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The CHAIRMAN. Yes. Let us assume now that that will be enacted into law, that recommendation, and that no ship subsidy bill is passed. Then what becomes of the American merchant marine?

Mr. CAMPBELL. It is destroyed.
The CHAIRMAN. What?
Mr. CAMPBELL. It is destroyed, without a question.
The CHAIRMAN. You feel that way about it?
Mr. CAMPBELL. Certainly.

The CHAIRMAN. And yet you come here today and tell us that the way to do it is to reenact the Jones-White Act?

Mr. JONES. No. May I speak on that, to make it clear?
The CHAIRMAN. Go ahead.

Mr. CAMPBELL. We came down here today in response to your invitation to comment upon S. 3500.

The CHAIRMAN. As amended.

Mr. CAMPBELL. As amended. We got that notice I think on last Friday and we were summoned down here to discuss this important measure in that short time. Now, what we have done is to devote ourselves to a consideration of the invitation which you extended to us, and that was to come down here and give you our honest views on S. 3500 as amended. We did not come down here to lay before you our own proposals as to what we thought should be the details of the legislation which you ought to enact.

The CHAIRMAN. In view of that I have not been very courteous to you.

Mr. CAMPBELL. I think your criticism is unfair to us.

The CHAIRMAN. All right, I will withdraw all that. Now, I will ask you, as competent witnesses, to tell us how we can fix one of these bills and pass it and keep the American merchant marine from destruction, because you yourself have said if the mail contracts are obliterated and no ship subsidy bill is passed that the American merchant marine is ruined.

Mr. CAMPBELL. I can tell you in fairly simple terms.
The CHAIRMAN. All right.

Mr. CAMPBELL. If you will provide means by which the existing contracts can be adjusted fairly under the laws as they exist today, and on their own terms

Senator CLARK (interrupting). What do you mean when you say “their own terms"?

Mr. CAMPBELL. On the terms of the contract, the terms of the law. If you provide a law which, in effect, will say that if a satisfactory adjustment cannot be made that the parties may resort to the Court of Claims with their rights as they now exist under the contracts and under the law, you have taken the first step. We believe that there is no question but what a very large proportion of these contracts can be properly and amicably readjusted. No doubt about it.

Having taken that step, if you pass an act which will provide for new ships so that we could obtain them at a parity of capital costs, and give us aid, that will make up the difference between the cost of American operation and foreign operation, and then perhaps in some instances you provide an aid for trade penetration, particularly for the steamship lines running out of the southern ports of the United States, you can have an American merchant marine. In other words, if you take your own bill, S. 3500

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The CHAIRMAN (interposing). No, no; we are going to take Senator Guffey's bill now, because he provides for the building of a merchant marine. He is going to build the ships and let you run them. That is the way to do it, is to let the Government build the ships and let you operate them.

Mr. CAMPBELL. I cannot see why you cannot create a Commission to be appointed by the President of the United States and give it authority to sit down with these contractors and attempt to adjust their contracts and provide, if you please, that the President of the United States may fix the just compensation which can be handed to them, and if his award is not satisfactory, following the precedent of other acts, that a proportion be paid to the contractors and jeave them then to their rights in the court of claims.

The CHAIRMAN. That is perfectly magnificent, and all you have to do is to wait until the 1st of July, when you get no more money, then you can go into court and under the rules of court procedure, and the Constitution of the United States, you can get back whatever you are entitled to in the way of relief.

Mr. CAMPBELL. You will find a vast majority of these contracts will be adjusted, and properly adjusted.

The CHAIRMAN. They may be properly adjusted, but what are you going to do when you haven't got any money? Whether the contracts are good contracts or bad contracts, whether they are legal or otherwise, what are you going to do if the Government does not provide you with any funds? I did not have anything to do with the action of the Appropriations Committee. I was here instead. If I had been there I should have voted against it.

You have got yourself that fine job. You as a lawyer, Mr. Campbell, will have a wonderful time from the 1st of July on for the next 10 or 15 years. That will keep you thoroughly occupied. In the meantime the merchant marine has gone to the devil.

