14. "Fighting ships."—Sometimes lines or confer ences operate one or more ships at a loss on certain lines in order to cripple competition or force competi tors to come to terms. The organization of such a "fighting fleet" was shown to exist in the case of six of the German companies by United States Consul General Robert P. Skinner, who thus reported: Any account of the methods and practices of the German steamship companies would be incomplete without reference to the Syndikats-Rhederei, a corporation thru which are operated the "fighting ships" of the six largest Hamburg companies engaged in extra-European trade. Nominally the Syndikats-Rhederei is a vessel-owning company with a capi tal of $1,428,000 engaged in commercial transportation en terprises. Actually it is a defensive corporation owned in respect to its capital shares as follows: Hamburg-American Line $785,400 Hamburg-South American Line 166,600 German Steamship Company 154,700 German Australian Steamship Co 130,900 C. Woermann 119,000 German East Africa Co. 71,400 Total $1,428,000 The above distribution of shares is apportioned with ref erence to the tonnage of the companies named. This fight ing corporation was organized on December 19 and regis tered on December 23, 1905, and one-half of the original capital was paid in immediately. Four comparatively small and inexpensive ships were purchased, and those with such others as may be chartered from time to time are hired out to the six owners of the company to meet dangerous compe tition and to drive it away. The fighting ships handle chiefly bulk goods, leaving merchandise which requires prompt transportation to the care of the parent company, which maintains its nominal rates as far as possible, the stress of competition being borne by the fighting ships prin cipally. In times of peace the fighting ships engage in regular trade on time charters.
As this corporation is not one for profit primarily, the investment, in reality, is a new sort of insurance. The Syndikats-Rhederci made no money at the beginning of its history, this fact indicating that the ships were all actively engaged in commercial warfare, but last year (1912) the returns were favorable, as rates, generally speaking, were higher and the regular lines required less expensive support.
The fighting of outside competition is not always as thoroly organized as in this case, but fighting ships are far from being uncommon. They have been used by the North Atlantic Pool in order to compel the Russian–American Line and the Uranium Steamship Company to abandon its service or to obtain membership in the Association.
15. Deferred rebates.—More effective than any other single method is that of deferred rebates. A deferred rebate is a provisional rebate computed on the freight paid during a certain period, usually six months, but not payable until after a six months' period has elapsed during which the shipper has con tinned to give exclusive support to the "conference" lines. Such rebates amount frequently to 10 per cent of the freight paid.
The system may,tho not necessarily,lead to abuses. The rebate is usually granted on the same conditions to large and small shipper alike. Sometimes the deferred rebate agreement allows the shipper a cer tain freedom of action. He may be allowed to ship over designated lines other than the one with which the agreement is made. He may be allowed to ship by any line provided the rate is not lower than the one charged by the contracting line. In a few cases the shipper is free to charter a tramp any time when the tramp rate is a certain margin below the line rate.
On the whole the shipper is satisfied with this sys tem. Mr. Purcell of the firm of Hard, Rand Com pany, importers of coffee from Brazil, said before the house Committee: "We stick to the syndicate lines, because they give us the service we want, and we must have that service. We are assured as long as we do business with the syndicate lines that we shall have the tonnage, and we do not have to pay more than 10 cents a bag above what we can charter for." • 16. Combinations in North Atlantic trade.—The most effective organization exists among the Ameri can–North European lines. The International Mer cantile Marine Company thru stock ownership con trols effectively many of the largest steamship lines,.
among them the American Line, the Atlantic Trans port Line, the Leyland Line, the Red Star Line, the National Steamship Company and the White Star Line. During 1919 and 1920 several additions were made to this list and the company increased its stock holdings in a small number of companies operating to New Zealand and Australia.
Shortly after the formation of this strong combine in 1902, two German lines entered into an agreement with the International Mercantile Marine securing a territorial division of traffic and arriving at an under standing concerning rates on freight and passenger traffic. The companies belonging to the I. M. M. _enter into separate agreements with steamship com panies not in the combine serving the same ports in Europe or America.
The Trans-Atlantic Freight Conference, composed of British lines, limits itself to the control of east bound traffic. This conference operates in sections known as the Liverpool, the Glasgow, the London and the Manchester conferences.
The American-Atlantic Conference is composed of the Continental lines, while the Atlantic Conference is made up of both Continental and British lines.
The N. D. L. V. (North Atlantic Steamship Lines Association) periodically fixed the amount of freight and passengers to he carried by its members and the rates to be charged. In 1909 the steerage traffic was divided as follows: Hamburg-American Line 31.38 per sent Holland-America Line 10.61 per cent North-German Lloyd 42.46 per cent Red Star Line 15.55 per cent Similar steerage passenger agreements exist be tween the Continental and British lines. Each line undertakes to arrange its service so that the percen tage actually carried will correspond closely to the number allotted to it in the agreement.