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would permit conference lines to grant these rebates, whereas independent lines and tramp ships, not members of conferences, would be prohibited from doing
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 competitors. 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 pre dominantly 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 hill 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 to 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 to 25 percent, and many shippers, however unwilling they may be to enter into these contracts, are forced to sign them. The outside lines, or those not in 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 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 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. Everyone knows that shipping, or foreign trade particularly, is a very comples 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 Bogemann Line, whom we représent, has been in business for about 30 years, and the fixing of ocean-freight rates will place us at a distinct disadvantage against those in the conference, and will unquestionbly benefit the larger American and foreig conference lines, give far more power to those 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. Yours respectfully,
H. E. UPTON, Manager.
1491 East FORTY-EIGHTH STREET,
Brooklyn, N. Y., May 7, 1935. Hon. SCHUYLER Otis BLAND, Member of Congress, Chairman Committee on Merchant Marine and Fisheries,
Washington, D. C. DEAR SIR: I understand that at a recent hearing on the bill (S. 1632) before the Senate Committee on Interstate Commerce, the tramp steamship owners of Great Britain, Norway, Denmark, and Greece were represented through the American Association of Tramp Operators. I quote in this connection from the record:
“Mr. Haight. No, sir; I have no figures for the United States. The United States does very little, sir, in the tramp business. We have developed lines when the Shipping Board started in its operations, and they sent their ships everywhere in general service, but after a year or two they settled back into the regular liner service, and by direction of Congress were told to establish lines that they thought to be important, and they did so. There is, comparatively speaking, very little, if any, ordinary tramp tonnage under the American flag. It is found under the flags of the Scandinavian countries and Great Britain, in large part.
Liners are faster. They built faster ships because they thought by so doing that they would have an advantage from a competitive standpoint; and that advantage they have and are entitled to. But I submit that no liner is entitled to deny to the shippers of this country the right to use the tonnage which is cheapest for the transportation of cargo, which is not expensive and which does not demand express rates and which can be moved in a 10-knot ship to best advantage because it is cheapest.
“The members of the American Association of Tramp Operators in the Canadian and West Indian trades operate most of the tramps which are engaged in American trade and practically all those in the foreign trade. The tramp owners of Great Britain, Norway, Denmark, and Greece represent most of the tramps of the world and a large part of the world's tonnage.
“The CHAIRMAN. What tramp steamship lines are you representing?
* Mr. Haight. I am representing all of the tramp operators who are engaged in the Canadian and West Indian trades. There are a number of them that carry cargoes, such as sugar, coal, coke, lumber, fertilizers, potatoes, oil-well supplies, asphalt, mahogany, sulphur, chrome ore, and manganese ore.
"The CHAIRMAN. You are not representing. then, any American lines?
“Mr. Haight. These are all American operators, but who charter for a single voyage, for a round trip, or on time, foreign tramp tonnage to handle such commodities as these in the American trade, chiefly to the West Indies and to the Canadian ports.
"The CHAIRMAN. But they are not American companies?
“Mr. Haight. No. They are engaged in West Indies and Canadian trades, because they cannot run coastwise, but they are American companies which charter tramp tonnage flying a foreign flag for the handling of cheaper cargoes in those trades.
"Senator Moore. Because there are no American tramps? "Mr. Haight. There are no American tramps that can serve the trade." :
To me it seems rather strange and unusual that foreign shipowners may appear before our lawmakers and have a voice in the preparation of legislation for the regulation of American water carriers operating in interstate and foreign commerce.
If it is the purpose of Congress to develop a strong American merchant marine, to promote the commerce of the United States, and to aid in the national defense, American tramps are absolutely essential.
The fact that American operators charter foreign tramps with low wages and standards of living is not a sufficient reason, in my opinion, to grant concessions to them; on the contrary, the building of American tramps should, I feel, be encouraged, and they should be officered and manned by Americans. Yours very truly,
J. BERRY COUGLIN.
HOUSE OF REPRESENTATIVES,
Washington, D. C., May 7, 1935. Hon. SCHUYLER O. BLAND, Merchant Marine and Fisheries Committee,
Washington, D. C. DEAR MR. BLAND: I am referring to your committee a telegram from the General Steamship Corporation, Ltd., of Seattle, Wash., proposing a limitation on section 701 of your bill, H. R. 7521.
It seems to me that this is a point that merits attention, and I am sure you will be glad to take it into consideration. With kindest regards, I am, Very truly yours,
M. A. ZIONCHECK, [Radiogram]
SEATTLE, WASH., May 7, 1935. Hon. MARION ZIONCHECK,
House Office Building, Washington, D. C. Order prevent monopoly intercoastal trade by large lines we strongly urge your support on amendment to Bland bill H. R. 7521, section 701, subparagraph 1, to provide that in prescribing such maximum and minimum rates, fares, and charges differentials shall be established based upon differences in the service rendered to the end that small water carriers operating domestic commerce of the United States should be adequately protected.
