United States. Shipping Board.

Report of U.S. Shipping Board. Letter from the chairman of the Shipping Board transmitting in response to a Senate resolution of December 27, 1920, a report covering the transactions of the United States Shipping Board and the Emergency Fleet Corporation from its inception to February 28, 1921 .. online

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Online LibraryUnited States. Shipping BoardReport of U.S. Shipping Board. Letter from the chairman of the Shipping Board transmitting in response to a Senate resolution of December 27, 1920, a report covering the transactions of the United States Shipping Board and the Emergency Fleet Corporation from its inception to February 28, 1921 .. → online text (page 1 of 12)
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745
192.1




U.S. SHIPPING BOARD
Report



Wmi




fi7TH CONGRESSl QFTSTATP /DOCUMKNT

1st Session / bi^iNAlh. | No. :«



REPORT OF U. S. SHIPPING BOARD



LETTER

FROM

THE CHAIRMAN OF THE SHIPPING BOARD

TRANSMITTING

IN RESPONSE TO A SENATE RESOLUTION
OF DECEMBER 27, 1920, A REPORT COVER-
ING THE TRANSACTIONS OF THE UNITED
STATES SHIPPING BOARD AND THE EMER-
GENCY FLEET CORPORATION FROM ITS

INCEPTION TO FEBRUARY 28, 1921 A^




June 2, 1921. — Referred to the Committee on Commerce.
June 9, 1921. — Ordered to be printed.



WASHINGTON
GOVERNMENT PRINTING OFFICE

1921









LETTER OF TRANSMITTAL.



United States Shipping Board,

Washington, June 2, 1921.
The President of the Senate,

Washington, D. C.
Sir: I have the honor to transmit herewith a detailed reply to
Senate resolution 413, dated December 27, 1920, introduced by-
Senator Walter E. Edge, instructing the United States Shipping
Board to submit a report on moneys appropriated from September 7
1916, to November 30, 1920, on profits capital, number and descrip-
tion of vessels, s^^stem of accounting, contracts of operation, number
of employees, etc. This reply has been prepared and covers the
transactions of the United States Shipping Board and the Emer-
gency Fleet Corporation to February 28, 1921, which date is some-
what later than that required by the resolution.

A previous tentative reply to this resolution was submitted under
date of March 1, 1921, but did not fully cover the various inquiries
contained in the resolution.
Respectfully,

W. S. Benson,

Chairman.



"1^

r



451665



REPORT OF THE UNITED STATES SHIPPING BOARD.

(la answer to Senate resolution No. 413. ]



United States Shipping Board and

United States Shipping Board
Emergency Fleet Corporation,

June 1, 1921.
To the President of the Senate

Washington, D. C.
Sir: Pursuant to directions of Senate resolution 413, we have pre-
pared and now render our detailed report in answer thereto. This
report is in addition to the report submitted you with our letter dated
March 1, 1921. (See p. 4432 of Congressional Record dated Mar.
2, 1921.)

2. The information given herein is in answer to points contained in
the resolution and the answers to such points are given in the same
order as points are set forth in the resolution.

3. We have prepared our entire report for the period "From incep-
tion to February 28, 1921," in place of "From September 7, 1916, to
November 30, 1920." This was done in order that a more recent
reflection of the activities of the organization could be had.

4. In the preparation of Exhibits A and B we have eliminated some
of the accounts, such as "Reserves," which are bookkeeping entries
and represent no actual values or indebtedness. While aepreciation
and insurance (the board carried its own insurance) relating to
operations of vessels are proper charges, they are omitted for the
reason that they might be confusing and not disclose the real situa-
tion, thus making the figures resulting therefrom useless for the pur-
pose for which the exhibits are prepared. Also we have used ship
construction expenditures applicable to March 31, 1921, inasmuch as
the information required to clearly answer points relating thereto
was not available at February 28, 1921.

5. W^ith the foregoing exceptions the data shown in the Exhibits A
and B represent the result of a compilation of the accounts as they
stood on the books February 28, 1921.

6. Point No. 1. — The total amount of moneys appropriated for,
and otherwise provided for, the United States Shipping Board and
Emergency Fleet Corporation, and the United States Shipping Board
as its successor, from September 7, 1916, to and including I^ovember
30, 1920.



