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"DON'T GIVE UP THE SHIPS"
i
V. s. SENATOR DUNCAN V. FLETCHER.
American Merchant Marine
i
SOME PALPABLE TRUTHS AND
A PLAN FOR THE FUTURE
BY
PHILIP MANSON
iiOi-A Cti
-k—
PAMPHLET No. 1
MAY. 1919
%
Extract from Letter sent by Philip iManson, to President ^^'ilson.
June 5, 1917.
">i! * .-i Qreat waste of public funds and overpaj-ments amount¬
ing to vast sums are being unnecessarily incurred by the Shipping
Board and the Emergency Fleet Corporation. This should be cor¬
rected at once as the American people, who must make great sac¬
rifices to pay these bills by means of heavy taxation and bond
issues, will be in no temper to permit a continuance of it.
"I did considerable work on behalf of the Government Shipping
Bill during 1914-T5-T6 when it was before Congress, by exposing
and disproving the falsehoods and falacies of those who so vic¬
iously opposed this legislation, and by providing the Administra¬
tion and Members of Congress with facts and arguments in favor
of the Bill. I, therefore, feel that 1 have a special right, aside from
that of a citizen, to call to your attention a state of affairs which
has already all but discredited this excellent legislation and is
causing great harm to the country, whereas if the Shipping Bill
be properly administered it would be one of the most important
and beneficial legislative acts of your administration."
ADDRESS BY PHILIP MANSON
AT MERCHANT .MARINE CONFERENCE,
WASHINGTON, D. C., JANUARY 23, 1919.
I am afraid what I am going to say will not be very popular with
many who are here. In fact I am certain that I am facing to a con¬
siderable extent a hostile audience. But inasmuch as eight members
of my family faced a hostile audience of a different sort on the battle
fields of France, I guess I will be able to come through this ordeal.
One of my brothers over there wrote home "They told us zve could
not take the Argoune Forest. Well, zve took it." They tell me I
cannot successfully oppose the interests so largely represented here.
We will see.
First, let me say, I am the President of a steamship company
which will soon be operating a steamship service across the
Pacific and according to the arguments of many of the gentlemen
here my private interests should dictate that I oppose and not advo¬
cate Government ownership and operation, but even if that were so, I
would still advocate what I do and my private interests can be damned
because I am convinced that in no other way will we have a proper
American Alerchant Clarine. But I deny that Government competition
will hurt private steamship companies. I would sooner contend with
any honest Government competition than dishonest, cutthroat private
competition with its fighting ships and illegal combinations and all
the rest of it.
On Jan. 8, 1918. Mr. George M. Andrews, General Manager of the
New York Ship-building Corporation, testified before the Senate Com¬
mittee on Commerce (page 649 of the Hearings) that the merchant
ships under construction in his yard at the time it was commandeered
by the Shipping Board after we entered the war, were being built for
private parties on contract for from $60 to $78 a ton. This, of course,
included a satisfactory profit to the builders. The higher price was
for tankers, which cost from $1.S to $20 a ton more than ordinary
cargo steamers. "The $/8 per ton ships," Mr. Andrews said, "zvere
built for the Standard Oil Company and are fine ships."
These were the prices for ship-building in one of the best American
shipyards after the war had been in progress over three years, causing
large increases in cost of materials and labor. And note you that these
prices were for single ships, not for ships of standardized design
ordered in large numbers and constructed by the fabricated process,
which materially reduces the cost of construction.
In the fall of 1915 I was offered by the Union Irons Works, of San
Francisco, Gal., a 9,000 ton steamer, Isherwood construction, then being
built in their yard, for $625,000. This was just under $70 a ton, and
San Francisco was then the dearest labor market in the United States,
if not in the world, and the materials for this vessel had to be hauled
4 "DON'T GIVE UP THE SHIPS" AMERICAN MERCHANT MARINE
by rail across the United States adding considerably to the cost. No
better ships sail the seas than those built by the Union Iron Works,
and they were completing them in from four to five months. Not¬
withstanding these facts the Shipping Board placed contracts for ships
at three to four times the prices testified to by Mr. Andrews.
Labor, seeing what was going on, demanded their share of the swag.
I am using labor's own language. Their president, Mr. Hutchinson, in a
public statement at the time said, "We want our share of the szvag. If
the Government will take over the shipyards zee will forego our
demands for higher wages and closed shop as we will then be zvorking
for ourselves, the people of the United States." They got their share
of the swag but it was not taken from the shipbuilders. The Shipping
Board very generously put the charge on Uncle Sam.
It has been said here that the gross wastes and extravagances of the
Shipping Board are justified on the score of speed and urgency for win¬
ning the war, hut there has been no speed. On the contrary, not a single
ship to carry troo'ps and very few other ships have been turned out on
contracts placed by the Shipping Board. There has been complete fail¬
ure to deliver ships in time to be of actual use in the war program
though Älr. Hurley has been functioning since July, 1917, and a good
shipbuilder can turn out a ship in four to five months. Even the ships
that were being built under private contract which were commandeered
by the Shipping Board were greatly delayed in their completion and
the original owners were compelled by the Shipping Board to pay the
shipyards more than double the original contract price. I refer you
to the testimony of Mr. E. L. Doheny, President of the Mexican Petro¬
leum Co., before the Senate Committee on Commerce, on June 27.
