Mr. DAVIS. It would be very difficult under those conditions, would it not, for another American company to establish a regular line in that service in competition with another mail company?

Mr. CONE. Oh, not in competition with another mail company. Mr. DAVIS. Or a company receiving mail pay?

Mr. CONE. But if he were receiving mail pay, he would be an established line.

Mr. DAVIS. I know; but suppose his line is established in some other service, and he is receiving large mail pay in some other service, but he is operating foreign chartered ships, or owned, either, in some service in which there is now no established American line, but American ships operating irregularly?

Mr. CONE. Well, I would say this, sir, that he would not hurt but one or two outside American ships; he would hurt very few American ships. Of course, that word "established" would also have to be interpreted.

Mr. DAVIS Yes.

Mr. CONE. And I think on any schedule of an established lineI am quite sure the definition of it is a line that is maintaining a regular schedule or nearly maintaining a regular schedule in those services.

Mr. DAVIS. But we are building for the future, and here is a service. upon which there is no established American line, but on which we may, at some time in the future, want to establish an American line.

Mr. CONE. Yes.

Mr. DAVIS. And yet that will be prevented by some American operator, with large aid from the Government, operating these tramp steamers in there. How can an American line go in there and successfully establish a line against competition of that kind?

Mr. CONE. That is another disadvantage of this, just as you say, to getting on its feet.

Mr. DAVIS. Yes; in other words, there has to be a beginning.
Mr. CONE. Yes.

Mr. DAVIS. And is it not a fact that, generally speaking, no line is established to begin with, except by ships first running occasionally and incidentally; then, as the trade grows, they put more ships in and more ships in and finally reach the point where they can establish regular sailings. Is not that the way it generally goes?

Mr. CONE. Yes, sir, and that is the best way to establish a line. Mr. DAVIS. And is not that the very reason it was necessary for the Shipping Board, after the war, to maintain these various trade services running from our ports to foreign ports at a loss here for 10 years, in order to get them established?

Mr. CONE. Well, we call those established lines. Maybe I have the interpretation of this wrong, but we called them established lines very soon.

Mr. DAVIS. I know, but the point I am asking you is if you think the money of the American people should be voted annually to any American operator, to pay him far beyond the service he is actually rendering, to give him this valuable subvention and to permit him to turn around and operate foreign tramp ships, foreign crews, under foreign flags in a certain service which would forever prevent some

other American company from going in there and establishing a regular service against such competition?

Mr. CONE. No, sir; I do not think we should.

Mr. DAVIS. Now the amendment which you suggest might have that very effect, might it not?

Mr. CONE. Well, yes; but I think it is less likely to have a bad effect that way than it will the other. That is the point I make.

Mr. DAVIS. Well, what is the purpose of this legislation, under your conception? Is it to favor this, that or the other operator and to help him make more money, or is it ultimately to build a rea'ly genuine, sound, 100 per cent American merchant marine, valuable in times of peace and in times of war?

Mr. CONE. Of course it is to build up a merchant marine.

Mr. DAVIS. Yes.

Mr. CONE. Now, about the donation-I do not mean that word, but the appropriation by Congress, that is meant to equalize the differential in cost between the Americn ship and the foreign ship, as I take it.

Mr. DAVIS. But why? It is to put ships under the American flag. Mr. CONE. Yes.

Mr. DAVIS. It is to build up an American merchant marine, so that we can carry our goods in our own delivery wagons, in times of peace, and then, if we get into war, we will have those ships available for national defense and to continue the carrying of American commerce, instead of having them scuttling back to those countries whose flags they fly, as they did when the World War began; is not that true?

Mr. CONE. Absolutely that is sound, yes, sir.

Mr. DAVIS. To sum up, you are for this bill?

Mr. CONE. I am for this bill.

Mr. DAVIS. And the only suggestion you make is that possibly it might be better to write in the words "established line?"

Mr. CONE. Exactly.

Mr. DAVIS. Are you positive that would be a wise amendment? Mr. CONE. Yes, sir, I think that would be wise and that is not a hurried opinion; I have studied it somewhat and I believe that would strengthen the whole thing.

