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Mr. Welch. And it was not a success. It did not come up to our specifications.

The cruiser that followed her was the cruiser San Francisco. That was of American design, and it exceeded in horse power and exceeded in speed the specifications.

Mr. Haag. There was some discussion this morning about large passenger liners. The largest ship ever built in the United States was the Manhattan and her sister ship, the Washington. They are just under 25,000 gross tons.

In the last 8 years there have been built by our foreign competitors ships ranging from 25,000 tons up to 80,000 tons.

Those ships, the majority of them, are called superliners; and nearly all of them will ply in the trans-Atlantic trade. The business that those ships will get will be largely American citizens.

Now, it would seem that if other countries adopted the policy of building naval vessels—that is, vessels for naval purposes solelyand if those ships are in that category, they are getting a very large support between-wars times from the passenger traffic, which largely originates in this country.

Those 18 ships, of somewhat over 700,000 tons, have been built during the last 8 years despite the fact that they are not justified from the amount of business available. The two largest ones are the Queen Mary and the Normandie. The latter one will make her maiden voyage this spring.

And that does not end it, because there are other ships, sister ships of those last two mentioned, that are talked about and even a larger Rer for the future.

So it would seem that those ships will perform a very useful peacetime service, and will be largely supported by the traffic that this country furnishes. Most of the traffic in the north Atlantic originates in this country, and of that only about 11 percent is carried by American ships.

Foreign countries are building large ships for commercial use, whether they carry passengers or cargoes. They are being used between wars to at least help pay some of their expense. We all know that superliners are costly, and very few of them at the end of the year can show profits.

We have no ships built in the United States over 25,000 tons, and our competitors have in the last years built 18 of those, slightly over 700,000.

The CHAIRMAN. When the Mauretania and Lusitania were built, it cost England six and a half million dollars, I think.

Mr. Haag. I think that is correct.

The CHAIRMAN. With an interest rate of about 2% percent, wasn't it?

Mr. HAAG. That is about right.

The CHAIRMAN. The interest rate was 2%; but the posts paid for the entire burden and practically amortized the ship. The postal earnings plus the admiralty subsidies amortized the investment that the Government had made in those ships.

Mr. Haag. That I believe is correct.

Mr. Sirovich. Have we the facilities for building any of those large superliners in this country?

Mr. Haag. We have those facilities.

Mr. Sirovich. What would be the objection to having our country build a few superliners?

Mr. Haag. I don't think there would be any objection, but the company that would operate such ships would be at a terrific handicap because our competitors cannot always make a profit even with their lower construction and operating costs. It certainly indicates that we have difficulty in breaking even.

Mr. SIROVICH. It is my theory that if we invested in one or two of these superliners, we would destroy the navigation of the superliners of the foreign countries, because the statement was made here by witnesses that 90 percent of their passengers are American; and the statement was made by Mr. Duffy that if we didn't patronize that 90 percent in those superliners, they would go out of business; and that would tend to get rid of the superliners and get the passenger traffic back on our American ships.

Mr. Haag. My own opinion is that if we had two superliners the equal of any in the world, built or building, those superliners would be well patronized by Americans. Americans will take a pride in patronizing their own ships when they are the equal of any in the world. That has been very effectively demonstrated by the patronage of the Manhattan and the Washington.

Jír. SIROVICH. And you would not be opposed, I take it, if Congress would want to subsidize some great merchant marine company to perfect these superliners? You would not say that that should not be done?

Mr. Haag. I would point with great pride to America having two such ships.

Mr. SIROVICH. Because most of the other countries have two of them. Italy has two, Germany has the Bremen and the Europa, France has its Normandy, and England its Queen Mary. There is no reason why we should be in the background, because we could begin to show that we could develop our merchant marine and get the passenger traffic upon our own ships both to and fro.

Mr. Haag. I am sure that the expense for operating those ships, because of the way they would be patronized by our own citizens, that it would help materially to cut down the high cost of operating such ships; and that if the necessary aid is given, I think they could be operated successfully.

The CHAIRMAN. Is Mr. Jenkins here? (No response.) The CHAIRMAN. Are there any other witnesses here to go on now? We want to get through with as much of this preliminary work as we

Can.

STATEMENT OF J. H. McVAY, LINDBERGH APARTMENTS, WASH

INGTON, D. C.

Mr. McVay. I wonder if your committee would be interested in having inserted at this particular point of the hearing the resolutions endorsing an adequate merchant marine. They are resolutions passed by the Military Order of the World War, the Veterans of Foreign Wars, the D. X. R., and various other patriotic societies. I have copies of all of them. If you care to have them inserted, I will bring them tomorrow morning.

The CHAIRMAN. That can be noted to be inserted in the appendix. Without objection that will be done.

Mr. McVay. Thank you.

The CHAIRMAN. Gentlemen, unless there is somebody else prepared to go on, I will have to adjourn the hearing. We want to get through with these outside witnesses, because when we get the bill before us, we will try not to have all these general statements. We will just confine ourselves to the bill.

Mr. Bendix. I would like to answer Mr. Haag's last statement regarding propaganda.

The CHAIRMAN. You may make a very brief statement.

STATEMENT OF V. B. BENDIX, NEW YORK CITY Mr. BENDIX. I subscribe absolutely to the statement of Mr. Haag just put into the record. Great Britain does need a lot of merchant ships as a matter of national defense. Great Britian is an island empire. She needs merchant ships in times of war and merchant ships in times of peace to feed herself.

No such need is required by the American Government, by the United States, because we have a continental territory here that can feed ourselves and the whole world.

