£6,717 brought forward, making £7,096 to be carried forward to the eighth accounting period. FREIGHT MARKET DECLINES AGAIN IN 1938 A general meeting of the International Tanker Owners' Association was held at London on May 19, 1938, during which the chairman, H. T. Schierwater, submitted the report for the 6 months ended November 3, 1937. The chairman took the occasion to remark that following a period of very remunerative rates the market had fallen very rapidly and drastically and was at a point where many owners realized that rather than cut rates further in an endeavor to get business it was more profitable for them to lay up and draw the pool allowance. This balancing point naturally varied with the efficiency and economy of the individual vessels, and that was why the pool affected the market not merely at the lowest point but throughout the various stages until the least economical class of vessel was absorbed above that point it ceased to have any effect on market rates, which was as it should be, for it had never been the intention that the machinery of the pool should be used to enable already profitable rates to be forced still higher. Other portions of the chairman's report follow: Market fluctuates rapidly.-Since we last met we have been through a period when the pool had no effect on rates, as all tonnage was able to find employment at a figure more remunerative than the laying-up return. Today we are at the stage in which, as I have said, the owners of certain vessels at least when quoting on freight inquiries are influenced in their calculations by the amount that they would be entitled to draw if laid up. If there is no improvement in the demand-and this is something beyond our control-we may come rapidly to the stage when this will apply even to the most modern and economical tonnage. The pendulum swings very quickly, and, having in mind the uncertainty in this respect, the council, at yesterday's meeting, decided to increase the rates of contribution to 10 percent on voyage charters and 121⁄2 percent on time charters, with appropriate reduction on long-term engagements. For some time past there has perhaps been a tendency for owners to assume that the greater part of their contributions would be returned as surplus, but in existing circumstances I think it would be unwise to act on this assumption. Effect of pool on market. On the question of the effect of the pool on the freight market, it seems to me that there are one or two points which are perhaps not quite appreciated in certain quarters. On occasions in the past when the rate of contribution has been raised, I have noticed comments in market reports to the effect that freight rates have not advanced in spite of the increased contribution, the implication being that the increase has been borne by the owners. What actually happens, of course, is that in the ordinary run of things the percentage is raised on a weak market and it may very well happen that the next fixture shows no improvement for the simple reason that had there been no increase in contribution the market rate would have declined. On a reduction in the rate of contribution, which, of course, would normally happen on a strong market, the reverse applies, and rates may show an advance in spite of the reduced contribution. Another point which causes comment is that on a rapidly falling market fixtures may be made at rates which appear to be below the parity of the laying-up allowance. I think that this can be explained by the fact that there are many owners who cannot easily lay up their vessels at short notice and consequently are apt to continue running for another voyage at a figure which is below that at which it would pay them to lay up. The council has had this under consideration and you will shortly receive notice of proposals which it is hoped will tend to rectify this position. Tanker pool sets precedent for tramp owners.-It has no doubt been of interest to our members to see that the tramp shipowners are at present con templating a pool on lines practically identical with our own, and I am sure that you will all wish them every success in their efforts. When we started, the principle under which we operated was something entirely new in the shipping world and was perhaps accepted by some of you in the nature of a faith cure administered to a patient in extremis. Our general cargo friends at least have the assurance that the principle has worked in practice and that our members have throughout shown the utmost loyalty in living up to the spirit of their obligations. I appreciate this, as I also appreciate the help that I continue to receive from my colleagues on the council and from our very efficient secretaries. BALTIC AND INTERNATIONAL MARITIME CONFERENCE SHIPOWNERS ORGANIZE TO FIX MINIMUM RATES The practical working of the minimum rates introduced by the Chamber of Shipping of the United Kingdom in the grain trades during 1935 encouraged shipowners in the Baltic and White Sea trades to establish minimum rates on timber for both liners and tramps. A scheme for this purpose was put into effect on January 1, 1936, with the adherence of practically all the shipowners of the following countries: Belgium, Denmark, Estonia, France, Finland, Germany, Greece, Italy, Yugoslavia, Latvia, Netherlands, Norway, Poland, Spain, Sweden, and the United Kingdom. CONFERENCE ANNOUNCES POLICY In submitting the scheme to the general public, the Baltic and International Maritime Conference, which had been made the administrative agency, issued a pamphlet on December 19, 1935, containing the following declaration