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M. SAUGSTAD. Yes, sir.

M: MANSFIELD. Can you tell us how it is in England, Italy, and

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CHAIRMAN. I think he is going to take up, Mr. Mansfield, of those countries separately. I have no objection to his g that question right now, however.

M: SAUGSTAD. I expect to deal with it as we go along, Mr. Chairtas convenient to the committee.

M: WALLGREN. According to those figures, then, we have spent same amount of money as France and we have not as good ant marine as they have?

AUGSTAD. I do not know.

CHAIRMAN. This witness undertakes to speak only as to facts t to give opinions.

S VICH. He has qualified his statement by saying he is only tings and not commenting.

CHAIRMAN. And is not giving opinions. Proceed, Mr. SAUGSTAD The next subject is subsidies to tramp shipping in By a law enacted last July, on the 12th day thereof, which festive a month later, the French Government undertakes 1.ze noncontract ships for operating on the seas and in the astal trades of France, under certain restrictions. The inZ part of that program is not the navigation bounty which is applied, but the way the funds are raised. The a.fchta.ning funds for the management of this policy is to

the import duties by a maximum amount not to exceed :t, and thereby raise funds which are to be redistributed to Fre: cargo ships.

orgnal appropriation for the first year's operation is 90,• frans. That is for the year 1935.

AROVICH. Is this 4 percent an import duty on everything! SAUGSTAD. The categories are not mentioned in the law, but determined by a decree to follow. It was estimated before Hof Deputies at the time the bill was under consideration would produce a revenue of 140,000,000 francs a year. The per.od

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HAIRMAN. How much would that be?

SALGSTAD. About $9,000,000. The first year's operation of franes at gold par is about $3,500,000, and at current rates at ge about $0,000,000,

tive period for this policy is 2 years. There are certain a. stie restrictions. The vessel must be manned by French , the majority ownership must be French citizens, any French chartering or having an interest in foreign ships is not uter the law, and no ships built or purchased abroad after 1.4. are eligible.

r.te iple of payment is known as a "ton-day basis "; that is, er of days that a ship is on a voyage is multiplied by the of gross tons of the vessel and to the result are applied cervs rates, which are qualified through a system of coefficients by speed and by other considerations,

Chairman, do you want me to state for the record all of the a of that system?

The CHAIRMAN. I think it would be very interesting.
Mr. SAUGSTAD. All right.

Mr. SIROVICH. You say they utilized the gross tonnage or the net tonnage?

Mr. SAUGSTAD. The gross tonnage. On power-driven vessels up to 500 tons gross there is paid 30 centimes per ton per day; from 500 to 1,000 tons gross an amount of 25 centimes per day; from 1,000 to 3,000 tons gross, 20 centimes per ton per day; from 3,000 to 5.000 tons gross, 17 centimes per ton per day; and from 5,000 to 10,000 tons gross, 14 centimes per day. For ships over 10,000 tons. 10 centimes per day.

Mr. SIROVICH. For tramp steamers?

Mr. SAUGSTAD. Yes, sir; general-cargo vessels, which are not confined necessarily to any contract route.

There is an increased allowance for speed. For vessels making from 10 to 14 knots a 10-percent allowance is added and a 30-percent allowance is made if they are passenger ships. I said cargo and charter vessels. Passenger vessels may come under the charter classification. From 14 to 16 knots

Mr. SIROVICH. You would not consider a passenger vessel a tramp steamer, would you?

Mr. SAUGSTAD. She may be on a cruise.

Mr. SIROVICH. I see.

The CHAIRMAN. You draw the distinction of not running on a regular line?

Mr. SAUGSTAD. Yes, sir: or I would rather make the distinction of not operating under a contract line.

For 14 to 16 knots, 30 percent additional is granted on cargo vessels and 50 percent on passenger vessels; from 16 to 19 knots, 60 percent additional; from 19 to 23 knots. 90 percent additional; and over 23 knots, 120 percent additional.

Mr. SIROVICH. And have they such tramp steamers?

Mr. SAUGSTAD. Not unless they would take the Normandie and put her in a cruise sometime, and that would not mean anything. Mr. SIROVICH. Then this is only for window dressing? Mr. SAUGSTAD. It is the law.

Mr. SIROVICH. Anticipating the future.

