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 NO. 95-82349 
 
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Goff, Guy 
 
 mpl5 
 
 basic princi 
 [Washington] 
 
 establish 
 
COLUMBIA UNIVenSITY LIBRARIES 
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 BIBLIOGRAPHIC MICROFORM TARGET 
 
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 OnOINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD 
 
 GOff. Ouy D , : ^ 
 
 A simple plan to establish the basic prlnciple||ii 
 controlling the establlsbnent of ship values of 
 United States shipping board vessels.. A 
 
 discussion and resblutions offered on January 5th, 
 1920 to tlie United States shipping board to carry 
 the plan" into effect 9 by -Guy D. Gaff . .. 
 ItoahingtonT 
 
 16 p. 31 cm. 
 \ Prepared in collaboration with Martin J'. Gillen, 
 John Barton Payne, Admiral W. S. Benson, and 
 L. L. Summers. 
 
 RESTRICTIONS ON USE: 
 
 TECHNICAL MICROFORM DATA 
 
 REDUCTION RATIO: l'^>^ 
 
 IMAGE PLACEMENT: lA IB IIB 
 
 DATE I^LMED: 3-"?~»^ 
 
 INITIALS. 
 
 TRACKING « : 
 
 FILMED BY PRESERVATION RESOURCESi pETHLEHEM, PA. 
 
2i 
 
A SIMPLE PLAN 
 
 to Establish the Basic Principles 
 Controlling the Establishment 
 
 of 
 
 SHIP VALUES 
 
 of 
 
 United States Shipping Board Vessels 
 
 f 
 
 ■J r , 
 
 4p- 
 
 Prepared in collaboration with BfAmTiM J. Gilubn, former member of the War 
 Iniiiialries Board Organization and Special Assistant to Chairmen of the U. S. 
 Shipping Board, John Baxton Payne and Admiral W. S, Bsnson; L. L. 
 SuifiixBS, former member of the War Industries Board Organization, and 
 technical advisor to the Allied Peace Commission at Paris; and Guy D. Goff, 
 piwsent commissioner of the U. S. Shipping Board. 
 
 A DISCUSSION and I?.ESOLUTIONS 
 
 offered on January 5th, 1921 t<Hbe United States 
 Shipping Board to carry the Plan into effect 
 
 By 
 
 GUY D. GOFF 
 
 CommUsiotur of U. S. Shipfing Board \ 
 
J) ^ 
 
 iiiiinii 
 
 Jmmry d, 1021 
 
 FeUotv Commmkmers of the Skipping Board: 
 
 From the time that I first foecame cmmected as an em- 
 ploye of this Corporation on June 1st, 1920, down to 
 Decemher 1st of last year, when I became a member of the 
 Board, there has ever been dWsed in Congress, by the 
 pubhc generally and by the ollcers of this Corporation, 
 the price at which the steel cargo boats should be offered 
 to the public. Cimgress, in the Jones Bill, granted to the 
 Shipping Board full and discretionary right to establish 
 the price at which these boats should be sold and absorbed 
 by private industry. The testimony taken before the 
 Senate Commerce Committee, prior to the enactment of 
 the Jones Bill; the voluminous evidence gathered by the 
 Shipping Board ; the editorial comment of tlic country, and 
 the information furnished by the private shipping interests 
 of America, has not as yet thrown light upon the subject 
 sufficient to enable the Shipping Board to intelligently es- 
 tablish the basic prindjyles which would enable the steel 
 cargo boats to be absorbed by the pubUc. 
 
