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COMPLAINT filed with the United States Ship

ping Board by the Port of Charleston, S. C., requested the abolition of the ocean differential of 71⁄2 cents per hundred pounds maintained by South Atlantic ports against North Atlantic ports, including Norfolk and ports north thereof. Jacksonville intervened on the same ground, and the Shipping Board spent several days hearing the evidence presented by the contending ports, in which Gulf ports finally intervened, their differential being 15 cents per hundred pounds higher than the rates of North Atlantic ports. It should be said that when the differential was agreed to ocean rates were very much higher than they are now. The effect of this, it was contended by the southern ports, was to make the differential more and more difficult for South Atlantic and Gulf ports to overcome, with a greater tendency to divert traffic to North Atlantic ports.

Wipes Out the Ocean Differential

The decision of the Shipping Board wipes out entirely the previously existing ocean differential and leaves the different ports free to charge such rates as they see fit. In its decision, rendered last month, the Shipping Board among other things says:

"Neither the Charleston nor the Norfolk complaint chal lenged the propriety of the practice of grouping ports for rate-making purposes, nor the general fairness of the present grouping; and while at the hearing some criticism was made of the sweep of the North Atlantic group the record as a whole does not reveal any widespread dissatisfaction with the prevailing groups. Such criticism as was made in this connection was directed against the inevitable resultant of any grouping system, i.e., that there is always some disparity between the distance from the various points in a group to a common market.

"It is natural and consistent with recognized principles of rate structures that the carriers should have in some manner grouped these ports. The present grouping does not seem either unnatural nor is it established by the facts in this case that it is unduly discriminatory or otherwise in violation of the statute. It might be said in passing, that the Board is not disposed to disturb port groupings which have prevailed for a considerable length of time and to which business has accustomed itself, except for very strong and compelling reasons."

It was pointed out that the greater volume of th: traffic moved from North Atlantic ports was of a much higher class than that moved from South Atlantic and Gulf ports. The differential was supposed to have been. based upon the longer ocean haul from South Atlantic and Gulf ports and the greater expense of ships operating therein. This was figured out on the basis of the cost per day of running a ship and the number of days more consumed in reaching Europe from South Atlantic and Gulf ports than from North Atlantic ports, $350 being the accepted ship cost per day of an ordinary freight ship, but regarding this the Shipping Board decision says:

Basis of Differential Not Clearly Defined

"As hereinbefore indicated, the circumstances surrounding the adoption of the present differentials by the steamship lines do not reveal any clearly defined rule or reason for their particular amount or measure. At the hearing, however, the theory was injected that the primary purpose of the

differentials was to offset the additional cost of operation from the South Atlantic and Gulf ports over the North Atlantic ports on the basis of the then existing level of rates. If that were the desideratum it is difficult to understand why these differentials have not varied with the exceedingly large variation in rates. In making this observation the Board does not concur in the theory that a carrier is justified in burdening a port with a differential for the sole and only reason that the cost of operation from that port is greater wan ircin some other port. It is obvious to the Board that many elements, such as volume of traffic, competition, distance, advantages of location, character of traffic, irequency of service, and others, are properly to be considered in arriving at adjustment of rates as between ports; but even assuming that the theory advanced is valid it is plain from the facts in this case that it had not been adhered to by the carriers."

It was shown that there was involved in the case railroad transportation, privileges local to a particular railroad, and through joint rates, all of which present different facts, said the decision, from those presented at the hearings; it was also shown that steamships shifted from one port to another to obtain cargoes. Says the decision:

"It is established by this record that these common carriers by water, possessing the ability among other things to shift vessels from one port to another, voluntarily met and entered into a definite agreement that the differentials against certain ports should be such and such, and that none of the carriers, no matter from which ports they operated, should depart from those differentials while a party to such agreement."

Where Distance is Disregarded

The Shipping Board points out:

"Against the objection of counsel for the North Atlantic lines evidence was admitted which tended to show that in other trades, for example, the trans-Pacific and West Indies trades, distance to a large extent is disregarded in rate-making. While we deem this evidence admissible in a proceeding of this character yet its probative force may or may not be considerable and we do not consider it to be our province or right to adjust rates in this particular trade on a basis which obtains in other trades in which there may be present entirely different circumstances and conditions with regard to cost of operation, character of cargoes, competition, and other matters. Accordingly, the failure to show similarity of conditions in the trades in these respects derogates greatly from the value of evidence adduced on this point."

