Atlantic ports, while a different scale is being applied on business handled through the Port of New York, with resulting higher costs for doing business at the ports where the higher rates obtain. We shall be glad to amplify this communication if you so desire, and in the meantime request your consideration of the situation which we have laid before you in the foregoing respects. Very truly yours, RICHARD PARKHURST, Vice Chairman. ANDERSON, CLAYTON & Co., Hon. SCHUYLER OTIS BLAND, Chairman House Committee on Merchant Marine and Fisheries, House Office Building, Washington, D. C. DEAR MR. BLAND: In looking through the Congressional Record of April 15, I noticed where you introduced a bill, H. R. 7521, which you referred to the House Committee on Merchant Marine and Fisheries, to develop a strong American merchant marine, to promote the commerce of the United States, to aid national defense, and for other purposes. Senator Copeland had President Roosevelt's message on merchant marine subsidy printed in the Record just before the text of the companion bill in the Senate, which would lead one to think that the bill had to do primarily with shipping subsidies. However, on page 5852 of the Congressional Record of April 15, in title VII, section 701, the Shipping Act of 1916 is amended to provide for complete regula tion of ocean shipping, including the authority to prescribe minimum and maximum rates, rules and practices, to be observed by foreign vessels, as well as United States vessels, in the foreign trade. Nearly all of your bill has to do with shipping subsidies and promotion of an American merchant marine, but title VII seems to have gotten in by mistake, as it is not mentioned in the President's address on the subject, nor is it necessary to carry out the other provisions of your bill. For decades the "conference" lines have attempted to fix rates on ocean traffic at high levels through "conference", the contract system, and the Shipping Code. Congress has invariably refused to restrict the freedom of ocean transportation. The latest notable instance was the refusal to approve the Johnson bill (S. 1963) in 1932. As early as 1913 it was stated (pp. 309–10) in the report of the Committee on Merchant Marine of the House of Representatives that "the fixing of hard and fast rules in the naming of rates in ocean transportation is impracticable. Unless the carriers are free to quote merchants freight rates which will enable them to compete successfully with the business of the merchants of other countries, the lines will suffer serious detriment." As you are aware, recent ratefixing proposals brought down an avalanche of protest against the proposed Shipping Code, for which reasons the Shipping Code was never permitted to go into effect. Producers of American articles and commodities, primarily agricultural, were responsible for the death of the rate-fixing provisions in the Shipping Code. We refer you to the address of Mr. Fred Brenckman of the National Grange, which was read into the Congressional Record of Tuesday, January 20, 1934, by Senator William E. Borah. We refer you also to the activities of Mr. Lawrence Myers, who led the Agricultural Adjustment Administration fight in Washington to protect American farmers attempting to export their surplus products against the burden of such rate-fixing provision in the Shipping Code. Now it appears that the "conference" lines have adopted still another move in attempting to restrict the freedom of the seas and to devise a method of fixing rates as high as necessary to maintain their expensive and wasteful liner services. They have tried to do so through the “contract system", whereby they held their rates considerably above the tramp charter market. With the dearth of international trade, the tramp operators were unable to find employment at all unless they wrote their investment down and got their operating costs down to the point where they could compete with the subsidized liner services. The accentuation of the spread between the liner rates and the tramp market made the economies of the latter so marked to shippers that the contract system then simply blew up of itself. Thus, today, we have many half-loaded liners going out of the Gulf the year round in fortnightly sailings, all fast vessels, where many less sailings and slower vessels would suffice in most of the 12 months of the year; and the bill for this absurd luxury is now paid for out of the public treasuries of the respective subsidizing countries. The "conference" lines, by fixing high rates, are attempting to shift this bill to the traffic. We feel most emphatically that the perpetuation of such a wasteful set-up certainly should not be a charge upon the agricultural products which form the bulk of all cargo from the Gulf. This is just what will happen if these lines succeed in getting rate regulation which enables them to keep tramps off their berths and to fix rates without the necessity of meeting tramp competition. In a service where monopoly is otherwise impossible, rate regulation or rate freezing is never resorted to in the public interest but always in the interest of maintaining an unnaturally high level of rates. It is an indisputable fact that freight on a commodity entering the competitive world markets is actually paid by the producer of that commodity. Knowing this, the national farm organizations and the Agricultural Adjustment Administration have consistently opposed