6 EEPOET OF V. S. SHIPPIKG BOARD.

The answer to this point, with the exception that it covers the
period from "Inception to February 28, 1921," is as follows:

(l) Moneys appropriated for:

(a) United States Shipping Board —

(1) Permanent fund (act of Sept. 7,

1916). to purchase capital
stock of Emergency Fleet Cor-
poration $50, 000, 000. 00

(2) Salaries and expenses, 1917 (act

of Sept. 7. 1916) 100,000.00

(3) Salaries and expenses, 1918 (act

of June 12, 1917).. :■ - .•■.■ 342,500.00

(4) Investigation of foreign discrimi-

nation against vessels and ship-
pers of the United States (act of
June 12, 1917) 175,000.00

(5) Increase of compensation (act of

June 12. 1917) 4,633.71

(6) Salaries and expenses, 1919 (act

of July 1, 1918) 842,500.00

(7) Salaries and expenses, 1920 (act

of July 19. 1919) 772.986.00

(8) Salaries and expenses. 1921 (act

of Junes, 1920) 442,500.00

(9) Total moneys appropriated for

United States Shipping Board $52, 680, 119. 71

(6) United States Shipping Board Emergency Fleet Cor-
poration :

(1) Emergencv shipping fund —

Art of June 15. 1917 $405,000,000.00

Act of Oct. 6, 1917 635,000,000.00

Act of Julv 1 , 1918 1. 806, 701, 000. 00

Act of July 11, 1919 500, 000. 00

Act of July 19, 1919 356, 000, 000. 00

(2) Total moneys appropri-

ated for United State
Shipping Board Emer-
gency Fleet Corpora-
tion 3, 203, 201, 000. 00



(2) Total moneys appropriated for 3, 255, 881, 119. 71

(3) Moneys otherwise i)rovidi'(l for:

(u)' AllotnuMils hy Pn^sident of the United
Statcis to United States Shipping
Board:- -

(1) National security and defense

fund, 1918 (act of Apr. 17,

1917) $27, Oil, 682. 84

(2) National security and defense

fund. 1919 (act of July 1,

1918) 2, 500, 743. 43

(4) Total moneys otherwise provided for 29, 512, 426. 27

(5) Total moneys appropriated for and otherwise provided for 3, 285, 393, 545. 98

In addition to the foregoing, we quote in substance extracts from acta having to do
with appropriations.



EEPORT OF U. S. SHIPPING BOARD. 7

FISCAL YEAR 1921 — SUBSTANCE OF APPROPRIATION AS SHOWN IN PUBLIC.
DOCUMENT NO. 246.

Purposes of (ipprnpri'itions. — The expenses of the United States Shipping Board
Emergency Fleet Corporation during the fiscal year ending June 30, 1921, for —

(1) Administrative purposes.

(2) Payment of claims arit^ing from (a) cancellation of contracts, (6) damage

charges, (c) misccllancdua adjustments.

(3) Maintenance and operation of vessels.

(4) Completing vessels now under construction.
Shall be paid from the following sources:

(1) Amount on hand July 1, 1920.

(2) Moneys received from operations of ships.

(3) $15,000,000 or less received from deferred payments on ships sold prior to

June 5, 1920.

(4) $25,000,000 or less from plant and material sold during fiscal year 1921.

(5) $30,000,000 or less from ships sold during fiscal year 1921.

SECTION 14. — MERCHANT MARINE ACT OF 1920.

Sec. 14. That the net proceeds derived by the board prior to July 1, 1921, from any
acti\ities authorized by this act or by the "Shi])ping act, 1916," or by the acts speci-
fied in section 2 of this act, except [such | an amount as the board shall deem necessary
to withhold as operating capital, for the purposes of section 12 hereof, and for the
insurance fund authorized in section 10 hereof, and for the construction loan fund
authorized in section 11 hereof, shall be covered into the Treasury of the United
States to the credit of the board and may be expended by it, within the limits of the
amounts heretofore or hereafter authorized, for the construction, requisitioning, or pur-
chasing of vessels. After July 1, 1921, such net proceeds, less such an amount as
may be authorized annually by Congress to be withheld as operating capital, and less
such sums as may be needed for such insurance and construction loan funds, shall be
covered into the Treasury of the United States as miscellaneous receipts. The board
shall, as rapidly as it deems advisable, withdraw investment of Government funds
made during the emergency under the authority conferred by the acts or parts of
acts repealed by section 2 of this act and cover the net proceeds thereof into the
Treasury of the United States as miscellaneous receipts.