1918. He testified that his company was mulcted to the extent of
from $1.500,000 to $2,000,000 in that way.
The few ships that have been built by the Shipping Board are a
serious reflection on our country and will work irreparable injury
to the high reputation of our past shipbuilding. Read the story
of the steamship "AG AW AM," a product of the Shipping Board,
which has been trying to get to Genoa with a $1,000,000 cargo
of sugar since Oct. 22nd. Her keel was laid 13 months ago
and she hasn't made a trip yet. Here is the latest about her, from the
New York "World" of January 14th. " 'AG AW AM' still keeps trying
to get there. Ship has not reached Genoa yet, but, anyivay, she has
gone as far as Bermuda." Read about the steamship "TUCKA-
HOE," another product of the Shipping Board, which has just
limped into Halifax in a leaking, condition unable to proceed on her
first journey across the Atlantic.
Now a few words about subsidies. It may be that American ships
mav cost a little more to operate than ships of other nations, but this
is equally true of British ships. It costs more to operate British ships
than the ships of any other nation except the United States. But
British shipping men have been enterprising enough and patriotic
enough to ignore this difference in operating costs, and have never¬
theless built up British shipping to a greater tonnage than the com-
hined tonnage of all other countries in the world ; whereas France,
Italy, Japan, Norway and other maritime countries, notwithstanding
that their shipping is operated at a lower cost than British shipping.
"DONT GIVE UP THE SHIPS" AMERICAN MERCHANT MARINE 5
have insignificant merchant marines, and German shipping which also
was operated cheaper than British shipping, was only one-fourth that
of Great Britain.
The pre-eminence of Great Britain's merchant marine is due to the
enterprise and patriotism of British shipping men and the confidence
of British investors in shipping enterprises. British shipping men
did not seek to wrest subsidies from their government to cover the
increased cost of operating under the British flag, as compared with
the German, Norwegian, French, Italian, or Japanese flags before they
would engage in shipping enterprises. Knowing full well the profit¬
able character of the business, they ignored the difference in operating
costs and more than made it up by superior efficiency in operating
methods.
The low estate of American shipping is due to the misstatements of
subsidy-seekers which have scared off American investors from ship¬
ping investments. ■ Who would invest in American shipping enter¬
prises in the face of repeated statements by our leading bankers and
shipping men during the past forty years or more that it is impossible
to operate profitably under the American flag?
Another reason for the low esteem in which shipping investments
are held by the American public is their sorry experiences with the
stocks of the International Alercantile Alarine, and the Consolidated
Steamship Co.[ In the case of the International Mercantile j\Iarine,
J. P. Alorgan & Co. issued in round figures about $50,000,000 common
stock and about $50,000,000 preferred stock, all water. After the stock¬
holders had seen their investments in these stock practically wiped
out, the common stock selling at less than $1 a share and the preferred
at $2^4 a share, shortly after the outbreak of the war the officers
of that company, seeing the great boom in store for shipping tried
to wipe out the stockholders by causing default in the interest on the
bonds of the company when it had $8,538,394 in cash on deposit to its
credit and undreamed of profits in the making.
I cjuote from the New York "World" of April 11, I9I6:
BIG SHIPPING TRUST WAS DELIBERATELY
WRECKED, THEY SAY
Stockholders charge Morgan and other Directors threw
International Mercantile Marine into receivership
in bondholders' interest.
HAD MILLIONS MORE THAN ENOUGH
TO PAY INTEREST
Reports of public accountants and records in hands of the
World seem to bear out allegations made in
Court by stockholders.
The amazing revelations by the committee of common stock¬
holders of the International Mercantile Marine that their bank¬
rupt company had earned more than $48,000,000 in its year of insol¬
vency and had on hand cash and quick assets of more than.
$30,000,000 at the end of the year, were followed yesterday by the
disclosure of charges which eminent corporation lawyers and
bankers declared unprecedented even in the highest realms of
finance.
6 "DON'T GIVE UP THE SHIPS" AMERICAN MERCHANT MARINE
The charges, most of which have been embodied in papers filed
in secretl}' conducted court proceedings by a committee of stock¬
holders and are supported by the reports of expert accountants or
the books of the company, are to the effect that J. P. Morgan &
Co., fiscal agents of the company, and a majority of the Board of
Directors, acting in harmony with the desires of leading bond-
holding interests, DELIBERATELY THREW THE COMPAX/
IXTO RECEIVERSHIP IN ITS FIRST PERIOD OF PROSPER¬
ITY AND HAVE SINCE KEPT IT THERE TO THEIR OWN-
ADVANTAGE AND TO THE DETRIMENT OF THE HOLDERS
OF THE COMMON AND PREFERRED STOCK.