ocean freight rate regulation. Regulation of ocean freight rates, such as the "conference" lines desire, would dry up American participation in foreign trade on every product produced or consumed competitively by other countries, or would force f. o. b. prices of American exports sufficiently below the world market to take up the slack, and landed prices of American imports sufficiently above the world market by the amount of the freight increase above similar freight to other competitive consuming countries. Such procedure would be directly contrary to the publicly announced views of our present Secretaries of State and Commerce (Cordell Hull and Daniel C. Roper), both of whom are exponents of increasing our foreign trade. In the case of cotton, a bulky, slow-moving commodity unable to pay for liner services, and today encountering such active competition from foreing producing countries that our exports are averaging about 43 percent under last year's figures, American exporters and producers for export are finding it very difficult to compete with exporters and producers of foreign-grown cotton. Why place an additional burden on cotton, the largest single item of American export and the backbone of the agricultural South? If a minimum rate is fixed, that must be the real rate that American steamship owners will get, because there are laws in this country that prevent them from rebating. The foreign lines, on the other hand, are beyond the reach of American laws insofar as what happens at the other end is concerned. Is it believable that they will fail to find means, either by financial inducement or by offering supplementary services, to make it worth the foreign importers' while to prefer them over the American-owned lines? Is it not then entirely probable that the net result would be no benefit to the American lines and, hence, that the full amount extorted from the American producer would go to the benefit of foreignowned lines? If it is necessary to subsidize American bottoms, why not pay it out of public funds directly to American owners, instead of indiscriminately to American and foreign owners at the expense of our agricultural population? Our own connection with the matter is that we are dealers in and exporters of cotton, and that our interest is to get the most economical freight that we can in order, on the one hand, to be able to pay creditable prices to the producers, and, on the other hand, to be able to lay down our cotton in foreign markets at attractive prices compared to the competing growths. We respectfully urge you to eliminate section 701 from your bill, thus relieving American exports of the burden of higher ocean freight rates. Yours very truly, S. M. McASHAN, Jr. VOGEMANN-GOUDRIAAN Co., Inc., Mr. PAUL H. MALONEY, M. C., House Office Building, Washington, D. C. DEAR MR. MALONEY: These bills provide for the creation of a Maritime Authority, which, among other things, would provide for subsidies and the power to fix all ocean rates of both foreign and domestic vessels for the carriage of all cargo and passengers, both into and from United States. The subsidy provisions of the bill seem sound and in accordance with the recommendation of the President, although their successful operation would depend to a great extent upon the wisdom, judgment, and disinterestedness of the individuals who would administer them. Under section 701 the Authority would have authority and unlimited power "to prescribe minimum and maximum rates, fares, and charges, rules and prac tices, which may be charged and enforced by vessels documented under the laws of the United States, although no standard of rate making has been suggested." Rate fixing in foreign trade was unsuccessfully attempted in the General Shipping Code which was not approved by the President. Congress refused to enact rate fixing in the so-called "Johnson bill." It was strenuously opposed when attempted in the "Rules and Regulations" under section 19 of the Merchant Marine Act, 1920, when recently proposed in the Shipping Board bureau; and it was most strenuously opposed in the Eastman water-carrier bill (S. 1632) on which hearings have recently been concluded. This provision is not found in the President's message or in the report which were submitted to Congress, and raises far-reaching and highly controversial problems of international and domestic law of foreign-trade economics. It would empower the authority to prescribe all rates of American and foreign vessels in foreign trade, including tramp ships and nonconference lines, together with both liner and full-cargo services. No other country in the world attempts to fix rates in its foreign trade. The subject of rate fixing was carefully investigated, considered, and rejected by the Democratic Congress in 1912-14. The Committee on Merchant Marine and Fisheries of the House of Representatives (commonly known as the "Alexander Committee") in the Sixty-second and Sixty-third Congresses, after exhaustive investigation and consideration, reported that rate fixing would be "particularly objectionable to American exporters who are competing with foreign markets and are often dependent upon an immediate and favorable rate quotation in order to close the business." It will provoke resentment among foreign nations, and retaliation will result. thus bringing about a very chaotic condition. Section 1006 authorizing the Authority to permit members of conferences to make deferred rebates