have a merchant marine under the American flag, we have to meet the unequal conditions, and I take it Congress did not just pass this to get rid of the merchant ships and have them fail, but they passed it in order to get rid of these ships so that this new enterprise, under the American flag, would be sustained and to build it up permanently. And I am pleased to think that the people of my section of the country a great many of then at least are coming to recognize the fact that a merchant marine is a valuable thing; that it is going to cost us a price and we have to make a contribution out of the general funds of the public in order to sustain it.

Mr. DAVIS. I know, but the point I am asking is that you do not understand Congress enacted this legislation and is voting these large appropriations of the people's money simply for the purpose of granting favors or bounties to any individuals?

Mr. NEWTON. No.

Mr. DAVIS. Whether they be ship operators or shipbuilders?
Mr. NEWTON. I never suspected that for once.

Mr. DAVIS. Do you consider that any Member of Congress would be justified to be actuated by any such motive?

Mr. NEWTON. No.

Mr. DAVIS. In other words, the motive was in the public interest; it was to build up and maintain an American merchant marine for the purpose of carrying, ultimately, the major portion of our commerce in times of peace and to act as a national defense in times of war?

Mr. NEWTON. And if this country is not willing to do those things which are necessary to meet the inequalities of foreign shipping, you had better junk the merchant marine and quit spending money on it. Mr. DAVIS. And the entire purpose of the 1920 Act was to hasten and to permit the transfer to private ownership and operation of various trade routes which the Shipping Board had establishedliner services?

Mr. NEWTON. I take it that, by 1928, the Government and Congress had come to recognize, especially the administration had come. to recognize, that private enterprise could not meet this competition without some aid from the Government and, in order to move the ships, in order to help the American merchant marine, they undertook, by that act, to provide for Government aid in the form of mail

pay.

Mr. DAVIS. And it is your view that these valuable aids should be granted to those operators who are willing to exert all of their efforts toward building up an American merchant marine?

Mr. NEWTON. Absolutely.

Mr. DAVIS. Where there is a choice of awarding a mail contract to an American operator who is operating American ships 100 per cent and as against another American operator who is operating some American ships and some foreign ships, is there any question in your mind as to which one of those should be awarded the contract?

Mr. NEWTON. I think it ought to be all American and I think it is fundamentally unsound to take a part of the money out of the Treasury and put it in the hands of someone and make him stronger to run a line in competition with ours.

Mr. DAVIS. Is it not a fact that one of the difficulties of building up an American merchant marine is the lack of support by Ameri

cans, such as the nationals of other countries accord their merchant marine?

Mr. NEWTON. Well I do not think we do support ours as well as the others; but we have to learn that.

Mr. DAVIS. Now how can we expect the civilian traveler or supporter to grant all of his support to American ships when the Government of the United States, through the Congress, representing the people, votes the American people's money for the support, at least in part, of foreign-flag ships?

The CHAIRMAN. Our legislation did not do that; that is an administrative act.

Mr. DAVIS. Well the way the law stands now, it may be done. The CHAIRMAN. Oh, it may be done if the administrative officer sees fit to enter into such a contract.

Mr. DAVIS. No, it was not directed; but the way the law stands now it may be done, and the purpose of my amendment is to prevent it from being done. Now, on the question of whether it would work any hardships, I want to ask you if it is not a fact there are very few American operators who own foreign-flag ships?

Mr. NEWTON. I do not know what the number is. I know we have learned and we could not reconcile it with sound American policy, that certain of the beneficiaries of our contracts were running foreign-flag ships in competition with ships under the American-flag ships that we were trying to sustain, and that does not look to me like good Americanism.

Mr. DAVIS. It does not to me, either.

Mr. NEWTON. I think this American marine ought to be an allAmerican marine.

Mr. DAVIS. Now I will ask you if it is not a fact under the law any American owner of foreign-flag ships can transfer those foreign-flag ships to American registry in a day, if he wants to do it?

Mr. NEWTON. I did not understand that they could; I am not so familiar with it.

Mr. DAVIS. That is the law; but, understand, if they were not transferred before February 1, 1928, he can not use them in executing one of these mail contracts.

Mr. NEWTON. I see what you mean.

