There is a very definite question of overhead as brought out by Mr. Allen this morning: That it is not possible for a company to operate one or two vessels effectively. During the strike the last Frisco strike-we lost four of the ships we had. Our overhead is still the same, handling three vessels, as it was handling seven. It is not possible to cut down the shoreside people, because you have to perform your services. Regardless of Mr. Bailey's statement this morning, we are members of the National Federation, but we very definitely do not subscribe to the policies set forth by CSAA, as I believe many other companies in our function are not. We are familiar with the 1936 act. We believe that the basis of that act is to help the entire merchant marine. That includes the domestic people as well as the foreign operators offshore and the subsidized operators offshore. The American lines in foreign trade at the present time are largely rehabilitated. They have got more tonnage and better tonnage than they had before the war, and are in better financial position than they were before the war. The domestic lines, both coastwise and intercoastal, have suffered greatly, having been unable, through railroad competition, higher operating costs, and other factors, to reestablish their prewar trades for their vessels. It might be pointed out that these domestic trades were the largest source of vessels available to the United States Government at the start of the Second World War. We believe it would be much more equitable for Congress and the Maritime Commission to assist the domestic operators and the smaller operators, who are struggling to survive, rather than to largely put them out of business to further assist the American offshore operators. This could be accomplished by permitting the prewar domestic operators to bareboat-charter vessels for the offshore bulk trades during this interim period, so that they might maintain their organizations until the domestic situation clarifies, and further stopping the bareboat charter of Government vessels to the present offshore operators whose fleets have been replaced, and to the subsidized lines who are receiving Government aid already. The subsidized and offshore lines have, in our opinion, received a great deal of aid and are the one segment of the industry that is relatively healthy in tonnage owned, and their financial position is very good. We believe that they have already secured their full share of Government aid and protection. The CHAIRMAN. Any questions. Mr. ALLEN. That provision I think Mr. Bailey mentioned: that preferences should be granted on the basis of operations prior to September 3, 1939, to take care of your company? Mr. STEWART. No, sir. Prior to the war, we started in 1936. We are definitely a small business. We do not own fifty vessels. We are in the position Mr. Watermann was in many years ago; we own one ship now. Prior to the war, out of the 70 to 80 ships that were on the coast, we time-chartered the vessels both northbound and southbound, and engaged as a common carrier. We filled a very important part in that trade, primarily northbound. Many of the companies were engaged in carrying their own products south. They were industrial carriers. They carried lumber south. We took the vessels over on the southern end and ran them north in general cargo trade, which was our business. We also did timecharter vessels which we operated southbound also. The CHAIRMAN. Any other questions? Mr. HARE. The gentlemen made one statement in his testimony that I want to ask him about. You stated that it was impossible to purchase vessels for coastwise trade? Mr. STEWART. It is impossible right now to purchase-it would be very imprudent to purchase vessels and put them into the coastwise trade, because we know the losses we are facing on the rates we have to take, because of the roalroad overhead. They have a ceiling on our rates. We cannot go over them or we will not get any business. Their rates are depressed, through the ICC, on port-to-port rates. We cannot get ours up. Mr. HARE. It is "imprudent" then, rather than "impossible"? Mr. STEWART. We would put money into the trade whenever we though that we could come out halfway whole on it. The CHAIRMAN. Any further questions? Mr. TOLLEFSON. Do I understand that you are one of these small operators on the coast who is trying to hang on until this situation does clarify a little bit? Mr. STEWART. That s right sir. Mr. TOLLEFSON. You own one ship, you say? Mr. STEWART. Yes, sir. Mr. TOLLEFSON. And charter two? Mr. STEWART. And charter two, which are money for