Evening star., 1928-11-16
"Lump-Sum" and "Profit-
Sharing" Plans to Be
Put Into Effect.
AIM TO BRING OPERATION
NEAR PRIVATE CONTROL
Increased Efficiency and Elimina-
tion of Duplication Are Assured
Under New Program.

The saving of millions of dollars in
net results in the operation of the
government-owned part of the Amer
lean merchant marine. with increased
operating efficiency and elimination of
duplication of operation by the Mer-
chant Fleet Corporation are claimed for
a new program to be put into effect as
rapidly as possible.
Two plans have been developed in the
Merchant Fleet Corporation and have
just been stamped with approval by
the Shipping Board and are known as
the "lunp-sum" and "profit-sharing"
plans. The "lump-sum" plan was rep
resented by officials today as bringing
the operation of the Government-oWned
merchant fleet as near to private con-
troll as is possible under the present sit
uation existing under the Government
ownership program.
Supervisory Duties Reduced.
Of1cials declared today that the su-
pervisory requirements would be re-
duced to merely an inspection and au-
diting force under the new program, and
initiative Of the private companies that
are now operating lines in various parts
of the world would be stimulated by
placing responsibility on the operators.
Officials termed the "lump sum- plan
ideal, as this puts control in the hands
of the private operator and is an incen-
tive as he stands the profit or loss, thus
encouraging him to reduce operating
costs, and get extra cargoes. Up to this
time, the Shipping Board has shared ex-
penses with these operators, and the
compensation will be changed under
the new plan from commission to a
lump sum- basis.
Under the profit sharing plan,
officials said, the operator will get part
of the net results and the Shipping
Board will likewise share in this.
.9s Overhead Now 81, 100000.
The overhead expense Of the Mer..
chant Fleet Corporation Is now some
$4,000. 900 annually, it was explained
today-almost as much as that spent
by all the Is managing operators to-
gether in connection with their activi-
ties in securing business and operating
the vessels. This overhead will be
allotted to the operators The present
system was described as lacking Pc
cuniary incentive for a managing op-
orator to operate efficiently, since the
cost of operation is borne entirely by
the owner-the United States-through
the Shipping Board.
OfdcialS illustrated the "lump-sum,
Ill Ill &c L.
ing 100000 annually, from which the
Fleet Corporation overhead allocated to
the line, about $125,000, would be de-
Quoted. Under the proposed plan the
operator will be given free hand to
control operations, so that he can
afford to- maintain specific service
and maintain ships for the fiat sum
of $500 900, with a larger profit to him
self and very apparent saving to the
owners.
Fixed Amount Per Voyage.
Under the "prof1t-sharing" plan, off,
cialS said, the operator would be allowed
fixed amount per voyage with which
to pay overhead expense so he would
not be subjected to an actual loss. A
Definite percentage on gross receipts
would be fixed to be paid him, officials
added, thus establishing a pecuniary
incentive for the operator to get all
possible revenue.
A percentage, under this plan, would
be f1red In balance with the percentage
OF gross receipts, to which extent the
operator would participate in the oper-
ating cost
Profit Sharing" Explained.
Officials illustrated the working of
tne pront-sharing" plan thus, in a hy-
pothetlcal case: An operator would be
allowed $4,000 voyage, for go VOYAGES
annually, to cover his overhead; he
would be credited with II per cent on
the gross revenue and debited with
10 per cent of the voyage costs, the fig
ures being arrived at to f1t each oper-
atOr.
The result claimed for this plan is
in making any substantial profit to the
operator dependant upon the increase
IN gross revenue and the decrease In
costs. This plan. officials explain, does
not involve any material change in the
present operating except as to COM
penSation, nor does it involve a shifting
of control to the operator on any items
which he does not now control, al
though 1t is believed that it will bring
about condition where fuller control
can safely be given him when felt ad-
visable by the operating department be-
cause of the operators incentive to
guard the owners interests, which
would also be his interest under the
plan.
A.