PORT DISCRIMINATION Mr. SCHUYLER OTIS BLAND, PORT OF STOCKTON, Stockton, Calif., March 25, 1935. Chairman Committee on Merchant Marine, Radio, and Fisheries, House of Representatives, Washington, D. C. DEAR SIR: While we believe most heartily in subsidies, we do not believe in subsidies to steamship companies which can be prevented by foreign-owned steamship companies from serving American ports. We are attaching letter we are writing Mr. Peacock of the Shipping Board, which explains our position. We would earnestly request that any legislation authorizing subsidies carry the attached provision, in order to prevent the vessels benefiting thereby from being dictated to by foreign lines in the serving of American ports. The situation is vicious at the present time, is not corrected by the Eastman bill, and we earnestly request your support for the inclusion of the attached wording in any subsidy measure. Very truly yours, B. C. ALLIN, Director of the Port. Mr. JAMES CRAIG PEACOCK, Director Shipping Board Bureau, PORT OF STOCKTON, Stockton, Calif., March 23, 1935. Washington, D. C. MY DEAR MR. PEACOCK: I wish to thank you most kindly for your consideration in the matter of our complaint against the Pacific Coast European Conference which your Bureau of Regulation is now handling. We appreciate your consideration in this matter and are writing you with reference to the matter of subsidies which is now before Congress. We are desirous of having attached the following amendment to any measure having to do with the granting of subsidies: "Be it resolved by the Senate and House of Representatives in Congress assembled, "1. That no steamship line operating vessels belonging to the United States or purchased or being purchased from the United States or any agency thereof; or any steamship company receiving from the United States or any agency thereof any subsidy or payment through contract for the carrying of mails, or otherwise, shall belong to any conference or association relieved of the Sherman Act which either through official acts or policies dictates either directly or indirectly the serving of any port within the continental limits of the United States located on any improvement project designed for the accommodation of ocean-going_vessels authorized by the Congress or through it by any other agency of the Federal Government." I am sure that every red-blooded American citizen is in favor of the American merchant marine, and, if he understands the situation, will be willing to do anything he reasonably can to assist; but at the same time we believe that every redblooded American citizen will be averse to foreign steamship companies operating under our laws relieved of the Sherman Act and able in restraint of trade to dictate to American-owned steamship companies which ports of the United States they may serve and which one they may not serve. In other words, taking as a concrete example the complaint which we have just registered with you against the Pacific Coast European Conference, there is a group comprising all of the steamship companies operating between the Pacific coast of the United States and Europe, numbering 17 steamship lines, without a single American-owned vessel in the entire group. There is one only other steamship line operating between this coast and Europe, which is the Isthmian Line, and which, on account of its affiliation with the United States Steel Corporation, does not belong to the Conference. Now, let's assume that, through some subsidy or Government assistance, an American line decided to enter the trade between the Pacific coast and Europe. They would go into this Conference and be 100 percent dictated to by these for eign steamship companies as to which American ports they could serve and which ones they could not serve. Since filing our complaint with you regarding these European steamship lines boycotting the port of Stockton for 2 years, we have just learned that they have arbitrarily decided to remove their service from the port of Richmond, Calif., and are also contemplating removing their service from the port of Vancouver, Wash. Certainly, following the old saying that "charity should begin at home", we feel that no steamship company receiving a subsidy should be allowed to be in a Conference where by foreign votes it can be denied the inherent right to serve any American port it wishes. That, in short, is the purpose of this amendment. Now, let us take its practical application. Let us assume that a steamship company through subsidy enters the European trade from the Pacific coast. The European steamship companies will desire it to belong to the Conference in order to stabilize rates. The new steamship line will desire to belong to the Conference because of the benefits which it will thereby receive. Consequently, the net result will be that the Conference under this amendment will amend its rules so as not to include in them the dictation of which American ports may be served. In all other details, the Conference will go happily on its way the same as ever. The especially unfortunate