New-York tribune., 1922-04-07
Lasker Fixes
Cost of Subsidy
AtS;52,000,O00
OF This Amount SIS. 100000
Earned by Vessels Garry
ing Mails VIII BE Re-
turned TO L. s.. He Saws
Limit on Profits Upheld
Colonel Montgomery Tells
Committee 10 Per Gent
Is a Fair Compensation

From The Tribune 8 Washington Bjwcau
WASHINGTON, April 6.--Iestifying
at the hearing on The ship subsidy bill
before the Joint session Of the House
Merchant Marine Committee and the
senate Commerce Committee to-day.
Chairman Lasker of the Shipping
Poard, said the total cost to the Treas
ury if the pending bill became law and
me merchant marine was highly sue
cesstul would be S52,000,000.
he itcmizcd this as consisting Of $50
000,00 from customs. 81 900 900 in ton
mage dues, $4,000 900 in income tax,
S3,000,000 for construction and So 5.00O,-
600 now paid for transporting certain
classes Of mails. He said however, that
the $5,000000 for handling mail would
not be an actual added cost to the
Treasury, and That in estimating the
added cost this should bc omitted. max
ing the actual net total added cost to
the Treasury $4,000 900. He explained
that vessels receiving subsidies would
have to pay back into the merchant ma
rine fund the moneys they receive for
carriage Of mails, now amounting 70
about $4,000 900
further cross examination OF Chair
man Lasker, chiefly by Representative
DAVIS, OF Tennessee, and testimony by
Colonel K. II. Montgomery, Of Lybrand.
Ross Bros, and MONTGOMERY. New
York, expert auditor and accountant,
took up The time OF the committees at
o-days hearing.
Col. Montgomery defended the plan
to limit profits and said it was reason
able
"The allowance" he said, 'of a net
operating income Of 10 per cent per
annum seems reasonable in view of
b1Cvh Not, ~ oh,
overseas shipping and the unusual
risks to which the capital employed
therein is subject, This plan has
been one cause of the difficulty in
raising capital for American shipping
enterprises. If six per cent is consid-
cred reasonable return on capital
invested IN railroads and other public
utilities which are monopolistic in
character and whose earnings are sub
ject to FAR less fluctuation, a minimum
of 10 per cent would appear to be a
talr return on capital employed in the
hazardous business of overseas ship
ping.
1t seems reasonable to require that
companies having net operating in
come in excess Of 10 per cent shall
return to the government one half of
such excess up to the amount of the
direct aid A requirement of this
character should not deaden initiative
aud enterprise of shipping companies,
since the few companies TO which such
restriction would apply would still
have sufficient incentive to put forth
their best efforts.
Any plan for the support OF the
American merchant marine should
provide aid only when aid is necessary
and should be flexible enough TO with
hold aid, in whole or in part, when
shipping companies earn more than
10 per cent on their capital invested
IN ships and facilities.
Colonel Montgomery was asked many
questions about the proposed rcgula
! tions by Senator Fletcher, Represents
atiVe Briggs and others on the Demo
cratic side. He was also auestione i
about the audit of Shipping Board
accounts which his firm did for the
board.
Representative Briggs sought to
BRING out that under the excess profits
tax law there had been many abuses,
and corporations mad to large de-
gree defeated the law By finding ways
to use up their income for the pur-
pose OF avoiding payment of taxes
on IT,