 The growing demand for the lowering of the price, on 
 the purt of the people of the United States, as evidenced 
 by the editorial comment in our great papers; the Con- 
 gressional discussion that has ensued; the financial dis- 
 tress of the pioneer purchasers, who endeavored to try out 
 the pohcy of the Shipping^ Board at its oW prices— all 
 urge unmediate action on the part of the Shipping Board 
 to establish basic principlell. As a Commissioner, I have 
 no eompkmt or criticism of this demand, nor of the state- 
 ment of Congressman James W. Good, Chairman of the 
 Appropriations Committee of the House, made on the 
 floor of the House last Friday, for I can readily appreciate 
 that his state of mind is one of honest exasperation, due to 
 the failure upon the part of the €kyvemment in its ship- 
 ping branch, to establish basic principles for the sale of 
 its boats in order to carry out the will of Congress ; to wit, 
 that the assets of the Shipping Board be sold and that the 
 Merchant Marine should be privately owned and operated; 
 and that in making the sale, new trade routes should be 
 protected insofar as possible. The mandate ^aell the 
 hoats at menshantable prices; establish an AmeJiean pri- 
 vately owned and operated Merchant Marine, cameiirom 
 
4 
 
 cwy section of the United States and from the RepuhM- 
 can and Democratic party alike, with the Pfoideiit of 
 the United States and the Pfesident-elect in harmony wMi 
 it ; ami to it is my pnrpoie today, as far as I am concerned, 
 to take fndi affirmatiYe and prompt action as afforded me 
 •nd I hope my associates on this Board may aid to a com- 
 mon purpose. 
 
 For some months I liaTe given considerable study to 
 this question and I have reached the conclusion, without 
 critidmi of anyone, that th^. faOure to establish the basic 
 principles has been due to our inability to see through the 
 clouds beyond and somewhere approximate the future, 
 rather than a desire on the part of the Shipping Board 
 not to make a decision. For over a year and a half the 
 discussion concerning prices hm ranged about the follow- 
 iiig factors: 
 
 (a) the cost of reproduction at liome and abroad— while 
 
 #1.% ^"^^"i "^^^ ^^'^^ * P^"""^ inflation of prices ; 
 (III tlie earaing capacity of the boats under current 
 ff%ht markets; 
 
 (c) the abiHty of the purchaser to amortize his capital 
 mwitiient diifing a period of twenty years hence; 
 
 (d) the abiUty of the purchaser to induce the American 
 farmer, labormf man. widow, large and smaU trust 
 company, to furnish him purchasing capital, while 
 
 the first three factors were so indefinite as to the 
 i and the deterrent effect of the sad financial 
 object lesson of the pioneer purchasers of 190 boats 
 being ever before the investment public of America. 
 
 At all times in the discussion of the above factors I 
 have only heard diseuased the question of price, namely, 
 eitber tbat the ships should be sc^d in the irst instance at 
 the price wbicb they cost the Oovemment ; or later at the 
 reproduction cost, less depreciation for the time the boats 
 were in the water; and still later, a discussion on %un!i 
 ranging from $150 a DWT to $eO a DWT-^ disciLion 
 ot dollars-never an analysis of the situation to cslabilsb 
 t^e basic principle of sales price, wbidb would cause the 
 American pubic to purdiase and invest in these boats 
 It niust be kept in mind that these boats are not Liberty 
 Itonds^the best security in the world, which are selling 
 today at 15% below the par value^but ratbcr are tbcy 
 oDjectsbuilt durmg war times for the purposes of national 
 war needs and whii* must now be ntiliied for an entirely 
 different purpcpptf f i. r., in jmvate industry-^ld at such 
 a prro tiiat the capital purchase price of them will be re- 
 towsd to tie purchaser over a period of twenty years, 
 witli a fair mterest return on his money during tbat pe- 
 »>d. He to take all of the risks of management, all of 
 
 
 
 the risks of competition with foreign shipping interests 
 and of national and international depressions for the next 
 twenty years. Tben, too, it must be kept in mind tbat 
 while these ships cost the United States Government an 
 average of $215 a DWT, they were not built by the Gov- 
 ernment as an investment for the Government, nor for use 
 in private industry, but they were built like our cantonments 
 and the supplies that went across the seas— to take care 
 of a great national war emergency in which the very life 
 of the nation was at stake. What the Government paid 
 for in building those ships is divided into two parts: 
 
