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Hon. SCHUYLER OTIS BLAND,

CLEVELAND, OHIO, January 25, 1949.

Chairman, Merchant Marine and Fisheries Committee,

House of Representatives:

Reference is made to hearings before your committee today concerning House Joint Resolution 92. This association believes there is need for continuation of the authority presently vested in the Commandant, United States Coast Guard, to waive certain navigation and marine inspection laws. We respectfully urge that you give consideration to amending House Joint Resolution 92 so that it will include the provisions of Public Law 423, Eightieth Congress, insofar as that statute relates to the above-mentioned subject.

LAKE CARRIERS ASSOCIATION,
LYNDON SPENCER, Vice President.

BURNS STEAMSHIP CO.,

Los Angeles 36, Calif., January 24, 1949.

Hon. SCHUYLER OTIS BLAND,
Chairman, House Merchant Marine and Fisheries Committee, House of
Representatives, Washington, D. C.

DEAR SIR: The undersigned, Burns Steamship Co., was organized in 1936, and has been since that date actively engaged in steamship operation. Prior to the war and for 6 years, this company owned the steamship Lurline Burns which, together with chartered American-flag vessels, was employed in the Pacific coastwise trade carrying general cargo and lumber. Shortly after the outbreak of the war, that vessel was requisitioned for title by the Government. This vessel was designed for operation in the coastwise trade and replacement thereof has thus far been impossible because of the adverse rail-water relationships presently existing in the coastwise trade, and because of the complete absence of similar replacement tonnage. The present, and we hope temporary, difficulties in connection with this trade have not deterred us, however, in our partial resumption of that trade.

The undersigned has presently an ownership interest in the steamship Daisy Gray, a lumber schooner especially designed for the Pacific coastwise trade, the average carrying capacity of which is approximately 2,225 tons. Cargoes have been carried pursuant to our common-carrier certificate which we have had since May 13, 1943. This vessel is, with the exception of those operated by Coastwise Line, the only vessel engaged in the Pacific coastwise common-carrier trade. Despite the unfavorable rate and rail-water conditions prevailing in that trade, such operation has been continued even though we have been forced to absorb heavy losses in the hope that prewar conditions will ultimately return. To this end, and as part of the calculated plan for full-scale resumption of that trade, the common-carrier certificate owned by J. Ramselius & Co., was recently purchased as a desirable addition to our present certificate. This purchase, at considerable expense, is rather persuasive evidence of our intentions with respect to present and future operations in the coastwise trade.

About the time of the requisition of the steamship Lurline Burns we accepted appointment as general agents for the War Shipping Administration, this step being motivated by the dual desire to utilize our operating organization and experience in the war effort, and to keep intact our key personnel for resumption of our Pacific coastwise trade. As general agent for the War Shipping Administration, we operated a total of 20 vessels, and a correspondingly larger number as subagent for other general agents and agents of the War Shipping Administration. Upon termination of the war, and again to maintain intact our operating personnel, we chartered four vessels from the War Shipping Administration and the Maritime Commission. One of the vessels chartered was the steamship Rutgers Victory, which had been operated by us under general agency, and three Liberty vessels. At the present time we are operating under bare-boat charter the steamship Rutgers Victory and the steamship Mahlon Pitney, a Liberty vessel. We believe and urge that the Commission's chartering authority should be continued for another year. Our request is based upon the premise that the rates and conditions prevailing in the Pacific coastwise trade are such that resumption of operations by private operators at this time would not be economically possible. Steps have been taken to correct the present competitive handicaps under which

water carriers must operate, and it is hoped that favorable results will materialize within the next year.

Obviously a one-ship operation will not justify retention of operating personnel sufficient for us to resume our prewar operations. The trade requires specialized knowledge of the peculiar traffic and operating problems encountered, and it is essential, therefore, that our trained and experienced staff be kept intact in order that we may commence coastwise operations with the least possible loss of time.

Continued chartering and the privilege of continued operation of the steamship Rutgers Victory and at least one other vessel will be of inestimable aid during the interim period and will provide the needed help in our reconversion program. Yours very truly, BURNS STEAMSHIP Co. L. G. BURNS.

The CHAIRMAN. We will resume consideration of H. R. 1340. The next witness given to me is Mr. Buckley, chairman of the Government relations committee of the Coal Exporters Association of the United States.

I would like to finish this hearing this afternoon if possible, and then I will probably refer the whole matter to the committee, just as soon as our subcommittees are formed.