FISCAL year 1922, SUBSTANCE OF APPROPRIATION AS SHOWN IN PUBLIC DOCUMENT

NO. 389.

Purposes of ap pro printiori .—The expenses of the United States Shipping Board
Emergency Fleet Corporation during fiscal year ending June 30. 1922, for —

(1) Administrative purposes.

(2) Payment of claims arising from (a) cancellation of contracts, (6) damage

charges, (c) miscellaneous adjustments.

(3) Maintenance and operation of vessels.

(4) Completing vessels now under construction.

(5) Carry out "Merchant marine act."
Shall be paid from the following sources:

(1) Amount on hand July 1, 1921.

(2) Moneys received from operations of ships.

(3) $55,000,000 or less received from (a) deferred payments on ships sold prior to

March 4, 1921, (h) plant and material sold during fiscal year 1922, (c) ships
sold during fiscal year 1922.

7. Point No. 2. — " The gross profits or losses, as the case may he,
for the same period."

The answer to this point is shown by the "Gross proceeds from
appropriations, allotments, and other sources." (See item 5, Exhibit
A.) We set forth below a summation in order that a further dis-
tinction may be had:

Gross proceeds from appropriations, allotments, and other sources

(see item 5, Exhibit A) $3,511,328,609.78

Deduct moneys appropriated for and otherwise provided for (see
answer to point No. 1) 3, 285, 393, 545. 98

Gross proceeds after deducting moneys appropriated for
and otherwise provided for 225, 935, 063. 80



8 REPOBT OF U. S. SHIPPING BOARD.

8. Point No. 3. — '^ Net projiU or Josinefi, as the case may he, for the
same period.'

The answer to this point is shown by "Net proceeds from appro-
priations, allotments, and other sources." (See item No. 8. Exiiibit
A.) We set forth below a summation in order that a further dis-
tinction may be had:

Net proceods from appropriations, allotments, and other Rourcea

(see item No. 8, Exhibit A ) $3, 084, 060, 247. 88

Deduct monevs approi)riated for and otherwise provided for (see
answer to point No. 1) 3, 285, 393, 545. 98

Net excess of expenditures over receipts after deducting
moneys appropriated for and otherwise provided for 201, 333. 298. 10

Briefly summarized, the foregoing "Net excess of expenditures
over receipts, etc." is the result of the following:

(1) Excess of expenditures over receipts:

(a) Sales $70, ,303, 467. 62

(b) Suspensions, cancellations, etc 116, 621, 895. 35

(c) Shrinkage in values, appraisal versus expenditures 128, 907, 351. 83

(d) Lost vessels 76, 912, 833. 63

(e) Released v e.ssels 1 1 , 607, 702. 89

(/) Statutory limitations of appropriations and allotments 4, 016, 026. 85

(g) Salaries and expenses, recruiting, etc 67, 607, 549. 86

(h) Total excess of expenditures oa er receipts 475, 976, 828. 03

Less:

(2) Excess of receipts over expenditures:

(a) Operations of vessels 274,643,529.93

(3) Net excess of expenditures over receipts, etc 201, 333, 298. 10

9. Point No. 4. — " The disposition of any net profits, if any such
there have been."

The answer to this point is shown in detail in the ''Statement
showing disposition of net proceeds of receipts from appropriations,
allotments, and other sources." (See Exhibit B.)

In order that a clearer understanding may be had, we believe a
few remarks relating to some of the items shown in this statement
are in order; ther(»fore, we make such remarks as they apply to the
particular item of the statement:

General cash and cash finds (item A-J), S4o, 623, 874.64.— Oi this
item, $17,280,460 is committed to a specilic class of activities, leaving
$28,393,414.64 to carry on current transactions of all divisions.