* * * It is charged that the records show that J. P. Morgan,
though his firm was fiscal agent of the company, CONSENTED
TO A DEFAULT OF INTEREST ON THE BONDS AT A TIME
WHEN THE COMPANY WAS NOT ONLY SOLVENT, BUT
WHEN IT HAD ON DEPOSIT IN HIS OWN HOUSE MUCH
MORE THAN SUFFICIENT FUNDS TO MEET THE INTER¬
EST PAYMENTS. * * ♦
The "^^'orld" then proceeded to show in detail how the attempted
robbery of the International IMercantile IMarine stockholders was
undertaken by some of our most eminent citizens and finally frustrated
by the stockholders organizing strong protective committees,
P. A. S. Franklin, President of the International Alercantile Marine,
one of the main actors in this deliberate and brazen attempt to defraud
the stockholders of his company, was subsequently appointed to a high
and responsible position in the Shipping Board organization, as were
also other officials of the International IMercantile IMarine.
P. A. S. Franklin is one of the men who did their utmost to defeat
the legislation which created the Shipping Board, and who were later
called to administer the very legislation which they did their utmost
to defeat.
P. A. S. Franklin is one of the men who "sees red'" whenever the
Seamen's Bill is mentioned, yet the Shipping Board must wbrk in
accordance with that Bill.
The Consolidated Steamship Co. was a Charles \V. Morse scheme
which resulted in a total loss to the stockholders, after Morse was con¬
victed of crime and sentenced to Atlanta Prison for 15 years. Presi¬
dent Taft was tricked into releasing IMorse from prison on the ground
that IMorse was sufifering from a fatal illness and had only a few days
at most to live. It is not amiss to here mention that notwithstanding
his criminal record and his many shady transactions following his
release from prison, the Shipping Board gave to companies headed
by Morse contracts totalling about $30,000,000.
After these two sad e.xperiences by .American investors with Ameri¬
can steamship companies, it is not at all strange that the American
investor is shy of shipping investments.
On January 7, 1015, when the Shipping Bill was before Congress,
a special committee of the New York Chamber of Commerce headed
by Irving T. Bush, and which included so well-informed a man on
shipping as George B. Dearborn, president of the American-Hawaiian
Steamship Co., brought in a report in which they stated that the claim
made by subsidists that it cost from 40% to 50% more to operate
ships under the American flag was not home out by the facts ; that,
in fact, it cost less than 5% more. The report went on to show that
the false claims of subsidists had destroyed the confidence of Ameri-
"DON'T GIVE UP THE SHIPS" AMERICAN MERCHANT MARINE 7
can investors in shipping investments and the committee outlined a
plan whereby that confidence might be restored by the Government
guaranteeing the bonds of the steamship companies whose character
and standing entitle them to it. The committee very modestly re¬
frained from naming the companies that would qualify under that
head. "If credit machinery be created to enable steamship men to
finance American shipping enterprises," said the report, "a substantial
tonnage of freight vessels zt'ould be assured zvithoiit the aid of subsidy."
Now a few facts about the profits earned by steamship companies.
If any steamship company has not paid dividends it has not been due
to a lack of earnings on the amount of their legitimate investments.
I will give you the earnings of some well-known steamship companies.
The figures are official and are taken from the London Stock Exchange
Year Book for 1914. 1 ask you to note that these are not war time
profits. They are profits earned previous to the outbreak of the war.
The White Star Line paid 60% in 1911 ; 30% in 1912; this was an
interim dividend and no further dividend was paid that year on account
of the loss of the "Titanic"; they paid 65% in 1913. After paying these
dividends the company had reserves and surplus of over $9,000,000,
gold.
The Ellerman Lines paid 13% in 1911; 12% in 1912, and 22% in
addition to 50% bonus in 1913, and still had reserves and surplus of
over $3,000,000. The Anchor Line paid 20% in 1912, and 20% in
1913, and had reserves and surplus of $2,000,000. The Orient Lines
paid 5% dividend and 50% bonus in 1911, and they again paid 5%
dividend and 50% bonus in 1912, and still had reserves, and surplus
of over $2,500,000.
The Strick Line has paid 10% regularly since the inception of the
Company, and in 1905 they paid 300% stock bonus and 1913 they paid
50% stock bonus thereby making the holdings six times the original
and the annual dividends equivalent to 60% on the original investment,
and after all this the Company still had reserve and surplus of nearly
$3,000,000,
The Year Book shows that in 1912 the Royal Mail Steam Packet
Co. paid about $160 per share for the entire capital stock of the Union
Castle Line, the par value being $50 per share, and they paid the former
owners of the line in addition nearly $3,500,000 not to compete with
them for 10 years.
1 could give you numerous other instances of the profitable nature
of the steamship business but these should suffice. Many steamship
lines refuse to divulge their profits and such notations as: "Reports
are not issued to the public," or "Company is a private concern and no
information is obtainable," frequently appear in the Year Book. On
September 21st, 1912, two years before'the outbreak of the European
War, "Shipping Illustrated," a leading shipping paper in America, said
"At present it is the easiest thing in the world for cargo steamers of
any description to make large profits of 40% on the present freights.
