Report of Conference Held in Washington, D. C. on May 22, 23, 1919 between the United States Shipping Board Emergency Fleet Corporation and Representatives of Shipowners Manufacturers, Bankers, and Farmers Associations WASHINGTON GOVERNMENT PRINTING OFFICE 1919 CONFERENCE BETWEEN U. S. SHIPPING BOARD EMERGENCY FLEET CORPORATION AND REPRESENTATIVES OF SHIP- OWNERS, MANUFACTURERS, BANKERS' AND FARMERS' ASSO- CIATIONS. May 22, 1919 : Morning session convened at 10.30 a. m., adjourned at 1 p. m. ; afternoon session convened at 2.30 p. m., adjourned at 5.40 p. m. May 23, 1919: Morning session convened at 10.30 a. m., adjourned at 1 p. m.: afternoon session convened at 2.30 p. m., adjourned at 4.45 p. m. Present: Eepresenting the United States Shipping Board Emer- gency Fleet Corporation : Edward N. Hurley, president; Raymond B. Stevens, vice president, John A. Donald, vice president; John H. Rosseter, director of operations, trustees. Ira A. Campbell, admiralty counsel ; John H. Griffin, assistant admiralty counsel; James V. Converse, assistant secretary; J. E. Barber; Donald Scott: William C. Ward. Present: Eepresenting shipowners, manufacturers, bankers and farmers associations ; etc. : Albrecht, Emil P., president, Philadelphia Bourse. Alexander, Hon. J. W., Congressman from Mo., Committee on Merchant Marine. Allen, William, secretary, National Merchant Marine Association, Munsey Building, Washington, D. C. Atkeson, Thos. C.. representing National Grange, Patrons of Husbandry, 303 Seventh Street, Washington, D. C. Baer, Hon., Congressman, North Dakota. Baldwin, George J., National Marine Association, New York. Barnes, J. E., Atlantic Coast Steamboat Association, Baltimore, Mel: Bennet, Claude N., Congressional News Bureau, Washington, D. C. Benson, W. D., representing Puget Sound Managers and Operators Associa- tion, Seattle, Wash. Billings, Harry, special representative, Pennsylvania Railroad System, Phila- delphia, Pa. Bowen, R. D., Paris, Tex., director, representing Agriculture, Mississippi Val- ley Association, and vice chairman Marketing Traffic Committee Associa- tion State Farmers Union Presidents. Bogart, E. L., University of Illinois. Bowen, Mr. American Exporters and Importers Association, New York. Burling, Edw. B., National Mercantile Marine Association, Washington, D. C. Cantelow, H. C., Puget Sound Shipowners and Managers Association, Seattle, Wash. Carroll, J. B., Atlantic Coast Shipbuilders Association, Washington, D. C. Coleman, H. A., Congressional Information Committee, Washington, D. C. Collins, W. F., secretary, Committee on Commerce and Marine American Bankers Association, New York City. Condon, E. J., Chicago, 111. (engineer). Crowley, Capt. J. G., Coastwise Transportation Co., also Boston Chamber of Commerce. Donalan, American Federation of Labor, Washington, D. C. Douglas, W. H., American Exporters and Importers Association, New York City. Duff, E. H., American Steamship Association, New York City. (3) 736056 4 Dn tilth-Smith, E., American Exporters and Importers Association, New York Evans, A. H., American International Shipbuilding Corporation, Hog Island, Pa. Evans, H. A., Atlantic Coast Shipbuilding Association. Baltimore, Md. Feiser, M. L., Marine Review, New York City. Fitzgerald, Congressman, Washington, D. C. Fletcher, Duncan U., Senator, Washington, D. C. Flinn, Mr., Mobile, Ala. Follansbee, A. W., jr., San Francisco. Ford, 'Sherman, the Texas Co., Munsey Building, Washington, D. C. Franklin, P. A. S., American Steamship Association, New York City. Gallagher, Hugh, Pacific Shipowners Association, Seattle, Wash. -Goodsell, E. L., representing State Market Commission of California and Island Growers of West Indies. 'Green, Lincoln, vice president, Southern Railway, Washington, D. C. Gregory, C. F., American International Harvester Corporation, Chicago, 111. Gustafson, C. H., Farmers Union, Nebraska. Hamilton, George G., representing Farmers National Council. Hamilton, Jolm L., American Bankers Association, Columbus, Ohio. Hampton, Mr., managing director, Farmers National Headquarters. Hart, T. J., attorney, Washington, D. C. Hartshorn, Mr., San Francisco, Calif. Hannepin, John S., Columbus, Ohio. Hannevig, J. A., Pusey & Jones, Gloucester City, N. J. Hauptman, Sidney M., Shipowners Association of Pacific Coast, also vice president and treasurer Charles R. McCormack & Co., Fife Building, San Francisco. Hardy, Congressman, member Merchant Marine and Fisheries Committee. Harper, R. N., American Bankers Association, Washington, D. C. Herr, Mr., American Exporters and Importers Association, New York City. Hibbard, Capt. L N., United States Navy. Howard, J. R., Iowa Farm Bureau. Hunter, T. T., general manager, United Transportation, 17 Battery Place, New York City. Jardine, W. M., farmers of Kansas. Julier, H. V,, Oriental Navigation Co., New York. Knox, W. H., American Exporters and Importers Association, also National Foreign Trade Council, New York. Leach, N. M., representing Mississippi Valley Association, also American Ex- porters Association, New Orleans, La. Leahy, Mr., American Exporters and Importers Association, New York City. LeBouteaux, American Marine Insurance, New York and Philadelphia. Leroy, E., National Foreign Trade Council, New York City. Lincoln, F. W., American Exporters and Importers Association, New York City Long, J. Weller, American Society of Equity, also Farmers National Council. Lucas, Emerson, foreign commerce service, Southern Railroad lines, Washing- ton, D. C. Lumas, A. M., National Grange, Washington, D. C. Magill, J. P., Harris-Magill & Co., 50 Grove Street, New York City. Maguire, J. K., Mclntosh & Seymour, Auburn, N. Y. Malone, Mr., Staten Island Steamboat Co., Staten Island, N. Y. McGrath, Justin, University Service, Washington, D. C. Manson, Philip, president Pacific & Eastern Steamship Co. (Inc.), New York. Mason, Mr., Pacific Coast Shipbuilders' Association, San Francisco, Calif. Marsh, B. C., secretary, Farmers National Council, New York City. MaGee, W. B., American Marine Insurance, New York and Philadelphia. McCarthy, C. H., Hanlon Dry Dock Co., Union Construction Co. (Pacific coast). Moffett, L. W., Marine Review, New York City. Morrison, Horace, Commercial Museum Publications, Philadelphia, Pa. Munson, Mr. F. E., American Steamship Association, New York City. Myrick, N. Sumner, vice chairman and counsel, committee ocean transportation, Chamber of Commerce, Riggs Building, Washington, D. C. Minar, New York Evening Sun, New York. Newburgher, Mr., American Exporters' and Importers' Association, New York City. Nute, H. N., president, Atlantic Maritime Corporation, New York. O'Connell, James, American Federation of Labor, Washington, D. C. 5 Omerod, Leonard, Washington Star, Washington, D. C. Perkins, Edmond T., Mississippi Valley Association, also St. Louis Association of Commerce, St. Louis, Mo. Pew, J. N., jr., Atlantic Coast Shipbuilders' Association, Chester, Pa. Plummer, Edward C., Atlantic Carriers, Bath, Me. Powell, J. W., Atlantic Coast Shipbuilders' Association, 30 Church Street, New ~" quiun, Stanley. American Exporters' and Importers' Association, New York City. Ransdell, J. E., Senator, Washington, D. C. Raymond, H. H., American Steamship Association, New York City. Richter. J. F.. Central News, Gov. Commerce, Washington, D. C. Ring, Welding, Chamber of Commerce, New York City. Robertson, F. E., State College of Agriculture, Ithaca, N. Y. Robinson, Norborne, Shipping News Service. Ross, P. H. W., president, National Marine League, New York. Royston, M. H., representing Galveston Chamber of Commerce, port of Galves- ton and city of Galveston. Rush. Benjamin, American Marine Insurance, New York and Philadelphia. Saint, N. Y., United States Shipping Board, Bureau of Operations. Sawhill, Ray V., editor, Marine Review, New York City. Schwerin. R. P., New York City. Sinclair, J. H.. Hon.. Member of Congress, North Dakota. Smith, George Edward, American Manufacturers' and Exporters' Association. Smith, Mr., American Exporters' and Importers' Association, New York City. Smith, James E., Mississippi Valley Association, St. Louis, Mo. Smith, Landon B.. port agent, Southern Railway lines, 401 Queen and Crescent Building. New Orleans, La. Smull. J. B.7 New York Chamber of Commerce, New York City. Steel, Seimnes, Mississippi Valley Association; also American Exporters' Asso- ciation, Galveston, Tex. Stetson, F. A., International News Service, New York City. Sterling. Henry, legislative representative, American Federation of Labor, Washington, D. C. Struthers, H. R., Pacific American Steamship Association. San Francisco. Sullivan, William F., attorney and secretary, Shipowners' Association of Pa- cific Coast, 112 Market Street, San Francisco. Talbert, R. F., American Marine Insurance, New York and Philadelphia. Taylor, J. S., appointed by Mr. Herrick as delegate of the Mississippi Valley Association, Mobile. Ala. Thomas, E. P., National Foreign Trade Council, New York City. Thompson, M., Illinois Agricultural Association. Tumulty. Mr., Staten Island Steamboat Co., Staten Island, N. Y. Walker, J. B., Scientific American, New York City. Walsh, A. B., National Marine League, New York City. Weil, Samuel, chairman, Foreign Trade Bureau, Association of Commerce, New Orleans, La. Welch. Howard G., secretary of water-front work for War Camp Community Service, 1518 Walnut Street, Philadelphia, Pa. White, Wallace H. J., Hon., Maine. Williams, Nathan D., National Association of Manufacturers, 613 Union Trust Building, Washington, D. C. The meeting convened at 10.30, May 22, 1919. Mr. HURLEY. Gentlemen, in behalf of the Shipping Board I desire to extend to each and every one of you a hearty welcome and to thank you for your kindness in responding to our invitation to attend this conference. We are desirous of obtaining first-hand information. from men who are keenly interested in the development of our mer- chant marine, and we expect to profit materially by this meeting with you. The transportation question, both on land and on sea, is most vital to the future of our country. Our overseas trade which we have en- deavored to develop the last few years must be expanded along sound 6 business lines, and the first step is a permanent, efficient American mer- chant marine. If our ships are not operated efficiently, it will mean high freight rates for our farm products and manufactured articles. With an even start in the race as regards the cost of our ships as com- pared with foreign ships, we can not continue to compete and have reasonable freight rates unless the ships are operated efficiently. We all have different points of view. The shipper wants reason- able freight rates. The carrier wants reasonable earnings. These two objections are not inconsistent. Efficient operation can achieve them both. Many of us are in favor of private ownership and operation, feel ing that the ships can be more efficiently managed in this way than by Government ownership. Others are disposed to favor chartering for a period of years. Still others are sympathetic toward Govern- ment ownership. There is no question that if the Government sells these ships to private operators an equitable distribution should be made so that the respective sections of the country will be able to own and operate these ships out of their respective ports. The ports of Wilmington, Savannah, Charleston, Brunswick, Jack- sonville, Pensacola, Mobile, New Orleans, Port Arthur, Los Angeles. San Francisco, Portland, and Seattle have developed wonderfully during the past few years in the production of products for export, and arrangements must be made whereby each section of the country will have every opportunity to establish through steamship lines iii connection with its railroads so that every community may receive first-class service. These ports are improving their terminal facili- ties, and when these improvements are made, not only will American ships be carrying cargo overseas and return imports from other coun- tries, but foreign ships will be entering these ports for the cargoes they require. The great ports of Norfolk, Baltimore, Philadelphia, New York, Portland, and Boston are also capable of taking care of a large amount of additional tonnage, and the efficiency or these ports with their modern methods for the quick turn-around of ships has been most helpful. Fifty per cent of our commerce should be carried in American bottoms, and the other 50 per cent should be carried by the ships of other nations. If we planned to carry more than 50 per cent it would be necessary for many of our ships to return in ballast, and, therefore, we would not hope to have low freight rates. I do not propose to touch upon the question of how the Govern- ment should dispose of these ships, for it is your views on the subject that we are assembled to learn. However, I feel that I should out- line to you three great national needs which our merchant fleet should be designed to fill in addition to the freight carriage which is its function. They are: (1) The establishment and maintenance of an American ocean mail service capable of covering the world. (2) A centrally controlled wireless telegraph service for use in pro- moting the safety of life and property at sea and for giving to American shipping and business the advantage of constant commer- cial information. (3) Adequate provision for the training of an office personnel capable of making sure that our ships will always go to sea in charge of American citizens. The importance of an American overseas mail service hardly can be overestimated. In the creation and transaction of overseas busi- ness it is second in importance only to the ships themselves. We never have had an American overseas mail service. In the trans- Atlantic mail service we never have had more than one American sailing a week, and we are, therefore, dependent upon foreign ships which I have been informed have at times refused to carry our mail. In the South American mail service foreign steamships always have carried all the mail from New York to Venezuela, the Amazon, Hio Janeiro, and Buenos Aires. In many cases this mail did not even go direct, but was taken 3,200 miles out of its way and delayed 10 days going by way of England. The shipping Board is beginning to correct this condition in so far as it lies in our power to do so. But, unfortunately, this trouble is fundamental, moored hard and fast by the precedents of half a century; and it can not be corrected merely by assigning a few American vessels to certain mail routes. We must discard our present laws and customs, and we must build anew on sound founda- tions and business principles. The idea that mail must be carried only in fast passenger vessels is fallacious. If we had daily, or even odd day, sailing of such ves- sels, no doubt the mail should go in them. But we have not a suffi- cient number of such vessels to make daily or odd-day sailings, and the needs of our trade do not call for any such number of them. We ought to send out mail by the 12 and 14 knot freight liners as well as by the 18 and 20 knot passenger liners. Then we could count on frequent sailings in every trade route, and the service would average better, both in time and reliability, than any service we have ever gotten from foreign steamship companies. Then, too, there is a certain psychological factor which should not be ignored. It would look more 'businesslike to have the American mails arrive in the ships which bring American goods. We handle our domestic mails on a business basis, and we should do the same thing with our overseas mail. We pay the railroads, the railway mail clerks, the postmasters, the post-office clerks and the city and rural letter carriers fair fees and salaries for public serv- ice rendered. We do not ask the citizen -who passes through a given street morning and evening to deliver the mail to his neigh- bors whenever he feels like earning so-many cents a pound for all the mail he so delivers. Yet this is exactly the basis on which we are now trifling with such an important branch of the public service as our overseas mail. The chief reason why we get any ocean mail service at all is because a ship happens to be making the voyage anyway, and might as well take a few sacks of mail along as not. The present ocean mail fee is only 80 cents a pound for letters and 4 cents a pound for printed hatter hardly a business proposition or a fair return for service rendered in most trade routes. We should change all this. We have a law which permits us to pay $8 a mile on the outward voyage to vessels carrying the mail at a speed of 35 knots an hour, and $4 a mile to vessels making 20 knots. This law as it applies to the 35 -knot ship is doing us no good, because we have no such vessels, and the needs of our trade prob- ably never will require a sufficient number of them to handle all our 8 overseas mail. We should establish at once a real American ocean mail service which would efficiently serve American trade if we would change this law so as to bring it down from the realm of im- practicability and make it apply to the seagoing units which we actually possess, and of which we expect the bulk of our future fleet will be composed. It would be well to reduce the $8 rate to $6 and make it apply to 20-knot vessels because we expect to have some liners making 20 or 25 knots. We need not seriously consider the 35-knot ship in our general ocean mail scheme for two reasons: First, the number of them alw y ays will be small ; and second, the superiority of their total service over that rendered by all the 20 and 25 knot ships would not seem to warrant the extra payment of $2 a mile. And such pay- ment not rigorously based upon service rendered would be open to the appellation "subsidy" a thing to which many of us are un- alterably opposed on principle. If the $6 rate were paid to 20-knot ships, the $4 rate to 14-knot ships, and the $2 rate to 12-knot ships, I firmly believe we would have an efficient American ocean mail service capable of covering the world, and of placing every American farmer, manufacturer, and merchant in direct touch with each and every one of his foreign customers. You will all readily admit that the money value of such a service to the American people would be difficult to overestimate. Simultaneously with the establishment of a general ocean mail service on business principles, we should include an overseas exten- sion of the parcel post. Properly carried out on a larger scale it would require the presence on each mail ship of a duly appointed United States overseas mail officer to look out for parcel-post pack- ages and the mail. These duties could be conveniently combined with those of the supercargo, who is the business man on all Gov- ernment ships in charge of the cargo aboard and who at present is also performing excellent service as the trade scout of American industry. Eegarding the presence of the wireless telegraph on board each vessel flying the American flag, I need not add to what I already have said. There is no question, however, that the wireless should be Navy manned under Navy control for three reasons : First, it would render more efficient the use of the wireless for the protection of life and property at sea. Second, it would enable our merchant ships to communicate commercial information to each other and to their home offices. Third, this control would make easy the instant mobi- lization and protection of the whole fleet in case of war. Lastly, I wish to lay before you the necessity for using our fleet for training American citizens to be its future officers. This matter is so vital to the public interest that the Government should under- take to supervise and finance it. Desk and engineer cadets should be carried in all vessels, three or four in small cargo steamers and six or eight in large liners. They should be selected from the rank and file of the boys who elect to follow the sea, perhaps by competitive examinations held by the steamboat inspectors at the customhouses under the direction of the Civil Service Commission. The cadets should be paid $50 a month the first year and $70 a month the second year. The officers of the ships should be required to give them professional schooling and the Government should pay the private steamship company $25 a month for the tuition of each- cadet, in addition to $15 a month for maintenance. If it is worth while to pay $50,000 to train a naval officer, does it not seem equally in the public interest to spend, say, $2,400 a man for the creation of an American personnel to command the fleet with which we expect to keep the American flag on the seas. Perhaps I ought to ask your indulgence for having said so much about matters which do not bear directly upon the questions of owner- ship and operation which we are here to discuss. However, they are matters which bear directly upon the usefulness of the merchant marine to the American people, no matter who owns the ships or who operates them, and as such they can not fail to help to keep us mindful of the vital national importance of the subject we are about to discuss. Gentlemen, in opening the meeting, it has been suggested that we first start out and hear from the gentlemen who are in favor of the Government ownership and operation, and I am going to ask Mr. Marsh of the Farmers' National Council, Washington, D. C. Mr. MARSH. Mr. Chairman and members of the conference, I want to express a feeling of very sincere diffidence in attempting to speak for the farmers, in view of the act that there are present here this morning Mr. Hampton, managing director of the council, Dr. Long, Dr. Atkinson, Washington representatives of the National Grange, and Mr. C. H. Gustaf son, president of the Nebraska Farmers' Union ; but I am talking only in a representative capacity, and I want to read to you the position of the Farmers' National Council on the question of the Government ownership and operation of a merchant marine, a position which was reached after careful, very careful deliberation at the Farmers' National Eeconstruction Conference held in Washington during January, 1919. That conference was composed of delegates and representatives of the American Federa- tion of Gleaners, and the American Society of Equity. Among those present were Dr. Long, Mr. Gustaf son, and several of the largest State farmers' unions, including the Nebraska Farmers' Union. Many of the western State granges were represented by delegates and also numerous small organizations. I was requested this morning to speak for North Dakota on this matter by Congressman Sinclair, who has also secured the indorse- ment of Gov. Lynn J. Frazier, of North Dakota, in reference to the position we are taking. The National non-Partisan League was rep- resented officially at this conference on reconstruction held in Janu- ary, 1919, by four delegates. Now here is our position, gentlemen, unequivocal, from which there will be no receding and which is, if I may put it that way, really our mandate to Congress regarding the disposition of ships constructed from the taxes paid by the men and women who have won the war. Enormous sums have been expended by the Government in con- structing these ships. The vessels so constructed at Government ex- pense should remain the property of the people of the country and should be operated as a merchant marine for the benefit of the people as a whole, with due regard to terms and conditions of employment. 10 Now I presume that Dr. Atkeson, representing the National Grange, will speak for them, and the Farmers' National Council does not in any way represent the National Grange but a number of the Western 'State granges. However, in 1914, the National Grange adopted this resolution at their meeting, if I remember correctly, I think it was held in 1914, at Wilmington, Del. : Resolved, That if Government funds are to be used to aid in building the American merchant marine that it should be used for ships to be owned and operated by the Government. We have crossed that bridge, we have constructed these ships with Government money, with our money. In 1915 the Pennsylvania State Grange adopted the following resolution. The Pennsylvania State Grange, if my memory serves me correctly, is the second largest State grange, and the resolution is : Resolved, That in order to stabilize such rates we favor the building of a Government owned and operated merchant marine, with free ports of entry to all ships of such merchant marine. There is a preamble as to rates. We are encouraged, deeply encouraged, gentlemen, in this matter. I have received a copy of a letter from Mr. Rosseter, Chief of the Di- vision of Operations, directed to Chairman Hurley, dated April 26, if I remember correctly, discussing this question of American mer- chant marine. He says: The prize is a great one. Aside from the feeling of national pride, and in consideration of the national security, our merchant marine will bring an in- creased revenue amounting to more than $500,000,000 a year to our national resources, which is a very moderate estimate but small in comparison to the great increase in trade. Now, gentlemen, the farmers contend if there is a profit of $500,000,000, and I am speaking for the Farmers' National Council when I use the word " farmers," that some one must pay high freight rates to produce that profit, and the farmer refuses to be made the goat of any privately privileged shipping concern again in the United States. That is a pretty fair profit. Now, of what concern is this to the farmer ? Of course, the export of farm products has not been very large. I am speaking from memory ; if I am not mistaken it was about $1,540,000,000 in 1917, and, perhaps, in excess of two billion last year, but we are going to feed the world in a large meas- ure for some years to come. Necessarily ; otherwise, we would have a spread of hunger strikes, which would bring about a very undesir- able condition. The farmers must export a great deal of their prod- ucts, and for that reason they are in favor of Government operation and ownership of the vessels constructed by the Government because, not merely do they know that rates will be lower, in all probability certainly, there will be no $500,000,000 melons to be cut annually, as is suggested under private ownership of the ships we have con- structed with our money but the farmers will get something which is equally important to them, and that is equality of service and no discrimination ; equality of freight, general freight rates. You gentlemen know perfectly well that a difference of 25 cents, or possibly of 10 cents 15 cents on carrying of wheat in bulk across the ocean may make or break the farmer, and the farmers do not want to be subjected to that danger. 11 I very much hope that Mr. Gustafson, the president of this organi- zation in Nebraska, which is doing a cooperative business of about $100,000,000 per annum, will explain to you the reason why farmers going into cooperative business do not care to trust to private owner- ship, because they feel they will have to buck a combination which is pretty strong. Now, gentlemen, when you come to think of Government operation of railroads for we have never had Government ownership you will realize that it has been about the most efficient organization in the United States during the war. You will admit it as soon as you figure this out of the percentage in increased rates, what percentages would have been necessary to meet current expenses. Compare that small increase of 12 or 14 per cent, or possibly 15 per cent, with the rate of increase in wages, with the rate of increase in the cost of farm products, or the rate of increase of all manufactured products, and then, gentlemen, the increase in cost of operation of railroads, you will find out what a small increase this is in comparison with the in- creased profits of the big business men of this country. You will also note that the most conspicuous thing in the world to-day is the busi- nesslike and economic governmental operation of railroads taken over under the most adverse conditions. We are not worried in the slightest way over the question of the efficient and economic governmental operation of the merchant marine. Isn't it gratifying to know that it was a Government de- partment which organized the first trans- Atlantic flight? No one thought it could be done ; at least, not for years to come, but it was through the assiduous working of Secretary Daniels and his asso- ciates in the Navy Department who organized that flight. We have seen marvelous exhibitions of governmental efficiency during the war. Of course, we have seen some manifestations of failure, but, if I re- member correctly, the mortality list among American business con- cerns in America is approximately 40 or 50 per cent, and the Government does not show any such percentage of failure in its undertakings. I told Mr. Hurley I would try to take about 15 minutes only to lay these matters, if you please, gentlemen, before you the conclusions of the farmers of America on this question. We deeply regret, and in complete courtesy to the chairman I would say we deeply regret that any of our ships, or any considerable number, have been sold up to date. I say " our ships." The people's ships have been sold, but in some cases, I understand, there was full occasion to sell, and we have written Mr. Hurley urging as strongly as possible that no more of these ships be sold. Xow, of course, you may have to write down the cost of construc- tion. That is demanded, because of the high war costs; that is demanded by the gentlemen who are saying to the Government, :< Turn over the ships to us now and write them down to the lowest figure." It unquestionably would be similarly necessary under Gov- ernment operation of the ships, because we have got to get into com- petition with the othe,r ocean-carrying nations of the world, and we do not want to have too high a basis on which to earn dividends. Thank Heaven we have not got to, as in the case of the railroads, guarantee exorbitant dividends upon seven or eight billion dollars of 12 stocks. In the case of a merchant marine, Government-owned to-day,, to be retained and operated by the Government, we stand on what is clearly a basis for a careful consideration and a careful experiment^ if you please to so designate it, of Government operation as is humanly possible, and, gentlemen, that is our position. We are going to have our boys on these ships, as Mr. Hurley has outlined in his address, and the American merchant marine is "to be conducted, not to increase the millionaires of America, nor is it to be used as a profit-making concern. We sincerely hope, as in the case of Government ownership and operation of the railroads, which is as inevitable as the election of some party in the next national elec- tion, we trust that the operation of these vessels will be democratic and that the men who operate the ships will have a fair, I do not say major, but a fair proportion of the management of this national enterprise. But the basic point is that these ships, constructed by our money with our money are not to be profit-making concerns, seek- ing to lay up a reserve. They are to be what every natural monopoly in a real democracy must be an instrument to develop the com- merce and the manufacture and the agriculture of the country, and to do it merely by being run at cost and not as millionaire makers. That, I think, correctly interprets the position of the farmers in the' matter and is their final decision thereon, and we thank you very much, Mr. Chairman, for giving us the opportunity to present our view r s. Mr. HURLEY. Mr. March, would you object to having the gentlemen ask you some questions? Mr. MARSH. I would be glad to have questions asked, but I want to tell you one thing, they can ask me a lot of questions that I can not answer, and I can ask them a lot of questions that they won't answer. [Laughter.] There was only one happy year in my life when I could answer any questions put to me right off the bat, and that was when I was a sophomore in college. [Laughter.] Mr. HURLEY. Mr. Rosseter has a point to ask you in connection with his letter. Mr. ROSSETER. Yes, Mr. Marsh, just to get the record straight. I think you did it inadvertently, but you have misunderstood that para- graph of my letter to which you referred. Mr. MARSH. Which paragraph was that? Mr. ROSSETER. The one you read " will bring more than $500,000,000 a year to our national resources." You have misunderstood that to be profit. Resources are not profit. Mr. MARSH. Sometimes. Mr. ROSSETER. That is true, sometimes, but in this case it is not. Mr. MARSH. I see; you included the whole receipts. Mr. ROSSETER. I am estimating what it means in the way of wages that will come to our people ; the whole organization of the maritime enterprise which comes through, say, 50,000 or 150,000 or 200,000 Americans manning the ships ; the facilities either in the ports at home or abroad being in American hands. It means the receipt, through American resources, of all moneys now paid to foreigners. Mr. MARSH. I am glad to be corrected. May I ask a question? Would it be the impression, under private ownership of these ships, with the cost of construction written down to meet the pocketbooks 13 of those who want to get control of them, would it not be the purpose to make some profits? Mr. ROSSETER. You mean profits in the ordinary pursuit of the business ? Mr. MARSH. All it will bear. Mr. ROSSETER. Profits are a peculiar thing. They are measured best by management. The waste of a poorly devised system is more serious and of a larger percentage than the profits. For instance, we will take on the gross revenue of a billion dollars of freight. The charges and the revenue like that would run as much as $800,000,000 out of a billion. The entire margin would be 20 per cent. Twenty per cent can be wasted in inefficient operation could be wasted from the fact that voyages are not balanced right. Then there is endless competition, not only among ourselves, but with foreigners ; there is the problem of properly conserving and properly developing the most efficient instruments of commerce. Mr. MARSH. Would you mind telling me what the profits of some of the big shipping companies were after the war began and before we got into it? Mr. ROSSETER. The profits were simply enormous ; there is no ques- tion about that. Mr. MARSH. Don't they want them now ? Mr. ROSSETER. I don't think so ; if they do they certainly will not have them. Mr. MARSH. Who is going to control the rates? Mr. ROSSETER. As in the past, it is going to be controlled by com- petition. Mr. MARSH. But they were enormous during the war, and haven't they been pretty heavy before the European war started? Mr. ROSSETER. No, not before the war started. I have been in the business for 30 years three decades and the voyage returns on the shipping interests, my own and others, which I have studied, have averaged less than 6 per cent. Mr. MARSH. On what capitalization? Mr. ROSSETER. On the capitalization required in each instance. Mr. MARSH. Didn't the Government control the capitalization, and pass upon whether it was valid ? Mr. ROSSETER. I am afraid we are getting a little afield. I don't want to appear as avoiding your questions. The American capitaliza- tion in shipping as compared to foreign capitalization, prior to the war, you know was insignificant. We had only three American over- seas steamship companies operating under the American flag. We had a lot of ships in the Lakes and in the coastal service, but our overseas trade cwas represented by a decimal point in the world's trade. Mr. MARSH. Somebody made profits in the carrying business ; that was my point. Mr. ROSSETER. The profits prior to the war, over a period of 30 years, will average less than 6 per cent. Mr. MARSH. For the whole world ? Mr. ROSSETER. Yes; that means British, Japanese, and American. In fact, shipping has been one of the most disastrous forms of in- vestment, particularly for men who have not been wise in the busi- ness. There are more wrecks strewn along the coast in shipping en- 14 terp rises than in any other business, not even excepting the farmer. Mr. MARSH. I am afraid you are not in close touch with the farmers. May I ask you another question? If this business is so dis- astrous, why in the name of common sense do you men want to do all of it. Mr. DONALD. You farmers can come in and take your share, if you so desire. Mr. MARSH. We are going to do it through the Government. Mr. ROSSETER. You have jumped at an erroneous conclusion. There is nobody here, least of all myself, who wants to do any part of it, except under a well-recognized scheme. The more new people we can get into the shipping business, the more sure we are going to be of success. Mr. MARSH. I think, if I remember right, that a similar argument was made by the railroads a few years ago, and it did not seem to work out in any marked reduction of freight rates. Now, didn't the big shipping companies try for some time, and finally succeed, in practically exterminating the tramp steamer? Mr. ROSSETER. No ; on the contrary, the tramp steamer tonnage of the world has been represented as 80 per cent, and 20 per cent has been regular lines. The mistake we have made all over the world, as compared with the Germans, having 80 per cent in the tramp and 20 per cent in the regular, is that the Germans have 90 per cent regu- lar and 10 per cent tramp. Mr. MARSH. Have you seen the report of the inroads made by the German and British commerce in Asia Minor? Mr. ROSSETER. I have, and I have read it with particular and sym- pathetic interest, because for nine years I went through a death strug- gle with the Germans myself. Mr. HURLEY. What we would like to get at is something concrete and definite. Your chief objection is the write off? Mr. MARSH. Pardon me? Mr. HURLEY. The writing down of war costs ? Mr. MARSH. No, it is not to the writing down of war costs, because that is probably a question of national policy, whether the ships be privately owned or retained by the Government. It is not solely that. But there is no power to-day which controls ocean rates I mean before the war there is nothing except the agreements, practi- cally, of the large shippers, and the point is that the farmers know perfectly well that if rates were reasonably the farmers could not be assured of equality of service on the part of yie ocean carrying freight steamers under private ownership. Of course, we all know how the farmers' products have been gambled in, partly because of private ownership of the ocean carrying trade, and for that reason they want the Government to own and operate it, and they propose to keep close tab on the Government and hold it responsible. Mr. HURLEY. That phase of it is regardless of the write off. If the Government did not write off anything and sold these ships, you would be opposed to it? Mr. MARSH. We would, because if they do write it off, it comes out of our taxes. Mr. HURLEY. What percentage of the farmers are in favor of Gov- ernment ownership, and what percentage in favor of private owner- ship? 15 Mr. MARSH. As I said before, I can not tell. Mr. HURLEY. How many farmers do you represent? Let me get this clear. Do you know of any farmers in favor of private owner- ship? Mr. MARSH. I know of a good many farmers, a good many thou- sands, but there are several million farmers in the United States, and I do not know Avhat number there are in favor of private ownership. There is a different question involved here, for which reason I read the resolution of the National Granges. We have crossed a bridge. We have built the ships. They are now ours, and in view of the great difficulties we are having to get ownership of the railroads we say, "For goodness sake, if this thing is now in our hands, a bird in the hand is worth a half dozen in the bush." Mr. HURLEY. What the Shipping Board is anxious to determine, and we are very much interested in your remarks, for our satisfac- tion as well as the satisfaction of the other gentlemen present, we would like to have you explain just who you represent and how many farmers your organization represents. Mr. MARSH. I would be glad to repeat I probably made a state- ment hurriedly in starting Mr. HURLEY. Give us the number of associations: put it on the record. How many members are in your different organizations? Mr. MARSH. Dr. J. W. Long is here and can speak as to that. As to the number, there are about 140,000 or 145,000 members. Mr. HURLEY. Members or organizations? Mr. MARSH. Members : this is one component body of the Farmers' National Council, united to carry out this program. There are 145,000, if I remember correctly. Mr. HURLEY. Are these 145,000 in favor of Government owner- ship? Dr. LONG. As chairman of the resolutions committee in our organi- zation for a good many years, I want to say that they have passed resolution after resolution advocating public ownership of public utilities for the past 10 years. Mr. HURLEY. How long since that resolution was passed ? Dr. LONG. The 12th day of December last year. That was a national convention. Not only that, but the reconstruc- tion program, the position of which was read here, was adopted in toto by this organization, because I was a party to the writing of the program, the reconstruction program, and it was the first organiza- tion ours was the first organization that had anything to do with the reconstruction program. It was not only indorsed and passed by our National Convention, but also the Wisconsin State convention, of which I was a delegate also. Mr. HURLEY. Mr. March, how many farmers are there in America ? Mr. MARSH. Now you mean, of course, exclusive of hired men? Mr. HURLEY. Just farmers; I don't care whichever way you care to put it. That is what I am trying to get. I am trying to get the proportion of your organization. Mr. MARSH. I can't give the figures with all the changes that have occurred. Mr. HURLEY. Well, four or five million? Mr. MARSH. There are over 6,000,000 farmers operating in Amer- ica. There are only about 2,000,000, possibly a little over 2,000,000, 16 farmers in definitely and specifically organized farmers' organiza- tions what we call organized farmers substantially something around 2,000,000. I can't give the exact figures. Let me illustrate: For instance, the Farmers' National Union, a southern organization, has been claiming 2,000,000 organized farm- ers; their last convention, last month, showed they had only 144,000 instead of 2,000,000. So we have to go carefully over the poll of the membership. Then another organization of farmers which has endorsed this lan is the National Nonpartisan League, with about 250,000. Am right, Congressman Sinclair? Congressman Sinclair of North Dakota will confirm me. Mr. Hampton, managing director of the Farmers' National headquarters here is present, and I understand >that there are about 150,000, roughly, members in the American Federation of Gleaners. Am I right, Mr. Hampton? Mr. HAMPTON. That is right. Mr. MARSH. There are hundreds of thousands of farmers organ- ized in the State granges and the farmers' unions which participated in this conference. And then, Mr. Hurley, I have read you the resolution adopted ! by the Pennsylvania State Grange which was not represented at this conference, unequivocally approving of Government ownership and operation. Mr. HURLEY. That was in 1914? Mr. MARSH. That was in 1915. The national resolution that I read was in 1914; yes, the year preceding. So that 750,000 organ- ized farmers at least plus the 70,000 Pennsylvania State Grange say roughly over 850,000 organized farmers, we know, are in favor of this; and I think I am safe in saying that an overwhelming ma- jority of the organized farmers of America favor Government owned and democratically operated merchant marine. Mr. HURLEY. Do you feel that you speak for 850,000 farmers? Mr. MARSH. On this matter, yes; very clearly. And I believe 1 am correct in saying a majority of the organized fanners the -gentlemen there know. Is that correct, that a majority of the organized farmers of America are in favor of Government owner- ship and operation under a democratic method of the ships that we liave constructed ? Am I confirmed in that opinion ? Mr. HAMPTON. Yes. Mr. MARSH. Clearly in the majority. Mr. HURLEY. That is all right, then. Mr. MARSH. Of course, the farmers are going to let the Congress know what they think about this. Mr. HURLEY. Congress will be glad to hear from the farmers. Mr. WILLIAM H. KNOX, of the National Foreign Trade Council. Might I be permitted to ask Mr. Marsh a question ? Mr. HURLEY. Certainly, if Mr. Marsh is willing. Mr. KNOX. As I understand your contention, Mr. Marsh, you speak for Government ownership and control and operation, and you base your argument on the fact that Government administration of our railway problem has proven so efficient and that the increases in rates have been so inadequate with the cost of operation, and that operation has resulted in a deficit of $500,000,000 in 14 months. What is your remedy for the deficit that should reasonably be ex- 17 pected to occur on similar lines of operation by the Government of American owned tonnage, handling overseas commerce all over the world? Mr. MARSH. In the first place, I would have to concede the first part of your understanding of my statement, my argument, which is not correct. If I may correct that, I will answer your question as to the way the majority felt, supposing there was a deficit how would it be met ? We do not argue, Mr. Knox, for Government operation and ownership of the merchant marine on the ground of the success of the railroad's operation by the Government, because let me point out to you I thought I did the Government went in with its hands tied and at the most difficult time in the world's history to make an experiment in Government operation. Now we can say that when all the railroads were throwing up their hands and proving the thing by that most powerful of all arguments, action which is louder than words that they had fallen down on the job, the Government came in and they guaranteed them the same dividends which they had averaged three years previously the highest in their record. We had to meet that, including at least half a billion dollars of un- earned dividends $400,000,000 of unfair capitalization, watered stock, increase in the value of the land owned by the railroads and so forth. We were handicapped and tied up ; we went in and we had to put on 400,000 additional men on the railroads, because a lot of them had left to help win the war, and we increased the salaries, the pay roll tremendously hundreds of millions hundreds upon hun- dreds and then we had congestion and a terrible condition which tied up things; and in the face of all that we broke nearly even, a monument of the efficiency of what can be done with Government ownership of railroads. But of course there was a deficit. Now what deficit would there have been under private ownership ^private operation of the railroads if we take the statement of the railroad men themselves it would have put them into the receiver's hands. That is on record. Fortunately, in the case of the merchant marine, the ships con- structed by the Government to-day, we have a fairly clean slate with them to start with. You gentlemen I don't say, " you gentlemen,*' meaning shipping interests alone. Of course, you represent many interests here. The shipping interests have demanded that the cost of construction be written down before you touch the proposition. All right, then you can't object to the Government writing it down so it can start into the proposition as a commercial proposition. But we say this and I am glad that Mr. Eosseter called my attention to my misunderstanding of this paragraph I did not intend to do so but, gentlemen, it is not a question whether that is $500,000,000, $200,000,000 or $250,000,000; it is a question of principle involved. The farmers think these ships should be operated not to make profits for anybody, but for service to the whole American people ; and they feel much safer that they will get low rates and there will be no dis- crimination under Government ownership and operation than under private operation. And don't forget that under private operation of the Post Office we paid 25 cents to carry a letter and now it is 2 cents. Did any private industry ever show a similar efficiency in reduction of charges? 