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marine, privately owned and operated. The expenses incident to this effort were approximately as follows: Publicity and advertising

$38,000 Salaries of staff solely engaged in M. M. legislation duties and for reports submitted..

32, 000 Services of experts.

26, 000 Hotel expenses at Washington..

23, 000 Office expenses.-

12,000 Traveling expenses.

15, 000 Miscellaneous (printing, telephone, telegraph, photos, etc.)

4,000

150,000

EVERY SINGLE DOLLAR OF THIS EXPENDITURE WAS SPENT LEGITIMATELY The board of directors of American Brown Boveri Electric Corporation have assumed these obligations without any assurance as to reimbursement, but with an abiding faith in the fairness of others whose interests have been so materially helped by this legislation As stated to you recently, we are hopeful that others whose interests have been so vitally helped will contribute to a fund of $100,000, which will leave the American Brown Boveri Electric Corporation to carry $50,000 of the direct out of pocket expenses and $56,000 for trans-oceanic development.

On the $100,000 basis, your proportion as nearly as we can estimate it upon the division of ship costs would be $15,000.

The other contributors who have been solicited are as follows:

American Engineering Co., Babcock & Wilcox Co., Bath Iron Works, Bethlehem Shipbuilding Corporation, De Laval Steam Turbine Co., Federal Shipbuilding Co., General Electric Co., Hyde

Windlass Co., Pusey & Jones, Sperry Gyroscope Co., Sun Shipbuilding Co., Westinghouse Électric & Manufacturing Co., Worthington Pump & Machinery Corporation.

I would very much appreciate the courtesy of an early reply.

Checks should be made payable to the company and forwarded to the offices at Camden, N. J. Very truly yours,

C. L. BARDO, Vice President. The CHAIRMAN. If they paid anything on that, they were bigger suckers than I thought they were.

Mr. LEHLBACH. All I can say is, that is an expense account for what appeared to be legitimate expenses, and, if I was going to pay any expense account of Larry Wilder, I would want it most carefully audited before I did so.

I want to say, as a member of this committee, and I think I will be borne out by the chairman, that the activities of Mr. Wilder and his gang were considered as an insufferable nuisance to the committee during the consideration of that bill.

The CHAIRMAN. Unquestionably.

Mr. Moran. I quote again from the President's message, where he said

Mr. WEARIN. Mr. Moran, before you go any further, I am inclined to agree with the chairman that is a rather serious charge to place before this committee, with the apparent implication it might have had some connection with the Congress: Do you have any evidence of that kind to submit?

The CHAIRMAN. And I would say to the gentleman that I know the men who composed this committee and the Congress at that time, and they were as high-minded men and as patriotic as the gentleman (Mr. Moran) who is speaking.

Mr. LEHLBACH. Of course the chairman of the committee at that time and one of the gentlemen whose names the act bears is the Senator from the gentleman's State of Maine, Mr. Wallace H. White,

and, if he is trying to impugn that he was corruptly influenced to pass the Jones-White Act, let him say so plainly.

Mr. MORAN. Let me say plainly that I have made no inference of that kind at all; but, in answer to that specific question, which raises a difficult question, that in combing the records I have learned of certain startling facts and here are two typical examples. I quote from a telegram dispatched only 2 years ago by a distinguished Member of the Upper House who is now, as he was then, actively interested in this legislation—a telegram which he dispatched to a leading shipping man whose name is internationally identified with a ship line now enjoying the benefits of the existing ocean-mail contracts, which reads as follows:

You will be pleased to know we defeated all amendments to oceanmail transportation item and bill now goes to conference with the full amount included. Regards.

The CHAIRMAN. Now what is there wrong in that?
Mr. MORAN. I am just presenting it for your consideration.

The CHAIRMAN. Do not you wire to your constituents on matters in which you are interested and they are interested?

Mr. MORAN. I do. I also quote from a letter on the letterhead of one of our shipbuilding companies written by one official of that company to another. I am leaving the names out. telephoned me today asking me to go down to

Island with Senators

and

for this week-end. I told him I could not go, so he said he would make a later date. Possibly you might work in the Senators. I feel mightily bold in making suggestions about the use of your shooting preserves, but you know we salesmen inust do that sort of thing.

I quote again from the President's message, where he said:

Reports which have been made to me by appropriate authorities in the executive branch of the Government have shown that some American shipping companies have engaged in practices and abuses which should and must be ended. Some of there have to do with the improper operating of subsidiary companies, the payment of excessive salaries, the engaging in businesses not directly a part of shipping and other abuses which have made for poor management, improper use of profits, and scattered efforts.

