shipment abroad, it can do that; in other words, it can operate between different ports in picking up or delivering cargo from abroad or going abroad, but it can not pick up a cargo, for instance, in Philadelphia and deliver it, on the voyage, at Norfolk, or at New York, because that would be engaging in the coast wise trade. I will ask you shipping men here is not that correct? That is my impression. But that is the law now, Mr. Lehlbach, and they could do that. after the passage of this amendment just as well as they can do it

now.

Mr. LEHLBACH. But, as you stated a little while ago, under the 1928 act a foreign-built ship under American registry could not participate in a mail contract.

Mr. DAVIS. Not unless it was transferred before February 1, 1928, or unless a contract for the construction of it for use in the foreign trade of the United States had been let before the passage of the act. The CHAIRMAN. You will find that in sections 4 and 5.

Mr. LEHLBACH. So that a company that has or wants a mail contract, that also operates a foreign line, it would not be possible for that company to transfer the registry and then take the mail contract?

Mr. DAVIS. Yes.

Mr. LEHLBACH. Provided that that retransferred line did not participate in the mail business?

Mr. DAVIS. That is right. Well, it can not do it now; if it is operating under the foreign flag, they could not use those vessels now; under the contract, they could not do it. They might do it on a poundage basis, but they can not do it under a contract, because it is under a foreign flag. And they could not do it subsequently, because it is transferred after the dead line fixed in the White Act. But the point I was making was this, that if a mail contract is to be awarded to a certain American operator and he is operating American ships and foreign ships, under the law as it now stands he is entitled to that contract although he could only perform it with his American ships and he would perhaps still operate his other ships under foreign flags. Now he can still get that contract by transferring his ships from foreign to American registry and still operate the same ships transferred to American registry anywhere that he could have operated them under the foreign flags, if he gets the mail contract under the present law.

The CHAIRMAN. Are there any further questions of Mr. Harding? If not, Mr. Harding, we will excuse you.

Mr. DAVIS. Mr. Chairman, I do not believe that Mr. Harding read all of his statement.

Mr. HARDING. No, I did not.

Mr DAVIS. I suggest that his entire statement be inserted in the record, in connection with his testimony.

Mr. BLAND. Just as though he had read it.

Mr. DAVIS. Yes.

The CHAIRMAN. Is there objection? jection.

The chair hears no ob

Mr. HARDING. While a large majority of American steamship companies engaged in foreign trade possess no ownership or interest in foreign-flag shipping, there are a number who find it profitable

or expedient to own or employ foreign vessels, or maintain agencies for foreign-steamship owners.

This statement does not imply any foreign ownership or interest in these American shipping enterprises, and in a large percentage of cases, American ownership of foreign vessels is extremely limited-in other words, the relinquishing of this ownership and replacement with American tonnage of similar character would, in most instances, work little or no hardship.

I believe that the enactment of the amendment to the JonesWhite Act proposed by Representative Edwin L. Davis, and designated as H. R. 8361, is an equitable measure, and in the final analysis will result to the advantage of American companies at present interested in the operation of foreign ships as well as to that of these American companies whose interest lies in American vessels exclusively. I may state that, in my capacity as editor of The Marine News, I have found that the consensus of opinion in American marine circles is that this amendment meets with general approval among those who desire to see the American merchant marine a 100 per cent American institution.

Contrary to a belief sometimes expressed, the Jones-White Act was not designed primarily for the benefit of American shipowners and shipbuilders. The construction loan fund, mail contracts, and other provisions of the act must be considered as a means toward the end, not of making American shipowners prosperous at the expense of the Government, but for the development and permanent establishment of an American overseas transportation system for the benefit of American industry and commerce, and, in the event of national emergency, providing effective naval and military auxiliaries.

These being the basic and true reasons for the enactment of the merchant marine act of 1928-national defense and national commercial welfare-it is no more than equitable that Government aids to American shipping in the form of construction loans, mail contracts, and low insurance should be confirmed by those American shipping companies who possess no interest or ownership in the operation of foreign ships, or those companies whose owners possess no interest in foreign-ship operation.

