does it asks the observant small

"H boy in the geography class, "that the big rivers

always flow by the important cities?" This is one of the old-time standard jokes, good anywhere. But make it concrete. Imagine a shrewd little DutchAmerican boy back in 1694, attending classes in the new district school at Acquackanonck Landing (as Passaic was called in the olden days). "How does it happen," he will ask the schoolmaster, "that the tide water comes up as far as Acquackanonk, and no farther?"

A Shipping Center Two Centuries Ago! Putting the horse before the cart, where it belongs, it is worth while to realize that the prime and determining

factor in the original location of Passaic, and the element which for a hundred years maintained it as the supreme trading center in northern New Jersey, was its waterway transportation facilities. The tide, and with it the possibility of easy navigation, reached far into the backwoods, providing easy access to the products of the wilderness for the consumers at New Amsterdam-later New York-and what more natural than that, in the pioneering days of 1678, when Hartman Michielson of New Amsterdam was looking for a profitable business venture, he should establish his trading post on the Passaic River at the head of navigation, and nearest the heart of the great rich wilderness.

Great Importance in Bygone Days

Before long additional facilities for transportation were built, in the form of roads, which converged here from several key points. Acquackanonk became the port of entry for a great expanse of northern New Jersey, and even for a part of New York; and from north and south and east and west the great wagons came, bearing ores from the mines of Morris County, furs from Sullivan County in New York, lumber, hoop poles, barrel staves, rain, hay and other farm produce, to be shipped down the River to New Amsterdam. Brisk was the trade; and a whole line of wharves and warehouses sprang up along the waterfront to accommodate it. An inn and a store

Passaic River A National Highway

The venture prospered; the natural highway was soon carrying down a wealth of furs which Hartman bought from the Indians, and carrying back again the products of civilization which the Indian craved-guns, powder, knives, socks, coats, blankets, handkerchiefs, pipes, tobacco, rum, and a host of other commodities. The land was fertile and the forest yielded abundant fish and game, so that the settlers who followed Hartman's lead could be nearly self-supporting; but the river was the one element without which the new settlement would have

been unthinkable.

were built, and a colony of rich farms grew up; but the central point of all the bustle and prosperity was the head of navigation, and the foundation and support of it was the Passaic River-in effect an arm of New York Bay.

A Beehive of Manufacturing Industries And so the trade grew for a hundred years. And then, from being a farming and distributing center, Passaic became a manufacturing center; and it now is one of the notable manufacturing cities of the country, with an unusual variety of products. Worsteds and woolen textiles predominate; but its factories also produce cotton textiles, including especially handkerchiefs, rubber and artificial leather goods, metal ware, insulated wire, chemicals. paper boxes, railroad cars and machinery, oilcloth, belting and packing, parchment paper, yarns and knitted goods, stove polish and stamp pads. There are also extensive bleaching, finishing, dyeing and textile printing plants.

River Succumbed to Railroad Rivalry

The rising tide of railroad popularity, after the coming of the Erie in 1836, diverted attention from the long enjoyed river highway; and the standard barges in use

(Continued on Page 17)

Passaic River's Improvement a Vital Port Need

By RICHARD MORRELL,

President, Campbell Morrell & Co., also President, Passaic Chamber of Commerce

what are they? The reinvested savings of a few brief years. It is time that the potential asset in our midst was made real. The valley is rich enough to afford the investment involved in developing the waterfront; we must secure federal aid to deepen the channel. The big project matures slowly; but the psychological moment comes at last. I hail this time as the happy beginning of the full utilization of our too long latent assets.

Richard Morrell, Pres't Passaic Chamber of Commercc interested in the improvement of the river channel; as president of a State Commission which made a prolonged study of the problem of flood control, and of the conservation of water for industrial and potable purposes in the New Jersey metropolitan areas, I have studied the regulation of floods; as a member of the North Jersey District Water Supply Commission, appointed especially to consider the sources of potable water for the metropolitan areas, I have studied the river from every angle, and have never failed to find it fascinating and inspiring. Like many peoples in lands of plenty, we of the Passaic Valley have failed in the past to develop our resources to their limit: we have rested content with the lead which a bountiful nature gave us, and which we took for the asking two hundred years ago. But science has put our natural advantages out of date. To some extent, they have become merely potential assets.

