We would, therefore, have rate regulation in the foreign trades which has proven impracticable in the past and is not now a require ment. Some term descriptive of rates should be used not subject to this objection. We still consider "market rates for United States vessels" the proper description. Now, may I speak about the counterpart funds. Section 2 of the Maritime Commission draft provides that the administrator may waive the deposit of counterpart funds by the recipient country in an amount not exceeding the excess of American-flag rates over world market rates for the cargoes so transported. The United States shipping industry, which I represent, realizes it should not intrude into the financial arrangements of the ECA program. We offer no opinion concerning the handling of counterpart funds as such. We do suggest, however, that the provision implies that such a difference in the rates is an additional subsidy to United States shipping, and that it is so segregated for this reason. There has been ample testimony before your committee to demonstrate the fallacy of such a contention. We believe it has been shown that on a national basis the financial benefits accruing to the United States through charter hire, taxes, and so forth, fully offsets the average rate differential between United States and foreign ships transporting such cargoes. It has further been shown that if it were not for the American ships the rates of the foreign vessels would undoubtedly increase to a point where they would equal the aggregate average, if they did not in fact reach the rate level charged by United States vessels. Under these circumstances there is no additional cost to the ECA program, and there obviously is no additional subsidy to United States vessels. We feel that nothing should be included in the act which would create such a false impression. Five. Section 3 of the Maritime Commission draft states that section 1 thereof shall take effect 60 days after enactment. We are at a loss to understand why the hiatus. Mr. Hoffman stated that he was at present administering the 50 percent provision and that he proposes to so continue until Congress acts. Under these circumstances why should there be a period of 60 days under which this requirement would not be effective? We feel that the act should become effective from and after the time of its passage. Six. At the February 3d meeting before your committee, ECA disclosed that a substantial quantity of ECA cargoes was transported to Bizonia, Austria and Trieste, by United States military vessels, for relief purposes in Army occupied areas; also that such cargo moving on United States military vessels have been credited as having been transported by United States vessels under the 50 percent provision of the Act. Obviously this cargo was not transported by United States flag commercial vessels. We suggest that of all cargo transported commercially Congress intended at least 50 percent thereof to be transported by United States flag vessels. To accomplish this we suggest an amendment to the first section of the redraft submitted by the Maritime Commission by addition to page 1, line 10 thereof, after the word "commodities" and before the word "computed" the phrase "after excluding such cargoes carried on vessels under the jurisdiction of United States military authorities." Mr. Chairman, and gentlemen, we very much appreciate the opportunity of coming here and giving our views. We are sorry that the provisions as contained in the Maritime Commission redraft were not before us before, which would have obviated the necessity of a second time before your committee. Thank you, very much. The CHAIRMAN. Are there any questions? Mr. HARE. Mr. Chairman, I want to express to Mr. Bailey my appreciation for the statement contained on page 7, with respect to ECA cargoes and 50 percent. I think the chart they had over there was erroneous, in view of the fact that they carry a great deal of that cargo on Army vessels. And I personally felt, even though I have a very high respect for Mr. Hoffman and his work, that it was an intent on the part of someone to mislead this committee. I intended asking the question, but I just did not. I appreciate your bringing that to the attention of the committee. Mr. BAILEY. Thank you, Mr. Hare. The chart, I think is misleading. I am not sure of the intent to be misleading, but the chart was misleading in that the cargo carried in military vessels was credited as having been carried in United States vessels. The CHAIRMAN. Are there any other questions? Mr. ALLEN. Mr. Chairman, I would like to observe that I think it is very commendable when the industry can get together, Mr. Bailey and anyone else, and come in here and say that the Federation of Shipping, CIO and AFL have reconciled what difficulties they had, and to make