12103419 2 18 I am very much obliged to you. I am very hopeful that you will call on some of these other gentlemen later. Mr. HURLEY. Can you suggest any particular ones? Mr. MARSH. They will take part in the discussion later. Mr. HURLEY. Congressman Sinclair? Congressman SINCLAIR. I have nothing to add to Mr. Marsh's statement. Mr. MARSH. Did I represent Gov. Frazier of North Dakota fairly ? Congressman SINCLAIR. Fairly well. Mr. HAMPTON, of the Farmers' National Council. Mr. Chairman, I am the managing director of the Farmers' National Council, for which Mr. Marsh has been testifying. Mr. Marsh is director of pub- licity and legislation. He has nothing to do, only incidently, with the question of organization. That comes under my administration, and Mr. Marsh has not been able to present to you gentlemen with sufficient force the real policy of the union of the organized farmers of America represented in this country. It is my business to know exactly what the organized farmers or the influence upon farmers amounts to in every State in the Union. Unless I could give to my people some reasonable evidence that I was competent to give that information, I would not remain their managing director. The Farmers' National Council has exactly in round figures those who actually subscribe to their reconstruction program and you want to understand, distinctly, that the Farmers' National Council has nothing to do with the general problems of the farm organiza- tions; its specific duty is to organize and unite them to carry their reconstruction program into effect. We have no authority beyond that. Now the Farmers' National Council among the different farm organizations of the United States, reaching clear to the Pacific coast, in the South Atlantic and Southern States, represents 750,000 members. It has been my duty since it was organized to reach out and present our facts to other farm organizations, and among those organizations I can only briefly mention a few to show how this thing is extending. You can take the biggest of the farm organizations of the State of Minnesota, the Federation of Farmers; I have within the last two weeks three weeks had their formal declaration in sup- port of the program of the Farmers' National Conference. That is true of a number of the farmers' unions that have not participated in the original conference. And furthermore, it is my duty as the managing director and in charge of organization to see that where we do not get an organized support, it is my duty to go into every congressional district of the United States and find, either among the farm organizations, or among the unorganized farmers, people who will cooperate with us, so as to make our work effective when we bring the united power of these farm organizations to bear upon the United States Congress. And I do not hesitate to say to you gentlemen without having all the facts at my hands that we have at least among the unorganized farmers 150,000 men of high grade among the farmers, strategically scattered through the unorganized districts, associated with these or- ganized farmers. And I do not hesitate to say that it is my positive conviction that by the time this thing is brought to a head we will 19 have over 2,000,000 of the organized and nonorganized farmers sup- ported in the construction program as relating to the merchant ma- rine that has been presented to you by Mr. Marsh. I simply want to bring that thing forward to your attention, gen- tlemen, to show that we are very deeply concerned in this matter. Now the farmers' interest in this question of merchant marine does not rest upon the broad general principles of Government ownership. It is entirely disassociated in their minds from the question of rail- road ownership, which will have to be fought out on its own merits, or the question of any other principle of Government ownership. The merchant marine had been a burning question in the farm or- ganizations long before I had anything to do with them, and I have been in active service in the farm organizations for the best part of 20 years. It was, as you gentlemen know from the previous con- troversy that they have had over ship subsidy you know that the farm organizations are unalterably opposed to ship subsides and have gone to the bat with the advocates of ship subsidies time and time again, until they absolutely, the last time ship subsidy was up in Con- gress in 1907, if my memory is rights they absolutely defeated the passage of the ship-subsidy bill through the United States Congress. Now. they do not want to be placed before the merchants and man- ufacturers of this country as merely wild-eyed obstructionists; they claim to be thoughtful constructionists. They have made it per- fectly clear, year after year, that they are deeply interested in seeing the American merchant marine built up and made the greatest mer- chant marine in the world. They are very desirous of seeing the com- merce of the United States made the greatest commerce in the world, and they have given thoughtful consideration to the problems that are involved. Every manufacturer in the United States, as well as every farmer and every merchant who is engaged or interested in export business, knows" that we must, to be able to command the markets of the world, and be able to lay down our manufactured products, or any other products, at a less cost than our foreign com- petitors: and therefore, after you have placed your goods f. o. b. on the platforms for export from your factories you have got to con- sider that you must have a lower transportation charge both ocean and land transportation and that middle ground that is so subtle, the terminal question cheaper and less costly than any of your com- petitors. And we are considering these things. We have been taking into consideration the question of terminal charges. We have been taking into consideration the question of the ocean freight rates and the conditions ; and if for no other reason, Mr. Chairman, and gen- tlemen, the farmers were unalterably opposed to private ownership and operation of our merchant marine, under these circumstances, they would be utterly and bitterly opposed until you had established the regulation of ocean freight rates, as they affect the staples of ag- riculture. It must be that every one of you gentlemen certainly the Members of the Senate and the^United States Congress who are here, who have served two or three Congresses know that back, I believe it was in 1916, we had a controversy in Congress over House joint resolution 311, providing for an international conference on the ocean freight rates, and the reason the farmers were behind that was that they knew by the unregulated condition of the ocean freight rates on 20 the staples of agriculture they were being milked of their profits by the manipulations on the grain exchange; and until you have got that question of ocean freight rates regulated on the staples of agri- culture, you are up against an impossible proposition in getting the support of the farmers even if they can see some advantage to the Nation in it. Mr. HURLEY. Mr. Hampton, just on that last remark that you made if the freight rate question was settled, would you be in favor of private ownership ? I mean, if there was a fair, equitable, and just freight rate would you then be in favor of private ownership ? Mr. HAMPTON. No ; I do not believe I would. But I mean to say, speaking in my official capacity and not undertaking to speak for the farmers on the point of that question; the point of that question is that you must adjust the ocean freight rates on the staples of agri- culture if you expect to get the support of the farmers of the United States on any question of returning your ships to private operation. Mr. HURLEY. Well, granted ; but I say if that was adjusted. What I am trying to find out Mr. HAMPTON (interposing). There are so many other principles that I was not taking up your time with that now. Mr. HURLEF. I wanted to get your thought on that thing. If the farmers of the country were satisfied that the freight rates could be adjusted and made equitable and fair that is about the main ob- jection they have to private ownership, isn't it? Mr. HAMPTON. No. This is the question as I see it, the funda- mental question ; that all the evidence as presented by the advocates of the merchant marine until we entered this war was based upon the theory that we could not operate a merchant marine without ship subsidies and the old argument, which I have taken pains to go into again and again, is that we were fearfully handicapped in operating our merchant marine against the United Kingdom, as the principal one, until we -had a ship subsidy. I believe, myself, considering all I have reviewed, that unless we do have Government operation and ownership and continue along the same lines we have begun, we will find that we will be crowded gradually off the seas by the United Kingdom. Mr. HURLEY. What other gentlemen can we hear from in favor of Government ownership; glad to hear from anyone. We would like to have all the men that are here in favor of the Government owner- ship discuss it this morning. We would be glad to have them speak later, but we want to cover that as part of our program. Mr. MARSH. May I ask will there not be an opportunity for us to ask questions and perhaps engage in a rebuttal later ? Mr. HURLEY. Oh, yes ; an open meeting. Is there any gentleman here in favor of Government ownership and operation for the benefit of the Government through the medium of a private corporation? (No response.) Government ownership and private operation for Government account? Any advocates of that plan here? (No response.) Government ownership and private operation for private account? (No response.) Private ownership and private operation? (No response.) I understand the Atlantic Coast Shipbuilders' Association had some 21 suggestions to make of this new plan. I would be glad to hear from Mr. Powell. Mr. JOSEPH POWELL (Atlantic Coast Shipbuilding Association), Mr. Chairman and gentlemen, I really did not come down to-day expecting to present a concrete plan to a meeting of this magnitude- It was our understanding that the meeting to-day was informal in character and very much smaller in numbers. The Atlantic Coast Shipbuilders- Association has given, naturally, a good deal of con- sideration to what was to become of this enormous fleet that has been built for and at the expense of the United States to meet con- ditions arising out of the war. We are interested personally from a business standpoint because the disposition of this fleet is sure to react upon our own business. We can not claim in shipbuilding as many members, as many voters as some of the other organizations^ but shipbuilding has grown from a small and very weak industry before the war to a very large one that is represented in practically every seaport State of the United States. The Atlantic Coast Ship- builders' Association speaks only for those shipyards from Maine to the Gulf of Mexico, other organizations will undoubtedly present men competent to speak for the rest of the industry. Some two months ago I listened with great interest to Mr. Hur- ley's speech made in New York, giving his views of the disposition of this enormous American fleet. There seems to be a great deal in that address that appealed strongly to the shipbuilders, and I be- lieve to the shipping men, but it did not seem to me that it went far enough to cover the whole situation; primarily, because I do* not believe there is in the United States to-day sufficient capital ready to go into shipowning to absorb the enormous tonnage built and building for the United States. In order to meet that difficulty it was deemed necessary to find some other way of disposing of the balance of the tonnage and very naturally the method. that occurred to us and that appealed to us was the method of leasing such ships- as could not be sold. There is a third very important factor in the situation, and that is: For reasons which we perfectly well understand, many ships have been built which are not suitable for the permanent commerce of the United States. The general proposal which we have had in mind is based immediately upon the idea of private operation of the American merchant marine under the least Government control es- sential to insure its performing the function which should be per- formed in handling our great commerce; the general idea that we had is : First, that no ship should be sold for a certain period while? readjustment is going on. Second, that there should be selected from all of the ships owned by the United States Government those which are not suitable for the commerce of the country and that after a period of two years, say, these ships should be disposed of wherever they can be sold to the best advantage. Third, that Mr. Hurley's scheme, as he has expounded it, should be writ- ten into the law for the sale of so many of the balance of the ships as can be disposed of to private ownership, practically as Mr. Hur- ley has outlined in his proposition. Fourth, that the balance of the ships should be offered for lease to private owners on a very mod- 22 erate leasing fee, say 4 per cent of the estimated value of the ship, with an arrangement by which the Government would share equally with the lessor in any profits in excess of 8 per cent on the actual capital invested by the operator. Of course, there are great many other angles to this general situation. Mr. Hurley has proposed a merchant marine development fund and an American insurance com- pany, Government operated. It seems to me that those two propo- sitions must be an integral part of any scheme that will result in any permanently profitable and useful American merchant marine. We have proposed to put into that marine-development fund a por- tion of the money saved from the leasing, and to give the Shipping Board extremely wide latitude in using those funds for building up the weak lines, for taking care of new lines during their development stages, for use in putting on fitting ships in lines where foreign com- petition needs such methods, and, in general, to use this fund which would be a large one, for insuring the stability of the American merchant marine and preventing the result that one of the experts has stated as a possible danger, and that is, that we would get an enormous merchant marine which would gradually dry up in com- petition with the lines of foreign governments. There are a good many other minor angles to the situation. Tho enlistment of the force operating these ships in a Naval Reserve and the assumption by the Government of the difference in their wages between the wages paid by American lines and those of the principal foreign competitor seems a fair and reasonable method for the Navy Department, for the Navy it is highly necessary to obtain a splendid reserve that would be of inestimable value in. time of war and also remove of the great reasons why American ships have not been able to compete in the past. Mr. Hurley's suggestion this morning of cadets to be trained to properly man. ships is an excellent one. In general, the scheme I have outlined is only a bare skeleton of what seems to us a method necessary to put back into private operation, under reasonable Gov- ernment control, the large number of ships built and building which will insure to the United States the sort of an overseas commerce which every red-blooded American to-day wants to see and which I thoroughly believe the country is going ito have. The reason the shipbuilders believe in private ownership rather than in Government ownership is based solely on efficiency. If any private owners can not make all the profit that he wants and still beat the cost of doing business under Government ownership why he don't deserve to be in business at all. Now, that briefly sums up our position. I have not presented my remarks in the form I would like to have done, but if anyone would like to ask any questions, I would be glad to answer them. Mr. EVANS. Mr. Chairman, Mr. Powell has drawn the remarks he has, to make up in a very rough draft which is not perfect by any means and which is open, undoubtedly, to criticism on small points, but I think it would be well, Mr. Powell, to submit that and read it because I think that it gives something absolutely concrete and I think with the explanation that that isn't final by any means, it would be well to read that and read it into the records : 23 A BILL Relative to sale and lease of vessels by the United States Shipping Board. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled: That the United States Shipping Board is authorized to sell any vessels built or acquired by the said board acting under authority of the emergency act of June 15, 1917, which said board may find after due investigation not adapted to overseas commerce either because of the nature of the materials from which they have been constructed or because of the design or because they are of insufficient size or tonnage. Any such vessels may be sold after public advertisement in the discretion of the Shipping Board without restriction as to flag, registry or enrollment. SEC. 2. No vessels built or acquired by the said board shall be sold except under the provisions of the preceding section during the period of two years from the date of the passage of, this act. SEC. 3. Two years from date of passage of this act, the United States Ship- ping Board is authorized to sell any vessel built or acquired by the said board acting under authority of the emergency act of June 15, 1917, to an American citizen or to companies, the officers and managers of which are all American citizens in accordance with provisions of section 18 of the act approved Septem- ber 7, 1916. Ships to be sold after advertisement and at a price which in the discretion of the United States Shipping Board represents a fair price in the current world market for similar tonnage at the date of sale. SEC. 4. Twenty-five per cent of the purchase price of each ship will be paid in cash, the balance to be payable in annual installments over a period not exceeding 10 years and to be secured by a mortgage for the unpaid balance bearing interest at the rate of 5 per cent. SEC. 5. The purchaser shall be required to insure and keep insured with an American insurance company his equity in the vessel and shall place additional insurance as the United States Shipping Board may direct to cover the Gov- ernment's equity in the vessel. SEC. 6. Transfer of vessel to foreign registry or to individuals who are not American citizens or companies, the officers and managers of which are not American citizens, is expressly prohibited. SEC. 7. All other vessels built or acquired by the said board as they cease to be required for direct operations of the Government of the United States may be leased to citizens of the United States or to corporations organized under the laws of any State of the United States for private operation under United States registry or enrollment. SEC. 8. Before a lease of any vessel shall be made, satisfactory evidence shall be furnished to the said board that the trade in which such vessel is to be used is in the interest of the commerce of the United States and that the lessee is able to furnish sufficient capital for the enterprise. SEC. 9. Before leasing a vessel the said board shall cause such vessel to be appraised. All leases shall be for the term of 10 years and for the first five years the rental shall be 4 per cent per annum of the appraised value of the vessel payable semiannually. At the end of five years said board shall cause such vessel to be reappraised and the rental for the remaining five years shall be 5 per cent per annum of such second appraisal payable semiannually. Every lease shall contain a provision that at the end of each year of operation said board shall require and establish an audit and that the lessee shall pay the said board one-half of the net profits from operation of the vessel, the lessee first deducting interest at the rate of 8 per cent on the amount of capital found by the said board to have been actually invested by the lessee in the form of working capital or otherwise for the operation of the vessel. No deduction shall be made for depreciation. SEC. 10. At any time after three years from the date of any such lease the lessee may call upon the said board to cause a new appraisal of such vessel to be made and such lessee shall have the option of purchasing such vessel at such appraised value. In the event of such purchase there shall be credited toward the purchase price any earnings which the said board may have received as its share of the profits under the provisions of the preceding section, first deducting from such earnings which said board may have so received an amount equivalent to 5 per cent per annum on the first appraisal of such vessel as a charge for depreciation. SEC. 11. All such leases shall contain covenants that the lessee shall maintain the vessels in a good state of repair, and such other covenants and provisions 24 as the said board may consider desirable and necessary to protect the interest of the lessor, and shall provide that the lease may be canceled by the board for breach of any covenant or if in its opinion a vessel shall be operated at any time in a manner prejudicial to the commerce of the United States. SEC. 12. After one year the lessee of any such vessel shall have the right to return the vessel to the said board by giving six months' notice of intention, if in the judgment of the lessee such vessel can not be operated without a loss, provided such vessel is returned in as good condition as upon its delivery to such lessee, reasonable depreciation from wear and tear only excepted. The lease of such vessel shall thereupon be canceled. SEC. 13. The said board shall cause to be made an annual survey and inspec- tion of each leased vessel. Such vessels shall be insured for the benefit of the lessor, and said board is authorized in its discretion to conduct an insurance department for writing insurance on such vessels, charging a lessee rates not in excess of the usual rates for such insurance. If in the judgment of said board it is necessary and desirable in the interest of the United States said board may also write insurance on cargoes carried in such vessels. SEC. 14. A merchant marine development fund is hereby established. Into this fund is to be paid all interest received on mortgages on ships sold in accordance with section No. 4 in excess of 4 per cent per annum. Into this fund is to be paid all earnings from insurance premiums collected by the Government on insurance written by the Government covering marine risks on hulls or cargoes insured by direction of the United States Shipping Board as herein provided. Into this fund will be paid all receipts on leased vessels in excess of 8 per cent of the appraised value of said vessel. SEC. 15. The United States Shipping Board is hereby authorized to administer the merchant marine development fund for the following purposes : 1. To provide for the establishment of regular lines of vessels on trade routes that may not at first prove self-sustaining or that may be required for the proper development of the commerce of the United States, sufficient sums may be paid to lessees of vessels to warrant their operation in lines as directed by the United States Shipping Board. Such payments shall continue only until such time and shall only be in such amounts as will yield a reasonable return to the lessees. 2. To cover the operation by the United States Shipping Board of vessels not leased or soid in unremunerative trades or for competitive purposes against foreign lines that may endeavor to force American vessels out of certain for- eign business by unfair methods. SEC. 16. For the purpose of formation of an adequate Naval Reserve all Ameri- can citizens serving on vessels of United States registry will be enlisted in the United States Naval Reserve under conditions to be laid dow r n by the Secretary of the Navy. In return for such services the Government will pay such part of the wages of such Naval Reserves as is in excess of the average pay of the officers or man in similar rating in the principal foreign competing steamship line, the rates of pay in the American vessels and the amount of such payments to be agreed upon between the Secretary of the Navy and the United States Shipping Board. Mr. MARSH. If I understand your proposal, it is sort of a Gov- ernment guarantee? Mr. POWELL. No, sir; there isn't any guarantee about it. Mr. MARSH. Underwriting Mr. POWELL (interposing). No; not even any underwriting, except that it may be necessary to start up, to let a weak line get on its feet. Mr. MARSH. But you say there isn't enough private capital to take over the ships. Then you must have Government credit for a private corporation to make money, which most IjState constitutions prohibit. Even if they didn't, that constitution could be amended it seems to us that if the Government is going to lend its credit in this way to enable corporations to make large sums of money, we are starting a very dangerous precedent. We tried it with the railroads and gave them 155,000,000 acres and three-quarters of a million subsidy, with an idea of reducing rates, and they have raised them every since. 25 Mr. POWELL. I believe in people making money. That is the in- centive that has made America a great country. And if I can not make money here, I want to go somewhere else to live. [Applause.] Mr. MARSH. Do you think I disagree with that? I am sorry you had to avoid my question by making a statement of a principle that I entirely agree with. That is, if you go out into the open market you come out all right, but you are suggesting that with the break- ing down of private efficient capitalists' methods you can not get the money to construct these ships which have now been constructed, and you come on your knees to the Government and say, " We want to make money ; for God sake give us a start." That is what it resolvss itself into. Mr. POWELL. If a farmer came to the Government and said. " I would like you to reclaim 5,000 acres of land and it is going to cost so much money, and when you have reclaimed it, I will pay you 4 per cent on the cost of reclaiming that land, and then I will share with you after you get 8 per cent of the money you invest; I will share with you 50 per cent on what you make." I shouldn't think the Government Avas doing anything that wasn't a mighty good business proposition. That is the proposition that we are putting forward toward the leasing of these steamships and it doesn't sound to me as if the Government is lending the fellow that takes the ships any credit or doing anything that isn't a good sound business proposition. Mr. MARSH. If the Government did that, and shared with the farmer, they would have to take deficits with the farmer. You do admit you want to make all you can out of it? Mr. POWELL. I didn't say all I can. I say a man who runs his busi- ness efficiently should get a suitable return for it. Mr. MARSH. How about the return on the stock ; are the dividends you earn due to your efficiency ? Mr. POWELL. There isn't any question of the returns on the stock in this proposition at all. I don't know how the company will run, but half of what they make over 8 per cent of the exact money that they invest goes back to the Government. They pay 4 per cent, the assessed value of the property, and they have left to divide up the other half of their earnings over a per cent on their financial investments. If they can make good earnings they will have enough interest to pay on a good deal of stock; if they can not make good earnings, they won't. How such a company would be capitalized doesn't enter into the question of discussion at all. Mr. MARSH. The packers told us they were making such a little tiny bit, but when the Federal Trade Commission got the facts, it averaged 54 per cent instead of 8 or 9 per cent. Can you get capital to-day at 4 per cent in private operations ? Mr. POWELL. No. Mr. MARSH. Then the Government is subsidizing to the difference between 4 per cent and the money you can get private capital for. Mr. POWELL. I am not arguing with you on that. What you have got to do is make a lease on your terms so that the man that takes the ship can make money on it, because if you don't he won't take it. What you are getting in return is the greater efficiency of private 26 operations that will carry farmers' goods to foreign markets far cheaper than under Government operation. Mr. MARSH. You can't say that; you have never tried it. Mr. POWELL. That is the only thing we have tried. Mr. HURLEY. We have to make a little more progress ; we can not give vou all the time; we want to have more concrete questions asked. Mr. HAMPTON. I would like to ask I understand you will agree that the exporters of the United States are divided into two classes ; those exporting finished products and those exporting raw materials. You agree that is a fair classification ? Mr. POWELL. Yes. Mr. HAMPTON. Now, the majority of advocates of such a prin- ciple for the operation of ships constitute the exporters of finished products. The farmers are in the class of the people who are ex- porting unfinished products ; that is true, is it not ? Mr. POWELL. I didn't just catch the first. Mr. HAMPTON. I say we divide the exporters sharply into two big classes, exporters of finished products or exporters of raw material or unfinished products. Now, the majority of the supporters on your proposition are the exporters of finished products. Mr. POWELL. I don't know that my proposition has any supporters. This is something that has been put forward as an idea for dis- cussion. Mr. HAMPTON. The farmers are largely in the group of the ex- porters of the unfinished products. That is true, is it not? Mr. POWELL. It depends Mr. HAMPTON (interposing). If you export manufactured prod- ucts, what do you take in return in a great many of the markets you are advocating to develop ? You intend to take in return the un- finished products, the farm products. You can not do business with Argentina and ship the agricultural implements and the other finished products to them without taking as pay farm products. There is no escape, as I see it, from that conclusion. When the farmer exports his products, what is going to be taken in return? Manu- factured products. No escape from that, is there? Mr. POWELL. I don't see that that makes any difference as to who operates the ships. Mr. HAMPTON. In regard to the attitude of the farmers toward the merchant marine Mr. POWELL. You don't want to bring back anything that com- petes with the farmers? Mr. HAMPTON. Not at all. We want equality of service and we want a merchant marine that will absolutely and positively and un- equivocally guarantee that equality of service and as a united Nation that is " 100 per cent American," we want to go shoulder to shoulder with the manufacturers and merchants, to go into the markets of the world. Mr. HURLEY. Any other questions you would like to ask Mr. Powell? Mr. Hamilton, of the. American Bankers' Association. Do you have any matters to present, Mr. Hamilton? We would be very glad to hear from you if you will come down this way. 27 Mr. JOHN L. HAMILTON (representing the commerce and marine committee of the American Bankers' Association, Columbus, Ohio). The American Bankers' Association, as you know, represents practi- cally all of the banking interests of the United States. That organi- zation has a membership close to 20,000 in the United States. Last September the association, recognizing the importance of this question, appointed a committee of 15 to study the values placed in connection with this problem and to cooperate with similar commit- tees appointed by other representative organizations of the United States. We are not prepared to say that any one plan is the plan. We recognize the different interests that enter into this commerce ques- tion. We recognize the agricultural, the mining, the manufacturing, and the labor interests in this problem; also the transportation end of it. We believe that the only feasible way of reaching a definite conclusion is by the appointment of representatives of these different organizations, a committee of two or three, or four, or perhaps five, from each, to get together and discuss the various phases of this problem. The American bankers believe that every industry, every line of endeavor, should have a fair and reasonable profit for its efforts. We have just come. Mr. Collins and I. from a meeting of the ex- ecutive council of the American Bankers' Association held at White Sulphur Springs this week, at which convention, or at which meet- ing, there were over 300 bankers representing the different sections of the United States present. At that meeting resolutions were offered and we are here to pre- sent you the draft of those resolutions. They were unanimously adopted by the delegates in attendance at that convention. Those delegates represent every distinctive class and interest, it seems to me. in the United States. I will ask Mr. W. P. Collins, the secre- tary of our commitee, to read the resolutions that were adopted at il}at convention at this time, with your permission. Mr. HURLEY. Mr. Collins. Mr. COLLINS. This is an extract from the report adopted by the committee on commerce and marine of the American Bankers' Association at White Sulphur Springs, W. Va., May 19, 1919, for presentation to the executive council of the association, and unanimously adopted by the executive council, May 21, 1919: The committee feels that its influence may properly be extended to the development of needed initiative and expert management with relation to shipping. This initiative and management, with reasonable financial sup- port and safeguards, can, in the committee's judgment, be found in the working out of a merchant-marine plan involving privately owned and operated vessels. with such assistance as may be necessary to make their operation successful against all competition. With respect to the merchant-marine question, it is the view of the committee that there must be careful, intelligent, and im- partial study of all the apparently worth- while plans presented ; that this study must be divorced as far as possible from politics, and that, while a permanent businesslike method of handling the merchant marine should be developed as soon as may be, there must be realization that any plan entered upon may be in a large sense experimental. Your committee is confident of the opinion and recommends to the executive council for its approval, that Government ownership or Government operation of our shipping is not to the best interest of our people. We believe that the Government should dispose of the shipping, which it has accumulated since we 28 entered the war, and at prices which will permit private ownership and opera- tion at reasonable profit. We further believe a decision in regard to these prices should be reached after proper investigation and consideration, as early as possible. We are further confidently of the opinion that the Government should adopt as a definite policy that it will in no manner or form compete with established steamship lines, as is the case to-day. We believe that in this attitude will be found the greatest encouragement and the greatest stimulus for individual initiative. If the Government should decide to dispose of its shipping after first fixing a reasonable price thereon, the plan will probably call for the payment in cash by the purchaser of a certain percentage, possibly 25 per cent, of the agreed price, the balance to be paid in installments. Having in mind this arrangement, if it be adopted, will call for financing on the part of banks, our committee has appointed a special subcommittee to study, formulate, and recommend a safe and consistent plan of ship financing for the benefit and guidance of all concerned. The committee considers that the question of ocean transportation is highly important, but that it is by no means predominant and hopes that bankers while giving it all needed consideration will apply themselves particularly to distinctly financial questions, of unquestioned urgency. In this connection it might not be amiss to emphasize that there may be disposition to consider that the financing of our shipping and foreign trade are particularly and dis- tinctly matters calling for the attention only of the large banking institutions of the country, but it is believed by the committee that one of the lessons of the war is that the prices which prevail for the products of the farm and the output of our factories are possible only as the result of the fact that such output and such products have found foreign markets. If these markets be shut off for any reason, whether it be competition or the lack of facility, a reflection will be quickly found in the prices of. commodities which we produce. Therefore, it is safe to say that the small banker as well as the large one will come to recognize, if he does not already do so, that the best interests of the community he serves will be found in the support which he as well as others of his community give to these very important questions. Mr. JOHN L. HAMILTON, of the American Bankers' Association. I will say in connection with this that the bankers recognize the neces- sity of establishing some form of suitable exchange. This must be done by some means that will recognize the importance of importing as well as exporting goods to and from this country. This is one of the chief difficulties in the way of business to-day ; the high rates of exchange prevailing to foreign countries where they