of policy: It might be appropriate to emphasize not only the object of the scheme, but what it is intended to do. The scheme does not aim at exploiting either exporters, importers, or consumers by securing for shipowners an unreasonable profit. Every endeavor has been made to compile the rates with due regard to the legitimate interest of these parties. The rates are fixed on a very moderate basis so as to represent what may be truly said to be minimum freight rates. That is to say, they are on the lowest basis at which shipowners will be able to maintain efficient transport services by sea in these trades in normal circumstances without a direct loss. The scheme is therefore a serious attempt by the shipowners to establish their industry on a sound economic basis-an object which ought to meet with sympathy on the part of all who are similarly engaged themselves or interested in the introduction of stable conditions. Such conditions alone can prevent the uncertainty and fluctuations that will always be a handicap to development of trade on account of compelling importers and consumers to restrict their purchases as much as possible to avoid losses. To some extent it may be said that history repeats itself with the issue of the Baltwhite Timber Scheme. The Baltic and International Maritime Conference (under the name of the Baltic and White Sea Conference) was formed about 30 years ago for the very same purpose. 1 See section on United Kingdom. This conference reports membership of 575 owners and brokers of 22 nationalities, having 9,750,000 gross tons of shipping. In the years that have elapsed the conference has continually worked toward stabilizing and equalizing loading and discharging conditions as well as the conditions of the charter parties used in the trades. There is, therefore, now a better and more equal basis than in 1905 for the establishment and the practical working of minimum freight rates.3 The understanding of the value of cooperation is more widespread, and, last but not least, as already stated, the timber trades no longer stand alone in upholding minimum conditions. In these circumstances and with the large measure of support given to the scheme by the interested shipowners, an optimistic feeling is prevailing in the trade as to the success of the scheme. It is realized, too, that the scheme is the last bulwark against chaotic conditions under which even the financially most fit would find it hard to survive. SHIPOWNERS ADOPT TARIFF EMBODYING RATES AND CONDITIONS Upon acceptance of the scheme by the shipowners, the Baltic and International Maritime Conference issued a printed tariff stipulating in detail minimum rates and conditions. This tariff applied to the timber-carrying trade from Baltic and White Sea ports to United Kingdom and continental ports. It included the following items: Deals, battens and boards, props, pulpwood, sleepers, kappbaulks, baulks, and logs. The rates were based upon the general charter-party conditions usually in force in the timber-carrying trade. As published, the scheme named the rates applicable from numerous loading ports, by fixing basis rates for certain ports in each district or zone with extras or reductions from other ports. CONFERENCE ESTIMATES VALUE OF SCHEME In its report for the year 1936 the conference reviewed the success of the scheme and furnished an estimate of its value to shipowners. The conference figured the total export of sawn wood from the Baltic and White Seas to be about 3,500,000 standards, and stated that an additional freight rate of 2 shillings a standard more than was paid in 1935 would mean an increased income for shipowners of between £300,000 and £400,000. To this, the conference points out, should be added higher freight rates for the other kinds of woods. This rough estimate of the additional freight earnings is quite sufficient to show that the scheme was of considerable benefit to shipowners. Success of the scheme in 1936 led to its continuance in the following year, notwithstanding that the actual level of freights rose considerably above the minimum. The conference issued a new tariff embodying what it considered moderate increases in rates to offset 3 W. J. Noble, acting for the vice president of the Baltic and White Sea Conference appeared before the Royal Commission on Shipping Rings, June 2, 1908, and submitted a statement on the activities of the conference, the following extract of which relates to freight rates. "The Baltic and White Sea Conference is an international association of shipowners formed in February 1905 for the purpose of arresting the ruinous competition on the low market then prevailing. This was effected by formulating minimum rates of freights for wood cargoes from the Paltic and White Seas. There are no penalties upon members nor any inducement offered to merchants to favor Conference vessels. "The plan succeeded in 1905, and after that year minimum ‘asking' rates only have been formulated, reliance being placed upon owners not accepting lower rates, unless at the last moment they could not do otherwise." higher operating expenses. Again, in 1938, the scheme was renewed with a further revised tariff. The following is a copy of the form which shipowners were asked to fill in for the purpose of adherence: THE "BALTWHITE TIMBER SCHEME" Compiled by the special "Baltwhite" committee comprising representatives appointed by various National Shipowners Associations and issued and operated by the Baltic and International Martime Conference. UNDERTAKING I/we the undersigned, pledge myself/ourselves to maintain the minimum rates