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Mr. ALLEN. Is it not true that Pacific Transport started since the war, bought one or two ships and chartered others, and has now gotten up to owning five ships and chartering one?

Mr. DUSHANE. I do not have the figures on the Pacific Transport. Mr. ALLEN. Is that not almost a similar situation with the Pacific Far East?

Mr. DUSHANE. That is right.

Mr. ALLEN. They bought ships as fast as their financing was available and the trade seemed secure.

Mr. DUSHANE. That is right.

Mr. ALLEN. Is not that generally true of all of them?
Mr. DUSHANE. That is generally true of all of them.

Mr. ALLEN. And the rates you referred to a bit ago I believe were not the rates at which the ships are chartered but rather the competitive rates between railroads and ships on intercoastal trade.

Mr. DUSHANE. That is right. They do not have competition with coastwise and steamship companies now. There are just a few of them operating now. It is mostly the competitive rates that they have with the railroads on that that is holding this whole deal up. Mr. ALLEN. That is all I have.

The CHAIRMAN. Are there any further questions?

Mr. TOLLEFSON. Yes, sir.

As I understand you, the coastwise trade as presently conducted is not comparable to the coastwise trade prior to the war. There is not the same amount of coast wise trade that there used to be.

Mr. DUSHANE. No, sir. It is there, if you could get the proper type of ships. They could build that trade up if they had the proper type of ships. The ships that are available now, the Liberty ships, for these companies to go into that trade, they are just a little too big and too awkward for that.

Mr. TOLLEFSON. You mentioned some conference or some matter before the ICC, which may help that situation.

Mr. DUSHANE. That is right.

Mr. TOLLEFSON. Did I further understand you to say that until they can get the proper type of ships, and until the ICC comes forward with some decision, some of these companies are engaged in offshore trade? I believe you put it, "kind of hold their own until that time comes."

Mr. DUSHANE. That is right.

Mr. TOLLEFSON. Thank you very much.

The CHAIRMAN. Any further questions?

Mr. BOYKIN. Mr. Chairman, no questions. Are we going to adjourn in a minute or two?

The CHAIRMAN. We will adjourn at 1, and meet at 2:30. Mr. Priest is asking for permission.

Mr. BOYKIN. Mr. Chairman, I did want to make a suggestion, because I think it is very confusing. I think we ought to ask somebody, either with the Maritime Commission, the ECA, or somebody, to really give us the facts on these forwarding agencies, and find out. who does that, whether they are foreign or whether we get our particular part, and also about the insurance, whether it is all foreign or whether we get our part over here.

I think we ought to have that information. And, if we are not, I think we should put something in this bill to get it if we can, because it seems a shame, with that tremendous business; it is the biggest business in the world.

We talked to Mr. Hoffman about it. I know he has more than he can do.

The CHAIRMAN. We have a law expiring on February 28.

Mr. BOYKIN. Yes, sir.

The CHAIRMAN. And we have to go ahead and act now to get that out of the way, and cover this as quickly as we can.

Mr. BONNER. It is not a part of the bill.

Mr. BOYKIN. No; it is not. I wonder if we could amend it so we could.

The CHAIRMAN. Let us finish dealing with this bill first.

Mr. BOYKIN. I agree with you, Mr. Chairman.

But it is such a big thing and means so much to many good businessmen in this country who are not getting the business now.

The CHAIRMAN. I do not doubt that the chairman of the Subcommittee on Maritime Affairs will give every consideration to hearings on all such matters.

Mr. BOYKIN. That is fine. It is in good hands.

The CHAIRMAN. Mr. Morrison. Which bill are you going to address yourself to?

STATEMENT OF DONALD S. MORRISON, VICE PRESIDENT, AMERICAN-HAWAIIAN STEAMSHIP CO., NEW YORK, N. Y.

Mr. MORRISON. I just wanted about 5 or 10 minutes on the extension resolution: House Joint Resolution 92.

The only reason I am asking to be heard again is because I would like to comment briefly on the amendments suggested by the Maritime Commission last Thursday.

