Whereas it is deemed desirous by the Government of the United States to give consideration to the development of the American merchant marine through assistance by the Government in the matter of sale of vessels constructed by the Government, in the matter of subsidies, mail contracts, or otherwise; and Whereas steamships operating over the various trade routes of the world are grouped into conferences or associations granting to the shipping industry a certain amount of self-government and coordination in the matter of rates and services; and Whereas under Federal laws enacted by the Congress, these conferences or groups are relieved of the Sherman Act preventing combinations in the restraint of trade; and Where as these conferences in the majority of cases having a preponderance of foreign ownership through their policies and rules have seen fit to prevent their members from serving certain American ports; and Whereas it is believed to be a sound policy for the Government of the United States to require that all vessels receiving assistance from it through the medium of subsidy, ship purchase, or otherwise, should partake in a free and unrestricted flow of traffic through all ports of the United States which have been improved by the use of Federal funds: Now, therefore, be it Resolved by the Legislature of the State of California, That the Congress of the United States, in connection with any legislation granting subsidy or assistance to the American merchant marine, be requested to incorporate therein the provision 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 the United States located on any improvement project designed for the accommodation of ocean-going vessels, authorized by the Congress or through it by any other agency of the Federal Government; and be it further Resolved, That a copy of this joint resolution be transmitted to the President and to the Vice President of the United States and to each Member of the Senate and of the House of Representatives of the United States. That resolution was passed unanimously in both the senate and the assembly of the legislature of the State of California, and I want to present to you a suggested wording of a paragraph to be inserted in the appropriate place in your bill, which will cover this situation: 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 dictates either directly or indirectly the serving of any port within the continental limits of the United States located on any improvement project designed for the accommodation of ocean-going vessels authorized by the Congress or through it by any other agency of the Federal Government. For the benefit of those gentlemen who came in after I started my remarks, I want to state that this resolution of the State Legislature and the suggested language of an amendment has been brought about by the fact that the Pacific Coast European Conference has discriminated against the ports of San Diego, Stockton, Sacramento, and Vancouver, Wash., and possibly some other ports, by refusing to make any rates, although these ports are all in a position to handle oceangoing ships and are ports on which the United States Government has spent large sums of money, running, in the case of Stockton, into millions of dollars, for the improvement of the channel. And we are fearful that this same condition may exist with some other conferences, not necessarily European, but oriental movements, and if some American lines should want to make rates for the benefit of San Diego or Stockton, at the present time they cannot do it if they remain members of these conferences, in which they are outvoted by the European lines. I think, Mr. Chairman, unless you have questions to ask, that concludes everything I have to say, and I thank you for the opportunity to appear. The CHAIRMAN. For the benefit of the members of the committee, I said yesterday a new committee print was being gotten up and there is on the desk of each member a copy of this new committee print marked "Committee Print No. 2", and dated at the top April 30, 1935. That includes some of the amendments we discussed yesterday and takes the place of the bill we were considering at that time. Now, we will hear Mr. Tuckwood. STATEMENT OF 0. W. TUCKWOOD, REPRESENTING JOHNSMANVILLE INTERNATIONAL CORPORATION Mr. TuCKWOOD. Mr. Chairman and gentlemen, I am not an attorney. I am here to represent the Johns-Manville Corporation, being employed in their transportation department and representing their interests. We are in accord with the main purposes of the Bland bill because we are convinced that the United States needs and should support an adequate merchant marine. The governmental aid which this bill provides is essential because in no other way is it possible to operate American flag ships in foreign trade routes in competition with vessels of other nations. We firmly believe that our international trade finds its greatest guarantee for security in an American merchant marine, and history has supplied the proof of its vital necessity in time of war. It is, however, our honest conviction that the successful promotion of American flag shipping as well as American foreign trade can only be accomplished by avoiding legislation of an international character. We are, therefore, opposed to the regulatory provisions which subvert the true purpose of the bill by submerging in international chaos a subject of purely national policy. The CHAIRMAN. What do you mean by "regulatory