New York Port Authority's Contention Julius Henry Cohen, Counsel for the Port of New York Authority, evidently made a strong and permanent impression upon the minds of the members of the Shipping Board, who say, in their decision:

"Permeating the record in this case is the thought advanced primarily by counsel for the Port of New York Authority and the New England ports that rail and water rates from Central Freight Association territory to foreign destinations should be equalized through all these ports. Without attempting to pass upon this matter, which is manifestly be yond the scope of the Board's jurisdiction, the Board can only state that in the great public interest it would seem obvious that rate structures should be so made as to permit the flow of traffic to pass through as many ports as the economies of transportation and distribution will allow.

"After consideration of all the facts, circumstances and evidence of record in this proceeding, the Board concludes and decides that complainants in Docket No. 23 (Port Utilities Commission of Charleston, S. C.) have not shown that the existing differentials and rates applicable to the foreign

ports herein involved unduly prejudiced South Atlantic ports in favor of North Atlantic ports, in violation of Section 16 of the Shipping Act; that complainant in Docket No. 25 has not shown that the maintenance of the same rates from Atlantic and Gulf ports to said foreign ports on so-called parity commodities constitutes an undue prejudice or unjust discrimination against the port of Nortolk, in violation of Sections 16 and 17 of the Shipping Act, and that the evidence submitted in Docket No. 26 fails to show the present rate adjustment between North Atlantic, South Atlantic and Gulf ports to be unduly prejudicial or unjustly discriminatory, in violation of Sections 16 and 17 of the Shipping Act.

Steamship Conferences Explained

The Shipping Board then explained the nature of steamship conferences, and gave the dates of the formation of the existing conferences, the North Atlantic Continential Conference having been established on March 9, 1922. Says the decision:

"In April, 1920, the conferences above named met and entered into an interlocking arrangement or agreement, for the avowed purpose of effectively controlling the acts of member carriers from all Atlantic and Gulf ports with respect to rates. It was at this meeting differentials against the South Atlantic and Gulf ports were adopted and also the parity and neutral commodity lists. Apparently the differentials were the hub of the tri-partite conference agreement, in the absence of which there would in all likelihood not have been any joint agreement. It is clear from the record that there was very little, if any, consideration given to the interests of the shipping public in negotiating the agreement. The point is made that the South Atlantic and Gulf lines consented to the differentials in exchange for the agreement on the part of the North Atlantic lines to permit the former to charge rates on a parity with the North Atlantic rates on certain commodities, most of which are indigenous to South Atlantic and Gulf ports. It is very doubtful whether the South Atlantic or Gulf lines fully realized the probably effect of their action with regard to future adjustments of rates. any event, they have at subsequent meetings of the three conference groups sought to have the differentials modified or abolished. An outstanding feature of the agreement is that the differentials cannot be changed except by the unanimous vote of the three parties. The result is, so long as the North Atlantic regards the differential as favorable to itself and withholds its required consent the other two parties are powerless to change the situation. In other words, the practical result is that the South Atlantic and Gulf lines have irrevocably bound themselves to apply the differentials.

In

"It is urged that the tri-partite conference agreement and procedure of the joint conference meetings is based on voluntary action. This may be substantially true with respect to new matters which come before the conference for adoption, but when a rate or rule is once adopted and one party consistently and selfishly refuses to cast its consenting vote which would remove or change that rule or rate the conference to all intents and purposes ceases to be voluntary. Representatives of conference members from all three port groups admitted that the existing differentials against the South Atlantic and Gulf ports were uneconomic or unfair, but nevertheless efforts to revise them have been futile by virtue of the present conference situation.

North Atlantic Lines Dominate

"It is therefore obvious that the differential situation is effectively controlled by the North Atlantic lines. In this connection it should be pointed out that the membership of the North Atlantic conferences is predominently foreign. This foreign membership with votes outnumbering by far those of the American members dominates the tri-partite conference and the rates applicable to American commodities moving in American bottoms from American ports. The result is effective control by foreign lines of an extensive portion of our commerce and of much of our shipping. Manifestly, in view of the responsibility imposed in it for the upbuilding of an American merchant marine, this situation calls for unequivocal action on the part of the Board.

