During the 19 years of operation under the agreements we had always acted on the assumption that the agreements were never intended to apply to American-flag ships. The agreement of 1921, executed a year and a half after these transactions took place, confirms the position we had taken. Section 1 reads as follows: "1. As from the date hereof the principal agreements shall be read and construed as if there were excluded therefrom any and all vessels documented under the laws of the United States of America to the end that the principal agreements shall not affect or apply to the ships under the flag of the United States of America which are at any time operated by the parties hereto of the second part or by any company under their control which is not a British company." This agreement not only excludes the operation of such ships from the provisions of the original agreement, but also leaves us entirely free to construct or otherwise acquire any amount of American-flag tonnage which we deem desirable, irrespective of what amount of foreign-flag tonnage we may acquire. The ex-German ships, if purchased, would have been placed in direct competition with the ships of all nations. We acted independently, without consultation with the British Government or any of its agencies, being governed solely by the action of our directors in New York. It has been suggested that the American Government should not encourage our desire to develop under the American flag, because it is claimed that our financial interests in British shipping is such that we could not work sincerely to promote the bests interests of the American flag. The conclusive answer to this suggestion is that we offered to pay $28,500,000 for the purchase of the ex-German tonnage, to recondition it at a great expense, which exceeded the amount of the bid, and to retain it under the American flag. Surely we should not have been willing to risk this amount of money unless the company had determined upon a bona fide development under our own flag. Our investment in these ships would have been so large that we would have had to maintain the fleet in the best possible condition as first-class passenger carriers, and make the necessary expenditures for repairs and replacements in order to keep abreast of the times with the developments of our competitors. Such an investment in American-flag tonnage would have been entirely inconsistent with the idea of control or domination of the company by interests opposed to the development of American shipping. Concluding remarks on American merchant marine.-We believe that the United States should have a merchant marine composed of proper types of steamers employed in foreign trades of the world for the distribution of its raw material and manufactures, and on this point I do not think there is any disagreement. The only question is of method. I think the people of the country have been impatient in demanding an immediate solution and accomplishment of a problem the difficulty and size of which is not appreciated. The shipping business is a very old business and its principles are not the subject of over night change. Following sound practices will bring results in this country as it has in others. The board is wisely surrounding itself with men who are familiar with the best practices of the shipping world. I think a solution will be found, but feel that the public must first recognize the difficulties of the present situation. The Government fleet is composed of ex-German passenger tonnage found in our ports and a large number of cargo boats, some of which were designed and constructed hastily and entirely for war purposes. There are also a few useful combined cargo and passenger steamers. If, prior to the war, a committee of the most optimistic experts had been asked to plan a commercial fleet for the United States, they would probably not have considered constructing over 5,000,000 tons of shipping, to be delivered during 10 years. The steamers would have been designed for special trades and purposes, and as these steamers were delivered corporations for operation and management would have been created and financed, and inducements to them on moderate lines could have been made to enable them to absorb the fleet. In other countries there are soundly financed, well-organized steamship companies who have been operating steamers for years, with no Government competition, whereas here we have a very large amount of Government-owned tonnage, and only a few properly financed and organized steamship com pjanies. The heart of the situation lies in the encouragement of private companies who have their capital and a risk in the business. Before the steamers can be liberally sold steamship companies must be offered inducements which will enable them to finance and build up their organizations and gradually secure trades. They must be freed from the blighting effect of Government competition. It is impossible to create steamship companies to buy this fleet except by first nursing them, helping them to finance and making them secure in their trades. This is a business problem. It can only be worked out on business lines. People from purely patriotic motives will not invest money in ships whose earning power is not productive of a fair return. Capital is working for one thing and that is profit. When we make our American-flag ships attractive for capital, then capital will go into the American merchant marine. If the American steamship companies can obtain such a measure of financial support from the Government as will enable them to equalize the difference between the cost of operation under the American flag and under foreign flags, then they can be properly financed and efficiently