The bills pending before this committee apparently make a feeble effort to correct a few of the many abuses the President referred to in his message, but I venture to predict that if this pending bill is written into law the high-priced attorneys for the shipping companies will find it easy to evade each and every one of these proposed "safeguards." I refer to section 517, subsection (b), which states that "salaries and allowances (including compensation in any form) to its officers, employees and counsel, shall be reasonable.” Who is going to say what is “reasonable" compensation? Where do you find in the pending oill any prohibition against the employment of highpriced lobbyists who will seek to influence the large discretion confided to this Maritime Authority?

I might refer to section 513, occurring on page 33 of the reprint dated April 30, which purports to exercise some control over affiliated, subsidiary, and holding companies, but provides that these safeguards may be waived with the written consent of, and upon such conditions as may from time to time be prescribed by, the Authority. Is it such weasel-worded phrases as this which are intended to correct the abuses complained of by the President?

Senator Black has offered an all-inclusive prohibition of this type of abuse, which amendment was printed in the Congressional Record (p. 6748), but which this committee has not chosen to accept. Women and children first has always been a rule of the sea, but this is the first time that the able and astute gentleman who have been so successful in milking the Treasury have managed to apply this wisdom to the financial aspects of shipping by having their wives and children as the dummy stockholders in these profit-absorbing subsidiaries.

I would suggest that the members of the committee request that the detailed reports signed by Postmaster General Farley, which I know give striking examples of the abuses I have been discussing, be transmitted to this committee for its information, and that these hearings be not closed until they have this information.

Mr. WEARIN. What detailed reports do you refer to there, Mr. Moran?

Mr. MORAN. I refer to the sixty-two odd volumes, as I recall it, of stenographic testimony which I have seen, taken before the Postmaster General's investigating committee in connection with oceanmail contracts.

I have presented a bill (H. R. 7854) which is proposed as a substitute to the printed bills, which appears to me to embody the spirit and intent of the new legislation requested by the President to give to shipping a "new deal” and to give a fair deal to the American people who are paying the cost. The bill I have introduced provides for Government ownership of the vessels, but also provides that they shall be privately operated whenever feasible. And why should not the Government own the ships

The CHAIRMAN. Do not you know that in nearly all the abuses that have been pointed out by the Black committee they are directly traceable to Government ownership and private operation?

Mr. Moran. I believe Government ownership with private operation under the safeguards lined up in my bill deserve consideration.

Vir. LEHLBACH. Why, they had so many safeguards that the pay roll of the Emergency Fleet Corporation and Shipping Board were more than the combined pay roils of the operators. For every one man working for the operators, they had two men working for the Emergency Fleet Corporation, and the more men they had watching them the more money was stolen.

Mr. WEARIN. Of course, part of the expenso in the original instance, when they were operating those lines, Mr. Moran, I would have you and every one remember was occasioned by the establishment of the shipping lines which were afterward turned over to private companies to be operated under a subsidy.

Mr. Morav. I have lived near enough to two shipyards and to the people interested in ship building to have some information in connection with that. I realize, too, they were engaged in a pioneering cause, and pioneering in any trade field, as evidenced by the proposed trade-penetration subsidy, is a most costly procedure. The effort was for the Government to take trade lines and to do the pioneering It was very dillicult to combat competition and to operate the lines until they could be built up to operate profitably and, during that period, the Government was holding the bag and paying the expenses. And, when the thing was built up so that they showed profit enough for the steamship companies to be willing to take them over and operate, then not only did they make a sale of the lines but they had a regular policy of selling them. Therefore, we took care of the period when it was most difficult and expensive in the pioneering development, and, after the trade line had been developed, and somebody was satisfied of that, to the point where it could be operated at a profit, then it was turned over to these steamship companies.

And why should not the Government own the ships, since it must be recognized that apparently we can have no merchant marine unless the Government supplies almost all of the money? Under existing law, the Government has been loaning 75 percent of the cost at rates of interest so low that it shocks the conscience of all but the recipients. I refer to rates of interest as low as one-eighth of 1 percent on a 15-year loan, such as made to the Grace Line. But, according to witnesses before the Senate Committee on Commerce the day before yesterday, this Committee's Print No. 2 provides that the Government shall loan practically 88 percent of the cost of the new vessels. For example, the witness before the Senate committee testified that, if a ship were built in American shipyards at a cost of $1,000,000, it is reasonable to estimate that it would cost $600,000 to build in a foreign shipyard; that the Government would make the shipowner a present of the $400,000 differential and, in addition, would loan 80 percent of the $600,000 balance, or $480,000, making a total of $880,000, or 88 percent of the cost of the new vessel to be advanced by the Government. Is 88-percent Government ownership good and 100-percent Government ownership bad?

