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STATEMENT OF GEORGE A. MARR, VICE PRESIDENT, LAKE
Mr. MARR. The declaration of policy stated in section 1 is to provide a merchant marine that shall
First. Be sufficient to carry at least one-half of the foreign commerce and to provide shipping service on all routes essential for maintaining the flow of national commerce at all times.
We have enough ships on the Great Lakes to handle all of the foreign commerce and more, too, even without sharing it with the ships of Canadian registry. We also have adequate shipping service on all routes on the Lakes now established or that can be established at any time in the future.
Second. Under treaty with Great Britain, neither country may maintain a navy on the Lakes; therefore we need no naval auxiliary, but we have it if a naval auxiliary is required.
Third. The United States fleet, which is the major fleet on the Lakes, is owned and operated by citizens of the United States and, so far as I know, has never called upon the Government for a loan and does not, and cannot under the provisions of the bill, receive any benefits from mail contracts.
Fourth. Ship construction and port facilities have gone hand in hand in providing the most up-to-date and most expeditious shipping facilities in the world; and the ships are modernly equipped, safe as human ingenuity can make them, of types best suited to the trades, and manned by skilled officers and seamen; and the percentage of citizen personnel naturally is high, for geographical reasons.
The benefits to the merchant marine, as proposed in title III, apply only to ocean-mail routes and ocean-mail contracts; and those of title V are extended to vessels engaged in the foreign commerce. The ships on the Great Lakes operate to a comparatively small extent in Canadian trade, many of them not at all. We have no problems that call for the benefits, the investigation, the regimentation, nor the directive features of this bill.
The Shipping Act of 1916, the Merchant Marine Act of 1920, the Merchant Marine Act of 1928 are not applicable to the Great Lakes trade except as to common carriers, and the Intercoastal Act of 1933 is, of course, not applicable at all. The provisions of titles VI and VII are therefore not applicable to the bulk freight trades of the Great Lakes, except as to section 702, relating to the interrelation of rail and water traffic. In the bulk movements of iron ore, grain, and limestone, there is no community of interest between the rails and the ships.
Under these circumstances we believe that it is not the intention of the President, nor of the Congress, nor of the authors of the bill to provide for shipping on the Great Lakes the benefits desired to be provided for the merchant marine, and that therefore the Great Lakes should not be subject to the inhibitions and exactions imposed by the bill.
Title VIII of the bill proposes certain legislation with reference to seamen. While we concur in principle with some of the provisions of title VIII, we recognize in some of them heavy and, we believe, unwise burdens upon American shipping.
The requirements of section 802 I believe to be impracticable and obstructive. The shipping interests are as anxious as the Government to have able seamen in fact as well as in name. The officers of the ships are more interested than anyone else in having real, efficient, trained, able seamen; but in these days of steam and motor vessels, seamanship is not what it was in the days of sail, and the lack of leadership in the Morro Castle should not be laid at the door of the sailors. Whether they were trained seamen or not, the testimony, as I read it, pointed the finger of blame to the officers rather than to the sailors.
There is so little of real seamanship required on a Great Lakes steam vessel that any officer of a lake ship could teach any average youth, in 3 months aboard a ship, anything he needs to know.
The present requirement of 18 months on deck as a prerequisite for able seaman's certificate is in itself a serious handicap in attracting to ships the kind of material desired and is the real reason for so much fraud in the procuring of certificates. To serve 18 months on deck means to serve three seasons on the Lakes. Now, to add the further requirement that with all this training in practice a seaman must go to school in order to obtain an able seaman's rating and certificate is not helping us to obtain real seaman but is putting a stumbling block in the way of our doing so. If this section is permitted to remain in the bill, then the law requiring 18 months' service as ordinary seaman should be repealed, as this provision makes the school certificate and not the man's experience the prerequisite for an able seaman's certificate.
Section 805 does not fit in with the operations of shipping on the Great Lakes. As stated to this committee last week, we have no commissioners on the Lakes and no United States consuls at Canadian ports, so the requirements of the bill as written cannot be carried out, and due to the rapid turn-around of our ships in port, it is not possible to pay off, sign on, make the elaborate entries contemplated in the discharge book before a commissioner or any other person designated to act as a commissioner.
We favor the use of discharge books, and there would be no difficulty in the Secretary of Commerce finding a suitable agency to issue books to the lake sailors, but the delay to shipping if the hiring, discharging, and recording are to be done in the presence of any shore agency would result in the serious disorganization of the present efficient lake operation.
