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REESTABLISHMENT OF FLEET

Thanks to the energy with which the Soviet Government pursued an intensive construction policy in this sphere, some of the leeway has been made up. Under the first Five-Year Plan the capital investments in this industry exceeded the original estimates and 1,233 million rubles were spent on river- and ocean-going vessels. The number of ocean-going vessels has increased by 120, while larger additions were made to the river fleet. The increase in the cargo turnover at the ports during the operation of the first plan was 92 percent, the total in 1932 being 49.7 million tons. In the short period of 4 years the mercantile marine almost doubled the quantity of goods carried in Soviet vessels—from 8 million tons in 1928 to 15 million tons in 1932.

Some idea of the general progress in this direction can be seen from the following table:

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As will be seen, between 1928 and 1933 the Soviet merchant fleet increased from 222 vessels to 352 vessels, or an increase by nearly 60 percent in number while the tonnage increased by nearly 160 percent. Recent years have also witnessed tremendous achievements in respect of the construction of new shipbuilding yards, and the reequipment and reconstruction of wharves. One of the great achievements of recent times is the construction of the Baltic White Sea Canal. Work is also being carried out to connect Moscow and Leningrad with the Volga River, which when completed will revolutionize the internal transport system. Noteworthy achievements have also been recorded in the navigation of the Arctic.

NEED FOR FURTHER DEVELOPMENT

Though enormous progress has been made in respect of improving Soviet merchant shipping, there still remain a number of shortcomings that require remedying. Undoubtedly the chief of these is the fact that the existing merchant fleet is incapable of meeting the growing requirements of sea and river transport.

The Soviet mercantile marine at present comprises an insignificant proportion of the world's total tonnage.

The Soviet merchant fleet at present carries only a small part of the total sea cargoes. Last year, for instance, it carried only about 20 percent of the total cargo turnover, the remainder being carried in vessels chartered in foreign countries.

It is considered that the most important immediate task is to accelerate the carrying out of the second 5-year plan decisions in respect of the mercantile marine. In the materials prepared by the state planning commission it is proposed during the period of the second plan to increase the cargo-carrying capacity of the existing merchant fleet by 74 percent. This, however, will mean that a considerable proportion of the Soveit foreign trade will still be carried in foreign bottoms.

At the present time there is a particular shortage of tonnage for dealing with foreign trade. With regard to the share of sea transport in the foreign trade, the following table showing exports and imports in the last 2 years in thousand tons is instructive:

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As can be seen from the above table, transport by sea routes is by far the more extensive, while transport over land routes takes quite a small part of the total cargo turnover.

To meet effectively the existing requirements, it will be necessary completely to transform the work in connection with shipbuilding. The present shipbuilding centers are inadequate in many respects. The following table shows the construction of tonnage in the shipbuilding yards of the People's Commissariat for Heavy Industry:

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In connection with the building up of a powerful merchant fleet, the possibilities of purchasing foreign vessels are not overlooked. The Soviet authorities have purchased a number of vessels abroad in the last few years and have repeatedly expressed their willingness to place orders for ships in foreign shipbuilding yards provided that satisfactory prices and credit conditions can be arranged.

Official sources show the following comparative progress figures for 1930 and 1934:

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Expenditures on contract services in Canada have doubled since 1930 because of the subsidies granted to services between Canada and the United Kingdom and between Canada, Japan, and China. The development is shown in the following table:

Expenditures by Canadian Government for subsidized services, 1929–30 to 1934-35

Fiscal year

1

Total appropria

Canada and West Indies or

Canada
Canada and New Canada, Canada
and South Zealand or China, and and Great
Africa Australia, Japan Britain

Local and all others

tions

South America, or both

or both

1929-30. 1930-31. 1931-32. 1932-33. 1933-34. 1934-35. 1935-36.