As in any other business, it is impossible for the shipowner not to let the left hand know what the right hand is doing. If he operates a line of American ships in one trade upon which he receives mail compensation, and also operates a number of foreign ships in another trade (either through ownership, charter, or as agent) it is only natural that all sources of income be considered as one, and the remuneration received from the Government in connection with the American-flag ships will contribute toward reducing his general overhead, including, naturally, that of his foreign-flag operations or connections. Therefore, if his foreign-ship operations are in competition with other American services, it may be seen that the money he received from mail contracts is used, either directly or indirectly, to combat the establishment or maintenance of American services in that particular trade.

The wording of the amendment under discussion appears to be all-inclusive, as it seems to cover every possible condition under which American shipowners may be interested in foreign shipping.

In this connection, it may be said that foreign affiliation of American shipping companies may be divided into four groups:

Ownership of foreign-flag ships by American companies, either directly or through subsidiaries. This includes a comparatively small number of vessels, the largest American owner of foreign-flag ships being, I believe, the International Mercantile Marine, while such companies as the Munson Steamship Co., United Fruit Steamship Co., Grace Steamship Co., Panama Mail, and others own considerably smaller numbers.

Operation of foreign-flag ships by American steamship companies by charter-frequently to move seasonal cargoes, but also chartered for more extended periods. The Munson Steamship Co., as shown by Representative Davis, is an extensive charterer of foreign ships, and has on occasion competed with these ships against American vessels in regular services.

Control of operation of foreign ships by American steamship companies who act as agents for foreign shipowners in securing passengers and cargoes and transacting ships' business. The International Mercantile Marine, which is agent for the White Star Line, and the Barber Steamship Lines (Inc.), agent for the Union Clan Line, come under this classification.

Control of operation of foreign ships, to a degree, through stock ownership in American companies by individuals also holding stock in companies owning foreign ships, although the two companies may not be closely identified.

Ocean mail contracts have already been awarded to American steamship companies coming under all of the above classifications, as the following examples will show:

The American Mail Steamship Corporation (Panama Pacific Line) receives $402,400 annually for ocean mail route 32, New York to Balboa, C. Z. This company is a subsidiary of the International Mercantile Marine which owns and operates foreign vessels in the North Atlantic in competition with the United States Lines, American Diamond Lines, Oriole Lines, and others.

The Munson Steamship Co. receives $1,247,584 annually for ocean. mail route 4, New York to Buenos Aires. This company has operated chartered foreign-flag ships between Gulf ports and ports situated on the east coast of South America in competition with the Gulf Brazil River Plate Line.

The American West African Line receives $286,650 annually on route 17, New York to West Africa. This company is owned by the owners of the Barber Steamship Lines (Inc.), its general agents, who are also agents for the Barber Line operating foreign ships to the Philippines and Far East in competition with the American Pioneer Line and the Dollar Line, and for the Union Clan Line, a foreign line operating ships to South and East Africa in competition with the American-South African Line.

The American-South African Line receives $248,280 annually on route 6, New York to Portuguese East Africa. It is reported that a portion of the stock of this company is owned by interests which are closely identified with foreign shipping.

From these illustrations, I believe it can be shown that if American companies interested in foreign-ship operation were to be given an

opportunity to divest themselves of these foreign affiliations, a much healthier condition would prevail, not only in the entire American merchant marine as a whole but in these very companies' American ship operation activities.

The American shipping company which devotes its efforts to securing freight for a foreign company may derive a profit from so doing, but if it must compete in its American flag service against foreign vessels operated by some other American company, and such a condition were to become general, it would appear to be a case of "dog eat dog."

In most cases these foreign affiliations-I call them that for brevity on the part of American shipowners, are matters of long standing. If in order to secure a mail contract an American shipping company should be compelled to divest itself almost overnight of foreign tonnage or foreign-ship operations, it is quite likely that a condition would result not entirely favorable to American industry and commerce. For illustration, if the Munson Steamship Co., by reason of a mail contract were precluded from chartering foreign ships to handle the seasonal sugar movement, the sugar would be carried, but is it not entirely plausible to believe that foreign ships would handle it anyway and at perhaps greater cost to the receiver or shipper?

