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The CHAIRMAN. I know this, that a Governor of the Virgin Islands was very insistent that the Virgin Islands should be taken out of the coastwise law.

Mr. Bull. Yes, sir.

The CHAIRMAN. This committee has never favorably reported that bill. One of the reasons that has given me a great deal of concern, and I think the other members of the committee, too, has been that if we did take the Virgin Islands out of the coastwise laws it would mean the diversion of business from Puerto Rico which was in the coastwise laws.

Mr. Bull. I think that is correct. The Virgin Islands are still under the authority of the President. The coastwise laws do not apply to the Virgin Islands, but he can enforce the coastwise laws at any time he sees fit.

The CHAIRMAN. It is by order entered every year, excepting the Virgin Islands?

Mr. Bull. Yes, sir.

The CHAIRMAN. They wanted us to except them until such time as they should be brought by law into the coastwise laws. Then they expected to go ahead and build up docks and that sort of thing.

Mr. Bull. Yes, sir.

The CHAIRMAN. We felt that if we gave them that advantage and let them build up the docks, they would then come back and say that having gotten that advantage they ought not be brought back into the coastwise laws again.

Mr. Bull. I think that would be correct.

The CHAIRMAN. In the meantime there would be a diversion of business from Puerto Rico to the Virgin Islands.

Mr. Bull. I think you are correct.

The CHAIRMAN. That is the trouble that has always appeared. That bill is still pending before this committee at this time, introduced by me but introduced simply by request because it came from the Department of the Interior. Personally, they have not convinced me yet.

Will you please proceed, now?

Mr. Bull. That is all I want to say. I do want to say this, that I think the construction loan—I do not mean the subsidy connected with it, but if we cannot borrow money from bankers, I think that on coastwise services where you want to replace a boat with a better boat and build a better boat to replace a boat, you should turn the boat over to the Government or scrap it. I would like to see that provision.

The CHAIRMAN. Personally, I want to congratulate you and the Bull Steamship Co. that it has not been an applicant for Government aid, that it has stood on its own feet.

Mr. Bull. Thank you very much.

The CHAIRMAN. We will adjourn until 10 o'clock tomorrow morning, at which time Mr. Campbell will resume.

(Whereupon, at 5:10 p. m., the committee adjourned until 10 a. m. Friday, May 3, 1935.)

TO DEVELOP AN AMERICAN MERCHANT MARINE

PART II. MERCHANT MARINE ACT, 1935

FRIDAY, MAY 3, 1935

HOUSE OF REPRESENTATIVES, COMMITTEE ON THE MERCHANT MARINE AND FISHERIES,

Washington, D. C. The Committee met at 10 a. m., Hon. Schuyler O. Bland (chairman) presiding.

The CHAIRMAN. We will hear first Mr. Moran, who is a Member of Congress.

STATEMENT OF HON. EDWARD C. MORAN, JR., A REPRESENTA

TIVE IN CONGRESS FROM THE STATE OF MAINE

Mr. MORAN. Mr. Chairman, on March 4, last, the President of the United States, in a message to Congress, presented the question as to whether or not the United States should have an adequate merchant marine. He answered that question in the affirmative. In a vigorous message, he enunciated as an integral part of the administration's national policy, that the abuses, waste and subterfuge which had accompanied the previous pouring out of vast sums of public moneys, with no substantial result except the enrichment of 8 few privileged insiders, should cease. He demanded that the American people should be given the opportunity to have and to use American ships. He called for legislation which provided not only for adequate appropriations to that end, but also safeguards for their expenditure and, consequently, for a complete reorganization of the machinery for the administration of these public moneys.

It is my contention, proved by ample evidence produced by the Postmaster General's investigation, that that high and desirable purpose of our great leader in the White House is not only no nearer fulfillment by the bill-or, shall I say, by the various bills which are being confusedly presented to Congress—but that his purpose is being grossly frustrated and betrayed. It is my opinion that the pending legislation not only perpetuates the flagrant abuses of the past, but intensifies, magnifies, and aggravates them.

The CHAIRMAN. How do you come to that conclusion? Mr. MORAN. I was going to ask, Mr. Chairman, if I could just follow that along in that way, just stating things I am going to try to demonstrate; then, from then on, I am going to try to demonstrate them, if I may be permitted to go on down in that way. Then, if I do not do it, I will be glad to answer questions.

The CHAIRMAN. It is a surprising conclusion. Go ahead.

Mr. MORAN. Ample evidence has already been collected, much of it not yet made public, by the Postmaster General's investigation

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to make it plain that the special privilege and favoritism which have characterized the conduct of our merchant marine are continuing and will continue unabated. Again, as before, it is the beneficiaries, the few powerful individuals enriched from the Public Treasury to the detriment of 100 million American people, who are dictating, are shaping, indeed are actually writing the legislation which it is proposed to present as an evidence that there is a new deal” in shipping. There is no “new deal" in shipping if this legislation passes

. It is the same old steal played with jokers and with aces up the sleeves of those who have received millions and given the American people next to nothing in return.