Mr. CAMPBELL. Are we responsible for that situation ?

The CHAIRMAN. No; and neither am I, but representing the American merchant marine you are certainly interested in its maintenance, as I am, you are interested as a citizen in its maintenance for the national defense and the building up of the commerce of the United States.

I have been for 2 days fighting the Gibson bill and Senator Guffey's bill, and now I find that my bill

isn't any good. Mr. CAMPBELL. I did not know before that S. 3500, as amended, was your bill. The CHAIRMAN. I notice, though, that Mr. Franklin did make

, some references to the part of the bill that I presented. Most of the criticisms were to the Post Office and Commerce amendments. Of course, if I had my way I would throw them all out of the window, but I want a merchant marine, therefore, I am going to take what I can get. In the 13 years that I have been in the Senate I never did get what I wanted, but I always took what I could get, and that is what you will have to do.

Well, if you do not have any more shipmen here that want to testify we might just as well have a field day. Is there anybody else?

STATEMENT OF L. C. PALMER, AMERICAN-SOUTH AFRICAN LINE

The CHAIRMAN. What is your name?
Mr. PALMER. L. C. Palmer, American-South African Line.
The CHAIRMAN. You may go ahead, Mr. Palmer.

Mr. PALMER. Mr. Chairman, I will be very brief with this. I am just one of the members of the American Steamship Owners' Association. We bought a line from the Shipping Board

The CHAIRMAN (interposing): Now, Mr. Palmer, just a moment. I think Mr. Campbell, in introducing Mr. Franklin, said that the Steamboat Owners' Association were unanimous in the presentation of this paper.

Mr. PALMER. I think they were, sir.
The CHAIRMAN. All right.

Mr. PALMER. I am just giving a statement of one of the lines, very briefly.

We bought this line from the Government 10 years ago. We paid the United States 25 percent down, in accordance with the law. We bought it in competition. We paid the highest price that had at that time been paid, and we were $8 per ton ahead of our competitor in price,

This line had been losing for the Government an average of $400,000 a year for the 3 years before we took it. We have paid off everything we owed on those ships, paid them off 4 years before they were due, and when the 1928 bill came through, which required the construction of a new vessel, we constructed our vessel immediately. We did not wait. We started right then and we constructed a new motor ship. We have paid everything that has been due as it has come due, interest and principal.

We have been in this service, which is, I think, recognized as an essential service, because during the complete 9 years we were the only American-flag company in this service, and we had seven competitors, foreign-flag competitors, and we have increased the carrying of American cargoes between our two countries continuously up to the present time.

We have endeavored to put on more ships and we have asked the Government from time to time to put on ships, and for a certain period they permitted it, and after that they said the appropriations were not sufficient. Recently we have had to put on extra ships on our own account, simply to look out for the carrying of American goods.

I would like to say in this connection, as far as carrying a certain percentage of the goods is concerned, a great many of the goods that are carried are specified that they shall go under a certain flag or in certain flag ships.

For instance, goods that come back, that are carried back, a lot of them are owned in South Africa, and some of our goods that are purchased from this country are purchased with an arrangement that they can go on any ship which the purchaser in South Africa designates.

I want to say we have paid everything that was due as it became due, and we have never been in default. We have paid a proper rate, or a fair rate of interest. I think Congress at that time spoke of 314 to 31/2 percent interest, and we have paid 338 percent.

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We have now planned for a new ship; we have had them already prepared and have had them out to be bid upon.

Senator GUFFEY. What is the route of your line?

Mr. PALMER. From North Atlantic ports to South and East Africa up as far as Bombassa and Zanzibar. Senator GUFFEY. How many ships have you?

Mr. PALMER. We have four ships on this route and also four ships chartered, all American-flag vessels, and all of our people are Americans, and all of the stock is American-owned.

The CHAIRMAN. Thank you very much.

Now, there was a gentleman spoke to me that wanted to make a statement. Here he is. Will you please come forward ?