have to procure the American dollar. We believe that through some kind of an agency which can be formulated out of an organization of this kind, when they get together in sober thought, might devise a plan which will help regulate the exchange. We have not only a duty to per- form in the United States, but we have a duty to the foreign powers to perform. We have got to see to it that these countries are built up and given an opportunity to build up the same as our institutions are permitted to run on and to continue to run at a profit in this country. Mr. HURLEY. I would like to hear from Mr. Rush on the insurance situation. Mr. BENJAMIN EUSH, of American Marine Insurance, New York. Mr. Chairman and gentlemen : I am like Mr. Hale. I thought this was going to be a very much more informal meeting than it appears to be, and I thought it was going to be smaller ; but on the whole I am glad, although I am not prepared to talk to you, I am glad it is large and as widely representative as it seems to be, because want to put a few thoughts of mine before you for what they are worth, and should they reach the organizations I would like them to reach, so much the better. I am president of the Association of Marine Underwriters of the United States, which is a formation of some 50 American marine 29 insurance companies, operating particularly in the United States, and also to a considerable extent in foreign countries. We are therefore able to take, perhaps, a wider grasp than a man whose business is solely confined to the United States. Personally, I represent the oldest American marine company, which has been in business since 1792. Our company has watched the growth of the American mer- chant marine, has watched it attain its zenith, with a greater amount of tonnage on the ocean than Great Britain ; has watched its decline and fall, and we now hope we are in a fair way to watch its rebirth and its assumption of its place on the Atlantic Ocean, the place to which it is justly entitled. Careful consideration of the reason for the decline and fall of the American merchant marine has led me to formulate two opinions: First and foremost, it declined because the American citizen had a vast continent opened up, and he could get better employment for his money in the development of the West and in the development of his manufactures than he could in trading on the ocean. That, per- haps, was one of the principal causes. After that, perhaps the chief contributing cause was that the merchant marine had been used very largely as a grindstone for other people to grind their axes on. It was regarded as a means of employing American labor in ship- yards, and employment on the vessels that navigated the sea. It was regarded as a means for training sailors and officers for the United States Navy, but the root idea, without which it is impossible for any merchant marine worth its name, in my opinion, was steadily disregarded, and that was the profit to the American shipowner. We are all, in this country, bound up one with the other. It is impossible for any one interest or industry to claim a preeminent share in the profits of the commerce and business of the United States. The farmers, the merchants, the miners, the manufacturers, all live and prosper as a whole community prospers, and they all fail and die as a community becomes unprosperous. I therefore think that we have to approach this problem from the angle of seeing to it that the American shipowner gets a fair and just profit, as fair and just a profit as does the American farmer, the American merchant, the American miner, or the American laborer. If he does not get that profit, he will not exist, and he will have to transfer his attention to other industries. The question is how to get that profit; how to resume control. Personally, I am not an advocate of Government management or ownership. I do not believe that it is possible for any large organi- zation, such as a Government organization, to have the keen eye for the possibility of making profit, as it is for the business under private management. When you come up in international competition with the English and Norwegians, the Japanese, the Italians, you come across people who have 40 or 50 years, at the shortest time, and a couple of centuries, at the longest time, training in shipbuilding and ship management, and they have their eye out for the main chance, and in my opinion the best way of meeting that state of affairs is by having a trained American shipowning branch classification or branch of trade, whichever you choose to call it which would be able to meet and beat them on their own ground, and I am sure you will have that if their hands are not tied. 30 Now, as regards the present method of achieving that result : I think, as Mr. Wood says, it will be difficult if all the American ships were thrown on the markets at once to find a market for them. I think you will have to have some plan, such as outlined by Mr. Wood, or a modification of that plan may be arrived at, which will help the American international mercantile marine I am not speaking of the company, but the ships and the international trade to get on their feet. That might be done by proper forms of chartering, proper forms of valuation of vessels, and proper arrangements for the equalizing of the difference in cost between the American wages and foreign wages, but on that point I would like to give a word of caution. I do not think a subsidy has ever put a merchant marine on its feet. You have got to go out in the open marts of trade and meet competition, and if you can not do it, you do not deserve to exist. I would advocate some plan whereby private ownership may be looked forward to as the ultimate goal, and that that goal be reached by wise and successive steps enabling the American shipowners to develop and to make good his standing in the international marts of trade. To succeed in international trade we must follow the ex- ample of our great competitors, Great Britain and the late German Empire. We find there are three factors in trade which have always been united banking, shipping, and insurance. These three form the trinity upon which foreign trade is based. If one is absent, the other two are handicapped. In the past I take an illustration from Great Britain, as she is the great shipping nation to-day in the past, the English mer- chant has manufactured goods for export, the English banker has made loans to foreign countries for their development, and as a ro- sult of these loans, these countries have been enabled to buy the Eng- lish merchandise which has been carried in English ships, and to send back their merchandise in English ships, and thereby cut down the freight rate; and that merchandise has been insured in English ma- rine insurance companies. They thereby keep their hands on both ends and the middle of the stick. They are enabled to better control the foreign market in that way. If they had only been able to im- port, without exporting, or only been able to export without import- ing, or if they had to depend on a foreign merchant marine to carry their goods they would not have been in as advantageous a position. Obviously a merchant marine belonging to the country having the goods to sell will get better service than from the merchant marine of a competitor. I would urge upon this convention to adopt a plan which will put the American shipowner back upon the seas, because until we can arrange that, the farmer, the merchant, and the manu- facturer in the United States will be handicapped as against our foreign competitors. They will not have as good service as they would had they retained the merchant marine. If I may say a word for the American marine underwriter, he does not want any subsidy at all. He does not want any protective tariff on the insurance encf of it. He feels quite confident if his hands are left untied, he can go into the markets of the world and hold his own. In the past I have had occasion to oppose efforts which have been made to make a discriminating tariff in favor of the American marine company, and our marine interests have grown under abso- 31 lute freedom, so that I do not want you to think I came down here holding any brief for any interests at all. I have come here as a citizen, a private citizen, who has watched American shipping for quite a while and my views on this subject I have expressed. [Ap- plause.] Mr. MARSH. I would like to ask Mr. Rush to explain to us whether there is sufficient capital in this country to do all the underwriting that our merchant marine now requires, or is likely to require, in reference to hulls and cargo, and what policy the country should pur- sue, or the Government should pursue, in respect to any surplus of underwriting that may be necessary. Mr. RUSH. It will give me great pleasure to answer that question. If I may go back for a shore time : In 1914, before the war, there was not sufficient American capital to carry the large values which would be required to carry both the hull and the value of cargo. Since that time the capacity has about doubled. I should say there is, at the present time, sufficient capital in American marine companies to carry all except the very largest values. By the very largest values I mean, if } T OU get the Leviathan, and filled her up to a cargo equal to her own value, which would give you about $20,000,000, you would not be able to place it in the American market except at very high rate. You must go around and get the cheapest market you possibly can. You are in competition with the foreigner. If you can not get it over here cheaply enough, you will be forced to go to London or France. It is your life's blood. That is why I say I do not want any protective tariff. There should be a competitive market in other ports of the world to keep the American underwriters from getting a little beyond what is just. But there is at the present time in America ample marine insurance to insure the hull value for a couple of million dollars, and to take care of $5,000,000 or $6,000,000 worth of cargo. The company which I represent, for instance, will write a half million; there are various other companies which will do as much. I do not think you will have the slightest trouble in getting the going market rate for a value from $7,000,000 to $10,000,000. After you go over that, you will have to go abroad. Mr. MARSH. May I ask two questions? Based on your pamphlet, Mr. Hurley, you state that the American marine insurance market has not sufficient resources to underwrite all the vessels the Govern- ment has to sell, and also you say, " Our experience in operation shows that the Government can carry this insurance for at least 1 per cent less than the open market rate." Is that a recommendation for or against Government operation? Mr. RUSH. Against. Mr. MARSH. From the point of view of the corporation or of the public ? Mr. RUSH. The public. We are up against Government insurance all the time. The trouble with it is that it is not flexible enough. In theory, it is beautiful. You write off your taxes ; you do not have any taxes or expenses to pay. I had the pleasure of a talk with Mr. George W. Norris on this very point. He came to me and asked if I would not insure farm loans at a given rate. I said no. He wanted to know why. I said, " First, you insure the man and not the prop- erty." That is a mistake that the people not in the insurance busi- 32 ness invariable make. In the second place, insurance rates are as fluid as water. We are obliged all the time to study the hazard of each individual vessel and each individual cargo and each individual voyage, and it varies. A steamer carrying cargo from the United States to Europe or any port of the world may very well have two or three hundred different kinds of cargo and they are all susceptible to different kinds of damage. That is carefully tabulated and item- ized, so that John Smith shall not pay for the losses of Tom Jones. That is the function of an insurance man. I recently had occasion to employ the efficiency expert who had just made an examination of the United States Steel Co., and I asked him if he could devise a better method of keeping tab on the cost of my operations, and they reported, to my surprise, and, possibly, to his own, that the insurance company of North America necessarily required a greater amount of bookeeping to achieve their results than the United States Steel Corporation. Now, every insurance company keeps an account of every marine policy on its books. They also keep an account of the different kinds of cargo, and it is for that reason that a private company, operating for profits and, including interest on our investment, over a series of 40 years, our profit has not amounted to any more than 5 per cent would we get better results than the Government, without the spur of profit consideration. Furthermore, that stimulus of profit is of the very greatest benefit to the community at large I will give an instance; the farmers of this country raise cattle. A large portion of those cattle were shipped abroad. They used to ship them abroad and insure them against perils of the sea and also against loss by death. The mortality amongst those cattle was very great. It got up as high as 6 out of every 100, and private underwriters got very shy of it; the marine rate was 7 per cent, and one of the marine companies thought that with a rate of that kind there must be some leaks that could be stopped up. They made an investigation and this is what they did. I give it to you in detail, to show how the insurance companies oper- ate. They found that the trouble was due to the 1 fact that freights were collected in advance as soon as the beasts were shipped, and the vessel's captain or shipowner did not care whether they landed or not. They had their freight moneys paid in advance. The result was that a dead steer was as good to them as a live steer. It was not as good to the man who had to eat it, because the sharks got the dead one. We made investigations, with the result that it was neces- sary to have the beasts properly inspected for red- water and other cattle diseases, so that they could go abroad in sound condition. We could not alter the payment of freights, but we gave the captain of each vessel a shilling for every head that landed, less a pound for every head that was lost ; we also arranged that he did not ship more than he had air space for; we arranged for proper ventilation. To make a long story short, the business which had cost the underwriters a lot of money at 6 per cent was ultimately written at a profit, at a quarter of 1 per cent, and the saving to the American farmer and to the domestic consumer as well as the foreign consumer was pretty close to $5.75 on every $100 over a period of about 10 years because of the careful investigation of each individual risk. That is why I maintain that private insurance companies are cheaper in the long run than any large Government concern can be. 33 Mr. HURLEY. Are there any other questions ? Mr. RUSH. As I say, I do not represent private interests. Mr. HURLEY. Gentlemen, we will recess until 3 o'clock. (Whereupon, at 12.52 o'clock p. m., the meeting recessed until 3 o'clock p. m. this day.) AFTER RECESS. The meeting reconvened at 3.15 o'clock p. m. Mr. HURLEY. I would like to hear from Mr. Welding Ring, Cham- ber of Commerce, New York City. Mr. RING. Mr. Chairman and gentlemen, Mr. J. B. Smull and my- self have come here as representatives of the New York Chamber of Commerce. Most of you are acquainted with that institution, but for those that are not, I desire to state that it is probably the largest shipping body in the United States. There are a larger num- ber of men interested in shipping connected with that institution than with any other institution anywhere. We are therefore vitally interested in this question that is before the Shipping Board at the present time. It not only has members in the shipping business, but it has a large number of members who are in the exporting trade, the importing trade, both of which are vitally interested in the shipping question, so I think that we are as extremely interested in the subject of an American merchant marine as any other institu- tion or any body of men, not even excepting our friend who spoke this morning about the very great interest that the agricultural people have in shipping. That reminds me that several years ago in St. Louis one of the members of the Government made a statement at a meeting of the Foreign Trade Council that there were plenty of ships to be had, and he had a friend in Worcester, Mass., who had 12 vessels which he would like to dispose of at once. I asked him how it was that a shipping man went to Worcester, Mass. He didn't know. I asked him if he would kindly turn over some of that tonnage to me, that I could use it right away very handily, but I never got it. So I am afraid that some of our people in the far West, Northwest, and Southwest are not so familiar with the shipping question as those on the seaboard. The chamber of commerce has been greatly interested in this subject, and last December, after the ending of the war, they appointed a special committee for consideration of the entire subject. They had numerous meetings, and the committee was composed of mem- bers who are fairly familiar with shipping conditions. The result of that was that they drew up a report and presented it to the chamber, which was unanimously adopted. I will not read all of the report, but I would like to file it with you, Mr. Chairman, as a matter of reference. I will read, however, two of the resolutions that were passed at that time: Resolved, That the United States Shipping Board be urged to confer without delay with practical shipping men, with the view of determining whether the ships proposed to be built by the Emergency Fleet Corporation are of the type, size, and construction best suited to enable this country to compete in foreign trade with the merchant marine of other nations and what changes should be made to effect that purpose; and 12103419 3 34 Resolved, That the Chamber of Commerce of the State of New ' York recommends to the President, to the Congress, and to the United States Ship- ping Board a careful consideration of the general features of the plan sug- gested in this report, and urges prompt action by the Government in declaring its future policy, in order that the merchants of the country may know how to adjust themselves as ram'dly as possible to the changing conditions of the world's business and upon what plan they may proceed to provide for tl it- future needs of the country. The full report I will file with you, Mr. Chairman. The sub- stance of this report is very much in line with the address delivered by our chairman in New York some three or four weeks ago, which outlined his views that the Shipping Board tonnage should be dis- posed of as rapidly as possible to private interests on terms made as advantageous for the Government as possible, and also for the buyers, paying a certain percentage in cash and the balance to be paid in yearly payments covering a period of years. They also indorse the proposition that it was not feasible, or at least, not desirable, that this shipping should be handled by the Gov- ernment; that they deemed it could be done very much better by private individuals, either as firms or as corporations; thai the ex- pense of doing so would be very much less than by the Government, and that everything in connection with shipping would be very much better carried on by private enterprise than by the Government. I think there is perhaps one point which was lost sight of by the gentleman this morning in speaking of the owning and operation of ships by the Government. I don't think he realized the fact that ships trade in all ports of the world, those which are well known and some which are less known, and it is necessary not only to have the operators in the United States to handle the vessels while they are loading here, or while they are discharging here, but they must have representation in every other port of the world to which these ships go. To affect such an organization for the Government and to have the Government establish agencies throughout the world would not only be a very expensive operation, both for the establishment and the continuance of the thing, but it would also take a long while to do it. Now private operators of ships have these agencies in hand at the present time. That has been their business and they are thor- oughly familiar with it. They know where certain trades can be ob- tained, how they can be obtained, and where it is best to send ships ; where it is best to avoid sending them. This is something that the Government would have to learn after a long experience, and I don ? t think it could be accomplished until after many years of arduous work. For that reason I think the Government operation would be undesirable. The chamber of commerce has not entered into any detailed plans except to indorse in a general way those submitted by Chairman Hurley, and we are here simply to represent them and state that they are back of the Shipping Board in its endeavor to bring this very important issue which we think Avill be favorable for all concerned. Mr. HURLEY. Mr. E. P. Thomas, of the National Foreign Trade Council, New York City. Mr. THOMAS. Mr. Chairman and gentlemen: Mr. W. H. Knox and myself were appointed by Mr. P. S. Franklin, who I believe will be here to-morrow on behalf of the National Foreign Trade Council, to represent them at this meeting. 35 The National Foreign Trade Council consists of 68 members from every section of the Union, and representing every species of manu- facturer and producers interested in the foreign trade of the United States, including the banking, shipping, railroad, and other interests. For the past 6 years they have called an annual convention of all for- eign trade interests of the United States, the first having been held in this city 6 years ago. At the last convention held on April 23, 24, 25, and 26 of this year, there were assembled in the city of Chicago 2,000 delegates from every State in the Union, representing all the largest associations that have any interest whatever in the foreign trade of the United States, both export and import. Among the larger associations there were the American Manufacturers Ex- port Association, the American Exporters & Importers Association, the National Association of Credit Manufacturers, American Bankers Association, and upward of 100 additional associations were repre- sented, and the subject of the American merchant marine was given considerable attention during the entire session, one session being devoted entirely to it. The consensus of opinion undoubtedly favored Chairman Hurley's plan as a basis for the development of fixed principles, and was received generally with marked approval. Among the other points made at the convention with respect to the question of private ownership as against Government ownership were the striking facts, as Chairman Hurley has pointed out, that with the completion of the shipbuilding program there will be 1,890 ships owned by the United States Government, constituting TO per cent of the total. These 1,890 vessels represent 12,660,000 tons of shipping, and must naturally be a subject of serious consideration as to the manner in which any governmental organization would be able! to cope with the problem of handling nearly 2,000 ships of over 12,000,- 000 tons with all the collateral difficulties surrounding it, touched upon by Mr. Ring in respect to foreign organizations in practically every port, to supplement the work of the American board. Con- sideration was also given to the problem as to what would beconle of the other 30 per cent of the shipping, representing at the present time some 4,000,000 tons if it had to enter into competition with the -Gov- ernment. These questions were submitted in full detail to -a committee ap- pointed by the convention, consisting of 74 delegates representing practically every class of manufacture in the United States which was susceptible to export or to import, and representing as well the producers of farm products; and this committee evolved recom- mendations which were at the final session of the National Foreign Trade Convention adopted unanimously, and I beg to submit them to you and this board as the final and definite conclusion of the prin- ciples adopted by a convention which, I think, truly and perhaps, solely, represents the foreign trade thought of the United States/ \Yith your indulgence they are brief and cover merely the prin- ciples without going at this time into details I will read them : MERCHANT MARINE NEEDS- Wo urge the earliest possible completion of the Government's present ship- building program. As shipbuilding is one of the greatest essentials for the prosperity of Ameri- can industry, the Government should immediately remove all restrictions now 36 placed in American shipbuilding and permit the free construction of vessels for sale to foreign interests. The imperatively necessary revision of our shipping, navigation, classifica- tion, and measurement laws should be accomplished without delay so that American vessels can be placed on a more equitable basis of competitive opera- ting costs in foreign trade. GOVERNMENT OPERATION OF SHIPS OPPOSED. While Government ownership and reasonable Government control of Ameri- can shipping must continue until some acceptable plan is devised for the transfer of such tonnage to private ownership, we are opposed to any continuance of Government operation and urge that, consistent with recognized war emergency needs, these Government owned vessels be allocated to suitable trades and trading routes for operation by any qualified competent American shipping enterprise, under conditions of sale or charter that will permit of their sending the American flag to any port of the world on a fair trading competi- tive basis with that of any other maritime nation. AMERICAN BUNKER DEPOTS NEEDED. We also urge the immediate consideration of the necessity for establishing coal and fuel-oil depots on all the great foreign-trading routes so that American shipping shall not be left dependent upon foreign-owned facilities for such vital service. American-built ships for American foreign trade freed from all burdensome restrictions a fair world field and no favors other than those known to be absolutely essential to the reconstruction and highest possible development of our American merchantile marine is the crying need of the day, if the United States is ever to win its rightful place in international commerce. Mr. THOMAS. These general recommendations are, of course, sus- ceptible to the working out in detail of a plan such as has been pro- posed by Chairman Hurley and others and my coassociate, Mr. W. H. Knox, has certain views to express, which I would be glad to have you invite him to do, which in the main covers the essential points but any final declaration of details so far as the approval of the Na- tional Foreign Trade Council is concerned, will naturally be left to their consideration at a subsequent meeting and would be submitted in more detail to the chairman. , Mr. HURLEY. Mr. W. H. Knox, representing the American Export- ers & Importers Association, New York City, we would like to hear from you, please. Mr. KNOX. Mr. Chairman and gentlemen, with the thought that we can perhaps make greater progress in this discussion by attempt- ing to limit our views to concrete issues, we beg to submit the follow- ing suggestions for that purpose, it being understood, of course, that they are not to be considered as any definite recommendations on the part of the National Foreign Trade Council. I would also like to state that we represent an old-time association in New York City which holds among its membership the pioneers in the foreign trade of this country whose lives have been spent in the promotion of this country's interests in overseas commerce, both export and import, and simply as a matter of interest, I should say that in the year of 1918 the normal trading operations of that association represent a sum in excess of $1,000,000,000. Consequently the views which they may express at this conference might perhaps be given considera- tion from a standpoint of men who have spent their lives in per- sonally handling in a large way the very problem that is now con- fronting your body. 37 1. We advocate the completion of present building program cov- ering construction of steel ships these to be of types known to be best suited for the employment required. 2. Some definite declared policy providing for Government owner- ship and control of all vessels unsold to be determined for a period, and this subject to modifications on the following lines: 3. The earliest possible establishment by Government of fast pas- senger mail and general cargo lines on - the most important foreign trading routes these to have regular sailing dates and operating schedules to suit trade needs. 4. The sale of Government-owned steel tonnage to be limited to American owned and operated shipping enterprises on some basis which would permit of purchase price being fixed at the actual world market valuation of similar tonnage, with payment in full or on an installment basis with revaluation at each payment period, the mort- gage or contract obligations of buyers to carry an interest charge not exceeding 4 per cent. 5. The lease or charter of Government-owned tonnage to be lim- ited to American operators on terms and conditions based on no more than the necessary reasonable return to Government of a fair rate of interest on the world market value of the tonnage so chartered and reasonable provision for depreciation. As an inducement for char- terers to take over the ships, an arrangement whereby the charter moneys paid could apply to purchase price. 6. Government to remove all restrictions as to the use of tonnage sold or chartered to American operators, and control of all shipping to be limited to the possible fixing of maximum freight rates. Any determined harmful foreign competition in freight rates to be met by proportionate reductions in the purchase price and/or chartered rates being paid Government. 7. We are opposed to Government operation of American shipping in any form. This should be left exclusively in the hands of Ameri- can enterprise. 8. The necessary revision and changes in our navigation, shipping, and measurement laws to permit of American tonnage competing in ocean-carrying trades with other maritime nations on a more equitable basis. 9. Government to assist in the establishment of coal and fuel oil depots for the use of American shipping on all the great trading routes, and also to provide measures that would prevent any discrimi- nation against American shipping by foreign nations. 10. That new construction for foreign account be encouraged in every possible way. 11. That all steel tonnage under construction and/or completed for foreign account during the war shall be retained by Govern- ment and placed at the disposal of American shipping needs under reasonable sale and/or leasing terms. 12. That all our wooden ships be sold to the highest bidder and that the completion of such tonnage now under construction be limited to vessels so nearly finished that abandonment would entail greater loss than completion. Mr. Chairman, if it would be possible so to do, we suggest that, if it meets with the approval of this conference, that we attempt to dis- 38 cuss these or any other suggestions advanced so that, if possible, we may be able to exhaust a discussion on any one given point and it will be kept away from desultory discussion on matters that may not be germane to the particular point. For the benefit of our agricultural friends who talked to us this morning I would like to point out several matters on which they are perhaps misinformed as to the facts. The question was raised that the farmers the agricultural interests in this country, put it in my language wanted a square deal on freight rates in their commodities. Surely they must understand that those freight rates are necessarily to be subject to world competition and as a result there can be no exhprbitant rates charged by private ownership for the carriage of agricultural commodity which, as is always the fact, those same com- modities must compete with similar commodities of other nations. Consequently if private ownership be established the matter of freight rate 'must automatically adjust itself to the inevitable law of supply and demand and the same thing necessarily applies to the administration of private owned ships as to the point of profiteering, when to operate those ships this country must face the keenest and best equipped maritime knowledge of the world. What the people of this country need is not so much protection, nor do we need subsidies from the point of being nursed up to our adult growth in shipping, but what we do need is the restoration of American ability to do our foreign trading on any basis which will permit our competing with the world. [Applause.] Mr. HURLEY. Mr. J. R. Howard, representing the Iowa Farm Bureau. Mr. HOWARD. Mr. Chairman and gentlemen, not having attended this morning's conference I did not hear the discussion which has been referred to, whereby the agricultural interests were represented. I am here representing the Federal farm bureaus of the State of Iowa with 50,000 members. I have also telegrams from the Iowa Grain Growers' Association operating over 400 elevators, with an average membership of perhaps 75 farmers to each organization, and the Iowa Wool Growers' Association with a membership of 10,000 or 15,000, and I am not prepared, because we, as farmers, have not given this matter of merchant marine sufficient study to commit the Iowa farmers to any definite policy. In the beginning I would like to speak of one or two things which we are opposed to. In Iowa we have had some experience in the last year with Government owned, or rather Government operated rail- ways and, basing our idea of a Government operated merchant marine, or a Government owned merchant marine, upon our expe- rience with our railroad shipping under Government operation, we don't want any Government control or operation of merchant marine. [Applause.] Now, I think we would not object to a privately owned merchant marine with a split Government control, although I am not going into details or make any suggestions because I am here to learn exclusively. There are just one or two points of view, however, with regard to" our middle- west farmers. We represent the agricultural section of the country which creates a surplus. Statistics show that one Iowa farmer produces three times as much food stuff as the 39 average farmer of the United States. Therefore, when we are selling our commodities the shipping is of vital importance to us. The farmer, like the manufacturer, must have a market for the stuff which he produces, and, unlike the manufacturer, he can not always tell very much in advance about what the market will be. However, we know that well paid American labor is our best cus- tomer and if we can promote American manufacturing, American in- dustries, with a well paid American labor who will eat the products of our farm, consume them at good round prices, we have found a good market. Then it becomes a matter of taking care of the surplus. We believe in American markets for American products and then to take care of the surplus in the best possible way. That depends, of course, upon the merchant marine. I wish to apologize a little for the views of a good many farmers. They appear to me possibly to be just a little narrow, inasmuch as they are opposed, many of them, to any merchant marine whatever. They have an idea that these ships will go to foreign countries, carry- ing the products of our factories and come back loaded exclusively with corn, wheat, and meat. If that were true, I think, we would all, every one of us present, oppose a merchant marine, for I think that it is known that your own businesses depends upon the product of the farm and the prosperity of the country at large is pretty much the prosperity of the farmer. I feel perfectly safe as a farmer in trusting the interests of the farmers in the hands of the business men. but at the same time I think the farmer must be in a position to look out for himself, too, and express his own opinion. So at this time I am not prepared to make any definite statement other than we are opposed to Government owned merchant marine or railroads and that we are in favor of any project which will stimulate American industry and American labor. [Applause.] Mr. HURLEY. Mr. Thompson, Illinois Agricultural Association. Mr. THOMPSON. I am here to-day representing the Illinois Agricul- tural Association, an association very similar in structure to the one which Mr. Howard represents, being a grouping together of 67 farm bureaus of the State of Illinois, with a membership of approximately 50,000 farmers in the State. We have had very similar experience to that of Mr. HoAvard in our shipping under Government operation of the railways, especially as relates to the shipment of live stock, and, basing our experience on that, we are inclined to feel that we would not favor the Government ownership and operation of a merchant marine. We know a lot more about box cars out in Illinois, how- ever, than we do about ships. Therefore I am here to-day to repre- sent our farmers, not only by counseling when I may, but also to learn everything possible from such a conference. We do create a good deal of shipping out in the prairies of Illinois and are naturally very interested in any transportation system which will mean that the grains and meats which we produce can be carried to the mar- kets of the world in a economical and efficient manner. I hope that out of this conference may come the right conclusion in the matter of the merchant marine. What that conclusion is, I am not prepared to say. Mr. HURLEY. Mr. James O'Connell, of the American Federation of Labor, Washington, D. C. 40 Mr. O'CoNNELL. Mr. Chairman and gentlemen of the convention, I regret very much that President Gompers has been ill and has not been able to be present. He asked two other gentlemen and myself to represent the federation at this conference. I have listened with much interest to the discussions that have taken place, particularly to the splendid presentation of the matter by the chairman. The different elements here are very naturally interested in the peculiar operation of industrial, manufacturing, or financiering in which they are directly associated. We are particu- larly interested in the labor of human beings, and we are very par- ticularly interested in how that labor should be employed, and under what conditions it should be employed. The American Federation of Labor is an organization represent- ing 3,000,000 workmen and has never gone on record as being in favor of complete Government ownership. It is on record for the ownership of those things necessary for municipalities, those things that are used directly by the people, but as far as the ownership of railroads, the ownership of steamship lines, commerce, it has not as yet gone on record as being in favor, of that proposition. It is very likely that in the convention in June, because of the experience we have had during the Avar, that some action may be taken which may lead toward that conclusion. The labor movement of this country has taken a very active part, as you all know, in the successful carry- ing on and conclusion of the war. We have been closely associated in the building of ships, the conduct of the Shipping Board and of the Fleet Corporation. We have been in close association and touch with them in order that ships might be built. To sit down all in one day and evolve from a very brief conference a conclusion as to whether Government ownership, in so far as the Government has applied itself during the war, has been successful or not, or whether we should insist on complete private ownership, strikes me as really attempting to perform a pretty big job in a very short time. There is no doubt in my mind but that the public mind has been trained very materially in the line of public ownership dur- ing the past two years. I do not mean to say that the American labor movement of 3,000,000 men is not in favor of public ownership, be- cause there are thousands and tens of thousands of men who believe in public ownership. I doubt if a vote was taken of the railroad men, for instance, it has been discussed here as being a failure as far as Government ownership is concerned, that a vote would not be largely in favor of Government ownership. In fact, at conferences recently held, a plan has been submitted to Congress, which has the indorse- ment of nearly all the prominent organizations in the country and particularly the railroad organizations, looking toward the Govern- ment's complete control of railroads. I do not mean to say that under Government control during the past two years the railroads have been operated efficiently or successfully. I do mean to say, however, that the question of Government operation of the railroads during the past two years has not brought out a position where a man could indicate that the Government has made a failure of the operation of railroads. You must know that the railroads came over to the Government under a demoralized condition; and it was found necessary to com- pletely equip the railroads of this country and put them on a working 41 basis. The men in charge of private railroads were not in agreement with the Government in taking the railroads over, and did not give the cooperation and assistance in making the operation of the rail- roads a success by the Government, that might have been expected. If it were understood and so ordered by the proper authority of our country that the railroads were to be operated and owned by the Gov- ernment quite a different state of affairs might exist ; but the fact was well known, or at least it was thought, that the railroads would sooner or later be turned back to their original owners; therefore my expe- rience with those with whom I have come in contact, who had to do with railroad affairs, indicates that instead of the Government getting the service which would make it successful in operating the railroads the opposite result was obtained, because of the desire to make it appear that the Government could not operate railroads. I am not here to defend the Government, nor have I any right to attempt to defend the Government, in its operation of railroads. Speaking from what I see and hear and know, in a practical way, of the operation of the railroads is all that I can do. The farmer is interested in his products of course, getting the highest possible price for it, getting it to the market in the best possi- ble condition; the shipbuilder is interested in selling ships, and ob- taining the best possible profit as a result of his labor. The commer- cial interests are interested in the operation of ships; the financial interests are interested in the financial side of that proposition. Now a great factor in all this question that must be seriously considered is the labor power required, whether it be Government owned or pri- vately owned. The laboring man is interested in knowing whether he is going to have the best condition of employment under Govern- ment or private ownership. He has had the experience of many, many years of private ownership. He is best able to speak for himself as to whether or not that has been successful. He has had little or no experience as to Government ownership. You might say, " Why take a chance with a devil you do not know rather than one you do know ? " If I know anything of what has been said publicly by those interested in the men engaged in the shipping operations I mean by that the laboring side of it their opinion has been that their interests have not been properly considered by the private interests who have oper- ated the shipping interests of our country. War has given an impetus both to all kinds of shipping questions first, the building of ships ; second, the operation of them. We know more about ships now; at least, we ought to know more about ships just now than ever before in our lives. We have had nothing but ship talk for the past two or three years. Almost daily Mr. Hurley is in the paper with something about ships; either building or canceling. It is one or the other every day we are going to build about a million dollars' worth of ships, or we are going to cancel about a million dol- lars' worth. We are going to sell those we built, or we are going to holfl those we built. The laboring man is in a quandary as to what the shipping people mean and what they are about. We will be glad to be of service in every way possible to work out a real businesslike and practical shipping plan which will give stability to the shipbuilders of the country and an assurance of stability of good and safe employ- ment for the workers of the country. 