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ment absorb the freight rate on all the commodities produced in this country, or produced and processed in this country, from their point of origin to the seacoast, on the proviso that they be shipped abroad in American bottoms.

That is a subsidy which will function in this way: It will encourage the agricultural element of the country to produce more; it will produce freight for the railroads to carry; it will create a buying power in the agricultural elements which will put the factories to work and will solve the unemployment problem in large measure.

I figured out, roughly, that to start it would take about $225,000,000 It will save the railroads from going into bankruptcy. It will rehabilitate the farmers and the small producers that are located a large distance from the seacoast. It will enable all of those industries to export their surpluses. And the greater the amount is, of course, the greater amount of freight rate that would have to be absorbed by the Federal Government. But the money will be returned to the Federal Government in taxes which these people will be able to pay, which they are not able to pay today.

So in the last anlysis it will not cost the Government anything; it will rehabilitate the agricultural industries in the interior; it will give tonnage to the railroads; it will start the factories to working; it will reduce unemployment; and it will guarantee to the merchant marine, the American bottoms, the tonnage which is absolutely essential to their final success.

I just offer this as a thought: It occurs to me that the problem is not a question of subsidy. That will serve the immediate necessities, but the immediate problem that you must solve is the problem of producing tonnage for these American bottoms to carry abroad.

The CHAIRMAN. There is a lower freight rate on shipments to go abroad than on domestic shipments, is there not? Mr. Ryons. Yes, sir; there is at the present time.

The CHAIRMAN. But in that export freight rate there is no distinction made as between ultimate shipments in American and in foreign bottoms?

Mr. Ryons. That is the thought.

The CHAIRMAN. There is legislation on the statute books under which a benefit could be given to American shipping; but that, too, is one of the measures which have not been carried into effect.

Mr. Ryons. As I visualize this, if you are going to put the mer. chant marine across as you and Dr. Sirovich this morning expressed your desire to do, it is necessary to have every State in the Union behind it, to have the entire country behind the movement. Then we will get a merchant marine such as we all desire and such as I fear the shipping interests have never visualized. We can get to that point by making it put dollars in the pockets of the men in the interior, the small manufacturer, the producer of cotton, and the producer of other commodities. Then you will get the country behind it, and then you will get a merchant marine, and you will have tonnage for these ships to carry, and your subsidy will not appear to be the all-important problem it appears to be at the present time at these hearings.

The CHAIRMAN. Thank you very much.

STATEMENT OF GEORGE A. MARR, VICE PRESIDENT, LAKE

CARRIERS' ASSOCIATION

Mr. Marr. The declaration of policy stated in section 1 is to provide a merchant marine that shall

First. Be sufficient to carry at least one-half of the foreign commerce and to provide shipping service on all routes essential for maintaining the flow of national commerce at all times.

We have enough ships on the Great Lakes to handle all of the foreign commerce and more, too, even without sharing it with the ships of Canadian registry. We also have adequate shipping service on all routes on the Lakes now established or that can be established at any time in the future.

Second. Under treaty with Great Britain, neither country may maintain a navy on the Lakes; therefore we need no naval auxiliary, but we have it if a naval auxiliary is required.

Third. The United States fleet, which is the major fleet on the Lakes, is owned and operated by citizens of the United States and, so far as I know, has never called upon the Government for a loan and does not, and cannot under the provisions of the bill, receive any benefits from mail contracts.

Fourth. Ship construction and port facilities have gone hand in hand in providing the most up-to-date and most expeditious shipping facilities in the world; and the ships are modernly equipped, safe as human ingenuity can make them, of types best suited to the trades. and manned by skilled officers and seamen; and the percentage of eitizen personnel naturally is high, for geographical reasons.

The benefits to the merchant marine, as proposed in title III, apply only to ocean-mail routes and ocean-mail contracts; and those of title V are extended to vessels engaged in the foreign commerce. The ships on the Great Lakes operate to a comparatively small extent in Canadian trade, many of them not at all. We have no problems that call for the benefits, the investigation, the regimentation, nor the directive features of this bill.

The Shipping Act of 1916, the Merchant Marine Act of 1920, the Merchant Marine Act of 1928 are not applicable to the Great Lakes trade except as to common carriers, and the Intercoastal Act of 1933 is, of course, not applicable at all

. The provisions of titles VI and VII are therefore not applicable to the bulk freight trades of the Great Lakes, except as to section 702, relating to the interrelation of rail and water traffic. In the bulk movements of iron ore, grain, and limestone, there is no community of interest between the rails and the ships.

