SHIPPING: Divorce?

The Problem. The Government owns a large part of the U. S. Merchant Marine, a portion of which was built or acquired during the War. It manages to operate a good portion of the ships it owns. In the fiscal year of 1923-24, it lost some $36,000,000 on its fleet-$3,000,000 a month. Of this amount, about 80% was actual operating loss. The largest reason for this loss is the poor condition of the shipping industry.

Ever since the War, the Govern-ment has been desiring to avoid this loss. But the Government has been prevented from disposing of its fleet to private owners because of its insistence on two things-a good price for its ships (or at least a fair price) and a U. S. merchant service to all the more important parts of the world, a thing which means maintaining a number of unprofitable lines.

Futile efforts to secure subsidies for private operators, so that they would buy ships, have practically been given up. So the question has resolved itself into how the Govern-ment can operate its vessels at a minimum loss.

The Agencies. In 1916, was created the U. S. Shipping Board, in-tended originally as a semi-judicial and regulative body. When the War came, it was supplemented by the Emergency Fleet Corporation, a Gov-ernment-owned organization, entirely controlled by the Shipping Board, for the purpose of carrying on the business of operating a Government merchant marine. For all intents and purposes, the Emergency Fleet -Cor-poration was the business organization of the Shipping Board. For long the Chairman of the Shipping Board was President of the Corporation. It was not until about a year ago (TIME, Jan. 14) that the two functions were separated and Admiral Leigh C. Palmer named as President of the Corporation, unconnected with the Board.

Administration Policy. This separation of the Board and the Cor-poration appears now to have been the beginning of a new policy under-taken by the Administration. This policy was voiced by President Cool-idge a month ago at the opening of Congress, when he asked for a new law to divorce completely the Board and the Corporation. “Let the Board confine itself to its regulative duties,” he said. “Let it lay down general policies, but place the entire business of operating the Government fleet, of carrying out the assigned policy, entirely in the hands of the Corpora-tion.” The argument for this arrangement is that the Board is not the kind of organization efficiently to operate a large business. Its seven members are by law chosen geographically to represent all parts of the country. Advocates of separation assert that the Board is political, whereas the operation should be placed entirely in the hands of a business organization.

The Action. At present, the President’s proposal is in Congress. Meanwhile, the Shipping Board has taken various measures purporting to carry out the President’s wishes. Last week, it passed a resolution re-taining for itself the right to fix trade routes, but giving the Corporation freedom in the selection of vessels, etc., to serve each route, as well as complete custody of all ships, active or inactive. Nevertheless, the Administration’s proposal is to be pressed.

Secretary of Commerce Hoover and others favor it, yet a good struggle over the measure is anticipated. For it is said the Shipping Board does not want its power curtailed, that its apparent acquiescence is to be used as argument against the legalization of the separation, on the ground that such a step is unnecessary. It is asserted that the Board is willing to make concessions by resolution, provided it has the power later to override the Corporation and interfere. Members of the Board, through their friends in Congress, are said to be preparing to oppose the Administration’s proposal, while Admiral Palmer, President of the Corporation, is urging that the separation be made legal, formal.