 The first part of the expenditure went purely for a war need 
 and was destroyed — to wit, emergency ocean transportation for 
 its troops and supplies for itself imd its Allies across the Seas. 
 That was primarily a war expense, and the Government must and 
 is willing to stand it. This factor in the value of the ships, stands 
 in the same category as cantonments, powder, compensation paid 
 to our drafted soldiers while in the service of the Government ■ 
 the supplies consumed during the war, and all purchases which 
 were destroyed or consumed in the prosecution of the war. The 
 public and Congress well recognize and have assented to this 
 doctrine, which is not new. The Shipping Board has no right, 
 under the law, nor any member of the Board, to withhold his 
 decision to establish the proper prices under the mandate of Con- 
 gress by endeavoring to merchandise this factor. It departed 
 when the emergency expired. It is ^ more. 
 
 The second part of the expenditure went into steel ships that 
 have some market value — like any other commodity purchased or 
 sold in the open market for private purposes ; to wit, ships that 
 can engage in the private commerce and return to the owner 
 thereof an income on an established capital price, while in com- 
 petition with the other privately owned ships of America and the 
 shipping interests of the world. Tlfere are two parties to every 
 free sale — ^a buyer and a seller. 
 
 *' 
 
 It is in reference to this second and only remaining factor 
 value in the ships no^ owned by the Government— 
 fAich too is the only factor before us for consideration— 
 that I desire to address myself to you. 
 
 Considerations Bearing Upon the Actual Worth 
 or Value of Steel Cargo and Other Stael 
 Boats of the United States Shipping 
 
 Board from a Sales Standpoint 
 
 I, 
 
 THE FIRST COmiDEBATION% 
 
 No private purchaser or corporation can be induced to 
 purchase Government steel cargo boats today in an open 
 and free market, unless he is assured the capital that he 
 invests in that boat will, in a measure, be a saf^vest- 
 ment; that it will be returned to him as the boat dqireci- 
 

 
 ales during a period of twenty to twenty-five years, and 
 can cam during that period, in world competilion, suffi- 
 cient inoome to pay all charges of operaticm and a reason- 
 able interest rate on the money invested. There not being 
 enough money in the hands of people desiring to purchase 
 ship, they must gp to the American inTestmg public to 
 get a large portion of the money they desire to invest. 
 Thus, there are two classes of people interested in the pur- 
 of boats. There is the first or original purchaser, 
 manages and operates the property; and there is sec^ 
 ond, the silent investor, who buys the common or pre- 
 ferred stock, or takes the bonds of the original purchaser. 
 The original purchaser is frequently willing to speculate 
 with his portion of the investment in the boat, whidi is 
 usually about 25% of the purchase price. The second 
 class: to wit, the investors who are made up of the farm- 
 ing, labor, widow and middle classes of the American in- 
 vesting puNijC will accept no specuktion; those who ad- 
 vise this class warn against speculative investments. These 
 advisers demand that the capital of the investing public, 
 who are silent partners, shall be invested in securities 
 where there is no risk, |or as a rule, the return on this form 
 of mvestment is modest and there must be a certainty of 
 interest and return to them of the money that they invest, 
 as silent partners. Those who advise them — our invest- 
 ment bamkers — ^are well aware today of what ships values 
 are and are likely to be during the next twenty years. It 
 is ri|^t that they should advise their dents — the invest- 
 ing public. Hence, until the values on our steel boats are 
 placed on the proper basis, so as to induce the silent part- 
 
 today in England, there wil be no sale of the Shipping 
 Board boats. Let a canvass be made of the Senators and 
 Congressmen of the United States for the purpose of in- 
 ducing them to invest their money, or the money of any 
 of their friends, in Shipping Board boat securities on any 
 other basis, and you will find that they will refuse and 
 advise their friends against putting a dollar into shipping 
 securities except <pi proper boat values. 
 
 I 
 
 THE gE€miB CON8IDEMATION: 
 
 With proper value fixed on the steel cargo boats of 
 the Si^f^ B(«rd, the Goremment must gnuit mort- 
 
 gi^^terms to the original purchasers similar to those al- 
 
 / 
 
 r 
 
 7 
 
 ready wisely established by the Shipping Board under the 
 lones Bill. 
 