I did not come here to speak of these matters and would not have
done so but for the statements made here yesterday ; 1 came to suggest
a program for the future of our shipbuilding and ship-operations which
I will now do.
8 "DON'T GIVE UP THE SHIPS" AMERICAN MERCHANT MARINE
A PLAN FOR THE FUTURE OF OUR MERCHANT MARINE.
The Government should not lay down the keel of another merchant
vessel, nor should it buy any more merchant vessels, until it has
definitely determined that it will retain and operate these vessels.
It is the height of folly and a deliberate squandering of the people's
money for the Government to continue to build and buy merchant
ships which the officials of the Shipping Board have publicly stated
they propose to sell to private parties for less than they cost the Gov¬
ernment, in fact for a mere fraction of what they cost the Government,
charging the difference to what they term war expense.
The Government should establish steamship lines in all trades over¬
seas. and should operate these steamship lines with its own forces and
organizations in the same way as it is operating the Panama Steamship
Company.
One of the speakers yesterday spoke of the serious international
complications that might ensue by reason of overt acts of the captain
on a merchant ship owned by the Government. There is nothing to
that, as years of operation of the Panama Steamship Co. has proved.
An overt act by the captain of a Government-owned merchant ship is in
the same category as a similar act by the captain of a private-owned
ship.
It has also been claimed that no private steamship company can com¬
pete against the Government. In competition with the Panama Steam¬
ship Co. there is the United Fruit Co.; the Royal IMail Steam Packet
Co., and the Luckenbach Line, all of which have managed to get on
notwithstanding the Government's competition, and before the war we
also had the Hamburg-American Line on this route.
The Shipping Board's present method of operating the Government's
merchant ships by allocation to private parties is fundamentally and
economically wrong. It is as wrong as the method it followed, and
which I denounced, in having the ships built through private inter¬
mediaries instead of the Government doing the work itself.
Here are the the plain unvarnished facts :
The ships have cost the Government greatly in excess of what they
are worth and cannot be sold for anything like the price they cost the
Government, and I believe the people will not permit them to be sold
for any considerable amount less.
All American shipping interests are on record to the effect that they
cannot operate American ships without subsidy and the repeal of the
Seaman's Act. Congress will not grant subsidies or repeal the Sea¬
men's Act. Therefore, private operators, by their own statement,
cannot or will not give the country an American Merchant Marine.
There is, therefore, nothing left for the Government to do in the
matter but to operate itself the ships it owns. But if the Government
continues the Shipping Board's present method of operation by allo¬
cation to private parties, it will result in the same complete failure as
has the shipbuilding program. It is to the interest of these private
operators to make it a failure, and they certainly will do so. There
is no reason for the Government to use these private operators other
"don't give up the ships" —american merchant marine 9
than the fact that they jnst now control the Government's policies in
regard to shipping through their control of the Shipping Board, and
are acting in their own interest and not in the interest of the Govern¬
ment.
If the plan of operation of the Government's merchant ships which
I have suggested is undertaken with sincere and honest purpose
to serve the interests of the n.*ition and the people as a whole,
instead of serving the interests of a handful of steamship men, most
of them foreigners or representing foreign interests, it must result
in success.
If the Government operates its merchant ships itself, cutting out
private intermediaries in connection therewith, it can give shippers
and importers of the country as low freight rates as are enjoyed by
other countries, and still make a profit on the operation. By reason of
the fact that the Government will not seek the large profits which
steamship companies normally earn, it will overcome the handicap of
the excessive cost of the ships and in due time will be able to amortize
their cost.
After the Government has established these steamship services, and
has demonstrated that ships can be profitably operated under the
American flag and American laws without subsidy, consideration can
be given to the proposition of the Government withdrawing from this
activity by the sale of the lines it has established to the highest bidder
after fixing a proper upset price, if such a procedure is thought advis¬
able by those who profess to fear this so-called "socialistic" activity of
the Government.
The Government should take over all shipyards that were built with
Government money and should eliminate all agents and other inter¬
mediaries in the management and operation of these yards. If this
is done and these yards are honestly managed in the interest of the
Government, the new ships to be laid down in them will be built at less
than half their present cost to the Government and large savings will
also be made in the cost of the ships now under construction in these
yards.
The Government should confine its shipbuilding to the yards it owns
and should cancel all contracts with private yards for merchant ships
on which a substantial amount of work has not already been done.
All restrictions should be removed from private yards and they should
be permitted to take orders for ship construction from anyone, except¬
ing, of course, interests of enemy countries.
Every now and then someone says. "The Shipping Board should be
composed of men ivhose business experience qualiñed them to shape its
policies."
