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Of course, I have an opinion on that, but it is not within my province and the office to administer a subsidy if any is passed, nor do I have anything directly to do with it.

The other question is the question of the failure of the South African conference to permit the Robin Line, or the Sea Shipping Co., otherwise known, to become a member of the conference.

That question is pending before the Department of Commerce through the division of which I am the chief, in order that we may determine whether or not the conference agreement should have our continued approval in view of the fact that the last party thereto have refused admission to the Robin Line.

There is also involved in that proceeding a question of whether the conference lines have, by changing the rates that are quite low, probably less than remuneration, operated what is called in the Shipping Act “fighting ships.”

Senator CLARK. Does that mean warships?

Mr. BROWN. No. The "fighting ship” is a ship on which the rates are reduced for the purpose of driving out or otherwise injuring a competitor.

Senator CLARK. That ship operates at a loss for the purpose of putting some competitor out of business who may have less means than the corporation which owns the fighting ship?

Mr. BROWN. That is correct. That is one of the questions involved.

It is also a question of fact to be determined in this proceeding whether the Robin Line or the conference first cut rates, on which there is testimony in the record, and one of the questions to be determined is which of those lines reduced the rates.

Senator Clark. Has the Shipping Board or your Bureau made any finding on that?

Mr. BROWN. No; not yet. The petition was filed in November, hearing held in December, the usual brief followed, and the final brief I think was filed January 31, and it is now early March. Under the rules of procedure provided, the examiner who conducted the hearing will issue a report as soon as it can be finished, after studying the record, which should be in a short time, and the various parties to the proceeding then have an opportunity to take exception to the report, and based on that report, those exceptions, the final report of the Department will be rendered.

The CHAIRMAN. In connection with the conference problems, the able Senator from Massachusetts handed me a telegram today which I want to read into the record, and have you comment upon it, Mr. Brown.

This telegram is addressed to Senator Walsh, from the Boston Port Authority, and reads:

West Coast Italy-North Atlantic Conference Meeting in Italy just voted additional ocean freight charge, $1.25 per ton against Boston as compared with New York, effective March 25, 1936. Two American lines, D and E, members of the conference, participated in this action. Both serve Boston and both receive United States Government subsidies. Paid in part by taxpayers of Boston and New England. This action gives particular point to topic 1 of our letter February 6 regarding equal rate to United States ports by United States lines receiving Government subsidies. Please call foregoing situation to chairman and members of the Commerce Committee's attention.

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Regard this conference action arbitrary and discriminatory to Boston and New England. Request your assistance to have proposed increase rate prevented. Letter following.

That is signed Robert Parker as chairman of the Boston Port Authority. Has that come to your

attention? Mr. Brown. I received a telegram this morning in substance the same as that. It is a violation of law for any order in the conference or outside of the conference to discriminate unfairly between ports.

I think there is oftentimes some misunderstanding of what discrimination means. It is not always the case that different rates to different ports constitute discrimination. It is only a case of discrimination if it is unjust or undue discrimination, and that depends upon the circumstances of each case whether there is a violation of law.

Boston has a remedy against the individual carriers in either event by filing a complaint with us. I am from Massachusetts myself, so I am naturally sympathetic to Boston, but it is not necessarily a violation of the law.

The CHAIRMAN. However, you are now on notice.

Mr. Brown. We received a telegram this morning, and I assume that Boston will file a complaint and ask us to investigate.

The CHAIRMAN. Suppose the committee here will file a complaint and want an investigation, what will you do about it?

Mr. Brown. We will have it investigated.

The CHAIRMAN. Then, we will ask you to have it investigated, and complain ourselves. Do you have anything further?

Mr. BROWN. No; I have not.
The CHAIRMAN. We will now call Mr. Lee.



Mr. LEE. Senator, I am going to try to clear up a question on which there seems to be a misunderstanding on your part. I participated yesterday in the very hurried meeting that the owners had.

Senator CLARK. Did you say whom you represented ?

Mr. LEE. I represented American-Scantic Line and we run from New York to the Baltic.