Mr. SAUGSTAD. To qualify for these subsidies, these vessels must produce a certain number of miles per day on an average per voyage. Thus the 14-knot vessels or more must make good 90 miles per day on the average; those that make 12 to 14 knots. 85 miles per day average; 11 to 12 knots, 65 miles per day average: 9 to 11 knots, 55 miles per day; and less than 9 knots, 35 miles per day.

There are certain variables within certain trades and these variables are managed through a mathematical coefficient system which is applied to each trade and ranges from zero to two. In other words in certain trades, the coefficient means that certain ships get nothing and in other trades, they may get twice the allowance if the two coefficient is applied to them. These vessels may receive postal pay under exactly the same conditions as contract ships.

The first results of this law, which went into effect in August, were published at the end of September 1934, and indicated that as a result of the law 147,000 gross tons of vessels had come out

a. been recommissioned: 40,900 gross tons had been resulting in a net gain of about 106,000 gross tons in emof French ships at sea.

a. Mr Chairman, is all I have to say on the subject of subto tramp shipping in France.

M Wan. Mr. Chairman, by way of comparison, according to art of the witness, it should be noted that the French et pays $27,000,000 for subsidies to only 4 lines, whereas Un ted States Government pays approximately the same amount es to 44 lines.

VSACH. How about the tonnage of the 44 lines as compared ntage of the 4 French lines!

AUGSTAD. I cannot answer that question. I can only suggest Ines you refer to are systems; that they include more than si route; that the C. G. T. Line, for instance, includes four it operations. So that it is not strictly comparable to say at the are four lines. At the outside, I presume the French ll not have more than 10 routes, as compared with the

you mention.

Mr. S.ROVICH. How about the tonnage of the vessels on those 10

Mr. SAUGSTAD. I cannot answer that question without a compari

f the record.

M: WALLGREN. Have you any knowledge as to private lines that rating without subsidies?

SAUGSTAD No, sir; I have not. We have some estimates, but rot now have before me what percentage of the total French 2 sudded in subsidized lines. I do not recall the figures and i rot want to guess at them.

MSIR VICH. Is there any registration of French ships under vf regni thugs! I mean is there any French company that operatter different nationalities than their own?

Mr. Saugstad, I have no knowledge of that.

Mr SIROVICH. Because I understand in reading over the reports have certain American ships that have been built here that rag under foreign government registries.

Mr. SAUGSTAD. I am not familiar with that.

Mr WALLGREN. There are, however, private lines operating and **at have been operating for many years; is that not so?

Mr. SAUGSTAD. Oh, certainly.

Mr WALLGREN. Is there any preference given in the matter of

**g mail!

Mr. SAUGSTAD, No. Any French ship is entitled to carry mails red it by the French Postal Adininistration and to receive fr the Universal Postal Union rates, or perhaps other rates 41. by the French Government.

M MANSFIELD. Do tramp ships engage in it?

Ve Saugstad. Yes, sir.

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SIROVICH. Does the French Government avail itself of the of taking 25 percent of the cargo space and passenger space st of the ships on the different routes!

Mr. Saugstad. I do not know.

T CHAIRMAN. Presumably that is with its colonial possessions.

Mr. SAUGSTAD. Yes, sir.

Mr CULKIN. Do those two disbursements cover the whole field of French subsidy?

Mr. SAUGSTAD. No, sir.

Mr. CULKIN. Including the 405,000,000 and the 90,000,000?
Mr. SAUGSTAD. No, sir.

Mr. CULKIN. There is more that you have not described?
Mr. SAUGSTAD. Yes, sir; I have not finished.

The CHAIRMAN. Proceed.

Mr. SAUGSTAD. The next subject under French subsidies is the interest contributions on loans covering mortgages on ships built by French shipowners, either in France or in foreign countries. The appropriation for 1935 under this head is 21,500,000 francs, an amount at gold par equal to $840,000 or at current exchange to about $1,420,000.

Mr. SIROVICH. How is that contribution given to interest?

The CHAIRMAN. I think the witness will cover that entire field if he is just permitted to go ahead and develop that, and then ask questions.