The Commission has recommended the inclusion in House Joint Resolution 92 of four provisions that shall apply in exercising its authority to charter war-built vessels. We have no objection to provisions (1), (3), and (4). In fact. I would like to make that stronger. We do not want the privilege of chartering vessels if private vessels are available for that at reasonable rates. We are perfectly willing to have that mandatory, as suggested by Mr. Bailey.

While that would not be of interest to us at this time, we think that is right; and that the privately owned vessels should be given the business, if they are available, and readily available at reasonable rates to carry that business.

Mr. BOYKIN. How are you going to say what is reasonable?
Mr. MORRISON. There are market rates.

Mr. BOYKIN. But we cannot compete with foreigners, you know. You know we could not, at the wages we pay. We do not even have

to try.

Do you think, under the suggestion that you make, it is possible for us to compete with them unless we do get a good subsidy?

Mr. MORRISON. Mr. Boykin, if the Commission finds there is no need for chartering foreign trade, we are not advocating that, sir. Mr. BOYKIN. But you are doing it; are you not?

Mr. MORRISON. No, sir. I am saying that, in response to questions of Mr. Hare, I believe, the last time I appeared, we do not take any position on this question on the need for chartering in foreign trade, because the foreign-trade merchant marine is several times as large as it was before the war, as to dry-cargo vessels.

We are not in a position to intelligently appraise just how much of a demand the ECA requirements and the other similar requirements are going to make on the American merchant marine.

If there is a shortage that must be met for chartering, then we think you should extend the charter powers to meet that shortage. We are not in position to say we have all the facts on that situation. That situation is one where your Government agencies know the facts. We do object, however, to the enactment into law of provision No. 2-talking about provisions suggested by the Maritime Commission and more particularly to the requirement that, in acting upon chartering applications for foreign trade

the Commission shall consider, among other relevant factors, the amount of United States tonnage owned or contracted for by the applicant at the time of application in relation to the amount of United States tonnage chartered by the applicant

is not necessary in order to afford complete and adequate protection to privately owned United States flag tonnage from competition from vessels chartered from the Government.

The establishment of such a ratio may seriously injure those branches of our merchant marine that are encountering the greateest difficulties; and, for this reason, its enactment into law should await the results of an investigation into these matters, as has been proposed by the chairman of this committee and by Senator Magnuson.

The requirement that the Commission give consideration to the amount of United States tonnage owned by each charter applicant in relation to the amount of tonnage chartered is not necessary to adequately and completely protect owners of United States tonnage from competition of chartered vessels.

Subsection (b) (1) of the amendments proposed by the Commission would require the Commission, before acting upon any charter application, to

consider whether the required transportation service could not be provided within a reasonable time and upon reasonable terms by vessels owned and operated under United States flag by citizens of the United States.

In addition, section 5 (a) of the Merchant Ship Sales Act of 1946 provides that

The Commission may, in its discretion, either reject or approve the application for charter, but shall not so approve unless in its opinion the chartering of such vessel to the applicant would be consistent with the policies of this act.

It seems to me that is a very clear mandate there not to do any chartering if it is going to injure those who have actually bought ships and own ships under the American flag.

Provisions such as these afford ample protection against the chartering of war-built vessels when privately owned American tonnage is available on reasonable terms.

The imposition of a fixed relationship between tonnage owned and tonnage chartered would not add to the effectiveness of this protection, but would merely restrict the tonnage to those who have been

able to purchase war-built ships in some fixed proportion to the United States tonnage owned, whether or not privately owned tonnage was available to provide the required transportation.

In fact, the fixing of such a ratio make more difficult, if not impossible, the effective administration of the Commission's subsection (b) (1), as such ratio, if applied equally to all owners, might well result in the chartering of war-built vessels when privately owned United States vessels are available on reasonable terms.

To drastically curtail chartering in foreign trade to those companies who have not been able to replace their prewar fleets because of the unprofitable conditions existing in the domestic trades is to deny assistance to those branches of our merchant marine that need the help the most.

When I appeared before your committee on January 26, I testified that our company lost approximately $1,900,000 from the operation of its ships during 1948. This loss would have been increased by more than $600,000 if we had not been permitted to charter vessels for operation in foreign trade.

Any restriction on the number of vessels we can charter for foreign trade would similarly reduce that share that the foreign-trade charters contributed toward the overhead.

