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I hear the murmurs of disapproval behind me, but everybody in the trade knows that is what is happening. The Maritime Commission itself, through the ownership of the American President Lines or its control, is competing definitely and viciously with the people who have just bought the surplus ships from them.

Mr. WEICHEL. Everybody knows that except the Maritime Commission?

Mr. O'CONNOR. I think they know it.

Mr. WEICHEL. You think they know it too?

Mr. O'CONNOR. They do not feel they are capable of doing much about it. They say the court has prevented them from selling the American President Lines. That was just recently.

Mr. WEICHEL. With reference to the extension of chartering, if it is extended, what do you think with reference to so-called profits arising that go to the person who charters, that instead of letting him have the money that that money be kept by the Maritime Commission as a payment on the purchase of ships?

Mr. O'CONNOR. Well, of course, there is a very serious economic question involved on this recapturing of profits and whether or not that is helping the American Merchant Marine.

Mr. WEICHEL. I mean, if you should charter a ship, with reference to the profit that would come to you in chartering it, instead of giving it to you, that that would be a deposit on the purchase of ships, so as to get everybody as owners rather than simply as charterers.

Mr. O'CONNOR. Well, the shipping business, as I as an amateur only, have observed it for a few years, understand its past set-up, has been that the shipping business has been done more through the charter of ships than through the ownership of ships.

Mr. WEICHEL. I am talking with reference to the war-built fleet, now, only. I mean, to promote the ownership and purchase of these ships, with reference to the money they make off of charters, it should be turned back to the Maritime Commission as payment for the purchase of a ship. Some of these people have not bought any.

Mr. O'CONNOR. You cannot compel people to buy ships, and you should not compel them to buy them, because the shipping business is done generally around the world through the chartering of ships. These ships which belong to our surplus fleet should be available for charter by the American operator.

Mr. WEICHEL. You mean it should be left there as a permanent pool, so any time the American owners have more business than they can handle they can come in and charter, so they do not have to go to a foreign pool?

Mr. O'CONNOR. That is right.

Mr. WEICHEL. That is all.

Mr. HARE. I would like to ask the gentleman a few questions. I probably overlooked the fact, but did I understand the gentleman to say his name was John J. O'Connor?

Mr. O'CONNOR. Yes.

Mr. HARE. I believe he is a former Member of Congress?

Mr. O'CONNOR. Yes.

Mr. HARE. From what State?

Mr. O'CONNOR. New York.

Mr. HARE. I believe I noticed the gentleman's name on the wall when I was toddling around here as a child.

Mr. O'CONNOR. Well, now, wait a minute.

Mr. HARE. I would like to know something of the company the gen

tleman represents.

Mr. O'CONNOR. Isbrandtson.

Mr. HARE. Is that a shipping company?

Mr. O'CONNOR. It is a merchandise and shipping company, an American company, 100 percent owned by American citizens. Mr. HARE. How many ships does it own, sir?

Mr. O'CONNOR. It owns seven ships, which it bought from the Maritime Commission.

Mr. HARE. Since the war?

Mr. O'CONNOR. Yes.

Mr. HARE. How many did it own prior to the war?

Mr. O'CONNOR. It owned about four ships prior to the war, but it was principally an agent for foreign lines, as many people were, and many of the big American companies are still agents for foreign lines. Isbrandtson now is not agent for any foreign line and has no foreign connection.

Mr. HARE. If I understand the gentleman's testimony, he proposes that this committee favorably report to the Congress that the charter provisions in the law today be continued.

Mr. O'CONNOR. Yes.

Mr. HARE. Does the gentleman favor as a fundamental principle of government that the Government should be in business?

Mr. O'CONNOR. Absolutely no.

Mr. HARE. How does he reconcile that statement with his others? Mr. O'CONNOR. It is not easy to reconcile. I would not say continue forever. I would say that you have the facilities to carry on a foreign shipping business which is now in lush times, and you have it as a result of a war, and it is more sensible to use it for the time being, until the upsurge subsides, than to compel people to go out and charter foreign ships.

Mr. HARE. How many ships does your company charter?

Mr. O'CONNOR. At the moment-from the Maritime Commission? Mr. HARE. Yes.

Mr. O'CONNOR. Fifteen or 20 at the moment.

Mr. HARE. It is very profitable, then, for them to continue to do so? Mr. O'CONNOR. Well, that is true.