the Army. Mr. TOLLEFSON. Under the legislation proposed by the Maritime Commission, how would you be affected? Mr. STEWART. We also have offices at San Francisco and at Los Angeles. We perform a service operating as a managing agency for the Kaiser Co.; we run their vessels. We are Los Angeles and California agents for the Bristish-flag Castle Line. Under the foreign-affiliations clause in the Martime Commission's resolution of September 24, we would not be able to charter any vessels. It is our position, on that foreign affiliation, that acting as an agent is in no way detrimental to the American merchant marine. If we time-chartered four vessels and took our money and put them into vessels and ran them with foreign crews, that would be detrimental to the American merchant marine and American labor, but the services we perform will be performed by other agency companies if we do not. The revenue we secure for such operations helps us greatly, and we ultimately are getting back into our own American trade, and we can use all the money we can get. Mr. TOLLEFSON. Are you what is called a forwarding company? Mr. STEWART. It includes husbanding. It also includes handling, solicitation of freight. However, I might point out that, on British vessels, a great deal of that freight is controlled by the country and the flag of the ship. It is going to move on that ship anyhow. It is not going to make available any more cargo to American ves sels, whether we are the agent or someone else is. The CHAIRMAN. Any other questions? (No response.) The CHAIRMAN. All right, sir. You may stand aside; and, so far as I know, there are no other witnesses to be heard. Mr. BONNER. I just want to ask one more question, Mr. Bland. I do not want to be persistent, but I have said repeatedly, and I have said on the floor The CHAIRMAN. I am not objecting to it. Mr. BONNER. There is something in this letter that I think will interest you. The CHAIRMAN. I am perfectly willing to hear it. Mr. BONNER. A letter was delivered to me from the Maritime Commission dated February 7, signed by Admiral Smith. The second paragraph of this letter reads as follows: The vessels in the Korean program, we understand, are being employed for the account of the Economic Cooperation Administration. Now, it was testified here, as I understand, that they did not operate any vessels, that they did not arrange for the shipment of freight or anything that they purchased, that they let the country making the purchase arrange for the shipment. Now what does this mean? The CHAIRMAN. Who wants to answer that? Somebody from the Maritime Commission? Mr. WEICHEL. Is this a letter addressed to the committee? week ago, and I just got it today. I asked for it over a Mr. WEICHEL. You were kind of slow getting it. Mr. BONNER. I do not want to rush through this matter without giving it a kind of overhauling. I realize that the time is short, but we can have night sessions, or any other kind of sessions, and I will stay here to develop this thing. Of coure, if it is just a desire to, from year to year, keep rechartering vessels, that is another matter. The CHAIRMAN. I do not know why the gentleman makes that statement. We are perfectly willing to hear him. I think all of the members of the committee are willing to hear him. I am. I will stay just as long as you want to make any statement, ask any questions, or offer any witnesses. Mr. BONNER. All right. Mr. SMITH. I believe that refers to the SCAJAP vessels. Mr. SMITH. It is the Supreme Commander of the Army of the Pacific, but it represents not the United States but an international organization of the Allied occupation forces. Mr. BONNER. Did you reach the sentence I read: "The vessels in the Korean program, we understand, are being employed for the account of the Economic Cooperation Administration"? Now, is that Mr. Hoffmann's administration? Mr. SMITH. That is what it is; yes, sir. Where is his Mr. BONNER. They are being employed for his administration? He testified that he was not doing any shipping. transport-export back there? Will you give us some explanation on that? Mr. SYRAN. We are not operating those vessels. known as the Baltic coastal. That is the type I believe there are nine of them out there have been for a long time, and have been on transfer to the Army by the Maritime Commission. The Army transferred those, in turn, to the operating jurisdiction of SCAJAP, which is the Supreme Commander, Allied Powers in Japanese Waters, which is the Navy counterpart, under General MacArthur, that has operating jurisdiction over those vessels. As of January 1 and since