But this is the age of big things. A Panama Canal--a New York water supply-the plans of a Port Authority-

Passaic River's Potential Possibilities

By JOHN H. McGUIRE, Mayor of Passaic HE CITY OF PASSAIC occupies a strategic position in the Passaic Valley at the head of tidewater, and nearly at the center of a great area which potentially is a vast industrial and residential metropolis. During a whole century or more, its facitlities for river-borne traffic made it a highly important distributing center. For a few decades thereafter the railroad, while contributing immensely to its general prosperity, made it rather a stopping point on a through route than a terminal; and its importance as a shipping point did not keep pace with its spectacular growth in other ways.

But with the swing back to the fundamental economy of water transportation, Passaic is bound to regain its old place as a central shipping joint. The river, of course, must be made to match the requirements of modern water transportation, or its great destiny will go unrealized. A channel that is six feet deep at high tide may do for the leisurely scows and low wages of 1750, and a wheelbarrow and a gangplank may suffice to unload those leisurely scows; but such channel and equipment will not meet the requirements of the hustling business methods of 1923. The river and its waterfront development must jump out of the eighteenth century into the twentieth. Improvement Began Half a Century Ago

There have always been a few people with the vision to see this future, who have striven to keep the idea of the proper devlopment of the Passaic River alive. As a result of their agitations, government work in dredging the channel was begun an even fifty years ago-work which was continued for twenty or thirty years, until a channel was established with a six-foot depth at low tide. But this channel will no longer suffice: the old scows that navigated safely at such a depth are slowly being worn out and discarded, and are being replaced-the channel must be made to accomodate the standard barges if it is to be commercially useful. And a practical plan of waterfront development must also be initiated-it is useless to have a channel that has no landing facilities at the terminals or along the sides.

City of Passaic Will Cooperate

The Board of Commissioners of the City of Passaic has long appreciated the need for local cooperation with the government-for it has been universally conceded that federal aid for so large a project as deepening the channel would be essential. On April 17, 1917, the commissioners placed the city on record as pledging the erection of wharves or terminals adapted to the commerce of the deepened river. On May 22, 1923, the pledge of the city was reaffirmed by another resolution to the same effect, passed by another board of commissioners; and the city stands ready today to lend the most effective kind of cooperation in the plan for the full development of the river and its waterfront to the limit of its usefulness. Bulkheads, Terminals, Industries and Motor-Truck Highways Planned

A hundred years ago, the Passaic River was an arm (Continued on Page 27)

D

URING his cross-country tour President Harding spoke at Kansas City, Mo., on June 22, in the course of his remarks dwelling at length on inland waterways and the low transportation charges that lend such great importance to their development. On that occasion this is what President Harding said:

There is another highly important phase of the transportation problem very much worth our attention. I believe the use of our inland waterways offers the one sure way to reduced carrying charges on basic materials, heavy cargoes and farm products. Probably all of us acknowledge the urgent need of diminished cost on agricultural shipments and many bulk cargoes essential to manufacturing industry. While it is well established by the Boston milk case decision that public necessity justifies carrying a commodity at less than cost, the service at less than cost on the larger tonnage of the country does not offer the righteous solution.

Waterways Should Be Developed

We ought to try the experiment of co-ordinating rail and water shipments, we ought to avail ourselves of the waterways developed through expenditures of enormous public funds, and we ought to give the waterway carriers a chance to prove their capacity for helpful service.

Railroads Discourage Every Worth While
Development

The Federal Government has expended approximately $1,130,610,000 on river and harbor improvement. Only last Spring the Congress appropriated $56,589,910 in spite of a budget recommendation of less than half. For the sums spent on harbors we have most beneficial results. The millions expended on inland waterways, on rivers and canals, have brought small returns because we have put them to no practical use. Though we expended to cheapen carrying charges and to facilitate transportation, we have failed in co-ordinating service and have allowed the railroads to discourage every worth-while develop

ment.

Strong But Just Words

Where barge and packet service has been established there has been such an unfair division of the joint carrying charge that waterway development has been impeded and where service lines by water have been established the hoped-for diminution of rates has been denied or avoided until the plea of cheapened transportation by water has seemed a mockery.