GENERAL STEAMSHIP CORPORATION, LTD.
INTERNATIONAL AGRICULTURAL CORPORATION,
New York, N. Y., May 7, 1935. HOUSE COMMITTEE ON MERCHANT MARINE AND FISHERIES,
House Office Building, Washington, D. C. GENTLEMEN: As large exporters of phosphate rock, we are very much concerned over the provisions of the Merchant Marine Act, 1935 (ship subsidy bill S. 2582, H. R. 7521), which bill provides for the creation of an Authority with power to fix all rates of American and foreign trade, including tramp ships and both liner and full-cargo services.
Our industry exports over 35 percent of its product, requiring bottoms to transport from 700,000 to 1,000,000 tons annually. Our product is of great importance to agriculture, and because it is sold at low prices it is essential to keep the rate of production as high as possible at all times.
Our exports are sold abroad under fierce competitive conditions and we are frequently dependent upon an immediate and favorable rate quotation in order to close contracts for foreign shipments. Any limitation upon the freedom of ocean carriers to change their freight rates promptly to fit the changing conditions of the freight market would prove injurious to us as well as to them. Any legislation which will interfere with prompt quotation of favorable rates and. on occasions, special rates to meet special conditions will undoubtedly cut off the export business of the phosphate miners to the detriment of American agriculture. We, therefore, earnestly urge that this harmful feature of the bill be eliminated. Yours very truly,
John T. BURROWS, Vice President.
Florida Hard Rock PHOSPHATE EXPORT ASSOCIATION,
SAVANNAH, Ga., May 8, 1935. Hon. SchuylER O. BLAND, Chairman House Committee, Merchant Marine and Fisheries,
House Office Building, Washington, D. C. DEAR Sir: We have been informed that House bill 7521 is up for consideration in the House.
Said bill, is passed, giving authority to fix all rates for American and foreign vessels in foreign trade, including tramp ships and both liner and full-cargo service, would result in highly injurious consequences to the phosphate-rock industry. The producers of phosphate rock for the export market are located in
this section and their sales are negotiated on cost and freight basis and they are often dependent upon immediate and favorable freight quotations in order to close contracts. Any limitations upon the freedom of ocean carriers to change their freight rates promptly to meet the changing conditions of the freight market would prove disastrous to those engaged in the mining and exportation of phosphate rock.
The sale of phosphate rock, mined in Florida for exportation, is in keen competition with phosphate produced in Africa, Curacao, Russia, and other producing markets; and to have freight rates on American phosphates stabilized while the rates on phosphates from other countries are pliable, would be sure to handicap the members of our association in disposing of their phosphate rock in foreign countries, thereby materially curtailing production of the phosphate rock industry, which in turn would effect the large amount of labor employed, also reducing the volume of rail traffic on the movement of phosphate from mines to ports of exportation.
In consideration of the large investments of the phosphate-rock producers, and the large amount of employment given labor, any injurious legislation would result in a highly disadvantageous manner to the industry. We, therefore, respectfully request that this feature of the bill, which is intended to fix all rates for American and foreign vessels in foreign trade, be eliminated. Yours respectfully,
J. M. EXTROWICH, Secretary.
REQUEST OF MISSISSIPPI RIVER SYSTEM CARRIERS ASSOCIATION FOR AMENDMENT OF S. 2582 (COMMITTEE PRINT No. 3)
May 6, 1935. Hon. ROYAL S. COPELAND, Chairman Senate Committee on Commerce,
Washington, D. C. DEAR SENATOR COPELAND: Confirming the oral request of Mr. O. S. Barrett, vice president of our association, for the amendment of the April 30 draft of shipsubsidy bill to exclude from its operation inland river carriers, we urge the following amendment to title 7, Regulatory Powers, section 701, paragraph (2) on page 42, line 19, by adding the words "except on inland rivers" so that this paragraph will read as follows:
“The term 'common carrier by water in interstate commerce' for the purpose of this Act shall include every common or contract carrier by water, except on inland rivers, engaged in the transportation for hire of passengers or property, between one State of the United States and any other State of the United States." for the following reasons:
1. This bill was drafted for the purpose of providing a subsidy for the American merchant marine and to regulate its rates and operations by amendment to the Shipping Act, the Merchant Marine Act, and the Intercoastal Shipping Act, the jurisdiction of which acts is confined to shipping on the high seas, intercoastal and Great Lakes. They do not cover inland-river carriers.