to shippers in consideration of exclusive patronage, has no relation to either a system of subsidies to American shipowners or to the promotion of American export trade. Section 14 of the Shipping Act, 1916, forbids in very positive terms the granting of deferred rebates, and the Authority would permit conference lines to grant these rebates, whereas independent lines and tramp ships, not members of conferences, would be prohibited from doing so. Conferences are combinations of ocean carriers whose members fix rates and arrange sailings among themselves, and otherwise act in concert in order to control or crush competition. They have been saved from the condemnation of the antitrust laws only by approval of their agreements by the Shipping Board, under section 15 of the Shipping Act, 1916. Conference lines are predominantly foreign in practically all of the important routes in the American export trade. Shipping and legislative history are replete with their ceaseless attempts to obtain an absolute monopoly over all ocean trades, and thereby to raise rate levels as they like. Section 14 of the Shipping Act, 1916, condemns not only the giving of deferred rebates, but the use of fighting ships. In specific terms, it forbids any common carrier by water in foreign trade to " use a fighting ship either separately or in conjunction with any other carrier through agreement or otherwise. The term 'fighting ship' in this act means a vessel used in a particular trade by a carrier or group of carriers for the purpose of excluding, preventing, or reducing competition by driving another carrier out of said trade.' Yet section 1009 of the bill proposes not only to legalize the use of fighting ships, but to oppress and destroy competitors who are serving the needs of American shippers, but it would finance the use of fighting ships out of public funds. The use of fighting ships is distinctly a weapon of monopoly, and for that reason was condemned by the Supreme Court. We believe that the proposed section is unconstitutional, because it permits and aids a favored private party to break the law, while his competitor is bound by it. It is apparent that the intent and purpose of these bills is to benefit the larger American and foreign conference lines, and give far more power to these lines (they already have tied up under exclusive conference contracts over 90 percent of the commodities), to the end that the smaller companies, like ourselves, will be completely legislated out of business. These exclusive conference contracts show a rate of some 20-25 percent lower than the rate quoted to those who do not sign these contracts. In other words, nonsigners of these contracts are penalized about 20-25 percent, and many shippers, how unwilling they may be to enter into these contracts, are forced to sign them. The outside lines, or those not in the conference, have today little cargo remaining to choose from, not more than 10 percent, which is not tied up by conference contracts, but by the steady working of the conference members, there may soon be a smaller percentage than this for companies, such as ours, to obtain. We do not believe it is the intent and purpose to promote or permit monopolies or monopolistic practices, or to eliminate or oppress small enterprises, or discriminate against them, but it is obvious that of these bills are approved, it will mean the elimination of lines such as ours, thus creating more unemployment in the operation and loading of vessels, manufacturing, rail transportation, etc. The fixing of ocean rates will be naturally result in increased prices on many commodities, will deprive the American exporter of the right to choose those vessels which are best suited to his needs, and to pay freight rates accordingly. Every one knows that shipping, or foreign trade particularly, is a very complex affair, to which there are many angles, it following the fundamental law of supply and demand, and adjusts itself to the least resistance. The export and import trade of this country has been declining consistently for the past 5 or 6 years, and this business must be supplied with every facility if an improvement is to take place. We do not believe that the fixing of rates in foreign commerce will be the means of improving matters, and if undertaken will cause business to dwindle still more rapidly, and further cause antagonism with our foreign customers, and will be a further handicap and help those countries, which are not so handicapped, in working up a much larger business. The Vogemann Line, whome we represent, have been in business for about 30 years, and the fixing of ocean freight rates will place us at a distinct disdadvantage against those in the conference, and will unquestionably benefit the larger American and foreign conference lines, give far more power to these lines, promote a monopoly, and will mean the elimination of small lines, like ourselves, with slower steamers and less frequency of sailings, although they can be operated on a much more economical basis, and we must protest against the adoption of these bills. An acknowledgment will be appreciated. With kindest regards, Yours respectfully, H. E. UPTON, Manager. MOHEGAN INTERNATIONAL CORPORATION, Representative BLAND, House Committee on Merchant Marine and Fisheries, House office Building, Washington, D. C. DEAR SIR: We are writing in protest of the Ship Subsi dy Act, S. 2582, H. R. 7521. We have been in the export and shipping