Mr. HARE. Your business takes the position, then, that in order to do so the Government will continually subsidize them, so to speak?

Mr. O'CONNOR. Oh, no; no, indeed. That does not enter into it. As I say, I do not know that that particular company is interested in my views on this question. I do not know that they are interested in the continuing of this charter. It just so happens that there are not many American ships available for charter which are privately owned, so that people go to this fleet of the Maritime Commission.

Mr. HARE. I noticed in the gentleman's testimony there that he spoke of the big or favored 12. Could I ask him to explain that? Mr. O'CONNOR. The 12 subsidized lines.

Mr. HARE. Is the Waterman Steamship Co. one of them?

Mr. O'CONNOR. No.

In connection with that-asking about Isbrandtson-Waterman, while an American operator, of course, is also an agent of a foreign line.

Mr. HARE. Waterman?

Mr. O'CONNOR. Yes.

Mr. HARE. I noticed that the gentleman in his testimony made a number of doubtful or slandering remarks-I considered them so, anyway, from just listening to them-with regard to the Maritime Commission.

Mr. O'CONNOR. No, indeed. I have the highest respect for them.

Mr. HARE. Yet you had some remarks to make that were not complimentary remarks toward their procedures.

Mr. O'CONNOR. Well, I disagree with them. I do not charge them with any ulterior or corrupt motives in the matter.

Mr. HARE. Do you think they have been following the law?

Mr. O'CONNOR. No; I do not think so. That is my only criticism. of them, that they do not follow the law.

Mr. HARE. That is your own individual interpretation?

Mr. O'CONNOR. Yes, sir.

Mr. HARE. That is all, Mr. Chairman. Thank you.

The CHAIRMAN. Anyone else?

Mr. NELSON. I would like to ask the witness how the Maritime Commission got the American President Lines.

Mr. O'CONNOR. Well, as I understand it, the Dollar Co. owned the President Lines, and they needed money and they got the money from the Maritime Commission, and the dispute is in court as to whether or not they put up the line as collateral, or turned over title to the Maritime Commission. When they tried to get it back, the Maritime Commission resisted and said, "You defaulted on your payment. We are now owners," and the first decision of the district judge here said that was correct, that it was not a loan, it was an outright sale or surrender of collateral.

Mr. NELSON. Are the American President Lines a corporation? Mr. O'CONNOR. Oh, yes.

Mr. NELSON. Do the Maritime Commission sit on the board of directors now?

Mr. O'CONNOR. I don't think so. I don't know that in detail. They control, as I understand it, some 89 or 90 percent of the stock. Mr. NELSON. Your point is that they elect the board of directors? Mr. O'CONNOR. Well, they control it.

Mr. HARE. Does the gentleman know that of his own knowledge? Mr. O'CONNOR. I think that is pretty generally understood, that the American President Lines is controlled by the Maritime Commission. Mr. BOYKIN. They have to try to control them to get their money back. That is the only way which I know of that you can prevent somebody else from getting their hands on it.

Mr. NELSON. Did they try to sell it?

Mr. O'CONNOR. Yes; they tried to sell it. They had a bid, and they rejected the bid.

The CHAIRMAN. The matter is still pending in the courts, is it not? Mr. O'CONNOR. Yes, sir.

The CHAIRMAN. Is there any further question?

Mr. NELSON. No.

Mr. BENNETT. I would like to ask the gentleman how he would feel about the proposition of one chartered ship for every ship that is purchased.

Mr. O'CONNOR. I think that is an unjust limitation. I do not think there should be any limitation. I think a man who does not own any ships, and that does not apply to anybody I could represent, should be entitled to come in here and charter a ship.

Mr. BENNETT. How long do you think the Federal Government ought to continue that type of business?

Mr. O'CONNOR. Not very long. They ought to get out of it.
Mr. BENNETT. How long is "not very long"-5 years?

Mr. O'CONNOR. Oh, no.

Mr. BOYKIN. Five minutes.

Mr. O'CONNOR. Just as soon as the need to carry the relief goods subsides, they ought to get out of it.

Mr. BENNETT. That is about 5 years, is it not; or 4 years?

Mr. NELSON. I would like to ask the gentleman if the company he represents would buy ships from the Maritime Commission if this charter provision was not extended.

