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CANADIAN NATIONAL (WEST INDIES) STEAMSHIPS, LTD. The Canadian National (West Indies) Steamships, Ltd., operating services to the West Indies under the West Indies trade agreement of 1926 has shown the following operations results, beginning with the first annual report for the year ended December 31, 1929:

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In 1933, the coastwise law of Canada was amended to read (ch. 52, pp. 23–24, Geo. V):

“No goods shall be transported by water or by land and water, from one place in Canada to another place in Canada, either directly or by way of a foreign port, or for any part of the transportation, in any ship other than a British ship."

Provision is made that this amendment shall not come into operation until a date to be fixed by the Governor-in-Council and proclaimed in the Canada Gazette. No such proclamation had been made late in 1934.'

Mr. Culkin. Mr. Chairman, might we have some brief statement, in connection with these various countries, as to the requirements regarding personnel? Can you put that in?

Mr. SAUGSTAD. It would be impossible, Mr. Congressman, for me to put that in, because I am not competent to deal with the question of personnel, although I would be very glad to submit whatever information we have

Mr. Culkin. Yes, so far as you can—just what they do about personnel, as to requiring nationals and that sort of thing:

Mr. SAUGSTAD. I mean I will be very glad to submit any information I have to whoever is competent to testify on personnel. I am not.

The CHAIRMAN. You can put in what you have or whatever you can get, but much of that will come in during our personnel hearings which we will hold a little later.

Mr. REBAUT. As between England and Japan, which nation seems to be striving for the greatest speed in vessels?

Mr. SAUGSTAD. Well, I should say there is hardly any question but that the results of the new Japanese construction program sets an entirely new mark for cargo ships in the trades of the world. The British Government, in proposing the scrap-and-build plan under the tramp ship subsidy bill, took the position that it would rather see the industry scrap old ships and build new ones of better caliber, than to subsidize and place in commission ships that were old and that have poor competitive qualities, which is an indication of the direction that the British tramp-ship program takes.

The CHAIRMAN. I might say in that connection that same contention was made many years ago in this committee, that we would be better off if we scrapped these old ships built during the war, of slow speed, and the construction of those ships not really being for commercial purposes. 1 Department of Overseas Trade, Economic Conditions in Canada, 1933–34, p. 127.

Mr. WEARIN. Is there a table in existence or could one be prepared that would indicate the comparative subsidies paid by various countries that we have considered here?

The CHAIRMAN. I really doubt that you could have a table prepared, other than the statements that Mr. Saugstad has been making.

Mr. SAUGSTAD. I have tried repeatedly to tabulate amounts of subsidies, but the complications of exchange, the shifts in programs each

year, and the fact we only have parts of programs continuing from year to year, make it practically impossible or would place us in a position of pegging a figure which might be very difficult to sustain under altered conditions. I have tried to do it repeatedly and have tried to do it before this committee, but it is impracticable.

The CHAIRMAN. I will say that I agree fully with the witness.

Mr. SAUGSTAD. I think it is impossible and I think it has very little bearing on the problem.

Mr. HAMLIN. I suppose this shows my ignorance on the subject, but may I ask is there any international law which keeps in abeyance the power of any nation to build its merchant marine or to subsidize its merchant marine? Can any nation go ahead and do in that line as it sees fit, or is there any international law governing that, which they have agreed to?

Mr. SAUGSTAD. You mean an international agreement on subsidies?

Mr. HAMLIN. Yes.
Mr. SAUGSTAD. No, sir.

The CHAIRMAN. There was a conference held this last January, was there not, but it did not get anywhere?

Mr. SAUGSTAD. There have been two conferences, one the London Economic Conference in 1933, and the second one which was held in London in January of this year. There have been no results so far as subsidies are concerned.

The CHAIRMAN. And, whenever we have gone into a conference, we have usually gotten the short end of it, too, have we not?

Mr. RABAUT. They say we have never won a conference.
The CHAIRMAN. The other fellows are better diplomats than we are.

Mr. SIROVICH. I was absent at the beginning of your statement, and can you recapitulate and give me the high spots of the construction program of Japan.

