Barbados by way of Jamaica and Cuba to Mobile, with branch. services to Tampico and Vera Cruz and from Habana to New York and Halifax. The annual payment to the company was £240,000, equivalent to $1,168,000. Additional payments were to be made not to exceed £60,000 annually, if insurance rates rose to undue heights due to causes of a public character, if coal freights and insurance on coal rose to too great an extent. By way of explanation, I may say that in the early days British steamers were dependent for their homeward fuel requirements on fuel stations which were stocked by coal carried on the outward voyage or by the sailing fleet. The original mileage covered by the company in these services was 684,816 miles, which would result in an average subsidy rate of $1.70 per mile sailed. During the first year, the company sustained a loss of approximately £79,790, equivalent to $388,300, whereupon the Government permitted the operator to reduce the required mileage to 392,973 miles, by which the relative subsidy was increased to nearly $3 per mile. The net cost to the Government, as represented by the difference between the cost of the subsidy and the mail revenues accruing to the Government, amounted to about £180,000, equivalent to $876,000, during the first year of operation. By the time the first contract had expired, the economic forces which were to stimulate the immense expansion of the Royal Mail had begun to be effective. Trade increased to such an extent that the company soon declared dividends, which rose from 30 shillings ($7.30) per share in 1844 to £2 ($9.73) in 1848. The gold discovery in California and the consequent stimulation in both cargo and passenger movement to the Isthmus of Panama were factors favorable to the Royal Mail Co. Again, the investigation of routes to Australia resulted in the House of Commons recommending the Panama route in 1849. This, in addition to the Panama railroad, which was then projected in the United States, placed the Royal Mail Co. in a highly strategic position insofar as its future fortunes were concerned. The company advanced £25,480, equivalent to $124,000, toward the building of the Panama railroad. In 1852, the contract was renewed for £270,000, equivalent to $1,314,000, for a mileage of 547,296 miles and a speed requirement of 9 knots. In 1864, the contract was renewed and subsidy reduced to £172,914, equivalent to $841,485, and speed was increased to 1012 knots. In 1868 came the change from paddle-wheel to screw-propeller propulsion. The company asked an extension of its contract to 1874, which the Government granted, and for which the Government was to receive one-half of all profits above 8 percent, being by way of guarantee that the subsidies should not develop unreasonable profits. By 1874, contract services had come under direct supervision of the Postmaster General and public tenders were called for under published specifications, due to the Atlantic services which had by this time developed to a point where competitive bidding would result in lowered expenditures for mail services. The Royal Mail Co. bid in the service for £84,750, or equivalent to $412,435. The final contract between the British Government and the Royal Mail Steam Packet Co. was that of November 4, 1911, under which the company was to receive £62,900, equivalent to $306,100, less receipts from sea postage. The contract of November 4, 1911, was ative retroactive from January 18, 1911, to August 9, 1917, and was to er d concurrently with other contracts between the company a; Grown agents for the colomes. In 1917, the contracts were trewed, partly because of war conditions which interfered angerations, but mainly because the company took the position ebligations imposed on it by the contract involved trouble i. for which the subsidy was inadequate compensation. I aquisition of the White Star Line, the Royal Mail ypted to main tain branch services from New York to ated to the West Indies, connecting with the White Star - at New York. ta brief sketch of the history of the Royal Mail, so far rvice operations were concerned. HAIRMAN. That is still in operation, is it not? SAUGSTAD, Well, you recall that 4 years ago the Royal Mail as a whole, got into difficulties and that the entire operation ; sed in liquidation, due to an apparent overexpansion of terests, and you will recall that 2 or 3 years before that hat hased the White Star Line from the I. M. M. of New CHAIRMAN. Are they still in liquidation, or in an operating AUGSTAD. I have not had time to keep up with the reorganif the Royal Mail. They have dual orginizations at present, iard, one of which is to deal entirely with the liquidation of the combination, and the other of which is to carry on oor operations they have. - CHIEMAN Do they operate the White Star Line now! CREEDMAN, Well, do you know whether there is any tie-up CHAIRMAN, Do you mean there is not, or that you do not UGSTAD. Well, 5t me put