42 _ I do not pretend, nor do I think anybody on our side of this ques- tion pretends, right offhand, to say what should be done, but I believe the question of whether the ships should be operated by the Govern- ment or private owner is one that ought to receive great consideration, and it ought to be taken up from some sort of a statistical stand- point the mere fact of our saying we are in favor of it or against it does not mean anything, because we speak then largely from a per- sonal point of view, or from the point of view of those we represent. Proper statistics should be gathered from both sides those in favor and those against and then the interests on the other side, the labor, ought to be prepared to present its side of the question, as to what has occurred under private ownership and as to what is occurring. It has been charged in Congress, by those who apparently know^, that those employed on ships were suffering slavery, and were in the position of being put in jail, losing their compensation, or being punished in almost any way. Now, these things ought to receive some considera- tion. If we are going to have private ownership, we should have it under the most searching restrictions. The Government should have the fullest authority in the regulation of the commerce of the seas, in order that the fullest protection might be given to all, and if it is to be private ownership, a fair and reasonable allowance should be assured to the lines which are operating the ships in order that they will have a full financial success ; whether that be 4, 6, or 8 per cent is a matter of indifference; it ought to be based on some reasonable financiering. It ought to be based on some sound principle, not on the fact that a shipping corporation is capitalized originally at a hundred thousand or a million dollars, and then later recapitalized at two million or ten million dollars, but this basic fact ought to receive proper consideration as to the investment, and the watering of it ought to receive that consideration that matters of this kind require and go to the botttpm of the sea. [Applause.] Labor is interested in this problem, and I believe that you will find organized labor ready to stand together on this question. When I speak of organized labor as an organization, that is the Avay I mean it. Of course, there will be individuals in the smaller organizations or large organizations within this great body of the federation that may not agree with it. But I think we leaders and the great majority of the men are in favor of finance getting proper considera- tion. All we ask in return is that labor get that consideration that is their just due, if it can not get it from private employment, it must get it from Government-owned employment, because, as you know, the Government owns and operates many things and has for years. It has operated its navy yards and arsenals and all its manufacturing for the War and Navy Departments in these lines. It has operated its postal services and other things. Somebody said this morning that the question of the railroads and some of the other things were too large for the Government to undertake. I do not think there is anything too large for the Government to undertake that a private employer can operate ; I am of the opinion that the people as a whole can operate it. I do not think that is a justifiable reason that there should not be Government ownership. I think there should be some- thing more reasonable. I think we are capable of establishing any- thing. We proved that beyond question of doubt in the last two years when we declared war and we were topsy-turvy and nobody knew 43 where we were at. We have proven we can prepare for war rapidly and successfully, and it is also true that we can prepare for peace rapidly and successfully, and we can prepare either for Government control or for private control, but we must do that in a rational, well-thought-out manner. I say again labor is willing and ready to cooperate; I think there should be sufficient time taken to such an important question as this, particularly when you are dealing with this question whether you should owii it or whether the Government should own it. It should be narrowed down to as few men as is possible to work it out and present in a businesslike way later with facts and figures to prove, as a well-known Congressman "said, "Where we are at," and I think we ought to fully realize " where we are at." We are at sixes and sixes just now ; millions of men coming back from the other side seeking employment, thousands and tens of thousands of men out of employ - ment, with an apparently fairly good demand for employment, the Government itself cutting off its appropriations so that some features of the Government have had to go out of business : some bureaus have had to stop doing business, particularly the employment bureau. This great question of unemployment, reconstruction, is confronting us. This is one phase of it. We want to see the ship industry live, thrive, and prosper. We want to see the shipyards run to give the men em- ployment, and we have built up a reasonably good condition of em- ployment in the shipbuilding industry, and we want to build up a reasonably good condition of employment in the ship-operating industry. If we have your cooperation, certainly, with the experi- ence we have had during the past two years, it ought to be of service to us during this time. [Applause.] Mr. HURLEY. Mr. O'Connell, this conference is not going to take any action ; the meeting was called for the purpose of hearing what you gentlemen all of you, the different groups, throughout the coun- try have in mind; just to get your views that it may be helpful and guiding to us in taking steps for our recommendations to Congress. Congress will, of course, pass on this. I am speaking of the opera- tion and ownership of ships. Mr. J. S. TAYLOR, of the Chamber of Commerce of Mobile, Ala., and a delegate of the Mississippi Valley Association. Gentlemen and members of the Congress, I am a member of a committee here from the Mississippi Valley Association that is made up of representatives from Chicago. St. Louis, New Orleans, Galveston, and Mobile ; Mr. M. W. Leach is the chairman of this committee ; he is the proper spokes- man, and I will call upon him to give you our sentiment and our opinions. Mr. LEECH. Mr. Chairman, I have been asked to act as chairman of a committee of the Mississippi Valley Association. The members of that committee are Mr. Edmund T. Brookes, of Chicago; Mr. Thomas E. Smith, of St. Louis; Mr. James S. Taylor, of Mobile; Mr. Samuel Whaley, of New Orleans; and Mr. George Seely, of Galveston. Mr. Seely, however, was unable to attend. We are ap- pearing before your board with a spirit of hearty cooperation, feel- ing that your merchant marine problem is probably the greatest one before this country at the present time, even condescending the rail- road problem. 44 Our committee has been instructed to place before you resolutions which were adopted at a meeting of the Mississippi Valley Asso- ciation, held in Chicago on April 20. The resolutions, which I will read are short, and I will leave them with you to be put into your record. They are to the general effect that we are in favor of ultimate private ownership. We are opposed, however, to immediate private ownership. We believe, as stated by Mr. Rush this morning, it should be reached by successive stages. In addition to the resolutions adopted at Chicago, at a meeting of our delegation this morning, we also adopted the same resolution which was adopted by the National Foreign Trade Council. We felt that our thoughts were in entire harmony with them and not inconsistent with their resolution. The resolutions that were adopted at the Chicago conference, after the preamble, read as follows : The following resolutions relative to the United States Shipping Board policies were unanimously adopted by more than 500 delegates, representing some 22 States, comprising the Mississippi Valley, in convention assembled in Chicago, Wednesday, April 23: Resolved, That the present time is inopportune for the general sale of the ships constructed by the Emergency Fleet Corporation. They should continue under Government ownership until an American Merchant Marine has been permanently assured, necessary trade routes firmly established, and a personnel of officers and men built up. These ships should be assigned on a commission or bare-ship or time charter basis to reliable, financially responsible American firms not under foreign influence, and whose Americanism is established. Furthermore, that the Shipping Board vessels should be utilized to build up American foreign trade and allocated on a fair basis to all American ports. The Mississippi Valley demands recognition of its Gulf ports and the assign- ment of ships of standard efficiency, sufficient to move the foreign commerce of the valley both for export and import through these ports. I have therefore asked for the consent of the foreign trade coun- cil's representative to file his resolution, which follows : We urge the earliest possible completion of the Government's present ship- building program. As shipbuilding is one of the greatest essentials for the prosperity of Ameri- can industry, the Government should immediately remove all restrictions now placed on American shipbuilding and permit the free construction of vessels for sale to foreign interests. The imperatively necessary revision of our shipping, navigation, classifica- tion, and measurement la\vs should be accomplished without delay so that American vessels can be placed on a more equitable basis of competitive operat- ing costs in foreign trade. While Government ownership and reasonable Government control of Ameri- can shipping must continue until some acceptable plan is devised for the trans- fer of such tonnage to private ownership we are opposed to any continance of Government operation, and urge that consistent with recognized war emer- gency needs these Government-owned vessels be allocated to suitable trades and trading routes for operation by any qualified competent American shipping enterprise, under conditions of sale or charter that will permit of their sending the American flag to any port of the world on a fair trading competitive basis with that of any other maritime nation. We also urge the immediate consideration of the necessity for establishing coal and fuel-oil depots on all the great foreign trading routes so that American shipping shall not be left dependent upon foreign-owned facilities for such vital service. Mr. J. S. Taylor, whom you called upon a few moments ago, has some remarks to make, and I hope you will not let him escape. Mr. J. S. TAYLOR. Mr. Chairman, Mr. Leech flattered me. I cer- tainly realize the difficulty of solving the problem that is before you 45 and our legislative bodies in disposing of the American ships. As I see it, however, when normal conditions are resumed, and we are all hopeful that such will be true before any very distant date, that we are going to be confronted with the same conditions that existed be- fore the war. I am a railroad man in the traffic department in the capacity of foreign freight agent. I have been booking freight for foreign nations for 25 years. I remember the time that freight rates on cotton from Mobile to Liverpool were 15 cents; at the same time the rate on cotton from Boston to Liverpool was 8 cents. We shipped our cotton from Mobile, rail and water to Boston, then booked it to Liverpool. At that time the storage on grain from North Atlantic ports in Liverpool was greater than the ship charges to take it to the other side and bring it back. We had to pay that ruinous storage. I hope we will never see such a condition in shipping again, but it is not impossible, and we are all working under abnormal conditions to-day, and if we do not return to normal in a reasonable time we are going to be confronted with foreign competition, and we are not going to be able to meet it unless we resort to that obnoxious word in the nostrils of every American, " subsidy," to keep our ships on the high seas. I believe that it is admitted that a ship can be built in foreign countries cheaper than it can be built in the United States. It can be manned cheaper; it can be operated cheaper, and if that is the case, how are we going to keep our flag on the high sea in the face of that kind of competition? Ships are not operated from a sentimental or patriotic standpoint; they are operated as a business proposition just as a shoe dealer sells shoes or a horse dealer, horses, or a grain dealer sells wheat. He goes into the business for the profit there is in it, and if we are going to be confronted by the foreign competition which will certainly come back I don't see how we are going to maintain our flag on the high seas without resorting in some way to I hate to use the word; I heard Senator Underwood in Mobile within the last two weeks, in order to avoid the word " sub- sidy," advocating the resumption of a policy inaugurated by Presi- dent Madison in 1823 to give traffic carried in American vessels a preferential duty. That is as rank a subsidy as you could possibly inaugurate, yet he did not call it so. But we must, in my opinion, ultimately resort to some means of this kind in order to keep our flag on the high seas. Mr. HURLEY. I would like to hear from W. D. Benson, of the Puget Sound Managers and Operators' Association. Mr. BENSON. Mr. Chairman, I am not prepared to discuss this question. Mr. Cantelow is chairman of our committee and I would like to have him discuss it. Mr. H. C. CANTELOW, of the Puget Sound Association of Shipping Managers and Operators, Seattle, Wash. Mr. Chairman and gentle- men, Mr. Benson, my colleague, and myself are here from Puget Sound. We came from Seattle to attend this meeting, but we are not going into the matter at any very great length now. We have jotted down a few notes ideas that strike us, especially from the viewpoint of a Pacific coast operator on trans-Pacific tonnage, and I would be glad to read these points so that they may be put in the record. I haven't them in such a state that I can present them except by reading. If we dwell at too great length upon Pacific coast 46 operation it is because, coming from that location, we rather feel that perhaps the viewpoint of the Pacific coast operators may be lost sight of by those who are so far removed from the conditions that are peculiar to the Pacific coast operation. These are the points which we advocate : 1. A strong merchant marine is essential to the national defense and prosperity of the leading commercial and industrial power of the world. 2. Before a strong merchant marine can be developed there must be " a thorough revision of our navigation arid shipping laws to as near as possible equalize competition in foreign trade. 3. A study of the Japanese merchant marine must be made and the cause of its rapid continuous growth must be understood. During the last four years Japan's merchant tonnage has increased 25 per cent. Her shipbuilding power is now increasing with enor- mous strides. She is determined to strengthen her commercial hold on China and Siberia. We on the Pacific const know that our great- est opportunity for trade expansion lies in th it direction. Any revision of our laws which does not take into strict account the relative cost of operating in Pacific foreign trade vessels under our flag and vessels under the Japanese flag will only half solve our merchant marine problem. It must be remembered that Japan is developing Chinese sources of steel supply in order that she may be more independent of England and America. 4. We favor the early establishment of coal and oil bunkering fa- cilities at Manila. This should be one of the first steps toward meet- ing the competition of foreign steamers in the Pacific. We also favor the establishment of a free zone in Manila. Great Britain has ad- vantages at Hong Kong and Japan at Kobe which can not be met in any other way. 5. Continuation of Shipping Board building program for at least one year, adopting types to meet the needs of the various trades, with due regard for comfort, speed, size, and economy of operation. 6. Opening of shipyards for private contracts without restriction. 7. Government to cease building merchant vessels on a date to be specified; all vessels then owned by the Government to be sold to private American operators, or, if all are not so absorbed by some date to be specified, any remaining may be sold to foreigners. 8. We favor a wholly private owned American merchant marine, but we are not at present ready to purchase Government ships nor will we be, until it can be shown that the risk of purchase is much less than at present. We must first pass beyond the present read- justment period. We are not ready to enter into any long term charters. The present control over our freight rates does not effectively control the rates of our principal foreign competitors. Experienced trans-Pacific opera- tors can not charter on a large scale until this present period of ab- normal and uncertain freight rates has passed. We favor continuing the present management and operation plan as long as may be found necessary. The compensation as now ar- ranged for managers and operators, is, however, inadequate and should be increased enough to afford a living income. 9. The fixing of foreign freight rates by the Shipping Board will harm, not help, our development. The employment of artificial 47 methods in the fixing of such rates should be rejected unless accom- plished by internationl agreement. Any rate policy is certain of failure which does not leave American operators free and un- trammeled, with an even chance to meet foreign competition as they find it. The American merchant marine will hold its own in the market of the world if it is not bound and gagged. 10. Small steamship companies should be encouraged and aided by the Shipping Board to survive in their chosen trade. All such small bona fide shipowners should be protected as far as necessary from any unfair rivalry of their larger competitor in such trade. 11. On the other hand, powerful experienced steamship organiza- tions are not /objectionable as such, so long as they conduct their af- fairs in an open way. No check should be placed upon the growth of a steamship company if it is honest and tends to promote legiti- mate trade. British opinion has been antagonistic to combination, but it is now being rapidly modified. The British and Japanese tendency is toward the creation and use of larger units in foreign transporta- tion. The creation and development of a host of new and necessarily weak steamship concerns should be discouraged by the Shipping Board. Our foreign competitors will not "send boys to market." 12. Careful consideration should be given the provision of the shipping act and the seaman's act, that constructive recommendations for their revision may be made to Congress, where needed to give our American steamship companies more freedom to meet competition in foreign commerce. 13. Competition for the trade of the world is to become far more intense than at any previous time in history. The American ship- owner and operator will welcome this provided he is given a fair, unhampered opportunity to meet it on even terms. American steam- ship men can be trusted with as much safety as any in the world. They must be given an equal chance with the steamship men of any country and their operators must be as unrestricted. Give them an equal chance and the steamship men of America will rejuvenate our merchant marine and make it a matter of national pride. 14. It is feared by some that unrestricted private control would lead to overcapitalization of steamship companies. There is no practical fundation for the fear. The regulation of this may well be left to foreign competition. Mr. HURLEY. Capt. J. G. Crowley. of the Coastwise Transportation Co., representing the Boston Chamber of Commerce. Boston, Mass. Capt. JOHN C. CROWLEY, of the Coastwise Navigation Co. and the Boston Chamber of Commerce. Mr. Chairman and gentlemen, I represent the Boston Chamber of Commerce and the Coastwise Trans- portation Co. I also represent the Boston Marine Society, which is the oldest society in the world, organized in about 1744. I am also a ship captain and I have been very much interested to-day to hear the different views on this merchant marine. Of course, I don't know any- thing else but merchant marine, being a sailor and having been con- nected with this business from boyhood. I have gone through all stages of it, and my opinion is, as my friend here, Mr. Taylor, ex- pressed it, if we are going to have a merchant marine we have got to have the assistance of the Government in some way or other to com- pete with foreign nations. 48 To-day at the present rate of freight we don't have to compete. The rate of freight is up in such a substantial way that we can operate, but I think the time is coming, as it did before the war, where our freights are going to drop, and then the question is must wages drop too? Is the building and repairing going to be lowered equally in order that we may compete with foreign commerce ? I believe that the ships should be owned by private individuals, and as I said before, they should be assisted by the Government in the event rates drop as low as they did a few years ago, where we can not .compete with foreign nations. You may call it a subsidy, you may call it anything you like, but there is no reason why the shipowners to-day should not be subsidized, the same as the farmers and other great manufacturers. There has been some criticism to-day regarding the sale of ships by Mr. Hurley. I think if Mr. Hurley has been able to sell some of these ships I. mean wooden ships he is to be congratulated, as they were built as a war measure only, and constituted one of the most wonder- ful things ever accomplished. A ship has just been returned to me from Bremen. The captain was telling me about it in Baltimore. A German over there said to him : " Is this one of the 30 or 40 day ships? " He said, " Yes." " I don't see how you did it! ' He gave them to understand that we could build ships and could meet any emergency which might arise. These wooden ships were not fitted for our overseas trade. You all know that ; Mr. Hurley knows that. He knew it when they were being built, but if it be possible for him to dispose of them at a good, fair price he is to be congratulated. We have a number of these large steel ships building to-day, for all kinds of service, and I trust that our merchant marine will be up to the standard and that we will see our flag flying all over the seas. EXHIBIT AAA. REPORT OF COMMITTEE ON MARITIME AFFAIRS ON GOVERNMENT CONTROL OF SHIPPING IN PEACE TIME. FEBRUARY 6, 1919. To the Executive Committee and Board of Directors: At the meeting of the committee on maritime affairs held on February 6, 1919, the question of Government control of shipping in peace time was taken up ,and carefully discussed. The committee favored a plan which will be acceptable to both the Government and the purchaser for the release from Government control as soon as the exigencies of the war will permit and the turning back of vessels taken over by the Government and the sale to private interests of vessels owned or under construction by the Government. Among the problems of readjustment one of the most important, it seems to your committee, is the question of the future operation of American shipping. Strong opposition to Government control of shipping, now that the emergency is over, has developed throughout the country, and it is the unanimous opinion of the committee that the Boston Chamber of Commerce should take a stand against Government ownership of vessels and in favor of the Government dis- posing of the vessels now owned, with the exception of those required for Government purposes. With this idea in view it was unanimously voted to recommend that the board of directors of the chamber indorse and forward to Washington the following resolutions which express the opinion of the committee: " Whereas the Boston Chamber of Commerce has been asked its opinion in reference to the policy to be pursued by the United States Shipping Board and -the Emergency Fleet Corporation in reference to the ownership and manage- ment of vessels in both foreign and domestic trade ; and " Whereas that matter has been referred to this committee ; and 49 " Whereas the questions involved have been carefully considered ; now, there- fore, it is hereby unanimously Resolved: " First. That there should be no Government ownership of vessels engaged in either foreign or domestic commerce. " Second. That as speedily as may be, taking into consideration the military needs of the country, the vessels now owner or operated under requisition by the United States through the Shipping Board or the Emergency Fleet Corpora- tion be turned back to the original owners. " Third. That the vessels heretofore built, or now building, for the account of the United States through the Shipping Board and the Emergency Fleet Corporation be sold and transferred at a fair market price to such private owners, concerns, or corporations as may be desirous of puchasing the same to be used in the domestic or foreign carrying trade. " Fourth. That the purchase price, or at least a portion thereof, to be paid for such vessels to the United States be allowed to be paid in deferred payments covering a reasonable time and secured by mortgage or pledge of the vessels. " Fifth. That all corporations, firms, or individuals of the United States of America who shall purchase, own, or operate these ships in the foreign trade shall be exempt in respect to the ships so owned and operated from all Federal and State taxes upon their capital stock, ships, franchises, profits, or earnings for a period of at least 20 years. " Sixth. That as soon as may be, after the exigencies of the war are over, all ships engaged in foreign or domestic commerce shall be owned, managed, and operated by private ownership and free from any governmental control. " Seventh. That the La Follette law and the navigation laws of the United States be forthwith so altered and amended as to allow United States vessels to compete in foreign trade on a parity with the vessels of other countries." It was agreed that if the directors indorsed the resolutions other exchanges throughout the country should be advised of the action of the Boston Chamber of Commerce, and that the attitude of the chamber in reference to the matter be given publicity through the press. Respectfully submitted, WILLIAM C. BREWER, Chairman. EDWARD E. BLODGETT, JOHN G. CROWLEY, A. W. CHESTERTON, 1 ARTHUR P. FRIEND, CHARLES H. MAYNARD, FRANK B. MCQUENTEN, WILLIAM H. RANDALL, Committee on Maritime Affairs. REFERENDUM ON POLICY OF THE FEDERAL GOVERNMENT WITH RESPECT TO OCEAN SHIPPING IN PEACE TIME. MARCH 17, 1919. To the members of the Boston Clwmber of Commerce: At a meeting of the committee on maritime affairs on February 6 there was a discussion of the policy to be adopted by the Federal Government in the con- trol of shipping during peace time. As a result of the discussion, the commit- tee on maritime affairs submitted to the board of directors a report on the subject. Under the authority of a vote passed by the executive committee on Febru- ary 12, after a consideration of this report, a special committee (Messrs. Henry E. Bothfeld, William C. Brewer, and Frederick Foster) was appointed by the president of the chamber to draft a referendum for submission for a mail" vote of the members of the chamber on the questions brought up in the report. On February 19 this committee submitted a draft for a referendum, dividing the subject into nine questions and presenting the arguments in favor of, and in opposition to, each. After this draft had been considered by the executive committee, it was referred to the board of directors, which, in a meeting held on March 5, 1919. voted to submit it to the members and also to send the members of the cham- 1 Mr. Chesterton was out of town and therefore did not have an opportunity to pass upon this report. 12103419 4 50 ber. for their information, the original report made to the board by the com- mittee on maritime affairs. These two documents are submitted to you here- with. The questions involved have seemed to your directors to be of such import- ance as to make it desirable that there be an expression of opinion on them obtained from the members of the chamber. In accordance with the provisions of section 3 of Article VII of the by-laws, the draft for a referendum prepared by the special committee is herewith pre- sented with a statement of arguments on both sides. In order to be counted, ballots must be received at the office of the secretary on or before March 27, 1919. The printed form of ballot must be used. By order of the board of directors. JAMES A. MCKIBBEN, Secretary. 1. Should the Federal Government continue to acquire merchant ships in ad- dition to its requirements for the transporting, provisioning, and protection of the armed forces of the country? ARGUMENTS IN FAVOR. Many ships will be required for the proper equipment of the American mer- chant marine. Probably not even the release of such ships as can be spared from the Government uses will be adequate for this purpose and for the re- placement of tonnage lost during the war. American private capital has not been accustomed in recent years to investment in ships, and therefore no great increase in orders for ship construction on private account can be expected. If these ships are to be on hand when needed, it apparently will be necessary for the Government to order them. Moreover, since ships probably will not be built on private account for American investors, and since also few orders for ves- sel construction can be expected from foreign investors if the Federal Govern- ment does not order additional ships in the near future, many of the shipyards which have been built in this country during the past three years will be obliged to cease operation on account of lack of orders. ARGUMENTS IN OPPOSITION. The ships now under construction in American yards are primarily designed for military purposes, and most of them would require redesigning in order to fit them for either general cargo service or any specific trade. With the war emergency passed, any ships ordered for commercial purposes ought to be ac- curately adapted to the sort of business into which it is planned to put them. The Federal Government is not in a - position to know with any degree of ac- curacy what is called for, for the equipment of merchant fleets. If it were to undertake further shipbuilding, it would be necessary for it to work out an elaborate program for the ownership and operation of steamships continuing over a series of years. Without such a plan (which the Government, having had no experience in shipbuilding, is not in position to develop) the only feasible means for insuring a supply of ships adapted to the needs of commerce is to put ship construction on the basis of private competition as promptly as possible. The wholesale entry of the Federal Government into this business would discourage the private undertaking of shipbuilding and ownership in this country. Furthermore, in all important maritime countries, steamship owning is a private enterprise conducted on a private basis both in the case of line and charter ships. The Federal Government of the United States, if it enters upon a permanent policy of ship owning, will be obliged to foresee the results of com- petition against whatever American private capital may be invested and also the private investments of the nationals of many other countries. 2. Should the Federal Government continue the ownership of merchant ships in addition to the requirements for the transporting, provisioning, and pro- tection of the armed forces of the country? ARGUMENTS IN FAVOR. The United States is dependent upon the foreign ownership of vessels con- ducting its overseas trade. Private ownership of steamers is not an attractive field at this time for the investment of American capital. If the shippers of the United States are to be freed from their dependence on foreign vessels. 51 it will be necessary for the Federal Government to undertake vessel owner- ship, and this is the most favorable time for its entry into this line of business. ARGUMENTS IN OPPOSITION. The ownership of ocean-going steam vessels by the Federal Government in- volves the whole problem of public as against private ownership of public utilities. There is no hope for the eventual upbuilding of the American mer- chant marine on a business basis if the Federal Government takes advantage of this first opportunity presented in a generation for the undertaking of ves- sel ownership as a commercial enterprise. The Federal Government, as a war measure, has invested in vessels a sum of money too large to be safely tied up permanently in an enterprise unless it is to be operated on a profit-making basis. The ownership by the Government of public utilities of this sort for profit, under the present circumstances, apparently is not one of the results which can reasonably be hoped for. 3. Should the Federal Government continue the operation of merchant ships in addition to the requirements for the transporting, provisioning and pro- tection of the armed forces of the country? AKGUMENTS IN FAVOE. There is an immediate and urgent need for an American merchant marine under purely American control and operation. It probably would be neces- sary at the outset, if this American merchant marine were to accomplish its real work, for many of the vessels in it to go on runs not at present profitable. For the time being, therefore, it seems wise to treat the American merchant marine as a whole and to make the profits of more profitable runs offset as far as possible whatever may be lost on the unprofitable runs. This unity of policy can not be obtained under private operation. ARGUMENTS IN OPPOSITION. The operation of unprofitable runs or of vessels operating unprofitably in charter business by the Federal Government would in the first place result in a serious drain on the public revenues. In the second place, it would serve to defeat the eventual purposes so much to be desired, namely, the upbuild- ing of an American merchant marine operated on a business basis which, under the circumstances, appears to be possible only by investment of private capital. The Federal Government has had no adequate experience in the com- mercial operation of ships. This is an intricate and highly specialized busi- ness, for the conduct of which certain private enterprises are well equipped. It calls for a degree of resourcefulness in quick shifting of plans and op- erations far beyond that ever displayed by a Government agency or depart- ment either in this country or abroad. The merchant marine is not operated by the Government in any country. Private enterprise has universally been accepted as the most expedient for conducting shipping enterprises. Govern- ment operation in this field is an untried experiment offering small reason to justify any expectation of its success. Moreover in certain circumstances Government operation might lead to serious consequences both for the Gov- ernment and for the merchant marine. Suppose, for example, at the season for the movement of the grain crop, say, from Russia to Italy, it should hap- pen that the official relations between the United States Government and that of either of these two countries should be of such nature that commercial transactions between them might be undesirable. Under Government oper- ation the entire American fleet would be excluded from this traffic. This might perhaps be an improbable case but it serves to make the point clear that the Government operation of ships does introduce an element of complication into the conduct of a shipping enterprise, which would serve as an additional handicap to its profitable operation, and therefore either an added drain on the public treasury or additional reason for higher freight rates. 4. Should the Federal Government, as speedily as may be, taking into con- sideration the military needs of the country, turn back to the original owners the vessels now owned or operated under requisition by the United States through the Shipping Board or the Emergency Fleet Cor- poration ? ARGUMENTS IN FAVOR. Many of the vessels now controlled by the Federal Government are urgently wanted at this time for the resumption of private lines and private charter 52 operations. Nothing should be permitted to interfere with the resumption of shipping business on a private basis as promptly as possible. ARGUMENTS IN OPPOSITION. The Government control of these vessels, for the present, at least, is ex- tremely desirable in order to secure to American importers and exporters pro- tection against possible unfair discrimination in the expansion of their busi- ness. Moreover, the protection of unprofitable runs against stoppage would be much easier if these vessels are still controlled by the Government than if they were turned back to their original owners. 45. Should all vessels hereafter built or now building on account of the United States through the Shipping Board and the Emergency Fleet Corporation be sold and transferred to such private owners or concerns or corpora- tions of the United States as may be desirous of purchasing them for use in the domestic or foreign carrying trade? the shippers or the operators. In order to avoid the adoption of artificial props such as subsidies, it will be necessary to reduce the avoidable burdens of ship 54 operation to a minimum. This could be done without an abandonment of those features of the present navigation laws designed to guarantee the comfort and safety of the crew and passengers. AEGUMENTS IN OPPOSITION. The American navigation laws make American vessels in many respects the safest and most comfortable ships in the world, and there should be no abandon- ment of the policy which guarantees this. In fact, it is essential that seafaring life be made more than normally attractive at this time in order to draw men into the navigation business as compared with the openings offered on shore. Moreover, the conditions prevailing in labor circles of the Great Lakes (and the fact that our navigation laws necessarily must apply in a large measure equally to Great Lake navigation, coastwise navigation, as well as overseas navigation) would make it extremely desirable not to interfere at this time with the existing relations between the Great Lakes ship operators and their employees. A gen- eral revision of the navigation laws would be almost certain to precipitate labor opposition to the whole merchant marine program. Mr. HURLEY. Mr. Sydney M. Hampton, of the Shipowners Associa- tion of the Pacific Coast. Mr. HAMPTON. Mr. Chairman, Mr. W. F. Sullivan, our secretary, who is present, will make such remarks as he deems necessary. Mr. W. F. SULLIVAN, Secretary of the Shipowners Association of the Pacific Coast, San Francisco, Calif. Mr. Chairman, it is not my desire to make a speech, but I would like the people of the associa- tion to go on record as being opposed to Government ownership and in favor of private ownership, for the reasons so well set forth by Mr. Ring and the two gentlement of the Foreign Trade Council; I also join in and agree with the statement made by Mr. Cantelow. Mr. HURLEY. We would like to hear from Mr. N". Sumner Myrick, of the United States Chamber of Commerce, Washington, D. C. Mr. K SUMNER MYRICK, of the United States Chamber of Com- merce. Mr. Chairman and gentlemen, this is an entire surprise to me, because I intended to come in here as an attentive listener only. It may not be unknown to the gentlemen here that the Chamber of Commerce of the United States has appointed a committee on ocean transportation to take into consideration the full question of the operation of a merchant marine. The committee is made up of two shipping men, two farmers, and other gentlemen representing various commercial interests throughout the country. We have reached certain conclusions which have not yet been made public, and yet I think I may, speaking personally and without representing anyone but myself, state briefly some of the salient points of the agreement at which we have arrived. It seems to me that the problem has not yet been distinctly stated. We have, according to the figures submitted by the Shipping Board we have a certain number of ships of certain tonnage, and when we consider the number of ships and the very large tonnage, we imme- diately picture in our minds a tremendous problem for solution, and I should like to point out to you what indeed you already know, but perhaps do not often think about, that the Shipping Board has three different classes of ships. There are the tankers, then there are the ships suitable for overseas trade, of 4,000 tons and above, and then the third class, the smaller ships, both wood and steel. Now, of course I say " of course " there doesn't seem to be any other way to express it our committee has reached the conclusion that these ships should be privately owned and operated. We believe 55 that the people of the United States have had all the Government ownership and operation of public utilities that they can stand or that is desired ; therefore, we look forward to private control, private ownership, and private operation, but the question is raised, as it has been here, that if you adhere to that policy and seek to execute it, is there capital enough in this country for investment in shipbuilding property to absorb the large number of vessels that must be taken over? Now let us consider that phase of the subject just for a moment. According to figures that have been given to me within a week, the Shipping Board has at the present time 267 vessels of over 4,000 gross tons. That, I suppose, is the smallest-sized ship that is suitable for overseas trade. The 267 ships represent about $1,631,527 gross tons. The board has on the program 664 ships of similar tonnage, unde- livered, of course, representing nearly 4,000,000 tons, or a total of 5,587,227 tons. Now, if the 267 ships which have been delivered, rep- resenting 1,631,000 tons, were to be sold at, say, $100 per ton they would bring $163,152,700. If 25 per cent of the purchase price were paid it would mean $40,788,175, which is not a very large sum of money for American capital to absorb. Now, assuming for the moment that these 664 undelivered ships would all be constructed and all be. delivered a fact that I suppose is not generally accepted we shall then have^ at $100 a ton, $395,- 570,000. Twenty-five per cent of that would be $98,892,500. Our total then would be $558,722,700 rather a staggering sum of money for people that have not been accustomed to investment in shipping enterprises to take over. But when you consider that if Mr. Hurley's plan, and that if any of the other plans that have been suggested, all of which involve an initial payment of 25 per cent, are carried out, the total payments, spread over a series of years, will be $139,680,675. And that, again, does not seem a tremendously large sum of money for the capitalists of the United States to absorb, especially when we read in the papers, as we have in the last day or two, that one ship- ping company in the United States would presently have $135,000,000 to invest in shipping. Now 7 , assuming for the moment that this is the problem, how shall we dispose of the ships? It is an easy matter to say. of course, " Dispose of them to private enterprises," but immediately you are confronted with these ques- tions : " What private interests are going to be able to take over the ships?" "Is there not fear that there will be created a shipping trust? " '^Will not those who have the most capital be able to have the first choice of ships leaving those who have less capital the poorer quality of ships? " Our committee have been considering those questions. They have reached this tentative conclusion, namely, that throughout the coun- try, all up and down the coast, Atlantic and Gulf coast and Pacific, there should be established shipping associations, made up of business men acting in cooperation with local chambers of commerce and trade organizations and public authority; that those associations shall determine the needs of all of the districts involved; ascertain how many ships are required for that trade ; how they will be taken over by local interests, so in that way the fear of a shipping trust, the fear of absorption by the few strong individuals, may be avoided. 