what presentations they have made to us. I think it helps the work of this committee and I want to say thank you, very much. The CHAIRMAN. No one approves that statement more than I do. I know when we were considering the original Ship Sales Act that one of the conferees, the late Fred Bradley of Michigan, finally came in one day and announced that we would have to adopt a rule that all ship operators and ship owners who were not agreeable should be shot on sight, in open season, because it was so difficult to get anybody to agree on that. I say that not in reflection upon these men. They had their own interests to look after and the interests of their stockholders. But I think it is desirable to have them get together as they have done in this case, and try to agree on something and present a united front to the committee. Mr. BAILEY. Mr. Chairman, I would like to add that both organizations have been most cooperative in this matter. The CHAIRMAN. Any further questions? Mr. BONNER. Mr. Bailey, are these cargoes insured? Mr. BAILEY. That is a matter that I have not looked into. It does not come within my purview. Mr. BONNER. I just wanted to ask you. Mr. BAILEY. I think they are insured. Mr. BONNER. All these ECA cargoes are insured you say? Mr. BAILEY. That I do not know. There is probably a representative in the room who could tell you that. I think I saw Colonel Syran come in. He may be able to answer that. The CHAIRMAN. I presume my friend was referring to a certain communication that I received that American insurance companies desire to have insurance on this? Mr. BONNER. The British are great insurers, you know, and I am wondering whether the British are getting all this insurance. The tendency has been shown here, it has been pointed out by Mr. Hare and others, the chart that was shown by ECA now proves to be incorrect by your own statement. I overlooked asking Mr. Hoffman that question. Does anybody in the Maritime Commission know whether these cargoes are insured? Commissioner MELLEN. Mr. Syran might be able to give you the information. STATEMENT OF ARTHUR G. SYRAN, CHIEF, TRANSPORTATION DIVISION, ECONOMIC COOPERATION ADMINISTRATION The CHAIRMAN. Mr. Syran, will you give that information? Mr. SYRAN. On the question of insurance, that does not come under my jurisdiction in the ECA. I can say this, that we do not directly make any insurance arrangements and we do not reimburse for the placing of insurance. The matter of insurance was the subject of considerable study by several of the divisions in ECA some months ago. At that time many of the insurance underwriters and underwriters associations presented their side of the story to the appropriate divisions in ECA regarding the issuance of insurance. But we do not reimburse for any insurance placed. So the matter as to whether it is placed in the United States or whether it is placed any place else is a matter that would follow the normal custom and practice of the individual shipper as to how he would select his insurance. Mr. BONNER. Of course, your operation is very elastic. You have ways of doing things directly, and you have ways of doing things indirectly. That is what I mean by the elasticity of your operation. You are with ECA, I understand? Mr. SYRAN. Yes, sir. Mr. BONNER. Will you find out, and have inserted at this point in the record, who does the major part of the insuring? Mr. SYRAN. Yes, sir. We can find out. But we would have to go back to each individual country and each individual shipper of these countries who have ECA-financed goods to determine what insurance they have placed with what broker and where it was eventually placed. There are just hundreds of thousands of transactions that we would have to get from the individual countries, and it would take a considerable amount of time. As I indicated at one of the previous hearings, we do not book any cargo ourselves nor book the space nor direct the movement of the cargo. The statute provides that it should follow normal channels of practice. Mr. BONNER. Then you are positive that there are no American dollars paying for insurance on these cargoes! Mr. SYRAN. I cannot say that I am positive. That is my best information at this moment-that we do not reimburse for the payment of insurance. Mr. BONNER. You can get the answer to that one question, to be positive whether or not American dollars are paying for insurance on these cargoes? Mr. SYRAN. Yes, sir. We will find that out and submit it. (The information referred to follows:) Mr. HUGH A. MEADE, ECONOMIC COOPERATION ADMIN STRATION, General Counsel, Merchant Marine and Fisheries Committee, House Office Building, Washington, D. C. DEAR MR. MEADE: At the committee hearing on February 9, 1949, Mr. Bonner asked whether ECA-financed cargoes are insured, and whether or not American dollars are paying for