1, 176, 642
1, 322, 745
2,998, 724
2,081, 818
2, 242, 930
2, 282, 636
2, 312, 258

156, 000
167, 100
145, 900
37, 350
37, 350
36,000
36,000

125,000
7239, 416
150,000
112, 500
1212, 500
196, 500
196, 500

184, 700 192, 400 141, 000 196, 000 318, 800 318, 800

988, 000 659, 000 659, 000 690, 000 690, 000

802, 000 535,000 535, 000 500,000 500,000

895, 642 740, 529 720, 424 596, 968 603, 080 541, 336 570, 959

Fiscal year ended Mar. 31. * Includes East Africa.

In addition to its trans-Atlantic and trans-Pacific contracts. the Canadian Pacific Railway Co. acquired a half interest in the two vessels operated by the Union Steamship Co. between New Zealand, Australia, and Canada, now operating as the Canadian Australasian Line, Ltd. The line is under a contract with the Canadian Government, which for 1934–35 amounted to $118,800, in addition to a supplementary contract with the Fiji Government for an annual subsidy of £5,000 in consideration of calls at Suva.

CANADIAN NATIONAL (WEST INDIES) STEAMSHIPS, LTD. The Canadian National (West Indies) Steamships, Ltd., operating services to the West Indies under the West Indies trade agreement of 1926 has shown the following operations results, beginning with the first annual report for the year ended December 31, 1929:

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In 1933, the coastwise law of Canada was amended to read (ch. 52, pp. 23–24, Geo. V):

"No goods shall be transported by water or by land and water, from one place in Canada to another place in Canada, either directly or by way of a foreign port, or for any part of the transportation, in any ship other than a British ship.”

Provision is made that this amendment shall not come into operation until a date to be fixed by the Governor-in-Council and proclaimed in the Canada Gazette. No such proclamation had been made late in 1934.1

Mr. Culkin. Mr. Chairman, might we have some brief statement, in connection with these various countries, as to the requirements regarding personnel? Can you put that in?

Mr. SAUGSTAD. It would be impossible, Mr. Congressman, for me to put that in, because I am not competent to deal with the question of personnel, although I would be very glad to submit whatever information we have

Mr. Culkin. Yes, so far as you can just what they do about personnel, as to requiring nationals and that sort of thing,

Mr. Saugstad. I mean I will be very glad to submit any information I have to whoever is competent to testify on personnel. I am not.

The CHAIRMAN. You can put in what you have or whatever you can get, but much of that will come in during our personnel hearings which we will hold a little later.

Mr. REBAUT. As between England and Japan, which nation seems to be striving for the greatest speed in vessels?

Mr. SAUGSTAD. Well, I should say there is hardly any question but that the results of the new Japanese construction program sets an entirely new mark for cargo ships in the trades of the world. The British Government, in proposing the scrap-and-build plan under the tramp ship subsidy bill, took the position that it would rather see the industry scrap old ships and build new ones of better caliber, than to subsidize and place in commission ships that were old and that have poor competitive qualities, which is an indication of the direction that the British tramp-ship program takes.

The CHAIRMAN. I might say in that connection that same contention was made many years ago in this committee, that we would be better off if we scrapped these old ships built during the war, of slow speed, and the construction of those ships not really being for commercial purposes. i Department of Overseas Trade, Economic Conditions in Canada, 1933-34, p. 127.

Mr. WEARIN. Is there a table in existence or could one be prepared that would indicate the comparative subsidies paid by various countries that we have considered here?

The CHAIRMAN. I really doubt that you could have a table prepared, other than the statements that Mr. Saugstad has been making.

Mr. SAUGSTAD. I have tried repeatedly to tabulate amounts of subsidies, but the complications of exchange, the shifts in programs each year, and the fact we only have parts of programs continuing from year to year, make it practically impossible or would place us in a position of pegging a figure which might be very difficult to sustain under altered conditions. I have tried to do it repeatedly and have tried to do it before this committee, but it is impracticable.

The CHAIRMAN. I will say that I agree fully with the witness.

Mr. Saugstad. I think it is impossible and I think it has very little bearing on the problem.

Mr. HAMLIN. I suppose this shows my ignorance on the subject, but may I ask is there any international law which keeps in abeyance the power of any nation to build its merchant marine or to subsidize its merchant marine? Can any nation go ahead and do in that line as it sees fit, or is there any international law governing that, which they have agreed to?