Under these circumstances we believe that it is not the intention of the President, nor of the Congress, nor of the authors of the bill to provide for shipping on the Great Lakes the benefits desired to be provided for the merchant marine, and that therefore the Great Lakes should not be subject to the inhibitions and exactions imposed by the bill.

Title VIII of the bill proposes certain legislation with reference to seamen. While we concur in principle with some of the provisions of title VIII, we recognize in some of them heavy and, we believe, unwise burdens upon American shipping.

The requirements of section 802 I believe to be impracticable and obstructive. The shipping interests are as anxious as the Government to have able seamen in fact as well as in name. The officers of the ships are more interested than anyone else in having real, efficient, trained, able seamen; but in these days of steam and motor vessels, seamanship is not what it was in the days of sail, and the lack of leadership in the Morro Castle should not be laid at the door of the sailors. Whether they were trained seamen or not, the testimony, as I read it, pointed the finger of blame to the officers rather than to the sailors.

There is so little of real seamanship required on a Great Lakes steam vessel that any officer of a lake ship could teach any average youth, in 3 months aboard a ship, anything he needs to know.

The present requirement of 18 months on deck as a prerequisite for able seaman's certificate is in itself a serious handicap in attracting to ships the kind of material desired and is the real reason for so much fraud in the procuring of certificates. To serve 18 months on deck means to serve three seasons on the Lakes. Now, to add the further requirement that with all this training in practice a seaman must go to school in order to obtain an able seaman's rating and certificate is not helping us to obtain real seaman but is putting a stumbling block in the way of our doing so. If this section is permitted to remain in the bill, then the law requiring 18 months' service as ordinary seaman should be repealed, as this provision makes the school certificate and not the man's experience the prerequisite for an able seaman's certificate.

Section 805 does not fit in with the operations of shipping on the Great Lakes. As stated to this committee last week, we have no commissioners on the Lakes and no United States consuls at Canadian ports, so the requirements of the bill as written cannot be carried out, and due to the rapid turn-around of our ships in port, it is not possible to pay off, sign on, make the elaborate entries contemplated in the discharge book before a commissioner or any other person designated to act as a commissioner.

We favor the use of discharge books, and there would be no difficulty in the Secretary of Commerce finding a suitable agency to issue books to the lake sailors, but the delay to shipping if the hiring, discharging, and recording are to be done in the presence of any shore agency would result in the serious disorganization of the present efficient lake operation.

This question of commissioners on the Lakes has been under discussion for a number of years, and no man has as yet been able to estimate with any assurance of accuracy what the cost of delays would be if the hiring, discharging, and recording were done in the presence of commissioners. The estimates have been mere guesses, but the most frequent guess has been that it would slow up operations one-third. On that basis I make the following rough calculation on the basis of a normal season's movement of the four principal commodities : Iron ore. 50,000,000 tons, at 70 cents..

$35,000,000 Coal, 35,000,000 tons, at 50 cents.

17,500,000 Grain, 350,000,000 bushels, at 112 cents.

5, 250, 000 Stone, 12,000,000 tons, at 60 cents.

7, 200,000

Total freight

64, 950,000

The loss of one-third operation would be over $20,000,000, but assuming a slowing up of only one-tenth it would mean a cost to the bulk-freight ships of six and one-half million dollars a year, which, I am quite sure, is more than their net earnings in any normal year, let alone the recent period when they have generally operated in the red.

I have attended all of the Shipping Board conferences on the merchant marine and have heard many distinguished speakers, including yourself, Mr. Chairman, make stirring appeals for the rehabilitation of our merchant marine. I have read books, magazine articles, editorials, and the utterances of many able leaders from the President down on the same subject. But what does Congress do in support of all these pleas for a restored merchant marine?

I have in my files up to date between 125 and 150 bills introduced in this Congress which directly or indirectly affect the merchant marine. Every one of these bills, if enacted, would place a burden on the shipping business. All place on this trade an expense for additional crews, for greater regulation, for added construction costs, for added equipment, for delays in operation, for taxation, and for dozens of other things. There is but one bill in the whole 125 that is designed to aid or favor shipping in any way, and that is the bill under discussion today, and even that would place on shipping some burdens that are impracticable, unnecessary, and unwise.

