During the above years cadets were graduated as follows:

With the States interested conducting the schools, the cost to the Federal Government must be less than if the Government were to take over the entire work of educating young men for the merchant marine. Education has been traditionally a function of the States. The Federal Government has educated for the national defense, and its wards. If the Federal Government undertakes to educate for the shipping industry, it will probably not be long before other industries demand Federal schools. There are many land-grant colleges throughout the country. Support of State nautical schools is in a way complementary to Federal support of such colleges.

If a National Merchant Marine Academy were to be established students would be admitted from all parts of the country. It is doubtful that those from inland States would continue to follow the sea after graduation. Graduates can hardly be assured of jobs upon graduation as are graduates of Annapolis and the Coast Guard Academy. It is believed that they would soon drift back home. Men whose homes are near the ports that their ships touch are the ones more likely to continue to follow the sea.

The Massachusetts Nautical School is well regarded in the State. The State legislature provides generously for its operation. Applicants for training exceed vacancies three to five times. All sections of the Commonwealth are represented in the school's enrollment. During the past year 78 towns and cities were represented by students in attendance. Cadets enter the school by competitive examination. With such excess of candidates over vacancies to be filled there is good selection. The merchant marine cannot afford to lose such material.

Cadets live on board the Nantucket throughout the course under ship routine and discipline. An intensive school schedule, both theoretical and practical, is conducted during the winter months, from November 1 to April 1. The ship cruises from early in May till late in September. School is conducted during the cruise as weather and ship's work permits. About one-third of the voyage is made under sail alone, and even when steaming, sail is used much of the time. Pulling boats are used almost entirely. The aim of the school is to prepare young men to be seamen, firemen, and oilers, as well as officers. The success of the school is attested by the fact that thoughout the depression graduates have consistently gotten jobs. Practically all have been placed within 2 months of graduation.

Whatever the committee may recommend with regard to the proposed National Merchant Marine Academy, it is hoped that it will in no way jeopardize the Massachusetts Nautical School, which has been

successfully operating for 42 years, and has supplied the Government with many ship officers during war.

I am authorized by the commissioners of the Massachusetts Nautical School to speak for them in this matter.

I am submitting to the committee with this letter a catalog of the Massachusetts Nautical School for the year 1934-35, and an annual report of the school for the year 1934.

The CHAIRMAN. Thank you very much.

STATEMENT OF R. H. HORTON, MANAGER OF THE PORT OF PHILADELPHIA OCEAN TRAFFIC BUREAU

Mr. HORTON. My name is R. H. Horton. I am the manager of the Port of Philadelphia Ocean Traffic Bureau, which is a civic body composed of representatives of numerous other trade and civic bodies in the city, for the purpose of giving a unified opinion and action concerning such matters as affected the port.

When I testified before the Senate committee I gave my personal opinion in regard to title VII of the act. Since that time the Traffic World has published an editorial opinion, and it is a very important periodical. It is perhaps the outstanding publication in regard to rates, services, and practices by carriers. I should like to read that editorial comment into the record:

We think the authors of the ship subsidy-merchant marine bill introduced in Congress by Senator Copeland, of New York, and Representative Bland, of Virginia, have made a mistake in providing for the creation of a body-the United States Maritime Authority-to administer the proposed subsidies and at the same time to exercise the regulatory powers conferred by the shipping act, the marine acts, and the Intercoastal Shipping Act of 1933.

The Government body charged with the duty of finding how much the various subsidies provided for should be and of making contracts under the subsidy and loan provisions should have nothing to do with regulation of rates and practices. It is not sound to mix promotional and regulatory activities. The CopelandBland bill obviously contemplates that the Maritime Authority shall do all it can to promote the development of an American merchant marine. It would be the Government agency through which various forms of Federal aid would be extended to the ocean shipping industry; it could not at the same time possess that impartiality that should be found without question in a body that is to regulate.

