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be justified in spending two or three times what this subsidy is in order to give the Navy the support it needs; and if we are justified in spending that much money for a Navy, we are certainly justified in having the auxiliaries necessary to make that Navy effective.

The CHAIRMAN. Furthermore, if the conferences for the limitation of naval armament should be successful, as they have not been heretofore, and reduce the navies of the world, then,correspondingly as the navies are reduced, the merchant marine becomes the navy of the world.

Mr. Newton. Exactly. What is the use of having a Navy unless we give it proper support? If we are justified in times like these in spending a half a billion dollars in building up the Navy in 1 year, certainly a small subsidy to the merchant marine is justified. But, on the other hand, after we have spent all that money for a Navy, the Navy does not yield anything in revenues. It is purely a defensive weapon. Here we build something that is essential in time of war and which in times of peace can be promoting our commerce.

I believe that the people of our interior, when they realize its importance, will spend money more freely for building auxiliary ships to their fullest limit, so that we can press our commerce in times of peace and make our Navy effective in times of war, than they will to build battleships.

The CHAIRMAN. I voted for most of the measures of the A. A. A., the processing tax, and so on.

Mr. MANSFIELD. Mr. Chairman, I think you are like myself; you have voted for everything that has been handed us.

The CHAIRMAN. I will say for the committee that I have inserted in the record a statement that was made by Mr. Brenckman representing the National Grange, who appeared before this committee in 1928 strongly urging a subsidy for Government aid of some kind and producing very important figures in connection with it.

Mr. NEWTON. I think it would be very helpful if we could relieve the interior on the idea that a merchant marine is only helpful to the seaboard.

The CHAIRMAN. Speaking of these farm subsidies, according to an article appearing in the New York Times for Sunday, December 31, 1933, based upon a survey made by the American Economics Institute, 307 Fifth Avenue, New York City, the Government is committed to pay a total of $1,250,000,000 to about 4,000,000 farmers in bonuses and subsidies before February 1935, the survey said, adding that a proposed $200,000,000 subsidy for beef and dairy farmers might bring the total close to $1,500,000,000.

Asserting that payments already authorized called for the distribution of more than $300 per farmer, the institute said this amount was probably the biggest subsidy any Government has ever offered to such a small group of citi. zens, and pointed out that the sums must be paid by taxation.

Disscussing the Government's relief program in detail, the survey declared chat about 570,000 farmers, or a total of 1,208,000 who grow wheat, had agreed to cut their 1934 acreage at least 15 percent under a system by which the Gorernment will rent land taken out of production,

"Payments on this account totaled $9,000,000 by December 15 and will reach $102,000,000 during the next year, an average of $179 for each farmer who joins the movement", the survey said.

About half of the 2,000,000 cotton farmers in the country have been induced to cut their acreage by an additional 35 to 45 percent in 1934 in return for subsi. dies, the survey declared. Under various forms of payment from the Government the 1,000,000 cotton farmers who cut their output will receive about $409,000,000, or more than $400 per farmer, the Institute estimated.

The corn and hog producers of about 150 counties in the Middle West will receive payments and loans of about $550,000,000, or an average of $315 per farmer, the survey continued. The loan feature of this form of relief, the survey said, was growing rapidly and might be expected to reach $1,000,000 a day in the near future. The estimated crop reduction in corn in 1934 was put at 20,000,000 acres and the reduction in the number of hogs at about 25,000,000 head.

"About 450,000 tobacco growers in five Southeastern States will get about $40,000 in direct subsidies from the Government, in addition to aid through price differentials and other devices ", the survey said.

The survey closed with the prediction that the $200,000,000 expenditure contemplated for the relief of beef and dairy farmers might be found too low and that pressure from the beef and dairy interests might ultimately increase the amount to twice as much.

That statement I will insert in the record, with the further statement that I have no objection to those subsidies if absolutely necessary, but that shows that we are subsidizing various other interests, and yet the question comes whether we shall subsidize this business, which is more competitive with foreign countries than any others.