 THE THIRD CONSIDERATION: 
 
 Unfortunately, there is a limited market into which the 
 Shipping Board can go for prospective purchasers. It is 
 almost limited at the present time to 176 corporations, 
 known as the operating managers. In this field are the 
 original privately owned shipping corporations who own 
 their own boats, a great number of whom have already 
 made pioneer purchases from the Shipping Board and 
 ruined their base capital investment and financial credit, 
 through the purchases made. The toll of receiverships, 
 which is before us, of some 60 sales out of approximately 
 200 sales, and the known difficult financial positicin of 
 every one of the other pioneer purchasers who have the 
 balance, or 140 boats, upon whom the Government has 
 tried to saddle the war cost, means that it has kiUed off 
 its prospects for future sales and any opportunity it might 
 have in the American investment market unless it re- 
 adjusts these sales on an equitable basis. Sane, honest 
 business judgment is requir^ before the balance of these 
 pioneer purchases pass into receivership and our future 
 market entirely destroyed. 
 
 If the Ford Company, Armour & Company, the In- 
 ternational Harvester Corp^tion, the United States Tire 
 Company, or any of the liher great industrial corpora- 
 tions of America, had and were limited to a definite list of 
 prospective purchasers, and then destroyed these pur- 
 chasers, there would be nothing left for those large indus- 
 trial corporations t(^ do but dose their doors until they 
 could grow a new crop of purchasers in the years to come. 
 This would mean financial destruction to those large pri- 
 vate institutions. The failure on the part of the Shipping 
 Board to act now does not mean the destruction of the 
 financial fabric of our Gk)vemment, but it does mean a 
 depreciation and waste of the remaining asset values be- 
 longing to our Government, in its steel cargo boats, and 
 the destruction of its pioneer and prospective purchasers 
 who are rapidly bleeding to death between paying inter- 
 est charges and insurance — ^the latter item is almost as 
 large as the item of interest — on a lar^l^d false capital- 
 ization of war amortization, a continuaOln of' which is 
 most extrlilllpant financial waste and folly, ^v 
 
8 
 
 THE FOUMTM CONSIDERATION: 
 
 That .must be ilie cslftkMsliiiieEt of a htm price cxn tiie' 
 sted cftrgo lMMiti-4oii for ta*— divided into ekises as to 
 llie relative superiority of 
 
 , (a) dicieiicj in service; 
 
 (b) the iMcliinery used; and 
 
 witb a depreeiation wbicb sbould be fixed at 5% a year for 
 tie time in use. In this regard, the Shipping Board has 
 alresdy classified, for sales purposes, the types, makes and 
 kinds of boats which it has, from an efficiency for service 
 standpoint. The present ratio of prices which has been 
 established between these differoit classes can now be 
 'Implied to the new base price when estabMshed, and no 
 delay need ensne. It is just a question of the present 
 ratio and simple calculation, for the Board with its experts, 
 in the past, has made a proper and fair classification for 
 sales purposes. 
 
 THE FIFTH mNSIDEMATION: 
 
 The World Tonnage. The best authorities maintain 
 that there is sufficient steel cargo tonnage in the world 
 today to take care of all the needs of world transportation: 
 the present world's sted tuinage being equal to 120% of 
 the world's tonnage. The pent-up and accumulated 
 after- war demands of ocean freight have been absorbed. 
 The idle boats in harbors, at home and abroad, and low 
 ocean rates testify silently to this fact. Henceforth, the 
 world wil return to a normarpeace time bads in its ocean 
 transportation— back to the n«|nd ocean f^ Addi- 
 tional or new tonnage will be biiilt from time to time in 
 the ship yards of the world when needed by private capital. 
 This consideration is but a small factor, if any, in establish- 
 ing the present base value on the steel cargo tonnage in 
 the hands of the Shipping Board. 
 
