Salvage

Last June Congress abrogated all 31 ocean mail contracts by which the U. S. Government had been subsidizing U. S. shipping at an annual cost of $20,000,000. Under the new Merchant Marine Act the Maritime Commission was empowered to provide "differential" subsidies for U. S. shipping to establish "competitive equality" in foreign trade. By last week eight U. S. shipping companies, having agreed to build 50 new ships in the next six years, had subsidy agreements with the Maritime Commission totalling about $10,000,000.

To companies engaged in foreign commerce, this arrangement meant calm seas ahead. But to lines in domestic coastwise trade it presaged disaster. Those that had mail subsidies lost them, got nothing in return. For those operating between Atlantic and Pacific ports, Panama Canal tolls ate heartily into whatever profit remained. For such companies the choice has been: 1) to transfer ships to foreign trade to be eligible for subsidies, or 2) to founder.

Month ago Panama Pacific gave up the ghost, withdrew its luxurious liners California, Virginia and Pennsylvania from coast-to-coast service. Last week the Maritime Commission consummated a smart deal. By wiping out about $10,000,000 of Panama Pacific's debt to the U. S.,* it got title to the three ships. Already operating 47 cargo ships, the Commission planned to use the new ones as the nucleus of a "luxury" passenger and commercial line to the east coast of South America, to vie with the eager efforts of Nazi and Fascist shipping to corner trade in Brazil, Uruguay and Argentina. Awaiting bids this week on the task of refurbishing the vessels with deck swimming pools, gay Lido decks, more spacious cabins and airconditioning, the Commission was even considering the ingratiating idea of changing the names of the ships to those of the three east coast countries they will visit, starting Sept 1.

*Contracted when the Shipping Board loaned Panama Pacific money to build the ships.

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