the election and the independence of Korea, those vessels, so far as I know, are still being operated by the Navy under the jurisdiction of the Army, with the assistance of Koreans in the local area. It is not very clear; it is quite complicated, and the matter has not been clarified sufficiently as to the jurisdiction of those vessels after the taking over by ECA of the assistance program in Korea. It is a matter of transfer from military occupation to assistance by ECA in Korea, so those vessels-the jurisdiction entitling use of them is very much in doubt, but we do not operate those vessels; and, so far as I know, we have no intention of operating those vessels. Mr. BONNER. Did you have jurisdiction over the movement of these vessels or freight in these vessels? Mr. SYRAN. No, sir. So far as I know, we did not have any jurisdiction. Mr. BONNER. How did you happen to get this in the letter: that they were operated by the ECA? Mr. SMITH. I do not know. I think that is probably not very well worded. I will say that Mr. Syran very recently worked for General MacArthur; and, if he cannot explain that picture out there, I certainly cannot myself. There may be somebody from the Maritime Commission who can. Mr. BONNER. Your letter says they were operated for the account of the Economic Cooperation Administration. Mr. SYRAN. We may be providing funds. We may be providing assistance in the form of some personnel. I might say this: that we have under consideration right now getting instructors, in accordance with the instruction program-instructors of various types-for the operation. Mr. BONNER. You say you may be doing that? Mr. SYRAN. Yes, sir. Mr. BONNER. But, first, you were not doing it, and now you may do it? Mr. SYRAN. We were not doing it, Mr. Bonner, and I say we may be financing it. Wt may be lending, in currency, assistance, but not the operation of the vessel in connection with any other monetary assistance that we might render for any operation. 85414-49- -24 Mr. LATHAM. Is this connected in any way with the movement of Japanese shipping? What is the present status of the moving in Government service of revived Japanese shipping? Mr. SYRAN. So far as I know, I have no official notice as to the status of activity, on the part of the Government, to revive Japanese shipping. Mr. LATHAM. You mean there is no such move in Government circles? Mr. SYRAN. Not that I know of. Mr. LATHAM. Is there any move in Government circles to revive German shipping? Mr. SYRAN. Not that I know of. Mr. LATHAM. You have not heard of any? Mr. SYRAN. No, sir. Mr. HAND. These ships are being operated by the Navy under the jurisdiction of the Army, with the assistance of the ECA and under the supervision of the Maritime Commission? Mr. SYRAN. That is about what that amounts to. It is a series of channels that developed as a result of the initial lending of those vessels to the Army in the Pacific. Mr. WEICHEL. Have you found any way whereby you could cut this operation down to 50 percent like you do with the others? Have you been able to figure that out yet? Mr. SYRAN. No, sir. Mr. WEICHEL. This is one of the 100-percent operations? Mr. SYRAN. Well, I mean they are used for local water purposes, but I cannot answer that. Mr. WEICHEL. I say this is one that you have not been able to figure out yet how to take half of it away. Are you just waiting until an opportune time or something? Mr. SYRAN. No, sir. The CHAIRMAN. Any further questions? (No response.) (The following proposed amendments to H. J. Res. 92 and H. R. 1340 not supplied in the hearings as indicated in the table of contents were subsequently submitted for the record.) AMENDMENTS TO H. J. RES. 92 OFFERED BY THE UNITED STATES MARITIME COMMISSION Admiral W. W. Smith submitted the following proposal on behalf of the United States Maritime Commission COMPARATIVE TEXT JOINT RESOLUTION To continue the authority of the Maritime Commission to sell, charter, and operate vessels, and for other purposes Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the joint resolution entitled "Joint resolution to continue until March 1, 1949, the authority of the Maritime Commission to sell, charter, and operate vessels, and for other purposes", approved February 27, 1948 (Public Law 423, Eightieth Congress), is amended by striking out the date "March 1, 1949" wherever it appears therein and inserting in lieu thereof the date "[March 1, 1950] July 1, 1950". That joint resolution is further amended by inserting at the end of subparagraph (b) thereof the words " Provided, however, That vessels may be chartered to the Republic of the |