provisions”such as section 701? Mr. TuCKWOOD. Such as fixing rates and rebates. World markets cannot be controlled by the planned economy of any single nation, and American exporters cannot hope to survive under artificial transportation regulation not applicable to their foreign competitors. I honestly believe that we are rendering a public service in stating our convictions, and I support this statement with the following proof: First, many of our commodities originate in Illinois, Indiana, and other States from which inland rates, to Canadian ports of export, are on a parity with inland rates to United States ports; consequently, any unnatural and prejudicial transportation disadvantage directed against United States ports would force the diversion of these Midwest manufactures to Canadian ports without any increased cost. Second, the Canadian business now transported by way of United States ports enroute to third countries would of necessity be exported direct from Canadian ports, and this would be harmful not only to American shipping, but to American railroads as well. Third, our exports enjoy no special rates or privileges not equally available to our American competitors and at no time have we requested preferential treatment. On the contrary, we have expended many thousands of dollars in establishing from the United States to common world markets ocean rates which are on a practical parity with ocean rates applying on competitive commodities shipped from competing foreign nations. These rates are available to and are actually used by our competitors in this country. Simply stated, we expect to pay no more nor no less than our American competitors and naturally have no fear that the proposed legislation will deny us any privilege not at present equally available to our American competitors. Fourth, we do not oppose the regulatory provisions of the Bland bill because of any fear of functional weakness to cope with governmental regulation, because we are probably as well equipped as any American exporter to contend with the many complexities surrounding and essential to governmental rate regulation. I have just recited four sound reasons which I believe prove that our objections are not prompted by purely selfish motives. objections are fundamental and reach the heart of American foreign trade. In simple substance, these objections mean that transportation regulation of internal trade routes is doomed to failure unless it is all-inclusive, unless it embraces all international competitors. Within the borders of the United States, chaos would result if one group of rail lines was regulated and a competing group was free of such regulation. Our States may properly handle their intrastate transportation problems, but the control over interstate commerce by any single State would destroy national unity. The commerce that moves on the world's waterways is international and, like our own interstate commerce, it cannot be regulated by any single nation; because every nation, whether surrounded by oceans or whether having its only access to the seas by way of a remote river port, has an interest in world trade. The CHAIRMAN. Your remarks would apply as well to the Eastman water-carrier bill, as to this bill? Mr. TUCK WOOD. Yes, sir; they would. Governmental control over freight rates in foreign trade is tantamount to regulation of prices at which American goods may be sold abroad because freight is a very important part of delivered cost. Frequently, ocean freight costs represent 50 percent or more of total sales prices c. i. f.-that is delivered-foreign ports. It is generally conceded that transportation charges are usually passed on to the ultimate consumer; nevertheless it is axiomatic that a foreign purchaser will buy competitive commodities from exporting nations affording the lowest delivered cost. Foreign competitors enjoying the benefits of a free and unrestricted world freight market would always be in a position to name the lowest delivered cost and outbid any nation imposing artificial control over its channels of international distribution. The United States cannot control the law of supply and demand governing world shipping, nor can she dictate the maritime policies of other sovereign nations; consequently, we strenuously object to the arbitrary imposition of any transportation restrictions not imposed in equal degree on our foreign competitors. Our position is tenable because all that we request is equality of treatment; we feel that we have a right to expect our Government to support such a fair request. International practices and policies govern our foreign sales and we are dealing with people of all nations and of all races, and these people have access to all world markets. A buyer in Buenos Aires, or Bombay, or Capetown contacts sources of supply in London, New York, Tokyo, and elsewhere; such a buyer is not interested in the nationalistic policies of any single nation, but places his orders in those countries where his interests are best protected. Any American merchant who fails to recognize and conform to these international principles and practices cannot successfully compete for foreign markets. Governmental influence over delivered prices in world trade, accomplished through regulation of ocean transportation rates and practices, will destroy the bulk of American exports. Such regulation will establish an unnatural, inflexible, distribution barrier not erected against