If, on the other hand, an American company interested in foreignship operation through ownership, charter, or otherwise were faced with the alternative of continuing foreign-ship operation or foregoing a mail contract, might we not expect the latter choice and subsequently intensified competition for other American lines? Would the passage of this amendment have the effect of driving a company, which might in time become a 100 per cent American owner and operator to the operation of foreign ships exclusively? By reason of commercial contacts resulting in good will, is it not conceivable that if an American operator employing some foreign vessels was thus driven to operating foreign vessels exclusively, he would continue to handle the same quantity of cargo as he did when he used some foreign and some American vessels, with consequent loss of patronage to American ships?

For these reasons it is believed that American shipowners operating or controlling the operation of foreign-flag ships in competition with American-flag ships, and this includes practically all such, should be given an opportunity to divest themselves gradually of these foreign connections. In the cases of direct ownerships of foreign tonnage it might be advisable to permit the owner to reduce this tonnage at the rate of 10 per cent annually, so that at the end of 10 years, the usual length of mail contract, he would possess American tonnage exclusively. A similar arrangement might be made in the case of the American owner who augments his American tonnage by chartering foreign vessels.

In both of these cases replacement naturally should have to bet provided for with American vessels. The construction-loan fund is available so far as building them is concerned, but in the matter of operation some means must be uncovered to permit operation somewhat on a parity with foreign shipping. The law as at present constituted permits the granting of a mail contract to only one American

line on any one particular route. It might be advisable to consider the granting of supplemental mail contracts to other American services operating on routes already covered by contract. This has been suggested primarily for the purpose of developing more speedy transportation and more frequent mail and cargo service to industry and commerce. Another factor to be considered is that American vessels so constructed to replace foreign ships would be of value to the Government in time of national emergency.

It is reported that in the specifications for mail contracts to be advertised shortly the Postmaster General seeks the right to change the terms of contracts to accord with any future legislation that Congress may make in dealing with ocean-mail contracts. The Postmaster General probably has reference to the amendment under discussion here, and in this connection I believe there is one point which has not been covered. The amendment reads that the Postmaster General shall not enter into any mail contract with any person, firm, and so forth, which is directly or indirectly, through any subsidiary, and so forth, operating or controlling the operation of foreign-flag ships in competition with any American-flag ships. There is no direct provision precluding the contractor from engaging in foreign-ship operation subsequent to the award of the contract or during the life of the contract. To my mind the fact that the law provides that the Postmaster General shall include in such contracts such requirements and conditions as in his best judgment will insure the full and efficient performance thereof and the protection of the interests of the Government does not thoroughly cover such a situation and might therefore be clarified or made more specific in the amendment.

That American ship operation can be conducted on a purely 100 per cent American basis is found in the fact that several such lines are making steady progress. For example, I might mention the American Export Line as being one of these; I am reliably informed that vessels of this line are departing from New York heavily laden and it is necessary in some instances to leave cargo on the pier. The Export Line possesses a contract for transporting mails, and while it would be difficult to conceive the following, and I have no reason to believe this will even happen, it is nevertheless possible under this mail contract for the American Export Lines to charter foreign vessels and even build them not to carry mail but to augment cargo service.

The CHAIRMAN. Now, gentlemen of the committee, I have this general thought about this bill and about the conduct of the hearings: My experience has taught me that we make progress here by continuity of hearing. I believe the members attend better, I believe the members have a better understanding of the problems involved if we run along from day to day from the beginning of our hearings to the completion of our hearings, and that such a course is vastly preferable to meeting to-day and taking an adjournment for two days and then an adjournment for three days. Apparently there are going to be a good many people who want to be heard on this legislation and I make the suggestion that we suspend this hearing until Monday, at which time Judge Davis can have present, or the committee can have present, those who want to appear in support of this