Unexpended appropriations and allotment funds (item A-2),
$40,778,165.56.— Of this sum, $39,621,441.32 is available for current
li'ansactions and represents the residue of a recovery from the War
L)('})artment. The balnace amounting to $1,156,724.24 is subject
to statutory liinilations which will require the return of a part of it
to the United Slates Ti'easury surplus account.

Accounts receivable {item A-3), $190,952,618.99. — The greater part
of this item, namely, $77,348,779.50, is represented by contracts
covering sales of vessels. It would seem quite clear that this indebt-
edness, unless amply secured or due from a debtor able to pay from
resources other than shi|)s purchased, can not be of any greater value
than tile value of the ship. This being so, there will necessarily be
a very considerable shrinkage in the value of the receivable items



REPORT OF U. S. SHIPPING BOARD. 9

representing this class of iiulcljlcdncss. Wo sot forth a division
of maturities of oontracts covoriiitr sah>s of vossols, wliicli extend
over a period ranging from 1 to 13 years:

Past due $4^ 797, 887. 44

Due in 1 year 5, (578, 222. 16

Due in 2 to 13 years 49. 822, 886. 02

Doubtful (in recei\ erships) 13, 269* 870. 14

Others 3, 779^ 913. 74

Total 77, 348, 779. 50

The amount due from foreign Governments is $26,599,279.45, of
which the hirg(>r part is owed by France and Great Bi'itain.

The amount due from departments of tlie Unitecl States Govern-
ment is $18, (592, 139. 13; of this sum $8,579,479.79 is owed by the
Food Administration (now exthict); $0,535,708.05 is owed by the
Navy Department; $2,408,312.11 is owed by the Panama Canal;
$1,168,639.18 being owed by other dejiartments.

There are also included in this item $1,362,518.43 which is owed
by the American Red Cross, Belgium Relief Commission, and Young
Men's Christian Association. Tlie balance of $66,949,902.48 repre-
sents accoHuts owed by sundry d(4)t()rs. The larger proportion of
this amount will be collected through the medium of settlements of
claims against the United States Shipping Board Emergency
Fleet Corporation, and thus no cash will be obtained.

Notes receivable {item. A-4), $75,236,673.28. — The larger part of
this item, namely, $69,016,010.61, represents notes received in lieu
of vessels that were sold. A similar condition exists in connection
with these items as the one referred to under accounts receivable;
that is to say, the indebtedness can not be of any greater value than
the value of ships, unless such indebtedness is amply secured or due
from a debtor able to pay from resources other than ships purchased.
This being so, there will necessarily be a considerable shrinkage in
the value of this receivable item. The maturities of these notes
range over a period of from 1 to 10 years. The division being as
follows :

Past due $6, 761, 166. 74

Due in 1 year 18, 336, 659. 58

Due in 2 to 10 years 43, 918, 184. 29

Total 69, 016, 010. 61

The amount due from foreign Governments is $3,095,396.80, of
which $2,923,985.24 is owed by the Rei)ul)lic of Poland. The greater
part of the balance, namely, $3,125,265.87, is due from shipbuilders.

United States Liberty and Kingdom of Beh/ium bonds {item A-5),
$2,604,812.47.— In this item $2,446,187.50 is represented by United
States Liberty bonds of $2,634,750 par value. Maturity of such
bonds is as follows :

Maturity Amount.

1928 $104, 000. 00

1938 2, 30(i, 000. 00

1947 224, 750. 00

Total 2, 634, 750. 00

The amount of Kingdom of Belgium bonds is $158,624.97 which
mature in 1928.



10 REPORT OF U. S. SHIPPING BOARD.

Siocl's and honds of other companies (item A-6) $662,210. — The
division of this item is as follows:

Capital stock of — .

Emergency Fleet Street Railway of New Jersey *-5"' x""

Anacortes Co 25, OOP

Total capital stock 275, 000

Bonds. Seattle Construction & Dry Dock Co 387, 210

Total 662,210

Mortgages (item A-7), $6,555,218.38.— This item consists of mort-
gages received in lieu of housing projects that were sold. The maturi-
ties of such mortgages range over a period of 5 to 10 years. We show
division of such maturity below"

First, 5-year mortgage $5, 298, 833. 88

Second, 10-year mortgage 1. 256, 384. 50

Total 6,555,218.38

Certificate of indebtedness (item A-8), $21,197.72.— This item repre-
sents certificates received from municipalities and corporations in lieu
of expenditures on utilities in connection with housing projects.
Realization will probably be made to the extent of $13,697.72.