Mr. DAVIS. But he can still transfer them to American registry and operate them in any other manner he wants to, under the American flag and, if he has charter vessels, of course he can turn them back at any time he wants to.

Mr. NEWTON. An American merchant marine is so important, not only to our commerce but to our national defense, that the fellow who owns and operates it ought to be 100 per cent American.

Mr. DAVIS. Now looking into the question of the national defense, you recall, do you not, that when the World War commenced, only 10 per cent of our foreign commerce was carried in American bottoms? Mr. FREE. Less than that, Judge.

Mr. DAVIS. Well it ranged from 8 to 10 per cent for about 10 years before the World War. I said "not exceeding." And almost immediately the foreign-flag ships were withdrawn from the American service and, furthermore, the United States could not then and it could not now requisition or seize any ship under a foreign flag unless it was an enemy ship which it captured; that is true, is it not?

Mr. NEWTON. I recall the very distressing incident in our war with Spain that we had to pay an exorbitant price to get ships to get our soldiers across to Cuba.

Mr. DAVIS. Now when you get down to the final analysis, what is the advantage to an American merchant marine of ships being operated under a foreign flag, whether they are operated by an alien or an American?

Mr. NEWTON. Well, I suppose the only answer to that is as a practical matter of commerce, that if it was not owned by an American, some foreigner would come in and own it anyway.

Mr. DAVIS. That is what I say, that there is no advantage from the national defense standpoint, is there?

Mr. NEWTON. No.

Mr. DAVIS. None whatever; and is there any advantage from any other standpoint that you can conceive of?

Mr. NEWTON. I can not conceive of any.

Mr. DAVIS. Now, of course, this amendment would not prevent any American operator, who preferred to do so, operating all the ships he wanted to under a foreign flag; but it merely would reserve these valuable aids to those American citizens who were willing to go 100 per cent in their operations.

Mr. NEWTON. It makes it necessary for the ship operators to be either all fish or all fowl.

Mr. DAVIS. Yes, In other words, there is no half-way ground on Americanism, is there?

Mr. NEWTON. No.

Mr. DAVIS. Now assuming that some individual hardships might result for the time being in a few cases, do you not think the ultimate result of this amendment would be to build up most substantially an American merchant marine?

Mr. NEWTON. I think it is absolutely essential in order to build a really successful merchant marine.

Mr. DAVIS. Now on the question of awarding mail contracts, I will ask you if you do not think it would be better Americanism, if you do not think it would be more in accord with the purposes and intent of the legislation, as declared therein, first to grant mail contracts to those lines which have been established by the Shipping Board at public expense and which are operating regularly, and valuable, and 100 per cent American [either those that have been sold or those that can be sold when it is known that such aids can be rendered], rather than to go along and pass a lot of appropriations and grant mail contracts to a few lines which are operating foreign flag ships?

Mr. NEWTON. It does seem to me that a line that has been built up by Americans and the trade established ought to be given a preference in getting into private ownership. I think it is in the interest of the public to do that; I think the security in the future is more throughly guaranteed by giving preference to people who have established the business and I think the United States ought to show its appreciation for that pioneering service by trying to sustain it, I think that will be conducive to cooperation that will insure an American merchant marine.

Mr. DAVIS. And, at the same time, gain the benefit of the experience and the connections made and the clientele that has been built up by those services?

Mr. NEWTON. I think that is valuable to the Government? Mr. DAVIS. Now on the suggestion that some time should be given to these companies who are operating foreign-flag ships to divest themselves of them, I will ask you if it could not very simply be done in this way, if the Postmaster General advertises for a mail contract on a certain line, a certain service, and the bidder to whom he desires to grant the contract is operating some foreign ships, for the Postmaster General to say, if this amendment is adopted

Now I can not grant you a mail contract as long as you persist in operating foreign ships, but the very minute you divest yourself of those foreign ships, either by transfering same to American registry, or selling them, or turning back the chartered vessels you have, I will give you a mail contract

Would not that leave it wholly within the operation of the operator himself as to how soon he avails himself of this aid?

Mr. NEWTON. I have no doubt but what if he has qualified himself as a really American operator, it won't take him very long to find a way to do it.

