Mr. LYKES. The smaller size ships. Mr. BRIGGS. One of the troubles that the American merchant marine suffers now is in getting enough cargo and particularly import cargo into the United States, is it not, Mr. Lykes? Mr. LYKES. Yes, sir; particularly in our section of the country— will say my section of the country, the Gulf. Mr. BRIGGS. You mean the Gulf? Mr. LYKES. Yes, sir. Mr. BRIGGS. That is pretty much true everywhere in the United States, is it not-lack of imports? Mr. LYKES. Yes, sir. Mr. BRIGGS. Which is one of the main reasons why the American merchant marine operates at such high cost, is it not? Mr. LYKES. Yes. The CHAIRMAN. You mean lack of imports carried in American ships? Mr. BRIGGS. Lack of imports carried in American ships is what I am talking about, precisely. And everything that contributes toward import cargo in American vessels lessens the cost of operation and increases your revenue, does it not? Mr. LYKES. Yes. Mr. BRIGGS. So that if you contemplate, or anybody else contemplates, starting into a new trade service and it looks like you have enough outward bound cargo to make it worth while to engage in such a venture, if you can have assured any substantial amount of import cargo, sugar or anything else, it just helps out that much and insures the success of it if mail contracts are obtained? Mr. LYKES. Yes; it lessens that problem considerably. Mr. BRIGGS. It would help you even though the mail contract were not available, if you could be assured of cargo both ways, would it not? Mr. LYKES. That is right. Mr. BRIGGS. Speaking of the sale of the Shipping Board services that are still maintained, is it possible to sell those services without mail contracts, Mr. Lykes? Mr. LYKES. It would not be possible for us to bid on them. Some other people may differ; but, according to my idea, it would not be possible to sell them. Mr. BRIGGS. The differential is too great? Mr. LYKES. Too great. Mr. BRIGGS. And if Americans hope to have those services preserved for Americans when no longer operated by the Shipping Board, you feel it is essential that mail contracts should go with those services? Mr. LYKES. It is absolutely necessary. Mr. BRIGGS. That is all. Mr. BLAND. Mr. Lykes, were you here when Chairman O'Connor and Admiral Cone testified? Mr. LYKES. No, sir. Mr. BLAND. I got the impression from their testimony that American cargo ships could not go into that trade anyhow, because they would be carrying at such a terrific loss. I wondered what your thought would be about that? Mr. LYKES. Well, only to the extent of the differentials in the cost of operation of American vessels as compared with foreign. Mr. BLAND. I got the impression from their testimony that the foreigners carried that seasonal movement at so much less cost than the American ships, that the American ships lost-I have forgotten how much on each voyage, but it seems to me it was seven or eight thousand and probably more. Mr. O'CONNELL. Eight or ten thousand dollars. Mr. BLAND. Eight or ten thousand dollars. Mr. LYKES. That is probably the same principle that we require mail contract to purchase these long-voyage trades; it is due to the differentials in the cost of operation and, therefore, the same thing applies to the Cuban sugar trade. Mr. BLAND. But would the mail contracts take care of that seasonal movement? Mr. LYKES. Well, no, probably not, as contemplaed to-day. Of course, I do not know what the future may bring. Mr. BLAND. Would it be necessary for the future development of those engaged in that business to call on foreign ships to act as cargo carriers for seasonal movements? Mr. LYKES. In other words, the traffic is heavier from Cuba here than it is to Cuba. Mr. BLAND. Yes. Mr. LYKES. Yes, sir, that is correct. Mr. BLAND. Assuming that the reservoir of ships now owned by the Shipping Board, upon which a call may be made, were exhausted and the Shipping Board had no reservoir, what would the shipping lines do then but go to the foreign ships? Mr. LYKES. Well, they would probably be forced to go there under those conditions. Mr. BLAND. I am trying to get information; I am not expressing any opinion about it at all. Mr. LYKES. Yes, sir. Mr. BLAND. That is all. Mr. BRIGGS. Mr. Lykes, suppose you were offered a substantial amount of additional cargo, would you take it on and handle it in American ships? Mr. LYKES. At a paying rate; yes, sir. Mr. BRIGGS. I mean if you had Shipping Board vessels available, these Lake-type ships and others, could you call on those for charter, and are they available for charter? It was testified here before this committee that they can charter those ships practically for a nominal. amount, to be used in that trade or any other trade. If it was necessary to take care of the commerce, could