The CHAIRMAN. Mr. Lee is a former Navy officer in charge of this Scantic Line.

Senator CLARK. I am glad to know that, but I just wanted to have him identified for the record.

The CHAIRMAN. Just go ahead, Mr. Lee.

Mr. LFE. I participated yesterday in the very hurried meeting that the owners had to have, to meet the necessities of today.

As has been stated here, the findings were unanimous, at least there were no objections to them, and it certainly was my understanding; and the understanding of a large number of others who participated in that finding, that we were in support of S. 3500, with the exception of only a few clauses in that bill.

The CHAIRMAN. I got the impression, that the only kind of a bill that would be satisfactory to the Steamship Owners' Association is: the Jones-White Act.


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Mr. LEE. If you take the association as a whole and ask for an absolute unanimous opinion, that is true, but I would say that 90 percent of the association, and I mean 90 percent of those that are in off-shore business, are in full sympathy with the act as proposed in the committee print dated December 24, and our objections are to the amendments that have been made since.

The CHAIRMAN. You can realize that so far as I am personally concerned, it was a bitter pill for me to swallow those amendments, and I think I may say the same thing for the Commerce Department, but we did not get any bill sent down to the Senate committee until we had the bill with these amendments, but what are we going to do about it when you do not give us any ammunition with which to meet our opponents!

Mr. LEE. Is it not ammunition for us to disclose that these amendments, and when I say these amendments I refer entirely to these amendments to article 529, as the most of us have no objection to any other part of the bill

The CHAIRMAN. I realize, and I did all of the time, that a great many of your objections were merely formal objections to put yourselves on record, but, nevertheless, at this stage of the legislative program it is not very helpful to us to receive 12 or 15 formal objections without having any information as to the importance of the objections you raise. If you

have a few substantial, well-founded objections to file, that is all right, but simply a blanket criticism of every amendment put in, in these conferences between the Post Office Department and the Commerce Department, that is not of much help to us.

Mr. LEE. What I am trying to tell you is, I believe at least 90 percent have no objections to all of the amendments, except the amendments that have been put in 529, and we believe those amendments we can prove to this committee are inadvisable.

That is my purpose in appearing before you here today, I have been working on this bill, as you know, for a number of months. A large number of the owners we know are in full accord with the bill as printed on December 24, and are in full accord with all of it except 529 as amended; 529 as amended leaves it impossible for us to go on, and puts practically all of us out of business, all but four or five, definitely out of business.

The CHAIRMAN. Were you here yesterday?
Mr. LEE. No, sir; I was in New York yesterday.

The CHAIRMAN. You heard the questions I asked Mr. Peacock this morning?

Mr. LEE. Yes, sir.

The CHAIRMAN. I went over those in greater detail yesterday, attempting to point out the best I could the serious objections to 529 as amended. I realize how serious they appear to the industry. Just for the sake of clarifying the situation, I think you have said your most serious objection is with reference to the amendments in section 529.

Mr. LEE. Yes, sir; that is the only serious objection that I or a large number of us have today.

The CHAIRMAN. That is to say, the other objections are not impertant?

Mr. LEE. They are academic.

The CHAIRMAN. I think Mr. Campbell will say I understood that. Mr. CAMPBELL. I cannot say that is quite correct, Mr. Chairman. The CHAIRMAN. All right. Go ahead, Mr. Lee.

Mr. LEE. The interests of the owners' association here are diversified and so different it would be impossible for them to sensibly agree completely on anything, because each man must, in the owners association, represent his own ideas and protect his own interests, but I think I can say honestly, a very large number of shipping people are in accord with the bill, with the exception of that one article.

The CHAIRMAN. That is to say, if the Post Office and Commerce Departments will recede in that, it will be acceptable.

Mr. LEE. If they will recede a little on their part, I think the bill will produce a merchant marine.

Senator CLARK. What do you mean by a little, Mr. Lee?

