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Making Ship Securities Popular Fresh Millions Are Going Into New American Steamship Lines-- Congress Asked to Alter Mortgage Statutes to Promote Investment merchant fleet of the United States was around 2,000,000 tons. At that time, new tonnage could be purchased for about $45. The Ameri- can fleet, upon a fair assumption, was valued at $100,000,000. Before the end of August, 1919, the shipping board had disposed of over $100,000,000 worth of ships. Fifty per cent of their purchase value was to be paid in the first year. Some of these vessels have been sold for foreign account as the sales through agents would indicate. But it is under- stood to be the intention of the shipping board to continue these sales as rapidly as the private operators can absorb them. It is but reasonable to expect, there- fore, that the cash to be derived from government ship sales this year will ap- proximate $100,000,000. ' This conservative estimate indicates that the new capital going into shipping enterprises during. the current year will at least equal the estimated capital in- vested in the total ocean going merchant fleet of the United States prior to the war. Bankers are fully aware of what this means, but the figure apparently does not stagger them at all. They have learned to deal in larger sums_ since 1914, and the capital which is being invested in American shipping this year on private account does not amaze them, _ American bankers could with facility invest two or three billion dollars in shipping did the situation warrant it, and thereby relieve the government of all liens it now has upon merchant ves- sels. They have not gone into this in- dustry more extensively because of the many other emergency demands for money. For instance, there is the for- eign trade situation and the international credits which must be provided if the foreign trade of the United States -is to be continued. They have been striving to bring order out of that chaos and such funds as they have will naturally go for that purpose first. Such investments as are now being made in a private way in shipping are being made by the practical and success- ful ship operators. Some persons with money have been drawn into the busi- ness because of the extraordinary re- turns which water transportation is just now giving. There have been interna- tional merchants, industrial concerns and others similarly situated who have sud- denly awakened to the fact that they must have a fleet of their own. Gov- Be the war, the ocean going , permanent investment proposition, BY V. G. IDEN ernmental commandeering of cargo space has too often prevented them making a shipment to a customer. This profitable. return to ship oper- ators promises to continue for some years to come. That is the concensus of opinion, For the moment, therefore, the comparative cost of ship operation under the various flags of the world does not present that obstacle it will in the future. At the present time the wages paid on American vessels are higher than on English ships, and yet England still holds a large percentage of the British vessels under requisition. Sales made by the shipping board to private operators release that ship en- tirely to the control of the purchasers. The operator can take the ship in such trade as is most profitable and he can take full benefit of the ocean freights which the market is offering. Such a concession is worth considerable money and undoubtedly recompenses' the ' American operator for the discrepancy in the costs of operation. ' It would appear, however, from the present outlook that the investments which are today being made in shipping are not entirely free from that specu- lative feature which dominated the ship- ping market during the war. The oper- ator who purchases must speculate upon what the shipping conditions will be in the future. He must speculate upon the maritime policy which our government is likely to formulate within the next year or so. He must speculate upon the con- ditions which are likely to prevail under foreign flags a few years hence.- As a ship- ping does not today offer the safeguards which conservative banking demands. For that matter few industries in the world offer absolute assurance, and will not so long as the social unrest con- tinues and political conditions remain unsolved. Cost Problem is Worldwide Even the Japanese, who have probably © the lowest labor costs in the world, are today having trouble with strikes, Many Japanese seamen served on the Japanese ships chartered by the United States during the war, and they received American pay for overtime. That ex- perience has caused much discontent. In the Scandinavian countries, whose peoples are navigators of long experi- ence, the seamen are agitating for an 8-hour day on the high seas. 536 The Eng- lish operators are not certain that the 8-hour day will not be forced upon them. It is therefore impossible to say what it is going to cost to operate ships under any particular ae even one year from now. Ship operators have long been known as a class of bold citizens who were able to foresee possibilities where others could not. It has been an_ industry in which the "long chance" has often predominated. At this moment, some- what the same conditions prevails de- spite the current high ocean rates and the obvious handsome returns which are to be had from a ship. ' New shipping companies with an ag- gregate capitalization of at least $50,- 000,000 have been incorporated each month for the last few months. This, naturally, does not represent all the money which is being invested in Ameri- can shipping by any means as the older established companies have funds which they are making use of in wise exten- sions. The undistributed surplus of the old companies has undoubtedly amounted to a large sum, as profits from shipping have been tremendous since 1914. Wise ship operators may be depended upon not to permit their fleets to become behindhand with the times. The shipping board is striving to en- courage small purchasers by revising the mortgage law so that bankers will more readily lend money on such vessels as are purchased. There are two schools of thought in regard to the new mort- gage scheme of the shipping board. On one hand it is contended that skillfully operated shipping corporations will not find it difficult to obtain loans from in- vestors when loans are necessary and that the old condition should continue. They insist that if the mortgage plan is drafted into the law the problem of owning ships will be taken largely out of the hands of the operating companies and made a bankers' matter. But not all the people who would engage in ship operation are able at the outset to float a company of sufficient capital to permit the purchase of an adequate fleet. Much of their capital subscription must be taken up with ex- ecutive and agency office expenses, over- head, the procurement of terminals and similar expenses. These are the people who will benefit the most proportionately from a revision of the mortgage statutes and if their desires prevail the posses- sion of merchant fleets would be dis-