Mr. LEHLBACH. And if the United States statutes in fact prohibited our American members of the conference from engaging in that practice, which all the other conference members are going to engage in, to that extent we will be at a disadvantage, will we not? Mr. RYAN. That is, you would not be able to-yes; but the conference lines could not grant rebates under existing law; and you are not repealing that law here.

Mr. LEHLBACH. It does not prohibit the conference lines from giving a voluntary rebate.

Mr. RYAN. Oh, yes; it does.

Mr. LEHLBACH. Well then, that is an unenforceable statute.

Mr. RYAN. You have two statutes. You have one flatly prohibiting it in foreign countries.

There is a specific law, section 19 of the American Shipping Act of 1920, which is the existing law, which is the best they can do.

Now, we come in with a special provision in this bill and we are going to allow all the conference lines to grant rebates; and, if all those conference lines were American, it would be all right. We can not ignore the fact that a majority of those conference lines are foreign.

Mr. LEHLBACH. Furthermore, section 19 of the Shipping Act of 1920 does not say that, if a foreign line engages in a practice that is prohibited to American lines by law, then we can inflict upon a foreign line those penalties which we can inflict upon our own citizens. We might get the cooperation of the various departments of the Government to agree upon some measure of retaliation.

Mr. RYAN. If the Congress wants to pass a law saying that American lines can grant rebates and that foreigners cannot, that is one thing. If they permit foreign lines to grant rebates, they should say that all foreign lines, including conference lines, can grant rebates.

Mr. LEHLBACH. Excepting by indirect means, they cannot prevent the foreign lines from giving such rebates if they agree among themselves to do it.

Mr. RYAN. Well, I feel that I am with you, in substance.

The CHAIRMAN. You may return this afternoon, Mr. Ryan, for further examination.

(Recess, 12:30 p. m. until 2:30 p. m.)

STATEMENT OF JAMES W. RYAN-Resumed

Mr. RYAN. Shall I finish this page of my statement?
The CHAIRMAN. You may proceed.

Mr. RYAN. Section 1009 of the bill would permit Government funds to be used by the Maritime Authority "in such manner as it deems advisable" to meet "any unfair competition or practice", by a foreign ship.

If that unfair competition of practice refers to the long list of unfair competitive practices listed by Congress and penalized in sections 14 to 20 and section 26 of the Shipping Act of 1916, it is, of course, entirely proper. If, however, it is a delegation of legislative power to the Maritime Authority, to define and, in effect, penalize, without warning, any act whatever as an unfair competitive practice, it is, of course, improper to authorize the application of official and private views as to what constitutes "unfairness." Such views are puzzling and do not conform to any definite, known standard.

The conference lines take the view that the quoting by an independent shipowner of lower rates than those of a combination of his competitors is an unfair practice on the part of the independent, even under circumstances where the combined competitors have tried to dominate the trade by force of their number and by the use of more or less coercive contracts.

On the other hand, a subsidy which purported to equalize costs of operation, by giving the difference or excess cost for those shipowners operating at greater cost, but which in practical application not only equalized the cost of operation but paid in full all operating costs of those privileged ship owners, was not considered unfair.

With such notions as to what constitutes "unfairness", a practical, independent shipowner or ship operator might, indeed, be in a bad way if this section were enacted, which also gives the power and authority to aid and support a fighting ship. And yet the unrepealed Shipping Act of 1916 still prohibits the use of a fighting ship, as an outright crime.

There is no defense for the use of a fighting ship, as provided in section 1009, and it should be left out of the bill unless the application of the section is restricted to the long list of unfair competitive practices already defined and penalized by Congress in the Shipping Act of 1916. If Congress wishes to increase that list of unfair competitive practices which are penalized it should do so properly by the enactment of a law listing and defining the unfair competitive practices which are prohibited.

Isbrandtsen-Moller Co., Inc., carries large quantities of cargo from the United States to foreign ports and offers a service to manufacturers and exporters who have no shipping facilities of their own. In the case of American goods experiencing difficulty in finding markets abroad because of transportation difficulties, it assists to the extent of its ability in establishing a market. It will accommodate all customers to the extent of its ability.

