The CHAIRMAN (at the conclusion of the hearing on H. R. 7998). It was proposed, also, that we should take up for consideration this morning H. R. 8361, introduced by Judge Davis of Tennessee, amending section 404 of the ocean-mail title of the 1928 act. That bill has attracted considerable attention and created considerable interest in this whole subject of ocean-mail contracts. I have had a letter from the American Steamship Owners' Association stating that they have been considering that bill and the changes suggested by it, which I will read. It is dated January 21, addressed to me as chairman of the committee.

DEAR MR. WHITE: The members of our association have been giving all the time that they can to H. R. 8715 and H. R. 8361, but so far have not been able to reach such definite conclusions regarding the bills as to make it possible for us to present our views to the committee at the time now scheduled-namely, to-morrow and Thursday.

We hope to conclude our deliberations this week, and trust that we have an opportunity of laying the views of the association before your committee the first part of next week, if the committee feels they can hold the matter open that length of time.

We regret this delay, but the bills are so far-reaching in their effects and embody such material changes in present law, that we feel that they justify the most careful consideration of all interested in American shipping.

Very truly yours,

H. B. WALKER, President.

Mr. KADING. What is the other bill they refer to? The CHAIRMAN. That is the bill we had up yesterday. I have had intimations from other shipping companies that they desired to present their views, but they have indicated, also, that they were not prepared to go on this morning. I do not know the attitude of the Shipping Board toward the bill now before us; I assume we shall want to hear from the Shipping Board on this legislation, and I assume we shall also want to give opportunity to these shipping and affiliated companies of the country to present their views. It may be, however, that there are those present now who would care to make a statement. Is there any one present at this time prepared to give us the benefit of their views on this proposal?<

Mr. DAVIS. Mr. Chairman, I have some written statements in behalf of the bill, addressed to the committee, which I desire to read; but they can be read after we hear any who are ready to be heard in person.

The CHAIRMAN. Yes.

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Mr. DAVIS. There are two witnesses in particular whom I expected to be here this morning and whom I think will be here. One of them is the chairman of the Shipping Board who yesterday I asked if he would appear and make a statement in regard to the bill, and he said he would if we wanted him to do so; but I have just been informed that he is in an important meeting at present, but will try to get here before 12 o'clock. Also former Congressman Cleveland Newton, one of the officials representing the Mississippi Valley Association, is in the city, and we are expecting him here at any moment. Then I have a telegram from the secretary of that association. At the same time, I would like to have Mr. Newton himself make a personal statement when he arrives.

Mr. FREE. I was just going to suggest that suppose we go into executive session for a few moments and perhaps by that time your witnesses will be here.

Mr. DAVIS. Well, I see one outstanding American owner and operator of American vessels present, who I think is held in high esteem by all the members of this committee and, with the permission of the chairman and the other members of the committee, I am going to ask Mr. Herbermann, if he is willing, to express his views on this bill.

STATEMENT OF HENRY HERBERMANN, PRESIDENT EXPORT
STEAMSHIP CO.

The CHAIRMAN. Will you give your name to the reporter?
Mr. HERBERMANN. Henry Herbermann, president Export Steam-
ship Co.

The CHAIRMAN. Operating between New York and Mediterranean ports?

Mr. HERBERMANN. Operating between New York and Mediterranean and Black Sea ports.

The CHAIRMAN. We will be very glad to hear you, Mr. Herber

mann.

Mr. HERBERMANN. I know of no man who can successfully serve two masters. I think it was the intent and purpose of this bill to help American ships. I had the pleasure of appearing before this committee in 1928, and I made statements that if we could get the aid we would operate American ships. We presently are operating 39 ships; we own 24 American ships and have chartered 15 others. At the time of my chartering American boats I could have chartered foreign boats at a much lower rate of charter money, but I felt that if we were going successfully to develop our merchant marine we should have American boats, so I hired American boats. The saving in the cost of hiring American boats and foreign boats is quite a difference, but we feel the money spent in hiring the American boats is well spent, because we keep so many foreign boats out of those particular territories in which we operate, and if our American steamship owners do not follow the same line, sooner or later the foreign steamship owners will get a foothold into the territories that we have already established. If that happens, our contest for supremacy in the carrying of our cargoes will be so much greater and, as long as I am president of the Export Steamship Co., they ever will hire a foreign boat.