I say that it is far more important that the Shipping Board be com-
]iosed of intelligent men whose honesty and character are such
that they will stand steadfast and loyal to the interests of the
Government and the people and not betray them into the hands of
conscienceless profiteers and exploiters. I say that the total failure of
the Shipping Board is due to a deliberate purpose on the part of those
in charge to make it so. The work of the Shipping Board has been
largely administered by men who did their utmost to defeat the legisla¬
tion which created it. These men were appointed in violation of the
10 "don't gi\"e up the ships" american merchant marine
spirit and intent of the Act which provides that "Xo Commissioner
shall be in the employ of or hold any official relations to any common
carrier by zvater or other person subject to this act, or ozcn any stocks
or bonds thereof or be pecuniarly interested therein." That is the law.
hat is the actual state of affairs in regard to the personnel of the
Shipping Board organization? Though it may be true that none of
the five members of the Board proper have a direct personal interest in
shipping properties, "or person subject to this act," the fact is that the
men who actually have fixed the policies of the Shipping Board in its
most important activities and who are administering some of the
most important functions of the Shipping Board, are the heads of com¬
panies that are vitally affected by their own acts as officials of the
Shipping Board organization.
I say that this is in violation of the purpose and the spirit of the
Shipping Act, and during the war constituted a grave menace to the
nation because some of these men have by their acts shown that they
are actuated primarily by their own private interests, and the interests
of the companies with which they are connected, and not by the best
interests of the nation. I gave an important instance of this in my
testimony in executive session before the Senate Committee on Com¬
merce on April 4. 1918. Officials of the Shipping Board have repeat¬
edly violated Section 41 of the Federal Penal Code.
I say to you th.\t we will never establish on a permanent
basis .\n Americ.\n ]\Ierchant INIarine of important extent
unless we go .*\t it in the way I h.ave here outlined. The first
essential, however, is to clear out the gang that now controls
the Shipping Bo.ard. Nothing will avail so long as intim.ates
of highly paid lobbyists and tipsters employed by the most sin¬
ister of trusts -and combin.ations, administer our shipping legis¬
lation. See recent testimony before the Senate Committee on .A.gri-
culture. of Tom Logan, lobbyist and secret \\'ashington tipster for
several trusts, and intimate friend, confidant and advisor to Edward N.
Hurley, Chairman of the United States Shipping Board.
O
"don't gi^"e up the ships" american merchant marine 11
A LETTER TO SENATOR RANSDELL.
London, April 4, 1919.
Hon. Joseph E. Ransdell,
United States Senate,
^^'ashington, D. C.
Aly Dear Senator;
I have just received from mv New York office the copv of your
speech in the Senate on February 24th, which you very kindly sent
me. I have carefully read your speech and wish to take issue with
you on some of your statements.
You cite a number of questions relating to the future of our mer¬
chant marine which you say were unanswered at the Merchant Ma¬
rine Conference held in M'ashington on January 22nd and 23rd.
Most of the questions which you cite were answered by me, and if
my remarks have been included in the proceedings of the Confer¬
ence, you will find the answers' there.
You say: "IVe had about ißo of the most thoughtful men of
Ulis Nation at that Conference, but not a single man there suggested
anything that seemed to me like a real, loise, thorough-going solu¬
tion of the problem. No one as yet has zoorked out a flan, and there¬
fore I do not like to criticise the Shipping Board for not hazing de¬
veloped a plan zvlien no one else seems to haz'e been able to develop
one."
In this connection, permit me to submit the following : Shortly
before the Conference was called by you I was asked by two Sen¬
ators, IMembers of the Committee on Commerce, to suggest a pro¬
gram for the future of our merchant marine and what to do in regard
to the Shipping Board's shipbuilding program. In submitting my
views to the Senators I took the opportunity to say:
''In view of the accuracy with zvhich I foretold the results that zvould
follow the past acts and policies of the Shipping Board, and. as nozv
recognized, the success that zvonld have resulted if my suggestions to
the Shipping Board had been follozved, should, I bcliez'e, entitle my
viezus and suggestions as to the future policy for our shipbuilding and
ship operation, to consideration."
One of the Senators replied :
"I am very glad to have the information and suggestions zvhich your
letter contains, and assure you that the documents shall have a place
among my valued files on this important question. Please know of my
z'ery great appreciation."
Yet, I was not allowed to submit these suggestions to the Confer¬
ence. The trouble, Senator, is that the plan desired is one that
will be agreeable to and acceptable to the special interilsts
that obtained control of the shipping boakd from the very
u "jion't give up the ships"—a:mi:ric.\n merchant marine
beginning of its organization. A plan in the interest of the
whole people of the United St.ates without particular regard
for these spect.vl interests^ is not accept.vble.
Upon }0ur special written request, and upon your statement that
those who attended the Conference would be permitted to "fully and
freely discuss'' the future of our merchant marine, I attended it at
considerable personal sacrifice, as I was booked to sail to Europe on
Januar}' 25th and could ill afiford to be away from my office the two
days just before sailing.
The discussion which was scheduled for the first day was omitted
to allow 51 r. Kirlin, a lawyer for several large steamship companies,
mostly foreign, that were so well represented at the Conference, to
meander through an impossible plan for the future of our merchant
marine, which plan he, with great deliberateness and with total dis¬
regard for time, presented to the Conference. This plan was printed
during the night and a copy of it handed to all who were present the
following day.