The CHAIRMAN. I will ask that that be done briefly, as it is very hard to carry on the hearings just for the benefit of one member.

Mr. SIROVICH. I think the gentleman can give me the high spots in just a minute or two.

The CHAIRMAN. Do it very briefly, because it just takes up the time of eight members of the committee for the benefit of one.

Mr. Sirovich. Mr. Chairman, I sat here through the entire hearings

The CHAIRMAN. I know you sat here yesterday. Mr. SAUGSTAD. The program, briefly, is this: It is effective from October 1932 until the end of this month March.

Four hundred thousand gross tons of old tonnage are to be scrapped; 200,000 tons are to be built.

The total subsidy for the entire program is 11,000,000 yen and it ranges from 45 yen to 54 yen per gross ton to the owner who builds

the new ship.

The principal feature of it is the production of a very high class, fine, speedy group of cargo ships.

That is the net result.
Mr. Sirovich. And that is to be done over a period of 2 years?
Mr. SAUGSTAD. It has already been completed.

SUMMARY AND GENERAL STATEMENT Now, Mr. Chairman and members of the committee, in answer to your suggestion about a general statement on the subject, I might say that in the discussions of the past few days on the subject I have attempted to deal with the more direct aspects of shipping and shipbuilding subsidies as now practiced in foreign countries, for whatever bearing this information may have on policies now under consideration by the Government of the United States. The message of the President and the accompanying reports outline the more obvious problems for immediate consideration. Little or no attempt has been made to touch upon the complicated subject of preferential treatment, trade monopolies, discriminatory practices, and other indirect measures of aid to national shipping.

Indirect measures appear to have less bearing on the immediate problem. We have not been able to digest and properly to prepare all available material on this subject. This I regret, but circumstances have been such that it has been impossible to properly contribute that information in effective manner at this time.

When I took the witness stand, I stated I appeared merely as a reporter and not as an advocate. I am grateful to the chairman for his support and to the committee for its patience in permitting me to maintain this status. I am impressed with the interest in the subject expressed by members of this committee and I have noted with interest the direction which the discussion has taken at various points. I propose to make some general observations in regard to the subject as a whole. I do so merely as a servant of this Government, past whose post of duty there flows a continual picture of the sea trades of the world, which has the obvious consequence of leaving certain impressions on the observer. Any observations on my part are the observations of an individual and are in the nature of a personal statement, which may be helpful to this committee.

The statement refers briefly to the following: (1) Facilities offered by this Government in providing information on the subject of subsidies; (2) current aspects of sea personnel policy; (3) weaknesses and abuse in subsidy policy; (4) current trend of corrective measures in maritime nations.

(1) INFORMATION ON SUBSIDIES This Government has been generous in providing means for developing information on the subject of world shipping subsidies. I would like to commend the foreign officers of the Department of State and the Department of Commerce, who deal with this, and with many other complicated technical subjects. Particularly do I commend to the committee the Department of Commerce for providing facilities which have permitted the work to be carried on.

For 20 years, the Bureau of Foreign and Domestic Commerce has provided these facilities as an academic contribution, at first, through its Finance and Investment Division and more recently through its Transportation Division. During the past year, the Shipping Board Bureau, which

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now is a part of the Department of Commerce, has made a material contribution to the work. Without the cooperation of these two bureaus during the past year, the presentation of this material in concise form at this time would have been a practical impossibility. Perhaps 50 percent of the source material on this subject is derived from the joint field services of the State and Commerce Departments, another 25 percent from the library of the Department of Commerce, and an equal amount from the Document Division of the Library of Congress

(2) SEA PERSONNEL In the discussion, we have touched upon sea personnel, and it may be helpful to the committee to have a general summary of developments in this direction, wholly without technical details. I am not competent to discuss the philosophy of social legislation; nor do policies relating to professional qualifications and working conditions of seamen come within the scope of my work. There are, however, some obvious developments in the trends of social security, as applied to seagoing personnel, which come within the facts of law and contract here discussed, and which are a matter of record.