56 I have been led to believe by some talks that I have had with repre- sentative men from various parts of the country, the Atlantic and Gulf coasts especially, that there would be no great difficulty in working under these associations to absorb all the tonnage, represent- ing the overseas tonnage, that the Shipping Board has or will have in pursuance of its program. Now it has been suggested that in view of the facts that there would be difficulty in enlisting the necessary amount of capital, that the Government should continue the ownership of ships and charter them to private individuals. Well, now, it seems to me there are various reasons why that policy is not the proper one for our national interests. In the first place, from the governmental point of view, and the business point of view, the time to sell anything that you have to sell is when there is a market for it, and there is to-day a market for ships. To-day men are willing to invest their money in ships. What the conditions will be two or three or four years hence when the Government ceases to operate or to own ships under private charter I don't think anyone would undertake to say. I do think, however, that it is safe to assume that when all the shipyards of the world are going at ships as they will be probably within two years, there is bound to be a surplus of tonnage to meet the requirements of the world's com- merce. When that day arrives it will be impossible for the Govern- ment to dispose of the ships at the- price which is now obtaining. Again, if we are going to have a merchant marine, the sooner we get it the more efficient it is likely to be. It must be remembered that it takes time to establish relations for a successful shipping business. Moreover, it requires capital. Men who are not sure of themselves and sure of their future in the shipping business will not be inclined to invest the money necessary to a full development of their business. It is only those who have established themselves, who have put at stake a certain amount of their capital, who can be relied upon to carry on the shipping business. Therefore, 1 suggest, the longer the time is delayed when private ownership goes into effect, the longer the time will be before we shall have an efficient merchant marine. Of course, Mr. Chairman and gentlemen, it is understood that the few suggestions I have made, I am speaking entirely from a personal point of view. I have no right to speak for the Chamber of Com- merce of the United States, because the chamber has but one method of making effective its determination and that is through a referendum of its constituent organization. Perhaps I might be permitted to add a single word to what I have said. That is this : Assuming for a moment that if an effoj-t is made to sell these ships, and it is not believed successful, so that the Govern- ment has on its hands a certain amount of overseas tonnage, that ton- nage can still be chartered or it can be chartered with the purchases to those who have established themselves in business and have invested their capital in it. [Applause.] Mr. STEVENS (chairman pro tempore). Mr. C. H. Gustafson, of Farmers' Union, Nebraska. Mr. GUSTAFSON. Mr. Chairman and gentlemen. I was asked to come here and participate in this conference. I did not have an oppor- tunity to take a referendum vote among the members, farmers, whom I represent, before coming here, but I feel certain that I am speaking lor a number of farmers in the few remarks that I expect to make. 57 I have been very much interested in listening to this discussion so far. and I think that there has been very few things said that have been proven with any facts or figures. Most of the remarks have been " I am for " or " I am against " mostly " I am for private owner- ship." Now, I want to tell you I am not for private ownership at this time. I want to say that I am not committing myself as entirely at all times in favor of Government ownership of everything. I believe that when the Government was required to take charge of this matter in a time of distress and emergency and proved themselves efficient in doing so, that we should give the Government ample opportunity to prove under normal conditions what they can do. I sincerely hope that this matter will not be decided at once, but that time will be given the Government to demonstrate to the people of this country whether they can operate a merchant marine successfully or not. I don't believe at all in this argument that the Government can not do what individuals can do. That sounds kind of funny to me. The very same men that are conducting the business or the affairs under private ownership might be the same men that will do so under Government ownership^ and how anyone can argue that they would not be as efficient in operating these several activities under Government ownership as they would under private ownership I can not understand. Now, if that was a fact, why did the Government take over those things when it was necessary to get the most and best efficiency possible. There must have been a bad act of the Government. Why didn't they leave it to private individuals when they needed the best that could be gotten ? I think that it is generally believed that, for instance, the working people would be fully as glad or fully as willing to work for the Government as they would for corporations of any kind. And I am morally certain that they would be as willing to do the best they could when working for the Government as against working for individuals, and probably more. Xow, I represent a farmers' cooperative business organization which represents a good many millions of dollars' worth of business a year, and we handle a good many thousand cargoes of farmers' products, as well as manufacturers' products, in a month. I have failed to observe any more complaints during war times as regards service than before, and I feel sure that when the smoke blows away the people will under- stand a little better just what the Government had to put up with. This great bugaboo of the inefficiency of the railroads is going to be cleared up considerably, and a good many people that have expressed themselves without thinking will change their minds. Now, it has been pointed out here to-day that freight rates have been advanced about 15 per cent, and that we have a large deficiency to meet. I want to ask all of you if the average increase in prices of everything has not been a good deal more than has been the increase on freight rates, including the deficiency that we have? I think if you will take your pencil and paper and figure it out that you will find it is much more. I believe I am right in that statement. Now, the greatest interests that I have in this matter from the viewpoint of representing the organization that I do is this : That we are doing cooperative buying and selling and we are expected to increase this and we are increasing it from month to month, and some day we may 58 be able to go into grain and meat business to such an extent that we could fill a ship load of that product, send it to foreign countries, and I believe that the members of our association would rather take chances in getting fair treatment with the Government owning the ships than they would with those of privately owned corporations. At least that has been our experience in the past. When I applied for a membership at the different stockyards in this country to do cooperative selling and buying in live stcek, our associations were turned down. We were not permitted to buy at the regular going price a membership on these different exchanges. When I applied on behalf of our organization for membership on the grain exchanges we received the same reply. We could not buy at the regular going prices any membership. ' And a good many other similar experiences I could relate this afternoon which would prove to you that we would be more willing to deal with the Government than with privately owned corporations. They are opposed to our method of cooperation because there is no profit to the individual. The profit goes to each individual ac- cording to the amount of business done in buying and selling and there is no individual who would reap benefits from somebody else's service of production. That is something which the business world to-day is fearful of, and they are going to do everything they can to block any efforts along that line. I believe if they can get control of the shipping that it will be a great advantage to them to have that control, and to exert their efforts to block this oncoming new system of doing business, namely, the cooperative system. I want to repeat again that while I have not had the opportunity to call our membership together I know that I am speaking for thousands and tens of thousands of farmers in the United States when I recommend that you do not turn over this Government property which the Government has acquired at this time but give the American people ample time to think this over and act more care- fully. I don't know, Mr. Chairman, that I have, anything further to say at this time. I would be very glad to answer any questions if they are put. I thank you for the opportunity. Mr. HURLEY. Is there any one here who would like to ask Mr. Gustafson any questions? (No response.) Mr. SAMUEL WEIL, of the foreign trade bureau of the Association of Commerce of New Orleans : Mr. WEIL. Mr. Chairman, the chairman of our committee has fiven you the result of our deliberations as to our opinion on the Liture of the Shipping Board's policy for the operation of the mer- chant marine. We are not opposed to private ownership but to private ownership to come with the future working of the board at a time when it will be of more benefit to the public than to the Government. The only point I wish to add to that which has al- ready been referred to by the chairman of our delegation is that 1 read in the paper a few days ago that the chairman of the Senate Committee on Merchant Marine is preparing a bill for the purpose of selling these ships. He is going to recommend that ships under 3,500 tons be sold to foreigners. I wish to enter my protest against any ships being sold to foreigners and ask that consideration be given providing for the sale of these ships to American citizens only 59 so that they may be operated for the general good of the country These ships under 3,500 tons may be employed in the food trade be tween our southern ports and Central America. We have been a\ the mercy of the Norwegian shipping interests for many years ana it would be a great benefit to us if these ships should be sold to re- main in the hands of Americans. Mr. HURLEY. Do you refer to wooden ships? Mr. WEIL. No, sir; steel ships: only steel ships. Mr. HURLEY. You don't object to wooden ships being sold to foreigners, do you? Mr. WEIL. No, sir; I don't. Mr. HURLEY. Mr. Atkeson, of the National Grange. Mr. ATKESON. Mr. Chairman and gentlemen of the conference, if I could have found any way of escaping without being called upon for a speech I should have sought that opportunity. I may say. with some justification, that I represent a class of our people, of our citizenship, which is more important to the American Republic than any other class as far as service is concerned the people who feed the Nation and who help to feed the other nations of the earth ; and in a way, we have been giving some attention to this question of operation of our merchant marine. And I happen just now to be a representatives of the oldest farmers' organization in existence. Fifty-three years ago in this Capitol city this farmers' organization was created and for 53 years it has continued to function and its numerous subordinate organizations in its county and State organi- zations and through its delegated representatives in its national or- ganization. It has a bona fide paid-up membership of nearly 700,000 producing farmers and I claim to represent nobody else on the face of this earth except the people in that organization and other people who may be in accord and harmony with our views. I regret very much not to be able to say that I represent all the farmers or that all the farmers of the Nation are in harmony with this organization, and that all of them are in harmony with me/ This organization has been a school of economics. It has not been the product of any sensationalism, any emotionalism, or any other influ- ence. It has been the deliberate substantial development after a long series of years and within the last six months it has established in this city an official representative body, and it was persuaded to establish that representation, first, that its views might be specifically and definitely presented to conferences like this, to Members of Con- gress and to anybody else on the face of the earth who might care to know what we thought about the basic, fundamental principles that affect a large citizenship and our great Nation's welfare. And it was thought further necessary that this organization have this oppor- tunity, that it might not be misrepresented by anyone at any time and we have tried to make our Members of Congress understand that we are not lobbying, that we are here to talk over problems which concern American agriculture and to confer with anybody and every- body that wants to confer with us and then to cooperate with any- body and everybody with whom we may agree in presenting the proposition that we have deliberately believed to be for the best interests and willing to admit, first, for American agriculture and. secondly, for the American citizenship, as the basic proposition of 60 this organization for the greatest good to the greatest number of all of our people. I asked Mr. Hurley this morning not to call upon me, because I thought maybe my conscience would be better justified if I were to sleep over it, after hearing these other gentlemen. I do not know whether I have followed expectations, but at the noon hour, realizing that I was liable at any time to be up against this proposition, I put on paper a few statements that I now present for the records of this conference. As a question for academic discussion, there seems to be but one side to the question of having a merchant marine. We all agree that this great Nation ought to have the greatest merchant marine of any nation in the world. We are ready to vote unanimously for that ideal as an ideal. It is not an ideal which confronts us, but a stern material fact. If we are to have a merchant marine we must determine how we are going to get it, who shall own and operate it, and who shall pay the bills. There are lots of luxuries in this world which people would like to have, but when it comes to paying for them, that may be another story. A merchant marine would be a luxury to us, and the question is whether we are willing to pay a luxury price for it. It is all very fine, to have the " Stars and Stripes " waving on ships in every port of the world, as Chairman Hurley, of the Shipping Board, tells us, but are the American people ready to go down in their own pock- ets to keep the flag flying there? If they are, then the problem is solved and it will be a very simple matter to have as big a merchant marine as we want to pay for. Our country seems to have become nauseated with the idea of Gov- ernment operation of anything, with all the stagnation that comes with red tape and bureaucracy. We certainly have had enough of privately owned and Government operation of utilities. In order to reduce the deficit, the Shipping Board has proposed to charge off a billion dollars which somebody will have to pay, which somehow will be spread over the taxpayers. Some Government owned ships have been sold to private concerns below the cost of construction, and the " dear public " pays the bill. It has been indicated that some steamer routes will not prove profitable and this will have to be made up by a sub- sidy of some kind, which the people will have to pay. Senator Jones, who is chairman of the Commerce Committee of the Senate, is quoted as saying: An adequate merchant marine is an imperative need of the United States, not only as a part of our commerce and transportation system, but also as a part of our national preparedness. He adds, We shall never again be so utterly lacking in those things so essential to our national safety as we were at the outset of the war. Senator Jones takes the stand that if the people are to foot the bill for the merchant marine anyway the best plan is for the Govern- ment to retain the ships. He says these ships belong to the people. If we are to lose money by their operation we should, in my judgment, prefer to lose it in operating the ships themselves rather than to sell them at a loss and to see private capital enrich itself by their opera- tion. 61 He goes on to say that we should adopt a system of discriminating duties to foster our ships. That is, we should allow lower duties on goods imported in American ships than in foreign ones. This policy is necessary, he says, in order to insure return cargoes for our ships, otherwise, though we might show preference to our own ships by loading them with goods for export, we could not force the people of other countries to patronize our lines, and .the only way to induce them to do so would be to make concessions to them. Of course, this is only our old friend " subsidy " in another disguise, and the people would only be putting in the one pocket that which they took from the other, but it would insure us a merchant marine, and that is what is wanted. This preferential treatment for American ships has been approved by both political parties, Senator Jones points out. He urges that the whole question should be approached from a high nonpartisan standpoint and provided for without delay. One of the most serious questions is how our ships are going to compete with ships made and manned by lower-priced Japanese and other oriental labor. We already have laws which impose high standards of wages and conditions of labor on American ships, but we can not impose these conditions of labor on Japanese ships, for it would be no more just for us to lay down these conditions for Japan than it would be for Japan to declare them for us. I was courteously asked by Mr. Hurley to " attend these discussions and give us your views from the farmers' standpoint." It might be easier to give my views from the farmers' standpoint than to give the farmers' views from my standpoint, but I am in pretty close touch with the working producing farmers of this country, and while I would not assume to speak for all of them, I do not hesitate to say that I believe a large majority of them at this time are opposed to any form of subsidy ; they do not favor Government ownership and opera- tion ; they are opposed to Government ownership with private opera- tion; they believe that our merchant marine should be and can be developed by private capital and operated more economically and efficiently by private owners than by the Government, and therefore they should be so owned and operated, but under the strictest pos- sible Government control compatible with the public welfare and the best interests of all concerned. They further believe that the time has come when Congress should adopt a definite and specific policy in regard to our merchant marine and put it into operation just as soon as possible and give it time to demonstrate by experience whether or not changes or modifications are necessary. There is a growing conviction among our farmers that the Govern- ment should keep out of all business except so far as may be neces- sary to protect the public against every form of injustice. [Applause.] Mr. HURLEY. Before we adjourn I want to call on Mr. J. H. Ros- seter, of San Francisco, and the director of operations of the United States Shipping Board. [Applause.] Mr. ROSSETER. Gentlemen, as a foreword, I would like to impress upon you this one fact : That entering into a conference of this char- acter, where we are to discuss from the standpoint of different in- terests this great question of American merchant marine, we should come, first, openminded, and, secondly, with mutual confidence. In 62 the day's proceedings of this conference, I have looked with pleasant anticipation, particularly to see the agrarian representatives, because it happens every day here in Washington I see shipping men, I see manufacturers, I see representatives of labor, but so far as the farmer's interest is concerned there has been no one coming to me with their viewpoint or with their troubles. I am tremendously im- pressed with the great importance this question bears to the farmer. Therefore, it was with some disappointment. I confess, that the first farmer representative this morning began with a flatfooted, firm, and irrevocable stand on questions which we were later to debate. I trust that as we proceed that that influence will gradually disappear, be- cause that is really the benefit we get out of a conference of this char- acter to- have an exchange of views. Next to that, comes the importance of confidence. Much has been said about the Government, as against private operation. I have rather pronounced views on the question, for the reason that I have been daily here in Washington for nine months, struggling as best I could, but very ineffectually, I will confess, with this complicated problem of ship operation. My view T s, therefore, are formed some- what definitely on that question, but I am not thinking of it to the disregard of public interest. I am not thinking of it as setting up private interest to the advantage of public interest, and to the detri- ment of the man in the field, or the man in the mountains or the man in the street. In fact, quite to the contrary. I am thinking of it as an agency to accomplish what every one in this country desires, and that is the perpetuation of our merchant marine; that we may, by wise council, formulate, develop, and put into being and operation a project which the old maritime nations in the world have previously deemed it impossible for us to do. They are very confident in that opinion ; more confident and more widespread in the opinion than public opinion would give you to understand, and there is very good reason for it. For years in domestic interest and enterprise, we developed our country, built up our country and our towns and railroads and tele- phones and public service corporations of all characters, and we paid no heed at all to shipping, with the result that, unfortunately, when the war broke out, the real shipping community of the United States might have been enumerated in two figures. Then, of course, when that period of great inflation of rates came and that is the principal question the farmer looks on with suspicion he thinks that if the Government's hand is removed and that Government control is no longer exercised, that promptly we will have a return of the inflated rates of the war. I think that theory can be dismissed by saying that following the war international competition will alone guarantee such rates of freight that commercial operation of ships will be a very difficult and a very serious problem. There will be no chance of inflation and no chance of high rates; there will be more ships in this business, and you will find again the relations of Europe coming here and seeking your support, which in the past you might gladly have given them, but you are entering upon an emergency which you will find without your own experience in trans- portation. In the operation of ships many points have been raised here and abroad; much stress- has been put on the difference in wages; the 63 difference in the manning and the feeding requirements of our ships as compared with the foreigners. Several of the gentlemen Mr. Crowley, in particular, made a very interesting statement as to what we should do ; representatives of the Pacific coast spoke of the neces- sity of fuel oil stations, of the importance of a free port in the Orient to offset Hongkong these and many other things are abso- lutely true. We have put ourselves seriously to the problem of ad- justing our home conditions, including the facilities of our ports. We have tried, as far as we could, to build up a broader organization of shipping people and there are some good results Avhich have ap- peared as well as bad. The large cost which is involved in the matter of return cargoes and the treatment of our ships at foreign ports is a problem with which we have not dealt yet at all. You can under- stand when we are loading a ship at a port in the United States we have pretty definite control of the cargo and the agency in whose control the^ship is placed and the captain and all the details of opera- tion, and then the ship leaves and she goes to a foreign colony; the captain, good as he may be, is quite powerless when he finds the agent has no particular facilities, no lighters, no wharves, or on the other hand, is more interested in the service of steamers of another flag, and he is quietly put off from day to day, delaying his discharge, and then it comes to the matter of securing homeward cargo, and he is, on every hand, the natural victim of intrigue and the policy of self-preservation. A man particularly interested in any line is nat- urally not expected to give our ships the best of the bargain. We have, in this whole shipping problem, the greatest opportunity that was ever given a nation. We have created a large fleet of ships unbalanced, if you will, but that can be corrected by changing our type and changing our style of ship and now we are endeavoring to decide how we shall proceed to the control and direction of these ships. Without going into extended argument on the point, I might briefly sketch to you what the Division of Operations has been doing all these months. First, we have had demands from the Army, and then demands from the European relief, but from time to time we were able to give certain support to trade. Happily we are coming to a time when we can give them much better support cotton and coal and manufac- tured articles of this country which have been suffering for a year past for lack of vessels will gradually now get some relief. We proceeded on the theory of revising our fleet. The difference between an economical ship and a wasteful ship is the difference between success and failure. Type of ship and type of propulsion is changing every day. As far as we can, we have been readjusting these conditions, intrusting our ships to operating companies at home and they are going abroad. The fleet is gradually piling up. There have been days when as many as five new ships have come to hand the average has been 20 a week. It gets to be colossal; it gets to be so complicated and so complex and so far-reaching that, do the best we can. we make poor headway with it. I am surprised that there has not been more criticism throughout the country than there has been. But this is the problem if we are to profit by all of the sacrifices we have made in providing these ships at a cost of over 64 three billion dollars to build a bridge of ships, we should study out now a very definite scheme of foreign trade. By foreign-trade routes I mean this very important point, which I would like to im- press on you regularity of sailings in all of the ports. This morn- ing reference was made to the tramp steamer. The real instrument of advantage to the industry and agriculture interests of this country is to be best served by the regular liner. In that respect we can well afford to take a page out of the book of the late German Em- pire. To illustrate in times before the war, as the chairman has pointed out to you, and right up to to-day, our mails have not been carried in our own ships. Before the war our manufacturers would receive an inquiry from such an important but remote market as South Africa, and they would not know beyond a few weeks in ad- vance what shipping opportunity was open to them. Contrast with that the opportunity of the manufacturer or agriculturist to know that every month of the year what date a ship would sail from a given point to a given destination. Couple that up with the great advantage we could derive from the unscrambling of our railroad situation. We have at our command advantages far offsetting the disadvantages of lack of experience, the disadvantage of probably not the ideal type of ships, leaving for us to construct this important element of foreign connection. Now, the way it appeals to me, the Government can function very well, but I know that it is difficult for the Government to establish proper agencies in other sovereign countries. That, it seems to me, is a matter for domestic enterprise. I would proceed along the theory of future management of ships from the standpoint of eco- nomic operation and the best results for all interests in this country to divorce the Government from the operation. That is the way it impresses me very strongly. Intrust it to private enterprise ; impose on the private enterprise all of the restrictions and all reasonable guarantees and regulations which good sense and foresight will per- mit maximum rates, if you will, a guarantee of sailings, the facility of through bill of lading in connection with your railroads, offering the small shipper the same opportunity as the large shippers had in the past, because the large shipper could provide himself with a ves- sel and load it entirely, whereas the small shipper was limited to the opportunity presented in the so-called berth business. This question of trade routes is really at the bottom of the whole problem. Until we have established a trade route, or if we should make the mistake of casting this fleet promiscuously to the winds under any form of random sale or charter hire and fail to conserve to the Nation the opportunity you now have of building up regular lines, why all of our efforts I am afraid will go for naught, because without regularity and without some direction or control, and with- out some control of needless competition between ourselves and the fierce competition that is coming to us, we are going to fail. The man who can make some money now and can not weather the stormy days will lead to the result where the whole fabric will totter. The railroad question is of tremendous importance. I do not know whether you gentlemen have realized that in the past the railroad rates from the standpoint of terminal charges have been often fixed from the basis of the most costly ports. For instance, the port of 65 New York, it can be truthfully said, that railroad* terminal charges there are as much as four times per car as at other ports, the reason being that the railroad is not adjacent to the ship. That high stand- ard is taken for fixing terminal charges on railroad rates on the ports in the whole country, and they are taxed needlessly in our export business. A proper survey of the shipping situation requires that we decide upon the best avenues of interior transportation. For many years past the Gulf area, for instance, has suffered from the influence of the east and west railroads. Cargo has been hauled east and west that could have gone to the Gulf ports ; even the great cotton regions of the southern States could have been delivered at ports such as the north coast of South America, west coast of South America, the West Indies, on a trade route that would be more advantageous than the route by other ports which had become more settled and better established. These are two problems that come very closely together, the solu- tion of the railroad proposition and of the shipping proposition. The Shipping Board, I can assure you, has struggled very valiantly with this problem. As far as we can see, the question of manning, cadets, the question of fueling our ships, the question of correct assign- ment of types to trades has been dealt with conscientiously here. We have been mindful of the fact that we have sometimes had to send ships that were too small and on too long a journey, but the fact was that we had such a limitation that nothing else could be done, and it was a case where we had to do the best we could. Xow we are coming to a new time when we will have more and better ships, and the question we have got to decide here, not in the spirit of suspicion that the shipping man is trying to take some advantage, but from the great principal standpoint of national interest, is this one I have laid before you, and I can assure you I have been committed, and Mr. Hurley has been committed, and all the members of the Shipping Board have been committed, to its solution. [Applause.] Mr. HURLEY. There is an invitation I would like to have read. It is from Mr. Brush, of the American International Shipbuilding Corporation at Hog Island. (Mr. Earnshaw read the following invitation:) I am advised by the Hon. E. N. Hurley, chairman of the United States Ship- ping Board, that he anticipates having a conference in his office in Washing- ton on Thursday and Friday, May 22 and 23 next, with representatives from various ports of United States, for the purpose of discussing the Shipping Board program and the future of the American merchant marine. Mr. Hurley lias suggested that perhaps it would be of interest to you as a member of this meeting to visit the American International Shipbuilding Cor- poration yard at Hog Island. Pa., and witness the launching of a ship and inspect the yard. In view of the fact that we have a launching on Saturday, May 24, and are constructing 50 ships on 50 ways, have 10 ships in the wet basin, and have satisfactory records of the performance of the 18 ships so far delivered, we are very glad indeed to extend to you an invitation to come to Philadelphia Friday night, the 23d, and be our guest from Washington. In order that we may be sure to make proper accommodations, we would appreciate it very much indeed if you would kindly promptly advise Mr. James V. Converse, acting secretary of the United States Shipping Board, 121034195 66 i Room 1012, 1319 F Street NW., Washington, D. C., who has kindly consented to assist us in this matter and advise us of the number to attend. Mr. Converse will take care of Pullman reservations and tickets. Tickets can be obtained at his office. I beg to inclose herewith an itinerary of the trip, which is self-explanatory. Trusting we will have the pleasure of seeing you on Saturday, I am, Respectfully, yours, M. C. BRUSH. Itinerary for trip to Hog Island, May 23, 1919. 12.40 a. m. Special cars leave Washington, train No. 8 a. m. Breakfast at Bellevue-Stratford Hotel. 9.30 a. m. Arrive Hog Island. 10 a m. Launching. 10.30 to 12.30 p. m. Inspection of ships and yards. 12.45 to 3 p. m. Luncheon at Hog Island Hotel. 3 to 6 p. m. Arrangements baseball game. 7.30 p. in-. Informal dinner at Bellevue-Stratford Hotel. 