2. All of the provisions of the bill are inapplicable to river carriers. 3. The inland river carriers have never received or requested any subsidy and will not receive any under this act.
4. The paragraph which we seek to amend and which otherwise would include inland-river operations was proposed to include coastwise shipping and was not intended to include by implication inland-river carriers. There has never been any demand by shipper or inland-river carrier for their inclusion in this act and it will not serve the public interest to do so.
On the contrary, because of the wide contrast in equipment and operations between the river carriers and ocean and Great Lakes carriers, and the fact that this act is not designed to cover river operations, their inclusion under its jurisdiction would create confusion, difficulty in administration, and gross injustice to the inland-river carriers.
We therefore respectfully urge that your committee, by this or any other appropriate amendment, exclude carriers operating on the Mississippi River and its tributaries from the operation of this act.
We especially urge our exclusion from the act in view of the proposed amendment of the ship-subsidy bill to include the limitation of liability provided under the British law which distinctly applies only to ocean shipping.
We therefore concur in the request of Mr. James G. Conway for the adoption of the following amendment to the bill:
“This Act shall not apply to tugs, or barges, ocean-going or otherwise, or to cargo vessels, including canal boats, tow boats, barges, lighters, and other nondescript, nonpropelled vessels used principally on lakes or rivers or in inland navigation; nor shall anything in this Act contained be held to repeal or modify, as to such vessels or crafts, any statute of the United States, dealing with ship owners liability.”
In support of this request we submit that the present limitation of liability under existing statutes has operated without hardship upon and has been entirely satisfactory to passengers, shippers, and carriers on the Mississippi River system, and there has been no demand for this proposed legislation from that source. Respectfully submitted.
MISSISSIPPI RIVER SYSTEM CARRIERS ASSOCIATION, By HERMAN A. BAYLESS, Counsel.
DRAEGER SHIPPING Co., Inc.,
New York, April 30, 1935. Hon. ScHUYLER OTIS BLAND, Chairman of the House Committee on Merchant Marine and Fisheries,
House Office Building, Washington, D. C. HONORABLE SIR: The above-mentioned bills, pertaining to shipping subsidies and dealing with the regulation of traffic in foreign commerce, have been introduced in the Senate and the House of Representatives by yourself and the Honorable Royal S. Copeland, Chairman of the Senate Committee on Commerce.
These bills, if passed, will, as we understand it, create a Maritime Authority and will confer upon this authority the power to prescribe minimum and maximum rates, fares, and charges, rules, and practices which may be charged and enforced by vessels documented under the laws of the United States or foreign vessels in the foreign trade of the United States.
Naturally, conferring a power of such tremendous scope upon a commission will result in putting all carriers upon a minimum basis as to the quotation of freight rates and will eventually eliminate from our shipping trade the nonconference carrier who, in our opinion (which is based entirely on our own experience), has been the only means of keeping our freight rates within a reasonable range of prices and allowed for bargaining between the shippers and the operators for special rates on competitive business.
The condition of our foreign trade at the present time surely suggests a flexiblerate scale, otherwise our American business interests might just as well pull up stakes and confine their activities to the domestic market, for a legislative control of freight rates makes competitive bidding impossible, for, all the foreign operator has to do is fix his rates slightly under what our fixed rate would be, as established by this Maritime Authority, and that would eventually close that market to us so far as United States ports are concerned.
These foreign operators certainly will not sit back and be legislated out of business when they have the port of Montreal so convenient to compete from, and you are certainly inviting this move by passing laws of this kind.
The commerce these operators enjoy from our shippers here (both conference and nonconference carriers) regardless of whether they are American or foreign bottoms, is the means of their existence, and if we attempt to fix rates by legislation, thereby driving our American business to a foreign port, all the ship subsidies you may legislate will not keep these ships operating.
Arguing from the manufacturer's, producer's, or seller's point of view, we know in figuring his price, he takes into consideration his cost up to factory or store exit and adds to this which he feels he is entitled to in the way of profit. Beyond that factory or store door involves transportation expense, and even though his price is c. i. f. foreign port, the consignee pays the freight and the manufacturer, producer, or seller receives his same amount of profit.
The buyer in the foreign market is fully aware of this and knowing his rates are fixed by a legislation on this side, and he, having no means of bargaining vis a United States port, suggests to our Mr. Business Man here that he negotiate via the port of Montreal, and isn't it natural to suppose that the American business man is going to forget his patriotism in the interest of his bread and butter.
We, who are engaged in foreign commerce as international freight contractors, must of necessity depend on a foreign port such as Montreal, if, under the passage