I give to every Congressman credit for honesty of purpose in the presentation of bills which he is sponsoring. Undoubtedly he fully believes that the object to be attained by his bill is a worthy one and that whatever expense is entailed to make it effective is reasonable and justified. But, Mr. Chairman, what if all these bills became laws? What if any normal proportion of them were enacted? I submit to you that the merchant marine would be so topheavy that it would capsize before the Department of Commerce could make a stability test.

The bill before us proposes to put great burdens upon all ships, even those ships that are not receptive of any of the benefits of the bill. I have given you an example—a rough one to be sure, but I believe a conservative one-of the effect on lake ships if the provisions of the discharge-book section are applied as written.

We do not fear the competition of Canadian ships so much as we do other disturbances that threaten not only our lake ships but the agricultural, iron-mining, coal-mining, and iron-making interests of the country. We are not even now producing the world's supply of grain. Two-thirds of the grain coming down the lakes is of Canadian origin and although we haul both American and Canadian grain a distance of nearly a thousand miles for from 114 to 214 cents, the competition of Russia, Australia, and the Argentine is making heavy inroads in the demand for the American product.

In the coal trade, our exports to Canada have normally been in the neighborhood of 17,000,000 tons, about 6,000,000 of which has been moved by lake. Canada is now consuming in annually growing quantities coal from Nova Scotia, England, and Wales.

Our greatest menace, however, lies in the threat to our iron-ore mining and our steel industries of Ohio and Pennsylvania.

As stated to you last week, the United States has reached the point of making 50 percent of the world's production of pig iron and 80 percent of this is made from iron ore brought down the Great Lakes. İt is now a fact that not any of the Lake Superior iron ore goes to furnaces east of the Allegheny Mountains. Iron ore from Chile can be laid down at the eastern furnaces at a cost per ton of iron for as little or less than the American ore, and any disturbance of the costs of delivering the Lake Superior ore threatens to close the Lake Superior mines and affect adversely the steel-producing plants west of the Allegheny Mountains.

James J. Hill said: The cheap production of the highest grade of ore in these mines (the iron-ore mines of Michigan, Wisconsin, and Minnesota) and the low rates of transportation to Lake Erie ports have done more to build up the iron and steel industries of the United States than all the tariffs that have ever been placed upon the statute books, and today, if these mines were closed, our superiority in the iron and steel trade of the world would be gone forever.

We fear that any legislation which disturbs the delicate balance of our national industrial conditions as provided by the cheap transportation of iron ore, coal, and grain on the Great Lakes will have disastrous effects upon not only lake shipping but upon these major factors in our industrial prosperity, and we urge upon Congress the most thoughtful consideration of any legislation that tends to throw out of balance the costs of lake transport.

The CHAIRMAN. Any questions, gentlemen? Thank you very much, Mr. Marr.

I want to incorporate in the record some papers that Congressman Burnham sent to me with the request that they be made a part of the record dealing with matters contained in the bill under consideration, and also a statement by Mr. John Possehl, general president of the International Union of Operating Engineers.

Without objection, they will be made a part of the record as follows:

STATEMENT OF Hon. GEORGE BURNHAM, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF CALIFORNIA

HOUSE OF REPRESENTATIVES,

Washington, D. C., April 27, 1935. Hon. SCHUYLER O. BLAND, Chairman Committee on Merchant Marine and Fisheries,

House of Representatives. DEAR MR. CHAIRMAN : On April 1, 1935. I requested that in your consideration of the President's message of March 4, 1935, to Congress (H. Doc. 118) dealing with the merchant marine and ship subsidies, you incorporate in whatever legislation you may approve the principle and proposal contained in a letter and suggested amendment or bill from Col. B. C. Allin, director of the port of Stockton, Calif., which I sent you with my said letter.

On April 15, 1935, you introduced the bill (H. R. 7521) to develop a strong American merchant marine, to promote the commerce of the United States, to aid national defense, and for other purposes. Since the introduction of said bill

, your committee has. I understand, been holding hearings thereon, which will continue throughout the coming week at least.

The suggested amendment sent to you with my letter of April 1, referred to above, is as follows:

" That no steamship line operating vessels belonging to the United States, or purchased or being purchased from the United States or any agency thereof; or any steamship company receiving from the United States or any agency thereof any subsidy or payment through contract for the carrying of mails, or otherwise, shall belong to any conference or association relieved of the Sherman Act which either through official acts or policies prevents or attempts to prevent, either directly or indirectly, the serving of any port within the continental limits of

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