 THE SIXTH eONSmEBATION: 
 
 Holding the "Five Considerations" above stated in 
 mind, we approach the last, and the oM importmt cormd- 
 maim, m the ietermmng factor, which fixes the basic 
 principle for establishing the values of our present com- 
 modity; to wit — steel cargo ships for sale in the open, 
 free, commercial i|iarkets of America, subject to the same 
 economic laws y any other American conmaodity when 
 offered for sa|i^' 
 
 There ww established, and in existence on July 31st, 
 1914, a^rtain standard of welfare, prosperity and living 
 
 
 
 for each of the nations of the world. The estabUshment 
 and stabilization of that standard of welfare, prosperity 
 and living, had been the result of the economic develop- 
 ment of each of those nations over a period of many years. 
 It was a peace time standard for each— the 100% stand- 
 ard. Into the making of it, through years of peaceful 
 pursuit, went whatever of national prosperity of natural 
 resources, of producing power, of wages, and of commer- 
 cial mtercourse with other nations, that was possessed by 
 each nation. Most of these naticms, like America, through 
 the war, were thrown off from this standard of welfare, 
 prosperity and living that had been established as of July 
 81st, 1914. Within the last five months, we who read 
 know that the United States is rapidly swinging back 
 agam to its peace time standard of wdfare, prosperity and 
 living. A comparison between the general commodity 
 pnces prevailing (a) on or about July 81, 1914; (b) with 
 those of 1915, 1916, 1917, 1918 and 1919; and (c) of De- 
 ranber 81, 1920, will show us the light and give us the 
 base for fixing our ship values. 
 
 Shortly after this nation went to wais there was organ- 
 ized in this country a Price Fixing CfMSimittee of the War 
 Industries Board, composed of most distinguished and ex- 
 pert Americans. That Committee gathered exact data as 
 to prices, and the fluctuation of those prices during the 
 war, in order to establish the control prices at which the 
 Government purchased for itself and the Allies during the 
 war. The data compiled is therefore authoritative and un- 
 questioned. It is a Govemn^nt record. They issued an 
 analysis of the price fluctuation of 92 important Ameri- 
 can commodities durmg that period, and gave in full de- 
 tail the price fluctuations of sted products from the mine 
 to the mill. 
 
 We have available to us: 
 
 (a) That exact data from 1913 to 1919; 
 
 (b) Tlie corresponding records of December 31, 1920 
 prices, showing where those commodities have receded, 
 mth deflatum not jfet complete m thk cmmtry; 
 
 (c) llie prices of ships built in America and the United 
 Kmgdom from 1910 up to the date when Europe went 
 to war-during peact times and under a peace time 
 •standard of Uvmg; and\ 
 
 (d) The prices at wWch ships ^ buUt in this country 
 and the United Kmgdom from -1914 to 1919 at war 
 f mie costs. | 
 
 These have been charted, and without con^iliMit, I suhmit 
 them to you herewith. They have formed a ^ and defi- 
 mte judgmiat. 
 
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IS 
 
 Four grait outstmiiliiig fuels are appireiil from these 
 igures: 
 
 First: That shipbuilding costs in the United Kingdom 
 rose from $25.65 a D WT-^the normal pre-war cost, under 
 a normal standard of living condition, existing from 1910 
 up to and including Dec. 81, 1§18, during the war, from 
 August 1, 1014 to November, 1918—543% ; while in the 
 United States, from a starting point of $45 a DWT, 
 under similar conditions, for the same period, prices rose 
 477.770 . The price of no important commodity in Amer- 
 ica during the war anywhere near approximated this ah- 
 noimal mcrease nor caused the tremendous war wastage in 
 ^lues that occurred in shipbuilding, both in the United 
 Kmgdom and in America, except steel products and coke, 
 
 Smomd: That this great increased price was due to three 
 things: 
 
 (•) Expensive expansion of shipbuilding plants and equip- 
 ment — for war purposes alone, with no peace time 
 vake remaining at the close of the war for money 
 expended ; *^ 
 
 (h) The mobilittiiiiiii of materials under premiums and 
 priority onfecs for ship construction; and 
 
 (c) The concentration and use of new and inexperienced 
 workmen for expert work— to meet the terrific de- 
 struction of tonnage caused by the submarine cam- 
 £f**?«^ Central Empires from April, 1915 to 
 the faM of 1918, and to promptly take care of the 
 additional needs o| transporting our troops and 
 supplies to aid ty AUiet-whoUy war costs which 
 did not add a dollar to Hie value of the ships when 
 completed for use ia .|piTate industry. 
 
