210 HOW CAN AMERICAN SHIPS COMPETE 



Shipping Board, of which number the Shipping Board controls some 1,450 of 10,500,000 

 deadweight or practically 60 per cent of the gross tonnage. The Shipping Board is there- 

 fore the controlling factor in the shipping situation today, and, through its policy, will de- 

 termine what the future of the American merchant marine shall be. I feel very strongly that 

 little real progress can be made in stabilizing the merchant marine situation until the present 

 market price of the vessels are determined upon a proper and logical basis and those prices 

 used as the basic value in considering what remedies must be given to American shipping in 

 order that it retain its proper position in world commerce. 



We have recently seen in the public press advertisements by the Emergency Fleet Cor- 

 poration offering its ships for sale on a private competitive basis, with a proviso stating that 

 the board has set a minimum price upon these vessels. So far as I know, the minimum price 

 has never changed from the previously announced $165 to $185 per ton deadweight. The 

 latest advertisement offers certain specific vessels of varying types for sale — supposedly ves- 

 sels of the highest grade — without, however, a minimum price but with the right of the Ship- 

 ping Board to negotiate after the bids are in. In view of the unfortunate experience of the 

 "pioneer" purchasers and the present deplorable condition of the freight markets, which make 

 the ownership of a ship a liability rather than an asset, I feel the Shipping Board will get 

 few bids that can be used for determining the basic value of the government fleet. The 

 board will undoubtedly get a certain line of information — namely, the value of existing ton- 

 nage in an oversold market — but this is not the basis that should be used in determining the 

 "capital cost" value of the Shiping Board tonnage. If the American merchant marine is to 

 be given any hope of holding its own as one of the carriers of the world's sea-borne com- 

 merce, the Shipping Board will have to get the book value of the fleet down to a point where 

 that value is comparable with the book value of the vessels operated by our competitors, and, 

 to my way of thinking, the Shipping Board should immediately take steps to find out from the 

 shipyards of Great Britain, Norway, Germany, France, Holland and others of our competitors 

 exactly what the "replacement" cost of the existing fleet is ; then use that information as a 

 base on which to make the other adjustments called for in clause No. 5 of the Merchant Ma- 

 rine Act, and, in that way, get down to some basis of "book" value that will be comparable 

 with that of our competitors. 



Mr. Donald has shown that a capital cost of $20 per ton is too high in the present mar- 

 ket without government aid, in competition with foreign tonnage. Well, if we cannot get any 

 help from the Government we must bring down the book value to where we can compete. 

 Say, for purposes of illustration, the cost works out at $15 per ton, then let the Shipping 

 Board advertise the ships for sale from time to time by competitive bid, stating that they 

 are offered at a minimum price of $15. A prospective shipowner could then value the par- 

 ticular ship he is interested in and determine how much more he can afford to bid in compe- 

 tition. Holding the present tonnage at $165 to $185 and without, so far, any apparent assist- 

 ance from the Government either by subsidy or the enforcement of existing laws, is a situa- 

 tion that militates against the sale of the ships to any private ship operator. 



The Democratic Administration formulated and passed the Merchant Marine Act of 

 1920, and, after it became a law of the land, promptly refrained from enforcing its provi- 

 sions. It passed into the Republican Administration, who, I think, are quite as anxious as 

 the Democrats to see an established merchant marine, but they, too, seem very reluctant to 

 enforce the various measures included in that law to assist our shipping. Now, if that law is 

 so "prickly" that our legislators are afraid to enforce it, let us get something that will be 