Loans and or advances (item A-9), $105,546 J67. 13.— Oi the
$66,606,053.35 item (a) there is $31,377,599.49 secured by mortgages
given in lieu of expenditures on housing projects of realty companies.
This class of loans are further secured by capital stock of realty com-
panies being pledged with the United States Shipping Board Emer-
gency Fleet Corporation, for the faithful performance of certain
operating agreements. Also certificates of indebtedness are indorsed
by realty companies to the United States Shipping Board Emergency
Fleet Corporation, as security for moneys loaned. The remaining
$35,227,453.86 of item (a) represents mortgages given in lieu of
expenditures in connection with plant and vessel construction.

The $15,979,983.92 item (b) is secured in part by mortgages given in
lieu of expenditures on housing projects of realty companies also fur-
ther security consisting of pledged capital stock of realty companies
and indorsed certificates of indebtedness as previously outlined.

The $22,960,729.86 item (c) represents unsecured loans consisting
of expenditures in connection wnth plant and ship construction,
receivers of steamship companies that purchased vessels of the United
States wShipping Board, and insurance syndicates.

Viewing this item as a whole, there will only be realized such amount
as represents the after war valu(;s notwithstanding the amount of
investment tluring the period of war. Furthermore such an amount
as is realized will extend over a number of years ranging from 5 to 10
or more in number under the present conditions.

Agents account current balances {item A-10), $52,609,221 .70.— This
item consists of (1) balances due from owners of requisitioned vessels,
amounting to $43,387,531.37; (2) balances of agents accounts in Bos-
ton, North Atlantic (New York), and Norfolk districts, less amount of
cash (see Exhibit B, item 1-a-l) in operator's trust funds of such
districts, amounting to $9,221,690.33.

The $43,387,531.37 item- due from "0^vners of requisitioned
vessels" — is to a large extent offset by " charter hire payable" to such



REPORT OF U. S. SHIPPING BOARD. 11

owners, amounting to $42,592,825.98, that is included in "Deductions
from workin*]: capital." (See Exhibit B, item 3-a-2-b.)

The ultimate disposition of the S9,221,()9().33 will tend to increase
the receipts from operations of vessels $240,970, 604. 70 (see Exhibit A,
item 1-c-l a) : increase the receipts from sundry sources .$264,088.76
(see Exhibit A, item l-c-3) ; increase the expeiiditures on operations
of vessels $238,273,376.61 (see Exhibit A, item 3-b-l); increase the
accounts receivable $17,389,527.29 (see Exhibit B, item l-a-3);
increase the materials and supplies $140,486.94 (see Exhibit B, item
1-a-ll-a); increase the custodian receipts $28,266.12 (.see Exhibit B,
item 3-a-l-a); increase the liabilities $5,312,740.93 (see Exhibit B,
item 3-a-2-b). Tiius at such lime as the "Ap;ents account current
balances" of all districts are cleared, the realization of this item would
increase the "Net working and lixed and donated capital" item (see
Exhibit B, item 10) to the extent of $2,967,316.85.

Materials and supplies {item A-11), SS5, 254,706.63.— The larger
part of item (a), namely, $28,564,681.42, represents materials for use
in connection with vessel construction and repairs. All of item (6),
amounting to $54,870,127.78, represents in part, appraisal values set
on surplus and salvage materials and otherwise actual expenditures.
In order that no misunderstanding may exist, you are informed that
this is book and not in all cases a physical inventory value.