It seems to us there should be no question as to what the proper disposition of this issue should be. One important reason why the Shipping Board did not command the respect it might have had was that it was a shipowner, a promotional institution, and a regulating agency. For years, when it controlled the largest single merchant fleet in the world, it paid little or no attention to its regulatory duties. Only recently have the provisions of law relating to regulation of ocean shipping been receiving the attention they should receive-and the present set-up is not a desirable one. The abolition of the Shipping Board by Executive order of the President and its transfer to the Department of Commerce has not changed the fundamental situation. The Department of Commerce is simply carrying on the duties of the Shipping Board, though it is paying more attention to the regulatory side of its work than did the Shipping Board. Administration of the subsidies proposed for the American merchant marine, it seems to us, could well be left to the Department of Commerce. That Department could also carry out the promotional activities directed by law and administer the navigation laws, as it does now. However, it is immaterial, we think, where this phase of the work is carried on, if provision is made for regulation by an impartial, competent agency, not charged with financial or promotional activities. There might be a separate agency created or the Eastman proposal for a water division in a reorganized Interstate Commerce Commission might be adopted.

If there is to be new shipping legislation enacted at this session of Congress, we hope the mistake will not be made of creating such a body, with the duties outlined, as proposed in the Copeland-Bland bill. Such a body would be seriously handicapped at the start and it probably would wind up just as did the Shipping Board-without a tear being shed for it when the ax fell.

The CHAIRMAN. Mr. Horton, this bill undertakes to separate administrative functions from the quasi-judicial and regulatory functions, because the old Shipping Board was swamped in administrative functions.

Mr. HORTON. I am sorry, but it would appear to me that title VII, regulation of rates and practices, was in the hands of the Authority, and they are the ones that grant the subsidies.

The CHAIRMAN. Yes; that is true.

Mr. HORTON. That is the point that we make. Let us say the Board sits today in conference with shipowners or operators, and they determine that they will promote a line to a certain district, and they grant it subsidies and loans and help it to build ships. They are interested in that traffic, and they are interested in that trade. The next day they turn around and, with a shipper as a litigant and that same company as a litigant, they sit as a judge, when yesterday they were promoting that company. It is a difficult situation for any one man to undertake with clear impartiality, which I think is difficult in any case. It takes a particular type of mind.

Mr. WEARIN. In line with that thought, I presume you are acquainted with the fact that the President recommended in his message that the quasi-judicial and the quasi-legislative duties of the United States Shipping Board be transferred to the Interstate Commerce Commission?

Mr. HORTON. I am aware of that; yes.

The CHAIRMAN. Do you think the Interstate Commerce Commission is a body to be properly vested with these rate and regulatory powers over water carriers?

Mr. HORTON. I think it could be.

The CHAIRMAN. I do not agree with you-at present, anyway. Mr. HORTON. There is a lot of disagreement on that point.

The CHAIRMAN. I will still be open to conviction, but at the present time I do not agree with you.

Mr. HORTON. I will tell you on what I base that, Mr. Chairman. It is this: You have a group of men there that are doing a very splendid job for the railroads, a regulatory job.

The CHAIRMAN. Some people think they are almost regulating them out of existence.

Mr. HORTON. There is something to be said on both sides. But regulation is a job in itself. I think a group of men can be brought together to regulate water carriers, but whether they go under the banner of the Interstate Commerce Commission or not I do not think makes much difference.

The CHAIRMAN. When you deal with foreign commerce and foreign transportation, they know absolutely nothing about the competitive conditions among water carriers.

Mr. HORTON. I think that is true. I think they ought to be distinctly separate, but with a liaison machinery such as you have set up in here with this interrelation board, which, though I am not

ready to talk about the water carriers' bill, appears to function in that case through the control board.

Mr. WEARIN. If this authority were to be vested in the Interstate Commerce Commission, in all probability in the future a portion of that Commission would devote its time to this particular problem. Mr. HORTON. That is the way I view it.

The CHAIRMAN. Yes; and be outvoted by the rest of the Com

mission.

Mr. HORTON. As I understood it, each section made its own decision, then the control group had 1 truck man, 1 air man, 1 water man, and 1 rail man.

The CHAIRMAN. That is three against one.

Mr. HORTON. I do not like that.