 TMrd: That while American commodity prices during 
 tfe yw 11114 generally fell below the average'cost of 
 lJllO.1018--wh,eh we call 100%-y^t the British demand 
 for war shippmg in American yards il-ove up shipbuildinir 
 prices m America 13.1% more than in 1918, with \mZ 
 steel costs and kbor costs preirailipg at that time in 
 •AmerMa* 
 
 J^rth: That when you compare the commodity prices 
 for three periods with each other; to wit: 
 
 ^ ^•^^ *^ period— 1910 to 1918; 
 (b) The war period— 1914 to November, 1918; 
 (cj The period consisting of a dayu-B^ember 81, 1920, 
 with more deflation yet to come in certain lines, 
 tlie startling fact at oncir lippears that the great basic prod- 
 ucts and commoditwtif this country have swung back in 
 "^^J^}^ tie peace time value of the 1910-1913 
 KJTl!?'^'' approximate very near to the 1910- 
 
 "^^^ "lejiriieat grower, the copper mine owner, have got 
 
 18 
 
 to sell the things that they produced at high khor costs in 
 the year 1920, at the 1910-1918 prices. The great law of 
 economics is no respecter of classes nor of Government, 
 and our ship values, at whatever they cost us during the 
 war, must come to a peace time basis. 
 
 The peace time prices which constituted the 100% 
 standard of welfare, prosperity and of living in this coun- 
 try as of July 81, 1914, was built through many years of 
 struggle, using all the natural resources, energy, indus- 
 try, inventive genius and our power of organization — 
 creating great productiveness in this country. We are 
 going back towards that basis rapidly. We are asking 
 the people to buy our ships, knowing that they have to so 
 operate them, that their capital investment will be returned 
 to them and a fair return on their money during a period 
 of twenty years to twenty-five years from today, while 
 this country is stabilizing itself more and more, day by day, 
 to the peace time standard of welfare, prosperity and liv- 
 ing, as was created and in existence on Ju|y 81, 1914, and 
 toward the prices of 1910 to July 81, 14>t4. 
 
 In f aumess to the pioneer purchaser| and the future pur- 
 chasers, it almost seems that we shoild offer our ships to 
 ttiem on the basis of the 1910-1913 period, but so that no 
 question can be raised, I suggest that we assume, in the 
 five year war period, that the standard of living of this 
 country was lifted 10% a year, a total of 50% in jive years 
 terriie advance; and thatifl will be maintained at that 
 point for the neict twenty years, during the life of these 
 boats. In a word, that we did lift and will maintain that 
 high standard of welfare, prosperity and living of the peo- 
 ple of the United States 50% and that we ask the pur- 
 chasers — ^past and future — ^to absorb that 50% ; in a word, 
 that we place the price of our ships at an advance of 
 50% of the 1910-1918 cost, which approximated $45, 
 which means when we establish that rule that the 
 Government wiU then be placed in a more favored posi- 
 tion as against any group or class of private persons sell- 
 ing commodities in America, for the economic swing, as 
 seen by the present figures in the deflation that is taking 
 place, is far below that point. 
 
 There are three great ooipmodities that have not as yet 
 liquidated their prices: 
 
 First: Retail Prices. The raw material producer, the 
 manufacturer and wholesaler has liquidated his prices in 
 the main. Within three months from now, the retailers 
 throughout the country will have to clo^^Mt their present 
 hi|^ priced stodcs imd will be forced to ^isept the liqui- 
 dated prices on the new goods, through coB%etition. 
 
14k 
 
 Smmi: War Time PrkeM on Steel Producie tmd Coke. 
 The further liquidation of steel and coke prices must come 
 shortly. The farmer buying motor cars and parts, trucks, 
 trailers, binders, tractors, gasoline engines, com planters, 
 plows, etc., will not pennit, nor pay war time prices for 
 Ms steel needs tmA accept peace time prices for the prod- 
 ucts of liis t oil. H e wii demand relief and within six 
 months it to belicTe that he will receive 'it. 
 