"Section 15 of the shipping act, 1916, enjoins upon common carriers by water subject to the act the duty of filing with the Shipping Board agreeents of the character now under consideration. The term 'agreement' as used in that section is stated to include understandings, conferences and other arrangements whether oral or written. Paragraph 2 of said section provides:

"The Board may order, disapprove, cancel or modify any agreement or any modification or cancellation thereof, whether or not previously approved by it, that it finds to be

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Dalzell's Increased Towing Service

The Pennsylvania Railroad

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The feature article in this issue of THE PORT OF NEW YORK AND SHIP NEWS is that beginning on page 3, describing the part that the Pennsylvania Railroad in little more than half a century has played in developing the Port of New York. This port is extremely fortunate in having this great trunk-line railroad transporting passengers and merchandise to and from it, because the ramifications of this vast system cover one of the most productive and progressive sections of the whole United States. That the Port of New York attracts such service and that the railroad so wholeheartedly furnishes it is a tribute alike to the port and to the foresight and genius of those controlling the railroad.

In Jersey City (including the Greenville terminal) and the approaches to that city, and in South Amboy, the magnitude of the Pennsylvania Railroad is impressive.

Then consider its tunnels to Manhattan, under the Hudson, its tunnels to Brooklyn, under the East River, and its colossal passenger terminal in Manhattan, its freight piers in different parts of Manhattan and elsewhere, as well as its ferry services, and reflect that but the half has been told; because, upon its tugboats, its lighters and its carfloats the eight million people within the Port of New York depend for so large a portion of their daily food.

While mention is not made of its control of the Long Island Railroad, the only railroad in the section unquestionably destined to become the larger part of Greater New York, in population, industries and commerce, mention of that control but accentuates the completeness with which the Pennsylvania Railroad and its subsidiaries are woven into the lives and the businesses of the people of the Port of New York. If it be true that the Pennsylvania Railroad is the greatset single factor in the development of the Port of New York, it is difficult to realize that New York is not its home base, a fact that but proves its almost measureless bigness. Time spent in reading our current feature article, and then in reflecting upon what it tells as well as what it does not tell, will be time profitably spent.

Subway Extension in Greater New York Major John F. O'Rourke's letter to Mayor Hylan, published with illustrations in this issue, proves that this experienced and practical veteran master tunnel builder is a veritable "friend in need", if the City government has the sense to realize it. His common-sense suggestions inferentially convey warnings. A master mind and recognized leader in tunnel building tells Mayor Hylan what can and what should not be done. Construction is likely soon to begin; but will it be by obsolete or modern methods? Will the work be as enduring as possible? Will it involve the open cut or avoidance of it by the use of tunnel shields, without impairing adiacent structures and the costly damages that follow in the train of obsolete methods? Will the finished structures lack the ventilation and safety devices for instant escape obtainable if modern practices are followed?

Forewarned is forearmed. Will the new subways be inefficient and costly? Will their construction be hastened by the adoption of modern, or retarded by the adoption of obsolete, methods? of obsolete, methods? Will the deb: limit nightmare control or be avoided in the way Major O'Rourke suggests in the Sixth avenue subway construction, through issuance of assessment bonds, like Detroit has done? Will the five-cent fare be assured, as Major O'Rourke points out it may be?

What is the city's answer to Major O'Rourke's suggestions?

We are gratified to be able to present in this issue a fairly complete biographical sketch of Major O'Rourke's long, important and successful career, which shows that his entire life's work uniquely and most admirably qualify him to advise on subway extension matters. Why should not his advice to the city be most welcome and acceptable to its officials?

The Differential Problem

The Shipping Board's decision in the ocean differential case, while against North Atlantic ports, scarcely brings joy to South Atlantic and Gulf ports. It does not forbid differentials, and it recognizes the value of conferences. All it asks is that these shall be fair-they must be fair to receive its approval, and without its approval no differentials will be permissible. Conferences, too, if unfair, may be disrupted by the Shipping Board, which for the first time exercises a power hitherto latent.