Mr. LEE. Go back to about the way the bill was written originally. In other words, the President of the United States is directed to appoint an authority, and it is reasonable to assume he will select on That authority or commission, whatever you like to call it, men of some integrity and some ability, and it seems to me wiser to leave to them a decision as to whether or not an operator can honestly own a terminal, or whether he must bring his ships into port and turn them over to someone else to do all of the work on them.

Senator CLARK. What portions of section 529 do you take exception to? Do you object to the provision that an operator who is operating foreign-flag ships shall not receive a subsidy? Mr. LEE. Yes I do.

Senator CLARK. Why should the people of the United States pay taxes to pay money into the treasury of a corporation which is also operating a foreign-flag ship?

Mr. LEE. If the Marine Authority can become convinced that that is for the benefit of the merchant marine, I think it should be allowed.

Senator SLARK. Let us leave that for a minute for discussion with the Marine Authority, that is a fact, it may be a matter of discussion. Congress is concerned in passing laws, but will you just explain why you object to the provision that a corporation which is operating ships under foreign registry should receive contributions from the Treasury of the United States, which can only come from taxpayers of the United States!

The CHAIRMAN. Let us have clearly before us what it is we are talking about. This prohibition is against any company


operates foreign-flag vessels competing with any service of the United States.

Senator CLARK. That is correct, and I am now addressing myself particularly to paragraph (a) of the amendment to section 529.

Mr. LEE. I think the section describes the very valuable possibility of building a merchant marine.

Senator CLARK. Expand that, please.
Mr. LEE. I can expand it by a direct example of my own experi-

I am agent in the United States for the Russian Government; I operate all of the Russian ships that come to the United States, and they operate all of my ships in Russia. I have no representative in Russia.


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That is a satisfactory, it is a good arrangement for the merchant marine. If I refuse to take that agency, it will fall into the hands of foreign agencies. They will not discontinue to run the ships because I refuse to take the agency.

I operate a line of ships to Leningrad and have an arrangement with them whereby I operate their ships in America and they operate mine in Russia.

The CHAIRMAN. What if you did not have that privilege?

Mr. LEE. You would have to subsidize me more heavily to compete with them, and it would cost the taxpayers more money than under my arrangement.

The CHAIRMAN. If there would not be such an arrangement would America be likely to have any of that back-and-forth trade between here and Russia ?

Mr. LEE. None at all.

Senator CLARK. How do you figure that, Mr. Lee; you do not mean to tell the committee that the Russian ships would go back empty?

Mr. LEE. They do not go back empty; they go back with their own cargo, but that is not shipped by Americans; it is bought in America and shipped as the Government of Russia dictates.

Senator CLARK. They are American exports ?

Mr LEE. They are American exports, but not controlled by the American Government.

Senator CLARK. It is the theory, I understand, of the merchant marine, that we shall have a means of exporting the products of this country abroad, and certainly Russian ships would not go back empty, and if they are filled at American ports and go back with American products, they are performing the function of carrying American exports to foreign countries.

Mr. LEE. Exactly; that is right, and they should be allowed to carry half of their cargo if you have a reciprocal arrangement. I have a 50-50 arrangement whereby I get half of their cargo and they get half of mine. That is a better deal, a better proposition for the United States than anything else you could devise.

The CHAIRMAN. Does that mean on your line you are employing American seamen on the ships of the American line, and at the terminals here, and so forth?

Mr. LEE. Yes; about 85 percent of our total personnel are Americans and we are required to have 67 percent. We have a few stewards who are not Americans, but even most of my stewards are Americans, and I would say nearly 90 percent of my crew are Americans.

The CHAIRMAN. Does the matter of language enter into that? Mr. LEE. Slightly.

The CHAIRMAN. If you did not have this arrangement with Russia, there would be some foreign flag outfit that was conducting it?

Mr. LEE. Undoubtedly there would be a foreign agent representing them in the United States competing with me in my territory.

Senator GUFFEY. Do you know of any similar cases to this one with Russia ?

Mr. LEE. I know that as soon as a definite shipping policy is established by the United States that I can make similar arrange

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