STATEMENT OF DANIEL T. BUCKLEY, CHAIRMAN, GOVERNMENT RELATIONS COMMITTEE, COAL EXPORTERS ASSOCIATION OF THE UNITED STATES

Mr. BUCKLEY. My name is Daniel T. Buckley. I am assistant to the president of Castner, Curran & Bullitt, Inc., an exporting coal company, whose offices are located at 60 East Forty-second Street, New York City. I am appearing here on behalf of the Coal Exporters Association of the United States, Inc., whose membership embraces companies that account for the exportation overseas of 100 percent of all the coal shipped from United States ports.

At the outset I would like to point out that Mr. Bailey, of the Federation of Shipping, yesterday stated that coal was among those commodities which had price support of the United States Government. I would like to point out that bituminous coal has not been regulated from the standpoint of minimum prices since August 23, 1943, nor from the standpoint of maximum prices since withdrawal of maximum prices on November 9, 1946, so that today we are in an open competitive market, with all the coals of the world which move for export.

Under the proposed bill, H. R. 1340, a change was made in the language as contained in section 111 (a) (2) relating to the 50 percent of tonnage that should move in American ships. We have no objection at all to 50 percent of ECA cargoes moving in American ships. However, I respectfully point out to the committee that we find ourselves in the bituminous coal industry in a position today of competing with European coal, Polish coal, Ruhr coal, English coal, on a competitive basis on the Continent. Much of this coal is purchased with American funds, and American coals must compete on a delivered value basis with these foreign coals.

It hardly seems fair that in allocating the 50 percent of American bottoms to be used to assign the high-priced American ships for the carrying of coal when they could be used for the carrying of other commodities of a higher value per ton, and afford to the American

coal industry an opportunity of having their coal shipped in lowercost ships, and at the same time maintaining the 50-percent provision which is requested in this bill.

Coal today is selling at approximately, f. o. b. piers, Hampton Roads, at $10 a ton. In the past there was a considerable tonnage of bituminous coal that moved out of the Gulf ports, up until 6 months ago; that moved out of the port of Charleston and from a number of the northern ports. We have found ourselves so highly competitive today, and I might say with respect to the bituminous coal industry that the conditions that exist today in our industry and in the Appa lachian area, are such that we have mines that are idle, working 2 and 3 days a week, and the volume of tonnage which we are able to export abroad is the means that enables us to operate our mines. We maintain the highest wage scale of any industry in the United States. In addition to the high wage scale we pay a 20 cents a ton welfare fund, and then we find ourselves in the position of having to compete with these foreign coals.

It is a reasonable assumption that if wheat with Government support costs approximately $2.25 a bushel, and 40 bushels of wheat make up a gross ton, that is a $90 value per ton for wheat. The transportation of wheat in an American bottom at a $12 rate roughly represents 12 percent of the total value of the cargo shipped. In the case of American coal today, on the basis of an $11 rate for transporting coal in American bottoms to Europe, bituminous coal is asked to absorb from 55 to 60 percent of the total cost of the cargo in transportation.

We do find ourselves in a position that the exportation of coal to Europe under the ECA program is running roughly about 30 to 35 percent of the high levels that we formerly had.

We had recommended to the Office of Economic Cooperation in November that if it was possible, in some way, to allocate these American bottoms to commodities of a greater value per ton than coal, without disturbing the 50 percent provision of the Congress, which I had felt, as set forth in Public Law 472 covered the situation as Congress intended it to be covered, that there should not be any decrease from the 50 percent provision. The language in this particular bill as written, insofar as the bituminous coal industry is concerned, will deny them an opportunity to compete with these foreign coals, much of which are bought with American dollars abroad, and what we have been attempting to do in the bituminous coal industry, in our conferences with ECA during the past several months, is to put our coal in Europe at a lower cost per B. t. u., at a lower cost per kilowatthour, at a lower cost per cubic foot of gas, so that we can successfully compete against the foreign competition, which is rather diffcult for us to meet if we do have to pay a cost of 55 to 60 percent from the standpoint of transportation.

Now, while we are thoroughly in accord with what the committee is attempting to do, and we believe that the American merchant marine should have ample cargo, we do not think it is desirable to take those funds from ECA funds that are needed for other purposes, and we think that Congress should appropriate sufficient money to take care of the shipping industry.

The CHAIRMAN. I wonder if you would point out specifically the language in the resolution that we are considering which will bring about that result.

Mr. BUCKLEY. I will be glad to, Mr. Chairman. If I may first read from Public Law 472, as we interpret it:

The Administrator shall, in providing for the procurement of commodities under authority of this title, take such steps as are necessary

and so forth.

