Evening star., 1934-07-18
OCEAN MAIL PACTS'
REVISION ORDERED
Roosevelt Asks Farley to
Conduct Hearings to
Reduce Costs.
By the Associated Press.

By the Associated Press
The system Of subsidies to the
American merchant marine u expected
to undergo far-reaching changes with
in six months.
Steamship companies which carry
the mail probably will be paid on q
weight basis, q change which officials
hope viii save the Post once De-
partment Sl0,00o, 900 q year.
As to new means of helping build
up the merchant marine, observers
pointed to a recent report Of Secretary
of Commerce Roper. After recon-
mending that the present idea Of mail
subsidies be scrapped, he suggested
specific subsidies to lines in direct
competition with foreign interests
These subsidies would be for building
and operating Vessels.
Ordered BY President.
The White House announced last
night that President Roosevelt has
ordered Postmaster General Farley 70
report within six months whether ex-
isting ocean and foreign airmal con-
tracts should be modified or scrapped
The holders Of these contracts will
be given public hearings. This u q
departure from the procedure followed
in cancelling domestic airmail con-
tracts. Critics complained at the time
that no hearings were granted.
Ofhcials estimated that If ocean
mail had been carried on q poundage
basis last year the cost to the Gov
eminent would have been $1,000 600
They said the actual cost under the
system of virtual subsidies was $26,-
100000.
One company. Post once figures
showed, received 1858 900 for carrying
mail which would have cost only
S25.52 on q poundage basis.
Farley said in Albuquerque. N
Mex, last night that the investiga-
tions necessary would be pressed i'm
mediately. The Post Once Depart
ment already has been investigating
the situation for the last eight months
The Commerce Department also hss
made an exhaustive study, resulting
in Secretary Roper's report.
During the Winter also q special
Senate Committee, headed by Senator
Black of Alabama, investigated both
ocean and airmail contracts. It was
this inquiry which led to annulment
by Farley of domestic airmail con-
tracts and the writing of new ones
The new airmail contracts, Farley
has estimated, have resulted In saw
ings Of about $4,000, 900 a year.
Roper's Report.
In his report, recommending .
change in the method of aiding the
merchant marine. Secretary Roper
said:
"Inasmuch as Government aids tc
shipping have as their objective the
establishment Of an efficient and ulti-
mately . self-sustaining merchant
marine, the essential trade routes tc
be served should be determined by
analyzing the how and volume OF
trafiic with due consideration to such
other factors as defense requirements
trade policies and industrial and agri-
cultural needs.
When these requirements are de-
termined, Government aid should be
withheld from any other domestic
operators seeking to enter into direct
competition with the line already re-
ceiving Government aid"
Roper suggested two classifcations
Of subsidies, one to cover the differ
ences in shipbuilding costs and the
second to offset the difference In
operating costs with competing for
eign companies. He suggested also
the Government should have author
ity to examine the books of the
steamship lines, establish uniform ac-
counting and scrutinize all cost items
Under the merchant marine act
lines receiving ocean mail contracts
were required to use the subsidies tC
construct q certain number OF ship'
to build up the American merchant
marine.
However, Post once investigator,
have found that only 80 new ship.
had been built and that more thar
$12o, 100000 Of the $12l ,000,0 they
cost was borrowed from the Govern.
| ment.
There are As ocean mail contracts
involved. Hearings on them vii
begin after September II. The Presi.
dents executive order, signed on july
IL, specified that so days notice b,
given as required under the independ-
ent offices appropriation act Of 1884