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The CHAIRMAN. Is that all you care to say in direct statement?
Mr. HERBERMANN. Yes.

Mr. DAVIS. Mr. Herbermann, the company of which you are president owns 24 ships which you purchased from the Shipping Board and are operating under the American flag?

Mr. HERBERMANN. Yes, sir.

Mr. DAVIS. And, in addition to that, you are operating 15 American-flag ships which you have chartered?

Mr. HERBERMANN. Yes, sir.

Mr. DAVIS. And you are and have for some years been operating these ships, or at least a portion of them and gradually increas ing, as you say, in the trade between New York and Mediterranean and Black Sea ports, and you went up against the strongest sort of foreign competition, did you not?

Mr. HERBERMANN. Yes, sir.

Mr. DAVIS. And you are making a success of it, are you?

Mr. HERBERMANN. Yes, sir.

Mr. Davis. And carrying very large amounts of cargo from and to our ports?

Mr. HERBERMANN. Yes, sir.

Mr. DAVIS. I believe that is all.

Mr. HERBERMANN. I forgot to mention this: In addition to chartering the 15 American boats, we actually have under construction 2 boats that I hope will be launched within the next 60 days and, within the next 30 days we lay the keels of 2 more; that is, when the first 2 boats are off of the ways, we lay the keels of 2 more. We are not afraid of foreign competition of any kind of a ship.

Mr. DAVIS. Now, how many of these ships that you are now operating carry passengers. as well as cargo, Mr. Herbermann?

Mr. HERBERMANN. Every one of them now.

Mr. DAVIS. Every one?

Mr. HERBERMANN. Except the chartered ships; I have not put passenger accommodations on those.

Mr. DAVIS. I asked as to the ones you owned; I did not think that applied to the chartered ships.

Mr. HERBERMANN. NO.

Mr. DAVIS. In other words, the 24 ships you own all carry passengers as well as cargo?

Mr. HERBERMANN. Yes, sir.

Mr. DAVIS. And you have built up a splendid passenger trade as well as cargo?

Mr. HERBERMANN. Yes, sir; and we operate the ships 98 per cent American crews.

Mr. DAVIS. How much?

Mr. HERBERMANN. Ninety-eight per cent American crews and all of our offices abroad are manned by Americans.

Mr. DAVIS. In other words, you are practically a 100 per cent American company in every respect?

Mr. HERBERMANN. Yes, sir; that is the way the company will have to be as long as I am president of it.

Mr. BLAND. May I ask Mr. Herbermann-you probably can not answer, but do you know of the specific conditions which are existing and which are sought to be remedied by this legislation? I do

not desire to be put in the position of appearing to criticize the amendment, but I am in a position of wanting all the information I can get as to the conditions which exist and which appear to make the amendment necessary. I do not know that you have that information; you may be just indorsing the general principles.

Mr. HERBERMANN. My idea of the bill as a whole is that the foreign steamship owners charter out their ships in this country. After a time, when the business is built up to a point where they think those ships can be successfully operated, they no longer charter and they send their own men to this country to operate their business. Now that was done in three different instances. It is only within the last month that the Italian lines consolidated and the American who was at the head of that unit is no longer at the head of it and the Italians are running with their own force. I think that was the purpose of this bill, to avoid those conditions.

Mr. BLAND. Are any of this fleet or affiliated concerns receiving the benefits of mail contracts?

Mr. HERBERMANN. No; not this particular company I speak of, but there are some companies operating American ships that charter foreign boats that are getting the mail subvention.

Mr. BLAND. Do you know what those companies are?

Mr. HEBERMANN. I would rather not discuss that here, because I would go back to New York and find it a little harder.

