10 REPORT OF AMERICAN MERCHANT MARINE COMMISSION.

Representative. Minor. Ordinarily, I believe, that is 5 per cent, is it not?
Major Drvor. We do not carry that, neither do we carry interest on investment.
Representative Minor. Then you do not pay any taxes, of course, as shipowners
vould have to pay?
Major DevoL. No, sir.

The CrairMAN. Do you insure the Government property?
Major Devor. We never insure.
The CralrMaN. So you take that risk?
Major Devol further stated that the original cost of the four
transports now performing the Manila service ‘could probably be
reckoned at $4,000,000”—others were being held in reserve. The
usual allowance of a steamship company for taxes, interest, insurance,
and depreciation would not be far from 15 per cent per annum, or
about £600,000 on these four transports, to say nothing of the fixed
charges on the others—charges which the Quartermaster’s Department
 may ignore, but which can not be so lightly treated in the
economics of an ordinary business corporation. Of course these
charges would convert the profit of the transport service into an
undeniable deficit. *

¥*

COSTLY AS WELL AS UNWISE.

And though these charges may be overlooked, they can not be
ignored. Deterioration proceeds as inevitably in the transport as in
the liner. Most of these foreign-built transports on the Pacific were
by no means new vessels when they were acquired. In general
efficiency and economy of operation they are not to be compared
with the new American-built commercial steamships which American
enterprise has put into service on the Pacific Ocean since the war
with Spain. A steamship manager at Seattle testified that his company
 could have saved the Government $150,000 in two years if the
supplies carried by an old foreign-built transport had been conveyed
by his new commercial steamers. Said this witness, Mr. Frank
Waterhouse, managing agent of the Boston Steamship Company:
I think I can show you that we can carry cargo cheaper than the Diz, for this
reason if no other. On the Dix there is no return cargo from the Philippine Islands.
All her cargo is one way. We could not begin to operate our line under any circumstances
 if we took eargo but one way. Now, we carry cargo both ways. Our
average earnings eastbound are fully as much as our average earnings westbound.
Of course, that is bound to tell in the cost.
Representative Spit. In that way you are able to carry cheaper than the
(overnment?
Mr. Warernouse. Certainly; we carry cargoes both ways.
If the same bookkeeping methods by which such factors as taxes,
interest, insurance, and depreciation are entirely ignored, were applied
to other transactions, it could doubtless be proved beyond dispute
that the United States Government could not only conduct a steainship
 business more cheaply than private shipowners, but that it could
make steel rails and woolen cloth and boots and shoes at a lower price,
that it could mine coal more cheaply, do the country’s banking and
operate its railroads. But if the United States Government is to
attack any industry as a competitor, it ought in all fairness to select
one that is prosperous and robust, and not set up asa rival to an
interest that, because of long continued neglect, is now fichting a
veritable battle for existence.
The two American steamship companies which regularly ply across
the Pacific to Asia and the Philippines are face to face with over-