We are just entering a period of great prosperity in the shipping business; cargoes are being offered more freely and more people are traveling than at any time in the past.

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Steamship companies that have planned a building program not build until they know what Congress is going to do. It is absolutely necessary to give the shipyards assistance if we do not want them to close down. The Copeland bill is the best bill before Congress now, but I would recommend a few amendments.

The first amendment we would offer, we suggest as to the bill, speaking for at least one-half of the commerce of the United States moving on American ships irrespective of what the State Department might have said.

The CHAIRMAN. What difference does it make whether that is on the front of the bill or not?

Mr. MADDOCK. We have a case pending before the Shipping Board at the present time. We do not want to discuss it much at this time, but in entering any of these foreign conferences, they are mostly foreign dominated, because there are only one or two American steamship lines in it, and they are 75 percent foreign lines.

When you attempt to enter into one of these conferences they will tell you that the trade is there, and unless you can point out to them it is the intent of Congress and the purpose of the shipping act that American commerce should move on American ships up to 50 percent, you have little chance of getting into the conference. That is most helpful to us.

Senator CLARK. What does really make up the eligibility for admission to a conference?

Mr. MADDOCK. Usually it is the discretion of the other members. If the law reads that at least 50 percent of American commerce shall move on American ships, then the Shipping Board is guided by that, or they should be.

Senator CLARK. In the absence of such a law the conference can keep anybody out that they want to.

Mr. MADDOCK. Yes.

You asked if we are losing money, and I must tell you there is no necessity for us losing money at the present time. The rates in that trade when we entered it, June 1, ranged from $8 to $20 a ton, and this conference cut the rate down to $4 a ton to put us out of business. Senator CLARK. You mean that is the old price factor going into operation to put a competitor out of business?

Mr. MADDOCK. Yes; and if it was not for the Shipping Board's approvel of the conference you could go to court under the Sherman and Clayton Acts and get relief. Because of this conference matter, we are losing money, and we have never applied for a subsidy. As strange as it may seem, we think we can operate in this South African trade without assistance from the Government, and we would like to try it.

Senator CLARK. You mean if the traffic were not restrained in that trade you would be able to operate at a profit to your own stockholders without a United States Government subsidy?

Mr. MADDOCK. We are satisfied on that point.

Senator CLARK. You are prevented from doing that by this conference agreement, which is in contravention of the general terms of the United States antitrust laws, simply because there happens to

be an exception that where the Shipping Board approves such violation of the antitrust laws they shall not be liable to prosecution under the law?

Mr. MADDOCK. That is correct.

Senator GUFFEY. If the subsidy was withdrawn from the South African line after July 1, do you think you could compete with them. and make money?

Mr. MADDOCK. I must say that the American line has joined with the foreign group, and they admitted they voluntarily cut the rate to $4 a ton, and they said they cannot afford to carry the freight at $4 a ton; they are losing money the same as we are.

Senator CLARK. If they can afford to lose it for a sufficient length of time, they can wear you out and put you out of business? Mr. MADDOCK. Yes.

The CHAIRMAN. Have you any further amendments?

Mr. BARNS. On page 75, in line 12, after the word "registry", a semicolon, and then add the following:

Upon such finding the authority shall make contracts under this title with respect to the vessels of each citizen of the United States operating vessels on such service route or line.

The CHAIRMAN. Would these two lines you have referred to be in direct competition with each other?

Mr. BARNS. They would be in competition so far as the shipper might ship in preference on one line or the other due to superiority of vessels.

Mr. MADDOCK. There would not be such preference, because they do not sail on the same dates.

Senator CLARK. They are equally available as naval auxiliary vessels in time of war?

Mr. MADDOCK. There is not that question of competition raised, because the sailings would not be at the same time, as they are now 2 weeks apart.

The CHAIRMAN. All right; have you further amendments?

Mr. BARNS. I urgently request the change in line 8 on the first page of the bill, whereby you would restore the provision with reference to at least one-half of the commerce.

That is all we have.

The CHAIRMAN. Thank you very much.

I am going to call Mr. Lee, but first I would like to have Mr. Harry Brown, of the Bureau of Regulations of the Shipping Board, to add a word on these subjects that have been discussed.

STATEMENT OF HARRY S. BROWN, CHIEF, DIVISION OF REGULATIONS, UNITED STATES SHIPPING BOARD BUREAU OF THE DEPARTMENT OF COMMERCE

Mr. BROWN. Senator, I have listened to the testimony of Mr. Barns and Mr. Maddock, and there are two things really involved, one of which I have no interest in, except as an academic matter, and that is the question of whether or not where there are more than two lines, more than one line should be subsidized in a given trade.

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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.

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.

STATEMENT OF ROBERT C. LEE, REPRESENTING THE AMERICANSCANTIC LINE, NEW YORK

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. LEE. 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.

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 important?

Mr. LEE. They are academic.