organized; and if this is done I see no reason why they can not operate American steamers successfully in competition with their foreign competitors. The amount that would be necessary for such equalization would be far less than the Government is now paying for losses in the operation of the fleet. Territorial distribution of International Mercantile Marine Co. stock as of August 1, 1921. Territorial distribution of International Mercantile Marine Co. stock as of August 1, 1921-Continued. Directors of the International Mercantile Co. for 1921: George J. Baldwin, Harry Bronner, P. A. S. Franklin, Donald G. Geddes, Thomas B. McAdams, J. P. Morgan, John M. Perry, John W. Platten, Charles H. Sabin, Frederic W. Scott, Charles Steele, Charles A. Stone, Frank A. Vanderlip. [Appendix D.] An agreement, made the 1st day of August, 1903, between the commissioners for executing the office of Lord High Admiral of the United Kingdom of Great Britain and Ireland and the board of trade (for and on behalf of His Majesty's Government), of the first part; the International Mercantile Marine Co. (formerly known as the International Navigation Co.), being a corporation incorporated and registered under the laws of the State of New Jersey, in the United States of America, which company is hereinafter re ferred to as "the American company," of the second part; and the Oceanic Steam Navigation Co. (Ltd.), Frederick Leyland & Co. (1900) (Ltd.), the British & North Atlantic Steam Navigation Co. (Ltd.), the Mississippi & Dominion Steamship Co. Ltd.), the Atlant'e Transport Co. (Ltd.), and the International Navigation Co. (Ltd.), of the third part. Whereas the party of the second part owns a controlling interest in the shares of the International Navigation Co. (Ltd.), which owns a majority of the shares of the other companies parties of the third part; and Whereas the term "the association," hereinafter used, means the parties hereto of the second and third parts, and also includes any other company, corporate or unincorporate partnership body or person whether British, American, or other foreign which by any arrangement is admitted to or brought under the control of the association or any of its constituent parts for the time being; and Whereas the parties hereto of the third part are hereinafter referred to as "the British companies included in the association"; and Whereas in the month of September, 1902, an agreement substantially to the effect of the provisions hereinafter contained was negotiated and made by and between His Majesty's Government and the American company, acting on behalf of the association; and Whereas it is considered desirable that such agreement, as last aforesaid, shall be embodied in a formal instrument to be executed not only by the American company but also by the British companies included in the association: Now, these presents witness That in consideration of the stipulations hereinafter contained on the part of the American company and the British companies, included in the association, the parties of the first part hereby undertake as follows: 1. The British companies included in the association shall so long as the stipulations on their part and on the part of the American company, hereinafter contained, are duly observed continue to be treated as heretofore on the same footing of general equality with other British companies in respect of any services, naval, military, or postal, to which His Majesty's Government may desire to have rendered by the British mercantile marine: Provided, That nothing in this agreement contained shall extend to vessels of uncommercial speed, which His Majesty's Government may specially require to be constructed and which are primarily designed for service in time of war. And these presents also witness that in consideration of the undertaking hereinbefore contained on the part of the parties hereto of the first part the American company and the British companies included in the Association hereby agree as follows: 2. The British companies included in the association shall be and continue to be British companies qualified to own British ships and a majority at least of their directors shall be British subjects.. 3. No British ship in the association nor any ship which may hereafter be built or otherwise acquired for any British company included in the association shall be transferred to a foreign registry (without the written consent of the president of the board of trade, which shall not be unreasonably withheld), nor be nor remain upon a foreign registry. Nothing shall be otherwise done whereby any such ship would lose its British registry or its right to fly the British flag. 4. British ships in the association and ships that may hereafter be built or otherwise acquired for any British company included in the association shall be officered by British subjects, and as regards their crews shall carry the same proportional number of British sailors of all classes as His Majesty's Government may prescribe or arrange for in the case of any other British line engaged in the same trades. 5. Subject to the existing agreement between the Admiralty and the Oceanic Steam Navigation Co. (Ltd.), and without prejudice to the provisions therein contained, the American company and any British company included in the association shall sell or let on hire at any time during the continuance of this agreement to the Admiralty, when required so to do by the Admiralty, any British ship in the association and any ship hereafter to be built or otherwise acquired for any British company included in the association which the Admiralty may from time to time select. The terms of purchase or hire if not otherwise agreed on shall be similar to those contained in the existing agreement aforesaid. 