to congressional committee. 6. Water (a) Same as deck, engine room, and fuel supplies, so far as short delivery, graft, etc, are concerned. (b) Unfair differentials are, in many cases, found to exist, as in Jacksonville, Fla, for instance, where the city rate to shipping board ships is almost 50 per cent higher than the city rate to manufacturers using less water than the shipping board uses in its ships. (c) Excess profits are common in the water supply business. Profits as high as 500 per cent are found to exist, in companies which, it seems probable, man- aging and/or operating agents of the shipping beard are interested. These ex- cess profits arise from excess charges for the service, short delivery, and fal- sification of tank capacity. (d) Middlemen's profits are in many instances taken off, as in the case of the ship chandler who will handle the water supply and will, simply by pro- cess of taking the order for the water and collecting the bill, and telephoning the orders to the water supply company, which company delivers the water di- rect to the ships at the same price to the ship chandler that he would provide the same service to the shipping board. The chandler adds 10 to 15 per cent. 7. Thefts. (a) Prevalence of thefts is so great as to demand immediate attention. Ac- cording to the testimony of masters, mates, stewards, supercargoes, even sea- 'men, the lack of proper checking, in- spection, and inventory has made the ease of theft of supplies from shipping board boats the talk of the world in sea circles. In both domestic and for- eign ports these thefts run into the thousands per month and little check is being applied to the condition by the shipping board. (b) Prosecution of these thefts is dif- ficult in many instances because, accord- ing to shipping board legal advisers, there are few laws to cover them, and the technicalities are so numerous that it is well-nigh masters, mates, engineers, or stewards who are known to practice theft. Every- thing from ships' clocks to brass, cop- per, oil, gasoline, fuel, food supplies, even to office equipment, is sold at var- ious ports, and the cases are so numerous as to stamp this practice as a menace. (c) The remedy, of course, lies in regulating the buying, and, more im- portantly, in proper inventory to check up the unconsumed supplies and thus regulate the unexplained consumption. MistakesMadein OperatingAgreements 1, Evils of (a) Lack of protection for the United States Shipping Board under managers' and operators' agreements 1-2-3 are marked, particularly as re- Sards the safeguards placed around the handling of shipping board funds collected by and remaining for long Periods in the hands of managing and/or operating agents. (b) Lack of supervision by depart- ments of the United States Shipping Board, due to lack of investigating and intelligence facilities, lack of Proper protective provisions in the 'gsteements, lack of competent men m many cases, and the influence of managing and/or operating agents, is Serious and makes for Jteaving such ™Portant duties as the service of Purchase and supply indirectly in the hands of the managers and/or oper- ators, and directly in the hands of men who draw the lowest salaries and have the least sense of respon- sibility in 'tthe matter. (c) The danger of losses arising under the conditions set forth are great. Only the closest supervision by departments of governmental af- fairs insures against losses. (d) Losses.in operation are encour- aged by interlocking contracts between managing and/or operating com- panies dwning stock in the subsidiary supply or service companies. (ce) Lack of proper supervision of revenues and expenditures makes pos- sible serious losses 'to the shipping board without a knowledge of them in time to prevent them. Indeed, pre- vention of these losses under' present practice is almost impossible with pres- ent methods of accounting. | Under a proper system of ship supply, in- specting, inventory, checking, and transmission of this tinformation from district to district, or port to port, following the ship's itinerary, this could be prevented. 5. Accounting and auditing. (a) Loss of time in auditing and approving voyage accounts and other proper expenditures many _ times works a hardship on the managing and/or operating agent and forces him to secure loans from banks or service or supply companies, thus placing him at a disadvantage. If in- voices containing items which, judgment of the agency auditors are questionable, were passed for the ex- impossible to convict in the .