Mr. SIROVICH. Are you in favor of giving a subsidy to any steamship company that operates subsidiary lines for their other enterprises?

Mr. BENDIX. I am not in favor of a subsidy to any steamship company whatever. I am in favor of subsidies for the operation of the individual ships; but they should be required to remain on registry and to engage in the foreign trade. They should not be given a

coastwise license.

When such a ship is transferred to coastwise or other protected trades, the subsidy should immediately stop, the ship be taken off registry and placed on enrollment, and the money paid by the Government toward its building should be returned to the Government before a coasting license is issued.

The Government should take care of the differential so as to equalize the difference between the wages paid by our average foreign competition and the American scale for their officers and crews, and the difference in cost of food. If the time ever came that there was no wage differential that payment should stop.

Mr. RABAUT. Why do you favor a subsidy to the individual ships and not to the companies operating the ships?

Mr. BENDIX. Because, if you subsidize a corporation, you have no jurisdiction and you can never regulate it efficiently and have control over where the money goes.

In other words, Mr. Dimond wanted to have a subsidy arranged so as to keep them from stealing; but the only way you can keep them from stealing is to keep them from getting their hands on it. Honesty is a matter of opinion. These gentlemen probably think they are worth $100,000 a year in running the ships; and that is just a matter of opinion; it is something you could hardly control.

Mr. RABAUT. You are talking about the fellows in the higher brackets?

Mr. BENDIX. Certainly.

Mr. CULKIN. Well, you know what happened in Pinafore, when the fellow stuck by his desk and never went to sea.

Mr. BENDIX. He got $60,000 a year.

The shipyards who want to build these ships that are built on subsidy should be subject to strict regulation and their books should be continually open to this semijudicial body that will have charge of the administration of this act.

Subsidiary stevedoring companies, or subsidiaries of any kind, should not be permitted to operate or to perform any services of any kind on a subsidized ship or any ship where the Government has a mortgage interest. There are probably not more than five men in the United States who could check up a stevedoring bill; and I don't think there is anybody who can check up a stevedoring bill with any assurance of being absolutely correct 2 weeks or a month after the service has been performed.

Mr. CULKIN. Í do not intend to be personal, but I wish to ask if you are 1 of the 5.

Mr. BENDIX. No. Nobody can check up a stevedoring bill after it is a month old. I think, on account of the fact that I have checked so many stevedoring bills, I can check them about as well as anyone can. I know what extra trucking is and what other charges are made. I therefore think that no stevedoring subsidiary should be permitted to operate on a subsidized ship.

man has his own money in his ship and he is interested in a prevent it g subsidiary or a coal subsidiary or an oil subsidiary, it is mt for them to serve his ships. But when he comes down here

tar bourne to get Government money for the ships, he has no betes having any subsidiaries to bleed his ship with, and then come here and say to the Government "We are losing money on the rat. n of this subsidized ship.”

SIROVICH In other words, you are applying similar principles Se we applied to bank credit, when we asked the large banks to themselves of security groups and other interests?

1

Mr BENDIX Yes. And the man who is trying to do it can take a and run it and make money and show a profit on his ship; and we had subsidiaries to take the profits, the ship would be losing

yard there would be no way of checking it up. It can be done bra ads of tricks over-storage, building up a break-down, and and it is done.

M

KABAUT And, by the same token, you would not have any of bsidiary companies or have them own tow-boat lines for their wg or holding companies?

BENDIX There is not any reason that I can see, in the present a of the development of the American merchant marine, for a tang company. Holding companies may have a purpose; but in pping bisiness there is no reason whatever to have a holding

..

M RABATT But the fact is that they have them.

Mr BrDix The fact is that they have them, because it helps to pnote a monopoly for a certain area; and it also helps to build up posutic executive salaries. I know of one company in New York at has got four floors of vice presidents; and I doubt if any of them ever saw a ship

Mr RABAUT What concern is that?