Mr. SAUGSTAD. You mean an international agreement on subsidies?

Mr. HAMLIN. Yes.
Mr. SAUGSTAD. No, sir.

The CHAIRMAN. There was a conference held this last January, was there not, but it did not get anywhere?

Mr. SAUGSTAD. There have been two conferences, one the London Economic Conference in 1933, and the second one which was held in London in January of this year. There have been no results so far as subsidies are concerned.

The CHAIRMAN. And, whenever we have gone into a conference, we have usually gotten the short end of it, too, have we not?

Mr. RABAUT. They say we have never won a conference.
The CHAIRMAN. The other fellows are better diplomats than we are.

Mr. SIROVICH. I was absent at the beginning of your statement, and can you recapitulate and give me the high spots of the construction program of Japan.

The CHAIRMAN. I will ask that that be done briefly, as it is very hard to carry on the hearings just for the benefit of one member.

Mr. Sirovich. I think the gentleman can give me the high spots in just a minute or two.

The CHAIRMAN. Do it very briefly, because it just takes up the time of eight members of the committee for the benefit of one.

Mr. SIROVICH. Mr. Chairman, I sat here through the entire hearings

The CHAIRMAN. I know you sat here yesterday. Mr. SAUGSTAD. The program, briefly, is this: It is effective from October 1932 until the end of this month-March.

Four hundred thousand gross tons of old tonnage are to be scrapped; 200,000 tons are to be built.

The total subsidy for the entire program is 11,000,000 yen and it ranges from 45 yen to 54 yen per gross ton to the owner who builds the new ship.

The principal feature of it is the production of a very high class, fine, speedy group of cargo ships.

That is the net result.
Mr. SIROVICH. And that is to be done over a period of 2 years?
Mr. SAUGSTAD. It has already been completed.

SUMMARY AND GENERAL STATEMENT Now, Mr. Chairman and members of the committee, in answer to your suggestion about a general statement on the subject, I might say that in the discussions of the past few days on the subject I have attempted to deal with the more direct aspects of shipping and shipbuilding subsidies as now practiced in foreign countries, for whatever bearing this information may have on policies now under consideration by the Government of the United States. The message of the President and the accompanying reports outline the more obvious problems for immediate consideration. Little or no attempt has been made to touch upon the complicated subject of preferential treatment, trade monopolies, discriminatory practices, and other indirect measures of aid to national shipping.

Indirect measures appear to have less bearing on the immediate problem. We have not been able to digest and properly to prepare all available material on this subject. This I regret, but circumstances have been such that it has been impossible to properly contribute that information in effective manner at this time.

When I took the witness stand, I stated I appeared merely as a reporter and not as an advocate. I am grateful to the chairman for his support and to the committee for its patience in permitting me to maintain this status. I am impressed with the interest in the subject expressed by members of this committee and I have noted with interest the direction which the discussion has taken at various points. I propose to make some general observations in regard to the subject as a whole. I do so merely as a servant of this Government, past whose post of duty there flows a continual picture of the sea trades of the world, which has the obvious consequence of leaving certain impressions on the observer. Any observations on my part are the observations of an individual and are in the nature of a personal statement, which may be helpful to this committee.

The statement refers briefly to the following: (1) Facilities offered by this Government in providing information on the subject of subsidies; (2) current aspects of sea personnel policy; (3) weaknesses and abuse in subsidy policy; (4) current trend of corrective measures in maritime nations.

(1) INFORMATION ON SUBSIDIES This Government has been generous in providing means for developing information on the subject of world shipping subsidies. I would like to commend the foreign officers of the Department of State and the Department of Commerce, who deal with this, and with many other complicated technical subjects. Particularly do I commend to the committee the Department of Commerce for providing facilities which have permitted the work to be carried on. For 20 years, the Bureau of Foreign and Domestic Commerce has provided these facilities as an academic contribution, at first, through its Finance and Investment Division and more recently through its Transportation Division. During the past year, the Shipping Board Bureau, which

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