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Biiilns: Bid for Ships Defendaa Shipping Board in Brief Filed Before District of Columbia Court Insists No Favor- itism Was Shown re Says Dollar Bid Will Conserve Government Interests shown in accepting the bid of Stanley Dollar and his associates for the transpacific President ships is contained in a lengthy brief filed in the District of Columbia supreme court by the United States shipping board April 17, in answer to the bill of complaint of the Pacific Mail Steamship Co., which is seeking to restrain the consummation of the sale. The board as defendant in the suit de- clares that a comparison of the bid sub- mitted by the Dollar Steamship line, in strict accordance with the terms and conditions .of sale laid down by the board after investigation and negotiations extending over sev- B Fives denial, that favoritism was security increases in value, so that no sinking fund to cover obsolescence and depreciation is necessary; whereas under the plaintiff's proposal, no provision for a sinking fund for obsolescence and de- preciation is provided until after all in- terest has been paid and after 6 per cent dividends have been declared on _ the common :stock, and the payment of the deferred purchase money is postponed 15 years so that although the ships would be depreciating in value, the debt would remain constant. The board admits that the Pacific Mail bid followed the plan suggested by the advisory committee appointed by Presi- dent Coolidge to study the shipping board the Dollar Steamship Co. was reached only after a full, complete, careful, and deliberate consideration of all the factors required by law to be considered by the board; that the competitive bidding for said ships and line was fairly con- ducted, in strict compliance with law, and that the sale to the Dollar Steamship line of said ships and line, at the price and upon the terms and conditions agreed to by the successful bidder, will be to the financial benefit of the United States and to the people and tax-payers there- of. “At the time the five shipping board vessels were allocated to the Pacific Mail Steamship Co., under the MO-4 contract, the answer eral weeks, with the proposal submitted by the Pacific Mail, shows many reasons why the Dollar bid was preferable. It cites some of these reasons as follows: “The Dollar Steam- ship line secures the operation of the ships on the trade route for a_ period of five years, by providing for the forfeiture of the ships to the seller in the event such op- eration is not continued, and also by a sur- ety bond in the penal sum of one million dollars, reduced in the last vear to $400,- 000; whereas the proposal of plaintiff gives no security and no guaranty by it of any operation over any period, but gives a promise of operation by the new company, subject to the condition and qualifications that such promise only shall be binding until the deferred pur- chase money and interest thereon is paid. “The Dollar Steamship line’s bid pro- vides for direct operation by the pur- chaser; whereas the plaintiff’s proposal provides ownership to be in the name of the new company, but the operation to be carried on by the plaintiff, and since the plaintiff is to control the stock of the new company, it is reasonable to presume that the operating agree- ment will be to the advantage of the plaintiff to the disadvantage of the holder of the title to the ships. “Under the Dollar Steamship _line’s bid the principal of the deferred pur- chase money is reduced 5 per cent every year, and the debt diminishes as the ‘ 1 Scat eee Meiciacaigt® ee is inichescelnbcieieiehebelninieenianoislaleebeinicalobelobetenchclel At ONE OF THE PRESIDENT SHIPS ENTERING THE GOLDEN AND FOUR SISTER SHIPS ARE THE PRIZES FOR WHICH TWO STEAM- ish SHIP LINES ARE CONTENDING situation and merchant marine needs, but it holds that the plan “was suggested by said committee solely as a basis for new legislation by congress, with the knowledge that it could not be carried into effect under existing law.” Further discussion on the acceptance of the Dollar bid is set forth as follows: “The answering defendants expressly deny the averment in paragraph 7 of the bill of complaint that, if said sale is consum- mated by the board, such action will be unlawful, arbitrary, and unfair; and expressly deny plaintiff's averment that such sale will result in great and ir- reparable loss and injury to the United States and to the people and taxpayers thereof; and expressly deny that, if such sale is consummated, it will result in a gross waste of the property of the United States and be a serious sacrifice of the national interest. On the contrary, the answering defendants allege that the consummation of said sale is lawful and within the discretion of the board; that the decision to award the sale of the said ships and California-Orient Line to 176 charges, it had lost much of its good will because of the move made in 1915 to withdraw its Ori- ental service. In that’. year,” it 4s stated, the Pacific Mail company sold a number of its ships engaged in the Oriental trade to the International. Mer- cantile Marine Co., GATE—THIS SHIP controlled by Brit-— interest, and other vessels to Jap- anese and Chinese interests,” charged the defendants. In defending its position the board continued: “It is denied that the appraised valuation placed upon these five ships by an appraisal committee organized un- der authority of the board was two and a half million for each of said vessels in the world’s market, but the appraised valuation was fixed by said committee at $1,500,000 for each vessel as of July 1, 1923, subject to depreciation thereafter, and such appraisal does not now directly represent the price that can be obtained for such vessels where the sale there- of is coupled with the condition that they shall be maintained in a certain specified service upon the Pacific Coast, for the reason that such restrictions limit the number of bidders who are willing to take the risk of such a business venture and limit the market in which the ships may be sold.” ; The injunction to restrain the shipping board from making the sale to Dollar was vacated. It is not known whether an appeal will be taken by the Pacific Mail Co. E E