Mr. BRIGGS. As I understand, your statement reflects the fact your determination is such that you are going to succeed in meeting all competition of antagonistic efforts on the part of foreign competitors; is that it?

Mr. HERBERMANN. That is true, and that is verified from my original statement to you men here two years ago-we have increased from 18 ships to 38 ships in a period of two years.

Mr. BRIGGS. What is the total tonnage you are operating now?
Mr. HERBERMANN. About 245,000 tons.

Mr. BRIGGS. And your line runs to Mediterranean and Black Sea ports?

Mr. HERBERMANN. Yes, sir.

The CHAIRMAN. We are very much obliged to you, Mr. Herbermann. Is there any one else?

Mr. DAVIS. Mr. Chairman, and gentlemen of the committee, after the introduction of this bill I received this letter from the Marine News, published by the New York Marine News Co. (Inc.), main office at 26 Water Street, New York, dated January 10, 1930.

Hon. EWIN L. DAVIS,

House of Representatives, Washington, D. C.

DEAR CONGRESSMAN DAVIS: I note in the press that you have introduced a resolution to the effect that the Postmaster General be directed, in awarding mail contracts under the Jones-White Act, to give consideration only to 100 per cent American steamship companies in order to discourage the making of, or continuance of foreign affiliations or the ownership of foreign flag vessels by American shipowners.

We are heartily in favor of this policy, and I am writing to ask if you will be so kind as to send me a copy of your resolution, together with any comment you may care to make on this situation.

Thanking you for your courtesy, I remain,

Very truly yours,

H. J. HARDING, Editor The Marine News.

Thereupon I acknowledged receipt of Mr. Harding's letter and advised him that we would be glad to have him appear before our committee to-day and make a more comprehensive statement on the bill, and Mr. Harding is here and I suggest that we now hear him. The CHAIRMAN. We will be very glad to hear Mr. Harding. Will you give your name for the record?

STATEMENT OF H. J. HARDING, EDITOR THE MARINE NEWS, NEW YORK CITY

Mr. HARDING. H. J. Harding.

The CHAIRMAN. And your business?
Mr. HARDING. Editor Marine News.
The CHAIRMAN. Published where?

Mr. HARDING. 26 Water Street, New York.
The CHAIRMAN. You may proceed.

Mr. HARDING. I am down here rather more as a spectator than as a witness, if you want to call it that; and as I did not expect to be here I wrote out a sort of a statement that I sent to Judge Davis and I have it here and, while I may omit some of it, I can touch on what I will call the high spots and we may discuss it in that way. To begin with, the number of foreign-flag ships owned by American shipowners is comparatively small. The largest, I think, is the

International Mercantile Marine and some of the other companies own up to three or four ships, perhaps.

Mr. FREE. Do you know what the International Mercantile Marine owns?

Mr. HARDING. I do not offhand, but the fact is there is the Red Star Line operating in the North Atlantic and other lines in which the International Mercantile Marine, if not owners, are interested in operating. Another case or another way in which American steamship companies are interested in foreign ships is, of course, in the chartered ship, and then still another case I notice that Judge Davis's bill speaks of controlling the operation of foreign-flag ships— and there we have the case of American steamship companies operating American ships and also agent for some foreign lines and, in this connection, ownership of foreign-flag ships by American companies, either directly or through subsidiaries. That is number one. 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.

The second thing is the operation of foreign-flag ships by American steamship companies, by charter, this 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.

The third thing is the 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.

Then we have the fourth situation, where there is neither ownership nor chartering, but there may be what we call interlocking directorates, where a high official of the American company is also an official of an American company operating foreign ships-such, for instance, as the American South African Line. One of the executives of that company is president of the American and Cuban Steamship Line, which operates some foreign ships under charter, I believe.

Now, of course, Judge Davis' amendment can not be retroactive, but there have been already several mail contracts awarded to companies coming within these classifications. For example, there is the American Mail Steamship Corporation (Panama Pacific Line), which receives $402,400 annually for ocean mail route No. 32, New York to Balboa, Canal Zone. The Panama Pacific Line 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 some others.

Then as to charterers, perhaps the most conspicuous is the Munson Line, which receives $1,247,584 annually for ocean mail route No. 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.

Then as to the class of agents: The American West African Line receives $286,650 annually on route No. 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.