Increased nationalism within maritime countries has been accompanied by increased social legislation. This policy is becoming apparent in the sea trades. Adjustments, which may appear desirable or necessary, are not so freely left to the natural checks and balances of an active international industry. The depression period and changing social philosophy during the past decade indicate that some of the social aspects of the world shipping industry are definitely altered. Forward-looking statesmanship may well include their consideration. Results of this change are obvious.

On April 1, 1934, France extended the general social insurance law to French seamen and their families.

The funds allotted to German shipping-
Mr. CULKIN. Might I ask a question right there?

The CHAIRMAN. Yes; but it breaks the continuity of the statement,

of Mr. CULKIN. Of course, I can go back and ask it a little later, but I thought it might be better if I asked it right at this point.

The CHAIRMAN. Possibly it would, just at this point.

Mr. CULKIN. Can you tell us what was that social security law that was extended to the French seamen?

Mr. Saugstad. It is the general social insurance law of 1928 covering French salaried employees.

Mr. CULKIN. All French workmen?
Mr. SAUGSTAD. Yes, sir.

Mr. SIROVICH. Which was passed in 1910, affecting child labor, and so forth.

Mr. SAUGSTAD. Insurance only, and which last year was applied to seamen for the first time, on April 1.

The funds allotted to German shipping during the past few years are reported to have been almost entirely set aside from general funds for the relief of unemployment.

Italian law and contract provide retirement benefits, not only for seagoing personnel, but for shore personnel and administrative staffs, and the organic relations covering subsidized services are such that contracting companies assume this burden as a contract provision.


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Japan, only a few years removed from feudalism, provides employment protection which, in instances, seems large to western minds.

During the deliberations of the House of Commons of Great Britain, the Labor position, in its relationship to the proposed trampship subsidy program, was concisely stated by Mr. Logan in the House debates on the bill in the following words:

It is fundamental in Christian ethics, whether or not it be the morality of the business world, that the man who works and has a home to support must be enabled to maintain that home.

A nation is made up of its people, not of its ships. A ship without men is of no avail. As I have said, we on the labor benches are not little Englanders and we are not trying to hamper trade. We are here to see that the men engaged in this industry receive better treatment than they now get if this concession is made to the industry. That is logic; it is reasonable and sensible. If any agreement is reached which means the giving of national money to an industry, the men who work in that industry must be taken into consideration.

(3) ABUSE IN SUBSIDIES I bespeak the tolerance of the committee on the subject of the tendency to abuse in subsidy systems. I know of no subsidy system yet devised which has been entirely free from a tendency to abuse. History and record indicate this to be so, and the cause seems to lie, first, in an inherent predatory instinct in man which may lie dormant but which springs to life when he thinks he can get something for nothing, or when he thinks he can get more than he may be entitled to. This tendency seems doubly active if the object of plunder is an impersonal force such as a government.

A second cause of depredation may be said to lie in rigid technical law, subject to nontechnical administration, a combination which lacks the first essential element in dealing with sea trade, namely, flexibility.

I believe I have read every contract the Government of Great Britain ever signed for its packet system. I am sure I have read all that have appeared in the published sessional papers of Parliament during the past century. I have read all the reports on these con, tracts by the British Treasury, the Admiralty, and the postmasters general. Eighty-two years ago, the House of Commons, through a select committee on the packet services, held hearings covering thousands of printed pages of testimony, on problems of mail contracts similar to those we have under consideration. Anyone who believes we have a monopoly on abuse should read them.

I have here a document, an official report by the Court of Audits of France to the President of France, in which the court finds itself unable to audit the 1918–22 operations of French ships for Government operation, charges manipulation of billions of francs of receipts and expenditures, charges shipping companies with pocketing receipts and paying expenses for account of the State, and mentions names of companies we have discussed during the past few days. I could clutter up this record with pages of instances of abuse, if it served any useful purpose.

I hold no brief for abuses which have become evident in our own system. My sole reason for mentioning past abuses is to give weight to consideration of measures undertaken by governments in the maritime countries to stop abuse.

(4) CORRECTIVE MEASURES We have discussed the three-way control system of the French Government. All decrees issued by the Government of Italy are

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