the United States located on any improvement project designed for the accommcdation of ocean-going vessels, authorized by Congress or through it by any other agency of the Federal Government; nor shall any steamship company receiving from the United States or any agency thereof any subsidy or payment through contract for the carrying of the mail, or otherwise, enter into any agreement, understanding, or other arrangement to abide by or concur in the acts or policies of any such conference or association."

I am informed that the California State Senate and Assembly, on April 25, 1935, unanimously passed a memorial requesting the inclusion of the abovequoted proposed amendment in any legislation approved by your committee. The adoption by your committee of this legislation is vitally important to the city and port of San Diego against which there is now assessed an arbitrary of $2.50 per ton; also to a number of other ports that are discriminated against by the attitude particularly of the trans-Pacific conference, called the "Pacific Westbound Conference." In this connection, I would like to quote a recent article appearing in San Diego's leading morning newspaper, the San Diego Union, under date of March 30, 1935, as follows:

"CONFERENCE ACTS TO RESTRICT SHIP TRADE OF HARBOR

"Once more a conference of steamship operators has lowered the boom' on San Diego.

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"Steamship row was agog yesterday over the latest action against local trade, the effect of which is to transfer from San Diego to San Pedro a promising trade just getting on its feet-the direct shipment of local commodities to the United Kingdom.

"The Pacific-European Conference, most of whose members are alien-flag lines, has ruled that ships may no longer call at San Diego to lift European cargo unless there is sufficient cargo to produce a revenue of $1,500 for each ship. The effect is to shut off the recently developed trade in fruit juices and extracts from this port to London which has been bringing at least one ship a month into San Diego, providing a neat addition to port revenues and to the income of local stevedores. As there never has been such a shipment coming up to $1,500 in revenue, and there is little liklihood of the possibility of concentrating enough cargo to reach that figure, it virtually shuts out this form of foreign trade, and forces its diversion by truck to San Pedro.

BATTLE ON NEW FRONT

“The question of discriminating against San Diego by steamship conferences has been one of long standing. Ships bound to the Orient may call here to lift two commodities-scrap iron and bulk gypsum. If they lift any other cargo while in port here they must add a penalty of $2 a ton-described as an arbitrary or move the cargo to San Pedro and load it there. This particular one is the subject of a protest by the city which still is before the Federal authorities.

"Meanwhile, the harbor traffic department has other worries on its hands. After several years of work it succeeded in getting into the laws pertaining to certain trades the proviso that no conference could stop one of its member lines from calling to lift cargo, at terminal rates, from any port on which public funds had been expended. Now comes the Eastman bill to regulate steamship and other facilities, which entirely eliminates this protection. However, Representative George Burnham is reported as working on an amend ment which would bar any line receiving a subsidy from membership in any conference which sought to keep its member lines out of any port which had been developed at public expense."

Reference in the above-quoted article to my working on an amendment which would bar any line receiving a subsidy from membership in any con ference which sought to keep its member lines out of any port which has been developed at public expense, is, apparently, in respect to the suggested amendment sent you with my letter of April 1, and first quoted above. This action was taken by me in the belief that, owing to the President's message of March 4, 1935, referred to above, action on earlier bills providing for the regulation of the transportation of passengers and property by water carriers, growing out of the recommendations of the administration through the Federal Coordinator of Transportation, Hon. Joseph B. Eastman (H. R. 5379 and S. 1632), would be deferred until the matters of the merchant marine were disposed of.

There are now in your committee two bills introduced by me on January 23, 1935 (H. R. 4525 and H. R. 4526), either of which, if adopted, would have corrected the condition existing at San Diego. As one of these bills (H. R. 4525) would probably have discriminated against certain inland ports, I decided to only ask consideration of the bill H. R. 4526. Knowing that the Senate Committee on Interstate Commerce was holding hearings on their water-carrier bill (S. 1632), I requested Senator Burton K. Wheeler, chairman of said committee, in letter dated March 19, 1935, to incorporate in the bill S. 1632 the substance of my bill H. R. 4526, as an amendment to be inserted following section 223 (d), on page 55, line 4, after the word "order", as follows:

"Provided, That it shall be unlawful for any common carrier by water, either directly or indirectly through the medium of an agreement, conference, association, understanding, or otherwise, to prevent or attempt to prevent any other such carrier from extending service to any port located on any improvement project authorized by Congress, at the same rates which it charges at its nearest regular port of call, provided that said improvement project and said nearest port of call shall both lie within one of the following coastal areas of the United States, to wit: The Pacific coast from the Canadian border to the Mexican border; the Gulf coast from the Mexican border to and including Key West; the Atlantic coast from Key West (exclusive) to Cape Hatteras; the Atlantic coast from Cape Hatteras to the Canadian border."