Mr. CROWE. I would like to ask the witness one question. When the World War came along, when we entered, we found that we needed ships; and we built them hurriedly, and they were not very good. We might need them again, might we not?

Mr. BENDIX. Yes, sir. I subscribe to the principle of an American merchant marine.

It might be well to mention here that Great Britain had the biggest merchant marine in the world when the war broke out; and she also had to build a lot of ships. Whether you have them or not, you will have to build them.

The CHAIRMAN. All right. Unless there is some one else who is ready to speak, we will adjourn until 10 o'clock tomorrow morning, If anybody wants to be heard, let him give his name to the clerk and we will give him a chance to be heard tomorrow.

(Whereupon, at 4:20 p. m., an adjournment was taken until Thursday, Mar. 21, 1935, at 10 a. m.)

TO DEVELOP AN AMERICAN MERCHANT MARINE

PART I.

MERCHANT MARINE POLICY

THURSDAY, MARCH 21, 1935

HOUSE OF REPRESENTATIVES,
COMMITTEE ON THE MERCHANT MARINÉ AND FISHERIES,

Washington, D.C. The committee met at 10 a. m., Hon. Schuyler O. Bland (chairman) presiding

The CHAIRMAN. I am going to ask Mr. Saugstad to take the stand first this morning. But before I interrogate you, Mr. Saugstad, I want just to make this statement. It has been stated in the Postmaster General's Report for the year 1932, as I recall, that the amount awarded the merchant routes under the contracts following the Jones-White Act, for the fiscal year ending June 30, 1932, was $22,431,791.04, while the cost at poundage rates paid vessels of American registry would have been $3,267,453.33.

I have seen it stated that during the same fiscal year an analysis of postal receipts and expenditures based upon each $100 expended shows that the receipts from second-class mail account for $2.91, while expenditures represented $15.74; or, to put it another way, another tabulation shows that the total revenues from second-class matter were $23,149,305.44, while the expenditures for delivering and handling this same class of matter were $125,293,596.27, or an expense of apportioned expenditures over revenue of $102,144,290.33, which constitutes nothing but a subsidy to the second-class mail interests of the country.

I am making that statement now for the purpose of asking that somebody connected with the Post Office Department verify it and advise this committee what they are paying now as subsidies to second-class mail, or whether it is self-sustaining.

STATEMENT OF J. E. SAUGSTAD, BUREAU OF FOREIGN AND

DOMESTIC COMMERCE, DEPARTMENT OF COMMERCE The CHAIRMAN. Please give your name to the stenographer. Mr. SaugsTAD. J. E. Saugstad. The CHAIRMAN. And what is your position? Mr. SAUGSTAD. Bureau of Foreign and Domestic Commerce, Department of Commerce. The CHAIRMAN. How long have you occupied that position? Mr. SAUGSTAD. I have been with the Bureau of Foreign and Domestic Commerce for 6 years.

The CHAIRMAN. I believe, Mr. Saugstad, you are the author of these documents that are gotten out, entitled “ Shipping and Shipbuilding Subsidies”, “Trade Promotion Series, 129 ”, and some others?

Mr. SAUGSTAD. I am.

The CHAIRMAN. Just for the purpose of the record, I wish you would make at this point a statement of the series in sequence, so that we will know exactly where to turn to bring them down to date.

Mr. SAUGSTAD. Series 129 is the latest series on this subject.
The CHAIRMAN. On the subject of subsidies?

Mr. SAUGSTAD. Subsidies to shipping and shipbuilding. The original series was 119, beginning with a first edition in 1916, and a second edition in 1923. Series 129, Trade Promotion Series, was begun in 1932, since which time it has been issued in annual supplements in order to bring the material up to date.

The CHAIRMAN. In other words, if a man has this volume which was gotten out in 1932, and which is entitled “ Shipping and Ship Building Subsidies”, and then has Trade Promotion Series No. 129

Mr. SAUGSTAD. Trade Promotion Series No. 129 is the latest?
The CHAIRMAN. Oh, this is the latest.
Mr. SAUGSTAD. Yes.

The CHAIRMAN. And then the same series has numbers one, two, and three-well this is one, is it not?

Mr. SAUGSTAD. That is the original; that is the basic report. The supplements are numbered one, for 1932; two, for 1933; and three, a special supplement on ship scrapping, and no. 4 is presently in process for distribution. It has not been released by the Department.

The CHAIRMAN. With those documents one has before him a very complete history of the shipping and shipbuilding subsidies throughout the world? Mr. Saugstad. As far as it is possible to obtain them; yes, sir.

. The CHAIRMAN. Well, without taking up your time with questions on matters which you are probably and I know better advised than I am, I would be glad if you would discuss the question of subsidies throughout the world, taking the nations up in such order as you think proper.

Mr. SAUGSTAD. Mr. Chairman and members of the committee, in making a statement on shipping and shipbuilding subsidies, I appear not as an advocate, but simply as a reporter of facts of law and contract as these may appear in the official records of certain countries which may here come under consideration. I have no opinions and draw no conclusions from these statements, except as the record itself may indicate.

The subject of subsidies is technically, in its simplest form, quite complicated. That complication is multiplied by the number of countries that grant subsidies. The confusion is still enhanced by the question of foreign exchange. I recite these things in order to show the difficulty of laying before the committee any concise picture converted into American dollars so far as amounts of money are concerned.

In approaching the subject, I believe we can best follow it by first considering it by nations; then, if the committee so desires, we may go into the various types of subsidy as these may be comparable by nations. So, to that end, I will try and confine the discussion to two general groupings: First, the group of subsidies

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