Should Co-ordinate With Roads

I believe we should encourage our water service, we should encourage and enforce co-ordinated service, we should see to an equitable division of rates, and exact rate reductions whenever practicable to operate successfully under rate reductions.

It is a very discouraging picture to contemplate the expenditure of $50,000,000 of public funds on an inland waterway when the tonnage on that waterway has diminished more than half, while the waterway itself is made better year by year. We have either wasted many hundreds of millions in blind folly or have been inexcusably remiss in turning our expenditures to practical account.

Appeals to Railroad Leadership

I wish the railway leadership of the country could see the need of this employment of our water routes as an essential factor in perfected transportation, and join in

aiding the feasible plan of co-ordinating service and cheapening charges, not alone as a means of popularized and efficient public service but as a means of ending the peril of their own fortunes.

No thoughtful sentiment in America will tolerate the financial ruin of the railroads. But the people do wish, now that exploitation has been ended, to have their transportation adequate to the country's needs, and desire all our facilities brought into efficient service. They wish to make sure of the ample agencies, and they demand the least carrying charge which will make an adequate return to capital and at the same time permit extensions and additions and enhanced equipment essential to the best transportation in the world.

Julian A. Gregory, Port Authority
Commissioner

New Jersey's new member of the Port of New York Authority, in place of J. Spencer Smith, is Julian A. Gregory, who all his life has been a resident of East Orange, New Jersey, a city of which he has twice been mayor, and which office he has repeatedly been asked, sinced his two terms, to run for again, but which suggestion he has always steadfastly declined.

Mr. Gregory is a graduate of Princeton University and of the New York Law School. He was admitted to the practice of law in New York State in 1899, and is now the senior member of the firm of Gregory, Stewart & Wrenn, with offices at 135 Broadway, New York City. While taking his law course Mr. Gregory taught in the New York City summer schools and night schools in Newark, New Jersey. In 1903 he was elected to the Board of Education of East Orange, being the first Democrat to be elected to any office in that city.

It was in 1910 that Mr. Gregory was elected Mayor of the city of East Orange for a term of two years and in 1912 was reelected to the same office. At the end of his second term he declined renomination and in 1920, although again nominated for the office of Mayor, Mr. Gregory declined to run.

Mr. Gregory was appointed a commissioner of the Port of New York Authority by Governor Silzer, of New Jersey, and took office on July 1. This is the first appointive office that Mr. Gregory has ever held. In politics he is looked upon as an independent Demo

crat.

Inspect New Jersey's Waterways

Members of the State Board of Commerce and Navigation, together with fifty invited guests, left Perth Amboy on June 30 aboard the State boat II. Parker Runyon, on the first trip of inspection of the waterways between New York and New Brunswick, N. J.

Among those who made the trip were Governor George S. Silzer of New Jersey, United States Senators Edward I. Edwards and Walter E. Edge, Congressman Elmer H. Comptroller Newton A. K. Bugbee, Bank Insurance ComGeneral Thomas F. McCran, State

missioner Edward R. Maxson, Budget Commissioner John A. Reddan, President of the Board of State Taxation and Assessments; James Baker, President of the Bridge and Tunnels Commission, Theodore Beotter, and Prosecutor of Middlesex County Joseph E. Stricker.

Α'

LBERT D. LASKER, who retired last month as Chairman of the United States Shipping Board, reviewed his two years of service and presented his recommendations in a letter to President Harding, under date of June 10, 1923, the text of which letter is as follows:

Dear Mr. President: When in June, 1921, you asked me to accept the chairmanship of the United States Shipping Board, I protested my lack of knowledge of the technicalities of merchant marine administration, but since you had shown such signal confidence in me I pledged myself to assume for two years what was, as obviously then as now, a gigantic task of salvage and organization.

In tendering me this office you were under no illusions as to the stark hopelessness which, to many, the situation presented. You spoke of "the mess so great and so unbelievable," but you did not fail to inspire me with your own confidence that a way would be found to bring order and progress out of the chaos that awaited you in this department when you assumed the presidency. With this faith I undertook to give the best that was in me to the solution of an abnormal financial and business problem, and also before the end of my term to lay before you a policy which I hoped would prove the basis of a permanent merchant marine.

