ere with the Inman Line which subsequently was purf. Agerian interests and became the nucleus of the famous I. 1. : puents from that point to the turn of the century are "pward and downware, of the various postal rates and ʼn have no partien'ar bearing on this question. But it i be 11 teresting to have a brief statement of the 1903 is the eontract that has been read into the at on of the International Mercantile Marine of New noon at i per! aps the fundamental reason contract well, the Cunard interests, which went into *, } ];a. TIM M. wis a combination which was Mr. J. P. Morgan, Mr. Bernard N. Baker, and Mr. Clemim, of the American Line. The company absorbed 1:at sport Co, wd the American, Red Star, Leyland, and White Star Lines, man. Were all of t: em British I nes? rap Not the American Line. Both the North German • Han borg American Lines were threatened with ab con b ne but obtained, instead, a working agreeི་ལ་ I M. M. agreed not to call at Germ in ports withfrom the German companies. In return, the German fosepp atti e cops anat hi, myr te wardroagit mers; also the compuntes agreed to pay the I. M. M. 25 ir; lus whove 6 percent rempred for dividers to the Gern *1, comminges; the I. M. M agreed to pay - tử stii Tean red to make up a as on the German companies, the Bush Governme;t to keep 1 itan età riflets unir Bitish nationality 4.1. of French rozstry. leng leg 'v subsized by the · Pat I dealing wit tre I, Te U brat I. Adoir ilty provisers, the Conard 1⁄4 two Veseys of 24 tổ 25krot sɔHE 1ae ord. treti ators at proved by t¦» Adm ralty; (2) the red the right to pincha é or li re t'use or ars co utapy as part of an A**** Ian to z veľ יד ་ t * ཝཱ ity Warchons for Adm. ply eqi, tert; (f) f y named not to elaiter or to hire any vessel, except to the G. 17t, with t 7 das written rote to the Govern ment; (7) all officers and 75 percent of the crew were to be British subjects; all deck officers and not less than half of the crews of the three principal vessels in service were to be naval reservists. Failure to fulfill this provision carried a penalty of 60 pounds per head for every person below this scale, to be deducted from the annual sum of 28,000 pounds due the company under the agreement with the Admiralty dated October 24, 1902; (8) the company engaged not to sell any vessel of 17 knots or above. In return for these considerations, the Admiralty agreed to pay the company £150,000 annually, equivalent to $730,000; £75,000 annually upon entry of the first vessel and £75,000 annually upon entry of the second vessel into service. There was to be advanced to the company as a loan the sum of £2.600,000, equivalent to $12,653,000, with which to build the ships. This constituted up to that time the only instance of a direct public loan being granted to a British shipping company by the British Government. Mr. MANSFIELD. When was this, please? Mr. SAUGSTAD. This was in 1903. The loan was secured by a mortgage upon the assets of the company. Interest charges were at a rate of 234 percent per annum and interest was to begin on one-half of the total amount when the first vessel entered the service, irrespective of how and when the loan was advanced, and one-half upon entry of the second vessel into service, thus providing no interest charge on any sums advanced during the period of construction. The loan was repayable in 20 annual installments beginning 1 year after entry into service of the second ship. The company was to issue one share of stock value at £20 to the Government. PART II. POSTAL SERVICES Postal-service requirements were to comprise weekly sailings on Saturdays from Liverpool under a fixed annual payment of £68,000, equivalent to $330,900. As previously outlined, 100 measurement tons, which is equivalent to 4,000 cubic feet, of parcel-post matter were to be carried free; any excess over this amount was to be paid for at the rate of 26 shillings, 3 pence, or $6.39 per 40 cubic-feet measurement space for mail. PART III. GENERAL PROVISIONS Part III of the contract contained various general understandings. The fleet considered as included in the agreement consisted of 17 vessels of 110,782 tons at an agreed-upon value as of September 29, 1902, of £1,990,550, or $9,687,000. In case of purchase of any vessel by the Admiralty, the purchase price was to be the value of the vessel on the date of notice of intention to purchase, plus 10 percent. Rights to hire the vessels were governed by a schedule which provided for a rate per gross ton per month according to the speed of the ships. The articles of association of the Cunard Co. were so altered as to comply with the requirements of guarantee of British nationality and protection of the equity of the Government. I quote from the contract: It is to be regarded as a cardinal principle of the company that it is to be and remain under British control. k-haps the most interesting provision under the contract was the of speed. The Admiralty laid down the proposition that rest be no compromise with speed. The ships were required Take 24 knots in moderate weather. If they made only 231 the payment was to be reduced by a deduction from the Aralty subsidy of £150,000, I Aralty had previously appointed a committee on merrasers to investigate and report upon technical matters. Butter reported in December 1902 substantially as follows: it early all large vessels of high speed were structurally strong to carry and fight with 4.7-inch guns; that they were sub- up to existing Admiralty standards; that they could be with steering gear below the water line without difficulty and *te of between £500 to £1,000 per ship per annum, includx of first cost, depreciation, and upkeep. The principle arsal Admiralty payment was adopted, and the payment to the male on the basis of a speed-cost scale worked out of 21 to 25 knots, according to a rather lengthy schedule which trert in the record at this time. But, according to that scale, stimated a 25-krot ship would cost nearly 3 times as much stot ship; would require nearly 3 times the power and 16 t.e of a 20-knot ship. rt of the contract is a matter of history. As we all know, atrala was sank during the war and the Mauritania carried rom the date of her entry into service until just a matter of a ats all I have to say on the Cunard contract. ~CHAILMAN. The postal subvention was generally regarded as et to amortize the loan to the Government, was it not! SAUGSTAD. I would say that the Admiralty subvention of ie CHAIRMAN, Yes; I should have said the Admiralty subMr. Saugstad. Which was really intended, in