Mr BENDIX. The I. M. M.

w when you come to these de luxe liners, you gentlemen have we talking about war and passenger ships. You don't win wars merchant marines and passenger ships. Merchant marines, of are used in time of war; but they are primarily used in time

Now, if you want to build some ships to fight somebody

a lets charge them up to the Navy.

wwe have to have a couple of fast ships to run to Plymouth Ceny purposes and we should have a couple of fast ships to run on tar-Pace routes. Those ships, however, as cargo carriers or

r carriers, can never be made to pay, if they are fast enough tis a mail service; and if they are suited for the military and rvice, they can never be made to pay as commercial ships. Let then, go to the Navy Department and let them tell you what shaps to build and let them use those ships in time of war; stead of charging their cost up to the merchant marine, it up to the Navy; and use the ships in the meantime as best You are going to throw away millions of dollars in building e trans-Atlantic liners. Me CULKIN Would not that type of ships made good transports me of war”

an

M BENDIX That type of ships did make good transports during nst war. I do not know what the future war will be. I do not that we can foresee what the future war will be. I do not think

that we can build these de luxe liners at the present time and call them merchant ships; and all this war talk about the merchant marine is purely propaganda. An American merchant marine is required. to replace ships that other nations remove from trade routes, to carry our commerce. If the Navy needs merchant ships in time of war, it would be far better for them to build those ships and keep them in position.

Now, if we go to war with a nation on the Pacific and we have all our trans-Atlantic liners over in the North Atlantic, they will be of no use to us there. According to the newspaper reports, the George Washington, the Monticello, and the Leviathan are to be used for war purposes, but I have got an idea that

Mr. RABAUT. What good would it be, even if it did take 2 weeks to get them over there, what good would it be if we did not have them?

Mr. BENDIX. It would be the same thing. Suppose you had a couple of fine de luxe liners, and they happened to be in Asiatic waters when a war was declared, and that war happened to be with an Asiatic power; you would not have them for use in that war. We have got to have them in some place the Navy can use them. If the Navy needs them, let the Navy pay for them, not the merchant marine.

Mr. RABAUT. I infer from your argument that you are not in favor of the American merchant marine.

Mr. BENDIX. I am in favor, absolutely, of the American merchant marine; but, if I can, I want to disabuse the minds of you gentlemen of the idea that the merchant marine is going to win any wars for the United States. It is not going to win any wars.

Mr. RABAUT. You have heard of the big stick. If a fellow has got a big stick, he will use that.

Mr. BENDIX. You will never use the merchant marine for a big stick. You gentlemen ought to go very slow on this idea of building our American merchant marine for war purposes, to make sure that it does not interfere with our international commerce. The policies of the Shipping Board have interfered with our commerce and they have not developed the American merchant marine. I hope you won't forget our customers.

The CHAIRMAN. Do you think we have got to let the other fellow carry all our goods and that we must not interfere with those other nations?

Mr. BENDIX. No, sir.

Mr. RABAUT. Were you here this morning when the gentleman testified to the supremacy of the American merchant marine in the last half of the former century and how it had disappeared?

Mr. BENDIX. We fell behind after the disappearance of the wooden ship. Then we had no shipbuilding industry in the country, when the wooden-ship builder disappeared, the Maine shipbuilder disappeared, the Jersey coast shipbuilder disappeared, and the Pacific coast shipbuilder disappeared. They were all builders of wood ships.

Mr. RABAUT. Don't you want to correct that condition in this country?

Mr. BENDIX. We do not want to resurrect any wood-ship building. Mr. RABAUT. Resurrect modern shipbuilding.

BENDIX. That is what we want to do, resurrect modern ship

M. KABAUT To do that, must not the Navy step in and do its the program?

Mr BENDIX The Government must step in and do its part, but the Navy must do its part by building up a fighting fleet and the shiper must do his part. I am in favor of the highest wages for ranen, and the highest wages for the white-collar men; but I am in favor of this racketeering in stocks in shipbuilding, such as we having at the present time.

A: KABAUT We are trying to do away with it.

Mr BENDIX. The New York Shipbuilding Co. is owned by a man is cruising around in the Mediterranean at the present time. never saw a ship yard in his life.

