And then it concludes; it states this: Initial and only investment in the Lykes Steamship Cos. other than from subsequent profits derived from steamship operations, which investment was made in October 1918, $115,439.13. In other words, that is what they invested; but it shows that the net profit, before income tax, from all steamship operations, including operations under mail contracts, as $6,625,936. would like to ask you, Mr. Campbell, just one question. Have they built, from all these profits, from all the time they have been operating the ships, during the profitable years and the lean years, have they built any new ships at all? Mr. CAMPBELL. No; they have not; but they have conserved their assets in the surplus and in the capital for that very purpose. Mr. SIROVICH. When do they intend to build them? Mr. CAMPBELL. Do you think that it was good wisdom, in the face of conditions which have existed for them in the last 2 or 3 years, to go into this building program, under such conditions? Mr. SIROVICH. When did the contract provide that they were to build those vessels? Mr. CAMPBELL. They had to build within 10 years, I think it was, then, originally, 10 years. Mr. BREWSTER. Yes; 10 years. Mr. CAMPBELL. Under the sales contract, within 10 years. Mr. CAMPBELL. If these people had taken and dissipated these funds, there might be just ground for criticism. But that is not the case, because they have not dissipated their funds. They have conserved them for that very purpose, as their testimony shows. Mr. BREWSTER. Do you mean that if anybody acquires a great deal of money, it is all right; and if they dissipate it, it is wrong? Mr. CAMPBELL. No; I meant exactly what I said. Mr. BREWSTER. The question, I said, was whether or not these funds were legitimately or fairly acquired in the beginning, but whether the gentleman has saved his ill-gotten gains. Mr. CAMPBELL. They are not ill-gotten gains, and I do not see how the Congressman could characterize a contract, made pursuant to act of Congress, passed by Congress, in strict accordance with the provisions of that act, and say that the contract is improper and the money obtained under it ill-gotten gains. It may have been a mistake. (Chairman Bland resuming the chair.) The CHAIRMAN. Mr. Farley says so. Don't you think that it would be a mistake to go into this contract, that if we went into one or two of these contracts we would have to go into 45 or 50 of them and stay here until next winter? The question we are concerned with now is the particular bill which sets up the machinery that will aid the President in determining these very questions. Mr. BREWSTER. Mr. Chairman, I do not know at just what point you came in; but at the very inception of Mr. Campbell's testimony this afternoon he expressed a very strong conviction regarding the inadvisability of Government ownership and Government operation-Government ownership and operation as compared with private ownership and operation, as contemplated in this act. The gentleman from New York (Mr. Sirovich) then sought to elicit his opinion as to Government ownership and private operation. Mr. Campbell had expressed very strong opinions as to the inefficiency of Government operation, and that seemed to the members of the committee who were then here, or to many of them, to make material the question as to whether the efficiency of private operation always served the Government interest and the public interest in the development of the merchant marine. That is what has led to this discussion, which seemed to make very material the report of the Postmaster General, who, according to his contentions, feels that the Government has fared very badly in the carrying on of the system which it appeared that Mr. Campbell continued to advocate. The CHAIRMAN. Is it not a fact that if the Post Office Department report is adverse and that there is no defense against the Post Office Department report, then we have in the Post Office Department report the strongest case, and we have that before us for our consideration in passing on the question? I have no desire for anything else than to expedite the hearings and conclude the testimony. But it seems to me that the report of the Postmaster General gives us the Government's case. These people do not want to come in to defend. If they had, I would certainly feel like saying to them, "Why, we cannot go into that now." Mr. HAMLIN. May I, Mr. Chairman, if it is not out of order, ask if this bill is a Government bill, if the Government is behind this bill? Is it an administration bill? Is that an illogical or an unjust question? The CHAIRMAN. That is a perfectly fair question. All that the committee had to go by was the message of the President and the two reports that were sent down. We had to work up the best bill that we could. It is not a Government bill. Whether we will be able to work out something that will be acceptable to the Government, I do not know. I hope that we will be able, before we conclude our consideration in executive session, to work something that is satisfactory to the Government. We have tried to follow the recommendations of the President, except as to the construction loan fund, in providing the two subsidies that he suggested, the