 Since writing the above, I note in the morning papers 
 of January drd the announcement that the Bethlehem 
 Steel Corporation is to cut the prices of all labor from 
 W% to m% on the present rate of wages, which means 
 « drastic recession of fmmW% to 40% on the peace tune 
 rate of wages. It is a known fact that from 75% to 80% 
 of the cost of all finished products is the labor item, when 
 considered from its original state to a finished one. The 
 recession in steel prices is now on. Steel is the largest item 
 in aiipliiiidiiig costs and in the next two years it will move 
 a long way toward the peace time, 100 % standard. 
 
 TMrd: War Time Prices of Labor. The law of supply 
 and demand, now at work in that commodity, which is in 
 evidence on every side, plus the li^dation that has oc- 
 curred in the priees^ of i& ■tose: commodities purchased 
 
 hy labor, is already rapidly spliliiing labor prices towards 
 peace time rates. 
 
 One of the reasons why present shipbuilding prices are 
 stil high, though there is practically no demand in Ameri- 
 can yards, or in foreign yards for conslmelion, is due to 
 the fad that steel and coke hive not as yet been fuly 
 liquidated in price. 
 
 Every banker in America, every economist, the Secre- 
 tary of the Treasury, Mr. Houston, the entire Federal 
 Reserve Board, have for six mcmths been insisting that all 
 American values be liquidated to a normal peace-time 
 basis. Is there anyone so weak in reasoning that he wil 
 suggest at this point that the Government can force a sale 
 of these steel cargo boats in the open, free, commercial 
 markets of America, and ask farmers, merchants, lawyers, 
 doctors. Senators and Congressmen, and bankers to buy 
 tiie securities' as an investment in these' sted cargvi' boats, 
 except on an honest and fair basis? I solemnly predict 
 that the steel ships will rust at their docks irst— for the 
 economic laws of trading and investment are inexorable. 
 
 The classiieation 0f the boats has already been made by 
 lilis Board, as^ to '^dmcf m service; machinerj ^and equip- 
 ment, and age^4nd the same mtio thai has been established 
 CMl be cstaUished now. A depreciation of S% per annum 
 
 Iff 
 
 for the time the boats have been in the water, must be de- 
 ducted from the base price when established. 
 
 These inevitable conclusions have forced me to realize 
 what must now be done and, too, the time has arrived when, 
 under my oath, I must act. Therefore, incorporating the 
 foregomg as a preamble, I move the adoption of the fol- 
 lowing resolution: 
 
 BE IT RESOLVED: 
 
 First: That the top price of the steel cargo boats owned 
 by the Shipping Board be fixed at $45 a DWT which was 
 the peace time price of construction, plus an increase of 
 50% thereof, as the base price for the new steel cargo 
 boats, with the same differential ratio for efficiency in ser- 
 vice, machinery and equipment that has already been es- 
 tablished by the Board, with an allowance for depreciation 
 of 5% per annum for the time the boats have been ip the 
 water. 
 
 Second: That all contracts made with pioneer pur- 
 chasers of Shipping Board boats be recalled and the pur- 
 chase price be rewritten on the basis of |he new prices as 
 established; that all profit made on those boats while in 
 the hands of the pioneer purchase be taken by the Gov- 
 ernment ; that they be paid a service charge for the man- 
 agement of the boats while in their charge, the same as 
 Managing Operators, on the basis of MO Agreement 
 No. 4 ; and that interest charges incurred or paid be ad- 
 justed in consonance with the new prices established; and 
 
 TMrd: That these new pricel be effective as of Febru- 
 ary 5, 1021, so that Congress have an opportunity to 
 have full knowledge of the methods and reasons for the 
 fixing of the prices, and may, if they so desire, dissent 
 therefrom ; that copies hereof be sent promptly to all mem- 
 bers of the Finance, Appropriations, and Commerce Com- 
 mittees of the Senate and the like C<Mnmittees of the 
 House. 
 