Deductions from worhinq capital {item 4), $91,163,733.67.— You are
informed that this item only represents the acknowledged and recorded
liabilities of the United States Shipping Board Emergency Fleet Cor-
poration. There are claims relating to the construction program and
other payable items amounting to many millions of dollars, but they
are not shown herein for the reason that their presentation amount is
not always indication as to their final settlement amount, therefore to
include them would in our opinion, be misunderstood and otherwise
defeat the purposes of the statement submitted. Briell}', the afore-
mentioned items are as follows:

Estimated construction program claims payable $146, 796, 548. 34

Awards payable to former owners, requisitioned hulls 11, 309. 962. 77

Estimated insurance, accident, and damage losses payable 21, 665, 719. 91

Total 179, 772, 231. 02

In our opinion, the rest of the items with their supporting schedules
are clear within themselves.

10. Pqixt No. 5. — " The amount of capital on which the United
States Shipping Board now is conducting its business.''

The answer to this point is shown by "Net working and fixed and
donated capital." (See Exhibit B, item 10.)

11. Point No. 6. — " Tfie number of vessels at present owned by the
Shipping Board, giving material of which each is constructed and ton-
nage of each. \

'fhe answer to this point is shown by "Statement of owned vessels,
tugs, and barges available." (See schedule 9 of Exhibit B.)

12. Point No. 7. — " The number of vessels, if any, at present owned
in part by the Shipping Board, giving material of which each is con-
structed and tonnage."

The answer to this point is shown by "Statement of owned in part
vessels, tugs, and barges." (See Exhibit C.)



12 REPORT OF U. S. SHIPPING BOARD.

13. Point No. 8. — "Number and description of i^esseJs owned hy
the Shipping Board now in operation nnder its sote management, and
numher and description under charter hy the Shipping Board in opera-
tion under its sole management.''

The answer to this point is "None."

14. Point No. 9. — "Number and individital and aggregate value
of vessels owned by the Shipping Board now managed by it in conjunction
unth private interests."

The answer to this point is shown by "Statement of owned vessels
managed in conjunction with private interests." (See Exliibit D.)

15. Point No. 10. — "Numher of vessels owned by the Shipping
Board now chartered by it to private interests and operated entirely by
private interests."

The answer to this point is shown by "Statement of owned vessels
chartered to private interests and operated entirely by private
interests." (Sec Exhibit E.)

16. Point No. 11. — "Number and individual and aggregate value
of vessels owned by the Shipping Board not at present in operation,

?'iving (a) name and description and tonnage of each such vessel; {h)
ength of time it has not been in operation; (c) reason why it has not been
and is not now in operation; (d) place where each such vessel is docJced
or tied up; (e) expense of daily maintenance of each such vessel; if)
percentage of each vessel's value lost monthly by such idleness; ig) esti-
mated percentage of each such vessel's value lost monthly in depreciation."

No attempt is made to place a value on the vessels. The limita-
tions of the law, the financial and business conditions, together witli
the wide variations in the opinions of those who are conversant witli
this subject, preclude the possibihty of making an estimate of value
that would be generally accepted. Moreover, it is obviously unfair
to use as a basis for the ascertainment of values of these vessels the
prices obtaining in the midst of a world-wide depression. Therefore,
it was thought best to omit any attempt to place a valuation on
vessels.

The answer to subsection (/) is not given for the reasons that

(1) as previously stated, values are ambiguous at the present time;

(2) under existing conditions vessels have little or no earning value;

(3) before vessels are tied up it is determined that losses while in
operation would exceed expenses while vessels are not in operation.

In answer to subsection (g), we estimate that depreciation during
tie-up exceeds depreciation during operation by 1^ to 2 pei-^cent.

With the foregoing exceptions, our answer to this point is shown
by the following:

(1) "Statement of owned vessels not under operations" (see
Exhibit F), answering subsections (a) and (d).

(2) " Statement of expense of daily maintenance on owned vessels "
(see Exhibit G), answcrmg subsection (e).

(3) "vStatement showing length of time owned vessels have not
been in operation and reasons why they have not been and are not
in operation" (see Exhibit 11), answering subsections (b) and (c).


1 3 4 5 6 7 8 9 10 11 12

Online LibraryUnited States. Shipping BoardReport of U.S. Shipping Board. Letter from the chairman of the Shipping Board transmitting in response to a Senate resolution of December 27, 1920, a report covering the transactions of the United States Shipping Board and the Emergency Fleet Corporation from its inception to February 28, 1921 .. → online text (page 1 of 12)