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Mr. BRIGGS. Now, what did it cost you to do that?

Mr. HANSON. It cost between seven and eight hundred thousand dollars.

Mr. BRIGGS. Would you have done that if you had not had the mail contract?

Mr. HANSON. Probably not, sir; because, if we did not have the mail contract, we would be running just a purely freight service over there and we were bound, before we had the mail contract, by the purchase terms of the Shipping Board to make only 26 sailings a year and, under the mail contract, the first year we had to make 36 sailings and, every year thereafter, 52 sailings. Now the Government requires us, from October 1st last, to make this sailing a week and, in order to make a sailing a week and to get the service out of our vessels, we had to go up to 12 knots, and when we went up to 12 knots we found, by an additional expenditure, we could go to 13 knots and we went up to there.

Mr. BRIGGS. Has that increase in the speed affected materially the expense of operation?

Mr. HANSON. Yes, sir, it has.

Mr. BRIGGS. Was it compensated for by the added amount of cargo you received, as well as the benefits under the mail contract? Mr. HANSON. We hope it will be compensated for not only by an added amount of cargo, but by an added compensation for the mail, because we are now running these vessels at a higher speed than that which is provided for under the contract and, upon mutual agreement between the contractor and the Postmaster General, we can get the higher compensation. We have not entered into such an agreement as yet.

Mr. BRIGGS. In other words, the purpose of the merchant marine act is to encourage modernizing, as much as possible, the American fleet so as to keep it on a competitive basis with foreign fleets. Mr. HANSON. As I understand it, yes, sir.

Mr. BRIGGS. And to help meet the differential in the cost of operating foreign vessels, they are given a contract to carry the mails? Mr. HANSON. Right.

Mr. BRIGGS. And you find those mail contracts practically indispensable, do you not?

Mr. HANSON. We think that service is absolutely indispensable. Mr. ABERNETHY. I follow you pretty well, but there is one trouble worrying me about this matter, and that is the delay on the firstclass mail. Do you not think it would be a better idea if they were to give you the extra money and let you make up for the difference in the delay? Is not the question of mail, particularly first-class mail, a question of speed, and is not that a problem we have to consider in connection with this?

Mr. HANSON. Oh, yes, that is quite true; but, since we have speeded up these vessels and have put in a regular service once a week, which is what we have now, our foreign competitors do not have that regular service once a week, but they will spot a vessel in New York to sail on a certain day and then they will notify the Postmaster General and the international mail director at New York will slip the mails on there. They will tell him how long it will take to get to Copenhagen, or some place. We are there every week and they can depend on us, and about all they can count on by putting it on

these other vessels is, at the most, a saving of two days, and we are allowed one day. If, on an 11 or 12 day voyage, a day is as important as all that, with the uncertainties of weather in that particular trade, the cable is cheap and I do not think the delay is anything that might be expected to bring a reasonable complaint.

Mr. ÅBERNETHY. You do not think a two days' delay on a letter would bring complaint?

Mr. HANSON. We are allowed one day now.

Mr. ABERNETHY. If you had two days' delay on a letter, you do not think it would bring complaint?

Mr. HANSON. If we had two days' delay, it would be on account of the weather, and the other fellow, sailing about the same time, would encounter the same weather.

Mr. ABERNETHY. Do not you think if you required a fellow to use the cable, instead of a letter, that there would be complaint about it? Mr. HANSON. Yes; but again you have to take into consideration the element of time, and the uncertainty of the service for a distance. as great as we are serving necessarily makes the delivery uncertain as to a particular day.

Mr. ABERNETHY. Now let me ask you what is your idea about the attitude of the present Postmaster General with reference to carrying out the spirit of this act that we passed here in 1928?

Mr. HANSON. Well I can say what my ideas about his attitude are. I will say this, that in all my contacts with the Post Office Department, I have found the men down there very anxious to carry out the spirit of this particular problem. I deal directly with the director of the International Postal Service.

Mr. ABERNETHY. Why do not you deal directly with the Postmaster General and see if you can not work out the proposition there, instead of going to some foreign agency? Of course, you are not going to get any help from the foreign agency. This whole legislation is based in the interest of the American, as against the foreigner, and now it would seem to me, if you would take your problem up with the Postmaster General, if he has the idea and talks like he did to us the other day and carries it into effect, that possibly he can help you out. Mr. HANSON. I recall an instance not of my own line, but of another line last year where they tried to put some mail on a ship that was sailing one day late, but which would get to England the same time as the English boat got to England, and there was such a cry raised that the Post Office Department laid down. My suggestion to you, this afternoon, is that you can ease the way for the Post Office Department if you give it a specific mandate as to what to do on this.

