Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-25
j. S. LINES HALT
SUPERL|NER WORK
Building Program Delayed
Pending Governments
Mail Contract Decision.


States Lines. Inc, pending final Gov
eminent decision on its application for
mail contracts, it was disclosed yester-
day.
The corporations stand, regarded in
administration quarters as a demand
for showdown, was stated diplo-
matically in brief fled with Walter r.
Brown. Postmaster General. challeng-
ing his conclusion that the lines adj
vertised financial condition did not
seem to require or justify such Fed
eral subsidy. $751;.
j. e. Sheedy, executive vice president
OF the lines, amplified with direct
statement that it was useless for the
corporation to proceed to the further
development Of its plans so long as
there was uncertainty about the mail
contract.
$80,OOO,OOo Deal.
The projected expansion of the United
States Lines feet calls for an expendi-
ture of about $80000,000 for two new
superliners of the Leviathan class, prob
ably bigger and faster than the Bre-
men, which were to be laid down within
the next six months, and two fast cabin
liners to replace the President Harding
and the President Roosevelt.
It was disclosed that preparations
for the cabin liners had proceeded to a
point where the preliminary plans had
been filed with the Shipping Board pre-
paratory to calling for bids. This was
the initial step toward seeking Govern
ment loans of about $50 ,000.0 900, by far
the largest yet contemplated under the
,Jones-White act to encourage develop
nent Of an independent American mer-
chant marine.
The corporations brief, made public
yesterday although filed more than two
weeks ago, declared that "a privately
owned and operated American rner-
chant marine cannot be developed nor
new vessels constructed by private
means unless the Government and all
departments thereof adhere to the an
nounced policy Of the Government, not
only by statutory recital, but also by
from day to day extending to privately
owned and operated American merchant
marine and to those engaged therein
the benefits solemnly promised by the
existing legislation of Congress"
Congress May Get Case.
Since the United States Lines, Inc.
Is under contract with the Government
to start building the superliners not
later than February Is, 1880. its present
stand Is interpreted to mean that the
contract will be voided in some way II
the mail contracts, amounting to $685.
100000 for 10-year period, are not
Forthcoming. If the situation reached
such crisis, however, 1t would no doubt
be laid before Congress by either side In
the present controversy.
The foundation of the deadlock over
the development of the premier feet OF
the new American merchant marine
appears to lie in administration dis
pleasure with the manner in which p.
w. Chapman & Co., Inc, proceeded to
finance the United States Lanes after
buying the feet from the Shipping
Board.
So far as can be learned, no question
has been raised as to the financial re-
sponsibility of the new management Of
the lines, but rather a question as to
whether the Chapman corporation was
not, by it's stock prospectus and other
advertising, painting picture Of close
relationship with the United States
Government.
Denies Misrepresentation.
That any such thing has been intend
ed by Chapman or the United States
Lines, Inc, is vigorously denied by the
Chapman interests. The brief. however,
claims that there is mutual obligation
under the Jones-Wtite law and the con.
tract covering the sale Of the United
States Lines, wherein the Government
is expected to give the corporation o
chance to bid on mail contracts and
also to assist it with loans up to rs per
cent of the construction cost Of new
ships and favorable insurance contracts.
and the corporation is required to post
bond of $4,000, 900 to guarantee q reg
ular service on the routes bought, to
al IN "a 0f
its crews and to use ships adaptable to
quick conversion into naval auxiliaries
in time of war.
The corporation maintains, IN its
brief, that it has lived up to its obliga-
tions and met the requirements for
North Atlantic mail contracts between
New York and Bremen, Plymouth and
Cherbourg, and challenges the right Of
the Postmaster General to withhold the
contracts on the grounds stated in his
letter to Mr.. Sheedy of July II, 1929,
published yesterday in the New YORK
Herald Tribune.
On behalf of President Hoover's in
terdepartmental committee on award OF
mail contracts, Mr.. Brown took the po-
Sition that the United States Lines, Inc,
had shown by their own stock pro-
spectus that they did not need the mail
contract subsidy, this In view Of state
ment in the Chapman prospectus that
the lines expected to make $2,500,000 in
the first year of operation to meet the
requirements of 100000 shares Of pref
erence stock.
Deny Large Melon Cut.
It Is denied by the corporations
brief that it is overcapitalized, or plan
ming to pay unreasonably large divi-
dends, but 1t submitted that "unques-
tionably the development of an Ameri-
can merchant marine owned and operz
ated privately by citizens Of the United
States" as contemplated by Congress,
cannot be accomplished unless there
be created a situation wherein funds at
this time invested in American ner-
chant marine can have reasonable as
excess of the returns customarily real
lied on funds invested in the more
staple industries and wherein uncon-
trolled and uncomfortable competition
Is not constantly threatened"
Mr.. Sheedy, in an interview here,
declared he would go no further with
his expansion plans until the Govern
ment's attitude toward the United
States Lines was made plain by the
award of mail contract. II there was
to be no postal contract, he sadi, there
would be no point in seeking a Govern
ment loan for the fleet expansion. =.
while there Is any question about
the award of the mail contracts" he
said, 1T is useless to go ahead with
further development of these plans"
The preliminary plans now before the
Shipping Board, according to Mr..
Sheedy, call for two 30,000-ton vessels,
each $50 feet long, to replace the Presi-
dent Harding and President Roosevelt,
which, the administration is advised in
the brief, "are not well suited 10 the
North Atlantic service"
These vessels are estimated to cost
10000, 900 each, he said. The two
ave ocfiy1of "a rHQf %pAyvp