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in the cost of shipbuilding abroad and here is so great that it is not offset by the construction loans and other aid given by the government it might be well to check up to see whether this is correct or not. For if itis correct there must be something radically wrong in the manage- ment of our shipyards for all the difference in wages which prevail here and in Europe. This returned shipping man is reported to have said that considering a 10,000-ton passen- ger and freight ship, one of the largest and best known foreign shipyards offered to build two ships to these specifications for 70 per cent less than the cost would be in the United States. This is obviously a grand gesture. It is diffi- cult to believe that an American business man would be so credulous. The simplest calcula- tion, as pointed out by H. G. Smith of the Na- tional Council of American Shipbuilders, will prove its absurdity. It means that for a ves- sel costing $1,700,000 in the United States, the foreign shipbuilder would be satisfied with 70 per cent of this amount less than the American figure, or $510,000. It may be, as the head of the National Coun- cil of American Shipbuilders points out, that tentative figures of a ship costing $1,000,000 abroad would cost $1,700,000 in the United States or that for these preliminary figures the American ship would cost 70 per cent more than the foreign built ship. This is not the whole story, however. It is certain, in order to make any such favorable comparison that many of the standards and ideas of the foreign shipbuilder would have to be reluctantly ac- cepted by the American owner and that in the end he would not have a tool as well fitted to his purposes as he would have in the more ex- pensive American ship. Since competition in shipbuilding in the United States is keen it must be accepted that the lowest bid received represents a fair price based on actual cost. Higher wages and higher salaries for technical and supervising staffs must be met just as they are in all other in- dustries. The investment in plant and ma- chinery for a first class American shipyard is undoubtedly greater than for a similar ship- yard abroad. Man for man, the American shipyard worker will hold his own with any foreign worker. By all means, the American shipowner should have the lowest reasonable price for new ships, but it must be recognized that in the building of ships as well as in operating them, there is and there must continue to be a sub- stantial difference as compared with foreign costs and that the aid given by the government reasonably makes up for this difference. In- terest charges on three-quarters of $1,700,000 at 3% per cent, we will say, is 41,437.50. Tak- ing the interest rate of the first 25 per cent which the shipowner has to find on his own ac- 52 count at 7 per cent, the aggregate capita] charges would be 71,187.50, whereas at 7 per cent for $1,000,000, taken to be the price of a similar ship abroad, the foreign shipowner’s capital charges would be $70,000 a year. Since these figures are based on a liberal dif- ference in cost for supposedly equally suitable vessels, it is difficult to see why the aid given in the construction loans and in mail contracts should not be quite ample to place the Ameri- can shipowner on a complete parity with his foreign rival. What we do need is to extend the benefits of the Jones-White law to encour- age the building of fast modern freight ships for use in foreign services not already covered by present mail contracts and those under con- sideration. Scrapping Old Vessels by Agreement N THIS modern day we have learned to be ruthless in regard to old and obsolete tools. Remarkable stories are told where machines have sometimes become obsolete between the time of purchase order and final installation in shop or factory. The idea seems to be that if there is a better tool it is economically un-. sound to continue the old even though but re- cently acquired. When at a time like this the entire world is suffering from a tremendous excess capacity of cargo and passenger space for the greatly re- duced demands it would seem to be a wise pol- icy to agree to scrap the older obsolete units. A recent report of the British board of trade’s committee on obsolete tonnage indicates that it would be both difficult and impracticable at this time to come to any agreement on scrap- ping old tonnage in order to aid the British shipbuilding industry. The committee’s conclusions were briefly: that it would be impossible to devise any scheme either for scrapping only or for scrap- ping combined with replacements that would secure financial support from the industries concerned that would be practicable to carry out and that would operate equitably between individuals. It is the committee’s opinion furthermore, that any scheme involving either replacement or restriction upon the shipown- er’s freedom of sale even if practicable, would not be in the national interest. Findings of the committee point to the sen- Sitiveness of shipping to the revival of trade and that if the older tramp steamers were de- stroyed British companies would be deprived of their share of the rougher general cargo business. Statistics are quoted to show that British merchant ships compare well with ships of other nations in respect to age. Also that under the present system a natural balance is maintained in regard to obsolete tonnage. MARINE REview—August, 1931 | | |