A'r SIROVICH. Does not the history of the world show that the that controlled the merchant marine controlled the destinies ft. @ world" Can you find any nation, outside of Spain when its Asia was destroyed, that controlled the destinies of the world pt one that had a great merchant marine?

Up to 1×50, 1860, as the previous witness testified, our Country was Table Nation, not only because it could build the wooden and only when the sailing vessels were relegated to the backnd and steam vessels came into the foreground did the United fai. behind in its merchant marine. The American merchant marre et allenged the British ships, the best of them, and with them on the triumphs of the sea We would have kept away ahead if we had not brought our shipping down from 75 percent of the sea

g commerce of America, down to 16 percent, when the World kar broke out; and if we followed the policy that you are speaking towar we would not have any merchant marine and we would be ze vatims of any nation that would attack us.

I am a great believer in peace and am against war, but I will do everything I can to protect this country against any nation that may atis & it, and I think we must look forward to eventualities and we = at have an adequate American merchant marine in order to be

Mr BENDIX I think that 15 ships a year, as a permanent turn***, is not inadequate.

Mr SILOVICH. I do too; but I do not agree with your ideas. The If at a few men that are at the head of various ship companies are sreet and have done things they should not, does not make it i to darin the American merchant marine. Because the banking teraty have not lived up to their duty and obligation to the public vo resson for destroying everybody interested in the development e Nation.

Mr BENDIX I am in favor of doing the things that will build up a American merchant marine; but I say that these birds that have sae princely salaries and bonuses and expense accounts have no ess in st ipping, where we must meet the competition of the whole

Buildings full of officials, most of whom know nothing about ing or any of its branches, cannot be supported by any interna& operation where our competitors do not stand for such foonshïze sn.all, well-managed concern is more efficient by far and is .rer to all concerned.

Our subsidies should take care of the difference in the cost of building the individual ship, the difference in the cost of wages and food for the officers and crew who man our ships. That is all and this should be handled so that no shipping company will get their mitts on it.

If we pay the differential in the cost of construction and operation and give them 2%1⁄2 percent to 3 percent better on their financing than they can get in any other country they can do business on that basis and we will build up a real American merchant marine.

Mr. RABAUT. How about the differentials in maintenance and repairs?

Mr. BENDIX. The differentials on maintenance and repairs, so far as the American trade goes, amounts to very little and the foreign ships have to meet the same costs.

Mr. RABAUT. If the ship costs 40 percent more to construct in this country, by the same ratio it would cost 40 percent more to repair and maintain.

Mr. BENDIX. Absolutely, foreign ships today have to meet the same maintenance costs.

Mr. RABAUT. Any major reairs are done on the other side.

Mr. BENDIX. Many foreign ships do not go to their own ports more than once every 2 or 3 years and they do their repairing here.

The CHAIRMAN. Have you anything more? We have other witnesses here.

Mr. BENDIX. That is all I would suggest at the present time.

If we were to give an operating deficiency based upon our competi tion with the trade routes of the world, in which foreign countries have already established their routes, it must run economically and it must be based upon scientific standards and, instead of giving a subsidy to the whole line, to cover a fixed route, we should give a subsidy based on the operation of the individual ship.

The CHAIRMAN. All right. We will adjourn until 2 o'clock.

AFTERNOON SESSION

The committee reconvened, upon the expiration of the recess, at 2 p. m., Hon. Schuyler Otis Bland (chairman) presiding.

STATEMENT OF WILLIAM KELLY, CLEVELAND, OHIO, REPRESENTING THE MARINE ENGINEERS BENEFICIAL

ASSOCIATION

The CHAIRMAN. All right, Mr. Kelly; give your name and address for the record.

Mr. KELLY. William Kelly, 210 Blackstone Building, Cleveland, Ohio.

Mr. Chairman, I want to submit some notes and comments here on the bills that we have under consideration pertaining to the main question of the upbuilding of the merchant marine.

The CHAIRMAN. We have only the President's message now. Of course, we have some bills on safety of life at sea and hearings are not being had on them, but if you think your remarks are related to these hearings and want to present your views we will hear you.

Mr. KELLY. Yes, sir. This is This is a brief digest of a series of bills under consideration intended to establish and maintain an efficient