part of the situation under existing law is that your department does not know what is going on in the meetings of these conferences. You have no representative who sits in the conferences. You do not know what are in the minutes, and still more important you do not know of the conversations and discussions which are just as important in these meetings but which are not put in the minutes. We, accordingly, feel that it is vital to our American ports to have this amendment placed in any subsidy legislation, and believe that in view of our recent complaint the situation which it exposes, and the other actions such as regarding Richmond and Vancouver, Wash., which I have mentioned and which are now under way by this same group, you may see the necessity of this sort of protection. This in no way interferes with any regulation either by your department or any other Government bureau, but simply preserves to our American ports their inherent right to service by the American merchant marine without hindrance of foreigners. We are requesting of our Representatives and others that this legislation be enacted and are making this explanation to you of our position in the matter. Thanking you again for your cooperation, I am Very truly yours, B. C. ALLIN, Director of the Port. MANGHUM & MANGHUM, Washington, D. C., April 29, 1935. COMMITTEE ON MERCHANT MARINE AND FISHERIES, House of Representatives, United States Capitol, Washington, D. C. GENTLEMEN: Supplementing my letter of April 23, regarding H. R. 7521, a bill to develop a strong American merchant marine, to promote the commerce of the United States, to aid national defense, and for other purposes, in which letter I requested opportunity to be heard on behalf of the Sacramento (Calif.) Chamber of Commerce. I am today advised by the Sacramento Chamber of Commerce that it is in favor of the provisions of the bill which preserve intact the Shipping Act of 1916, the Merchant Marine Act of 1920, and the Intercoastal Shipping Act of 1933. The provisions of the bill preserving these acts we find are sections 701, 702, 1005, and 1012. The Chamber of Commerce of Sacramento is in favor of regulation in line with the acts referred to. In respect to the other provisions of the bill it expresses no opinion. It respectfully requests that its position, as indicated above, be given due consideration and spread upon the record. Respectfully, H. E. MANGHUM. RATE REGULATION STATE DEPARTMENT, Washington, May 15, 1935. Hon. SCHUYLER OTIS BLAND, Chairman Committee on Merchant Marine and Fisheries, House of Representatives. MY DEAR MR. BLAND: I am informed that the ship subsidy and water carrier bills (H. R. 7521 and 5379, respectively) now pending before the Committee on Merchant Marine and Fisheries contain provisions for the regulation by governmental authority of rates, fares, and charges of foreign ships in our commerce, and as this would directly affect our foreign relations and the problems of commercial policy with which my department is concerned, I feel that I should not fail to make clear the fact that such provisions are, to my mind, open to certain serious objections. I can understand that the regulation of the rates charged by vessels in our domestic commerce may be necessary, but I think it important to keep clearly in mind the essential distinction between that commerce which both begins and ends within our territory, and the foreign commerce which at one end or the other enters the jurisdiction of another government. I do not feel that an attempt by this Government to prescribe minimum rates which may be charged by foreign vessels on the cargoes which they carry between American and foreign ports would be in harmony with that basic principle in our treaty structure under which we have granted to foreign shipping the right of free access to our ports and in return have obtained for our ships the right of free access to foreign ports. Certainly such regulation would be in conflict with the generally accepted practices of international law. It is pertinent to observe that when, last year, a code of fair competition for the shipping industry was under consideration, which would have authorized the regulation of the rates of foreign vessels with respect to traffic into and out of our ports, representations were made by several foreign governments to the effect that such regulation would be in violation of treaty rights. On April 5 I transmitted to you a copy of a note from the Danish Minister in Washington expressing his government's objections, on similar grounds, to the relevant provisions of the Eas man water-carrier bills, and I am sending you separately a copy of the same Minister's more recent note relating to the corresponding provisions of the ship subsidy bills. As you are doubtless aware, the proposed code of fair competition for the shipping industry referred to above failed to receive the President's approval, and one of the principal objections raised against it related to the provisions for regulation of rates in foreign commerce. In my opinion, a most serious objection to any