we have to recognize what the costs are and the advantages are in England," and we have to do the same with respect to other nations. So the philosophy of this bill is setting up a rule of conduct so as to place the American shipper, shipbuilder and ship repairer upon the same footing, if we intend to stay upon the high seas. But by the same token it was never intended by our President-and I believe if it was called to his attention he would have included this item in his message that we should militate against the zones in our own country in all of our enactments in this recent "new deal" Congress, if you are in sympathy with it, there is a recognition of a zone condition in our own country. We have taken the far South and said to the cotton raisers, what? We have said to them "You have got to come into the city with your farm dollar, which is affected through the years by a parity. Its value is affected, and, in order to equalize the economic process, we give you an advantage by a processing tax which is spread out among you, the cotton raisers. And so we have gone into the Middle West, the Northwest, the great wheat areas, and tried to equalize that situation as against the city folks.

Now it would be entirely within good logic and good legislation to equalize the situation existing, so far as this industry is concerned, between the Pacific and the Atlantic coast.

I thank you.

STATEMENT OF HON. GEORGE BURNHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. BURNHAM. Mr. Chairman, the ground has been very thoroughly covered and there is little that I can say.

We have no ship-building industry in my district. We did, I will say for the benefit of my good friend, Mr. Lehlbach, build two concrete ships during the war and, unfortunately, I was a member of the board of directors of the concern that built them, the Pacific Marine Construction Co. They were built, of course, as an emergency undertaking. We had to bring all of our builders, or experienced men, from Philadelphia. But they were successful concrete ships; those two ships were the best concrete ships ever built in the world and they are in service today as tankers-and that is what they were built for. That yard, however, was given over to the Government afterward and it is now a destroyer repair base operated by the United States Navy.

I am very, very anxious, as are all of the people of the Pacific coast, to see some encouragement given to the ship-building industry on the Pacific coast and I think this suggestion of Mr. Welch's is very timely. If we can get an amendment of this kind incorporated in this bill which you are now considering, I believe it will give the assistance necessary to resuscitate the ship-building industry on the Pacific coast.

It is a very small item, only three-quarters of 1 percent on the money they shall borrow from the Government and I am very, very anxious to see this amendment incorporated.

I thank you very much.

STATEMENT OF HON. JOHN H. TOLAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. TOLAN. Mr. Chairman and gentlemen of the committee, anything that I might say about this matter would be more or less a repetition. I am from the Seventh Congressional District of California; that is, Oakland and Berkeley, just across the bay from Mr. Welch's district, and it is really pathetic, gentlemen, to see those idle shipyards there.

Now I have always been in favor of a ship subsidy. I debated that at one time in the university and remember it very well, because I lost the debate. You always remember longest the things you lose. But it has always struck me as a citizen, not as a Congressman, with our richness, with out brains and intelligence, that such a small percentage of the shipping of the world is carried in American ships. I look upon that really as an insult to our intelligence. And we have known for countless years that we cannot compete with them on account of labor. We have known this, but we have not remedied it, and one of the finest suggestions that I have heard since I have been in Congress is the chairman's suggestion that we should have a committee on foreign commerce.

I just want to say, in conclusion, that nothing could better serve to stir up the feeling on the Pacific coast than this proposed amendment of Mr. Welch, and there is nothing I can go back to Oakland with that they would treat as better news than legislation of this kind.

I thank you.

STATEMENT OF HON. WESLEY LLOYD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Mr. LLOYD. Mr. Chairman and gentlemen of the committee, I regret I was not here in time to hear the discussion as it has thus far progressed upon the subject. I fancy that each community, each locality on the Pacific coast is desirous of obtaining some differential that will rehabilitate our shipbuilding interests upon that coast. I am not particularly concerned with the question of whether this shipbuilding is going to the North Pacific or the South Pacific, but I am concerned, as a nationalist, in that whatever differential is reasonable and proper be granted to the Pacific coast, to the end that shipbuilding generally upon that coast may be, as I said, rehabilitated.