I do not believe it is in the public interest to drastically curtail chartering to lines such as ours except where privately owned United States tonnage is available at reasonable rates. Clearly such drastic action should not be taken pending the result of the investigation which this committee proposes to make into these problems.

The CHAIRMAN. Is that all?

Mr. MORRISON. That is all I have.

The CHAIRMAN. Are there any questions?

Mr. BOYKIN. How many ships do you operate?

Mr. MORRISON. Mr. Boykin, it has varied a great deal. I have with me here the Maritime Commission statement of January 15. At that time it showed that we had six vessels chartered for intercoastal operation, and one more allocated. It has not been delivered yet. We had eight ships chartered for operation in foreign trade, and one more allocated that had not been delivered.

In addition to that, we have five vessels that we own.

Mr. BOYKIN. Did you buy them from the Maritime Commission? Mr. MORRISON. Three of those are Liberty ships we bought from the Maritime Commission. Two are ships we built before and are left over from the prewar fleet.

Mr. BOYKIN. How many have you sold? Have you sold many? Mr. MORRISON. Since when?

Mr. BOYKIN. Right about the time the war started. Did you not sell most of your fleet?

Mr. MORRISON. In response to Mr. Bonner's question when I appeared here last, Mr. Boykin, you probably recall, our company sold seven ships in 1940 to Great Britain, with the consent of the Maritime Commission. That was early in 1940. We have 22 others that were either requisitioned or lost.

Mr. BOYKIN. You sold your ships and then lost most of them during the war. Is that right?

Mr. MORRISON. That is right, sir.

Mr. BOYKIN. Did you collect the insurance?

Mr. MORRISON. We have not collected all. We collected on some of the ships. On others we have not.

Mr. BOYKIN. About how many have you collected on?

Mr. MORRISON. We have collected full insurance, I think, on three ships.

Mr. BOYKIN. How much did you lose?

Mr. MORRISON. There were four others we lost. On the other four, we have taken 75 percent of the amount tendered by the Commission and reserved our rights to adjust compensation.

On the title-requisition ships, we have reserved our rights and taken 75 percent on all on which tenders have been made. There are three on which no payments have been made.

The CHAIRMAN. Are there any other questions?

Mr. ALLEN. Mr. Morrison, we talk about comparative rates on intercoastal shipping as against the rail rates. Can you tell me very briefly about what the comparison is?

Mr. MORRISON. Of course, Mr. Allen, we have to operate under the railroad ceilings; otherwise, we get no business. The railroad transportation is faster and has certain conveniences that water transportation does not possess, so we have to operate under those railroad ceilings.

In so operating, we have to make sufficient margin under the rail rates so that the goods can come from the place of origin, from the shipper's place of business, to the seaboard, to the dock; and, likewise, so that they can be delivered from the point of discharge to the receiver's place of business.

All of that enters into the ultimate final cost to the shipper. The rail rates, generally speaking, are much lower on business and traffic that is competitive with water lines, like the long-haul intercoastal rates, than they are on the shorter haul and intermediate hauls.

I think I gave an illustration of that when I was here a week or so ago. One of the principal commodities from California points to the eastern seaboard are dried fruits. The cost on fruits by railroad from California points of origin to Denver, Colo., is the same, if my memory is correct, as it is from the California point of origin to ports of Maine; and the railroads are blanketed in that territory between there to keep the business away from the water lines.

Our case before the ICC is directed directly to that issue, whether such rate making is lawful. We do not believe it is under the Transportation Act of 1940.

Mr. ALLEN. I take it, then, that your controversy with the Commission is not in fixing your own rates but rather in the rates which the Railroad Commission allows the railroads?

Mr. MORRISON. Which the railroads have had in effect for so many years.

Mr. ALLEN. Thank you.

The CHAIRMAN. Are there any other questions?

Mr. HAND. The witness in his statement said that he did not think that, for the protection of the merchant marine, the second provision suggested by the Maritime Commission-that is, to charter in relation to tonnage, and so forth-was necessary.

What does the witness have to tell us as to his views concerning the effect on the Government's program to sell these ships under the Ship Sales Act?

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