Now, it is quite evident that the procurement of commodities, as we understood it, meant that in the total purchase by ECA of all commodities, American ships were to get 50 percent of it. With that we are heartily in accord. Under this proposed resolution, however, it states that 50 percent of the gross tonnage of such commodities referred to above, "computed by country and separately for dry bulk carriers," and incidentally no reference was made to bulk carriers in the ECA law, so that ECA would be committed, as we read this resolution, to require that 50 percent of the coal, even though the 50 percent could be made up in other commodities, be moved in American bottoms.

Now, we say that that imposes on the bituminous coal industry a burden today that it is rather difficult for us to carry, because of the fact that we do have surplus coal, we have coal of a very high quality, with which we are able to compete in all the other markets of the world with the exception of the European market, and that particular provision, the insertion of the word "such" from the general language set forth in ECA, which we had believed gave ECA ample authority to give the American shipping industry the 50 percent that they wanted, now makes it mandatory upon them to impose on the American coal industry a transportation rate that will not enable them to compete against these foreign coals with which we are competing.

We want to be fair in this thing. We want these boats to operate. We believe in a strong merchant marine. That has been the position of the bituminous coal industry for as long as I can remember. It so happens that my own company operates a steamship company coast wise, in the collier trade. Domestic Steamship Co. is one of the subsidiary companies. We want to do what is right for American shipping. But we do not think it fair, under the provisions of this bill as written, to deny the bituminous coal industry, which has developed excess productive capacity, an oportunity to compete in the markets of the world, and particularly in the European markets, with these foreign coals.

That has been our basic and fundamental argument with the Office of Economic Cooperation Administration. Under the new program to begin the 1st of April, it is not that we want any hand-out, but that we can put coal in Europe at a lower cost, at a better value, than any coals that they are buying in Europe today, and I state that position honestly, sincerely, and believe that it can be done, and all we need now is analytical data pertaining to the European coals. Perhaps we can resume the exportation of coal from Alabama, which has not exported any coal for 5 months, and from sections of Tennessee and Virginia. We have been having a very difficult time in this coal industry, and other than the fact that there has been a

French coal strike we would have had a very nominal tonnage of coal moving to Europe in recent months.

That, briefly, is our position. We do not want to take any more of the time of this committee, but we do want you to give very serious consideration to our position.

The CHAIRMAN. I am very sure you will have sympathetic support from Mr. Boykin. What the position of the committee will be I am not prepared to say now.

Mr. BUCKLEY. I appreciate the fact, Mr. Chairman, that it is a difficult problem. We are very sympathetic with the problem of the American shipping industry, but we do think some latitude should be allowed, so we will have an opportunity to compete with others. Mr. WEICHEL. What did you say was the name of your company? Mr. BUCKLEY. Coal Exporters Association of the United States. Mr. WEICHEL. That is an association of coal people?

Mr. BUCKLEY. Yes, sir.

Mr. WEICHEL. This is the export end?

Mr. BUCKLEY. It is under the National Coal Association, which is the producing end.

Mr. WEICHEL. Before the war, how much coal was exported?

Mr. BUCKLEY. There was not, Mr. Congressman, a very high tonnage of coal. The volume of tonnage that used to move in export was very limited. Since the war, because of the conditions that have existed, we have found ourselves in a position of being able to ship particularly to South America a greater volume of tonnage that has been moving to South America since the war.

In the case of Europe, because of your Government program of aid, and with the idea of helping Europe get on its feet, there has been considerable money expended in the shipment of American coal.

One of the difficulties, I might say, that we have had to overcome, is that up until 5 months ago the quality of coals that had been shipped out of the United States had, generally speaking, been of inferior quality. We have been able to ship our high-quality coking coals, now that supplies and stocks are ample, so that putting those coals in Europe, and considering, for example, in the case of Britain, that they have a subsidized export price that is extremely high, and that is brought about in part by reason of the high cost in the British mines, costs on the Continent generally are very, very high in comparison with American costs, and we are able to ship our coals of higher B. t. u. value at reasonable cost as against the foreign coals, whereas in the past and prior to the war you did not have the same conditions existing. Mr. WEICHEL. You compete against what foreign coals?

Mr. BUCKLEY. Coals from Poland, coals from the Ruhr, coals from Britain.

Mr. WEICHEL. Coming over here?

Mr. BUCKLEY. Shipping them to Europe.

Mr. WEICHEL. Before the war England and those other countries were bringing coal over here, were they not?

Mr. BUCKLEY. You only had a very limited tonnage. You had some

coal such as Scotch anthracite.

Mr. WEICHEL. Didn't they bring it into the New England coast as ballast, in competition with the colliers running up and down from Norfolk?

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