Mr. ABERNETHY. I want to help you if I can, but what is worrying me about this is that if we load down this Davis amendment with a lot of other amendments-everybody seems to be favorable to the Davis amendment, so far as I can ascertain; even folks who have been partly foreign are beginning to come in and becoming Americans now, and if we load it down with additional amendments we can not get it through; and why is not your problem more a problem with the Post Office Department rather than to load this down with a lot of amendments?

Mr. HANSON. As I understand the theory of the Davis bill here, it is to protect American shipping; and, in the way the Post Office

Department is probably compelled to operate at the present moment, the money it spends on foreign ships, where American ships are available, is giving aid to the foreigner.

Mr. ABERNETHY. What I really believe is, I believe if you will take your problem to Mr. Brown it would be settled without legislation. That is my belief.

Mr. HANSON. If it could be settled that way it would be all right. Mr. ABERNETHY. Well, I commend that to your consideration. Mr. HANSON. Thank you very much.

The CHAIRMAN. Are there any other questions? If not, we are very much obliged to you, Mr. Hanson.

Mr. WALKER. Mr. Munson would like to make a further statement in connection with the Cuban sugar situation.

FURTHER STATEMENT OF MR. FRANK C. MUNSON

Mr. MUNSON. It occurred to us, gentlemen, in talking this matter over at lunch time, that we have not left a very clear record on the matter of the resolution of the Steamship Owners' Association, read by Mr. Walker at the beginning of our hearing, and I wanted to reread the clause and add some testimony in connection with it. It is paragraph No. 2 (reading):

Whereas, At the same time it must be recognized that there are trades, and especially trades to the West Indies and Central America, the seasonal grain and cotton trades of the Gulf, and certain oil trades, in which it is impossible for American-flag ships not receiving the benefits of mail compensation under the merchant marine act, 1928, to be operated successfully in competition with foreign-flag ships until adequate aid is provided by the Government.

Now this clause, we felt was not adequately covered as to the meaning of it and as to the necessity of some amendment in the Davis bill, as it is worded to-day, in order to cover this particular trade. Unless some additional compensation is given, it means that a considerable number of American steamship companies operating chartered boats in those trades will have to give up the trades and turn that over to foreign owners and any profit that these American owners are to-day making and turning into the building of American ships would be lost and, therefore, the progress of the merchantmarine problem be delayed much further. The profit would go to the foreign-flag owner if the American-flag owner can no longer operate in those seasonal trades, so that I wanted to bring it up again and suggest a verbiage here which will clarify, in the opinion of the owners, with whom I have talked, this particular seasonal need.

That is a very important point, as to taking care of this trade by American charters today, and there are a considerable number of them that would be affected. The suggestion we make is that, under section 404, the following changes be made, to insert, after the word "provided

* * * That, unless such contract is recommended by the United States Shipping Board, the Postmaster General shall not enter into any such contract with any person, firm, corporation, or association which is, directly or indirectly, through any subsidiary, associated or affiliated person, firm, corporation, or association, or as a holding company or through stock ownership, or otherwise, operating regularly any foreign-flag vessels, in competitions with any Americanflag vessels operated by other American citizens on any ocean mail route certified by the Postmaster General to the United States Shipping Board under section 402 of the merchant marine act, 1928. This act shall not take effect until the

lapse of a reasonable time to be determined by the United States Shipping Board to enable any American citizen to dispose of foreign-flag ships which may now be operated in contravention with the foregoing provisions of this act.

The CHAIRMAN. You said

This act shall not take effect until provided by the Shipping Board?

Mr. MUNSON. No, that section 402

In competition with any American-flag vessels operated by other American citizens on any ocean mail route certified by the Postmaster General to the United States Shipping Board.

The CHAIRMAN. I thought, immediately before that, there was something about approval by the Shipping Board that the act would not go into effect except upon or until approved by the Shipping Board.

Mr. REID. The first words after "provided."

Mr. MUNSON. Yes-"unless such contract is recommended by the United States Shipping Board."

The CHAIRMAN. I got that; then I thought, further down, you said something about "approved by the Shipping Board."