This question of commissioners on the Lakes has been under discussion for a number of years, and no man has as yet been able to estimate with any assurance of accuracy what the cost of delays would be if the hiring, discharging, and recording were done in the presence of commissioners. The estimates have been mere guesses, but the most frequent guess has been that it would slow up oper ations one-third. 'On that basis I make the following rough calculation on the basis of a normal season's movement of the four principal commodities : Iron ore, 50,000,000 tons, at 70 cents.
$35,000,000 Coal, 35,000,000 tons, at 50 cents.
17,500,000 Grain, 350,000,000 bushels, at 142 cents.
5, 250,000 Stone, 12,000,000 tons, at 60 cents-
Total freight --
The loss of one-third operation would be over $20,000,000, but assuming a slowing up of only one-tenth it would mean a cost to the bulk-freight ships of six and one-half million dollars a year, which, I am quite sure, is more than their net earnings in any normal year, let alone the recent period when they have generally operated in the red.
I have attended all of the Shipping Board conferences on the merchant marine and have heard many distinguished speakers, including yourself, Mr. Chairman, make stirring appeals for the rehabilitation of our merchant marine. I have read books, magazine articles, edi. torials, and the utterances of many able leaders from the President down on the same subject. But what does Congress do in support of all these pleas for a restored merchant marine?
I have in my files up to date between 125 and 150 bills introduced in this Congress which directly or indirectly affect the merchant marine. Every one of these bills, if enacted, would place a burden on the shipping business. All place on this trade an expense for additional crews, for greater regulation, for added construction costs, for added equipment, for delays in operation, for taxation, and for dozens of other things. There is but one bill in the whole 125 that is designed to aid or favor shipping in any way, and that is the bill under discussion today, and even that would place on shipping some burdens that are impracticable, unnecessary, and unwise.
I give to every Congressman credit for honesty of purpose in the presentation of bills which he is sponsoring. Undoubtedly he fully believes that the object to be attained by his bill is a worthy one
and that whatever expense is entailed to make it effective is reasonable and justified. But, Mr. Chairman, what if all these bills became laws? What if any normal proportion of them were enacted! I submit to you that the merchant marine would be so topheavy that it would capsize before the Department of Commerce could make a stability test.
The bill before us proposes to put great burdens upon all ships even those ships that are not receptive of any of the benefits of the bill. I have given you an example-a rough one to be sure, but I believe a conservative one-of the effect on lake ships if the provisions of the discharge-book section are applied as written.
We do not fear the competition of Canadian ships so much as we do other disturbances that threaten not only our lake ships but the agricultural, iron-mining, coal-mining, and iron-making interests of the country. We are not even now producing the world's supply of grain. Two-thirds of the grain coming down the lakes is of Cana. dian origin and although we haul both American and Canadian grain a distance of nearly a thousand miles for from 114 to 214 cents, the competition of Russia, Australia, and the Argentine is making heavy inroads in the demand for the American product.
In the coal trade, our exports to Canada have normally been in the neighborhood of 17,000,000 tons, about 6,000,000 of which has been moved by lake. Canada is now consuming in annually growing quantities coal from Nova Scotia, England, and Wales.
Our greatest menace, however, lies in the threat to our iron-ore mining and our steel industries of Ohio and Pennsylvania.
As stated to you last week, the United States has reached the point of making 50 percent of the world's production of pig iron and 80
percent of this is made from iron ore brought down the Great Lakes. It is now a fact that not any of the Lake Superior iron ore goes to furnaces east of the Allegheny Mountains. Iron ore from Chile can be laid down at the eastern furnaces at a cost per ton of iron for as little or less than the American ore, and any disturbance of the costs of delivering the Lake Superior ore threatens to close the Lake Superior mines and affect adversely the steel-producing plants west of the Allegheny Mountains.
James J. Hill said: The cheap production of the highest grade of ore in these mines (the iron-ore mines of Michigan, Wisconsin, and Minnesota) and the low rates of transportation to Lake Erie ports have done more to build up the iron and steel industries of the United States than all the tariffs that have ever been placed upon the statute books, and today, if these mines were closed, our superiority in the iron and steel trade of the world would be gone forever.
We fear that any legislation which disturbs the delicate balance of our national industrial conditions as provided by the cheap transportation of iron ore, coal, and grain on the Great Lakes will have disastrous effects upon not only lake shipping but upon these major factors in our industrial prosperity, and we urge upon Congress the most thoughtful consideration of any legislation that tends to throw out of balance the costs of lake transport.
The CHAIRMAN. Any questions, gentlemen? Thank you very much, Mr. Marr,
I want to incorporate in the record some papers that Congressman Burnham sent to me with the request that they be made a part of the record dealing with matters contained in the bill under consideration, and also a statement by Mr. John Possehl, general president of the International Union of Operating Engineers.