Mr. DAVIS. And I want to ask you if you do not think this, that if he is unwilling to do that and refuses to do it, there will be no difficulty in finding some other 100 per cent American who is willing to operate a line of ships upon any essential service, if he can get a mail contract?

Mr. NEWTON. If the Postmaster General has not already the power, I can not see why this Congress should not relieve him of his American contract and let somebody else take that.

Mr. BLAND. Will you permit a question right there, judge?
Mr. DAVIS. Certainly.

Mr. BLAND. I have not read this bill with especial reference to that last suggestion: Do you think the bill would be ample, without amendments, to permit the Postmaster General to do that?

Mr. DAVIS. Yes, for the simple reason that the 1928 act gives him three years within which to award a mail contract after advertisement, and the fact that under the advertisement of the proposed 13 contracts, which have recently been made, none of them go into effect before July 1, and one of them goes into effect in two years and another one not until three years, in order to give bidders time within which to prepare themselves to bid for it. That is all, Mr. Chairman. The CHAIRMAN. We are very much obliged to you.

Mr. NEWTON. Thank you very much.

Mr. FREE. Mr. Chairman, I would like to make a motion right here: I move you that the chairman be requested to communicate with all the steamship lines holding mail contracts and ask them these questions:

First. The number of ships operating under the American flag. Second. Those owned and operated by them under foreign flags. Third. The number of vessels chartered by them and operated under foreign flags during the past year.

I think that information ought to be before this committee. The CHAIRMAN. Do you not anticipate that those facts will be disclosed when_the Steamship Owners Association representatives are before us? I rather assume it will.

Mr. FREE. I want to be sure to get it; that is all.

Mr. DAVIS. If we do not get the information through the source the chairman suggested, I would be very glad to get it myself. I think I have most of it, but I would be glad to get it fully.

Mr. FREE. I would like to get it and to get it as early as possible, so that in examining the witnesses we would have the information. For instance, one company rang me up and said there had been a misstatement here; that they did not operate foreign ships. Now I would like to have that information before me in questioning witnesses.

The CHAIRMAN. Now what is your motion, that the chairman be requested to communicate

Mr. FREE. That the chairman be requested to communicate with those companies holding mail contracts and ask them

First. The number of ships which they are operating under the American flag.

Second. The number of ships owned by them and operated under foreign flags

Mr. DAVIS. Now, Mr. Chairman, of course there is one suggestion about that. My amendment, as it stands, does not affect those who have been awarded mail contracts.

The CHAIRMAN. He had not gotten through with his motion, Judge. May we get the motion stated first? Now the third is what?

Mr. FREE. Third. The number of ships chartered by these companies and operated under foreign flags.

The CHAIRMAN. Now you have heard the motion. Judge Davis, do you want to discuss it?

Mr. O'CONNELL. Before you put the motion, let me say I understand the Shipping Board has all of that information, and why not get it from them instead of getting it piecemeal by writing to all of these lines. Have you that information, Mr. O'Connor?

Mr. O'CONNOR. We have.

Mr. O'CONNELL. The Shipping Board has that information; why not get it from them.

The CHAIRMAN. Mr. Free, then, withdraws his motion.

Mr. FREE. May I ask, then, that the Shipping Board give us that information as early as possible, so that we have it before us.

Mr. DAVIS. As you have changed it to the Shipping Board, I move to amend that they include, in the information they furnish the same information with respect to prospective bidders upon the services that have been advertised for mail contracts.

The CHAIRMAN. Gentlemen, you have heared the motion of Mr. Free, and you have heared the amendment of Judge Davis to the motion. Those in favor of Judge Davis's amendment to the motion will say aye.

(The motion was carried.)

Now the question is on the motion as amended: Those in favor will please signify by saying aye.

(The motion was carried.)

Now I think it would be well, if we can, to give those who are here from out of town, and who may be anxious to get away, an opportunity to be heard, before we call the members of the Shipping Board. Is there any one here from out of the city who desires to be heard at this time? I may say, in that connection, that I have a telegram from the American Steamship Owners Association stating they will be here to-morrow to present their views and expressing the hope that the hearings may be continued and kept open until to-morrow. I have no doubt we will want to hear them.