The CHAIRMAN. Well, those are general statements and they are very surprising statements and I certainly want you to present your proof of them. And you can prepare a bill

Mr. MORAN. I have a bill

The CHAIRMAN. But every effort has been made to protect the American people; all the framers of this bill have had that definitely in mind and they have adopted a course which they believe will protect them.

Mr. Moran, Mr. Chairman, I have prepared a bill —

The CHAIRMAN. It is such a vicious attack that I want for one, that you submit your bill.

Mr. MORAN. Mr. Chairman, I have written such a bill. I introduced it in the House yesterday and it is being printed. I have made efforts to get it this morning, so far without success. I imagine in a matter of minutes or hours the bill will be available.

(See appendix.)

I for one propose to uphold the President. I shall not be silent in the face of this crass nullification and betrayal of his high and worthy purpose.

It is difficult to know where to begin in analyzing this thoroughly vicious bill, particularly vicious, I may say, as its various provisions seem to shift and change like a kaleidoscope. The President said that the present system of mail contracts “is an unsatisfactory and not an honest way of providing the aid that the Government ought to give to shipping”, but the bills now pending before this committee (I refer to title III) continues this "dishonest” system in aggravated form. It is true that it takes away from the Postmaster General supervision over the mail contracts, but it gives this new Maritime Authority unlimited discretion to continue this dishonest subterfuge for an indefinite period.

The CHAIRMAN. I call your attention to the fact that in the committee prints which have been available now for some days, the ocean mail contracts have been entirely eliminated.

Mr. Moran. Of course it has been difficult, Mr. Chairman, to follow the various committee prints and I secured the one I obtained yesterday here at the desk and was talking along that line on that particular point.

The CHAIRMAN. And of course the necessity for speed and the importance of the consideration has prevented consideration of many matters, except as we proceeded with the bill. This bill was prepared by Senator Copeland and myself and I am very much surprised at such an attack.

Mr. Moran. The President's message referred to the lending of money for shipbuilding, and he said it "has in practices been a failure." He said: "I propose that we end this subterfuge.” He also said Congress "should terminate the practice of lending Government money for shipbuilding." Yet the bills sponsored before this committee do not end this vicious practice, but, on the contrary, provide under title V that even more of the Government's money should be used for shipbuilding.

The CHAIRMAN. Where do you propose to get the money for shipbuilding, then; if we do not lend it out of the construction loan lund, where do you suppose we would get it? Have you any banks up in Maine that are ready to finance it?

Mr. MORAN. Of course, Mr. Chairman, I expect to comply with your wishes in the presentation; but, if I could be permitted, I will take that right up in detail following the statement I am now making.

Not only does title V provide for loans, but the pending bill reaffirms the policy of the 1928 act which the President has so severely criticized and which cost the shipbuilding companies $150,000 to pass.

Mr. LEHLBACH. What is that?

The Chairman. Where do you get the grounds for saying that it cost them $150,000 to pass the bill in 1928? I absolutely deny there was any use of money, other than what they paid themselves for their expenses--that there was any money or influence of that kind with the committees.

Mr. MORAN. I have here a letter dated August 13, 1928, signed by C. L. Bardo, vice president, American Brown Boveri Electric Corporation, which is the predecessor of the present New York Shipbuilding Corporation, addressed to Mr. H. L. Ferguson, president Newport News Shipbuilding & Dry Dock Co. of Newport News, Va. I believe it was this same C. L. Bardo who recently appeared before the Senate committee investigating the munitions industry and opposed the suggestion that any limitation should be placed on the profits of the munitions makers when this country is at war.

Mr. LEHLBACH. Yes; he is the same person.
Mr. Moran. The letter reads:

DEAR MR. FERGUSON: The Jones-White merchant marine bill as passed by the last Congress is the most helpful and constructive national shipping legislation ever presented to the American shipping public. This legislation was only made possible by the energetic action of Mr. Wilder and his associates in the transoceanic enterprise, with the help and cooperation of other shipping and shipbuilding interests.

The CHAIRMAN. He had nothing to do with it.

Mr. MORAN. I was merely quoting the letter there, and this letter has been developed in that investigation.

The CHAIRMAN. I do not care what has been developed in that investigation, he had nothing to do with it.

Mr. MORAN (reading). As a direct result of the passage of the Jones-White bill a number of remunerative foreign mail routes have been advertised, and some contracts let. ber of new ships are under active negotiation to build.

This activity was carried on in the interests of the shipper, shipbuilder, shipowner and suppliers of materials used in ship construction. The vision of the 4-day, high-speed transoceanic liners made an effective background for this legislation. Several months were spent in Washington by Mr. Wilder and his staff, explaining and educating Congress as to the need of an adequate merchant

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