The Waterbury Democrat., 1945-05-25

shipping men have anything to say in the matter, the Japs won't ever again be allowed to build up their fleet to become maritime power.
 This offers U. s. shipping a golden opportunity. European countries have their old home trade routes to re-establish and their fleets to build up.
 China and Soviet Russia may have some ambitions to build ocean, going fleets. But whether any of these nations will be interested or able to take care of anything be- yond their own immediate and most pressing domestic needs is a great question.
 CHEAP LABOR GAVE
 LAPS EDGE
 Japan's cheap labor, cheap ship construction and operating costs plus ample government subsidies for all merchant marine sailings under the Japanese flag, resulted in freight and passenger rates so low that no other nation could compete in the pre-war Pacific. But with the Japs now out of the competitive picture, the hopes that American ship operators can capture large part of this Pacific trade are de- finitely bright. according to such men as Hugh Gallagher of the Mat son Lines. Russel Lutz of the Amer ican President Lines, John E. Cush- ing of the War Shipping Adminis- tration.
 To keep the American flag on the Pacific will take some form of sub sidy, they and all other shipping men seem to agree, but they en- phaSiZe that this question of ship ping subsidies is pretty generally misunderstood and in any case the amount of subsidies paid out will always be less than the cost of hay ing to build up a new merchant marine from scratch, as this coun- try has had to do in two world wars
 Cost of the War I fleet was four billion dollars. That fleet was scrap ped when the American Congress and American public opinion as whole refused to support U. s. merchant marine The cost of the War II fleet vii be between 12 and 15 billion dollars. If this modern fleet is also allowed to go to the scrap heap, it will only mean that U. s. foreign trade will again have to be dependent on ships of other nations
 CONSTRUCTION SUBSIDY
 URGED
 Subsidies to keep U. s. ships af1oat after the war can be applied in sev- eral ways. First as a ship con- struction subsidy, which is really subsidy to U. s. shipbuilding labor. U. s. law does not permit any U. s. shipping line to operate a vessel built in a foreign country, where costs of construction are much lower.
 This being the situation, it is argued that American-bui ships should be sold to private operators at costs equivalent to foreign con- Struction costs, the government paying the subsidy U. s. and for eign shipping lines would then have an even start and could compete on more equal terms through shipping conference agreements on equal rates.
 Conference rates are now legal 1zed in the United States. Even though they do constitute a kind of cartel agreement which costs the shipper more money based on a fair return to U. s. ship operators who have higher wage rates and food costs. Conference rates are accepted by foreign ship operators because they yield higher profits.
 When conference agreements break down and rate wars are in- stltuted through the payment of op- erating subsidies by foreign govern ments to their shipping lines, then of course U. s. lines cannot con- pete.
 Under such conditions the Amer lcan ship operator must turn to the U. $. government and ask for subsidy. But even as, U. s. law per- mlts the payment of these subsidies only when they are necessary to keep line in operation.
 It is on this basis that U. s. ship ping interests must embark to cap- ture postwar Pacific trade.