Practical . S. Ship Problems-I] What To Do with New Fleet of Commerce Carriers -- How Funds Can Be Provided HE backbone of the merchant fleet of any nation is its cargo carriers. For the sake of sim- plicity we do not here discuss the mat- ter of passenger ships, although of course the same principles will apply to passenger lines, or combined freight and passenger liners. In the preceding article we consid- ered the two questions "Where are we?" and "Whither are we tending?" The conclusions reached were that we (the American taxpayers) were now, through force of circumstances, owners of the largest commercial fleet in his- tory; and that the trend of recent ex- perience, combined with reasonable foresight, would forbid any disposition of the tonnage which would either place it under foreign flags, or other- wise destroy it as a special instrument to promote our own foreign trade. In considering these points it ap- peared that (a) Actual government operation must prove a failure. (b) Detailed government. direction of private agencies has proved failure. (c) Sale of the fleet, under pres- ent conditions, would mean the waste of all that we have al- ready spent on the experiment; and its abandonment for a gen- eration or more. Merchant Marine Essential In his recent message to congress, the President of the United States said: I have thought this to be a be- fitting occasion to give notice that the United States means to es- tablish and maintain a great mer- Eien! marine. *.o*. * © Te will strengthen American genius and management to have it understood that ours is an abiding determina- tion; because carrying is second only to production in establishing and maintaining the flow of com- merce to which we rightfully as- pire. Here the question of "What to do?" seems measurably answered. It is the present purpose to maintain our mer- chant marine on the seas, giving neces- Sary government encouragement to utilize our advantages, and aid to over- come our inevitable handicaps; until such time as private ownership may BY ROBERT EDWARDS ANNIN be able to maintain and operate the ships without such aid. This has been, and is likely to be, the policy of all the great maritime nations--to give to merchant ships such support as proves necessary to enable them to keep the seas. Some have given more and some less of such aid, but all who have succeeded have given whatever conditions re- quired. Seek a Practicable Method There remains the question of "How 10. do. it'. . Having eliminated present sale of the ships; government operation; and de- tailed government direction of private agencies, only one course now appears feasible. That is to retain ownership of the fleet until our carrying trade is On a more secure foundation and seek a practicable method to ensure responsible, efficient and economical operation. Under this method, the taxpayers would stand in the position of any shipowner who finds it impracticable to undertake the operation of his own vessels. By bearing this clearly in mind--namely that every taxpayer would stand simply as a part owner-- the discussion would be sim- plified. Such a position is no novelty. Owners, the world over, have profit- ably occupied it and have evolved out of long experience, the best methods of delegated operation, Hence, we can hardly do better than glance at the practice of experienced private owners, whose sole object has been to obtain the best financial results and to retain effective control of their property, while confiding the actual operation to agents. Under such conditions, the first thing that a private owner would do with his fleet would be to find out from the records of his ships which units were losing propositions under ordinary circumstances. These he would refuse to keep in commission. He would sell them, when and if op- portunity offered, at the best prices ob- tainable, regardless of cost, because by retaining their ownership, whether they were busy or idle, he would be cutting down his profits or increasing his 254 losses. We are referring now to that class of ship which cannot be Operat- ed at a profit in any competitive mar- ket, because operation, maintenance and overhead will more than eat up gross revenue. Having thus selected for operation the ships which promise ultimate prof- its, the owner -- selects his agents, choosing them for their standing, ex- perience, ability and responsibility. He keeps close watch of them to see that they are achieving the best - results that conditions permit. He. strictly and promptly audits their accounts that he may be always in position to judge of the management. He has the ships frequently examined by com- petent engineers that he may know how they are being maintained and be informed as to their condition. He holds his agents strictly accountable for good management and good judg- ment. By closely following and com- paring the result achieved by each he keeps himself in position to judge in- telligently of the honesty and the rel- ative competence of all his agents. These are safeguards which nonop- erating owners place around their prop- erty the world over. Having done this they confide the details of operation to their agents. Selection of voyages, making of char- ters and freight rates, choice of cargo, the handling of minor repairs, manning and provisioning, purchase of supplies, and the practice of all the numerous small economies which in ordinary times makes the difference between profit and loss, are put up to the agent. If he does not know enough to han- dle these matters he does not know enough to be an agent, and should be replaced by one more competent. Learning from Private Owners Applying these principles to our problem, it suggests a department of allocation, a department of accounting and. audits, and a department of en- gineering, compactly organized, with centralized authority and responsibility in the heads of each, supervising the work of competent agents, operating only efficient ships, and all under the direction of a great organizer. If the owner purposes to remain in