10.40 p. m. Train leaves for Washington. Mr. HURLEY. The meeting is adjourned until 10.30 a. m. to-morrow morning. MORNING SESSION. The meeting was called to order at 10.30 o'clock a. m., by Chairman Hurley. Mr. HURLEY. Did you want to say something, Mr. Knox ? Mr. WILLIAM KNOZ, of the National Foreign Trade Council, New York City. I simply wanted to suggest to the conference that the chair make a ruling that all speeches shall be limited to 15 minutes. Mr. HURLEY. Following out our course of yesterday? Very well, if that is agreeable, we will do that. I will call first on Mr. Edw. C. Plummer, of the Atlantic Carriers' Association, of Bath, Me. Mr. E. C. PLUMMER, of the Atlantic Carriers' Association. Mr. Chairman and gentlemen, I think I know why that motion was brought up, because, as Senator Ransdell knows, my face has been a familiar one in this city for 20 years. My friends say it has not changed much during that time, and my views have not changed at all during that time, and so, of course, we had better put a 15-minute limit on speaking, and I will keep inside of it. I represent, and have now for 20 years, Americans whose life work has been the building and the operation of American vessels, largely in the coasting trade, and when this war came on, our men, men like my friend Capt. Crowley, Crowell, and Thurlowe, and others who had been progressive, had the steel ships that were needed and were a godsend to the Government in the time of peace. Now, I want to take up one of the suggestions I heard yesterday unfortunately I was not here in the forenoon because whenever I hear a suggestion or a criticism made, manifestly in good faith, I think the man is entitled to a real answer. I think the most important suggestion that was brought up rela- tive to the subject of vessel operation by the Government was made by the gentleman who asked whether or not there would be danger of a shipping trust. I think I can give the facts Avhich will confirm what Mr. Rosseter said yesterday and we speak by the record. For 100 years the coasting people have enjoyed what has been called a monopoly in the coasting trade. When this war came on they had 67 the greatest coasting fleet the world ever saw, and just during that- time, in spite of the monopoly, the constant competition and progres- siveness resulted in bringing freights in the coastwise trade to the lowest point the world had ever seen. Let me say this to my fellow farmers, because they will know what I am talking about. They will remember that under that progressive work the Lake carriers brought down by progressive work the price on wheat so jthat it could be taken .from the West down to Chicago and Buffalo and other shipping points at 1J cents a bushel, which at that time was the lowest freight rate on water in the whole world. How did they do it ,? They did it in a way that the Government could not do it. I will refer to one instance, and it is only one of many. When the locks were enlarged and the opportunity was offered, those people " junked " a great fleet of vessels, none of which were more than 12 years old. They junked them and built new and bigger ships that could equal the business. Would this Shipping Board or any other Government institution dare to junk a great fleet of vessels? Take it in the coasting trade, when Capt. Crowley and I were young men, it was costing from 3 to 3J cents to bring coal from Norfolk to Boston and Portland. Capt. Crowley was one of those who devel- oped the line, you will remember four, five, and six masters and then with Capt. Crowley, who built the only seven-mast vessel in the world, they went into the building of steamers and they brought" the transportation of coal down to as low as 45 cents a ton. It was competition that did it; so you will understand that, by the record, Mr. Rosseter is correct when lie says you don't have to foar any ship- ping trust, because if internal competition will hold you down like that, that internal competition, to which will be added the foreign competition, is sure to hold you down. Now, I understand that yesterday forenoon one of the gentlemen asked why it was that we did not go into the ship business before the war came on. Let me answer from experience in my home town. Many of you shipping men will recall the Sewell flag, a flag which has been on the ocean for a hundred years. When I returned from the English yards, Mr. Arthur Sewell proceeded to turn over his wooden ships to a steel shipbuilding plant, and he built the most magnificent fleet of steel sailing vessels the world ever saw; ships like the Atlas, the Acme, and that magnificent William P. Frye, which the Germans sunk, because of its name as well as of its flag. That man had capital of his own, and he could command capital. He had built the vessels at a time when we had a hope that the Government was going to stand behind us. He built them just on that hope a. hope that was dis- appointed. And they ran those vessels as long as they could get a dollar back. It was not a question of profit; they had the vessels; their money was in them; they had to run them if they could; and they found that under *the competition they could not even keep running, let along get profits, and to-day the Sewell flag is a thing of the past. That is why we haven't been in that trade. Now, I won't discuss what Government ownership may mean, except to this point : You can not get in Government operation that personal initiative which is the only thing which assures success. In times of emergency you can call on men like Schwab and Franklin and others, but they are not hired men. Ordinarily you must take the average 68 men, and men who make progress in business are the men who are not trying to get their salaries each Saturday night ; they are trying to make a record, to build up something which is more than money. That is the reason that men like Capt. Crpwley have worked and gone ahead in overcoming the difficulties which have faced them and built up a great fleet. To-day the Shipping Board proposition is right in the air. I think I know what shipping men are thinking of, and I know that we are facing a radical development that to my mind is as great as that development which came when sail gave way to steam. I know what my neighbors are doing in the Texas Steamship Co. I will mention one thing. They are building Diesel-engine ves- sels. They are not jumping blindly ; they are building ; they are going to find out. That is only one of the things. Again, Mr. Rosseter has been for years with W. R. Grace & Co., a world-famous body now, yet I can remember when W. R. Grace was just starting in and building Avooden sailing vessels within a pistol shot of my home. They developed the business because they studied the business. They had the merchant intelligence to go with the ship- ping operation, and the result was that in spite of handicaps they built up a great business. If we are going to have success with an American merchant marine you have got to have the business in charge of experts, men who can study and who will study, and who will take the problems to bed with them at night and have them with them in the morning, if you are going to develop. You can not run successfully a 4,000-ton ship on a 10,000-ton route ; neither can you run a 10,000-ton ship on a 4,000-ton route. And you can't run successfully a 16-knot ship on a 12-knot route, and the reverse is also true. Therefore. I say that we have got, if we are going to meet this world competition and it is going to be the fiercest competition that we have ever had, and we have had something fierce for the last 40 years you must have the very best brains in the country devoted to it, and you can't get that devotion unless the men have something besides dollars to draw them on. Now, gentlemen, here is a question that came up yesterday : " What should the Shipping Board be allowed to do in the matter of these vessels ? " And it was suggested that they be allowed to sell the wooden vessels. I feel that this body can do nothing better than to say to this Shipping Board : " Gentlemen, you sell any or all of those ves- sels to foreigners or to natives or to anybody who will buy them, pro- vided you think that is the best thing that could be done." And, inci- dently, let me say that the implied knocks against tjie wooden vessels have a comeback! There are places in this world where wooden steam- ers are in demand. Within 10 miles of my home town we are building three wooden steamers to-day for foreign account. They can be op- erated in those foreign waters ; they can not^e operated here. There- fore, the Shipping Board should be encouraged to sell any of those vessels that in their judgment and in the judgment of their experts should be sold, and we should give them our indorsement and give them a free hand and say : c Gentlemen, go to it." Now, again, there is a great work for the Shipping Board to do. The great trouble has been with us in the past that we have been stabbed in the back. There has been no better work done in Congress 69 in years than was done by Judge Alexander, as chairman of the Com- mittee on Merchant Marine, when it investigated our shipping propo- sition, and they brought out, among other things, the fact that certain great European lines had combined, divided up the trade, and when any outsider undertook to get in they had six fighting ships, as they called them Mr. Barstow Smull, of New York, knows what that means ; he got hit, and others that tried to do business got hit, too, by them. They would send one or two or the whole six of those fighting ships down to that port and take the trade at a figure that the other man couldn't live on, drive him out of business, and then up would go the rates again and the other fellows paid the bills. There is a place where our board can do great work. I think I must have used up my time, but, as Senator Ransdell knows, there is nothing to prevent, so far as I am concerned, my talking for a week, but I simply wanted to touch a few of these points. Mr. HURLEY. Thank you very much, Mr. Plummer. Mr. HURLEY. Mr. C. F. Gregory, of the International Harvester Co., Chicago, 111. Mr. GREGORY. Mr. Hurley, I think I would like to be a spectator to-day. I wasn't able to be present yesterday, and I would like, if I might, be called upon to speak. I have an open mind on this subject to a very large extent and I have had so many opinions and so many arguments advanced in almost every direction that I am quite frank to confess that I am a little bit at sea. Mr. HURLEY. Mr. Lincoln Reed, vice president of the Southern Railway. (Not present.) Mr. HURLEY. Mr. Edward B. Burling, of the National Mercantile Marine Association. Washington, D. C. Mr. BURLING. I have been asked by the National Mercantile Marine Association to come here more than on the invitation of the Shipping Board. I was also asked by the Chamber of Commerce of the United States in care of the committee to present the views of that com- mittee. I don't think I am going to be able to give you the views of the merchant marine association or of the chamber of commerce definitely, because neither of those organizations have come to final and definite conclusion, but, I think, I can give you a general drift of the opinion of the members of those organizations as I have got them. I don't know that you all know what the National Mercantile Marine Association is. It grew out of a conference which Senator Ransdell called in Washington on January 19. Men came here from all parts of the country and the interest was so great that it was resolved to form a permanent association and that association has offices in the Munsey Building, in Washington, and Senator Ransdell has kindly consented to act as president o? the association and Mr. William Allen is secretary. It is an association which, I believe, will perform a very useful service. Speaking now for the committee of the chamber of commerce of which Mr. Myrick and myself and Mr. Gregory are members, I don't know whether any other members of that committee are here or not. That committee has taken for granted that there should be a mer- chant marine under the American flag. They have not gone into a study of that question. Some of the men who have come before that 70 committee have raised a question as to whether or not it wouldn't be desirable from aa economic standpoint to continue possibly a ma- jority of the ships now being built by the Government. That com- mittee has considered as its policy that this country is to have a merchant marine under the American flag and the problem is not whether we are to have a merchant marine, but as to how it can be de- veloped, as a Government institution as perhaps the post office is operated, or as a private enterprise under private commissioners and private management. Briefly I think I can say to you that all the members of the chamber of commerce are unanimously of the opinion that a merchant marine can not be successfully established except under private operation and they are of the opinion that the Gov- ernment should as early as practical go out of the operating and the owning of the merchant ships. They are of the opinion that all the ships could be sold. They do not consider it feasible to sell a portion of the ships. They do not believe that private capital would be willing to compete with Government. If the Government were to be operating some, they believe that private capital would not be readily secured to undertake to operate part of it. They are of the opinion that all the wooden ships should be disposed of at the best price obtainable to any buyer, foreign or domestic, without any re- striction as to flags. They also understand that there is a surplus of the smaller type of steel ships. They do not believe that for overseas trade ships of less than 6,000 tons dead-weight can be suc- cessfully operated. They are in favor therefore of selling for the best price obtainable to foreign or domestic buyers all the surplus of the smaller steel ships. This leaves the larger steel ships which are capable of overseas service which the committee takes to be ships of over 6,000 tons dead-weight. What shall be done Avith those ships which the Government now owns or has building under contract? The committee are of the opinion that those ships should be sold should be sold to private American buyers. They believe that the buyers should be free from any governmental restrictions whether as to routes or as to rates, and that the Government should go out of the business of operating ships of that class entirely. They believe that those ships should be sold as widely as possible, that they should not be concentrated in any one port or in a few hands and for that purpose they are dis- posed to i^commend that the Government invite the formation of organization in all the principal ports of the United States, that the chambers of commerce and similar bodies in all the ports of the United States be invited to form an association which would take their allotment of these ships; that those associations be responsible for distributing to private shipping companies the ships allotted to each section. The purpose of that is to secure the widest dis- tribution possible. They believe that those associations could be formed as a patriotic public service which would have each com- munity undertake to take over from the Government the ships allotted to that section and to find competent, or to organize com- petent, shipping companies to take them over. It is not the thought that those associations would earn any profits or engage in the opera- tion of ships. They would be semipublic organizations, designed simply for the purpose of acting as intermediary between the Gov- 71 eminent and the private shipping organizations of the respective, sections. As to the price of the ships to be sold the committee can not see how American buyers can be expected to pay more for their ships than their foreign competitors. They are therefore of the opinion that the ships should be sold at the world market value. They are of the opinion also that liberal terms as to payment should be given, that it be on long-time terms at a moderate rate of interest. The committee is not prepared to say whether under those circumstances they believe that the private shipping companies can operate ships successfully in competition with the shipping men of other countries. They consider that conditions are so chaotic at the present time that the future condition of the shipping business is so unsettled that they are not prepared to form a conclusion as to whether or not any governmental assistance will be required in order to enable the owners of those ships bought from the Government, to operate in competition with the foreign shipping companies. I think I have expressed the opinion ; Mr. Myrick, have you any other questions? [No response.] I think that expresses the opinion of that committee. Now the National Merchant Marine Association has not attempted to formulate any opinion as representing their organization as yet. That association has members living in all parts of the country. It has a council, a governing council of some fifty odd members. All the members of that council have been invited to express their in- dividual opinion. Individual opinions have been obtained from most of the members of that council and the secretary of the council, Mr. Allen, is going to deliver to the Shipping Board all those individual opinions. There is not entire unanimity among those members, but in general I think that the drift of the opinions of the members of that council are strongly in the direction of a sale of all the ships as soon as that may be accomplished. EXHIBIT AA. COPIES OF LETTERS FROM MEMBERS OF THE COUNCIL OF THE NATIONAL MERCHANT MARINE ASSOCIATION. [Received in response to the request of the chairman of the executive com- mittee for written expressions of opinion upon the disposition of the merchant ships controlled by the United States Shipping Board. Filed with United States Shipping Board in connection with statement by Mr. E. B. Burling at the conference held in Washington, May 22-23, 1919.] A POLICY FOR AN AMERICAN MERCHANT MARINE. [By GEO. J. BALDWIN, President, Pacific Mail Steamship Co.] Naval value of merchant marine. An important fact, always understood by naval experts, now fully appreciated by the Congress, but not yet by the country at large, is that a naval vessel, in order to constitute a sufficient first line of defense, must be able to attack in any waters and can not be so used unless supported by an adequate fleet of transports and supply vessels as its second line of defense. The United States, not having such a merchant fleet, thereby reduced the major portion of its Navy to an expensive ornament of the ports along our own coast. It is unprepared to cope with any other first- class power in the world and can not properly fulfill its purposes in time of war. Our fleet of merchant vessels under the American flag being insufficient to keep our Navy properly afloat as a fighting unit, we sent to the assistance of our allies only our older coal-burning war vessels, as coal could be secured in England, while all oil tankers obtainable were urgently required in order to keep the British Navy in operation and for supplying oil to our destroyers in convoy service. In transporting 2,056,122 troops to France, we placed in service every possibU American vessel and finally succeeded in carrying in our own ships not ovet '2'2 per cent of the above number. British ships carried 51 per cent, French and Italian ships took 5 per cent, while about 22 per cent traveled by interned German vessels seized in our ports. This is a shocking confession of national weakness. These are the real reasons which compel our Government to build up and permanently maintain an adequate Naval Reserve of suitable vessels with trained officers and sailors to man them. This can be accomplished at reasonble cost if the Government is prepared to aid in the upbuilding of a merchant marine by private initiative on a commercial basis and in no other manner, save at an expense impossible to bear. The need of a merchant marine owned and operated in our interests instead of one owned and operated in the interests of our greatest competitors is a necessity not previously understood by people living away from our seacoasts but which has now been definitely forced upon their attention by the difficulties and costs of sea transportation of the products of their farms and factories. The United States has now become one of the great exporting and importing nations of the world, and present conditions point to a most rapid and con- tinuous increase of our commerce. Both before we entered the war and now since the armistice, the disadvantages in not controlling our own ocean trans- portation have been very definitely manifested. If our farmers are to be permitted to sell their surplus products abroad instead of glutting our home markets with them, and if our factories expect to grow by supplying foreign needs, we must operate a complete ocean trans- portation system serving our own interests. The producer must be prepared to haul his goods to the best market, as, if he can not transport them himself, he must accept whatever price the buyer chooses to pay at the point of pro- duction. Dependence upon a competing seller, or a shrewd buyer, to haul your products to the consumer, is a most insecure foundation upon which to build foreign commerce. This is self-evident. Shipping conference. On January 22, , 1919, a conference was called in Washington by Senator Joseph E. Ransdell and attended by many of the im- portant ship owners and builders of the United States. The three principal speakers were Senator Duncan U. Fletcher, chairman of the Senate Committee on Commerce; Senator Ransdell, vice chairman of the same committee; and Hon. Joshua W. Alexander, chairman of the Committee on Merchant Marine and Fisheries of the House. These three gentlemen are among the leaders of enlightened thought on the subject of a merchant marine, which all of them emphatically stated must be made thoroughly adequate. They believed the ships composing it would be more efficiently operated by private corporations than by the United States Government and that whatever aid and encouragement might be necessary from the Government to bring this about should be furnished, and that if the business men assembled would devise and propose a sound and rational policy which could be enacted into law, such policy \vould meet with their support, "if no satisfactory means could be found for maintaining a merchant marine under private initiative, then they believed the Government should own and operate it. Many illuminating suggestions were informally made during this conference, emphasizing the following ide'as : (1) Public opinion demands an adequate Navy for proper defense. This re- quires the ownership and operation of a merchant marine sufficient in tonnage to keep the Navy at sea in war and to carry our people and merchandise in peace. (2) It should consist of American built ships manned by American officers and crew, operated by American owners, classed and insured by American com- panies, and fly the American flag. (3) It must have the advantage of private initiative and energy in its opera- tion instead of a less effective and more costly operation by Government, but must have some form of Government assistance. (4) Freight and passenger rates must be fixed by the demands of trade and world competition, not artificially restrained by laws nor commission rulings. 73 (5) The need for immediate determination of a definite policy is urgent juwl all action waits upon it. After its enactment into law, our maritime code must be amended to fit the policy adopted. (6) The fleet now under construction was designed to meet war conditions. This entire shipbuilding program should be revised as completely and rapidly as possible and adjusted to the conditions of commercial use and competition. This fundamental platform can well be adopted, but to carry it forward to success we must follow a policy as broad and as bold as was our shipbuilding- plan, complete and definite, so that universal confidence in its accomplishment will be aroused. Once this be done by placing behind a sound plan the full credit and power of the Government, the difficulties can and will be overcome, and we shall have our merchant marine. Let our plans be so fair that no coun- try can object and all can do the same thing, if they have the courage, the wisdom and the power. Types of vessels needed. Before discussing a policy based on the above plat- form, let us consider what kind of vessels we need and what we have. For this purpose, American shipping can be divided into four classes : Class A. Express passenger and mail liners : Foreign trade of any magni- tude depends primarily upon and is built up by means of the establishment and maintenance of regular sailings at fixed dates of fast, first-class steamship with the best passenger accommodations, each boat de igned for its particular service, speedy enough for carrying passengers and mail as rapidly as may be needed. Such vessels are adapted for carrying a limited amount of express freight. Our foreign trade can never reach a satisfactory volume and character and be permanently maintained until we have organized and put into operation lines of boats of this and of class B, running from American ports on the Atlan- tic, Gulf and Pacific coasts to the principal trade centers of the world, such as the Orient, India, Australia, the east and west coasts of South America, the Caribbean, the Mediterranean, the Baltic, and the principal European countries, and even to both coasts of Africa. Class B. Cargo liners: The boats next in importance are the cargo liners from 10,000 to 15,000 tons dead- weight capacity with a speed of from 12 to 15 knots, in some cases fitted for limited passenger service and making regular runs between such American and foreign ports as may furnish a sufficient quantity of business to need them and where the port facilities are adequate for this class of vessel. Unlike class A, the routes of these vessels can be changed to meet the various requirements of seasonal trades and shifting business con- ditions, but should follow the main general routes of trade. This class is intermediate in character of service between the express liner and the tramp. Class C Specialized boats : Certain trades require specialized boats, such as oil tankers, ore and coal carriers, refrigerated boats, fruit vessels, etc., each of them designed for the particular business intended and often owned by the corporation conducting it. Class D Cargo tramps : About two-thirds of the world's tonnage is of this class, in which Great Britain sends abroad the coal exports which enable her to maintain the great fleet of ocean tramps in which she brings back the bulk of her raw materials. They are usually boats averaging perhaps 5,000 tons, from eight to ten knots speed, and with less draft than class B, fitted for the general bulk-carrying trade of the world, built at the lowest costs, operating in all ports and particu- larly where port facilities are not adequate nor cargo sufficient for the larger vessels. These boats shift from one trade to another and fix the freight rates for the world carrying trade, necessarily extremely competitive in its nature. Their operation under the American flag, while advisable as an auxiliary for our naval defense and also for the maintenance of our foreign trade, is not as essential as the operation of the first three classes, but they must be used in sufficient quantity to export American coal, cotton, phosphates, lumber, and other raw materials to those ports supplying enough return freights of such bulk foreign products as may be needed. For the present we can hardly help leaving the bulk of the tramp business to England, Scandinavia, Japan, etc., but looking to the future we should certainly continue construction of sufficient numbers of this type of boat. While we must not fail to build up a permanent fleet of cargo tramps, yet we must devote our main efforts for the immediate present to the maintenance of 74 the first three most necessary classes of boats, in doing which we should utilize our existing shipping and shipbuilding organizations, expanding the former to whatever extent may be needed. All boats of these three classes should be buiit in the United States, operated, manned, and owned by American citizens, rated and insured by American companies, and fly the American flag, and as they constitute our second line of naval defense, w r e can not afford to have them owned or operated by foreigners, even though this should be attempted through the medium of American corporations. This should now be possible, if the United States Government, through the President, the Congress, and the Ship- ping Board, will express its determination to accomplish it. Possible forms of Government aid. It is axiomatic that the ideal trade should be an absolutely free trade. Every burden or restriction, every tariff, license, tax or similar cost, however necessary some of them may be, tends to act as a barrier in the way of trade ; hence, we must carefully weigh the effect of each one before applying it. Our intent should be to so lighten all burdens upon our merchant shipping as to enable it finally to compete in the world's carrying trade without the Government aid now required during the upbuilding period. There are many ways in which entirely adequate assistance can be safely and properly extended by our Government to foster private initiative in build- ing and maintaining our merchant fleets, and as many of the following methods may be adopted as are needed to accomplish our purpose. 1. In order to attract American seamen so that we may build up the Naval Reserve needed as the very foundation for both our fighting and our trading navies, we must provide ample and decent accommodations for the men and pay wages on the American scale equal to those paid in inland trades, which are necessarily higher than are earned by the sailors of any of our competitors. The three needed classes of steamships should all be adapted for Naval Re- serve use, and as this is distinctly a Navy cost, it should be so recognized. All of the officers and men should be enlisted in a United States Naval Reserve, ready and qualified at any time to report for active naval service. If this be done and the steamships held subject to requisition in case of war, the United States Government should pay to the operating companies, to be distributed by them to the officers and men, the difference between the American and for- eign wages. By no other means can an ample and efficient naval reserve of officers, men and ghips be continuously maintained as economically. The cost would be fully warranted by the results. 2. It is essential that our foreign mails to those ports with which we trade should be carried in American vessels, subject neither to alien control nor in- spection for the benefit of our foreign competitors. This is not a question of carriage at a low cost per ton, but a measure for the protection of American trade. With increasing parcel-post facilities and growing trade, the volume of mail will rapidly increase. For these reasons, such liberal compensation can be paid as will materially assist in bearing the excess operating costs of the passenger liners, and in order to induce private ownership in such boats, mail contracts could be made for 20-year periods, so the owner could confidently look forward to such stable business and definite income to enable him to amortize the cost of the vessel. There is no reason why these costs should be excessive for the service rendered, and such contracts might be made whether the vessels were ow r ned by the Unite! States Government and privately operated, or entirely privately owned. 3. Vessels of all three classes could be temporarily owned by the United States Government until paid for, as hereinafter suggested. In this case, there would seem to be no reason why the United States Government could not carry its own insurance at cost and thus partly felieve the operating com- pany of this burden. The interest cost would be held at the lowest possible rate by thus extend- ing the Government credit during the period in which the vessel's cost is amortized ; this might perhaps not exceed 3 or 3 per cent instead of a cost of 6 per cent or more, which the private owner would necessarily require to compensate for the investment risk, but which would not be required by the Government. The amortization period for these vessels could well be fixed at 2o years, o 4 per cent per annum. 4 Vessels owned by the Nation pay no State nor Federal tax, nor need ves- sels used in the national service, even though owned and operated by pri- vate corporations, and our merchant marine could well be freed from this 75 burden. This aid has been granted by Brazil to her merchant fleet, and the principle recognized by at least two of the States of our Union. I. On account of its smaller bulk, its quick handling and easy stowage, thus permitting greater freight carrying capacity and a much enlarged radius of action, oil fuel is worth three or four times as much per thermal unit as coal where space and freight carrying capacity are of so much value as in steam- ships. All American vessels should be freed as far as possible from the use of coal fuel and fitted to burn oil. Our American consumption of oil is increasing rapidly and at present ex- ceeding our productive capacity ; hence the Government should conserve its oil supply for its own vessels and avail itself of any opportunities for such friendly alliances as may be possible with neighboring countries producing oil. The Government could well afford to fix a low price for oil fuel supplied to Ameri- can vessels from any of its oil lands, which should be preserved for this sole purpose. Oil bunkers must be established at such world ports as may prove beneficial to American shipping. 6. The freight paid by the ultimate consumer includes both the ocean and the railroad rates. The railroad should be free to name through export and im- port rates on through bills of lading from and to the interior of the United States via any port to or from any foreign port, such rail division being less than the regular rail rate for inland traffic alone. This provision should apply only where such through bill of lading is made in connection with an American vessel. This is one of the plans adopted by Germany, to which she very largely owes the growth of her merchant marine. 7. We should not place upon our merchant marine of the future any portion of the burden of war costs ; otherwise we shall immediately handicap ourselves to such an extent that progress will be impossible, and the entire program will prove unsound. The United States Shipping Board should carefully value all of the boats which it keeps, sells to Americans, or builds prior to a return to normal costs, and should write down the value of all of these boats to such normal cost, charg- ing off the entire excess as a war expense and forgetting it. No more foolish proceeding can be conceived than the creation of a new merchant marine in com- petition with other nations who for the past fifty, years have beaten us in all sea traffic and then handicapping this new merchant navy with the dead and gone costs of a completed war. None of the above suggestions have anything in common with the old-fash- ioned ship subsidy idea. As will be noticed, they meet the needs of our Navy, encourage our foreign trade, point toward removing all unnecessary burdens and restrictions and permitting the freest possible operation of individual initia- tive in commerce. The abnormal cost of building tonnage during the war can not be borne by individuals or corporations engaged in commercial trade; hence relieving the industries from this excess cost is not a subsidy but a definite war expense. The whole idea of these suggestions is distinctly different from the cash subsidy, method. Discrimination in port clues and discriminatory tariffs on merchandise have both been considered, but these methods seem unsound, dangerous, and liable to international misunderstanding, diplomatic difficulties, and possible misuse at home. Present Government-on-ncd merchant fleet. In summing up the situation, we must consider the present fleet owned and to be constructed by the United States Shipping Hoard. This fleet contains very few vessels of class A, and as im- mediate consideration must be given to the establishment of our transocean passenger lines, ships should be built at once specially adapted for use on each one of these lines. If we are determined to maintain an American merchant marine, we shall need them, no matter what our policy may be, and the sooner they are built, the better. We have quite a number of class B boats under construction and contract, possibly enough, although we should give careful consideration to the question as to whether or not we need more. Of the class C boats, we know that in some lines our fleet is entirely inade- quate. Orders should promptly be given for this construction, and owners en- couraged to build for their own use. Of the class D boats, Emergency Fleet Corporation is constructing quite a large number, and after carefully selecting all of the individual boats or classes 76 of boats which fitted into the above policy, it should sell 'the least desirable of them at the best obtainable prices anywhere in the world's markets, even trans- ferring to foreign flags if so desired. Shipbuilding industry. If we adopt such a protective policy toward operating as is here outlined, we shall continually build enough new ships to maintain a great shipbuilding industry, which would need no further assistance than the requirement that ships of American registry must be built in American yards. With the volume of shipbuilding thus provided for, the shipbuilders should be able to closely approximate the low construction costs of any competitor and ultimately meet them squarely in the open world markets. No Government operation of shipyards in expensive competition with yards of private owners should be permitted, the Navy should throw all possible con- struction to private yards so that by increasing their volume of output, these yards might still further decrease their costs and increase their value to the country. The policy of costly building in Government Navy yards is unwise and has so nearly wrecked the private shipbuilding industry in the past that our existing organizations were totally unable to meet our war needs. Suggested form of Government aid. Let the Shipping Board, in conference with shipbuilders, ship operators and merchants, decide upon the main shipping routes upon which we must maintain service, agree upon the types of vessels required for them and select such existing experienced shipping organizations as can best operate each line. While some of these lines are now In existence, many more must be created, and all must be strengthened. The most advisable forms in which -Government aid may be extended would be First. Creation of the Naval Reserve. Second. Adequate mail payments. Third. Loan of Government credit. Fourth. Freedom from taxation. Fifth. Conservation of oil fields and creation of oil bunkers. Sixth. Permissible shrinkage of rail rates on through bills of lading by American boats only. Seventh. Valuing vessels at normal instead of war costs. The extent to which these methods must be applied should be determined by the importance of and need for each line. Some routes might require all of them and some only three or four. The loan of Government credit could be made by permitting a private owner either to purchase any steamship now owned by the Government or any special boats needed and to be built, the purchaser paying 25 per cent of the vessel's normal value (not the war cost), title remaining in the Government until the purchaser at his continuing option liquidates the balance by cash payment, or it be paid by annual amortization when and if the same be earned. The first charge against boats so ow r ned but operated entirely by private initia- tive should be the actual operating costs, excluding interest, amortization, and insurance, but including the agency and operating expenses of the shipping cor- poration, allowing a sufficient profit to keep the organization actively functioning and encourage its enlargement. Provide that interest and amortization be only payable if earned, which concession the Government can well afford, but if such interest and amortization be annually earned and paid, any profit remaining should then be divided equally between the operating corporation and the Govern- ment, the latter applying its entire share to an additional amortization of costs, the operating company becoming the owner of the vessel if and when entirely amortized and the Government repaid its entire investment. This form of extending credit by the Government should ultimately be self- liquidating. A definite precedent has been established in the construction of Government irrigating projects in the West. Requirements for foreign trade. The vital importance of maintaining our shipbuilding plants upon a profitable basis and the expansion of our ship-operat- ing organizations must be fully recognized by the Nation, which at the same time must realize that it is only one of the elements of creating and holding our foreign trade, which we must at the same time consider. We must have a free operation of our railway systems upon a sounder basis than has been possible at any past time, permitting our imports and exports to seek the most economic routes via our most convenient ports. Our foreign mails must travel by the most expeditious routes and by the quick- est means from seller to customer, radiating from United States ports to all 77 world trading centers. The airplane must be used to its utmost extent in this service both for inland and foreign traffic. A complete cable system under Government protection but under private opera- tion must carry our quick messages by wire over alternative routes radiating from our coasts to all foreign countries. Every steamship route must be paral- leled by its equally important cable or wireless service. Our bankers are now extending their facilities in foreign lands, and must be encouraged to enlarge this service by every possible means until dollar exchange is as readily obtainable as the pound sterling in the world's trading centers. Our merchandising companies must extend the scope of their operations until the American salesman, speaking the language of the country he visits, will be a familiar and friendly visitor to every country. Our Consular Service must be made a stronger and more efficient arm of our Government to serve in this trade expansion. The American merchant abroad must have his Government behind him wherever he carries American trade. Our ship operators must establish in every world port an effective system of agents to secure and forward all obtainable freight in American vessels. We must no longer rely upon foreigners for the classification of our vessels and for insurance upon them and their cargoes, and until American corporations can be increased sufficiently in number and size to carry all of our insurance, the Government should continue its War Hisk Bureau, reorganized to carry any bal- ance uninsurable in American companies. All of these things are possible, all are obtainable, and if we have the unani- mous will to obtain them we have the power and the skill. Let us come to a deci- ,sion and act upon it. [From J. B. Carroll, Washington manager, Atlantic Coast Shipbuilders' Association.] I am opposed to Government ownership and operation of our merchant fleet. The ships now owned and those building by the Shipping Board should be sold to private investors at a fair value and on reasonable terms without un- necessary governmental restrictions, with proper safeguards, however, to insure against their disposition to foreigners. The American people are in a better frame of mind now to digest the necessary write-off as a war expense than they will be several years hence. Our ships should be operated for America and manned by American crews recruited and trained by the Navy Department, and thus create a naval re- serve which should be of inestimable value in a national emegency. Such crews would provide an element of safety and lessen cost of operation through their greater efficiency. Any differential in wages over that of foreign competitors should be met by direct or indirect Government subsidy as for instance, increasing the present rate of $1 a month pay for reserves on the inactive list. Inducements by way of subsidy or otherwise should also be offered by the Government for the establishment of new mail and commercial routes and in like manner encourage the upbuilding of foreign trade routes which are other- wise unprofitable. Incidentally encouragment should be given to the establishement of coaling stations and facilities at new ports of American entry, and where those facili- ties are now dominated by foreign interests. [From Stevenson Taylor, president American Bureau of Shipping, New York City.] I am opposed to Government ownership and operation of any special business in times of peace. The result of Government ownership and operation, both here and abroad, fully warrants such opposition. I am also opposed to continuing the ownership of ships, and leasing same to private companies on any basis because such operation will only result in private operators getting as much out of the business as possible without responsibility for upkeep of the ships and probably without regard to profit which the owner- ship should receive. I am opposed also to the scheme of turning over to one large private corpora- tion the operation of the now Government-owned ships, the Government guaran- teeing a return on the stock thus to be issued. In other words, I am opposed to this scheme because it still means Government ownership and operation. In my opinion there is only one sensible way of handling the subject. The Gov- ernment under stress of a great emergency properly fostered the construction of 78 shipyards and the building of ships for the definite purpose of winning the war now, I trust, shortly to be ended forever. The enormous expenditure for this purpose was justified exactly for the same reason that other enormous expenditures were warranted, such as the building up of a large Army, a large Navy, and the manufacturing of all of the materials required by the Army and Navy. Now that the war (as we trust) is over, it is the time to salvage what we can from all of the materials now on hand and that are no longer required for the past war ; and just as a business corporation would do under the circumstances, it is the time to realize what we can from the salvaging, charging the loss to the cost of the emergency which caused the loss. Therefore, believing as I do that private ownership will in the years to come be better for an American merchant marine than Government ownership, I sug- gest the sale of the ships owned by the Government on some such plan as pro- posed by Mr. Hurley, chairman of the United States Shipping Board, in his recently spoken and published " Plan for the operation of the new American merchant marine," a plan which in general appeals to me as an American citizen and which surely provides a means for discussion out of which will come an agreement which will result in the establishment of a great merchant marine, so much needed by all classes of industry in the United States. [From H. L. Aldrich, president Aldrich Publishing Co., New York City.] Theoretically, the fifth proposition for the handling of our merchant marine is the best one in my judgment, but there are not shipping companies in -die United States to take up anything like the amount of tonnage there is to be disposed of, and if the ships are disposed of along the lines suggested in the fifth proposition, I think we will find that foreign interests will get greater percentage of the tonnage. Therefore, I am more in favor of the fourth proposition. This proposition should be safeguarded by the requirement that the directors and officials of the company taking over the ships be American citizens and that all of the ships fly the American flag. With the Government guaranty suggested, I think it would be easy to sell the stock. For 25 years I have been giving very careful attention to the subject of op- erating vessels under the American flag, and I believe I have outlined in the attached carbon copy of a letter which I sent to Senator Ransdell last week by all odds the most practical and scientific method ever proposed for building up our merchant marine. Meantime, I want to lay before you a plan for operating the American merchant marine that has been thoroughly thrashed out, and that lias the full indorsement of many Members of Congress, of labor union leaders, and is backed by such strong men as Capt. Donald of the Shipping Board, .Capt. C. A. McAllister of the Coast Guard, etc. The important section of the bill that was drawn up several years ago is the following: " SECTION 12. That the master, watch officers, and seamen employed on such vessels, being citizens of the United States, may. with the consent of the Presi- dent and under such terms as he may impose, enlist and be enrolled as a spe- cial naval reserve, and while so enrolled and during such employment, said master, watch officers, and seamen may receive such pay and relative rank as the President may prescribe." You can readily see that under this section wages of men on the American ships would be automatically made to correspond to wages paid on competing ships under foreign flags and yet through the machinery of the United States Treasury would receive the prevailing rate of wages paid on American vessels. This system would work automatically whether there was a slight difference in wages, as between an American and a Japanese or other Asiatic ship. The special naval reserve feature of this bill is immensely important. When the Spanish War broke out, the Navy was desperately off to find men to man some of the ships put into the service. The same has been true in the recent great world's war. Under this proposed bill there would be constantly training for the United States Navy a very large number of men, and the cost would be only a frac- tional part of their regular wages. May I urge you, through the executive committee of the National Merchant Marine Association, to try to put this measure into the form of a bill and have 79 it presented promptly at the opening of the next session of Congress. I am sure that Capt. Donald of the Shipping Board and Capt. McAllister would be only too glad to assist you in any way that they possibly can. [From William Butterworth, president Deere Plow Co., Moline, 111.] It is my thought that the best plan for the Government to pursue in connec- tion with the operation of the Government-owned ships would be to dispose of them to private owners on a basis which would enable the owners to run them at a fair profit. It might be advisable to have some kind of Government supervision the character of the supervision and the type of men that should go on the board should be very carefully considered, however, before any legislation creating the board is enacted. The trouble with the most of our Government commissions is that they are made up of men who are not thoroughly acquainted with the industry with which they have to deal, and offtimes they are politicians who have very little knowledge of any kind of business. [From Charles S. Keith, president Central Coal & Coke Co., Kansas City, Mo.] I beg to say that of the plans suggested and stated in your letter, in my judgment, the proper one to pursue is No. 5, to wit, the Government should sell the ships to private shipping companies, thus relinquishing ownership and control over same ; provided our shipping laws are so amended and modified as to permit a privately owned merchant marine to be operated without loss to the owners. Unless American shipowners are permitted to operate on a basis that will permit them to meet the competition of foreign shipping, then the only alternative is Government ownership and operation, with taxation of the American people to make good the deficit arising from Government operation. [From George W. Norris, Federal Farm Loan Bureau, Treasury Department, Washington, formerly port commissioner at Philadelphia.] 