Business: Sale or Salvage?

An air of expectancy pervaded the offices of the U. S. Shipping Board in Manhattan last week. Chairman Thomas Ventry O'Connor was awaiting bids to settle the destiny of the great, long-troubled U. S. Lines (TIME, Aug. 17). On Thursday the 13th two bids were received, and after they were examined it was apparent there was no use waiting until deadline of the 15th at midnight, for all competent U. S. shipping interests were mobilized on opposite sides of those two bids.

On one side stood Philip Albright Small Franklin and his International Mercantile Marine combination. On the other side stood Paul Wadsworth Chapman, present head of U. S. Lines, now evidently aided by Pacific coast shippers headed by Robert Stanley Dollar. Optimistic Philip Franklin offered $3,000,000 in liquidation of existing indebtedness and otherwise complied with all the conditions laid down by the Board. Tenacious Mr. Chapman offered $3,170,900 but dodged the problem of operating the Leviathan, heaviest money-loser of the fleet. Let the Shipping Board take title to the Leviathan, suggested Mr. Chapman, and he would operate her at his expense on a minimum schedule of five trips a year for five years. Mr. Franklin was willing to keep this floating elephant and send her on seven circuits a year to Southampton for five years. Both offers provided for continuing work on the two new vessels abuilding at Camden, N. J. and for their eventual operation in transatlantic service under the U. S. flag.

From Mr. Dollar and from Kenneth D. Dawson, Seattle's potent shipmaster, the Chapman interests got assurance of fresh capital to salvage their enterprise by a private loan. The arrangement made to secure it was not made public.

The Franklin offer involved forming a new company with a capitalization of 600,000 shares of 7% preferred stock and 2,400,000 shares of common. The new capital needed would be raised by sale of 350,000 of the preference shares at $10, purchasers to get a handsome bonus of new common. The present unfortunate owners of U. S. Lines, Inc. preference stock are offered a share-for-share exchange of the new company's common; no provision at all was suggested for the U. S. Lines common stockholders. This stock is entirely owned by Mr. Chapman and a small group of friends. If the Franklin proposal should be accepted the equity of these men in the company would be wiped out.

Admitted by the Shipping Board is the fact that Banker Chapman paid too much for the Lines in 1929. This will weigh with them during their conferences this week in Washington. The Franklin offer makes no effort to correct this, could not be expected to, but Steamship Row was betting that when the decision came, U. S. Lines, Inc., bulwarked by Pacific Dollars, would continue to operate the ships. In other harbors the U. S. merchant marine progressed with less difficulty last week: