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above this should meet with the ap- proval of the British committee. The committee’s report continues with reference to construction loans as follows: “The ship construction loan funds of the United States shipping board on Dec. 31, 1932,. have reached the amount of nearly $154,000,000. In- terests rates charged on vessels in foreign trade vary from 4% to 5% per cent for loans authorized previ- ous to the passage of the 1928 act. For those authorized under the 1928 act prior to the 1931 amendment, some interest rates have been as low as low as % per cent. Loans au- thorized subsequent. to February, 1931 are made at the rate of 3% per cent for vessels engaged in the foreign trade. The 1928 act au- thorizes the extension of the total sum of the fund to $250,000,000. Loans may be secured for a period of 20 years.”’ Differentials in Cost The above statement is correct ex- cept that no mention is made of the limitations of loans to 75 per cent. The first 25 per cent of the cost must be supplied by the owner before any loan is made. And it was undoubted- ly never the intention of the law that any interest rates should be as low finite handicap of American ship op- erating in competition with foreign shipping. With reference to the aid granted the American merchant marine, the British national committee’s report stated: “The government publicly justified the grant of these subsidies by the high cost of shipbuilding in the United States, the high wages of the crew and the need for counteracting the advantages given by other coun- tries to their mercantile marine.” In this connection it may be in- teresting to state specifically what these differentials have been found to be, as set down in the same report by Mr. Saugstad which the British committee, by its own use of selected excerpts, admits to be authoritative. The excess cost of an American built over a British built two-deck 10-knot cargo steamer, of 7500 tons dead- weight, in the spring of 1929 was $170,000, equal to 50 per cent of the total cost in British yards. On this excess of $170,000 the American op- erator will be obliged to carry an- nual capital charges covering insur- ance, depreciation and_ interest amounting to 15 per cent, or $25,000 the first year. On an 8000 ton deadweight vessel this amount will be $26,700 as the excess capital 4 4 M.S. pees of New York—8272 gross tons—Speed, 14 knots—Oompleted, Jan. 18, 1930 —Sisterships, none—See MARINE Revimtw for February, 1930 as %4 per cent which is evident from the February, 1931 amendment. It was the intention of the law that the interest should be no greater gen- erally speaking than that which the government was called upon to pay, so that there would be no loss to the treasury on account of these loans. The reading of the law now having been clarified, adjustment in the low interest rates, if legally possible, is likely soon to be made. The construction loan fund was created to give encouragement to the building up of an up-to-date and efficient merchant marine: and is complementary to the mail contracts proviso in overcoming the very defi- 12 charge on the construction cost dif- ferential during the first year of op- eration. On higher types of vessels such as high class passenger, and combination cargo and passenger ves- sels where less standardized design and practice may be employed, the cost differential between British and American yards will become less. Higher Operating Costs Now turning to operating costs. Mr. Saugstad states that the great- est differential between vessel op- eration expense of United States ships and ships of other nationalities is that of wages. Cost of repairs, stores, and fuel may differ in vari- ous parts of the world, and if so they are the same to all ships of all nationalities. Our own comment in this connec- tion would be to point out that each nation’s ships will admittedly be called upon to purchase by far the greater proportion of their repairs stores and also possibly fuel in the ports of their own country, and on this account will be at a consider- able disadvantage, on account of higher cost. To illustrate the operating cost differentials, Mr. Saugstad points out, that a cargo ship of 8000 to 9000 tons deadweight under the United States flag will have a wage cost of approximately $100 a day or $3100 a month, whereas for the nearest competitor, a British ship, this item would be $65 a day or about $2015 a month. Ships of other nationali- ties have proportionately lower wage cost. It is estimated that the annual payroll for this type of vesse: will approximate $34,100 for an Amer- ican vessel, and $22,165 for a com- parable British ship, a difference of $12,035. This difference is equal to 35 per cent of the total wage cost of the United States ship or 55 per cent of the wage cost of a British vessel. Subsistence cost on American ships are also relatively larger than on sim- ilar foreign ships. On the typical American vessel used for establish- ing difference in wages, the subsist- ence allowed will approximate 60 S. 8. Seatrain New York—8062 gross tons—Speed, 16% knots—Completed, Sept. 28, 1932—Sistership, one—See Marine Review for November, 1932 ‘MARINE REVIEW—July, 1933