Mr. SAUGSTAD. The interest contribution of the French Government is one-half of the interest charge on that portion of a loan underwritten by the Government itself with certain variations. Under the original law of 1928, it was found that the 50-percent liability of the Government resulted in some cases in the operator paying a very small sum and it was therefore fixed as a limit that no matter how low the interest rate fell the French shipowner must pay not less than 2 percent of the interest share on cargo ships, nor less than 3 percent on passenger ships. Does that answer your question?

Mr. SIROVICH. Yes.

Mr. SAUGSTAD. Now, the developments under that policy were these: There was set aside an annual contribution by law of 6,000,000 francs for a term of 5 years. It was found that that amount of money was not necessary; so, in order to give a further aid, the French Government by subsequent amendments to the law authorized the expenditure of one-half of the interest rate on 85 percent of the loan, which would, in that case, cover not only the Government's position as the mortgagee, but also one-half of whatever interest might be paid to others holding interest in the ship. And finally, in 1931, the money still not having been expended, they authorized one-half of the interest contribution on the basis of 100 percent of the value of the vessel under construction. That, however, was made as a special contribution in the interest on account of the exchange rates at that time.

The basis on which these interest contributions are made rests. upon the fifth subject that I outlined this morning, which is the extension of public credit by the French Government on mortgages on vessels. În 1928, the French Parliament authorized the Credit Foncier, which is the leading French real estate bank, to advance an amount of 200,000,000 francs annually for 5 years against ship mortgages. At the expiration of the 5-year period, the authorization was again extended for 4 years to a total amount of 125,000,000 francs annually. This means that the total authorization of that

and ander its charter operations permits it over a period of 9 alivance 1,500,000,000 francs, or an equivalent at gold par LUNAOKOgono and at current exchange rates about $100,000,000. exter t to which the Government authorized the bank to underthe paper was 30 percent of the value of the tonnage under ton or building, but that limitation may be increased if the er, in addition to his mortgage on the vessel, adds a bank In that case, the Credit Foncier may advance 70 per

f the value of the vessel.

** CHAIRMAN. That is for construction purposes?

Mr SAUGSTAD, Or for purchase. In addition, if the owner or wer pats up additional collateral, the bank may advance 85 t of the value of the vessel.

ie anal results of that law up to the end of September 1934, report of which covered only the first period of operation— ...from 1928 to 1933 show that during the first period ist equal to 441,235,000 francs had been advanced, of which franes had been repaid; or, roughly, 15 percent of the vo; wart me to state for the record the tonnage and the amount It is in these publications and it is a lengthy, detailed I wonder if we could not merely extract it from the

d here and insert it.

λ CHAIRMAN. Yes, insert it in the record.

I austa above referred to is as follows:)

CORGANIZATION OF COMPAGNIE GÉNÉRALE TRANSATLANTIQUE

AND CONTRACT OF 1933

6 the Compagnie Générale Transatlantique was completely reorganized at a new contract was concluded, covering three services previously for individual contracts This was accomplished (1) by law of l'ews, authorizing and covering the reorganization of the company; at ter low of July 20, 1993, authorizing the minister of the merchant to enter into an agreement with the Compagnie Générale Transatlanfer if it ev ni pany had been reorganized; and (3) by the contract and - fit ally adopted.

DEVELOPMENTS LEADING TO REORGANIZATION

the Government of France officially recognized a serious financial the oberstitis of the Compagnie Générale Transatlantique_The_compencents for 1930 showed a deficit of 30 423 079-franes (81 192 584), * grow profit of 107.306:354 fratios (84 206 409) and a net f10781868 franes (8657 851) for 1929. The company had ordered many neig revent years, and payments due shipyards by 1931 totaled frines (810×19200) Dne to the depression in world trade, 30 pati steamers were laid up.

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resorganization came up for consideration in the French Parliabewerber 1961. These included: (a) Temporary reduction in capital s1 write off of operating deficit, subsequent increase of capital to be anther French steamship company and a ship building company; ratorium on the annuities of 35000000 francs ($1,372 000) excu88due the French Treasury; (e) increase in subwiches to the New to 25 000 000 francs ($980,000) for 4 veirs, and 20.000.000 fratOR te the next 10 years; and (d) rein bursable advances of 160 000 000 2720001 from the French Treasury, or a Government guaranty of a fat amount.

℗ Chamber of Deputies passed such a bill the latter part of December beit when it was received by the Senate, that body refused to take it under

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