Mr. O'CONNOR. They have already bought seven. Of course, it is not beyond possibility that they might not be able to buy, as I say, an unlimited number of ships. There is a limit to some people's ability to buy. I do not believe that is the test at all, as I said before. That has never been the test. The owner of property does not get any more police, fire, or other protection than the tenant of property. That is American.

Mr. NELSON. I am not asking the question as a test. I would like to ask you further, if the charter provision was not extended would your company make foreign charters?

Mr. O'CONNOR. They might be compelled to.

Mr. NELSON. Do you think the likelihood of making foreign charters is greater than purchasing ships from the Maritime Commission? Mr. O'CONNOR. I don't know. A lot of people are hopeful, including my company, that they won't have to charter foreign; that they can charter American. They are chartering all the private Americanowned ships that they can get.

Mr. WEICHEL. If all the private owners were subsidized in the manner that the subsidized lines are, were not only subsidized with reference to building and operating but also to have them requisitioned for charter during the war at very high charter rates, when the Government had a right to take them for title-if all the private owners had that same kind of benefit, you could buy a lot of ships, could you not, if you had the same kind of subsidy the subsidized lines had, and instead of taking them for title, which the Maritime Commission had a right to do, they took them for hire and paid fabulous charter rates during the war.

Mr. O'CONNOR. I am not familiar with that. I only saw the headlines on that.

Mr. WEICHEL. That is a matter of record in this committee, that the Maritime Commission, with reference to the subsidized lines, on which this Government paid for half the construction, all during the war took them for hire and paid them fabulous sums for hire, and then turned them right back to them and said, "Now you operate them as an agent," and so forth, besides that. I think if all private owners had that same kind of treatment as these 12 subsidized lines, you could pay all kinds of money for ships and nobody would have to charter any.

Mr. O'CONNOR. When the distinguished gentleman was chairman of the committee, he had some very wholesome views about the subsidy question, which is a big question in itself, and many of the things we have been talking about stem from the discrimination in granting subsidies. Fundamentally every reputable responsible American operator who desires a subsidy should get a subsidy.

Mr. WEICHEL. In other words, everybody should be treated on the same kind of basis with reference to the hand-out of Government money, which I think is all right.

Mr. O'CONNOR. Many of these errors of discrimination stem from there, but that is a big subject in itself.

The CHAIRMAN. All right, gentleman.

Mr. HARE. One more question, if I may.

Does the Isbrandtson Co. belong to the National Federation of American Shipping?

Mr. O'CONNOR. No. Neither do Waterman and many other of the big companies.

Mr. WEICHEL. There are a lot of people that don't belong to the federation who know something about shipping, too; don't they?

Mr. O'CONNOR. I think only 20 American companies belong to the federation. There are 65 or 70 American companies, and it is assumed all of them know something about shipping, and whether they join this club or that club is no criterion.

The CHAIRMAN. I am afraid, gentlemen, if we go into the membership of different clubs we will never finish, so, if the gentleman. has concluded his testimony, that will conclude our hearing on House Joint Resolution 92, and we will resume consideration of H. R. 1340. Mr. SETH LEVINE (CIO maritime committee). May I submit the amendment Mr. Haddock proposed yesterday?

The CHAIRMAN. File it with the counsel
(Following is the amendment referred to :)

At the end of line 5 on page 2, replace the quotation marks and the period with a semicolon and add the following words:

"Provided further, That no vessels shall be chartered to United States citizens who own or charter vessels documented under the laws of countries other than the United States or who share in the profits or revenues of, or receive compensation in proportion to the cargo value, weight, or space measurement, or freight moneys of such vessels."

Mr. MEADE. I have two telegrams, one from the Sailors Union of the Pacific and one from the vice president of the Lake Carriers Association, and one letter from the Burns Steamship Co., which they asked to have included in the record, expressing their views on House Joint Resolution 92.

The CHAIRMAN. They will be incorporated in the record at this point.

(The documents so identified appear herewith, as follows:)

Judge BLAND,

[Telegrams]

SAN FRANCISCO, CALIF., January 26, 1949.

Chairman, Merchant Marine and Fisheries Committee,

Congress of the United States:

In connection with the present hearing on Ships Sales and Charter Act, please be advised that our organization stands very strongly in favor of continuance of the full chartering program for all citizen companies.

SAILORS UNION OF THE PACIFIC.

HARRY LUNDEBERG, Secretary- Treasurer.

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