it this way- or 1, a summary of that a tion which shows the potion, i t» glad to sub-ait tlat for the record, or I can read it. → CHAIRMAN. I would be glad to have it subnatted for inserthe record. I was particularly interested in knowing what von of the I. M. M. was to the White Star Line at this Hey clam they sold their foreign connections, but I presume til have their equities, INTERNATIONAL MERCANTILE MARINE INJUNCTION PROOFEDINGS Mr. SAUGSTAD. The International Mercantile Marine Co. of New v, which sold the White Star Line to the Royal Mail Co. in 2ght an injunction in the Chancery Division of the United m, re-training the carrying into effect of the Cunard-White According to the judgment rendered in the early part of May 1934 motion of the plaintiff was based on the allegations, first, that the merger agreement was, in substance, one of the sale of the Oceanic Co.'s undertakings and assets (that being the formal name of the White Star Line), and that in the absence from the articles of association of an express power, the company cannot effect such a sale while it is a going concern; second, that even if it be competent for the company, in general meeting, to effect such a sale, it is beyond the powers of the board of directors to do so; third, that even if the agreement had been concluded within the powers of the board and the company, it is a transaction brought about by an improper exercise of the powers of the directors. The judgment stated that a plaintiff impeaching the conduct of a company's affairs upon the grounds enumerated must be a shareholder in the company, that the plaintiffs admittedly were not shareholders and that 4,958 out of 5,000 shares were registered in the names of the Midland Bank Executor & Trustee Co., Ltd., and the New York Trust Co. The terms of sale covered the whole of the share. capital, namely, 5,000 shares of 1,000 pounds each, for 7,000,000 pounds, on the following terms: Two million pounds cash on or before February 1, 1927; 1,250,000 pounds on or at purchaser's option on or before June 30, 1928; 1,250,000 pounds on or at purchaser's option on or before June 30, 1929; 2,500,000 pounds on or at purchaser's option on or before December 31, 1936. All unpaid amounts were to draw interest at 4 percent, and it was agreed that in case of default in payment of any installment of the purchase price or of the interest thereon, the trustees might, and upon the written request of the plaintiffs should, sell all the Oceanic shares and apply the net proceeds of such sale, first, in paying costs and expenses; second, in paying to the plaintiff's the balance of the purchase price and interest then due to them; and, third, in paying to the Royal Mail Co. the surplus, if any, of such proceeds. The decision stated that no default had been made and the power of sale had not become exercisable. The decision continued: An appreciation of these documents demonstrates that, so far from the plaintiffs being the only persons interested in the share capital of the Oceanic Co., they are not only not the holders of those shares, but they never can be. They are merely unpaid vendors who, so far, have received all they are as yet entitled to under the contract for sale: they have no lien or charge upon the shares and have agreed to their being vested in trustees upon trust until the power of sale conferred upon the trustees shall have become immediately exercisable to allow the purchasers to receive and enjoy all dividends, bonuses, and income to be declared or become payable in respect of the shares, and to exercise, in relation to the management, operation, and general business of the Oceanic Co., the voting rights conferred by the shares. The CHAIRMAN. Is the International Mercantile Marine acting as agents now for that company at all, do you know? Mr. SAUGSTAD. I do not know. The CHAIRMAN. Do you know what the British holdings of the International Mercantile Marine are now? Mr. SAUGSTAD. The British holdings? The CHAIRMAN. Yes. Mr. SAUGSTAD. I have no knowledge. The CHAIRMAN. You may proceed. SALGSTAD, Yesterday, Congressman Sirovich asked to have - the record the vessels and speed of the ships belonging P&O in the Far East service. Shall I read that into the - CHAIRMAN. I do not know that is necessary. You can just that t'as point. It was, in answer to an interrogatory, to be your remarks yesterday, and you can just insert it, unless wh to make an explanation. AUGSTAD. There is no explanation. I have only the notes ard would have to write it. · Charman, All right, then; go ahead. Mr SAUGSTAD. The size groups of the ships now in operation by P&O Co mclude 13 vessels at 15,000 to 17,000 gross tons; 3 at 200 gross tons, and 2 vessels at 222×4 tons. On the services they have five vessels of 13,000 tons. e speed group, their vessels are 2 at 21 knots; 4 at 18 knots; knots; 6 at 17 knots; 4 at 16 knots; 2 at 15 knots, and 1 at P. & O, Co, owns about 475,000 gross tons of