foreign competitors, but rather serving them as a positive and material aid in depriving the United States of its share of world trade. In extending Federal control over rates and practices applicable to American foreign trade, the proposed bill assumes, without consent authority over the commerce of other nations. Our exports become the imports of foreign countries and, if a Federal authority exercises control over export rates, a foreign authority will assume control over the same rates because our export rates become the import rates of foreign nations. The result of this proposed international meddling would be an impassé destructive of peaceful international intercourse. Russia purchases all of its imports through a single governmental agency, which agency also arranges the ocean transportation. Any governmental attempt to regulate the ocean rates paid for transporting these Russian purchases would result in immediate transfer of purchases to other nations. The United States is powerless to prevent the spread of the Russian idea to other countries and it is generally known that Italy has already considered adoption of a similar plan. Obviously, even international regulation of ocean transportation would not be acceptable to such countries. History affords no parallel to guide such a dangerous international course proposed in H. R. 7521; it would be suicidal to the foreign trade of any country to ignore the interests of other nations and embark on such a course alone. The proposed legislation would give the Authority power to disturb and change the internal transportation systems of many nations and upset foreign rate bases of long standing. For example, central Europe routes its foreign trade by way of the Adriatic as well as by way of Hamburg and Atlantic ports. An Authority having control over rates could develop the port of Trieste at the expense of the port of Hamburg. Similarly, Mexico and Canada route United States foreign trade via all rail as well as via ocean ports; the power that could regulate rates from New York or New Orleans to Veracruz, Mexico is automatically clothed with the power to regulate or destroy the all rail routes from the international border to interior Mexican points. The authority to regulate water rates to and from Canadian ports. carries with it the authority to dictate rates for or destroy competitive rail routes within Canada. Congress would consider as preposterous any proposed legislation openly calling for regulation of transportation within foreign countries, yet the Copeland bill would establish by subterfuge that very inimical and dangerous legislation over the affairs of other nations. In all nations, internal transportation rates applicable to foreign trade are adjusted to meet past and present world shipping conditions. These rate adjustments are in present balance with the natural working of the laws of economics; any artificial substitution which has the power to disturb that balance carries with it the ability to change, modify, or destroy the normal and logical channels of international distribution. Naturally, we vigorously oppose any such unnatural legislation because it is a serious menace to our international trade. Like a good reputation, the development of foreign trade requires years of patient and costly promotion; however, a deliberate move not in conformity with the accepted principles governing international trade sows the seeds of its destruction. Therefore, we urge your committee to expunge the proposed regulatory provisions from the subject bill. The CHAIRMAN. Now you refer to section 701? Mr. TuCKWOOD. That is right. Mr. WEARIN. Of which bill? The CHAIRMAN. I think the numbering is the same. Mr. TUCKWOOD. Yes; H. R. 7521. The CHAIRMAN. That is, you object to paragraphs Mr. TuCKWOOD. 701 and 702. The CHAIRMAN. Paragraphs 701 and 702 and possibly the other paragraphs. There have been some changes in them. Mr. WEARIN. That is the bill introduced on the 26th, or the one introduced yesterday? Mr. TuCKWOOD. This was the original bill; I did not have the revised issue. Paragraphs 701 and 702 of the original bill have to do with the control over minimum and maximum rates in foreign trade. The CHAIRMAN. There was an amendment put in there simply defining common carrier and then there were some other amendments, but you are referring particularly to 701? Mr. TUCKWOOD. It is really three paragraphs here, 701, 702, and 703. The CHAIRMAN. It was 701, subsection 2, at page 32, of the issue we were using yesterday. Mr. TuCKWOOD. In concluding our objections, we wish to show that our interests are extensive and that our statements should be given the weight of authority. Our problems may be considered as truly representative of those which confront the American exporter; particularly that large number constantly confronted with aggressive foreign competition. We send material to the great ports of the world and to the far corners of the earth; we ship from United States, Atlantic, Gulf, and Pacific ports; we also export from the ports of Canada and Europe. We are familiar with the practices of practically every ocean ratemaking conference in the United States and make use of over 100 different freight classification descriptions embracing approximately 2,200 different articles of commerce. We are also familiar with ocean rate-making practices in other countries and know that any discriminatory legislation of our own making is to be feared far more |