New-York tribune., 1920-12-17

The three fundamental matters in
VOWED in equality of opportunity in
competition are: (1), the first cost of
shlpS bought by our citizens must rea-
sohaoly approximate the costs of their
competitors in order that capital
charges may be substantially equalized
with those of the competitors; (2) op-
''ratlng costs must be, or must be made.
approximately equal to those of our
competitors; and (3) privately owned
shlps must be free from competition by
tonnage owned by the government.
place the condition Of equality of
capital costs ahead of all others be-
cause the annual capital charges, which
run throughout the life of the general
cargo steamer, constitute the main fac
tor in determining whether it can or
cannot be operated successfully.
Handicap of Capital Cost
Capital charges based on the prices
altogether prohibitive. They would be
far greater, in comparison with the
similar charges Of their competitors,
than the difference in the cost of op-
Grafton under our flag and the flags
Of such competitors.
The annual capital charges, payable
from earnings, are insurance and de-
probation, to which l add per cent
interest upon the investment.
Insurance is a necessary charge, uni
versally paid for in premiums, or paid
from an insurance fund created by
a charge on earnings equivalent to
such premiums. Depreciation is usu-
ally charged at s per cent per annum
on the cost of the ship, on the theory
that its useful life is limited to ap-
proximately twenty years. The amount
is taken from earnings and placed in
a sinking fund for replacement. In
terest upon the investment must be
considered, since the expectation of q
reasonable return upon capital is q
necessary inducement to investment.
The price asked by the Shipping
Board for q vessel of this class, con-
tracted for during the war, is $175
deadweight ton. Great Britain, immedi-
ately after the srmistice, sold to it's
citizens the ships of similar type and
class which it haA built during the war
for 923, or approximately 500 ton.
scandinavian snip owners have recently
offered in our market ships contracted
for during the war at prices much less
than S1O0 a ton, without finding buyers.
Comparison of Charges
comparison of the capital charges
on a typical steamer of $500 dead
weight cargo capacity, purchased by
citizen at the Shipping Board price of
>I,5 a deadweigAt tn, with those on a
similar ship bought by foreign sub
ject a s1O0 ton, shows the follow
ing result:
American Foreign
Cost price 81, $4,000 $3.50 900 i 0
Capital charges:
Insurance at 40. $1,000 $4,000
Depreciation at SO 1900 44.00O
Interest at 6fo.... 92 400 $1,000
Total. ........ s23l,soo s1a2,
Excess OF capital
charges on the
American ship. 500 900 per annum
The excess of capital charge on
American ships is probably greater
than this when compared with the
similar charges on a great part of the
image # our competitors. The
amount of similar foreign tonnage built
at prewar prices and now in active
competition is more than twice the
quantity that our government has to
sell. The capital cost of this COM
peting tonnage is far less than 500 d
deadweight ton probably not more
than from $40 TO $75 a ton), and its
average capital value. for the purpose
cf computing annual capital charges,
is carried at less than that amount.