vessels carried pany's books in 1933 at about £14,764,000, or an equivalent The company holds colonial and British Government isted in 1961 at £72202,000; in 1932, at £5,942,000, and in A org te pracipal sto kholders in this company are listed 12 e companies, 22 banks and investment trusts, besides various con pantes and individuals. e been informed that there was some confusion yesterday en in regard to my discussion with Congressman Sirovich of "ard Co -the historic aspects thereof. It seems an impress was created that I said the Cunard Co. received no aid from british Government at the time of its origin. I meant no aid in n to the contracts. I understood the Congressman to be 2 of loans or cash advances, or other financial aid. In view Cunard operations to this country, it might be well, if the itce so desires, to recite a brief history of that operation, in n to what was said yesterday. I @ CHAIRMAN. Proceed, CUNARD LINE M- SAUGSTAD, I want to correct an error. In yesterday's discus... I ad I thought Mr. Cunard was born in Philadelphia. The shows that the Cunard family lived in Philadelphia, but when Ited States declared their independence the Cunard family stesi to Halifax and there Mr. Cunard was born in the year CULKIN. Of what stock was he French? SAUGSTAD. I do not know. I am not familiar with the family first nul contract between Great Britain and the United as concluded between the British Admiralty and Mr. Samuel at 1 on Juny 4, 1839, through private negotiation. Specifications teriers had been prepared and invited, but the tenders were unacceptable and, consequently, rejected. The contract was made effective for 7 years at 60,000 pounds, equivalent to $292,000 annually. Certain space reservations for official passengers and freight were required and the passenger rates specified. In the contract he agreed to carry a naval officer, or an officer of the Postal Service, to supervise the fulfillment of the contract. In 1846 the contract was increased to 85,000 pounds annually. Plans then under way in the United States to promote the Collins and the Ocean Steam Navigation Cos., which would compete with the Cunard operations, caused Mr. Cunard to double the service and make weekly sailings between Liverpool and Halifax, and thence to New York and Boston alternately. Under the terms of his contract Mr. Cunard was entitled to a double amount of subsidy for a weekly service. The Admiralty, however, took the position that since he was the interested party in the development of weekly services with which to meet competition of the New York lines, the Government would agree only to doubling the original sum of the contract, namely, 60,000 pounds. Accordingly, a sum of 145,000 pounds, equivalent to $705,600, was granted for the weekly services. The practical effect of this competition was reduction by the Cunard Co. from 7 pounds ($34) to 70 shillings ($17.03) on freight rates in competition with the ship Great Western. In 1848 rates were reduced from 70 shillings to 50 shillings, about $12.17, in competition with the American ship The United States. Fine goods were taken by the Cunard Co. at 30 shillings ($7.30) per ton in competition with the City of Manchester. Furthermore, it might interest this committee to know that as an example of the virtual monopoly on the carriage of mail created by the British mail-steamer services, the Postmaster General of the United States on March 9, 1846, reported to the United States Senate that a letter weighing one-half ounce dispatched from Boston to Bremen by the Cunard Line was charged 423 cents, while an ordinary sized newspaper was charged 61 cents, and the Postmaster General felt that such rates would prohibit intercourse between the United States and the Continent. The next Cunard contracts of 1850 and 1853 were for a period of 10 years for weekly services between Liverpool and New York or Boston for an annual subsidy of 173,340 pounds, equivalent to $843.600. The report of the Committee on Contract Packets of 1853 stated that the rate of the subsidy payable was 11 shillings 41⁄2 pence ($2.77) per mile; that the average duration of the 54 voyages between Liverpool and New York for the period December 1851, to January 1853, had been 12 days 1 hour 14 minutes, and the average speed was 10% knots, and that the postal revenue of the line offset the contract so that the net cost to the Government was 61,642 pounds, or $300.000. British postmasters general pointed to competitive conditions in the North Atlantic as inviting competitive bids and, in 1866, the then Postmaster General requested and was granted permission to serve notice of the termination of the Cunard contract upon expiration and to call for public bids for the conveyance of the trans-Atlantic mail. Subsequently the Cunard Line received about 73,000 pounds ($355,250), while other and varying amounts were paid to competitive lines, including a contract with the North German Lloyd Co. |