you itilize those ships and carry additional cargo in them? Mr. LYKES. Why, we do not consider it in connection with our service, because we are limited in our present operation to our southbound business. Mr. BRIGGS. I am not speaking of only one service, but you gentlemen have a great many services. Are you contemplating any extension of services in that area in the West Indies? That is what we are talking about now. Could you expand along these lines and handle a substantial business in American ships? Mr. LYKES. We could if we could get tonnage at a cheap enough figure. Mr. BRIGGS. Of course, the Shipping Board vessels are being bought at very low rates, are they not? Mr. LYKES. Yes. Mr. BLAND. Mr. Lykes, is there, in the reservoir of laid-up ships now ships that are vailable for the services? Mr. LYKES. I am rather under the impression the number is limited, sir, although I am not closely posted on that. Mr. BLAND. It requires a peculiar class of ships? M.. LYKES. Yes, sir. Mr. BLAND. Small size and limited draft? Mr. LYKES. Yes, sir. Mr. DAVIS. Mr. Lykes, is your company a member of the American Steamship Owners' Association? Mr. LYKES. Yes, sir. Mr. DAVIS. Mr. Snider, is the United States lines a member of the American Steamship Owners' Association? Mr. SNIDER. Yes, sir. The CHAIRMAN. If there is nothing further, we are very much obliged to you, Mr. Lykes. Is there anything further, Judge Davis? Mr. DAVIS. I believe that is all the oral testimony I will offer. I have a written statement here I would like to read to the committee.. The CHAIRMAN. Then, if there are no witnesses to be heard, we will consider the oral testimony brought to a close now. I have a telegram here which, perhaps, should go into the record, from B. L. Stafford; and, if there is no objection, that will be included in the record. The telegram above referred to is as follows: January 22, 1930, Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D. C. As American shipping man urge the enactment of amendment to Jones bill by Representative Ewin, Davis granting mail subsidy only to companies operating American flag ship only don't want subsidy used to build up foreign fleets consider this utmost importance to build up American fleets pass this bill. Now, Judge Davis, you say you have a statement there? Mr. DAVIS. This is from Jett & Co., ship brokers and agents and marine insurance agents. It is dated: CITIZENS BANK BUILDING, Norfolk, Va., January 21, 1930. The COMMITTEE ON MERCHANT MARINE AND FISHERIES, House of Representatives, Washington, D. C. DEAR SIRS: As a steamship agent and ship broker located at Hampton Roads, and greatly interested in the upbuilding of an American Merchant Marine, I desire to strongly indorse the bill introduced in Congress by Hon. Ewin L. Davis to amend the merchant marine act of 1928 so as to provide that no mail contracts shall be awarded directly or indirectly to any company which operates foreign-flag ships in competition with American-flag ships. A large number of American ship operators, some of the very largest of them, use principally time-chartered, foreign-flag ships. Frequently these companies have special and preferred arrangments with foreign owners, and whenever they can secure a greater profit, even temporarily, they will take on foreign_ships for one or more trips and only use the American ships when they have to. Under such circumstances it is natural that they can not give their best efforts toward developing American shipping. Also I have known instances where operators of foreign-flag tonnage would use such vessels deliberately, at cut freight rates, during a distress time charter market, to compete with owned American-flag ships trying to build up a route and thus run them out of the trade. It is manifestly impossible for any outright owner of American vessels to compete successfully under such conditions. With all the handicaps and opposition that operators of American ships will have anyhow, they cannot be too strongly supported and protected, in my opinion, if our merchant marine is to succeed. I therefore respectfully ask that your honorable committee approve this bill, which, in my humble judgment, goes to the very heart of the American merchant marine problem. Nothing less than 100 per cent American ownership, interest, and support will even start it on the road to success, in my opinion. Yours very respectfully, L. ARCHIE JETT. Then he wrote another letter, under date of January 27, in which he states: Hon. EwIN L. DAVIS, House Office Building, Washington, D. C. DEAR SIR: I beg to call your attention to another point in connection with the consideration of your bill to amend the merchant marine act of 1928, especially the report made by Mr. M. J. Harding, of the Marine News, as