1. I am opposed to Government operation as a general principle, and opposed to it in this particular case, unless it should appear to be an unavoidable neces- sity, in which case I would reluctantly sanction it, with the hope that it might be abandoned as soon as possible. 2. I am opposed to operation by private companies on a commission basis. 3. I am opposed to the plan of turning over the sliips to one large cor- poration, which would sell its stock to the public with a Government guaranty of a fixed minimum return. 4. I am opposed to the sale of the ships to private shipping companies, with the exception that I would be willing to approve the sale of a limited number of ships where fair prices could be realized, and where the pur- chasers would consent to reasonable Government supervision as to their operation. My objections to the sale of all or a large part of the ships are: (1) The offering of such a large number of ships for sale would have a prejudicial effect upon the shipbuilding interests in this country. (2) If minimum prices were not fixed, the Government would suffer an unnecessarily heavy loss. If minimum prices were fixed, and fixed at a reason- able basis, I doubt whether many sliips would be sold to be operated with any reasonable degree of Government supervision. (3) I believe that to get these ships ofiicered and manned by American seamen it will be necessary to pay better wages, and give better living conditions than generally prevail on foreign ships. This would either make it impossible for the purchasers to man them with American officers and seamen, or would handicap them if they did so. I do not believe that Congress would vote for any form of subsidy payable to ship operators. It therefore seems to me to be advisable that the ships should be officered and manned by men who constituted a Naval Reserve Force, and were paid by the Government. (4) In view of the large amount of capital that would have to be raised in connection with the mere operation of Government-owned ships. I do not see the advantage of adding the additional burden of even one-fourth of the purchase price of the ships. 5. I favor the continuance, for the present at least, of Government owner- ship, the ships to be chartered to private shipping companies to be operated upon their own account on " time charter," the Government furnishing the crews and stores. This minimizes the ninount of private capital required to be raised; builds up a Naval Reserve Force, the members of which could be 80 used alternately on merchant and naval vessels ; and will secure for the Govern- ment, if properly administered, all the return that it can fairly expect. These are my views to-day, subject to revision or change in the light of further discussion and information. [From W. R. Ingalls, New York City.] I am strong in my conviction that Government ownership and Government operating of public utilities should be limited to the minimum, and especially no entry of the Government into commercial business should be promoted. The experiences of both the American and British Governments in operating railways and telegraphs are sufficient object lessons. Consequently I am in favor of the fifth plan suggested in your letter, namely, that the Government should sell the ships to private shipping companies, charge up the loss to war expense, and get out of the shipping business en- tirely. Let me add to this that there should be new legislation that will per- mit private shipping companies to operate in competition with foreign shipping companies and in conformity with the principles of economic law. [From Peter O. Knight, Knight, Thompson & Turner, Tampa, Fla.] I have given this matter some thought and agree with you fully that there is no question before the American people of more urgent importance than that of determining how our fleet shall be disposed of and operated. The question of how the fleet shall be disposed of is of comparatively easy solu- tion ; but what we are going to do in order to enable American citizens to operate a ship under the American flag in competition with the shipowners of other countries, is something else. I am, of course, opposed to Governmental ownership, of ships or anything else. Governmental ownership means incom- petence, waste, extravagance, and inefficiency. The practical and capable men to-day, with few exceptions, are in private life and not in governmental ser- vice, city, country, State or national. The ships should, of course, be sold to American citizens, either individuals or corporations ; and that should be done as quickly as possible. But when that is done, then the serious question arises as to how the shipowners are going to operate them under the American flag. I have run around a good many circles mentally in trying to arrive at some solu- tion of this question the last year, and I have not yet arrived at any definite conclusion. I am inclined to think, however, that either : (1) All of the restrictive, regulatory, burdensome legislation that places the shipowner of this country at a disadvantage as compared with the shipowner of foreign countries, must be repealed, and the shipowner of this country left free to employ such labor as he sees fit, paying such wages as he and his em- ployees can agree upon, and operate his ships under such conditions as his ingenuity and ability will suggest ; or (2) That such legislation must be passed by Congress along the lines of our coastwise legislation that will make it cheaper for Americans to ship their produce and merchandise in American bottoms than in foreign ones ; or (3) If the present restrictive, burdensome, regulatory legislation is to re- main in force, that the Government must in some way or other provide a subsidy to make good the losses that the American shipowner will suffer by reason of his attempt to operate his ships under the American flag in competi- tion with the foreign shipowner. If it is defensible, under our system of gov- ernment, to provide for a protective tariff whereby tribute is laid upon every man, woman, and child in the United States to enable the manufacturer to pay the wages that are now being paid in this country and still compete with manufacturers of other countries, then it is defensible to levy a like tribute upon the people of this country to make good the losses that the American ship- owner will suffer if we are to have a permanent American merchant marine. One or the other of the three above-named methods must be adopted. Which is best for the country, I do not know. I have some positive views about it ; but, on account of the labor-union situation in this country, I expect it will be quite hard to have the ordinary, modern, American politician undertake to put them into force. There is one thing, however, that I do know, and that is that the road ahead for the establishment of a permanent American mer- chant marine is anything but clear. 81 [From P. A. S. Franklin, president. International Mercantile Marine Co., New York City.] I am strongly in favor of the last of the five plans which you suggest^ namely : " Lastly, the Government could sell the ships to private shipping companies, thus getting out of the shipping business entirely." We are convinced that the only way to establish and operate a successful American merchant marine is on the basis of private ownership and opera- tion. Unlike a business being conducted wholly within our country the mer- chant marine must compete with every nation, and to do this successfully it is essential that private initiative and the spur of financial success shall be applied. It should be the aim of the Government, therefore, to sell the fleet which has been built and is building, to private operators, as promptly as possible, and further, every effort should be made to encourage and increase the number of investors in the shipping business. At the same time the operations of the private operator should be as free from restrictions and restraint as those of our foreign competitors. One of the greatest difficulties which confront the American operator is that of obtaining the necessary capital to carry on his business. In the case of our foreign competitors shipping investments are well known and operators can obtain capital from a large number of sources. In this country, on the con- trary, shipping investments are almost unknown, and operators able to supply good security, and with the best financial standing, find it most difficult to get the necessary capital. Under these circumstances it seems most important that a plan which is designed to place the fleet under private ownership and operation should also provide a sufficiently attractive basis so that investments in shipping may be stimulated throughout the country. Without some encouragement to the in- vestor the development of our merchant marine through private channels will be seriously restricted. The merchant marine of the United States should be as free from regula- tion and restriction as the merchant marine of our competitors. This is most essential if we are to compete on equal terms. Any limitation of rates or any direct representation by the Government in the affairs of the shipping company will mean a corresponding loss in the ability to compete on equal terms. We think that the plan proposed by Mr. J. Parker Kirlin, copy of which we inclose, covers completely and satisfactorily the various necessities of the case and we strongly urge its adoption. I Suggestions for a governmental policy toward the merchant marine, presented to Senator Ransdell's Merchant Marine Conference, Jan. 22, 1919.] I. The Government should adhere to its policy, declared in the United States shipping act, approved September 7, 1916, to encourage, develop, and create a merchant marine to meet the requirements of the commerce of the United States with its territories and possessions and with foreign countries. II. It should adhere to and emphasize its policy, as declared in the shipping act of September 7, 1916, and the emergency shipping fund act (part of the urgent deficiencies appropriations bill, approved June 15, 1917, and the act to prescribe charter rates and freight rates and to requisition vessels, approved July 18, 1918, of withdrawing from Government ownership and operation of ships and the fixing of freight rates in foreign trade, so soon as this can be done with due regard for national interests. The periods of time limited by the previous legislation above referred to are six months after the declaration of peace under the first two statutes; and at the time of the declaration of peace, or in the discretion of the President, within nine months after the declaration of peace, under the last-named act. III. The decision of Congress not to interfere with or attempt to regulate normal freight rates was reached in connection with the passage of the act of September 7, 1916. The decision then arrived at, after protracted hearings, was that the regulation of freight rates in foreign commerce was inexpedient, and the bill was so altered during its passage as to strike out the proposal which it originally embodied to regulate such rates. The conclusion reached and embodied in the act was that public safety re- quired no more than the enactment^ of the provisions of sections 16 and 17 of the act, which prohibit a common carrier by water 12103419 6 82 (1) From giving undue preference or advantage to any one person, locality, or description of traffic; (2) From using unfair means and devices to obtain lower rates than were given to other persons or localities similarly situated ; (3) From influencing marine insurance companies to discriminate in rates of insurance between vessels or cargoes ; and (4) From collecting any rate or charge which is unjustly discriminatory be- tween shippers or ports, or unjustly prejudicial to exporters of the United States as compared with their foreign competitors. The decision of the Congress on this point should be adhered to and not extended. Any further attempt at regulation of international rates will be prejudicial to the interests of both shippers and shipowners in the foreign trade, as imposing on such trade a burden of regulatory provision not found in the laws or regulations of competing nations. IV. The ships suitable for foreign trade now constructed and owned by the Shipping Board, or building under contract by the Government, should be sold and distributed to private owners for management and operation in foreign trade, on the following terms : (1) Sales of such steamers should be made by the Government to American companies, firms, or individuals established in foreign trade, and to such others as in the discretion of the Shipping Board are responsible and qualified to operate ships in such trade, at valuations per ton, for new ships to be deter- mined by the Shipping Board, now exceeding, however, the lowest cost of con- struction of similar tonnage in standard shipbuilding yards of our principal competitors, and at similar valuations for used ships, less the usual allowance for depreciation for age. (2) Payment of such price should be made to the extent of 25 per cent in cash, the remaining 75 per cent to stand on mortgage at 4 per cent interest, payable in fixed installments, apportioned over a period of 20 years, the mortgage to contain provisions for the establishment of sinking funds to amortize the mortgage within such period, and the purchaser to have the privilege of paying off any part, or the whole, of the remainder of such mortgage on any interest date, at par. (3) The mortgage law should be revised so as to constitute the mortgage a first lien on the ship, subject only to liens for salvage, general average and the wages of seamen. (4) Any residue of shipping in the hands of the Government not purchased by private owners should be allocated for management and operation, so far as may be reasonably practicable, to such companies, firms or individuals as shall purchase ships from the Government, in the proportion to which ships shall be purchased from the Government by such companies, firms, or individ- uals, due regard being had, in the division of the types of ships, to the trades of such corporations, firms, or individuals. A commission should be allowed to the operating corporation, firm, or individ- ual, and the remaining income derived from the operation of the ships should be consolidated with the earnings of all the other ships owned by the operating corporation, firms, or individual, and the proportion of such consolidated earn- ings which the operated tonnage bears to the owned tonnage of the operating corporation, firm or individual should be paid over to the United States. The Shipping Board already has authority, under sections 20 to 32, inclusive, of the United States shipping act of September 7, 1916, to make such examina- tion of the books and accounts of the operating managers as will enable it to be satisfied of the accuracy of the sums to be accounted for as the Government's proportion of the consolidated earnings as aforesaid. V. All corporations, firms, or individuals who shall purchase or operate ships in the foreign trade in pursuance of the foregoing plan, should be exempt, in respect of such ships or the other ships now owned or hereafter acquired by them and employed in foreign commerce, from all Federal and State taxes upon their capital stock, ships, franchises, profits or earnings, for a period of 20 years, and for such further period as the legislation may remain unchanged. (NOTE. This provision corresponds with the law of the State of New York as regards State taxes (60 Consolidated Laws, New York, 1909, sec. 4, subdi- vision 12), which has been in force, with various alterations as to periods of time, since June 1, 1881. A similar law exists in California.) VI. The Government should enact some / special legislation to assist existing passenger lines in the construction and operation of new passenger tonnage of the highest class and latest design and type, and to develop additional passen- 83 ger lines to countries with which it is desirable, in the national interest, that direct passenger service should be established. Some scheme similar to that adopted by the British Government in the building of the Mauretania and Lusitania might be expedient. The mail subsidy laws should be revised to meet the additional costs of reconstructing and operating such lines, as compared with costs of foreign competitors, and to adapt the mail grants to the speeds economically practicable in the several trades. VII. Provision should be made for the incorporation under a general Federal incorporation law, of steamship companies operating in foreign or interstate commerce. [From John H. Kirby, president, National Lumber Manufacturers Association, Houston, Tex.] Your letter is very interesting and the several plans you have outlined for the operation of an American merchant marine should have careful consid- ration. I think I reflect a deliberate judgment and wish of the people of our section of the United States when I say we view with apprehension any further cen- tralization of power at Washington. We do not think our Government ought to enter upon the transportation of business, either land or marine. The Gov- ernment should stay in the business of government and not enter any of the fields of private enterprise. The Government is incapable of conducting private enterprise as economically and effectively as the citizen can, a fact which is almost universally accepted by thoughtful men who have any real comprehension of the fundamental purposes and functions of the character of Government created under our Constitution. The Government should sell its ships as promptly as possible to private ownership, under guaranty for the continuous operation of such ships on such routes and in such waters as may be helpful in promoting our commerce, receiv- ing such price for the ships as may be obtainable and basing the payments on such terms as will encourage citizens to acquire them and to operate them. The more promptly our Government can sell the ships to private shipping companies or to citizens and thus get out of the shipping business itself, the more surely will the public good be safeguarded and an American merchant marine capable of meeting our needs assured for both the present and future." [From Holden A. Evans, president, Baltimore Dry Docks & Shipbuilding Co., Baltimore, Md.] Regarding the plans suggested in your letter, numbers 1 and 2 are opposed by practically all business men. This being the case, I do not feel it necessary to comment other than to state that I am most emphatically opposed. I am very much in favor of plan No. 3 ; that is, " Government ownership to continue, but the ships to be chartered to private shipping companies to be operated for their own account. This could be on a " bare-boat " or a " time- form " basis. My idea regarding this plan is that the vessels should be leased or chartered for a period of three years to companies with substantial financial backing, and that these companies should b.e required to give bond to the Government covering their contract. No more than 200,000 deadweight tons should be leased to any one company. The charter rate should be such that the new com- panies which are more or less inefficient, owing to their lack of experience in operation, could make a small profit. Of course, efficient companies would necessarily make a larger profit. After the three years, if the vessels chartered have been operated to the interests of the United States as a whole, and the companies have fulfilled all of their obligations to the Government, the companies operating should have the option of purchase at the then market rate. Provision, however, should be made that the vessels could not be transferred to a foreign flag for a period of, say. 5 years. This scheme appeals to me most strongly. The building up of an American merchant marine is a most complex subject and will require much study. I doubt if you were to obtain the services of six of the best men in this country to study the subject, that they would be able in six months or a year to bring in a satisfactory scheme for building and operating such a marine. We have had so little experience in this country both in building and operat- ing, that we are just beginners in the game. With the three years that these 84 vessels are leased we will gain much experience in building and operating and world markets, and this experience is needed to tell what is best to be done to build up and maintain a lasting American merchant marine. Public opinion must also be educated in order that we can obtain necessary legislation to meet foreign competition and the requirements of an American service. By chartering these vessels in lots not to exceed 20, companies with strong financial backing will be organized all over the country and the interests of the communities in the interior will be turned toward shipping. In no other way can we obtain substantial interest and substantial influence from the interior. Scheme No. 4 listed in your letter will not, I believe, obtain much support from business men. Scheme No. 5, namely : " Lastly, the Government could sell the ships to private shipping companies, thus getting out of the shipping business entirely," appears to be in much favor, particularly with certain interests and with the present ship-owning companies. It appears to me that there are serious objec- tions to this scheme, namely: (A) It would be necessary for all ships to be sold, otherwise prospective operators would not care >to buy, fearing Government competition from the unsold ships. This would require very large financing, and the present time is not a propitious one for such financing. (B) The price at which these ships could be sold would be far 'below the cost to the Government. Citizens of the interior are not familiar with the con- ditions, and should these ships be sold with enormous losses to the Govern- ment it will make a very bad impression in the interior and charges will be made of jobbing, and it will give many talking points for every interior small- minded Congressman to attack the merchant marine and our shipping policies. In other words, it will have a very bad political effect. (C) It is most important that the ships now owned by the Government should be operated for the interests of the United States as a whole nml not be operated, dominated, or influenced from London or by British interests, I greatly fear that should these ships be sold off immediately, that although they might be sold to American companies and operated as American ships, they will be dominated by British influence. (D) Should these ships be sold at market prices at present, it will prac- tically close every American shipyard, except those engaged upon naval work. If these ships are sold they will bring not more that $75 to $100 a ton. It will cost the American builder under present conditions from $150 to $180 per ton to build ships, depending upon variation in efficiency of the shipyards and the type of ship. It stands to reason that no one will place orders for ships at this price, knowing that they must compete with ships sold by the Gov- ernment at prices far below the cost to build. (E) Selling these ships at the present time will prevent further develop- ment of the American merchant marine and expansion of our commerce, for instance: suppose that a year after the ships are sold, a group of manu- facturers see an opportunity to develop trade in, say, South America, and to dispose of their products, and they desire to operate their own ships for this purpose. If they attempt to build, they will have to pay shipyard prices and compete with ships owned by companies which have paid Government prices. It is quite obvious that it will be impossible for them to do this. I should be very glad to have you go over the notes submitted you above, and if there are any points which I can explain or go into more fully, please let me know. [From Robert Dollar, The Robert Dollar Co., San Francisco, Calif.] I am very decided in my opinion that there is only one way to successfully handle the ships the Government has, and that would be to sell them to private ownership at the same price ships can be bought in England for, and to give liberal terms so that small owners can purchase the ships and get up a com- munity of ship owners the same as we had in the New England States a hundred years ago, which made America famous in the shipping world. As to our Government going into operate the ships in the foreign trade without organizations in foreign countries would simply be a joke. For the Govern- ment to own the ships and charter them to individuals, would help some, but in the end, the real thing is actually ship owning. 85 [From E. T, Chamberlain, Washington, D. C.] The council of the National Merchant Marine Association in framing sug- gestions to Congress for a merchant marine policy in the interest of the American people will recognize doubtless that the state of the finances of the country will control the decision by Congress. I. Government ownership and operation of ships and Government shipbuild- ing will be determined by the appropriations committees of the House and Senate, for the policies require heavy and continued appropriations, which naturally will be taken up early in the session. The Government should set the example of rigid economy. II. Peace will find us with two immense Government maritime establish- ments on hand : ( ) Shipping Board ships operated by or for the Government. (6) Shipping Board investments in shipyards and contracts for ships. These establishments were erected to win the \var and are founded upon Liberty bonds and war taxes. Commercial considerations were entirely subordinated in their creation, and- financial obligations amounting to about $8,500,000,000 were assumed by Congress as a war measure without regard to commercial policies. III. Government ownership and operation as systems lend themselves to ship ownership and operation on a large scale less readily than to any other form of commercial activity I know of. IV. P'or these reasons, I favor (1) The sale to private shipowners as soon as it can be effected of all the ships of mercantile types now owned by the Shipping Board. Over 300 ships building or contracted for by private owners, American and foreign, were requisitioned or seized by the Shipping Board to win the war, and a scrupulous Government, having in view both the necessity which was affirmed in support of that action and our commercial reputation hereafter, it seems to me, should at once undertake mutually satisfactory arrangements with such owners con- cerning such ships. (2) The proceeds of these sales should be applied to payments on unfinished ships now so far progressed toward completion that the loss in finishing them will be less than in stopping. (3) Partially built Shipping Board ships or contracts to build should be sold to private owners as far as practicable, and the proceeds applied as in 2. (4) Shipyards should be allowed as soon as possible to contract to build ships for private American or foreign owners (excluding Germans). V. I realize it is easy to make general suggestions like the above but very hard to carry them out in detail. But the choice between a merchant marine, conducted on merchantile principles, on the one hand, and on the other a Gov- ernment institution ought to be made at the coming session of Congress. Gov- ernment ownership and operation of ships and private ownership and opera- tion can not exist concurrently. If the present system, doubtless necessary for the prosecution of the war, is maintained by bond issues and war taxes through a year of peace it will take root, with all its attendant disadvantages, as a per- manent Government institution. The council should affirm in the plainest and most direct fashion that the Government should stop as soon as possible operating and building ships for trade, foreign or coasting, selling the ships and settling the contracts. Second stage. An authoritative statement of general policy, as outlined above, and measures by the appropriations committee to give it effect, come first. The questions of the second stage are (a) Can Americans build ships in competition with other nations? This can be determined by giving our shipyards a chance to try, .and now is the best time when the yards are in the best shape, certainly as compared with foreign yards, and the demand for ships is active. (6) Can Americans operate ships in foreign trade in competition with ships under other flags? The sooner the effort is made, the sooner shall we know affirmatively by experience our advantages and disadvantages. For several years ships of .all nations have been working in uniform and under orders of Government ownership or control, to win a war, which in the meantime has made immense relative changes in the volume and distribution of shipping, of wealth, and of conditions of exchange of commodities. For one I have neither the foresight nor the hardihood when everything here and abroad is still tied up with Government regulations, based on war conditions, 86 to predict just how the changes in the controlling factors of maritime affairs in the past four years can best be employed to enlarge or preserve the opportu- nities for the enterprise and skill of our people in building and sailing ships. On one point, however, I am quite clear, the American ocean mail service should be extended and improved. This is a legitimate field for Government cooperation and has been accepted as such for over half a century by all mari- time nations and by men of all parties here. Improvement has been needed for years. In a general way the shipping scheme outlined by J. P. Kirlin, at the first meeting of the Association, seems to me the most comprehensive I have seen, and, so far as general action in the next five or six months may be needed, it lays down the lines for consideration. You will understand that the suggestions above are all personal and offered as a member of the council to comply with your request. Under the very proper rule of the department, I am not at liberty to express as Commissioner of Navigation opinions on general policy without consulting the Secretary of Commerce, and I can not ask him to take the time now to discuss with me the suggestions above." [From George S. Dearborn, president, American-Hawaiian Steamship Co., l^ew York City.] At the conference called by Senator Ransdell and held January 22 and 23 of this year, Mr. Kirlin submitted a plan in which my views regarding a ship- ping policy were fully covered and do not believe I could do better than to refer you to that plan. [From Hendon Chubb, Marine Insurance Underwriter, New York City.] I think this can best be considered under two headings which fire very closely related : I. The disposition or operation of the present war fleet. II. A general policy for the mercantile marine in the future. First. I feel very sure that Government operation, if tried, is bound to be an expensive failure and that steamship property lends itself less to Government operation than almost any other class of property. I think it equally certain that operation by private interests under any plan of commission or compen- sation for services can not be really efficient. I know from experience that the shipowner can discount the future and reap quick profits at the expense of the property operated to an extent quite unappreciated by those without ship- ping experience. I therefore feel that in considering what is to be done with the war fleet one of the following plans should be followed : (a) The fleet soltl to approved American private owners on a part payment plan extending over not more than 10 years. The price fixed should be based upon the cost of reproduction in the shipyards of the world and the difference between that and cost marked off as a war expenditure. (b) Chartered to approved American charterers on bare boat basis for a term of years, the charter to contain suitable guarantees as to physical upkeep of the boat based upon periodical classification surveys. The first plan has much to commend it, particularly that it will remove the threat of Government competition which \vhile it exists must have a deterrent effect upon private enterprise and prevent the development of efficient organiza- tions, but there are two objections that need to be specially considered : (a) Could this large tonnage, even at a price ascertained as suggested, be absorbed by people qualified to run it so that it will be an economic asset to the Nation? (5) Because of the large amount of tonnage to be handled it is impossible to sell these vessels on a competitive basis and price will have to be fixed which would be based largely upon the present cost of reproduction in the shipyards of the world, but such reproduction is for a future date, whereas these boats would be available to the owners at once, and by reason of the present freight situa- tions the owners should make a very large profit, and this out of vessels that have been sold at a loss to the Nation. I very much doubt whether the public would be willing to accept such a program did they fully understand it, and yet I find it hard to suggest an alternative. The second plan (ft) would make it possible to incorporate in the charter a provision that in event of the net profits of the charter exceeding a certain 87 sum there should be a division between the Government and the owners. Assuming that such charters be made for a period of two or three years, this provision could be arranged on a basis that would be fair to both parties. If freight rates during that time are unusually high, the inevitable result will be an increase in'tonnage in the following period with consequent lower rates, and there is no unfairness in having the time charterer apportion to the Government a sufficient percentage of these profits to form a sinking fund for the loss of value caused by probable lower freight rates at the expiration of the charter term. Second General policy. I believe this should be based upon First. Giving us a sufficient number of vessels always under our flag to act as naval auxiliaries. Second. To establish mail lines to important points under our flag. Third. To have enough vessels under our flag to supply a strong naval reserve. Fourth. As many other vessels under our flag as can be maintained in com- petition with other nations without governmental assistance. I believe that the mortgage la\v should be revised, and that provision should be made so that there should be either no taxation on ships engaged in foreign commerce or that it should not exceed that of foreign competing nations ; also, that the shipping law should be revised and any disability that now exists removed as far as possible. I do not believe it would be practicable to modify to any extent the present seamen's act, and I think we have to recognize that if we wish American vessels manned by American crews that the scale of wages paid mil be higher than that of foreign countries. I think that this can be met by allowing such crews, under proper restrictions, to be enrolled in the Naval Reserve and paying them sufficient additional compensation as part of the naval forces. Beyond an allowance for naval reserve crews, adequate mail subsidy for mail lines and special compensation for vessels enrolled as naval auxiliaries, I do not favor any subsidy, direct or indirect, whether it be in the shape of a partial remission of duty charges on shipments imported by such vessels or by railroad rebates. While I believe that a certain fleet is necessary as per suggestions Nos. 1 and 2, I do not believe beyond this it is an economically sound proposition for us to force ourselves into the general carrying trade by throwing a burden on the taxpayer or on the community to meet an increased cost. I think our ship- owners should be given every opportunity to compete with equality, but I do not feel that it is wise or advisable or would make for efficiency if they were pro- tected by indirect means. They will start with the advantage of a large tonnage available when the tonnage of the world is depleted, and if disabilities are removed this should enable them to compete with other nations in so far as it is economically sound in the national interest to do so. The above represent my general views at the present time but is not intended as my final judgment. [From W. V. X. Powelson, Overseas Transport Service, Xew York City.] I have been suddenly called to Central America and will not return before approximately June 15. I have done a certain amount of work in preparing a memorandum of my views regarding the shipping policy, but am sorry I shall not be able to get it into shape to send before sailing. It is my judgment that any plan that is adopted by Congress should be one which would insure that all the ships acquired by the United States Government should be kept continually in operation under private management under the American flag. As judged t>y this standard all the plans that I have studied are defective. Under such plans but a portion of the ships would be operated and I do not think any of them furnishes the opportunity of a satisfactory solution of our so-called merchant-marine problem. [From F. L. Sanford, lumber manufacturer and exporter, Zona, La.] As to my idea of a shipping policy for the ships owned by the Government would say that I do not believe we can hope to compete upon the seas with foreign cheap labor, therefore it will be necessary to overcome the difference in cost of operation in some manner. In my opinion it would be impossible to get a ship-subsidy bill passed through Congress the coming session, nor could we hope to have any tariff changes favoring ships under United States registry, 88 but I feel confident that we could get a bill through to man these boats with a naval reserve, feeding the men, this would place the cost of paying and feeding the men on the Government through the Navy Department and would build up the necessary force for a Navy should we ever need one again. Then the boats should be allocated to certain lines according to their adaptability for the par- ticular service needed, for a period of say three or five years, theV should then be advertised for charter with the charter party paying all port charges, re- pairs, insurance, etc. Many of the smaller ships would no doubt show no returns, while many of the larger ones would probably show a good return on the in- vestment. This plan would enable the building up of routes of traffic that would not be built up under other conditions, as they would not pay to start with, and this plan would reduce the cost materially by absorbing all the cost of wages for the men operating the ship, and the feeding of these men, in chartering at a merely nominal figure the parties operating the line would have little investment until such time as the traffic was sufficient to make fair returns. It w r ould also be well to have an understanding that the parties chartering the vessels and operating them for the three or five year period should have the right to purchase them at the expiration of the charter period. [From M. J. Sanders, Federal manager, Mississippi- Warrior Waterways, New Orleans, La.