The $30,000,000 a year now largely wasted and dissipated on mail contracts will suffice to supply the $300,000,000 additional capital to go into the new corporation proposed in the bill I have introduced and, as the result, the United States will have a merchant marine.

I will now give a synopsis of my bill. I am sorry the bill itself is not available as far as I know; at least, I have not been able to get it. It was introduced yesterday afternoon and I confidently expected it would be on your desks this morning; but, from telephone calls I have made, I have been unable up to the present to get a copy of the bill.

Mr. LEHLBACH. Let me ask you: Do not you see the difference between owning real estate and holding a mortgage on it?

Mr. MORAN. Oh, yes, quite well.

Mr. LEHLBACH. There is quite a difference where the money is loaned with the ship as security, and owning the ship and trying to make money out of it.

Mr. WEARIN. The ship is only a means of collecting the mortgage.

Mr. MORAN. In theory, there is a great difference between whether the Government owns the ship, or whether the Government gives the money and owns a mortgage; but if, as an actual fact, there has not been any paying back of the mortgage and if as an actual fact, in addition to the mail payments which have been made with that in view, construction has not been increased to any appreciable extent and if as an actual fact the actual assets of these companies in the business, their capital investment in the business, as developed in the Post Office Department's hearing, is so small as compared to the entire liability involved that there apparently would be no hope to do so, as I think the Postmaster General's report shows that all of the shipping companies combined could not build a $10,000,000 Manhattan today, then I say there is practically in effect, so far as the taxpayers of this country are concerned, not much material difference between that and the Government's owning the ships outright.

Mr. WEARIN. Except, in the event of a national emergency, the ships would belong to us and we would not have to pay anybody any exorbitant fees for the use of them.

The CHAIRMAN. Which is a very important factor.

Mr. MORAN. I recognize that particularly and I might call to the committee's attention that that particular feature is an advantage of the position that I advocate and is a particular argument in favor of the bill I advocate and a particular disadvantage under this bill before the committee, for this reason: The bill I advocate is 100 percent Government ownership of the ships. It also provides that those ships can be taken over, of course, under the direction of the President and be operated by this Federal corporation, and, in the event of an emergency, the United States Government does not have to buy the ships; the shipbuilders cannot come to them at that time and say “Here, we have a wonderful prospective profit ahead of us in this war game." I remember about the World War and the various cruises our ships took where on trip alone would pay the entire cost of the vessel. The enormous saving to the Government, under this particular system I suggest, of the tremendously high prices they would have to pay for ships otherwise, would in itself pay the Government for the cost of this in time of war.

The CHAIRMAN. You know very well, under existing law and under this proposed law, these boats can be taken over at actual cost, less depreciation, and without any consequential damages.

Mr. MORÁN. But my bill has the distinction there are no consequential damages to be paid and no damages to be paid of any kind, because the boats are owned by the Government.

The CHAIRMAN. The bill we are considering provides there are po consequential damages to be paid and the Government takes the boats over at their actual value, less depreciation.

Mr. MORAN. Every ship, under the present legislation, would have to be paid for to the owner of the vessel, for the simple reason that the title is in his hands; whereas every ship under my bill would not have to be paid for, not a single ship, because it is the property of the United States Government.

Now I would like to place in the record a very brief synopsis of my bill, which is divided into titles. Under title I, section 1, is declaratory of the policy.

Sections 2, 3, 4, and 5 relate to the organization of the corporation, its management, assets, and so forth.

Sections 6, 7, and 8 transfer title to the vessels and other assets, formerly controlled by the Shipping Board, to the corporation.

Section 9 authorizes the corporation to issue bonds guaranteed by the United States up to a sum not exceeding five hundred million dollars.

Sections 10, 11, 12, and 13 relate to contracts for the building of ships in American yards.

Sections 14, 15, and 16 provide for the purchase of vessels from the present owners.

Sections 17 to 25, inclusive, relate to the chartering of vessels by private operators.

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