Mr. BLAND. I do not want you to discuss anything which might embarrass you.

Mr. HERBERMANN. The information is available to this committee; they know the companies, I believe.

Mr. BLAND. I do not want you to discuss anything that would embarrass you and if there is any question I ask that might put you in an embarrassing situation, just say so at once. I do not care to embarrass you in any way.

Mr. HERBERMANN. I am in a little embarrassing situation right now. I know the names of the fellows, but I do not want to name them.

Mr. SLOAN. You say that these lines have á compensation for mails, do they have it through the poundage system, or have they contracts such as we have been talking about here?

Mr. HERBERMANN. I am sure they have it on the mileage basis.
Mr. SLOAN. Mileage and poundage?

Mr. HERBERMANN. On the mileage basis.

Mr. BRIGGS. Mr. Herbermann, how long do you operate these chartered ships during the year-how many voyages?

Mr. HERBERMANN. We are going to operate them until we will be able to replace them with new ones.

Mr. BRIGGS. I mean, are they in constant operation?

Mr. HERBERMANN. Yes; and all full.

Mr. BRIGGS. And all full?

Mr. HERBERMANN. Yes, sir.

Mr. BRIGGS. Are you operating your lines successfully now; I mean by that, are you operating them so that you are breaking even, or more than breaking even?

Mr. HERBERMANN. This last year we have not got our figures complete, but I think for the entire year's operation we will lose about

$130,000. I have saved all the mail money I have received from the Government and put it in new ships.

Mr. BRIGGS. In other words, the mail contract you are getting, or the mail contract that you have got, is being devoted toward new construction entirely, is it?

Mr. HERBERMANN. Yes, sir.

Mr. BRIGGS. Are these new vessels you are building modern ships? Mr. HERBERMANN. The best ships that go into that Mediterranean trade.

Mr. BRIGGS. Just what character of ships are they? I do not mean in detail, but the speed, tonnage, and the character of the shipswhether combination passenger and cargo, or what?

Mr. HERBERMANN. The combination passenger and cargo ships. On that question of length-we could have increased the length of the boat, but it was to our advantage to keep the tonnage low, and by placement in a proper manner of our machinery those boats will be approximately 9,500 tons which ordinarily are about 14,000 tons. Mr. BRIGGS. Gross tons, deadweight or what?

Mr. HERBERMANN. Gross. And the reason of that is to reduce the harbor dues in the respective ports in which they are running. The passenger accommodations, as they start out, would be for the accommodation of 125 passengers; but they are so constructed that the public rooms would support probably 250 passengers and when the business develops to the point that we have more calls for the service than for 125 passengers, we will just break open the bulkheads and put in additional rooms, and it is contemplated we will carry 250 passengers per vessel.

Mr. FREE. What do you figure the refrigerator space in those boats will be?

Mr. HERBERMANN. We will be able to take 500 tons of refrigerator space, which has all been contracted for for the next five years.

Mr. BRIGGS. Mr. Herbermann, what is the speed of those boats? Mr. HERBERMANN. I am hoping they will go 15 knots. My contract with the shipbuilder was based on horsepower rather than miles. The purpose of that was to get a reduced cost of the vessels.

Mr. BRIGGS. Could you have entered into this new construction and built those boats without the aid of the mail contracts? Mr. HERBERMANN. Positively no.

out postal aid.

No American boat can live with

Mr. REID. During the first part of your statement you said you did not fear any foreign competition.

Mr. HERBERMANN. I am unafraid of it; we will put it that way. Mr. REID. Are you making enough money so that you do not care about what your competition is?

Mr. HERBERMANN. Oh, no.

Mr. REID. I was rather surprised at that remark.

Mr. HERBERMANN. Oh, no; but what we will do is we will meet any cuts they make.

Mr. REID. Did I misunderstand you in that statement?

Mr. HERBERMANN. You misunderstood me on the question of the monetary values; but, when our foreign competitors cut the rates, we will go step by step with them. That is what I want you to understand.