and conditions of the "Baltwhite Timber Scheme" for the year 1938, in the case of all cargoes of sawn wood and/or props, and/or pulpwood, and/or sleepers, and/or kappbaulks, and/or baulks and logs from the Baltic and/or White Sea to be carried by vessels owned and/or managed by me/us, and to adhere to the minimum time charter rates stipulated in the said scheme for tonnage let on time charter for operation in, or likely to be engaged in. the Baltic, White Sea, Great Britain and Ireland, continent timber trade for 1938. This undertaking to be binding for the year 1938 provided I/we have been informed through my/our national organization, or by the Baltic and International Maritime Conference, on or before January 10, 1938, that at least 85 percent of the timber-carrying tonnage belonging to owners in Belgium, Denmark, Estonia, Finland, France, Germany, Great Britain and Ireland, Greece, Italy, Latvia, The Netherlands, Norway, Poland, and Sweden have signed a similar undertaking. I/we agree to accept such estimate as to adherence as may be ascertained by the special committee as referred to above. The special committee is authorized to adjust the tariff when and where it is warranted. The timber-carrying capacity of my/our vessel (s) is shown below. Steamers' name(s)‒‒‒‒‒‒‒‒Deadweight tons_-_-___-Standard capacity In its circular to interested parties the conference made the following statement: Since the last tariff was issued there has been a considerable increase in the cost of various items, which owners must take into account when working out their freights, such as operating expenses, wages, bunker coals, stevedoring, not to mention the shorter working hours introduced in some countries resulting in vessels having to stay longer in the ports to discharge the cargoes they carried. On this account it has been deemed necessary to increase the rates, by about 20 to 25 percent and adjust the differentials according to the altered conditions. The Committee, desirous that the minimum rates for 1938 should be established with due regard to the quite recent changes which have taken place in costs, postponed the issue of the tariff until reliable information as to the increases was available. This is the reason why it has not been possible to publish the tariff at an earlier date. Even so, it is to be feared that the costs on which the minimum rates have been figured out will increase during the coming season. If any of the costs for loading or discharging referred to in the tariff should be put up, owners should hold out for correspondingly higher rates of freight. UNITED STATES LINER RATES PRIVATE CONTROL The extent of liner cooperation in the United States is indicated by the large number of conferences in existence, there being as many as 120 in March 1938, not counting those operating in trades outside the continental area. All districts are well represented-Atlantic, Gulf, and Pacific; moreover, the conferences are rather evenly divided as between outward and homeward. Deferred rebates are illegal, therefore conferences resort to the contract system of differential rates. Most of them employ this system, but not all include the whole range of items listed in their tariffs. As the exigencies of outside competition require, conferences from time to time relinquish their control over rates on particular commodities and declare them "open," with the view, however, of restorting them later if and when conditions warrant. The following tariffs are on file, by requirement, at the Maritime Commission, Washington, D. C.: (1) Out-bound tariffs of all common carriers and (2) in-bound tariffs of common carriers, parties to rate-fixing agreements. In addition, miscellaneous rate information is published in trade and shipping journals, and in circulars of agents and brokers. This information is limited in scope and seldom includes manufactures. Firm quotations must be obtained from the lines or their agents. SHIPPER REPRESENTATION Either individual shippers or trade associations may negotiate with conferences in rate matters. Without exception, the conferences which have replied to a questionnaire sent out by the Bureau of Foreign and Domestic Commerce have expressed a desire or willingness to deal with trade associations. Many of these are active at the present time, especially those for industries that ship in large volume. The following may be cited as typical: Rubber Manufacturers' Association, New York City; National Lumber Exporters' Association, Memphis, Tenn.; Automobile Manufacturers' Association, New York City; Pacific Forest Industries, Tacoma, Wash.; Institute of American Meat Packers, Chicago, Ill.; Dried Fruit Association, San Francisco, Calif.; Wenatchee Valley Traffic Association, Wenatchee, Wash.; and the Canners League of California, San Francisco. Details of their procedure are not standardized. A lumber association reports that it has been customary for its representatives, 60 or 90 days before expiration of contracts, to request the chairman of the conference to arrange a meeting for the discussion of the rates to apply during the ensuing period. The meeting has been semiformal and representatives of the association have submitted their views as to foreign market conditions and as to what rates the traffic would bear. In one instance, when the conference named a rate that the association regarded as arbitrary, the whole industry declined to contract with conference lines. A special committee was organized to negotiate further and eventually a compromise was reached. Another illustration is that of a fruit association, which |