6. At least a moiety of the tonnage built and at least a moiety of the tonnage otherwise acquired for the association in each successive period of three years (commencing from the date of this agreement), including a reasonable proportion of the faster classes of vessels, shall be built or acquired, as the case may be, for British companies included in the association and shall be registered as British ships. There shall not be reckoned in ascertaining the moiety of the tonnage so built or otherwise acquired (a) vessels of the exceptional class referred to in article 1, which may be constructed by special arrangement with the Government of the United States of America; (b) any vessels not already in the association purchased for the association from owners other than British subjects or American citizens or subjects or companies or bodies subject to a British or American jurisdiction, provided such last-mentioned vessels are existing ships which have been running for at least two years prior to the contract for purchase and have not been built or acquired directly or indirectly for the association. 7. If at any time hereafter any British company (not being a party hereto) or any British partnership, body, or person shall be admitted to or brought under the control of the association or any of its constituent parts for the time being, 98339-22-P then and in every such case subject and without prejudice to any agreement then existing between such company, partnership, body, or person and His Majesty's Government, and subject and without prejudice to any agreement which may be made in view of such admission or inclusion between the American company or other person or body acting for the association, on the one hand, and His Majesty's Government, on the other hand, all the provisions of these presents shall inure for the benefit of and bind such company, partnership, body, or person, as the case may be, in like manner as if such company, partnership, body, or person had been a party hereto of the third part and had been comprised in the expression "the British companies included in the association" as used in this agreement, and except with the consent of His Majesty's Government no such British company, partnership, body, or person as aforesaid shall be admitted to or brought under the control of the association or any of its constituent parts for the time being otherwise than upon the terms specified in this clause. 8. If at any time hereafter during the continuance of this agreement any other company, whether corporate or unincorporate, partnership, body, or person. whether British, American, or other foreign, shall be admitted to or brought under the control of the association or any of its constituent parts for the time being the association shall give notice thereof to His Majesty's Government and shall furnish all such particulars with regard to terms, parties, or otherwise as the Government may reasonably require. 9. The American company and the British companies included in the association and any British company, partnership, body, or person hereafter admitted to or brought under the control of the association or any of its constituent parts for the time being will forthwith and from time to time do and cause to be done all such further acts and execute or cause to be executed all such further documents, and take all such steps as may be necessary to give full legal and binding effect to this agreement. And these presents lastly witness that it is hereby mutually agreed as follows: 10. This agreement shall have effect for 20 years from the 27th of September, 1902, and shall continue in force thereafter subject to a notice of five years on either side (which may be given during the continuance of this agreement i provided that His Majesty's Government shall have the right to terminate this agreement at any time if the association pursue a policy injurious to the interests of the British mercantile marine or of British trade. 11. This agreement shall be construed and take effect as a contract made in England and in accordance with the law of England. The American company hereby irrevocably appoints the chairman for the time being of the British committee of the association or if there be no such chairman then each and every British company in the association to be the agent or agents in England of the American company for the purpose of accepting service on behalf of the American company of any process, notice, or other document in respect of any matter arising out of this agreement and service of any such process, notice, or document on such chairman or company as aforesaid shall be deemed to be good service on the American company. Any notice or document sent by registered post addressed to the American company at No. 22 Old Broad Street, London, or to the registered office of any British company in the association shall also be deemed to have been duly served on the American company. 12. In case of any difference as to the intent and meaning of this agreement or in case of any dispute arising out of this agreement the same shall be referred to the Lord High Chancellor of Great Britain for the time being, whose decision whether on law or fact shall be final. As witness the hands and seals of two of the before-mentioned commissioners and the seal of the board of trade parties hereto of the first part and the corporate seals of the parties hereto of the second and third parts. The seal of the International Mercantile Marine Co. was hereunto affixed in the presence of— C. E. DAWKINS, Director. The common seal of the Oceanic Steam Navigation Co. (Ltd.) was affixed in the presence of— J. BRUCE ISMAY, Director. |