No man can see around the bend of the road; no man can look over the hilltop; but if past history is any guide to future events it would be wise indeed and I speak of this country generally-to provide adequate shipbuilding facilities upon the Pacific coast_now. That can only be done by granting reasonable differentials. I have urged and have introduced a bill providing for a differential which would cover in part the cost of freight between the Atlantic and the Pacific coast. As a factor of economy, it would be wise for the Government to do that; because it is cheaper to ship the metal used in ships around in ship bottoms than it is to move the completed ship after it is built. We have wonderful opportunities on the Pacific coast for snipbuilding. Our days are longer; our working days are more numerous

and we can, if the business and opportunity affords, erect shipbuilding yards from the North Pacific, at Seattle, Tacoma, and Portland, down as far as San Diego Harbor. The time may come I hope that such an eventuality will never occur-but if the time does come when it is necessary to repair ships in time of emergency, our Government yards will never suffice. And I hope that whatever can be done by way of the Welch amendment, or whatever other proceeding seems proper, may be carried out, with the ultimate idea. in view of providing adequate shipbuilding and ship-repair facilities that may be used in any eventuality.

I thank you.

STATEMENT OF HON. CHARLES KRAMER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. KRAMER. Mr. Chairman and gentlemen of the committee, I believe you have heard quite a repetition on the need of shipbuilding on the Pacific coast. However, I heartily am in favor of the amendment and of this bill, but I do not believe my colleague and friend, Mr. Welch, has gone quite far enough.

My colleague, Mr. Dockweiler, emphasized the fact that the interest rates are higher on the Pacific coast than they are in the East and Middle West, but he did not emphasize to what extent. He said they were probably 1 percent higher. Well, in my experience, in dealing with financial matters in the Middle West as against the East, you will find there is a differential in that distance of 1 to 2 points in the interest rates; and, to my great amazement, when you go out on the Pacific coast, your interest rates go all the way from 1 to 3 points higher than they are in the Atlantic States or the Eastern States. Therefore, in order to carry on all projects on the Pacific coast, there must be some differential-not alone in that line, but also as to the amount that would be given as a differential in the cost of building. Now it costs something to bring ore or other materials that are necessary in construction that are not on the Pacific coast, from the Middle West and whether the ship was originally built on the east coast, you will find, after the time it is transported back there and passes through the Canal, it is going to carry a certain overhead in order to bring it over into that Pacific coast area.

The Thirteenth District of California, which I represent, has the largest manufacturing industry west of Chicago. I know the northern part of the State, San Francisco, has a large industry, but they do not have the steel mills and the other machinery industry that we have, particularly in the Thirteenth District. And I dare say that the Thirteenth District in that particular area has fast been growing. There is a vast number of men there who are in the field and "r'aring to go as soon as we give them the opportunity, and I feel if this amendment of Mr. Welch's was reconsidered and if you would make that, instead of three-quarters of 1, from 1 to 14, it would probably alleviate the situation a great deal better than it would by leaving it at the present rate.

I know our Pacific coast. As has been said before, you can build these ships and build them almost the entire 365 days that we have in the year. We have wonderful facilities there. As some of you men who have been on the coast know, there are a great many advan

tages in that respect that they do not have on the Atlantic coast. However, we do not wish to take the construction of ships away entirely from the Atlantic coast. There is a great deal that they can maintain. I have some very dear friends on the Atlantic coast, in the Government navy yard, at Brooklyn, and I know he has often remarked to me it was very peculiar that we did not have a merchant marine shipbuilding industry on the Pacific coast.

So I want to emphasize again the fact I am heartily in favor of this and hope you will reconsider it and see if you cannot raise this a point, to at least 1 or to 14, instead of three-quarters to 1 percent.

I thank you.

STATEMENT OF EMMETT MCCABE, SECRETARY TO CONGRESSMAN COSTELLO OF CALIFORNIA

Mr. MCCABE. Congressman Costello, of the Fifteenth California District, was detained at the Military Affairs Committee meeting and he asked me to come here and tell this committee he is entirely in accord with what has been said in behalf of Mr. Welch's proposal by his colleagues from California and the other Western States.

His district lies entirely in the residential section of Los Angeles and he has nothing to gain by this particular bill. There is no possibility of shipbuilding in his district. But he does feel, as he is interested in the development of the West and western industry, that this proposal should be enacted.