insurance on those cargoes. Later on the same day you introduced an ECA press release of September 13, 1948, which, as you pointed out, tended to answer these questions. As to authorizations issued since September 13, ECA has not provided dollars for insurance on cargoes. Some of these cargoes have undoubtedly been insured in foreign currency and some in dollars, but in neither case dões ECA provide the funds to pay premiums. Very truly yours, E. L. KOHLER, Controller. Mr. MILLER. Might I ask a question in line with that? The CHAIRMAN. Yes. Mr. MILLER. Can you tell us when title passes as a general thing to these cargoes? If these cargoes are still United States owned, we probably would not insure them. It being such a tremendous operation, it probably would be more economical to carry the cargo without any insurance. Mr. SYRAN. Again I answer that the passage of the question on title does not enter with us because it is a matter of the commercial transaction, as such, between the supplier and the purchaser of the commodity; and the transaction is financed by ECA after the items for the sale or movement has been aproved. So we would not get into the question of title. Mr. MILLER. We would not have title in the United States Government at any time? Mr. SYRAN. I am certain that on some commodities there would be a question of time of passage of title between the Commodity Credit Corporation at the time it transferred title to the recipient nation as to when it would make delivery. Mr. MILLER. On such items as coal, does the United States ever get title to the coal? Mr. SYRAN. No, sir. We merely allot a certain amount of money, for instance, to the French or the Belgians or the Dutch to buy coal; and they then go through the normal channels of trade and purchase the coal from normal coal suppliers. Mr. MILLER. Thank you. Mr. HARE. Mr. Chairman. The CHAIRMAN. Mr. Hare. Mr. HARE. I may have misunderstood the gentleman, but it seems to me the question of title should be very important to the ECA in view of this grain, for instance. We financed a foreign country to purchase so much grain here in the United States under the ECA program. If that cargo should be lost at sea by an act of God, for instance, are we going to give credit to that foreign country for so much money? That is, are we going to put that amount of money against, say, an allotment? Or is the foreign country going to assume that expense? Mr. SYRAN. The Congressman has brought up a question that was the subject of many conferences and considerable thought at the time that the insurance paper was first considered, back, I believe, in July; as to whether, in the event of a loss and insurance was paid, who would get the money, and whether the money would be reduced to an identical quantity of the same commodity, or whether the money could be used by the individual nation to purchase another commodity. I believe that insofar as some of the nations go, and in some of the transactions, the volume that they purchase, they may feel that insurance is not necessary and they can become self-insured and assume a portion of the risk, because the risk of loss in large volume is fairly low. But that was a point that was under consideration at the time. The CHAIRMAN. Are there any further questions? Mr. WICKERSHAM. I have one question. Mr. Bailey, I appreciate, in line with our questioning that I brought up at the last meeting, your including this amendment excluding cargoes transported under the jurisdiction of the United States military authorities, relating to the 50 percent requirement. That is very important in your opinion? Mr. BAILEY. We consider it is, Mr. Wickersham; yes. The CHAIRMAN. Mr. Thompson. Mr. THOMPSON. I wanted to ask Colonel Syran, did I understand you to say that you were having a conference to determine what would happen in the event of a loss at sea, where the insurance money would go? Mr. SYRAN. Yes, sir. We had those conferences. We were directly interested. As the Transportation Division, we are directly concerned with the question of marine insurance and cargo insurance. We raised those issues before, for instance, the Comptroller, who was the one who had charge of the question of insurance, as to a broad policy matter covering all phases of activities of ECA, including transportation. Mr. THOMPSON. It evidently included insurance, Colonel. Mr. SYRAN. Yes, sir. The matter under consideration, yes, sir, it did. Mr. THOMPSON. What we are trying to find out is, Who pays the insurance? Mr. SYRAN. We do not reimburse for insurance. We got out of the question of reimbursement of insurance premiums, and it was up to the individual commercial trader on small items, or the nation itself, if it was a government-purchasing agency that was doing the buying, to cover itself with insurance and pay for it out of free dol |