the reports of the to cover the extra cost of the high speed the ships had to mainIt is not necessary for the record to insert the actual workt of that schedule, but we have it if it is desired, showing how d out year by year. are there any questions on the Cunard or any further ques the line services of Great Britain! M-. MANSFIELD. It seems that they regarded speed as the most rint feature, did they not! SAUGSTAD. No question about it. The crux of the Admiralty t in the entire contract was that of maintenance of high speed. is, the British Admiralty had declared that they had no ay particular interest in mercantile vesels for convertible -r purposes that were incapable of making 22 knots under M. MANSHIHID. Now, as I understand from Mr. Haag, our merharine in point of speed stands at the bottom of the list! SAUGSTAD. He so testified; yes, sir. M: WALLGREN. What was the history of those contracts; were filed f Mr. SAUGSTAD. Yes, sir; except the Lusitania was destroyed during the war. Mr. WALLGREN. I mean in the matter of repaying these loans? Mr. SAUGSTAD. Oh, yes, sir. The Cunard Co's. credit and financial standing was brought out in connection with the Cunard-White Star merger a year or so ago and as we proceed we will get to that merger and we will continue from that point, and probably that will answer your question. Mr. CULKIN. Are there any conclusions available as to the effect of this merger, in which the Morgan Co. participated, upon the development of the American shipping? Mr. SAUGSTAD. I know of no particular conclusions. Mr. CULKIN. I do not wish to put you on the spot, but are there any conclusions that may academically be drawn from it now? Mr. SAUGSTAD. I am sure I could not draw any academic conclusions on it. Mr. CULKIN. Or any other kind of conclusion? Mr. SAUGSTAD. Or any other kind of conclusion. Mr. CULKIN. You do not know whether it helped the development of the American merchant marine, or hurt it? Mr. SAUGSTAD. I am sure I could not say. Mr. CULKIN. It must have done one or the other. The CHAIRMAN. The witness, at the very beginning of his testimony, I think, said he was only qualified to present the facts. Mr. CULKIN. Well, Mr. Chairman, you and I both have had considerable experience with experts and, of course, if a man is an expert why you are entitled to opinions from him. But I am not going to press it, if the witness does not wish to express an opinion. The CHAIRMAN. Proceed, Mr. Saugstad. Mr. SAUGSTAD. If there are no further questions on the line operations of Great Britain, we will now proceed to the question that is current and which involves the first direct subsidies granted by the British Government to cargo ships. The CHAIRMAN. That is within recent years? In past years were not subsidies for the construction of ships granted when they commenced to build up their merchant marine? Mr. SAUGSTAD. I know of none prior to the Trade Facilities Acts. The status officially of the bill is not known to me. I know it had its third reading in the House on the 1st of February; I know or have been informed that it has had its third reading in the House of Lords which, in effect, makes it law, but such information comes through trade papers and is not official; yet I assume that that policy is now in effect. The CHAIRMAN. I really had reference to the ancient history of the British merchant marine, when contributions, as I recall, were made for ships and vessels in the early days of the merchant marine. Mr. SAUGSTAD. I think I can make you a statement on that. You mean under the Navigation Acts? The CHAIRMAN. I do not know about that; it seems to me it was along commencing with the time of King Alfred, and on down, that they contributed. I would not ask you to go back that far. At least, this is true, that they built up their merchant marine very inaterially by the adoption of the navigation laws in the time of Cromwell, did they not? V- SALGSTAD, Yes, sir. MAN. And which continued down to about 15497 atesian, Yes, sir. CARMAN, Hat, they reserved certain shipments with 8. AD, Yes, - r. CHHMAN. Which had a very material effect in building up པ་་ ant Larine of Great Britain throughout the world 12 the carrying trade from Holland, or the Netherlands, Satirin. The policy rested al o on another factor, which tran ng of personnel for ships at that t me, simply because at that time were potentially war vessels. If the chairman , I would be very glad to state for the record two or three “sion that sui ject. CHUALEMAN. All right. Mr. CURKIN. How proment did the wars with the Netherlands atto that! Was not that really the beginning of the subsidy? SAUGSTAD. Yes, sir. CUEKIN. That was when England first began to be a sea LGSTAD. Yes, sir. CUTKIN. And found out she had to be a sea power. M: SAUGSTAD, Yes, sir. The early consideration and a-loption of i-peastie navigation acts by Great Britain were due as much ་ peutical desire to use the merchant marine as a school for ze Laval personnel, as to economic reasons. Ing the seventeenth century all vessels still were potential war , carried armaments and were at all times liable to be drawn tary campaigns or in lividual encounters depending upon al events or upon conditions in the trades in which they were orated. It was, therefore, a matter of deep concern to the e-tabishment that this potential navy be manned, so far as le, by nationals, in order that the authority, discipline, and ret, e thus acquired might be more effective in emergencies, ht steam vessels were almost exclusively experimental warand while they naturally classed themselves apart from the al fleet, they brought their own problems in the matter of ng trained engineers. The demand for engineers soon became ater than the supply and the contemporary records are full of ontroversy between the commercial and naval establishments in r rivalty for experienced engineers for sea service, tay in that connection that we hal almost that situation ni years ago, when we started to build the railroads. Army rs were drawn in for the purpose of constructing railroads of hers were not available. - CLKIN. They laid out all of the transcontinental real! SAUGSTAD. Yes, sir; some of them at least. One factor which a the determination on the carnage of the mails in Governtar-ips of both Great Britain and France was the early év of the sea going engineers by ravies, As a result of considerations, the development of sea-going travel has been Iv issolated along with the development of the Briti à comral fleet, the increase of the British steam power driven com 1 |