At that time the House water carrier bill was in the Committee on Interstate and Foreign Commerce. In view of the nature of the proposed legislation now being considered by your committee the proposed amendment sent to you with my letter of April 1 may be more appropriate than the one quoted immediately above. However, it is vital to the future of San Diego and the surrounding territory that relief be given. It should be mentioned that failing to get the full relief desired, the Shipping Board Bureau was appealed to to lift the arbitrary placed upon shipping out of San Diego Harbor several years ago. This was known as the "Trans-Pacific arbitrary case." Since the hearing held in this case in September 1933, at which time a brief was submitted in behalf of the port of San Diego, the steamship lines involved in this trade have found grounds from month to month to cause the Shipping Board Bureau to postpone each time the limit date set for filing of steamship lines' brief. Their brief is now due on May 1, but it would not be surprising to again see the time extended. Even should it not be, the port of San Diego must then file an answer to their brief before the matter can be studied by the examiner who held hearings at San Diego in September 1933. It will probably take several months for him to render his recommendation, following which counsel on both sides will file objections if the examiner's recommendation is not in accord to their respective contentions. Each side then has the privilege of answering the other's objections brief. Then the matter is up to the Shipping Board Bureau for final decision. It will, therefore, be at least another year before a decision is reached in the Trans-Pacific arbitrary case.

In the meantime the port of San Diego will be deprived of the opportunity of participating in any of this business, which will not only result in a great loss to its own shipping but will keep hundreds from participating in gainful operations. This will result naturally, notwithstanding the fact that San Diego has one of the finest natural harbors in the United States and its port facilities are most extensive and modern. Let me here quote from title I of your bill H. R. 7521-Declaration of Policy-as follows:

"SECTION 1. It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine (1) sufficient to carry at least one-half of the foreign commerce of the United States and to provide shipping service on all routes essential for maintaining the flow of national commerce at all times, (2) capable of serving as a naval and military auxiliary in time of war or national emergency, (3) owned and operated under the United States flag by citizens of the United States and so operated and regulated as to secure to the shipper of American products adequate service and parity of rates to foreign markets.

This is just what we are asking for the port of San Diego-" to secure to the shipper of American products adequate service and parity of rates to foreign markets." Under present conference discriminations the port of San Diego and the fertile territory for which the port is the natural outlet is deprived of the shipping business of hundreds of shippers of agriculture of all kinds, in

cluding fruits, fruit juices, and extracts, cotton, vegetables, olives, and nuts, canned fish, and many other valuable products. This will continue until this conference restraint or trade business is broken up.

Most of the steamship conferences are comprised of foreign-flag lines. Not that American-flag lines do not approve of conferences, but there are more foreign-flag lines operating to and from our ports in foreign trade. Too, all foreign-flag lines do not belong to conferences. However, the conferences existing exert sufficient power to influence nonconference operators, whether American or foreign flag. We have a very recent case of the Pacific Coast-European Conference, composed entirely of foreign-flag lines-17 or 18 lines-exerting this influence upon the only American-flag line-nonconference-in the PacificEuropean trade. This line, the Isthmian Line, has been calling at the port of San Diego for some time-irregularly in the beginning, but with a great deal of regularity in the past year-lifting grapefruit juice manufactured in National City, destined to London, and miscellaneous cargo. Regularity of calls was just beginning to be such that cotton shippers in the interior could depend upon it when the Pacific Coast-European Conference of 17 or 18 ship lines put through a rule that no vessel would be permitted to call at the port of San Diego for less than $1,500 revenue per call. While the Isthmian Line is not a member of the conference, the conference exerts sufficient influence to cause the Isthmian Line to abide by its rules. An Isthmian Line representative sits in the conference meetings but has no vote. However, the rules and regulations laid down by the conference are followed by the Isthmian Line. It is apparent that the Isthmian Line must abide by the rules and regulations of the conference to avoid gang throat cutting by conference lines.

Another recent incident is the promulgation of an arbitrary of $1 per ton and a 500-ton minimum against the port of San Diego over Los Angeles Harbor by the Argentine-Brazil-River Platte Conference. It is my understanding this conference is comprised in the majority of foreign lines. This action came swiftly following efforts of San Diego to develop a movement of Argentine corn through that port, followed by efforts to induce one of the lines in the trade to call their vessels direct with the tonnage. The conference apparently realized that whatever lines succumbed to the pleas of San Diego to call their vessels direct would have an advantage for that particular business over the lines that did not desire to call direct. Consequently, the conference set out to prevent this happening and did, for it is obvious that the shipping of the Port of San Diego cannot be increased in the face of arbitraries and the many other prohibitions.