The program of the second day, which was the last day of the
Conference, was also changed so as to practically cut out all discus¬
sion. I heard the acting-Secretary say to someone sitting directly
behind me; "ÍFe arc going to adjourn permanently at i P. M. and
cut ont the afternoon session. There are some here who want to
shoot off some hot air."
When you left the meeting at noon and turned it over to Mr. Kir¬
lin, a man who is completely out of sympathy with the Shipping Act
and as the hired attorne}- of opponents to the Act did everything in
his power to defeat it when it was before Congress, he called on
three or four men by name and asked them to discuss for five minutes
each. It was clearly the intention to prevent any one speaking who
might state some unpleasant truths,
1 hope you will pardon the apparent lack of modesty when I say
that I had a message for the Conference which was far more import¬
ant than anything that had yet been said there. It included my sug¬
gestions for the future of our merchant marine as submitted to the
two Senators previously mentioned. Furthermore, I came to the
Conference at your express written invitation and your assurance that
I would be permitted to address the Conference during the discussion ;
but it was known to those present, most of whom were representing
special interests that I would address myself to the best interests of
the peo]de of the United States, and they did not want that, so when
1 tried to gain the floor, Mr, Kirlin would not recognize me, until
Representative (ireene, who was present rose and said: "I think we
should hear what Mr. Manson has to say."
Mr. Kirlin then generously allotted me five minutes for a "full and
free discussion,'" though he had taken an hour and a half of the Con¬
ference's time the day liefore, not to mention other dreary and long-
winded siieakers who s])oke on matters that were only slightly related
to the main questions before the Conference, I rose and said: "// I
am to have only fi'oc minutes in which to speak on this great subject, I
zvill simply say that until the grafters and self-servers ivlio control
"DON'T GIVE UP THE SHIPS" AMERICAN MERCHANT MARINE 13
the Shipping Board are cleaned out, we will never have a merchant
marine worthy of the name." A jeering and derisive howl went up
from most of those present.
At Mr. Greene's request I took the platform and quickly took the
jeering grins off their faces with the opening sentences of my speech.
I said : "I am afraid what I am going to say will not be very popidar
with many who are here. In fact, I am certuin I am facing a hostile
audience to a considerable extent; but inasmuch as eight members of
my family faced a hostile audience of a different sort on the battle¬
fields of France, I guess I will be able to come through this ordeal.
One of my brothers over there wrote home: 'They told us we could
not take the Argonne Forest. Well, we took it.' They tell me I can¬
not successfully oppose the interests so largely represented here. We
will see."
That, as I said, took the jeering grins off their faces. It was not
good form to jeer and grin about the battlefields of France, and thé
American troops' capture of the Argonne Forest. At the end of five
minutes, however, I was stopped by Mr. Kirlin's gavel, but Mr.
Greene again came to the rescue by asking that I be given five minutes
more. No one daring to say "No," I had five more minutes, when I was
again stopped by Mr. Kirlin's gavel and told to give the rest of my
speech to the stenographer. So much for your "full and free discus¬
sion." How the notes of my speech were suppressed from the press
I have already written you in previous letters.
I have given this lengthy recital of what happened at the Conference
in order to drive home just what is wrong with the Shipping Board
and the American Merchant Marine.
You admit, as you must, that the Shipping Board was created for
the purpose of building up the American Merchant Marine, yet the
men who have fixed the policies of the Board and have administered
its most important functions have been the very men who did their
utmost lo defeat this Legislation. I quote a letter from a Member of
Congress who I regard as one of the best informed men on shipping in
the United States, which he sent to Chairman Hurley of the U. S,
Shipping Board.
Washington, D. C, September 16, 1919.
Mr. Edward N. Hurley, Chairman,
U. S. Shipping Board,
Washington, D. C.
Dear Sir ;
From time to time I have received from Mr. Philip Manson let¬
ters of which the enclosed are copies. I know Mr. Manson pretty
well. He was a very earnest friend of the Shipping Act. I have
always regarded him as trustworthy. I fear the Board do not give
Mr. Manson's letters the consideration to which they are entitled.
I do know that Rosseter and some others who have been placed
in some very responsible positions by the Shipping Board, in the
past did everything in their power to block legislation the purpose
of which was to rehabilitate our merchant marine, and I regret the
necessity for them to be placed in responsible positions now.
The only answer to that letter was more appointments of the same
sort.
14 "DON'T Gi\"E UP THE SHIPS" AMERICAN MERCHANT MARINE
So long as Senators will say, as you do, '"I do not think we ought
to criticize the Shipping Board," and vigorously defend and excuse its
evil acts, it is useless to hope for any proper plan or program for the
future of our merchant marine.
It is, indeed, most unfortunate that the President is in a very embar¬
rassing position because of the inexcusable rottenness and venality
of the Shipping Board administration, and because of his direct
responsibility for the billions of dollars which were wasted and squand¬
ered by the Shipping Board, which he appointed as his agent for the
administration of the vast sums entrusted to him by Congress, but
he has only himself to blame for this. He was repeatedly warned by
me of the way things were going and I know that my several com¬
munications to him on the matter reached him. But Hurley had the
ear of the "Big Chief," as he called the President, to the e.xclusion of
all others.