 ♦Was Industries Board Price Fixing Committee's 
 Definition of the terms of b^ch commodity listed in 
 table on fa0e8 10-11. 
 
 BARLEY — Fair to good or Standard Grade. Market, Chicago. 
 
 CORN — Contract grades, cash. Market, Chicago. 
 
 FIXIUR (Rye) — ^la Jute, curlots; f. o. b. New York. 
 
 FLOUR (Wheat) — Standard. Market, Minneapolis. 
 
 MEAT (Beeves) — Average of Cattle-Steers, Choice to P%ie, and CatUe- 
 Steers, Good to Choice. Market, Chicago. 
 
 HOGS — ^Average of Hogs, heavy; Hogs, light; Common \a Choice. 
 Market, Chicago. \ ^ 
 
 PORK — ^Mess Fork» old to new. Market* New York. 
 
 \ 
 
16 
 
 OATS — Contract grades, cash. Market, Chicago. 
 
 RICE — ^Honduras, Head Domestic Clean. Market, New Orleaiit. 
 
 RYB — No. 1, cash. Market, Chicago. 
 
 WlilBAT — Average of No. 1, Northern Spring, mah, Mliiiieftpolls; No. S, 
 
 red, Winter at Chicago; No. 1, Northern Spring, cash at Chicago. 
 
 COTTON — ^Average of Upland middling at New York, and middling at 
 New Oceans. 
 
 HIDES — ^Average of Calf ikin No. 1, country at Chleago; green salted 
 packer; heavy iiatiTe ateere at Clileaco; pMfeara lieaTy Tmm alaera 
 at Chicago. 
 
 LHATHlilll — ^HameM* oak No. 1. Market, Clileagii. 
 
 WOOL — Medium fleece, % to % grade, MO«Fei. Marfceta. laatem. 
 
 Boston, Baltimore, Philadelphia and New Tori. 
 RUBBER — Para. Market, New York. 
 COPPER (Ingot)— Electrolytic. Market, New York. 
 COPPBR (Skeet)— Hot rolled. Market, New York. 
 LEAD — ^Average of lead. Pig, desilveriied, and lead, pipe at New York. 
 
 ClIMENT — Arerage'Of Portland Doaeatle ipot; BiMlaiale. Market, 
 New York. 
 
 COAL — ^ATerage of Anthracite Chestnut. Anthracite Egg, Antitraclte 
 Broken, Anthracite Stove; at New York. 
 
 COAL — Bituminous, Pittsburgh run of mine; Cincinnati, 1 o. h. caw. 
 
 COKE — Connelsville, Furnace, f. o. b. Ovens, Market. 
 
 PIQ IRON BASIC — Mahoning or Shenango Valley Furnace. 
 
 PIO IRON BESSEMER— PIttabmrgh Market. 
 
 PIG IRON FOUNDRY-^o. Southern, Cincinnati, Market. 
 
 STEEL SCRAP— Heavy, Melting. Market, Pittsburgh. 
 
 SCRAP — No. 1 Railroad Wrought. Market, Pittsburgh. 
 
 IRON BARS — ^Best Refined. Market, Philadelphia. 
 
 STBBL BHjLBTfl-iBeBaemer. Market, Pittaburgh. 
 
 STEEL BILLETS — (Ipen Hearth. Market, Pittaburgh. 
 
 SHEET BARS — Bessemer. Market, Pittsburgh. 
 
 SHEET BARS — Open Hearth. Market, Pittsburgh. 
 
 STEEL BARS — Base Price. Pittsburgh Market. 
 
 STEEL — Struetural. Market, Chicago. 
 
 snacL PLATMS— Tank. Market, Plttabnrgn. 
 
 STEEL SHEETS— Blue Annealed, No. 10 Gauge. Market, PittabnKgll. 
 RIVETS — Button Head, Structural 1. Market, Pittsbnrgk. 
 WIRE RODS — Bessemer. Market, Pittaburgh. 
 
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