contained in the Journal of Commerce of January 24. According to my experience there is no foundation for Mr. Harding's statements that the forcing of any American operators to give up foreign connections would cause an unfavorable result to American commerce and for instance increase the cost of moving sugar from Cuba to this country. There are a number of operators of American vessels who have been regularly handling sugar in American flag ships at the same going rates as those offered by foreign flag ships, and it is my opinion that they would be glad to get more of this business, but is usually controlled by the larger operators or the foreign flag ships, such as the Munson Line. On the other hand if the operators of foreign-flag ships are given the advantage of mail contracts, they are free to use the profits and experience obtained in such operations in the further use of foreign tonnage whenever they see fit, and with such an advantage, can take on foreign-flag ships through time charter, as the changes or conditions permit, and thus at times drive the constant operators of American-flag ships out of the trade. In my opinion such argument as that put out by the Marine News, is nothing but propaganda, influenced by some of the larger and more powerful operators. I feel confident that with the mail contracts and such indirect subsidies restricted to 100 per cent American operators, that the necessary and a greatly increased steamship service would result, and such American operators could then meet foreign competition, whereas they never could, otherwise. At the same time the revenue derived from the operation of American ships would be devoted entirely to the continuous upbuilding of the American merchant marine, rather than in fighting it, as would be often the case under the opposite system. Again commending you on the great work and assistance you are rendering the American merchant marine through your present efforts, I am, Yours sincerely, L. ARCHIE JETT. The CHAIRMAN. Is there anything further? If not, the Chair will declare this hearing closed. (The committee thereupon adjourned, subject to the call of the chairman.) [Western Union Telegram] Hon. EwIN L. DAVIS, NEW YORK, N. Y., February 11, 1930. House of Representatives: We heartily indorse your proposed measure forbidding American steamship owners enjoying mail contracts to employ foreign-flag vessels. We feel that owners receiving mail contracts from the United States are in a fiduciary position and should not use foreign-flag ships to compete against other American-flag lines. We hope your bill will pass. LUCKENBACH STEAMSHIP Co. (Inc.) Hon. EwIN L. DAVIS, Washington, D. C. B. L. STAFFORD, Brooklyn, N. Y., January 29, 1930. MY DEAR MR. DAVIS: I read Munson's statement to the effect that sugar from Cuba was a seasonal business and they could not get American vessels for that trade. It is very strange that the finest of steel oil-burning American ships, especially suitable for the West Indian trade, are being sold for less than $10,000 and destroyed while foreign ships are used in this trade. Munson pays more per month charter hire to charter these foreign ships than it would cost to own and operate American ships suitable. I know Americans who would gladly buy ships for this trade, if given an opportunity and not forced to give bank or bond guarantee on deferred payments and would gladly employ American sailors and give American-flag ships the freight. As far as foreign-ship competition, that is a bugaboo. With low capital costs on, we can hold our own in any trade any time. Only security requirements on deferred payments prevent the small ship operator from acquiring American ships. Why not remove this barrier and see how quickly the American-flag ships would increase on the seas. Why sell ships for scrapping at $18,500 each and if an operator wants to run them, ask him over $100,000 each and all kinds of guarantees to prevent the operator from obtaining tonnage to operate. Mr. Bowen, credit department, boasts to me he killed every proposition I put before the board even when I offered to give a $25,000 bond to keep vessel free of liens. Your work is good for American ships. Why not extend it to people willing to buy and operate. I am ready and willing and can get operating capital to buy, if granted relief from guarantees on deferred payments, even to paying more down than the Government realizes from so-called scrap sale. Many others are in my position. The ships can be sold and put in operation, if only the small man has a chance. Wishing you every success in your efforts, I am B. L. STAFFORD. American steamers owned and operated by the Munson Line, 1929 1 Some of these steamers traded Cuban and/or coastwise before berthing this trade. |