f our large fleet in the world's markets is thus
to hold up rates, for so long as this great fleet in one hand holds a
fixed rate others will only barely underbid. If we hold up rates an
increasing number of our ships will be idle as the private fleet grows.
On the other hand, if we reduce rates we shall be underbid until the
government margin of larger operation cost causes us to lose money.

We shall yet be faced with the question of demobilizing a considerable
part of this fleet into private hands, or frankly acknowledging that we
operate it for other reasons than interest on our investment. In this
whole problem there are the most difficult considerations requiring the
best business thought in the country. In the first instance, our
national progress requires that we retain a large fleet under our flag
to protect our national commercial expansion overseas. Secondly, we may
find it desirable to hold a considerable government fleet to build up
trade routes in expansion of our trade, even at some loss in operation.
Thirdly, in order to create this fleet, we have built up an enormous
ship-building industry. Fifty per cent of the capacity of our ship yards
will more than provide any necessary construction for American account.
Therefore there is a need of obtaining foreign orders, or the reduction
of capacity, or both. I believe, with most engineers, that, with our
skill in repetition manufacture, we can compete with any ship builders
in the world and maintain our American wage standards; but this
repetition manufacture implies a constant flow of orders. It would seem
highly desirable, in order to maintain the most efficient yards until
they can establish themselves firmly in the world's industrial fabric,
that the Government should continue to let some ship construction
contracts to the lowest bidders, these contracts to supplement private
building in such a way as to maintain the continuous operation of the
most economical yards and the steady employment of our large number of
skilled workers engaged therein.

When we consider giving orders for new ships, we must at the same time
consider the sale of ships, as we cannot go on increasing this fleet.
When we consider sale, we are confronted with the fact that our present
ships were built under expensive conditions of war, costing from three
to four times per ton the pre-war amount, and that already any merchant,
subject to the long time of delivery, can build a ship for