24 PANAMA RAIL ROAD COMPANY.

GENERAL REMARKS.

Subject to the necessary Governmental restrictions regulating the
movement and operation of the ships of all Steamship Lines and their
cargoes alike the vessels of our Line were continuously operated during
the fiscal year with but one serious accident that involved the sinking
in New York Harbor of the U. 8. C. T. “Saratoga” by this Company’s
S. S. “Panama,’’ as a result of which the latter ship was practically un-
harmed while it is our claim that responsibility for the heavy losses
sustained by the “Saratoga’’ does not rest wholly upon this Company.
The net revenue derived from the operations of the Steamship Line
was $1,359,208.00, an increase of $196,407.54 as compared with the pre-
ceding year.

The operating revenue was $5,649,729.68, an increase of $1,541,317.382
over 1917. The percentage of operating expenses to revenue was 75.94%
as against 71.70%, an increase of 4.24% as compared with 1917.

The progressive advance in the cost of all operating items referred to
in the report of 1917 continued during 1918, especially in respect of prices
for material, skilled and unskilled labor, Owing to the shortage of labor
that seriously interfered with the prompt execution of orders for work and
material, coupled with the high cost of living that justified demands for
higher pay, a condition was produced where the chief consideration became
unavoidably one of expediency to secure results rather than the cost in money.

Since December, 1917, the wages of the Officers and crews on the
Company’s steamers were increased by a war bonus of 25% on those
vessels operating along the Atlantic Coast of the United States, and by
50% on those vessels that were operated in trans-Atlantic trade.

To offset the advance in operating cost it became necessary for the
Company to make comparatively small advances in its tariff rates from
the United States, and to depend upon its cocarriers on traffic from the
West Coast to produce sufficient increased revenue.

The repeated demands for advance in pay by stevedore’s employes
and longshoremen, together with the higher cost of material, made it
impossible for contracting stevedores to continue their labors on a price
per ton basis. Accordingly, late in June, the method of “‘cost plus’ in
use by the United States Government for that work was adopted by this
Company.

During the year the Steamships “Colon,” “‘Panama,”’ “Allianca,”’
“Advance,” ‘‘General G. W. Goethals” and ‘General H. &. Hodges”
were regularly engaged in handling the traffic between New York and
Cristobal. The Steamships ‘“‘Achilles’” and ‘‘Ulysses’”’ were assigned at
the urgent request of the Shipping Board to assist in relieving the serious
coal situation existing in New England. The ‘Ulysses’ was so engaged
from February 13, 1918, to October 8, 1918, and carried 271,377 tons.
The “Achilles” was so engaged from January 5, 1918, to October 11, 1918,
and carried 329,2041% tons. There was a total of 600,58114 tons trans-
ported by these two vessels from Hampton Roads to Boston. ‘The -
_ Steamships ‘‘Ancon,” ‘Cristobal,’ “General W. C. Gorgas” and ‘‘General
O. H. Ernst” were engaged in carrying coal from Hampton Roads and
New Orleans to the Canal Zone, proceeding thence in ballast to ports
in Chili for nitrates for account of the War and Navy Departments that
were discharged at various ports in the United States that best suited
the needs of the Government. ‘Two of these cargoes, after arrival of the