Mr. NEWTON. What appeals to me is that here is the one place where the subsidy is absolutely essential to the existence of the merchant marine. We pour subsidies into other places amounting to billions, and we get economical and parsimonious when we strike the one thing where the continuation of the existence of the commercial activity depends on it. I think the country generally does not realize how important it is.

The CHAIRMAN. After all, these are but the different delivery wagons

Mr. NEWTON. That is right.

The CHAIRMAN. Of industry and of agriculture and of commerce in this country.

Mr. NEWTON. Absolutely.

Mr. CULKIN. Sometimes the patient dies under some form of these subsidies, does he not, Mr. Newton?

Mr. NEWTON. I think that the farmers that get subsidies in these various forms realize fully how essential it is, but I do not think they realize the full import of the need for this subsidy. However, I remember the day when

I was in the campaign trying to overcome the handicap about the Panama Canal in my section. I realized that Missouri had lost three seats in Congress in 2 years and Kansas had lost 2, and that Iowa had lost 2, and that we had lost 17 seats in that section—when I saw industries moving out of our Mississippi Valley to the eastern seaboard in order to enable themselves to sell their commodities on the western seaboard and even on the Gulf Coast–I went to work to try to do something to overcome that handicap, and I thought that low-cost water service would be the only way we could do it, and I never realized until we began to unload our goods at the Gulf that we had not gotten anywhere when we got them there, that we had to have ships that would be interested in carrying those goods to the markets of Central and South America, and to other foreign ports as well as the East and West of the United States before we get the full benefit out of the great expenditure we had made to open those channels in the valley.

I think the farmer when he realizes that when he gets to the coast he has not gotten anywhere unless he has a ship that is interested in his goods and that will carry them to the place where there is a market, will then support a merchant marine with all his might,

The CHAIRMAN. I think that is absolutely desirable. But more desirable even than that is that the beneficiaries of these subsidies shall realize that they are not constituted for their private gain, and that these abuses which have existed in the last few years must stop.

Mr. NEWTON. Mr. Chairman, I think that if those abuses were removed, the problem of our subsidies would disappear. I do not think that they are all violating; I do not think they are all unfaithful; but the few bad examples have made a bad impression.

The CHAIRMAN. That is undoubtedly true; they are not all guilty.

Mr. NEWTON. But the few examples of the abuse of the subsidy has made the people sick and disgusted with the whole proposition. Of course, that is a matter of administration, but if we are going to have a merchant marine we must not only give Government aid but it must be administered so that the public has confidence in that administration.

Mr. Culkin. And it must have an adequate and trained personnel.

Mr. NEWTON. Absolutely. We do not want to take the sailors on our merchant ships and pay them our money, and then when the time comes when we need them as transport auxiliaries for the Navy they are not American citizens.

The CHAIRMAN. And they must realize that the funds that are being received by the shipowners are accountable to the United States in their expenditures, and the closest scrutiny will be had of those expenses.

Mr. NEWTON. And we wonder sometimes in the interior whether the Government, in the use of those moneys, scrutinize closely enough the necessities of having ships that will be of real service as auxiliaries, because one of the purposes of giving financial aid to these lines is that they shall be auxiliaries, and if you give them to lines that are operating only for the profit they can get out of it and are not building up a personnel and are not building up a type of ship that will be useful when an emergency comes, then we are wasting our money.

The CHAIRMAN. Thank you very much, Mr. Newton.

Any other witnesses to appear this afternoon? Because when we close this afternoon we will probably close subject to call of the chair, until we have the merchant-marine bill ready. If there is anyone else who wants to appear now, we will be glad to hear him. When we get the bill ready we will want to have hearings in connection with the bill.

If there is no one else who wishes to be heard, we will stand adjourned subject to the call of the chair.

(Whereupon, at 3:15 p. m., the committee adjourned, subject to the call of the chairman.)

PART II. MERCHANT MARINE ACT, 1935

Hearings on H. R. 7521

135956-35-25

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