Its quotations of freight rates are based upon the ordinary, healthy rules of trading in ordinary commerce by a concern that receives no aid from the public purse. It renders a service to American exporters at rates below those of the conference lines or shipping combination. Its success is not based upon rate-cutting, and it does not operate at a loss. It is able to operate profitably at low rates because of careful planning, conservative methods, and efficient operation. It has been its aim to meet the need for simple and economical service, and not to force its customers to pay for an extravagant and expensive service which they do not require. It has been most careful not to engage in any of the unfair competitive practices which the Congress of the United States has listed in great detail and penalized in sections 14 to 20 and section 26 of the Shipping Act of 1916, and no charge has ever been made against it before the Shipping Board Bureau, or any other governmental body, that it has committed any of those practices. Thus, there is no reason whatever why the United States Government or its citizens should enact any discriminatory legislation against it or the other independent nonconference steamship lines in foreign trade which do not receive any subsidy from any government or other source.

Apart from its natural desire to protect its own interests against unjust discrimination, Isbrandtsen-Moller Co., Inc., feels that it is

rendering a public service in pointing out that the regulatory provisions of the ship subsidy bill, if enacted, will add another serious handicap to the foreign trade of this country...

Now, I would like to say just a word

The CHAIRMAN (interposing). You want to drive out of business, I suppose, American ships, for the interests of those foreign ships that you are running?

Mr. RYAN. Õh, no, Mr. Chairman. I would just like to answer that point, very briefly.

Mr. SIROVICH. When you answer that, will you also answer, at the same time, what personnel you have on those ships--American seamen or foreign seamen?

Mr. RYAN. We have no objection to the Congress, of course, giving to the American shipowners the full differential in wages between the wages paid on foreign-flag ships and those paid on American ships; and we have no objection to the Congress giving to American shipowners the full differential in the construction costs, the full differential in the maintenance cost, the full differential in the operating cost.

There is no difference between us whatever on that. I am not opposing that at all. In other words, all American ships should be on the same basis as foreign ships.

The CHAIRMAN. You want to get all the business you can for the foreign ships, at the expense of American ships.

Mr. RYAN. Here is the point I want to make: If you really want to reduce unemployment in the United States, to reduce the relief rolls, and to give a lot of jobs to American labor in the United States, the thing to do is to aid them in disposing of the products of their labor in foreign markets, where the goods produced by American labor can be delivered..

Mr. SIROVICH. That is the purpose of this bill.

Mr. RYAN. I am for that.

The CHAIRMAN. You will have to

Mr. SIROVICH (interposing). Let me show you something, because you purposely omitted one thing, which you wanted to omit.

There are what I construe as the 3 fundamental features of this bill, and you stated 2. First, we give the construction differential subsidy, and that is to place upon a parity the American cost of construction with the foreign cost of construction; and, since 90 percent of all this differential in the cost of construction goes to American labor, we are taking men and women off the relief rolls and are putting them to work for the development of the American ships, in American yards.

Is that correct?

Mr. RYAN. I am for that. I agree with you.

Mr. SIROVICH. Let us go along step by step. So you agree with me on that?

Mr. RYAN. That is right.

Mr. SIROVICH. Now, we find that, when it comes to the operation of American ships in competition with foreign ships, the differentials, so far as the American standard of living are concerned, and the differentials, so far as the American standard of wages are concerned, are so different from what they are on European-manned ships on

American ships, that we give them an operating deficiency that will put them upon a parity, at least, so far as operations are concerned. Mr. RYAN. Yes, sir.

Mr. SIROVICH. That, of itself, helps to put upon our American ships American seamen, American sailors, receiving the American standard of wages, and taking them from the relief rolls and putting them to work.

Mr. RYAN. Yes.

Mr. SIROVICH. And the third thing, upon which you failed to say a single thing about it, is the promotion of the commerce of the United States. You have not said a word about that. You said that we want to open up the exportable markets of the world for our exportable products. Is that right?

Mr. RYAN. Yes.