field for a number of years and know that the commerce of this country which is so important would be very seriously handicapped if rates were fixed in any way due to the foreign competition which this country has. It is very imperative at times for ocean-freight rates to be lowered in special cases in order to meet this competition and if these rates could not be lowered business would revert to the foreign competitor. We therefore wish to enter our protest against this bill. Yours very truly, SCHUYLER OTIS BLAND, Esq., House Office Building, Washington, D. C. HONORABLE AND DEAR SIR: As Chairman of the House Committee on Merchant Marine and Fisheries, we are sending to you, herewith, a copy of our respects of today to Senator Royal S. Copeland which bears upon Bland bill, H. R. 7521. May we assure you that no less respect to you is intended in sending this copy of letter to you, instead of our writing a separate letter to you along exactly the same lines. We know you will understand that a steamship company cannot benefit by higher freight rates when that very increase in freight rates will surely serve to very much restrict the traffic. Respectfully, L. M. VAN DOLEN, President. ROYAL S. COPELAND, ESQ., Senate Office Building, Washington, D. C. HONORABLE and DEAR SIR: Rosin and turpentine (naval stores) are considered agricultural products since they are distilled from the gum of the southern yellow pine trees. It is physically impossible for producers of gum rosin and turpentine to exist without trade in these commodities from abroad. Producers of gum rosin and gum turpentine, and dealers like ourselves, have had to face the inroads into their business for some 15 or more years of the wood rosin and wood turpentine. Then, they have had to face the loss of a great part of their gum turpentine business to the numerous oil refiners who turn out a product known as "mineral spirits" and which many past users of gum turpentine have been able to use as a substitute for the latter. Both here and abroad those deflections of business have been enormous during the past 15 years or more. The major portion of our business for the past 37 years has been in the export of gum turpentine and gum rosin. The export sales of these commodities have been further interfered with during the past several years by the competition of Portugal, Greece, and, most lately, Russia; France having been a competitor for many years. These newer countries of export have been curtailing, further, the business for American gum rosin and gum turpentine in the many markets abroad outside of Europe. Our ability to compete against this newer competition has been further aggravated by the fixing of prices for gum rosin and gum turpentine by the Agricultural Adjustment Administration and, very unfortunately for us, exporters of these commodities, the Agricultural Adjustment Administration has seemed to fail to appreciate the necessity for excluding the exportation of these commodities from the fixing of higher prices. To aggravate the export situation still further, we understand Congress now has before it the Copeland bill, S. 2582, and the Bland bill, H. R. 7521, which deals with shipping subsidies and with the regulation of traffic in foreign com merce. Many of the actual producers of gum rosin and gum turpentine may not sufficiently realize the importance of the export business in these commodities but they certainly will come to the sad realization of what it will mean to them if this business must submit to further losses in the foreign markets. In any event, we do fully realize the already large curtailment of business in our line in the markets abroad and even the curtailed business cannot be maintained if the bill above referred to becomes a law because higher foreign freight rates from this country will only serve to take more of this business away from us and to the competing markets in Europe. Therefore, may we respectfully register our most earnest objection to the passing of this Copeland-Bland bill, and may we hope that the information contained in these respects may be available to the Senate and House of Representatives because we know that many of you respected representatives of the people very often believe you are doing good, when you actually may be doing harm to the major interests of the country at large since you cannot be expected to know something about every interest of the country unless you may be so informed by those of our people who are more directly concerned with some one interest or another. While we speak only for our own line of business, we are convinced that there are many lines of American export business which will lose a large part of that export business if the steamship lines plying from this country to countries abroad are permitted to increase freight rates upon our foreign-borne traffic which, already, has to face the competition of more cheaply made goods abroad, with their lower freight rates. If the American shipping industry requires help, surely, an increase of foreignfreight rates cannot help them, when the falling off in the traffic will be great as a result of the increase in freight rates and, unfortunately, while the shipping industry goes without the sought help, the exporters of numerous of American commodities shall suffer greatly and, naturally, as a consequence, the manufacturing trades throughout the country will suffer as well. Respectfully, L. M. VAN DOLIN, President. |