I am sure that all good Democrats, of whom I am one, would rather
that the evils of the Shipping Board be fully exposed, and not white¬
washed. and that those who are responsible for them be properly dealt
with, rather than that the President's face be saved by his supporters
in the Senate defending the Shipping Board and conjuring up excuses
for the Board. The best way for the President to retrieve himself is
that he immediately remove Hurley and all who are in the Shipping
Board organization who are officials of steamship companies or other¬
wise interested in companies affected by the policies, acts or regula¬
tions of the Shipping Board, and replace them with men who will
administer this important work for the best interests of the people of
the United States. I beg to remain.
Yours very truly,
PHILIP HANSON,
290 Broadway,
New York City.
O
^DON'T GIVE UP THE SHIPS" -AMERI'CAN MERCHANT MARINE IS
A LETTER TO MR. EDWARD N. HURLEY, CHAIRAIAN,
U. S. SHIPPING BOARD.
290 Broadway, New York City, May 5, 1919,
Mr. Edward N. Hurley, Chairman,
United States Shipping Board,
Washington ,D. C.
Dear Sir:
A Senator who has given mucli tliought and study to the problem of
our merchant marine, recently sent me, on my return from Europe, a
copy of your speech of March 27th, last, and requested me to comment
on it, and to state my arguments in support of my plan for the future
of our merchant marine, which is diametrically opposed to your plan.
I replied to the following effect:
I now reply to that part of your letter of April 23nd wherein you ask
me to comment on Mr. Hurley's speech of March ätth in which he out¬
lined his plan for the future of our merchant marine; also my arguments
in support of my contention that the Government should continue to own
the ships which have cost it so dearly, and to operate them, at least for
a time.
First, permit me to say that no plan recommended by Mr. Hurley is
worthy of serious consideration by those who have only the best in¬
terests of the American people at heart. He has been shown to be a
creature of the special interests that will fight to the bitter end any plan
which is likely to interfere with their private interests. They are un¬
alterably opposed to the Government continuing ownership of its ships,
and operating them without the horde of parasitical private intermedi¬
aries.
No matter what virtuous phrases Hurley may use for the purpose of
camouflaging his utterances, it is a known fact that he is hand in glove
with the interests that have sinister designs on the public treasury. Can
you imagine worse humbug and hypocrisy than some of his utterances
in his speech of March 27th?
As a matter of fact, the plan he outlines is similar to the plan pro¬
posed by that super-patriot and friend (?) of the American merchant
marine. Captain Robert Dollar, one of the directors of the American In¬
ternational Corporation, whose plan was printed in pamphlet form and
widely circulated to newspapers, magazines, Chambers of Commerce,
etc., throughout the United States.
Hurley and other members of the Shipping Board organization have
within the last few weeks dropped their mask and have shown that they
have all along been opposed to the Government itself building or oper¬
ating its own ships, which bears out my contention that the Shipping
Board's work was made a failure so as to discredit Government activi¬
ties and Government ownership, which is not at all strange in view of
the now known fact that Hurley's confidant and advisor, Tom Logan, is
a highly paid tool and agent of the most sinister of the trusts and com¬
binations.
Hurley's latest proposal is for the benefit of the American Interna¬
tional Corporation, the International Mercantile Marine and the other
financial and shipping interests that have fixed and controlled the poli¬
cies of the Shipping Board.
In the face of the world-wide unrest, the present is not an auspicious
time to wipe out billions of dollars of the people's money, as is pro¬
posed by Hurley's plan to hand over the ships, as would be done, to the
16 "DON'T 01\'E UP THE SHIPS" AMERICAN MERCHANT MARINE
American International Corporation, and the International Mercantile
Marine, and kindred companies, at "a price which fairly reflects the
current world market for siniiiar tonnage," which is the way Hurley
describes it in his speech. They would, of course, let an occasional out¬
sider not in the clique get one or two of the ships, but the whole thing
would be a base betrayal of the people's interests.
After having submitted his plan and finding it necessary to sidestep
somewhat because some members of Congress recognized the obvious
purpose, notwithstanding the high-sounding phrases in which Hurley
indulged, was to turn over the billions of dollars of the people's prop¬
erty to the highly-placed gentlemen who have coined this terrible war
into untold wealth for themselves, and who are still unsatisfied and will
remain unsatisfied until they get hold of the Government's ships for
about 25 per cent of their cost to the American people, he now says that
his plan was put forth only as a feeler to guage American sentiment.
Of course, American sentiment as exemplified by the U. S. Chamber of
Commerce, the .American Manufacturers Export Association, the National
Foreign Trade Council, the National Marine League, and the numerous
other anti-.\dministration and so-called commercial organizations, which
are financed by, or otherwise controlled by the special interests that are
violently opposed to the Government retaining ownership of its ships
and operating them for the best interests of the whole people of the
United States, are one and all in favor of Hurley's plan, and are busy
passing resolutions commending it; even as thej' all were opposed to
the Shipping Bill and the Seamen's Bill, and resoluted against those
Bills.