The CHAIRMAN. Then another organization was to be set up, in which Mr. Eastman was to be the man at the top, the dictator.

Mr. HORTON. I am really not prepared to go into the detail of that. The CHAIRMAN. Nor am I.

Mr. HORTON. The only point I make here is that I think the regulation should be separate from the promotional activity.

There is one other thing, in section 506 (b). I appeared at your hearings previous to the introduction of this bill. I think some of the members will remember that I mentioned the fact that the bill would be so drafted that it would permit Philadelphia to obtain direct services which we are now prepared to promote; 506 (b) reads:

No such contract shall be made with respect to a vessel to be operated on a service, route, or line served by citizens of the United States unless the Authority shall determine that the service already provided upon such route or line is inadequate, and that in the public interest additional vessels shall be operated thereon.

I will cite an example to make it a little more brief. Let us take the service in South Africa. I think there are four of five British lines operating there and one American line. There is a sailing about once a week by the British lines, and an American ship sails about once a month. There are plenty of ships to carry all the traffic that is offered.

The CHAIRMAN. Your objection to that is that it ought to show that there is not an adequate service of ships under the American flag?

Mr. HORTON. Under the American flag and relate back to the 50percent provision.

The CHAIRMAN. I agree with you. That was intended at the time, and I think there is a doubt about the expression. I thought so when you testified before the Senate committee the other day.

Mr. HORTON. Thank you, sir.

The CHAIRMAN. Your point is well taken on that.

Thank you very much, Mr. Horton.

STATEMENT OF FRED B. RYONS, CHAIRMAN OF THE LEGISLATIVE COMMITTEE OF THE MILITARY ORDER OF THE WORLD WAR

Mr. RYONS. My name is Lt. Col. Fred B. Ryons. I am chairman of the legislative committee of the Military Order of the World War, an organization composed of officers who served with the Allies dur

ing the World War. We are here to try to be helpful in the establishment of a merchant marine.

Under section 801, as I testified before the Senate committee, we would like to have the wording of this section changed to read:

All vessels operated under any contract made under and pursuant to this act shall be manned in their deck and engine rooms and steward department exclusively by citizens of the United States, native born or completely naturalized. Section 802 has our entire endorsement. We believe that the establishment of an academy is necessary and desirable. We believe it should be under the Navy Department; that the training should be carried on along the applicatory system-that is, including the theoretical training and the practical training on board ship at the same time. We commend the very good work that is being done by the several States in this line.

On page 49, under "Repeals ", we believe that a provision should be added to that section incorporating the language contained in H. R. 67, known as the "Bland bill ", which has passed the House.

Our organization believes that a merchant marine is absolutely necessary for the proper functioning of the Navy.

The CHAIRMAN. The bill to which you there refer, H. R. 67, is a bill repealing the language of the immigration and naturalization law which permitted 3-year-certificate men to have the benefit of being considered American seamen.

Mr. RYONS. Yes, sir.

The CHAIRMAN. The bill has passed the House half a dozen times and is now pending in the Senate.

Mr. RYONS. It is necessary in order to make this bill complete in its objective, which the committee that prepared this bill intended it should be, that these ships be owned and manned by Americans, inasmuch as the Navy depends very largely on the service of these ships of the merchant marine to supply it and tend it in case of an

emergency.

Mr. WEARIN. Would you say exclusively?

Mr. RYONS. Exclusively.

The thought is that in giving this subsidy to the shipping companies we are doing something that is absolutely necessary for their continuation at the present time. To visualize the merchant marine of the future, such as we all desire, we would add to that the very necessary element of tonnage. Tonnage is the backbone of any successful merchant marine.

Our country has grown to an extent where great distances enter into all of our calculations and considerations. During the period of the clipper ship, when the country was limited to a small strip of land along the sea coast, the question of distance did not enter into the consideration and our clipper ship was operated successfully.

Today, as you have heard explained, the development of coal, the development of iron, the development of cotton in our great Mississippi Valley, the development of wheat and agricultural products, all come into the picture.

If it is necessary in order to make the operation of our merchant marine a success, it may be practical and desirable that the Govern