STATEMENT OF FRANK V. BARNS, REPRESENTING THE SEA

SHIPPING CO., OF NEW YORK

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Mr. BARNS. Mr. Chairman and gentlemen, I appear for the Sea Shipping Co., and I speak on behalf of that company. I also have with me Mr. S. J. Maddock.

I have had over 30 years' experience in the practice of maritime law, and have been acting as counsel for the Sea Shipping Co. since the date of its incorporation in 1920.

I shall first, in appearing, voice what the Sea Shipping Co. has talked about many times, and that is the purpose of this bill. I was quite startled, as others, when we read the change from at least onehalf to a substantial portion of the carriage of water-borne export and import commerce of the United States.

The CHAIRMAN. You mean you were startled by the change?

Mr. BARNS. By the change; yes, sir. In view of the things that I want to bring to the attention of this committee, I think that any bill to promote the commerce of the United States and to foster it should take a stand that would be respected by the other countries.

I think this country is entitled to carry at least one-half of the water-borne commerce of the United States, and that it should be so incorporated in the bill.

The CHAIRMAN. It looks to me, from what I have heard today, it is not going to carry but about one-eighth of 1 percen

Mr. BARNS. Perhaps nothing, under this part of the bill. The CHAIRMAN. I think we had better leave that part of it out. What else have you? Mr. BARNS. The company which I represent owns its steamers which it purchased without any governmental aid and which it has operated without any governmental aid.

The CHAIRMAN. Did you buy them from the Government ?

Mr. Barns. We bought those vessels back in 1920 and 1921 from a private ship builder, and we paid the high prices of that time. Those four vessels represent an investment of almost $5,000,000, actually paid for, and as I say, without any governmental aid or loans whatsoever, and in the operation of them we have never had any subsidy.

Those boats suffered, we were not able to find business, and they were a year ago tied up. The company looked around for a trade in which they could engage, and the finally decided to announce a service to South and East Africa.

At that time there was in that trade six foreign companies and one American company. The business there was being carried by a conference, including in its members, with one exception, all foreign companies.

We sought admission to that conference and the conference denied admission, and that is a matter that is now the subject of a complaint filed with the Shipping Board Bureau.

Senator CLARK. That conference did what?

Mr. BARNS. The conference denied us admission as a part of the United States of America South African conference.

The CHAIRMAN. We have not in S. 3500 anything about conferences.

Mr. BARNs. It comes in, indirectly. Let me call the committee's attention to the point I want to make.

Senator CLARK. I am interested in this conference business, and would be glad for you to speak on that, as far as I am concerned.

Mr. Barns. We wanted to get into the conference, which is a conference composed of six foreign lines and one American line, the American line being subsidized.

Senator CLARK. Who makes up the conference?

Mr. BARNS. The conference was formed by the voluntary filing of a conference agreement, which has the approval of, or was approved by, the Shipping Board Bureau. Senator CLARK. The United States Shipping Board?

Mr. BARNS. Yes; the United States Shipping Board, or the Shipping Board Bureau today. The conference agreement was approved, and the conference group have operated under that conference agreement from that time and are operating under it today.

As I said, we were denied admission to the conference, and claim has been made that it is the intent of Congress to provide aid for one line, rather than for two or more lines.

Senator CLARK. Let me get this straight; this conference was a voluntary organization!

Mr. BARNs. It is a voluntary organization.

Senator CLARK. Composed of six foreign shipping lines and one American shipping line, in this particular case?

Mr. BARNS. That is right.

Senator Clark. After their agreement is approved by the United States Shipping Board, what is the effect as far as the granting of subsidies is concerned ?

Mr. Barns. The effect of a conference, and how it affects us, goes to this point. Under the Shipping Act of 1916 and the Shipping Act of 1920, which made the provision for the filing of conference agreements and the working under conference agreements, those members of a conference who operate under the agreement are not subject to the Sherman Act and the Clayton Act. They are in a position to go out and contract with the carriers for all of their goods, when an independent operating in that line is not able to enjoy the benefits of those contracts.

Senator CLARK. So that the antitrust laws of the United States are suspended so far as these conference organizations are concerned if approved by the United States Shipping Board ?

Mr. BARNS. That is right.

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