A Gigantic Commercial Enterprise

On that day the investment of public funds by the Shipping Board was thrice that of any commecial enterprise in history. Its operations had been extended in futile endeavor over every sea and to every world port. It was a war-time effort, justifiable and praiseworthy in its motives, but having been conceived in a great world crisis, it was doomed to the disaster which awaited any attempt to create a maritime power by compressing into months the natural growth of generations.

Losses $16,000,000 a Month

The administration of the fleet was not remotely competent. Shipping Board boats had lost the confidence of American exporters, and competitors stressed the inadequacy of the service as effective arguments against its use either by American or foreign shippers. The reasons for this failure were neither obscure nor unnatural. From America's meager merchant marine as it it existed before the war, it had been possible to recruit relatively only a few men competent to operate ships, and upon the conclusion of hostilities most of these men, more or less precipitately, returned to private life. The deficits in operation were averaging $16,000,000 a month. Although hundreds upon hundreds of accountants on the board's pay roll were unable to comprehend why they had been retained, no accounting system worthy of the name existed. The smallest private business could have boasted a more accurate control of its affairs. A residuum of some $150,000,000 of war claims, of which no adequate record existed, remained to be settled, and the organization which might have

been cognizant of the date relating to these claims had been scattered.

Disputed Accounts Adjusted

Thousands of disputed accounts for ship operations, not including claims-some of them involving millions of dollars-remained in controversy, with quite inadequate accounting records of their history. When proper accounting methods were introduced, large accounts were found outstanding that had never been recorded. Securities of all sorts which had been received from the sale of Shipping Board properties were found in many instances to be loosely drawn, and general carelessness existed in connection with the assets and liabilities.

These open accounts are now adjusted, securities have been properly exchanged or negotiated, and many of them disposed of. At the end of this fiscal year from liquidation alone the Shipping Board will have on deposit in the Treasury, either in the construction loan fund or for covering into the general fund, $125,000,000, as against the fact that the day I assume office that the total cash reserve of the Shipping Board was $4,000,000.

Taking the Inventory

The Shipping Board possessed, among other things, entire villages built for the workmen during the war, railroads and street car systems that had been constructed for the transportation of the workmen. Among the assets of the Shipping Board were large shipyards, such as Hog Island, for which we had no peace-time needs and which of necessity had to be dismantled; dry docks which it could not use, and surplus material scattered over the entire country at over four hundred points, running into millions of items.

No accurate inventory existed of these varied and scattered assets. The first thing the present board did after assuming office was to have an inventory made. and create a sales organization for the disposal of these surplus properties. That organization, created two years ago, has now been completely disbanded, for with very small exceptions the surplus property has all been sold..

One of the problems the new board had to solve, and which at first seemed unsolvable, was the situation as regards fifty-six shipping companies, who had bought 184 ships, aggregating 907,241 dead weight tons, exclusive of tugs and barges, from the board at war-time prices, on which they had made comparatively small payments, the board holding mortgage notes for the balance due, and who found themselves bankrupt, or facing bankruptcy, by an 80 percent. decline in the value of their ships. It took months of study to work out a settlement programme that would be fair to all, resulting in the saving of forty of these concerns, who thereby have been preserved for the American flag. I will not here dwell on the problem of the disposal of 285 wooden ships, which cost over $300,000,000 to build and which had no peace-time value. Settlement of Claims With this brief glimpse of the problems which con

64

fronted us, I may with some satisfaction report to you the results of the past two years. Now the most complete and accurate accounting system in the Government service exists in the United States Shipping Board, and, as the director of the budget has recently stated, the Shipping Board is the only Governmental agency with a monthly trial balance. By June 30 we will have practically settled, at less than 12c on the dollar, claims involving cash and materials amounting to the full $150,000,000. There remains unliquidated a negligible amount representing claims which, in the opinion of the board, must be forced into the courts. Fleet Corporation Efficient

The Emergency Fleet Corporation, largely by reason of the resolute attitude of my fellow-members of the Shipping Board, has emerged an economic, efficient and distinct entity, charged with the commercial operation of the ships in so far as is possible under existent conditions. Although the history of merchant shipping for decades has presented no more ruinous period for merchant owners than the years since the armistice, the deficit of $16,000,000 a month which existed in a time of tonnage scarcity has been cut during the board's life under your administration to an average of $4,000,000 a month.

