MERCHANT MARINE ACT, 1936 MONDAY, MARCH 9, 1936 UNITED STATES SENATE, The committee met, pursuant to call, in the caucus room, Senate Office Building, at 10 a. m., Senator Royal S. Copeland (chairman) presiding. Present: Senators Copeland (chairman), Fletcher, Bailey, Caraaway, Clark, Overton, Bachman, Bilbo, Guffey, Radcliffe, Vandenberg, Maloney, and White. The CHAIRMAN. The committee will come to order. We have a witness here from Chicago who would like to be heard for a few moments. Chicago men are always in a hurry and have to get back to the Windy City, so Mr. Belnap, if you will come forward, we will hear you now. Give your name and position to the stenographer. STATEMENT OF NUEL D. BELNAP, REPRESENTING THE Mr. BELNAP. My name is Nuel D. Belnap. I am a member of the firm of Waller, Burchmore & Belnap, lawyers, of Chicago, Ill., and I speak here for the National Industrial Traffic League. The National Industrial Traffic League is a national organization of shippers. Its membership is composed of individuals, firms, and corporations located throughout the United States who are engaged in the shipment and receipt of commodities of every character in great volume. It also has as members most of the important commercial, trade, and traffic organizations, which deal with traffic transportation matters. A large number of the several hundred thousand shippers who have representation in the league are interested in the shipment of property by vessels in the foreign trade. While the membership of the National Industrial Traffic League has not expressed itself on the bill under consideration, not having had a meeting since its introduction, it has from time to time considered bills embracing the same subject matter, particularly at a meeting held in Cincinnati in April 1934, at a meeting held at New York in November of 1934, and at a meeting held at Chicago in November of last year. The league is vitally interested in this bill. It endorses and advocates a national policy of subsidy and support of our privately operated merchant marine, so as to enable it to continue in competition with the ships of other nations. 1 The league favors conferring such powers of regulation as may be provided for carriage of goods by water in the foreign trade upon a body corporate, and distinct from any executive department. Such an independent body is created by this bill. The league opposes any extension of regulation beyond that provided by existing statutes. The chairman of its ocean coastwise and intercoastal committee testified before this committee when S. 2582 was under consideration in opposition to the additional regulations for water carriage provided by that bill. Similar objections can not be made to the bill now under consideration, since it does not extend regulation beyond present limits. Section 701, which deals with regulation, does no more than transfer to the "United States Maritime Authority" created by section 201, the regulatory powers heretofore vested in the United States Shipping Board and the Department of Commerce by existing statutes. As stated, that provision has our support and approval. The CHAIRMAN. Thank you very much, Mr. Belnap. The CHAIRMAN. Mr. Belnap, Senator Guffey would like to ask you a question. Senator GUFFEY. Would you oppose the operation of rate making in the Interstate Commerce Commission? Mr. BELNAP. We think that the regulation of water carriage should be in a body distinct and separate from the Interstate Commerce Commission to the extent that there is to be any such regulation. Senator GUFFEY. You are opposed to transferring that feature of it to the Interstate Commerce Commission? Mr. BELNAP. Exactly so. Senator GUFFEY. Did your association take any action on that feature of the bill? Mr. BELNAP. I am reasonably certain that at the time a similar provision was under consideration in the former bill to which I referred, the league approved the transfer of existing regulation to a body similar to that created by this bill but separate from the Interstate Commerce Commission. Senator GUFFEY. Did it ever go on record as opposing the transfer to the Interstate Commerce Commission? Mr. BELNAP. Without reference to some minutes which I do not have with me, I cannot answer that directly. Senator GUFFEY. All right; thank you, Mr. Belnap. The CHAIRMAN. Now, may I say to the committee that we are here to give consideration to the ship subsidy legislation. If we are to have legislation this year, if I may believe what I read in the newspapers, we are not going to be here very long and we will have to hurry with our work. We have before us three bills; one which I introduced on January 6, S. 3500; a bill introduced by Mr. Guffey of Pennsylvania, S. 4110; and a third bill introduced by Mr. Gibson of Vermont, which is S. 4111. I may say for the record that this bill in the so-called star print of the last session, was given study by the Post Office and Commerce Departments through the summer and the fall in the hope that there might be an understanding and agreement as to provisions of a subsidy bill. A few days ago the Departments, Post Office and Commerce, brought to me as chairman of the Commerce Committee, a modified S. 3500 which is before us now in the form of a committee print. As I understand the matter, this bill as modified, and the amendments are indicated by italics throughout the bill, I understand that this bill is now satisfactory to the two departments. I want to say for myself that if I had