Senator Butler's bill, like the Port of New York Authority's attitude, is for the abolition of all differentials, ocean and rail. Such abolition would in the end, we believe, be best for all concerned. But the immediate concern is the patching up of the rents made in differentials and conferences by the Shipping Board's very moderate decision.

The Administration's Shipping Policy T. V. O'Connor, Chairman of the Shipping Board; Leigh C. Palmer, President of the Fleet Corporation; Secretary of Commerce Hoover; Secretary of the Treasury Mellon; Secretary of War Weeks; and Secretary of the Navy Wilbur-this great array of talent and wisdom has labored and brought forth a mouse of a shipping policy, which President Coolidge has let the world know has become his policy. It would continue Government operation until private citizens buy the Government's ships, which means until Congress adopts a practicable permanent protective shipping policy. It would build no additional ships for five years. It does not want great, swift, mail carrying, passenger carrying, express carrying leviathans, it wants, instead, ships of "the cargo-liner type".

The long-looked for report is more or less of a travesty. Literally, it means "scuttle", but lacking the courage to say it, says 'leave things as they are'. But it is the Administration's policy. Will it be Congress's policy,

There's the rub!

New York's Barge Canal

Governor Smith's annual message to the Legislature calls attention to the cost of continuing our Barge Canal in a most striking manner. During the past five years $31,007,977.99 have been expended, $4,742,318.59 for salaries, $7,703,758.41 for maintenance and operation, and $12,561,000.00 for new construction construction and permanent benefits; and for 1926 the Superintendent of Public Works asks $5,262,695.80, of which $1,709,095.80 is for "personal service", $2,473,600.00 for maintenance and operation, and $1,070,000.00 for construction and permanent betterments. The Barge Canal is expensive. The inference is that the slightly more than a million tons of freight it accommodates annually does not justify its maintenance.

The comeback of the canal men is that the canals never have been brought to their statutory depth of 12 feet, that little more than 9 feet is maintained, and they claim that a greater commerce would be carried if shippers

were assured that the canal would be maintained at its statutory depth and width. It is too early to form judgment; the new Barge Canal has not been long enough in operation to win shippers to use it, especially with its rates so near railroad rates, instead of far below rail rates, as expected. But the fundamental trouble with the canal is that it is closed five months each year, a trouble that it would be too expensive to attempt to overcome.

The Legislature will probably appoint a commission to study and report. Meanwhile, the statutory depth and width are insistently demanded by users of the Barge Canal which, it is well to say very emphatically, is a long, long way from being abandoned.

Discriminating Duties

From 1789 until 1850 this country by import duties and tonnage dues discriminated in favor of American ships. During that 61 years our ships carried an average of more than four-fifths of the nation's entire foreign commerce. With the suspension of discriminating duties, hastened by ravages wrought by the Civil War, our ships in foreign trade diminished until for a quarter of a century preceding that late war our ships carried an average of but 11 per cent of our imports and exports. When we suspended discriminating duties we agreed in trade treaties not to continue them, although each treaty provides for its abrogation by either party to it, a right the executive branch of our Government opposes our exercising. The protection our ships enjoyed in pre-Civil War days took nothing from the National Treasury but added money to it, instead, just as our protective tariff discriminates in favor of our home producers, annually adding hundreds of millions to our National Treasury.

Shipowners have demanded subsidies, as the form of protection that would induce American capital again to engage in foreign carrying, but over and over again Congress has refused subsidies. For 35 years there has been a demand for a return to discriminating duties, and three different times Congress has tried to make a start toward the readoption of discriminating duties. The last attempt, in the Merchant Marine Act of 1920, was by directing the President to give notice to nations with which we have trade treaties of our desire to abrogate such provisions therein as restrained us from readopting discriminating duties, and three Presidents have refused to carry out that section of existing law.

The State Department, meanwhile, negotiated a new trade treaty with Germany, in which this country is to be restrained from readopting discriminating duties. The Senate Foreign Relations Committee has had the treaty for more than a year, and refuses to recommend its ratification, because, it is said, of executive defiance of a law of Congress which the ratification of the proposed treaty and others to follow would practically repeal. Now, it is said, President Coolidge has decided to have the proposed German and other trade treaties ratified with the restraint against discriminating duties a part thereof. But he must first obtain the Senate's approval. Will he get it? Let's wait and see!