Mr. Fixit

In Reno a wife may get rid of one husband and acquire another the same day, but industries seldom undergo such swift vicissitudes. For them the process of losing one meal ticket and acquiring another is generally a matter of years. Not so the U. S. shipping industry. Last week, after only 75 days of argument, it underwent the equivalent of a Reno divorce and remarriage, with a disconcerting reduction of alimony.

Celebrated with the launching of 2,300 hastily built Wartime ships, the marriage of the U. S. merchant marine and the U. S. Treasury has, for 20 years, been going from bad to worse. During all that time the bride did little but run up bills. For a number of years she has been going through the pockets of the Treasury for $25,000,000 to $30,000,000 a year in mail subsidies and steadily getting more down at the heel. Today 90% of U. S. merchant ships are over 15 years old and few are able to travel as much as 12 knots. Aside from oil tankers not one seagoing merchant vessel was built in the U. S. last year, and no general cargo type ship in 15 years.

Year ago a disgusted Congress abolished the old Shipping Board and created a new U. S. Maritime Commission to wipe the slate clean and start afresh within one year. In the autumn, President Roosevelt appointed a temporary commission of two superannuated admirals and a man from the Treasury Department, but not immediately could he get the man he really wanted to do the job. After his brilliant performance launching SEC, a lot of people with big business headaches wanted Joseph Patrick Kennedy to be their Mr. Fixit. Paramount Pictures, Inc. paid him $50,000 for a drastic survey report. William Randolph Hearst got him to look over his jumbled publishing empire (see p. 26). Not until this spring did Franklin Roosevelt persuade his rusty-haired friend again to give up his private affairs, say goodby to his wife and nine children in Bronxville, N. Y. and report for public service in Washington. When he gathered his commission,* the personnel of the old Shipping Board, and a few trusted aides who had been with him in SEC, and set to work, only 75 days remained before the deadline set by Congress for expiration of the old Shipping Board setup of the U. S. merchant marine.

Joe Kennedy's job included: 1) canceling the old mail subsidies and settling up between the Government and some 40 shipping lines; 2) figuring out a new type of direct subsidy on a businesslike basis and getting the shipping lines to make new contracts. The first required tireless negotiation of claims and counterclaims. The second required Mr. Kennedy to figure out what shipping routes were necessary and reasonably economic to operate so as to be worth subsidizing, and to arrange for the building of enough up-to-date ships by the operators so that they will have a chance to compete successfully for trade on those routes. All this had to be done under an awkwardly framed law, a law so imperfect that many .people believed it unworkable.

Since mid-April Mr. Kennedy has worked more 16-hr. than 8-hr. days, more seven-day than six-day weeks. Last week he made his deadline, not with all loose ends tucked neatly away, but with the most pressing part of his task under control. First he had arrived at final settlements with 23 companies holding 32 of 43 mail contracts. These companies would have had $52,000,000 in mail subsidies due them if their contracts had run to completion. They also had miscellaneous claims of $21,000,000 against the Government. He settled the lot for $750,000 net, after settlement of counterclaims by the Government. In accomplishing this feat he had the aid of a gun sticking into the solar plexus of the shipping industry. They could have refused settlement and sued the Government but if Mr. Kennedy did not give them a new subsidy most of them would probably soon be out of business and unless a line is prepared to make a show of earning its keep with reasonable aid, Mr. Kennedy was determined to cut it off the Government payroll. With only five lines settlements had not been reached. Three of these are important: the Munson Steamship Corp., with which settlement was delayed because the com-pany is in reorganization under the Bankruptcy Act; the Dollar Steamship Lines where settlement was delayed pending the rounding up of more data; and United Fruit Co.

Then Chairman Kennedy proceeded to make new subsidy contracts with 16 lines covering 22 ocean mail routes. These contracts run for only six months, to see how they will work out. The total six-month subsidy is $4,600,000, calculated on the basis of the difference between U. S. and foreign costs of operation. In addition operators will be paid by the pound for carrying mail at ordinary rates, which will yield them about $488,000 additional. Since they would have received $8,059,000 for the same period under the old mail subsidies the Government will have a saving of $3,000,000 in six months on these 16 companies. Any earnings the lines may have over 12% on invested capital will go to the Government until the subsidies are paid back.

From the long-range standpoint, this last was the most important of Joe Kennedy's maritime achievements. Last month he announced: "We are finding out which companies are in a position to attract the necessary private capital to cooperate in building ships. And we are going to be pretty sure they are able to go ahead with new ships before they get any operating assistance. We are through giving operating subsidies to ships so out of date that they can't possibly compete with modern foreign bottoms."

*Rear Admiral Henry Ariosto Wiley, U. S. N. retired (head of the temporary commission); Thomas Mullen Woodward, onetime vice president of the Shipping Board; Rear Admiral Emory Scott Land, chief of the Navy's Bureau of Construction & Repair; ex-Congressman Edward Carleton Moran Jr. of Maine.

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