construction subsidy differential and the operating differential. I would suggest that, if this line is to be followed, we go through it. Mr. LEHLBACH. There is just this to be said, in view of the discussion that has preceded. A construction differential to be paid by the Government and an operating differential to be paid by the Government presupposes private ownership and private operation. Otherwise, it simply does not make sense. The CHAIRMAN. That is quite true; but it is entirely out of the power of this committee. Mr. WEARIN. Mr. Chairman, I do not think that the conclusion of the gentleman necessarily follows. We can take into consideration the matter of the construction differential and the matter of the operating differential, without viewing it from the standpoint of private ownership and private operation. Mr. LEHLBACH. It is not taking into consideration only a differential, but it is paying a subsidy. There must be someone to whom that subsidy can be paid. Mr. WEARIN. I still insist that that can be done without following the lines of private ownership and private operation, necessarily. The CHAIRMAN. Will not the gentlemen agree with me in this, that this is a matter to be thrashed out in executive session? Mr. WEARIN. I think the chairman is eminently correct. The CHAIRMAN. Rather than to be debated before the crowd of those who are here and want to be heard. I have no objection to following out any reasonable lines. It is within the power of the committee, if they so desire. Mr. BREWSTER. We want to keep the testimony within bounds. The CHAIRMAN. I know you do. Mr. BREWSTER. On the other hand, apparently the whole question of policy, as between Government ownership and Government operation and private ownership and private operation, is going to be involved in the final determination of this; and I feel that one as representative as Mr. Campbell and one with as broad experience as he has, in expressing his opinion, which naturally carries weight, must take the relative advantages of the two situations into consideration. I can appreciate the personal delicacy of it; and I do not want to venture over into that field, but there are 41 other companies that you do not represent. It would be rather to those, on the basis of this report, that your discussions of policy and opinion might perhaps much more happily be addressed, without getting your own clients The CHAIRMAN (interposing). I suggest that we get through that line as quickly as possible. Mr. BREWSTER. I simply wanted to be clear that Mr. Campbell cannot, as it seems to me, ignore this whole matter, which he says has been a matter of discussion for 2 years, with substantially the same charges, before the Black committee, without leaving an aching void in his testimony. The CHAIRMAN. The administration desires a body that would assist in working out these problems. Mr. BREWSTER. Exactly. Mr. CAMPBELL. I wish that I were in a position to discuss the whole Post Office Department investigation; but I do not believe that one man can possibly do it. They worked on that investigation for 3 solid months and there are 34,000 pages of the hearings. I will say this, that those boys down at the Post Office Deparment worked extremely hard to do what they did. Thousands of documents were put in in addition to all the thousands of pages of testimony. I was there myself for 15 days on one particular case before the Post Office Department. It is obviously impossible for any man, without reading through that great volume, to know what is in the record, and it is not fair to pass judgment on anything of which you have not full knowledge. Mr. BREWSTER. How do you pass judgment on the Government ownership and operation? How do you speak with authority and full knowledge of that? Mr. CAMPBELL. Because, if I may plume myself on that, I lived with that situation for years. I was counsel for the Shipping Board during the war and I have lived in intimate contact with it during all these years. I have seen it operate and, if I have any intelli gence at all, I could not help forming opinions and judgment. I may be wrong. I could not help it. My own judgment is, and I think that the records of the Shipping Board will bear me out, that Government in business is not the efficient way. Mr. BREWSTER. The difficulty I find, Mr. Campbell, is that you have very decided opinions, apparently, about the shortcomings of Government ownership and operation, but that you are not concerned about the iniquities of private operation. Mr. CAMPBELL. Not the iniquities. I do not like that word. The inefficiencies, we may properly say. Mr. BREWSTER. I will accept your word-inefficiencies. Now, you seem to plead inefficiency. Now, what are alleged to be the iniquities of private operation? That is the thing I cannot reconcile in your testimony. Mr. CAMPBELL. Mr. Congressman, the distinguished President of the United States was given power, by Congress, to cancel all of these contracts. This investigation was made by the Post Office and the report was made to the President. Is it to be presumed that because there are iniquities of which the President has knowledge-by "iniquities" I mean just plain cheating the President of the United States is closing his eyes to