Without objection, they will be made a part of the record as follows: STATEMENT OF HON. GEORGE BURNHAM, A REPRESENTATIVE IN CONGRESS FROM THE
STATE OF CALIFORNIA
HOUSE OF REPRESENTATIVES,
Washington, D. C., April 27, 1935.
House of Representatives.
On April 15, 1935, you introduced the bill (H. R. 7521) to develop a strong American merchant marine, to promote the commerce of the United States, to aid national defense, and for other purposes. Since the introduction of said bill
, your committee has, I understand, been holding hearings thereon, which will continue throughout the coming week at least.
The suggested amendment sent to you with my letter of April 1, referred to above, is as follows:
" That no steamship line operating vessels belonging to the United States, or purchased or being purchased from the United States or any agency thereof; or any steamship company receiving from the United States or any agency thereof any subsidy or payment through contract for the carrying of mails, or otherwise, shall belong to any conference or association relieved of the Sherman Act which either through official acts or policies prevents or attempts to prevent, either directly or indirectly, the serving of any port within the continental limits of the United States located on any improvement project designed for the accoinmodation of ocean-gving vessels, authorized by Congress or through it by any other agency of the Federal Government; nor shall any steamship company receiving from the United States or any agency thereof any subsidy or payment through contract for the carrying of the mail, or otherwise, enter into any agree ment, understanding, or other arrangement to abide by or concur in the acts or policies of any such conference or association."
I am informed that the California State Senate aud Assembly, on April 25, 1935, unanimously passed a memorial requesting the inclusion of the abovequoted proposed amendment in any legislation approved by your committee.
The adoption by your committee of this legislation is vitally important to the city and port of San Diego against which there is now assessed an arbitrary of $2.50 per ton; also to a number of other ports that are discriminated against by the attitude particularly of the trans-Pacific Conference, called the “Pacific Westbound Conference.” In this connection, I would like to quote a recent article appearing in San Diego's leading morning newspaper, the San Diego Union, under date of March 30, 1935, as follows:
" CONFERENCE ACTS TO RESTRICT SHIP TRADE OF HARBOR “Once more a conference of steamship operators has lowered the boom" on San Diego.
" Steamship row was agog yesterday over the latest action against local trade, the effect of which is to transfer from San Diego to San Pedro a proinising trade just getting on its feet-the direct shipment of local commodities to the United Kingdom.
" The Pacific-European Conference, most of whose members are alien-flag lines, has ruled that ships may no longer call at San Diego to lift European cargo unless there is sufficient cargo to produce a revenue of $1,500 for each ship. The effect is to shut off the recently developed trade in fruit juices and extracts from this port to London which has been bringing at least one ship a month into San Diego, providing a neat addition to port revenues and to the income of local stevedores. As there never has been such a shipment coming up to $1,500 in revenue, and there is little liklihood of the possibility of concentrating enough cargo to reach that figure, it virtually shuts out this form of foreign trade, and forces its diversion by truck to San Pedro.
BATTLE ON NEW FRONT
“ The question of discriminating against San Diego by steamship conferences has been one of long standing. Ships bound to the Orient may call here to lift two commodities--scrap iron and bulk gypsum. If they lift any other cargo while in port here they must add a penalty of $2 a ton--described as an arbitrary—or move the cargo to San Pedro and load it there. This particular one is the subject of a protest by the city which still is before the Federal authorities.
* Meanwhile, the harbor traffic department has other worries on its hands. After several years of work it succeeded in getting into the laws pertaining to certain trades the proviso that no conference could stop one of its member lines from calling to lift cargo, at terminal rates, from any port on which public funds had been expended. Now comes the Eastman bill to regulate steamship and other facilities, which entirely eliminates this protection. However, Representative George Burnham is reported as working on an amend. ment which would bar any line receiving a subsidy from membership in any conference which sought to keep its member lines out of any port which had been developed at public expense.".
Reference in the above-quoted article to my working on an amendment which would bar any line receiving a subsidy from membership in any con. ference which sought to keep its member lines out of any port which has been developed at public expense, is, apparently, in respect to the suggested amend. ment sent you with my letter of April 1, and first quoted above. This action was taken by me in the belief that, owing to the President's message of March 4, 1935, referred to above, action on earlier bills providing for the regulation of the transportation of passengers and property by water carriers, growing out of the recommendations of the administration through the Federal Coordinator of Transportation, Hon. Joseph B. Eastman (H. R. 5379 and S. 1632), would be deferred until the matters of the merchant marine were disposed of.