Evening star., 1933-02-21
BY ]. A. FOX.

The mail compensation feature of
the jones' White act. designed by Con-
gress to restore the American Merchant
Marine, has been administered with
! two definite detectives: First, to get
Government-owned lines into private
hands, under conditions where neces-
sary service will be maintained, and,
second, to insure modernized program
of merchant ship construction.
| In practice, 1t has worked out this
way:
An operator agrees to purchase a
line, provided the Postmaster General
will certify the route for a mail con-
tract. This is done and, with specifica-
tions for the service drawn, bids are
asked Under these, certain new con-
struction is required and such other
important elements incorporated as
provision for training cadets for ship
officers.
Up to now Shipping Board line pur-
chasers always have been successful
bidders. The law specifies that the
award must be made ito the lowest
bidder who in the Judgment of the
Postmaster General possesses such
qualifications as to insure proper per-
formance" of the contract.
| According to a report made to the
Senate by the Postmaster General,
there have been but five instances in
which there was more than one bid
submitted. In four, it was said, but
one bid was in proper shape, and in
the other Congress passed a joint
resolution to make the award to the
high bidder, who operated a Shipping
Board line, in preference to the low
bidder, who had his own ships.
Preference is Given.
The Shipping Board has maintained
consistently that operators of its lines
should get the preference in mail con-
tracts as matter of good business
In a way, these sales amount to tax
ing money from one pocket and put
ting it in another. Officials, however,
emphasize that a mail contract costs
less than the leasing arrangement by
which the Government foots the losses
incurred by Shipping Board lines under
| private management.
Then, too, purchasers necessarily are
required to invest money of their own,
the shipbuilding program to which
holders of mail contracts are committed
involving an expenditure of $300,000,-
600 for new boats, and more than $22,-
100000 for reconditioning.
In the administration of a problem so
great as that involved in reviving the
American merchant marine it was
natural to expect that mistakes would
be made, and they have been.
In couple of cases operators get
ting the benefit of mail pay have con-
travened the spirit of the law, if not
the law itself, officials assert, by doing
coastWise business, prohibited to lines
| mir TN inY1
with their foreign trade.
Discussing this feature lately, Irving
Glover, Second Assistant Postmaster
General, said "it appears there are not
adequate safeguards in the mail con-
tracts to cover this feature" Consid-
Grafton is being given a plan, however
to give these concerns mail pay only
in the proportion that the revenue from
their foreign cargo bears to the total
revenue received from the route.
Another object of attack was the low
rate of interest on constructions loans
one-eighth OF l per cent for foreign
trade ships having been fixed on some
because the law specified the rate
should be the lowest rate of yield on
outstanding Government obligations
This was interpreted by the Secretary
of the Treasury to include short-tern
Treasury bills, on which the yield is onlj
the discount at which they are sold.
Interest Rates Changed.
The law has been amended to make
these leans carry 81 per cent interest
when the ship is for foreign trade anc
5A per cent for coastwise. Up to the
end of this past year the ShippinI
Board reports the average yield ez-
, ceeded 4 per cent. These loans zrs
limited to rs per cent CT the cost Of the
: project undertaken.
Shipping interests which have OBJ.
tanned the help of the Shipping Boarc
have managed to keep their account:
! in good shape despite the depression
Out OF construction authorizations o!
, $146, ,000,0 900, there is only about 81, >.
, 100000 in arrears. About dozen con.
Germs which have purchased lines arr
!, behind in their payments, according tt
the board but on both classes of obli.
cations interest payments are up tt
date
, In its last annual report the Shipping
Board recommended that some form o.
assistance that would equalize operating
costs be given to such shipping com
panies as do not have the benefit o.
, mail contracts. The only help thest
now get is from any mail they ma!
carry the poundage rate being much
higher than that allowed foreign ships
= The pound rate in American vessel