unilateral attempt by this Government to fix rates in foreign commerce lies in the fact that this procedure would add one more form of restriction to the entangled and conflicting mass of nationalistic restrictions from which our foreign trade is suffering today. The impracticability of such unilateral regulation can readily be appreciated if one considers the impasse that would result if another government should adopt the same practice, but should prescribe rates covering its trade with us differing from those our authorities prescribed for the very same trade. It is fundamental that any method of control or stabilization of shipping rates, fares, and charges in foreign commerce must, if it is to operate satisfactorily, be formulated with due regard to the fact that the carrying of our foreign trade takes place in part on the high seas and in part within the jurisdiction of foreign governments. The executive committee on commercial policy has adopted, and requested me to transmit to you, a resolution on this subject which has my full concurrence, and which I am accordingly sending to you as an enclosure to this letter. I hope that the Committee on Merchant Marine and Fisheries will be good enough to give consideration to the remarks I have expressed in the foregoing paragraphs and to the enclosed resolution. For the convenience of your committee, in view of the advanced stage which I understand the committee has reached in its consideration of the ship subsidy and water-carrier regulation bills, a copy of this letter is being transmitted to each member. Sincerely yours, CORDELL HULL. RESOLUTION ADOPTED BY THE EXECUTIVE COMMITTEE ON COMMERCIAL POLICY, MAY 10, 1905 The Executive Committee on Commercial Policy, having noted the provisions in the pending ship subsidy bills (H. R. 7521 and S. 2582) and also in the Eastman water-carrier regulation bills (H. R. 5379 and S. 1632) granting authority to the Federal Government to regulate rates, fares, and charges of foreign ships with respect to traffic into and out of ports of the United States, desires to express the view of the committee that these provisions, if enacted into law, will prove injurious to American foreign trade, will be certain to encounter grave difficulties of enforcement, and will be an impediment to the maintenance of friendly commercial relations with other maritime countries. With respect to the effect upon our foreign trade, the committee is of the opinion that establishment of minimum rates, fares, and charges by national authority, and the rigidity of rate structure in the carrying of our foreign trade that will result, will definitely handicap our export trade in competing abroad with similar goods brought into foreign markets from countries which do not subject foreign shipping to such rate regulation. In this matter it is essential to bear in mind the fundamental distinction between rate regulation within our own boundaries or in intercoastal shipping by such a body as the Interstate Commerce Commission and such regulation as applied to international trade. With respect to the effect upon our international relations, the committee desires to stress the fact that such unilateral assumption of authority over foreign shipping will be contrary to the accepted practices of international law and in conflict with those provisions in our treaties guaranteeing in return for the right of free access of foreign shipping to American ports, free access for American shipping to foreign ports. Moreover, even though no technical violation of treaties were involved, such arbitrary assumption of regulatory powers over the rates charged by foreign vessels would be almost certain to lead to retaliatory measures in foreign countries against the ships and commerce of the United States. To the initial burdens upon our commerce would therefore be added those arising from such retaliations; and in the final outcome both American shipping and American foreign trade, upon which the prosperity of our shipping depends, instead of being assisted, would be seriously hadicapped. Hon. SCHUYLER OTIS BLAND, STATE DEPARTMENT, Washington, May 14, 1935. Chairman Committee on Merchant Marine and Fisheries, MY DEAR MR. BLAND: I enclose a copy of a note dated May 10, 1935, from the Minister of Denmark at this capital, in which are set forth observations of the Danish Government concerning certain provisions relative to the rates charged by foreign vessels in our commerce, in the ship subsidy bill (H. R. 7521) now before the Committee on Merchant Marine and Fisheries. May I ask that you be good enough to have your committee give due consideration to the representations made in the Danish Minister's note. Sincerely yours, Hon. CORDELL HULL, CORDELL HULL. ROYAL DANISH LEGATION, Washington, D. C., May 10, 1935. Secretary of State, Washington, D. C. SIR: With reference to my note of March 18, 1935, I have the honor to address you on the following subject: Two bills of the same tenor concerning the development of the American merchant marine, S. 2582 and H. R. 7521, have recently been