those? He has full knowledge. He has not canceled one contract. He has sent a message to the Congress suggesting that you reframe this Government aid to the merchant marine so as to establish it on a permanent and successful basis, to call a subsidy a subsidy, if you please. And somebody, I take it the distinguished chairman of this committee and the Senate committee and perhaps other members of the committee, prepared this bill, and it went out to the shipping interests. We understood that we were invited to appear before this committee to express in the best way that we could our views on this particular measure in the hope that we might help you solve this problem as the President wants it solved, so that we may go forward with an American merchant marine that will build up the foreign commerce of this country to the welfare of the Nation. That is all I am here for. If I cannot help any, I am prepared to walk right out that door. It is no pleasure to me to stand here and be lampooned and harpooned. But if I can contribute anything to this discussion, I am delighted to do it. The CHAIRMAN. You were not here, Mr. Brewster, on the day that we agreed Mr. Campbell should come back. The primary purpose was to get Mr. Campbell's reaction on what is commonly called the "Haag amendment ", which is an amendment that has been suggested by many people, which was formulated by Mr. Haag, providing for construction by the Government and then sale to individuals at the foreign cost of the vessel, amortized over a period of years, and credit on the amortization of the operating differential. Mr. BREWSTER. I thought I heard Mr. Campbell the last time he testified here, but I refrained then from asking questions because I had not examined these reports. Since then I have and they gave me very great concern. The CHAIRMAN. I think so far as that is concerned, I have not read these reports, but I have read practically all of the testimony that was presented to the Black committee. There have undoubtedly been abuses. It was at least my thought that we would try to build for the future to prevent their recurrence. If Government ownership is that solution, well and good. Personally, it was my thought that the President's message contemplated private ownership. Mr. BREWSTER. I think that Mr. Lehlbach's point is perfectly sound, that the President's message apparently contemplated that. The President's message did not, however, contemplate continuation of construction loans. Mr. LEHLBACH. Of course, that is a detail of the major question of policy. I would like to state this: I do not want what has gone before to remain in the record without some comment. I was taken very much by surprise this afternoon, and I did not know that we were considering or that it was supposed that the committee would consider the policy under which a merchant marine was to be developed and continued in this country. With respect to either Government ownership or private ownership or Government operation or private operation, I thought that that matter was settled. In 1920, when we first established this method of developing and building up a merchant marine-and that was the first act that was passed in modern times in that respect, and that was under the administration of President Wilson-the declaration of policy contained in the first sentence says that The United States shall have a merchant marine * ultimately to be owned and operated privately by citizens of the United States. That policy was reaffirmed in the act of 1928. The bill that we are considering states in its declaration of policy in section 1 that the United States shall have a merchant marine * owned and operated under the United States flag by citizens of the United States and so operated and regulated as to secure to the shipper of American products adequate service and parity of rates to foreign markets. If we are going to start out to deliberate whether we should go back to Government ownership or institute Government ownership-we never had it as an operation but for a very few years, possibly 2 or 3 years after the war ceased-then considering the provisions of this bill or any other bill like it is useless. If that is the subject matter, let us quit these hearings and go into executive session, and let us determine whether we are going to have what the policy of the United States since 1920 has been, a privately owned and privately operated merchant marine. If we are not going to have that, as far as I am concerned, we will have to see what we can do. But to continue the consideration of these bills when there is a disposition to change radically and fundamentally the entire conception of a merchant marine privately owned and privately operated I do not think is proper. We ought to settle that before going further. The CHAIRMAN. My thought is that we would go on with the hearings. That is a question that would address itself to the committee as every question with reference to the merchant marine would. Mr. WEARIN. May I interpose this one brief remark, that of course I think in the consideration of this legislation we naturally should consider it in the light of the experience that we have had in the past as evidenced in these reports; and following upon the |