Mr. SIROVICH. This bill contains a third provision. It is a bill designed to grant subsidies to various markets of the world that have never been approached by American ships in the past, who, if the American merchants go in and sell their products, would have to compete against the foreign countries with their low wages and standards of living, and to open up new lines and channels for our products to go.

So, in the testimony that we have heard in the last 48 hours, you gentlemen here, who represent these tramp steamship lines of foreign countries, testified that there are only 150 American tramp ships, as against 2,500 foreign ships that come into our ports through these tramp ships, which, you said, you have nothing to do with-your organization. You said that this morning, didn't you?

Mr. RYAN. That is right.

Mr. SIROVICH. Mr. Chairman, when I left this afternoon I found on my desk a letter, addressed to me by a New York organization, which is almost word for word the testimony of this distinguished witness who has come before us, and that sets up also that the two people that are making it possible for the American exporter to do business are the tramp steam ships and the independent steamersand/or independent steamers, which you operate as an American agency, for foreign ships, constructed in foreign yards, manned by foreigners, and worked in such a way that they demoralize any trade that we have.

After hearing all this testimony, I am in favor of granting a third ship subsidy, that will develop our own tramp ships and that will put such things out of business as the company that you represent. Mr. RYAN. May I answer that?

Mr. SIROVICH. Yes.

Mr. RYAN. I say that you are writing into the third section of this bill just the opposite of what you have said, for this reason, that, by that third section of the bill, you are throwing a great number of American laborers out of employment because the

Mr. SIROVICH (interposing). You are throwing them out of employment by your

Mr. RYAN (interposing). May I just answer that, complete my answer?

You are throwing laborers in American industries out of employment, deliberately doing it, for the benefit of a few American ship owners and for the benefit of a great many foreign flag ship owners,

in the conference lines, these shipping combinations. The people we are throwing out of employment

Mr. SIROVICH (interposing). Show me that, how you are throwing them out of employment. Show. You are making a statement and not proving it by any facts.

Mr. RYAN. If you want to give more American workmen employment, what you want to do is to make it possible to sell their products, their manufactures, in foreign markets.

Mr. SIROVICH. That is what we are going to do by this bill.

Mr. RYAN. Now, the only way you can make it possible to sell the products of American factories and agriculture in foreign markets is to let them have freight rates under which they can be delivered, to have the freight rates to the foreign markets from the United States low enough so that they can compete with the workmen in foreign countries, who are selling their products in these other countries, in the foreign markets where we are trying to sell our products.

Mr. SIROVICH. And we are going to do that through the indirect subsidies and put them to work and take them off the relief rolls and dole, and take the money to help to open up our foreign markets. So it is the very reverse of what you are trying to have us believe.

Mr. RYAN. You have not such a provision in this bill; and I am looking at the latest revised print. The provision that you have there is the one which says that American laborers, who produce their products in this country, and American manufacturers, and all the American labor connected with them, shall be deprived of selling their goods in foreign markets, by having the freight rates on those goods increased, arbitrarily, to a fixed minimum, which is above the cost of operation and above the cost of operation plus a reasonable. profit.

The purpose of your doing that, as you say in the bill, is to give a subsidy to the foreign shipowners in the conference lines.

it.

The CHAIRMAN. We have no such provision in the bill.

Mr. RYAN. I am trying to make myself clear. That is the effect of

The CHAIRMAN. That is not the effect of it.

Mr. RYAN. How can an American exporter sell his products in foreign markets if he can not obtain cheap transportation, so they can be delivered. He has to have a low rate.

Now, I say that, by fixing a minimum freight rate, which is higher than your necessary cost of operation

The CHAIRMAN (interposing). If that happens

Mr. SIROVICH (interposing). But your very argument-let me go step by step, to show you how your argument is fallacious. Let us go step by step.

In the first place, if you compare the American standards of salaries and that is something based upon minimum wages and maximum hours and the elimination of child labor-we have certain standards of wages and hours which every man who works in any industry has got to live up to. Is that right?

Mr. RYAN. Yes; certainly.

Mr. SIROVICH. So that, when the American laborer comes to manufacture, from the raw material to the finished product, he has got to meet the American standard of wages-that is, the minimum wages,