FURTHER STATEMENT OF HON. CHARLES J. COLDEN

Mr. COLDEN. Mr. Chairman, would you indulge me a few minutes for a little further statement?

The CHAIRMAN. We will be very glad to have it.

Mr. COLDEN. Mr. Chairman and gentlemen of the committee, I was very much intrigued by the remark made by the chairman of this committee concerning the necessity and desirability of a committee on foreign trade and, in the further discussions of the Pacific trade, the question of the oriental trade was touched upon. That is one of my pet subjects.

I was awakened to the possibilities of that by a trip through the Orient a few years ago, and at Tokyo I attended a luncheon which was addressed by Mr. George Bronson Rhea, the editor of the Far Eastern Review. Very much to my surprise, he made the statement, as I recall it, that about 70 percent of our trade with China is not of record, for the reason that the Japanese control what we call the wholesale trade of China to a very large extent, and that Americans generally do not appreciate the value of the Chinese trade.

I also want to call attention of the members of this committee, all of whom are necessarily very much interested in the foreign trade, that China is the only country on the face of the globe that affords a possible market for our two great surplus products, cotton and wheat. It has been said-it is an old saying about the Chinaman's shirt, but there is no question but if the Chinese were properly clothed, if the average workingman could have the clothes of comfort that he ought to have, that China would absorb the surplus cotton of this country. And we must recall-it is a sad story-that probably 100,000,000 of

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those Chinamen-there are 450,000,000 of them altogether-that 100,000,000 of them do not have food in any day sufficient for their wants and their comforts. I remember a few years ago this country was having a great discussion as to what to do with a 200,000,000bushel surplus of wheat-200,000,000 bushels. Why, this 100,000,000 Chinese could consume that wheat within a few weeks. It would not

last very long. That shows the possibilities of that market.

Of course, that market is not going to be available until China is rehabilitated, but I want to call your attention to this fact, that China now is beginning to show the processes that occurred in Japan a short time ago, in modernization. You take the city of Nanking, the capital of China, a walled city, and one of the most outstanding things about Nanking is that you find a boulevard cut, from one gate to the other in that wall, right through the heart of the city, 100 feet wide. That is an instance of modernization in China. And in hundreds of fields where you see these little mounds, graveyards of their ancestors, they are being plowed up now because the Chinese are very rapidly changing their attitude toward those things.

And you take the city of Canton-there are few cities in the world today that show as many miles of new streets and new buildings as the city of Canton, and in the suburbs of Canton you will find subdivisions with beautiful homes in them that would be a credit even to Washington and Los Angeles. There is a rapid modernization going on in China. It is true it is only in the more populous centers, but the process has taken root and there is no time like the present for this country to begin to get its toe-hold in China.

And, of course, our country is awake to that fact, for the very reason we are proposing this new air-mail service over the Pacific Ocean. But of what avail is it going to be to carry mail to China and not have ships to follow it? If this committee sees fit, in its good judgment, to approve this amendment of Mr. Welch and encourage shipbuilding on the Pacific coast, where are these ships going to find cargoes and where are they going to take them? It is very evident the great market of the world today is China in her process of modernization. And I might say, incidentally, if we had loaned half of the credit to China that we loaned to the European countries, we probably would have a very good market for our cotton and our wheat today.

Another thing about China that astounded me is that China is still a canalized country, with 120,000 miles of canals. If you would spread the canals of China through the United States, you would have 30 canals from the Atlantic to the Pacific; you would have 30 canals from the Canadian line to the southern borders of the United States. And that accounts for the fact there are great famines in China. The canals, of course, are confined to the river valleys and the low lands. You take the canal system of the Yangtze River, it is entirely separated from the Hwang-Ho and also the Pearl River country; there are no lines of transportation from one of those valleys to the other that are adequate to carry sufficient food from one community to another. The National Government, under Sun Yat Sen, promoted the great plan for modernizing the transportation system of China and they have a great railroad program; they have a great highway program. Of course, that has been delayed and interrupted by the successive rebellions and troubles they have had, but the building of