Mr. ABERNETHY. Being as you represent my territory, I want to get a little better acquainted with you.

Mr. CONE. Thank you.

Mr. ABERNETHY. The south Atlantic seems to have gotten out of this picture.

Mr. CONE. The reason that we are out of the picture is that we are getting along all right, so far.

Mr. ABERNETHY. That may apply on further down the line, but it does not get up to my section. I happen to be a little further north than you.

Mr. CONE. Yes.

Mr. ABERNETHY. Your idea is that this Davis amendment is desirable?

Mr. CONE. Yes, sir.

Mr. ABERNETHY. I was not here when you first started and, just briefly, for my information, what is the amendment that you suggested might be helpful?

Mr. CONE. Well I apprehend, as it is written, it may be interpreted that any one American flag ship, at any time, would be considered as "in competition with," and I suggested that this competition should apply to established lines of American flag ships, rather than to the competition of one single American flag ship

Mr. ABERNETHY. Well your amendment would come in where, now?

Mr. CONE. In line 10, page 2, between "any" and "American flag"; put in the words "established line or."

Mr. ABERNETHY. Well that would allow a fellow to go out and, for temporary purposes, get him a foreign ship and get into trade for temporary purposes; is that the idea?

Mr. CONE. Yes, sir.

Mr. ABERNETHY. Now why is that desirable?

Mr. CONE. As I was attempting to say, there are cases constantly coming up where shipping lines have not enough ships to handle all the business that is offered.

Mr. ABERNETHY. You said a while ago, and I think you changed your language, that this was a donation. Are not these mail contracts virtually donations, the way they are being given out now? Mr. CONE. Well, some are and some are not. Not all; no, sir. Mr. ABERNETHY. Not all of them?

Mr. CONE. No, sir; not all of them.

Mr. ABERNETHY. Well, it seems the Postmaster General said the other day, as I got it out of him, that we have really taken the hulk of an institution here known as the American merchant marine and have put blood into it, or heart.

Mr. CONE. That is right.

Mr. ABERNETHY. And some of the folks on this side of the House did not want to call it "subsidy," so we called it "mail subvention,' and now it is getting to be popular; but I am going to come around and call it what it is, a "donation;" is not that what it is?

Mr. CONE. I honestly do not know whether the word "donation"

Mr. ABERNETHY. I want to get what is in your mind.

Mr. CONE. Well, I think the word "subsidy" would be better there.

Mr. ABERNETHY. Well what is the difference between a donation and a subsidy?

Mr. CONE. Well I do not really know. You have a dictionary here.

Mr. ABERNETHY. In other words, it is giving a man something for nothing to encourage him to go out and build up a merchant marine under the American flag; is not that what it is?

Mr. CONE. No; I think a donation implies you are giving the man something outright. That is not the case here.

Mr. ABERNETHY. But you are paying him more than the service is actually worth; is not that so?

Mr. CONE. Yes; that is, we are paying him more than it is worth for carrying the mail, but it is not more than it is worth to the Government.

Mr. ABERNETHY. I am not talking about what it is worth to the Government.

Mr. CONE. "Donation" would imply you are giving it to him for nothing.

Mr. REID. "Donation" would imply a donation to a campaign fund? [Laughter.]

Mr. CONE. Yes. I am sorry I used the word "donation."

Mr. ABERNETHY. The thought I have, Admiral-of course, I am trying to be helpful in this matter.

Mr. CONE. I do not think the word "donation" is the right word, sir; I think the word "subsidy" or "subvention" would be better.

Mr. ABERNETHY. Well, make it "subvention." Of course, that sounds better down home than "subsidy" does; is that the idea? Mr. CONE. Yes.

Mr. ABERNETHY. Now it is a valuable asset?

Mr. CONE. Yes, sir; it is.

Mr. ABERNETHY. To an American who will undertake to run these ships that is an essential matter?

Mr. CONE, Yes, sir.

Mr. ABERNETHY. You consider it is very valuable?

Mr. CONE. Oh, yes, it is necessary.

Mr. ABERNETHY. You could not even sell your lines without it? Mr. CONE. No, sir.