I am sure that the majority of the members of those organizations
would be in accord with the views I express, if the facts could be put
before them; but this, as j'ou know, is very difficult because the interests
that control those bodies see to it that only the arguments they submit
are put before the membership.
Here are the plain, indisputable facts :
The ships have cost the Government greatly in excess of what they
are worth and cannot be sold for anything like the price they cost the
Government. The American people will not permit them to be sold for
any considerable amount less. "A price which fairly reflects the current
world market for similar tonnage," which is what Hurley would sell the
ships for. would not average over 25 per cent of the cost of the ships
to the American people.
Furthermore, all American shipping interests and the financial in¬
terests allied with them are on record to the effect that they cannot
operate .American ships without the aid of a substantial subsidy and the
repeal of certain features of the Seamen's Act. Congress will not grant
subsidies, not even a Republican Congress, nor will it make the changes
in the Seamen's .Act that these interests desire.
There is therefore nothing left for the Government to do in the matter
but to operate, itself, the ships it owns. The Shipping Board's present
method of operating the Government's ships by allocating them to pri¬
vate parties, is fundamentally and economically wrong. It is as wrong
as the method it employed, and which I warned against and denounced,
of having the ships built through private intermediaries, instead of the
Government doing the whole thing itself.
If the Government continues the Shipping Board's present method of
operation by allocation to certain favored private interests, it will ulti¬
mately result in the same complete failure as has the shipbuilding pro¬
gram.' It is to the interest of these private operators to make it a failure,
"and they certainly will as soon as it becomes necessary. There is no
reason for the Government to use these private operators other than
the fact that just now they control the Government's policies in regard
to shipping through their control of the Shipping Board, and are acting
in their own interest and not in the interest of the Government.
THF GOVERNMENT SHOULD ESTABLISH STEAMSHIP LINES
IN ALL TRADES OVERSEAS, AND SHOULD OPERATE THESE
STEAMSHIP LINES 'WITH ITS O-WN FORCES AND ORGANIZATIONS
"DON'T GIVE UP THE SHIPS" AMERICAN MERCHANT MARINE 17
IN THE SAME WAY AS IT IS OPERATING THE PANAMA STEAM¬
SHIP COMPANY.
If this plan of operation of the Government's merchant ships is under¬
taken WITH SINCERE AND HONEST PURPOSE TO SERVE THE IN¬
TERESTS OF THE NATION AND THE PEOPLE AS A WHOLE, instead
of serving a handful of steamship men, most of them foreigners or rep¬
resenting foreign interests, it must result in success.
If the Government operates its merchant ships itself, cutting out pri¬
vate intermediaries in connection therewith, it will be able to give to
shippers and importers of this country as low freight rates as are en¬
joyed by other countries, and still make a profit on the operations. By
reason of the fact that the Government will not seek the large profits
which steamship companies normally earn, it will overcome the handi¬
cap of the excessive cost of the ships and in due time will be able to
amortize their cost without loss to the taxpayers.
After the Government has established these steamship services, and
has demonstrated that ships can be profitably operated under the Amer¬
ican flag and under American laws without subsidy, consideration can be
given to the proposition of the Government withdrawing from this activ¬
ity by the sale of the lines it has established to the highest bidder after
fixing a proper upset price, if such procedure is thought advisable by
those who fear this so-called "socialistic" activity of the Government.
When the American people were being solicited to invest their money
in the Fourth Liberty Loan, the following advertisement signed by
Charles M. Schwab, then Director-General of the U. S. Shipping Board
Emergency Fleet Corporation, was extensively circulated in the news¬
papers throughout the country ;
"Ships cannot be built without money. In war time it takes a
great deal of money. UNDOUBTEDLY AFTER THE WAR IS OVER
THE SHIPS THAT ARE BUILDING NOW WILL PAY FOR THEM¬
SELVES MANY TIMES OVER. But the immediate need is money
and the whole-hearted support of the entire nation."
There was much more to the advertisement, but I want to call your
attention to the promise made to the American people that "AFTER THE
WAR IS OVER * » * THE SHIPS WILL PAY FOR THEMSELVES
MANY TIMES OVER."
The American people invested their money in these ships on the above
statement. Now Hurley puts forth a proposal to dispose of these ships,
that were to pay for themselves MANY TIMES OVER, for 35 per cent
or less of their cost to the American people. To dispose of these ships
in this manner would be a breach of faith which the American people
will not permit, and I shall do all in my power to prevent it.
The first thing that is necessary to be done is to remove from the
Shipping Board organization Hurley, Rosseter, and all who are tools,
agents, or employees of the special interests that are plotting to get for
35 cents on the dollar, and on easy terms, with interest at 5 per cent, the
ships which these very same interests made cost the Government billions
of dollars in excess of their true worth, or what they should have cost
even under the worst of war conditions.
The foregoing is submitted for your careful consideration. I hope
you will find food for very serious thought in it.
Yours truly,
PHILIP MANSON.
O