my way fully, I would not have any bill that is now before us, but I suppose that is true of everybody who has studied the subject. No one bill will be entirely satisfactory to everybody, but this bill is here. It strikes me that it is a reasonable bill, but the record should show what the attitude of the Post Office Department is, and what may be the attitude of the Commerce Department. I am anxious for the sake of the record that we shall have testimony from the two departments indicating why legislation is needed and why this modified bill meets the requirements of such legislation and why the experts of the Government have decided this is a wise form for the legislation to take. I assume that, as the debate continues, the provisions contained in Senator Guffey's bill, which are not in this committee print, and likewise the provisions contained in Senator Gibson's bill, which are not in this committee print, will be given full and serious consideration. With this statement, I shall call upon Colonel Johnson, the Assistant Secretary of Commerce, to make a general statement, and perhaps we will ask him some questions. Colonel, we are very happy to have you here this morning. STATEMENT OF J. M. JOHNSON, ASSISTANT SECRETARY OF COMMERCE Mr. JOHNSON. Mr. Chairman, as you said, the amendments to S. 3500 and printed on March 3 were arrived at after long conferences between the Department of Commerce and the Post Office and, as you said, this bill could not possibly meet the approval of everyone. There are things in it that do not satisfy me, but it does satisfy the termination of the mail contracts. It does provide under its appropriate name a subsidy for construction and operation to meet foreign subsidies as contained in the President's message. The CHAIRMAN. In that connection, may I say that in preparing S. 3500, which I presented in January to the Senate, I took the President's message of March 4 of last year as the yardstick and attempted to include in this bill everything that he suggested and to omit from it those subjects which are of interest to shipping, but which he did not include in his message. Mr. JOHNSON. Yes, sir. The mail contracts gave us a great deal of consideration, and finally they are to be canceled in a year. In the meantime, the Authority-and, by the way, I imagine it is called the Authority because it will have some authority. Because many excesses and objectionable things have happened in shipping-so the investigations show-but still, while they are called to the attention of the proposed Authority, they are given permission after hearing and formalities to meet the conditions that arise in three or four thousand ports in the world which our shipping goes to and does business. The 90-day feature in the mail contracts, of course, means that the holder of a contract may indicate that he would like to have his mail contract settled. It has no other meaning in the determination of the mail contracts than that, as I understand it. Senator FLETCHER. What section is that? Mr. JOHNSON. Page 15. Senator FLETCHER. Of this committee print? Mr. JOHNSON. Yes, sir; of the amended committee print, lines 13 and 14. The CHAIRMAN. It begins on page 12. Mr. JOHNSON. The general subject begins on page 12, section 301. If the determination of the Authority is unsatisfactory to the holder of the main contract, they may sue, provided they begin that suit before January 1, 1938, and in the meantime, which was a highly controversial subject, he may qualify under the new subsidy, and his line may be continued in operation. The new construction-and I might say in general that the plan of this bill and of the Post Office and the Department of Commerce has been to arrive at a subsidy that would create parity; nothing more. That the Government would assume as its burden for the purposes of national defense and commerce, that it would absorb the difference in the cost to the United States flag shipowner and that of the foreign shipowners. Nothing more. It is our opinion that Americans if placed on a parity can sucessfully perform the shipping of the United States. In this case, you have the determination to absorb the difference in building ships in America and in foreign shipyards, and it is expressed as not to exceed generally 333 percent but in special cases, it may got to 40 percent. Senator CLARK. Is any yardstick set up to determine costs either in the United States or abroad? Mr. JOHNSON. None except after investigation by the experts, which it is provided they should have. There could be no other yardstick. It is a very difficult thing to do, and never will be arrived at with great accuracy, but it is near enough for us to build ships in America and let our shipowners and operators have them at a price comparable with that which their competitors enjoy in foreign shipyards. Senator CLARK. How do you determine the costs abroad? This Authority would have no right or authority to go into the books of foreign shipyards. Mr. JOHNSON. None whatever. Senator CLARK. How will they go about determining costs abroad? Mr. JOHNSON. By knowing what market prices are for material and labor, and other matters of that sort; just as we have no authority now in investigations to go into the books and operations of material men, but we have the market prices, and most material men will furnish you with their prices as of any date. The CHAIRMAN. Is a large part of a construction of a ship, the labor? Mr. JOHNSON. Yes, sir; a very large part. |