Then as to the fourth class, where there are interlocking directorates, or interest on the part of executives of one company and another company, there is the case I have just mentioned of the South African Line. In most cases, however, these foreign affiliations are matters of somewhat long standing, and I have suggested that if the Munson Line, by reason of a mail contract, were precluded from chartering foreign ships to handle the seasonal sugar movement, the sugar would undoubtedly be carried in foreign ships, and in that case might we not expect that the cost would be greater to the shipper or receiver. If, on the other hand, an American company interested in foreign-ship 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. The method of getting rid of these foreign connections is something that requires a great deal of thought and care. As I pointed out, there have been a number of American companies operating foreign ships who have already received mail contracts. While this amendment could not be retroactive, 10 years in the development of our merchant marine, after all, is only a short time and they should be given some opportunity to get rid of those foreign connections and foreign ships before the time for the renewal of these contracts comes up. In the event they would not reduce their foreign holdings, replacements would have to be provided for with American ships. While we have the construction loan fund to help out on the building costs, the difference between American ship operating costs and the foreign ship operating costs is another matter that should be investigated or should be solved in

some way.

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. Perhaps Judge Davis can set me right on that. The amendment reads

* that the Postmaster General shall not enter into any mail contracts with any person, firm, which is directly or indirectly, through any subsidiary, * * * 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. Am I right on that, Judge Davis?

Mr. DAVIS. That is true, and I wish to say, Mr. Harding, that I already had in mind (to prevent a situation of that kind arising), to offer an amendment to my bill in another section, providing that hereafter if a mail contract is awarded to a company which at the time of the award, of course, could not be, under the provisions of this bill, operating foreign-flag ships, that if they thereafter, during the life of their contract, operated foreign-flag ships in competition with American-flag ships, that their mail contracts would become null and voil. Otherwise, anybody could resort to that subterfuge. At the time they would bid for and be awarded the contract they would not be operating any flag ships; but, immediately thereafter, if they desired, could acquire and operate as many foreign-flag ships as they wanted to. And, of course, a situation of that kind, which has since occurred to me, should be prevented.

Mr. REID. That is on the theory, then, that all mail contracts, once taken, would prove profitable? Would not that be a good way to cancel a contract; if you are going to make it null and void, you are going to help situations out a lot of times.

Mr. DAVIS. I do not think any of the companies would do that for the purpose of getting rid of one of those valuable mail contracts.

Mr. REID. Have not they proved irksome sometimes?

Mr. DAVIS. No; there is no likelihood of that at all occurring, unles it is in the trade between New York and British ports, where there is a very heavy mail and where it is said that carrying it on a poundage basis would perhaps be as remunerative as it would under the contract basis. But that is the only instance in which it could occur and, in the final analysis, I do not think the Government could get hurt on that proposition-if they accept it on the poundage basis, rather than on the contract basis.

Mr. REID. The point I had in mind was that it should be at the option of somebody to do it. There might be circumstances where you would not want to do it; that is the point I was making to you. Mr. ABERNETHY. Mr. Chairman, I would like to ask one or two questions?

The CHAIRMAN. You may proceed.

Mr. ABERNETHY. Whom do you represent?

Mr. HARDING. I am editor of the Marine News.

Mr. ABERNETHY. Of New York City?

Mr. HARDING. New York City.

Mr. ABERNETHY. You are representing no special interest here? Mr. HARDING. No.

Mr. ABERNETHY. You are just here for the good of the cause? Mr. HARDING. That is it. Now, just to conclude this statement— I do not want you to think there is any collusion here because Mr. Herbermann preceded me, because I already had written this in this statement. 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 ever happen, it is, nevertheless, possible, under this mail contract, for the American Export Line to charter foreign vessels

Mr. HERBERMANN. Strike that out. [Laughter.]

Mr. HARDING. I just wanted to reinforce your statement.

Mr. HERBERMANN. Just strike out "charter foreign vessels." [Laughter.]

Mr. HARDING. Well, it would be possible. Is there anything in your contract, Mr. Herbermann, to prevent you from doing so? Mr. HERBERMANN. No; but I can get all the American boats I

want.

Mr. HARDING. I agree with you.

Mr. DAVIS. Mr. Herbermann has declared positively he was not operating any foreign ships and would not do so, but you merely give that as an example?

Mr. HARDING. That is merely an example of what could be done. I know he is not going to do it.

Mr. DAVIS. It is just to show that the bill should go just one step further?

Mr. HARDING. Yes.

Mr. DAVIS. And provide, after those contracts are awarded, that they should be prevented afterwards from acquiring and operating foreign-flag ships?

Mr. HARDING. That is right.

Mr. DAVIS. And, with that suggestion you make, you heartily indorse this bill?

Mr. HARDING. I do; yes, sir.

Mr. DAVIS. And, as I understand, there are only a few operators of American ships who own and operate foreign-flag ships?

Mr. HARDING. Comparatively few, I believe.

Mr. DAVIS. And most of them own only a small number?
Mr. HARDING. That is right.

Mr. WELCH. What is the period of the contract?

Mr. DAVIS. Ten years. Now, Mr. Chairman, I did not mean to commence questioning in advance of the other members of the committee, but right on the point he was making I interposed.