introduced, respectively, in the Senate and the House of Representatives. Hearings have taken place in the Senate Committee on Commerce and the bill S. 2582 has been redrafted. In the form in which it is presently submitted to hearings (Committee Print No. 3 of Apr. 30, 1935) it contains among others the following provisions: (1) Title VII, section 701 (3) provides that paragraph (b) of section 19 of the Merchant Marine Act, 1920, be amended, so that the United States Maritime Authority, proposed by the bill to be vested with the powers formerly granted the United States Shipping Board, etc., be further authorized "to prescribe and order enforced the minimum and maximum rates, fares, and charges, which may be charged and rules and practices to be observed by vessels documented under the laws of the United States or foreign vessels in the foreign trade of the United States." Such an extension of the power granted the Authority would, if enacted, in its application to foreign vessels go even further than the powers recently proposed by the Shipping Board Bureau and in the so-called Eastman bill (S. 1632 and H. R. 5379) mentioned in my note of March 18, 1935, inasmuch as no exception is made with regard to "cargo loaded and carried in bulk without mark or count' nor to "tramps.' My Government is therefore still more of the opinion that a measure such as quoted would, as far as Danish ships are concerned, not appear to be in accordance with the rights secured by treaty and the generally recognized principles of international law, granting free access to ports for the purposes of international trade as well as with the universally recognized principle of "the freedom of the seas.' Accordingly, I have the honor to request that through your good offices the attitude of the Danish Government with regard to this new proposed provision may be brought to the early attention of the appropriate branches of the American Government with a view that the bills may be so worded as to eliminate foreign (Danish) vessels. I further beg leave to invite your attention to (2) section 1006, which contains a provision giving the Authority the power to permit members of conferences to make agreements in writing for what is generally known as "deferred rebates", thus to employ a method of competition which, at the same time, is illegal and punishable for independent operators. A very considerable part of Danish shipping engaged in trade with the United States is operated by independent owners and such owners would consequently, if such a provision should be enacted, be placed in a position of decided disadvantage in the exercise of their rights as shipping operators. My Government fears that if such measures as the ones mentioned should become effective, they would have serious consequences for Danish shipping now engaged in American trade, and acting upon instructions from the Danish Minister of Foreign Affairs I have the honor to request that, through your good offices, due consideration may be given to the views of the Danish Government as outlined above, in the further procedure with regard to the said bills. I avail myself of this opportunity to renew to you, Mr. Secretary of State, the assurances of my highest consideration. OTTO WADSTED. Hon. SCHUYLER O. BLAND, BOSTON PORT AUTHORITY, Chairman House Merchant Marine and Fisheries Committee, House Office Building, Washington, D. C. DEAR CONGRESSMAN BLAND: In connection with the legislation being proposed and discussed for the subsidizing of the American merchant marine, we may say that we are firm believers in the need for an American merchant marine, and that we recognize the necessity of Government aid in some form or other for the maintenance of our merchant marine on the high seas. Granting the need of such aid, we, however, believe that it should be extended only if all lines involved afford United States ports equal treatment in the matter of rates, and specifically on the North Atlantic range do not in some cases apply one set of rates at one port and another at another port. Any American line receiving Government aid is, of course, being supported by the taxpayers of the entire country and should, therefore, accept the responsibility of giving fair and impartial treatment to all ports of the country. It seems to us, consequently, that any legislation set up to aid American lines should have included in it a proviso that such lines must establish fair and equitable rates and practices insofar as all United States ports are concerned, and that they cannot, for example, within the North Atlantic range apply different rates and set up different practices at any one port in comparison with any other port. All ports should share alike in this respect, and taxpayers of one part of the country should expect to receive from American lines for that section treatment in the matter of rates and practices which can be regarded in no way as discriminatory. This letter is inspired by our knowledge of certain situations whereby American lines are applying one set of rates at Boston and some of the other North |