or more frequent sailings from each side of the Atlantic or Pacific is a most costly venture. To fulfill the requirements that must be met in the present-day passenger and mail services means the investment of several millions of dollars, and the organization of a business that only a large corporation can undertake. The number of ocean lines is consequently limited, and if the small number of rivals can come to an agreement as to rates, division of traffic, or pooling of earnings, competition can be regulated and some measure of monopoly can be established. Each line has a very considerable investment at stake, and while its ships can be transferred to some other ocean route and to some other service, the vessels, having been constructed and equipped with special reference to the particular service they are performing, cannot, in normal times, be sold or transferred to other routes without large financial loss.

The ungoverned struggles of the giant lines for traffic are apt to be financially destructive for both or all combatants. Like the traffic wars of powerful railroad companies, the competition of great steamship companies, if unrestricted, becomes so severe as to cease to be a healthy stimulus to business; artificial and unstable conditions of trade are created, and at the close of the struggle the carriers find themselves financially weak, and less able than they were at the beginning of their traffic war to improve their service and to keep their equipment and facilities abreast of business needs.

As with rival railroads so with competing steamship lines, coöperation for the regulation of competition is necessary. This is shown clearly by the history of the interrelations of steamship companies, by the rate and traffic agreements and pooling arrangements they have made, by the merging of small companies into larger ones, and by the consolidation of several large companies into a yet more powerful corporation. Before taking up the question of rates, it will be well to study the ocean line conferences, pools and agreements which have been organized in nearly all parts of the maritime world.

REFERENCES

JOHNSON, E. R. "Competition versus Coöperation in the Steamship Business," in Annals of the American Academy of Political and Social Science, LV, September, 1914.

JOHNSON and VAN METRE. Principles of Railroad Transportation, chap. xx on "Monopoly and Competition in the Railroad Service" (1916).

National Foreign Trade Council. Ocean Shipping, 2d ed. (House Doc. No. 2112, 64 Cong., 2 sess., March, 1917).

CHAPTER XIX

RATE AND TRAFFIC AGREEMENTS, POOLS AND CONFERENCES OF OCEAN CARRIERS

Agreements in chartered ocean service, 286. Prevalence of ocean line conferences, 288. Organization of line conferences, 289. Types of line rate agreements, 291. Ocean line pools, 293. Other methods of controlling competition between conference lines, 296. Methods of controlling competition of non-conference lines, 298. Complaints against ocean conferences, 299. Advantages of ocean conferences, 300. References, 302.

THE differences between tramps and lines mentioned in the preceding chapters have a special bearing on the extent to which their rates and services are controlled by agreement. Although a measure of coöperation among chartered vessels has at various times been attempted, complete coöperation is difficult to attain. The vast number of vessels and their owners, the bulky character of the greater part of their cargoes, the relatively small investment required to engage in the tramp service, and the fact that they are not limited to particular routes or ports, have maintained a much greater degree of competition among chartered vessels than among lines. Indeed, the most disturbing element confronting the lines is the frequent competition between the line and tramp services.

CONFERENCE AGREEMENTS IN CHARTERED OCEAN SERVICES

The occasional agreements or conferences that have been arranged among the owners of tramp vessels have been limited in scope and have had no great effect upon charter rates. In 1904, for example, the Sailing Ship Owners' International

Union was organized for the object of fixing minimum rates. of freight for the principal voyages in which sailing vessels are engaged in bringing freight to European ports from countries outside of Europe. A permanent committee was organized by the union to fix these freight rates from time to time for the various leading foreign ports. In joining the union each member promised to abide by all rates fixed by the union, and not to grant any rebates or commissions. He also agreed to let his ship lie by or sail in ballast if cargo could not be secured at union rates.

The scope and effect of this conference, however, were decidedly limited. It applied only to certain long voyages, such as those from the west coast of South and North America and the return voyages; only sailing vessels were included in the agreement; and these had to be relatively large vessels of an agreed minimum tonnage. The rates agreed upon, moreover, were merely a minimum, which was fixed largely with reference to the line of no profit.

There are also various steamship owners' associations, particularly in Great Britain, that have at times endeavored to control charter rates between certain of the larger ports, but have never exerted a widespread effect upon such charges. They are concerned mainly with obtaining favorable harbor regulations and shipping legislation; government protection against the shipping policies of foreign countries; improved charter parties; reduced coal-trimming charges; favorable tolls; protection against organized labor; or economical marine insurance.1 In 1905 a number of vessel owners entered into an agreement applicable to the rate on lumber from Norway, Sweden and Russia to Great Britain, Germany, Holland, Belgium and France; but the main work of the organization has been in building up a uniform charter party and in providing rules governing matters such as lumber measurement, loading, discharging and insurance.

At times certain ship operators have complained of agreements making it difficult for them to charter vessels for use. 1 J. R. Smith, The Ocean Carrier, 243.

in particular trades, such as the trade between Porto Rico and the United States. No evidence has, however, been presented that any considerable number of such agreements have ever been in existence nor that their effect was general. The Porto Rican agreement was possible because the trade of the United States with that island is "coastwise" trade and is not open to the competition of foreign vessels.

PREVALENCE OF OCEAN LINE CONFERENCES

It is in the ocean line business that coöperation has displaced unrestricted competition. The number of lines is relatively small, their invested capital is relatively large, they usually operate over definite routes and at a limited number of ports, and much of their traffic consists of high-grade commodities, general cargo, express goods, mail and passengers, from the carriage of which the tramps are ordinarily excluded. Conferences, agreements and pools have become general in the ocean line traffic because their organization and maintenance are less difficult than in charter traffic, and because the competition between ocean lines, if unrestricted, is likely to become so intense and persistent that their successful and profitable management practically requires them to enter into arrangements regulating their interrelations. As was stated in the Report on Steamship Agreements and Affiliations in the American Foreign and Domestic Trade, made by Professor S. S. Huebner to the House Committee on the Merchant Marine and Fisheries,

as regards nearly every foreign trade route, practically all the established lines operating to and from American ports work in harmonious coöperation, either through written or oral agreements, conference arrangements, or gentlemen's understandings. The few

1 House Committee on the Merchant Marine and Fisheries, Proceedings in the Investigation of Shipping Combinations, I, p. 701.

2 Proceedings in the Investigation of Shipping Combinations, IV, p. 281.