Mr. ABERNETHY. Now, why can not we, right now, just make the dead line and say to these folks who are going to get the benefits, "If you want to get them, let us be all-American?" Why can not we do that now and not have any exceptions to the rule?

Mr. CONE. I do not want to be too persistent, but I am sure these situations are coming up to the great disadvantage of operators of American ships-the situations which I mentioned. I do not pretend to say this may not be the way to amend it; possibly it is necessary to pass the bill just as it is, and I would rather do that than not at all; but these situations I am convinced will come up constantly, of companies that are operating American-flag ships that have business offered to them at times when American-flag ships will not be available to take that business.

Now, then, they are confronted with one of two things-they must either turn that business over to their foreign competitor, or must charter foreign-flag ships to lift it. In my opinion, it is much better to permit them, under certain administrative regulations, to charter foreign ships to lift that, providing the charters of those ships do not in any way hurt the American-flag ships.

Mr. ABERNETHY. If I follow you, that amendment, according to my notion, would mean we might as well not pass it, if we make that exception; because I believe the exception will absolutely neutralize and destroy the thing you are undertaking to do. That is what I am getting at.

Mr. CONE. This does not prohibit now what I am talking about, except in the case I pointed out. This would not prohibit it. If Í were operating to-morrow an American-flag line, take the South Atlantic Line, if I wanted to operate that to-morrow and this were the law, I would fully expect the interpretation of this to mean that if I had offers and could charter foreign-flag ships and was not in competition with any American ships, I would have a perfect right to do it. Mr. ABERNETHY. Why the amendment, then?

Mr. CONE. The amendment is just as I stated before you came in, sir; that may be my competitor, who would want to damage me seriously, would put one small ship into that run for one trip, may be, or may be he would operate it for six months there, in which case it would make hash of my whole business. I would either have to turn it over to my competitor, or let the business go, or something like that. I do not think this is so terribly important, sir, I am frank to admit, but that is just my opinion.

Mr. ABERNETHY. As I understand, you are heartily in favor of the amendment?

Mr. CONE. I am, sir, heartily in favor of the amendment.

Mr. ABERNETHY. And it is just a question in your mind whether we ought to have this amendment, or not, and, as you say, you are not committed or wedded to that.

Mr. CONE. It is quite possible, as I say, I have been so close to the thing that I may see difficulties that may not turn up.

Mr. DAVIS. Admiral Cone, do you know of any company that is opposed to this amendment or in favor of a modification of it, except those that are operating foreign flag ships?

Mr. CONE. No, sir. I have not discussed it with a single steamship owner, I do not think; I do not believe I have.

Mr. DAVIS. That is all.

Mr. CONE. I do not know of one.

The CHAIRMAN. Thank you very much, Admiral. Now, Commissioner Denton.

STATEMENT OF HON. ALBERT H. DENTON, COMMISSIONER, UNITED STATES SHIPPING BOARD

The CHAIRMAN (continuing). Now will you go ahead, in your own way, Mr. Commissioner, and give us your ideas as to this legislation. Mr. DENTON. From my viewpoint, the bill is constructive and helpful. I would like to see an American merchant marine owned and operated by Americans, patronized by Americans, and it seems to me this bill will aid such a measure. I believe it is a good bill and hope it will become a law.

The CHAIRMAN. Does any member of the committee desire to interrogate Mr. Denton? If not, we are very much obliged to you. Now, Commissioner Sandberg.

STATEMENT OF HON. SAMUEL S. SANDBERG, COMMISSIONER, UNITED STATES SHIPPING BOARD

Mr. SANDBERG. Mr. Chairman and gentlemen of the committee, in reference to this bill introduced by Mr. Davis, I have nothing to say except that I am in accord with it and believe it will help to develop an American merchant marine 100 per cent and also, I think, give to American private shipowners of to-day a feeling of security in making further investments in building up American ships.

I have nothing further to say.

The CHAIRMAN. Does any member of the committee wish to ask any questions?

Mr. BLAND. Do you know the conditions which make the legislation necessary, Mr. Commissioner?