Mr. MUNSON (reading):

Any foreign-flag vessels, in competition with any American-flag vessels operated by other American citizens on any ocean mail route certified by the Postmaster General to the United States Shipping Board under section 402 of the merchant marine act, 1928. This act shall not take effect until the lapse of a reasonable time to be determined by the United States Shipping Board

That is what you had in mind?

The CHAIRMAN. That is what I had in mind.

Mr. MUNSON. That is the matter of the two or three years already allowed by law, according to the testimony this morning.

The CHAIRMAN. There is quite a difference between authorizing the Postmaster General to negotiate a contract and fix the effective date of the contract and providing that an act of Congress shall not take effect until approved by the Shipping Board. I just wanted to get that; I do not want to argue that with you now.

Mr. MUNSON. That is simply a suggestion which we desire to place before you and to emphasize the importance of the point we make, in that to-day it is a factor in the building up of the American merchant marine which will disappear immediately that the Act becomes effective under the language which will not enable them to make money out of these chartered ships.

Mr. DAVIS. Now you have changed your mind, then, since you indorsed the bill before lunch?

Mr. REID. He had a good lunch. [Laughter.]

Mr. MUNSON. I have only changed my mind to try to take care of the contingencies, Judge Davis, that seemed to us important in the interest of maintaining the merchant marine and building it up. Mr. DAVIS. Well, if it is right in principle, as you said this morning, do you think it is right to pull all of the teeth out of it?

Mr. MUNSON. It is not intended to do that at all, Mr. Davis. In both Mr. Mooney's and my testimony we emphasized this contingency in these trades and these resolutions started the whole group of testimony and we felt that we did not leave the impression in your minds here as to the necessity of covering this point.

Mr. DAVIS. Yes. You want the Shipping Board, then, to grant anybody a longer period than the Postmaster General can do, of three years, to get in shape to receive a mail contract; is that it?

all.

Mr. MUNSON. Whatever time seems reasonably necessary; that is

Mr. DAVIS. Well, now, in that sugar trade, you understand, of course, if there were no American ships operating in that trade, this amendment would not apply against you operating chartered ships in that trade.

Mr. MUNSON. But there are occasional American ships operating. Mr. DAVIS. Are not there several?

Mr. MUNSON. There are occasional vessels operating there. For instance, the Bull Line has seven or eight ships a year that it brings out of the Porto Rico trade, when that is slack, and runs them up with sugar from Cuba. They are not a line with a mail contract.

Mr. DAVIS. I will ask you if Lykes does not operate a number of Lake-type ships in that trade that they got from the Shipping Board? Mr. MUNSON. They do.

Mr. DAVIS. Under the American flag?

Mr. MUNSON. They do. They run from Cuba to the Gulf.
Mr. DAVIS. And there are others that do that?

Mr. MUNSON. There are some others.

Mr. DAVIS. You want the privilege, then, as indefinitely and as long as the Shipping Board would permit, to go abroad and pick up idle foreign ships, built abroad, documented under foreign flags and flying foreign flags, and bring them over here manned 100 per cent with foreign crews and officers and put them in this trade in competition with these American-owned and operated ships?

Mr. MUNSON. Well, they are not seriously in competition with any considerable number of American boats.

Mr. DAVIS. If you are permitted to bring over those foreign fighting ships, instead of the American ships in the service increasing they will likely decrease, will they not?

Mr. MUNSON. No. I think, on the contrary, they will increase. Mr. DAVIS. You think that will happen?

Mr. MUNSON. Yes, sir; I think as long as American citizens are permitted to

Mr. DAVIS. If that will help them, why not put in a lot of American ships and operate against foreign ships, if foreign competition helps? Mr. MUNSON. Because American-flag ships will cost from 25 to 30 per cent more money to operate, carrying the same commodities as the foreign ship.

Mr. DAVIS. But, still, there are other companies who are operating American ships in that service.

Mr. MUNSON. They have the benefit of regular cargo business southbound, and some have mail contracts like Lykes Brothers and Ward, which give them a benefit to carry a cheap commodity northbound, which is a benefit rather than going back in ballast.

Mr. DAVIS. You say, then, their mail contract helps them to operate their American ships in other trades than that on which they have the mail contract?

Mr. MUNSON. Yes.

Mr. DAVIS. And, in like manner, would it not help you or anybody else to operate foreign-flag ships in competition with American-flag

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