As stated above these conferences are composed in the majority of foreign steamship lines. Several American lines are members of the conference and receive subsidies from the Government now in the form of mail contracts. Other American-flag lines in the conference have received construction loans, etc. If they were prohibited in the manner I have suggested in any shipping subsidy legislation formulated by your committee, they could not belong to this foreign-controlled conference, else it would have to be a part of the preamble of the conference not to interfere or attempt to interfere with any line desiring to serve any ports. We only ask for equality of rates with other ports and that conference restrictions be not placed upon the port of San Diego and the communities served thereby.

I enclose, and make a part of this letter, a statement going into different phases of this situation, and sincerely trust these will be given the careful and favorable consideration of your committee that they deserve. Respectfully submitted.

GEO. BURNHAM.

BASIC PRINCIPLES JUSTIFYING THE AMENDMENT TO THE SHIPPING ACT OF 1916, PROPOSED IN H. R. 4525 AND H. R. 4526

Introduced by Congressman George Burnham, Twentieth District of California, San Diego

1. The provisions of H. R. 4526, in part, are now a law as to intercoastal steamship lines only through the Panama Canal. Experience has proved their value in connection with the intercoastal operators; and it has been found that the proposed law is absolutely necessary for the port of San Diego and ports similarly situated, as protection from discriminatory practices by lines plying between foreign ports and ports of the United States and its possessions, and by lines plying in the coastwise trade.

2. Combinations in restraint of trade are illegal in all lines of business except ocean shipping, as permitted by the Shipping Act of 1916.

3. The Shipping Act recognizes combinations of steamship companies, permitting combines, conferences, or associations to initiate action either in service or rates, subject to approval by the United States Shipping Board Bureau; however, if such actions are considered discriminatory, or otherwise unlawful and objectionable to certain ports and shippers, a long drawn-out hearing and subsequent briefing of facts and arguments are necessary to correct the situation, notwithstanding the fact that a member line of such conference may desire to extent its service to additional ports at rates the same as it charges its nearest regular port of call. To date conferences have not permitted individual members the prerogative of following their desires in this regard.

4. The United States Shipping Board Bureau authority over foreign and coastwise rates (interstate) is limited only to maximum rates, which are required to be filed with the Board by the carriers, thereby enabling conferences to dictate to individual members rates at variance as between different ports. The Intercoastal Shipping Act of 1933, in which there is incorporated the provisions of H. R. 4526 in part, confers regulatory powers on the Shipping Board Bureau only as to intercoastal shipping through the Panama Canal, and does not remove the right of conferences, etc., to establish rates, rules, and practices in foreign and coastwise services in variance as between different ports. 6. The Shipping Act of 1916 does not require the establishment of service, leaving such action in the hands of combinations of shipping companies, or individual shipping companies when permitted by conferences, etc., thereby making it possible for combinations, conferences, and associations to prevent establishment, which they do, of service to ports additional to those already served at rates charged the nearest port of call to the added port.

7. The Federal Government, on recommendations of the War Department, Board of Army Engineers, are continually approving new harbor and waterway projects which are, for the most part, justified by a result in saving in transportation cost, relieving congestion and providing additional national defense. However, the Shipping Act, as amended to date, is an instrument tending to nullify the full value of Federal expenditures on new port and waterway projects through absence of prohibition of combinations, conferences, etc., to prevent members of such agreements, combines, associations, and conferences from using the new facilities at rates permitting their use as contemplated by the War Department, Board of Army Engineers, when the projects were recommended.

8. Unquestionably it is wrong for the Federal Government to expend the taxpayers' money on harbor and waterway improvements, and at the same time permit private steamship companies through agreements, combines, conferences, or associations to nullify the full value of these expenditures.

9. For the purpose of serving certain areas better than are, or may be, served by existing facilities, are new harbor and waterway projects recommended by the Board of Army Engineers and authorized by Congress, thereby assisting in the development and prosperity of area concerned. However, this purpose may be, and is, defeated and development and prosperity greatly retarded through the combination of private interests which are unsound and not in the public interest.

10. The Shipping Act of 1916 should be amended, making illegal these practices permitted by law and actually done by groups of shipping interests, thereby allowing any member of combines, conferences, associations, etc., who so desires, to extend service to any terminal or port at rates which it charges for service to its nearest regular port of call.