The operations of the Emergency Fleet Corporation under the supervision of the Shipping Board, while not unancially profitable, have won back the confidence of world shippers and have provided with nearly two score freight lines under the American flag an efficient service on every ocean trade route. American exporters have been protected against discriminatory freight rates of foreign-owned bottoms and have been assured

of continuous communications between our shores and our actual and potential customers. All of the advantages and stimulus that can accrue to the foreign trade of a nation through the possession of its own ocean carriers have been placed in the hands of the American exporter, and a service has been given which is at least comparable with that of any other merchant marine.

Vessels Increasing Trade

Shipping Board passenger and freight facilities have brought the United States six days closer to South America than it was before and are advancing, perhaps in greater measures than any other factor, the

realization of that Pan-Americanism which is one of the cardinal aims of American policy and statesmanship. Through the splendid lines operated by the Government from Seattle and San Francisco we enjoy rapidly expanding trade relations with the Orient. With the entry of the Leviathan into service and the completion of other plans of the board we will make more rapid progress in the North Atlantic, where competition is keenest and where, because those with whom we trade have already extensive shipping facili ties, we have not as yet made the gains that we have

been able to secure in other routes.

Merchant Marine Policy

Thus briefly I sketch the administrative results of the Shipping Board during the past two years. My second commitment was that I would endeavor before leaving office to lay before you a policy which might prove the basis of a permanent merchant marine.

The costs of physical operation of American merchant ships are from 10 to 15 percent. higher than the similar costs of competitive foreign vessels. This dis

advantage arises both from legislative requirements and restrictions, and from higher capital charges, which in the main have their genesis in commendable causes-better wages and better conditions of American labor. These had been sufficient, however, to confine the pre-war American merchant marine largely to those waters from which foreign competition is by law excluded--the coastal trade. Outside of tanker, sugar, fruit and similar fleets which came into existence as the complement of American industries, and which are not ocean carriers in the general sense, our overseas merchant marine was, and is, apart from the fleet of the Shipping Board, inconsiderable. Private capital has not entered the carrying trade today for the same reason that existed prior to 1914--the higher operating charge of American ships. In these circumstances the effort was made to secure from Congress a measure for direct and indirect aid to our merchant marine, and I firmly believe that the enactment of that bill would have brought about the profitable transfer of the Government ships to private ownership, and the assurance of our economic independence in ocean transportation.

Disadvantages of U. S. Ownership

The apparent alternative is to go the full length of direct Government operation. My recommendation of this course would be only as an alternative. My conviction is that there are inherent in any form of Government ownership of a merchant marine marked disadvantages as compared with private ownership which cannot be overcome, and this opinion has been emphasized every day of my tenure of office. Before entering upon a final commitment to a policy of direct Government operation of the ships, in order to ascertain if private American capital be interested in their acquisition, the board has within the past few weeks ad

vertised its established lines for sale. A few of these may be sold through negotiations that have been started, but developments thus far indicate that by reason of the higher operating cost to which I have! already alluded, most of the bids will be inadequate, and in the main the Government will be forced to maintain in some way the routes now being operated at its expense; under these circumstances, and these circumstances only, is the Government warrant in assuming the task of direct operation.

A Merchant Marine Indispensable

Under such circumstances the justification will be ample, for the benefits arising from the national operation of such a merchant marine are public benefits which the investment of private capital could not be expected to provide. Chief among these are the guarantee of an adequate merchant marine under the American flag available in case of war, and the protection of American trade from discriminatory foreign charges, for only in the possession of a merchant marine is the trade of a country secure from a freight disadvantage being imposed by its competitors.

Should Completely Control

When I came into office the ships were being op erated by the Government through private agents, a vicious system, which, however, with its evil features as far as possible eliminated, I continued in the view that in the event of the passage of the subsidy bill it would provide an avenue for the disposal of the ships. (Continued on Page 18)

1