11. Present practices and policies of conferences preventing individual members from extending service to additional ports and charging rates the same as charged their nearest regular port of call retards the development of certain ports of this country, and such business as can withstand the practice and policy of the conferences, causing higher transportation cost, is forced through competing ports and from the port to which it naturally belongs and should move through.

12. The port of San Diego, Calif., experiences at the present time a case in point-that of the Pacific Westbound Conference prohibiting member lines calling ships at the port to lift cotton and general cargo at terminal rates or rates which are the same as in effect at Los Angeles Harbor, with the exception of gypsum and scrap iron for oriental ports. The trans-Pacific Line calling at the port at present to lift gypsum and scrap iron is a member of that con

ference and desires to lift cotton and other general cargo at the rates applied at its nearest regular port of call, Los Angeles Harbor; but the conference has prohibited this, and requires that tonnage lifted at the port of San Diego, with the exception of these two commodities, be assessed an arbitrary of $2.50 per ton over and above terminal rates, which are the rates charged at the nearest regular port of call of the line, notwithstanding the fact that vessels may be in port loading one or the other or both of these commodities, and the cotton and general cargo could be taken by said vessels. In addition, handling charges averaging 60 cents per ton are exacted, which are double like charges at the nearest regular port of call of the line, or are not exacted at all at said port or other ports of call of the line's vessels.

13. This conflict or lack of coordination in the merchant-marine policy affecting the development of United States ports and waterways is not in the public interest or the interest of the merchant marine and should be promptly rectified. Nearly a million dollars has been expended by the Federal Government in the past few years in deepening and widening the San Diego Harbor entrance channel, the value of which is at least partially nullified by the action of the Pacific Westbound Conference; $1,800,000 more has been recommended by the War Department Board of Army Engineers and the Rivers and Harbors Committee for widening the inside channel.

14. The Congress recognized the policy of providing for equalization of rates to new or additional ports with rates applying at the nearest port of call in passing the Intercoastal Shipping Act of 1933, applying to the intercoastal trade through the Panama Canal, by withholding from the Shipping Board Bureau the right to prevent equal rates, which act also prevents combinations of private interests from preventing members to accord equal rates, leaving the individual members free to do as they wish, but the law does not apply to foreign and coastwise operators. The proposed amendment is designed to correct this evil and lack of regulation.

15. At the committee hearing on the Intercoastal Shipping Act of 1933 an amendment was requested recognizing the soundness of allowing no one to prevent steamers from going to additional ports at the rates they charge at their nearest regular port of call, and amendment was made in view of the fact when the amendment was presented, representatives of shipping companies (who strongly urged passage of the intercoastal bill) were asked whether they saw any objection to the amendment, and it is understood their replies were they did not see any objection, and others not asked interposed no objection; consequently, it is felt they would not now oppose the proposed amendment, which simply makes effective the amendment already incorporated in the Intercoastal Shipping Act of 1933, applicable to foreign and coastwise lines.

16. Problems of the port of San Diego, in addition to the trans-Pacific arbitrary, already outlined in paragraph 12, which the proposed amendment will solve, include

A. The Pacific Coastwise Conference, covering the carriers in the Pacific coastwise trade, prevents member lines according San Diego the same rates as Los Angeles Harbor, or a more equitable relationship of rates, notwithstanding certain members of the conference desire to do so. Such practices are not permitted in the Interstate Commerce Act applying to the rail carriers, each carrier being free to do as they like and prohibited from interfering with another only through complaint to the Interstate Commerce Commission.

B. Handling charges exacted by steamship lines calling at the port of San Diego, through the guise of the San Diego Steamship Association, which is unknown, the lines calling in reality being dictated to by the Los Angeles Steamship Association, to which they and many others not calling at San Diego are members, are double like charges at Los Angeles Harbor. No handling charges at all are exacted at San Francisco. The port of San Diego is endeavoring to handle inland tonnage tributary to the port and has found it very difficultin fact, practically impossible due to the steamship lines calling at San Diego also calling at the port of Los Angeles, which is able to serve practically the same tributary territory cheaper than the port of San Diego, due to the handling charge there being one-half of the amount exacted at San Diego.

17. The Federal Government expenditures on San Diego Harbor approxi mate $14,000,000 to date, and the community expenditures $6,000,000, with the 5-year plan of the San Diego Harbor Commission calling for the expenditure of approximately $1,000,000 for general improvements, including piers and bulkheads, etc., all of which will be nullified to a large degree by rates, rules,