} (1) That the Shipping Board should sell to purchasers at any reasonable price obtainable, and without unnecessary restrictions as to flag, all such vessels, either wood or steel, as expert shipping men consider are undesirable and unsuitable commercially for operation either in our coastwise trade, for trade to nearby tropical ports, or for overseas. (2) That the desirable steel steamers which are too small to meet conditions, in the overseas trade, either trans-Atlantic or trans-Pacific, should be sold at reasonable prices for further development of our coastwise service and our nearby tropical service. (3) That such vessels as are desirable and suitable for overseas trade should in part be sold at equitable commercial prices, with a stipulation against the transfer of the flag to any foreign power ; that a further part, to be determined after proper investigation, should be retained in the ownership of the Emergency Fleet Corporation, as representing the operating part of the Shipping Board, to be utilized in the development of new trades under the American flag, such as can be demonstrated would furnish desirable additional transportation where there is a lack of such transportation, and for the proper development of our foreign trade generally. In some trades these vessels remaining in the ownership of the Shipping Board could probably be operated under time charter to private parties. Whether this be upon the "bare boat" basis or upon the well-established form of time charter, is a matter that experience will best determine. Others of these steamers should in my opinion be placed in the hands of responsible and thoroughly experienced shipping managers for operation upon various desirable routes, as can be demonstrated, for the account of the Ship- ping Board or the Emergency Fleet Corporation ; that is to say, the Shipping Board would retain its direct interest in the revenues and expenditures of the actual operation, the shipping managers being given the customary fee for management and operation only. I am aware that these expressions are mere broad general principles, and I believe that any attempt to definitely determine elaborate details is undesirable until the Shipping Board has the advantage of several years experience. It is my belief that there is grave danger in the actual direct operation of ships by any governmental agency, and that therefore, the actual operation of such ships as continue in the ownership of the Government should be left as far as possible in the hands of the experienced private parties; and further that a definite policy against the building of additional tonnage by the Government should be declared. [From T. F. Newman, Cleveland & Buffalo Transit Co., Cleveland, Ohio.] In my opinion the Government should not undertake the operation of our merchant marine. Government machinery is not adaptable to. its successful operation. If this is true the Government should dispose of the ships either under some form of charter or sale. Under either of these plans, the charter party or purchaser would have to be reasonably assued of a profit. 89 My experience has been that ships must be well adapted lor the service they are to perform with reasonable initial cost. While I have had very little experience with coastwise or transoceanic shipping, I am nevertheless of the opinion that even with the best of ships at reasonable initial cost it will be difficult to compete in many lines of trade with our foreign competitors. This is due partially to our laws, which compel American vessels to incur expenses both in maintenance-operation and subsistence of the crew, which is not required by some of the other governments. I would therefore suggest that the ships now owned, or to be hereafter owned or controlled by the United States Shipping Board, be sold outright at price consistent with what the same property would cost if purchased from standard shipbuilders in foreign mari- time cQuntries. These ships should be sold either for cash or part cash, and deferred payments secured by mortgage on the vessel or vessels sold at a reasonable rate of interest. I would sell the vessels either to corporations, firms, or individuals, paying attention to the character and ability of the purchasers to operate ships suc- cessfully. The Government could then, in my opinion, \vell afford to guarantee to the purchaser a certain minimum return on the investment, possibly not over 2 or 3 per cent, which would be the incentive to purchase and operate. The Government guarantee should run for a period of at least 10 years and perhaps 15 or 20 would be better. Under this plan the Government would only have to make good its guarantee in the event that the vessels did not show a profit equal to the guarantee, after proper operation, both as to expenses and up-keep, together with interest on the investment. Of course, the whole opera- tion would have to be surrounded by a proper system so that the Government could be at all times fully informed as to the operation, maintenance, and expense of ships thus sold. I believe under some such plan as this, more vessels would be sold and operated than any other plan, and in many instances the Government would not be called upon to make good its guarantee. The whole proposition resolves itself into this: Can the boats be made to pay ? If they can they will be purchased ; if they can not they will not be purchased or chartered. I have not gone into detail as I do not believe it necessary. If the plan is feasible it would be necessary for experts to work out all of the details surrounding the sale and operation of ships. [From Emile P. Albrecht. president, Philadelphia Bourse, Philadelphia, Pa.] In my judgment, the upbuilding of an American merchant marine to ade- quately serve the needs of the United States permanently in the times of peace, when conditions become more nearly normal than at present, can only be accomplished by the adoption of a policy which shall have behind it legislation commercially successful operation in competition with the merchant fleets of other nations which have for years w T ith great success been doing the carrying trade of the world in over-seas commerce. Unless the vessels of the United States can be operated as cheaply or make as good a return to their owners or operators as do the vessels under other flags it needs no argument to prove that we can not hope to have a merchant marine under the United States llag to carry our foreign commerce, but we will have to be content to go back to the same or a worse position, if it be possible, as we were in prior to the war. American initiative, skill, business judgment is as high as any in the world, but there is no sentiment in business, and neither our people nor those of other lands will pay 1 cent more per ton for carrying their goods because the vessel Dies the United States flag. To accomplish the desired end I submit the following suggestion they are not original perhaps but arrived at after a study of other plans from an un- biased standpoint, having no monetary interest either in ships or in importing or exporting. 1. Government ownership and operation of vessels to be discontinued as quickly as possible. 2. The Shipping Board should return to their owners as quickly as possible the vessels requisitioned from American owners, including any seized while building, and pay for them a proper compensation based upon their earning power during the period they were out of their owners' control. 90 3. The Shipping Board should sell all vessels owned by it, both built and under construction, which are suitable for foreign trade, to private owners on the following terms : (a) Sales should be made to American corporations, firms, or individuals now established in the foreign shipping business, and to such others as appear to the Shipping Board to be responsible and qualified to operate in such trade at a valuation per ton to be determined by the board, not exceeding, however, the lowest cost of construction of similar tonnage in standard shipbuilding yards of our principal competitor nations at that time ; usual allowance for depreciation to be made in the case of used ships. Ships in course of construction either to be completed by the board or by the purchaser so as to permit changes to be made if desired, the price to be adjusted on the basis of the price established for new finished vessels. (&) Payment to be made 25 per cent in cash balance to remain on mortgage at the then prevailing rate of interest paid by the Government. The mortgage to run for a period of 15 to 20 years and to provide for a sinking fund to pay off the mortgage in fixed installments but with the privilege to the purchaser of paying of any part or all of the remainder due on any 1 interest date. Mort- gage also to provide for full insurance in American companies with the obliga- tion on the part of the Government to carry its own insurance on the vessel on the extent of the balance due it on the mortgage if the entire amount can be placed by the owner in American companies, the same rate of premium to be paid to the Government on such insurance as is paid to the insurance com- pany. 4. Any vessels suitable for foreign trade not purchased as above should be distributed for management and operation, as far as possible, to those who have purchased ships in proportion to their purchases, due regard being given in such distribution as to the type of ships suitable to the trade of the several purchasers. The operators of such ships should be paid a fair commission for their management and operation. The earnings of such ships should be pooled with the earnings of all the other ships owned by the operator and the same proportion of the combined earnings should be paid to the Government as the tonnage of operated ships bears to the tonnage of the ships owned by the operator. The Government should reserve the right to sell such ships at any time and to withdraw them on proper notice for delivery to the purchaser, but the operator should be given the option to purchase them at the same price offered by any other prospective purchaser. 5. Legislation should be speedily enacted so as to constitute a mortgage on a ship a first lien, subject only to liens for salvage, general average and wages of crews. 6. Legislation should be enacted so as to authorize the payment by the Government to the owner or operator of ships in rhe foreign trade -under the American flag such sum as may be found to be excess cost, if any, of operation of such vessel over the cost of operation of a similar vessel in the same trade under the flag of our closest competitor in the same trade. The Shipping Board or other governmental authority should be given, if it does not now possess, the authority to make the necessary investigation in order to determine the amount of such excess, also to enable it to be satisfied of the accuracy of the sums to be paid as the proportionate earnings of vessels operated for the Government under clause 4. 7. The establishment of regular lines of passenger, mail, and freight steamers to certain countries in which our interests are considered paramount and to our dependencies is of great importance. Such vessels must at least equal in speed, comforts, and general adaptability to these routes the foreign lines now serving those countries and it will be necessary in all probability to run such vessels at a loss while the trade is being built up. Therefore legislation should be enacted which will encourage and provide for the building and profitable operation of vessels perfectly suited for such lines, either or both by building subventions, payments for carrying mails, or in some similar form. 8. An American merchant marine to be of value as an auxiliary to the Navy and Army and to build up a strong Naval Reserve force should be officered and manned by Americans. The permission at present granted to foreigners to officer American vessel* should be withdrawn as quickly as possible and it should be made mandatory 91 until this is done that American officers, both deck and engine room, should be given preference. Legislation should be enacted making it mandatory that ar least one-fourth the crew in each department shall be American citizens, said proportion to be increased as more men become available. It should be made mandatory now that in shipping crews for American vessels Americans be given preference if available. 9. An immediate investigation should be made, as the Shipping Board is authorized to make, or a conference be called of Government officials, steam- ship owners and operators, officers of vessels, and representatives of seamen to discuss the navigation and inspection laws, regulations, and practices thereunder in order to ascertain fully what, if any, handicap is placed on American ships by those laws, regulations, etc., so that they may be corrected, modified, or abrogated if possible, but without reducing the safety of the vessel, its passen- gers or crew, or sacrificing their health or comfort. 10. Legislation should be enacted to permit railroads to make special rates on export and import goods between inland and seaboard points for shipments on or from American vessels. 11. Legislation should be enacted to provide for Federal incorporation of steamship companies engaged in foreign or interstate commerce. 12. As far as possible restrictions and limitations upon shipping should be removed, so that there shall be every encouragement given to enterprise and initiative in the operation and building of ships on the part of those who have made this business their chief aim and study, who have not and will not hesi- tate to still further invest in it as well as those desirous of entering the field as soon as they can see under national policy firmly established a reasonable chance for the commercially successful operation of a merchant marine under the American flag. I Extract from report of general convention committee National Foreign Trade Council, Chicago, Apr. 24-26, 1919.] We urge the earliest possible completion of the Government present ship- building program. As shipbuilding is one of the greatest essentials for the prosperity of Ameri- can industry the Government should immediately remove all restrictions how placed on American shipbuilding and permit the free construction of vessels for sale to foreign interests. The imperatively necessary revision of our shipping, navigation, classifica- tion, and measurement laws should be accomplished without delay so that American vessels can be placed on a more equitable basis of competitive oper- ating costs in foreign trade. While Government ownership and reasonable Government control of Ameri- can shipping must continue until some acceptable plan is devised for the transfer of such tonnage to private ownership, we are opposed to any con- tinuance of Government operation and urge that consistent with recognized war emergency needs these Government owned vessels be allocated to suitable trades and trading routes for operation by any qualified competent American shipping enterprise, under conditions of sale or charter that will permit of their sending the American Hag to any port of the world on a fair trading competi- tive basis with that of any other maritime nation. We also urge the Immediate consideration of the necessity for establishing coal and fuel oil depots on all the great foreign trading routes so that American shipping shall not be left dependent upon foreign-owned facilities for such vital service. American built ships for American foreign trade freed from all burden- some restrictions a fair world field and no favors other than those known to be absolutely essential to the reconstruction and highest possible develop- ment of our American mercantile marine is the crying need' of the day, if the United States is ever to win its rightful place in international commerce. [From Eugene P. Thomas, president, United States Steel Products Co., New York City.] " Pending a full discussion, which will undoubtedly take place when the execu- tive committee considers this matter in detail and formulates an opinion which will probably be circulated among the members, I would state that I am in favor substantially of the plan as proposed by Chairman Hurley of the United States Shipping Board, subject to certain modifications, such as the proposals of the 92 New York Chamber of Commerce as contained in the report on American mer- cantile marine, dated New York, December 26, 1918, of which you no doubt have copy ; also subject to the amendments adopted unanimously by* the National For- eign Trade Convention, -recently held in Chicago, as follows: " We urge the earliest possible completion of the Government's present ship- building program. "As shipbuilding is one of the greatest essentials for the prosperity of Ameri- can industry, the Government should immediately remove all restrictions now placed on American shipbuilding and permit the free construction of vessels for sale to foreign interests. " The imperatively necessary revision of our shipping, navigation, classifica- tion, and measurement laws should be accomplished without delay so that Ameri- can vessels can be placed on a more equitable basis of competitive operating costs in foreign trade. " While Government ownership and reasonable Government control of Ameri- can shipping must continue until some acceptable plan is devised for the transfer of such tonnage to private ownership, we are opposed to any continuance of Government operation and urge that consistent with recognized war emergency needs these Government owned vessels be allocated to suitable trades and trad- ing routes for operation by any qualified, competent American shipping enter- prise, under conditions of sale or charter that will permit of their sending the American flag to any port of the world on a fair trading competitive basis with that of any other maritime nation. " We also urge the immediate consideration of the necessity for establishing coal and fuel oil depots on all the great foreign trading routes so that American shipping shall not be left dependent upon foreign owned facilities for such vital service." [From C. E. Grunsky, consulting civil engineer, San Francisco, Calif.] 1. The United States to retain the ships now in Government ownership. 2. Operation to be by private corporations whose subscribed capital stock is to be not less than the cost of acquiring tonnage equivalent to that which each proposes to operate at current prices per ton in the world's market. (Cost new only to be considered.) The paid-in capital stock of* any operating concern is to be at least 25 per cent of what it would cost to acquire the equivalent tonnage. 3. The Government-ow r ned ships to be subject to recall or withdrawal by the United States upon two years' notice or in case of war without notice. 4. The operating concern to pay to the United States an annual amount, representing current depreciation, wherewith to amortize the legitimate in- vestment, thereby providing a fund out of which to replace the ships which are discarded from time to time. The current depreciation will be charged by the operating concern to operating expense and is to be computed as follows : Determine the legitimate investment of capital which any ship represents by deducting accrued depreciation (straight-line method), if the vessel is no longer new, from the cost of acquiring an equivalent tonnage in the world's market. Estimate the expectancy of each ship at the time the lease is entered into. Then amortize the investment in uniform annual amounts obtained by dividing the investment as above computed by the expectancy expressed in years. The amount thus fixed as current depreciation should* be paid annually dur- ing the period of each ship's usefulness, even though the ship serves beyond its expected term of usefulness. The payment thereof should be out of any excess of earnings over operating expenses other than interest on invested capital and depreciation, and should become due annually out of the accumulation of any such excess. The expectancy of each ship at the time it is turned over to an operating concern should be fixed by competent experts. 5. When United ' States ships are operated by a concern which also operates other ships, the concern's entire shipping business to be pooled and the United States tonnage to be credited with that proportion of net earnings which this tonnage bears to the total tonnage operated by the concern. 6. Not more than 20 ships to be allotted to any one concern within any two-year period after a plan of procedure is adopted. 7. The salaries of the principal officers of the operating concern, charge- able to operating expense, to be made subject to the approval of the United States. 8. The net profits (after payment to the United States of current deprecia- tion) to be divided between the United States and the operating concern on the basis of two-fifths to the United States and three-fifths to the operating concern. 93 9. The United States would, under this plan, recover as depreciation or as amortization of investment somewhat more than the cost of replacing the ships as they go out of use. (The assumption is made that the ships which will come under consideration may be all regarded as practically new.) It would require no increase of original investment to replace those which shall have served their time, consequently the United States would be placed in position to maintain ownership of the present amount of tonnage for all time, without recourse to funds from other sources. 10. An unequal division of profits in favor of the operating concern is sug- gested because a somewhat larger risk of loss will be assumed by it than by the United States. The United States in case of business failure will be out the current depreciation and will get no return on its invested capital, but by retaining ownership of the ship the United States' does not risk the loss of any capital other than the unpaid amortization increments. 11. The establishment of regular lines of transportation to foreign coun- tries and to our dependencies may require government subsidies. To any ex- tent found desirable, the profits resulting from the proposed plan of operation can be held available for such subsidies. The balance should be used in caring for ships not inactive use and for such other purposes as Congress may deter- mine. Mr. HURLEY. T would like to hear from Mr. Emil Albreght, president of the Philadelphia Bourse, Philadelphia, Pa. Mr. ALBREGHT. Mr. Chairman and gentlemen, the subject of the upbuilding of a merchant marine has had the attention of the Philadelphia board for some time and has had my personal at- tention not only as an individual but also having the honor of being a member of the council and executive committee of American Merchant Marine Association. I have submitted to that association my views, which were prepared back in April and I would be glad to' refer to them here, and, no doubt they will come in as part of the record which the secretary of that association will submit to the Shipping Board to go into the records of these proceedings. I would like to say, first of all, that we consider that it is entirely out of the question to bother much about the cost of the vessels which are recommended to be sold by the Shipping Board, as com- pared with the price that may be obtained for them, for the reason that those vessels were constructed not primarily for the purpose of building up a merchant marine, but as material of war which served its purpose even though it was not completely built, and that the moneys which will be received from those vessels, if and when sold, will be just that much money saved from war expenditures, just as though we could turn to some useful commercial account all of the large guns which were started and not completed and not gotten to the other side. The money is saved so far as commercial purposes is concerned. Of course we would not recommend that they be sold regardless of price, but we do not think that too much stress should be laid upon whatever difference there may be between the cost of those vessels for war purposes and what can be obtained for them at world market prices as commercial units in a merchant marine. We first of all recommend that Government ownership and opera- don of vessels be discontinued as quickly as possible. Secondly, we believe that the Shipping Board should return to their owners as quickly as possible the vessels requisitioned from American owners, including any that were seized while building, and pay for them to the owners a proper compensation based upon what those vessels might have been expected to earn had they not been taken out of the owner's possession. We feel that the Shipping Board should sell all 94 of the vessels owned by it, both wood and steel and other construc- tion, which are suitable to foreign trade to private owners on the fol- lowing terms, and when I say " Sell all of the vessels," I must except from that probably any vessels which are considered absolutely suit- able both as to size, speed and equipment for special trade route to the countries in which we feel that we have a predominating influence or within which we feel we ought to have a connection because that subject may have to be treated in a somewhat different manner. But we believe those sales should be made to American corporations, firms or individuals that are now established in the foreign shipping business and I say right here that this suggestion is not mine indi- vidually. The suggestions that I am making are really compiled from other suggestions that have been made by various individuals,, and this one in particular I think was, in fact I know, was in the plans submitted in January last by Mr. Parker, of New York ; that they should be sold to the firms, individuals, and corporations now established in the foreign shipping business, and to such others as appear to the Shipping Board to be responsible and qualified to oper- ate in such trade. That differs somewhat in language from the suggestions which have been made by the chairman of the hoard as to selling them at the world market price, but I don't think that there is much difference in effect if we consider the cost of construction at the present time in connection with the time of delivery of the vessels. The world's market price probably would be the best terms to use for those sales. As to the payment for the vessels we believe that the terms should be liberal. The chairman of this board has suggested 25 per cent in cash and 10 years for paying off the balance. I feel that that time is rather short. It might interfere with the sale of some of the ships, that is to say, parties with large, but still not too large a capital might with a longer term for payment be enabled to purchase more ships than would be likely if they should have to pay off the mort- gage in 10 years rather than 15. The chairman and I have had considerable correspondence on this subject and he has intimated that the ships might not last for 15 or 20 years and consequently the shorter time would be necessary. There have been, I know, a number of opinions expressed that some of the ships that have been produced would not last that time, but I did not want to give expression to that opinion by naming that in my suggestion. However, from a business standpoint, naturally, the mortgage should not run for a longer period ,of time than property is expected to last. The mortage should provide for full insurance, naturally, and we believe that that insurance should be carried so far as possible in American companies, and where the insurance can not be so carried it should be not only the business but it should be the duty of the Government to carry that insurance until such time as the American insurance companies can take it over. We dp not be- lieve in the Government being a competitor in the joint business any more than in the operation of the ships themselves. The sales should all be made subject to the restriction that there should be no transfer to foreign flags for foreign registry without the expressed consent of the Government. As to the vessels suitable for foreign trade that might not be pur- chased, we believe that they should be distributed for operation so 95 far as possible to those who had already purchased the vessels. The chairman recently wrote me that he did not think that plan need be considered as they had sufficient offers in hand at good prices to take all of the ships, but if that situation should exist, we feel that there should be some provision made for taking care of the surplus tonnage which is not bought by the operator, and the plan suggested was that they should be distributed to those who had purchased ships in pro- portion to their purchases, due regard being given in the distribution as to the type suitable in the trade of the several purchasers, and the operators of those ships should be paid a fair commission for their management and operations. The earnings should be pooled with the earnings of all ships owned by those parties and a prorating made of the earnings of those ships which were placed with those who had purchased for prosharing with the Government. The chairman suggested that he did not believe that the steamship owners and opera- tors would agree to any such pooling arrangement. I have taken the opportunity of calling his attention to the fact that this particular arrangement was in the plan submitted by the American Steamship Association of the Atlantic coast. I think that is the title. The Government should reserve the right to sell those ships which are being operated at any time on proper notice for delivery but the operator should be given the option to purchase them at the same price offered by any other prospective purchaser. Legislation should be speedily enacted so as to constitute a mortgage on a ship, a first lien subject only to salvage, general average and wages of the crew. We are told that there is every reason to believe that our operators can operate the ships on a profitable basis without any other assist- ance being given. Personally I hope that can be done but I doubt it, and if it can not be done we feel that there should be legislation enacted so as to authorize the payment by the Government to the owners or operator of the ship in foreign trade under the American flag, such sum as should be found to be the excess cost, if any, of operation of such vessels over the cost of operation of a similar vessel in the same trade under the flag of our closest competitor in the same trade. If the ship can be run without assistance, well and good. There is nothing to be paid. But if we want to have an American merchant marine manned by American officers and seamen for the purpose, first of all, in my judgment, as an auxiliary to the Army and Navy, we must be willing to pay for it directly or indirectly, and whether it can be called a subsidy, subvention, or equalization pay- ment makes no difference whatever, but if assistance must be given to sustain that American merchant marine the Government must be pre- pared to pay it just exactly the same as the profit of the people for the benefit of the people of the Mississippi Valley is subject to levy to protect that territory from floods, which is perfectly proper. It is standing the excess cost over the receipt for parcels post. It is doing it in a national part where only 2 per cent of the population receive any benefit from it. But they are being paid for out of the pocket of the people, and I can not see why there should be any difference of opinion raised when it comes to the upbuilding of a merchant marine which nearly everybody says we should and must have. As to the establishment of regular lines of passenger, mail, and freight steamers to those countries in which our interests are consid- 96 ered paramount, it is quite likely that we will be unable to find pur- chasers who will of their ow r n volition agree to run such lines for a specified period of time because not only have the lines got to be run but the trade has got to be obtained from those who now possess it and those foreign people are rather slow, I know, from my own expe- rience, to make changes once they have made satisfactory connections and it may, therefore, be desirable for the Government tg retain the ownership of such vessels as have been built or jnay be built abso- lute!}' suited for those trades and pay a commission to establish well-equipped houses for running those vessels until such time as the trade is profitable and then have them taken over. At first I thought otherwise. I have become convinced from the suggestions made by people representing export associations that their view in the matter is correct because of conditions that exist. Not because w r e want the Government even to continue owning those ships, but in the event that it is impossible to secure that result in any other way, then it may be necessary for that to be done. One point on which I want to lay particular emphasis is the necessity for having the ships of the American merchant marine manned by American officers and seamen, and to build up a class of American officers and seamen will take time, but at the present time there is discrimination against them. At Philadelphia the .chief engineer of the building which I have to look after is in charge of the sea service bureau, and was in charge of the recruiting service until it was, I think, rather inadvisably put into hands of the Riker-Hegeman drug stores. I know from what he tells me almost daily the difficulties he has had in placing natural born Americans who have gone to the engineering and navigation schools on their ships to get their six months' sea training before they can get their tickets. EXHIBIT B. COMMENT UPON THE PLAN FOB THE OPERATION OF THE NEW AMERICAN MERCHANT MARINE AS PROPOSED BY EDWARD N. HURLEY, CHAIRMAN OF THE UNITED .STATES SHIPPING BOARD. [By Bmil P. Albrecht, president of the Philadelphia Bourse, Apr. 7, 1919.] I will not attempt here to do more than comment upon Mr. Hurley's plan my own suggestions, which are not perhaps original but a compilation of ideas, I have given in another paper. I have carefully studied the plan proposed by Mr. Hurley and the general principles stated by him I can heartily indorse, but with his suggestions as to some of the details I am unable to agree, not because the ideas are not good but because they do not appeal to me as capable of being worked out practi- cally. I agree heartily with his statement in favor of private ownership and opera- tion and his expression " the formalities necessarily surrounding Government operations are not suited to the successful conduct of a shipping venture, re- quiring quick decision, sudden reversals of policy, and the assuming of great hazards. The successful shipping man in an emergency consults no book of rules. He consults only his wits " ; also with his remarks as to return cargoes, " Such operations require a degree of special negotiation and freedom from control to which Government operations are entirely unsuited. They can not be standardized. No rule can be laid down which a Government employee could follow, for the conditions are constantly shifting, and in this tramp busi- ness the competition of the world must be met, facility with facility, rate with rate." I agree with his suggestion that " the ships should be sold at a price which fairly reflects the current world market for similar tonnage," but I think his 97 terms are hardly fair. The cash basis of 25 per cent is all right, but the bal- ance should be 'extended over a period of 15 to 20. years instead of only 10 years, and it should be permitted the purchaser to pay off the mortgage when- ever he can do so. I can not see any reason for compelling all purchasers to buy on same terms and not permit early payment of the mortgage if possible. He says if the ivi'i- ciple were deviated from " we would place the big, powerful, and exne'-ioncetl operator in a position of such great advantages that new blood -md brains hardly would dare venture into the business." I should suppose experienced people are what is needed he says so himself in his argument in favor of private ownership. In my judgment we need not worry about that feature. The inexperienced man will not succeed merely because the big experienced one is not permitted to pay off his mortgage. Mr. Hurley's suggestion of a " Merchant marine development fund " is perhaps good in theory, but I can not see that it will w r ork out in practice. An interest charge of 5 per cent on the mortgage might be all right at the present time, but there is not a difference of 1 per cent between this and what the Government is now paying on its loans. Furthermore, it is questioned by those familiar with the marine-insurance husiness that the Government can carry the insurance on its equity in the ships at 1 per cent less than the regular companies. The Government's expenses are as great or greater to carry on this work than are those of the companies, and if the formation of new insurance companies is to be encouraged, the Govern- ment ought not to take away any business that they might carry. It would be all right for the Government to carry (and it should do so) any that they could not, but it ought not to take the business away from them. I feel that the development fund would not amount to anything like the figures given by Mr. Hurley, nor would the use of the fund in the way he sug- gests really be of permanent benefit to the lines assisted, as the assistance would really be only a loan to be repaid just as soon as the lines began to be profitable. While provision should be made for Federal incorporation of steamship com- panies engaged in foreign and interstate commerce, I can not see the necessity for forming a new corporation by each purchaser. This would seem to shut out all the companies as at present organized, because Mr. Hurley's plan limits the stock to be issued to the actual money value paid in on the vessel property. Furthermore, such limited capitalization would leave the companies without working capital, and with the ships mortgaged to the Government I can not see what they would have as a basis for other financial assistance, of which he speaks, as likely to be accorded them. There could be, I think, no objection to a minority interest being held by aliens, provided officers and directors were citizens. The idea of a Government director in each corporation does not appeal to me as a practical one. With 1,891 ships to sell, and an average of 10 ships to a corporation, at an average price of $700,000 each, it would mean 189 corpora- tions, with an average cash capital of 25 per cent of $7,000,000, or $1,750,000. On the board of each of these would be a Government director 189 of them, lo serve without compensation, except fees for attending meetings and his thought is because they draw no salary it " automatically insures that no great number of them will be men whose interests are centered in the steamship business." I confess I can not follow his reasoning. He also says that the provision that "the Government shall name them insures that they will be men of standing, sympathetic with American interests, and alive to the public service character of the steamship business." I can not see that this necessarily follows. These directors, without expenses being paid (at least that is not suggested nor the size of the fee named), beside attending the meetings of the corpora- tion board, are expected to attend quarterly meetings at Washington, accom- panied by members of the operating companies' boards form a permanent or- ganization and establish permanent offices. They are to handle, through com- mittees, the questions of trade routes, freight rates, etc., and yet Mr. Hurley says also that the ships should " be sold to and operated by the purchasers under no other restrictions than the terms of the bill of sale and the fixation of maximum freight rates." It seems to me that the thing to do is to remove every restriction possible and let the purchasers go ahead and hustle for their business. No attempt 12103^ 98 should be made to dictate to them as to where they shall send their ships or fix rates, The demand for tonnage will satisfactorily take care of both these points. Of course, for the establishment of regular lines of passenger, mail, and freight carriers to countries in which we have what we consider a paramount interest, and to our dependencies, special arrangements must be made, but it is doubtful whether any of the ships now built or building will be suitable for these trades, and if not, inducement must be offered for the construction and operation of vessels in every way equal to or surpassing the foreign vessels now in that trade, and even then the business has to be coaxed away from the old line. That however is a separate problem and can well be handled inde- pendently of the other one. The proposed merchant marine development fund, as I said before, may be good in theory, but I do not think it will work out practically (1) because I doubt it will reach any such figure as given; (2) because the assistance pro- posed is merely a loan and piles up debt in addition to the mortgage against the ship or the corporation; (3) because the method of handling the fund through the Associated Government Directors of Steamship Corporations, an unwieldy body of men selected because of their having no interests in steamships, would mean in all probability a series of disastrous and expensive experiments and a continual interference with the management of the ships by their owners from men without financial interest in them and therefore without incentive to make them successful. Let the purchasers run their ships where and as they please (except ships on special routes above referred to) and if they can be operated on an equal basis with their foreign competitors they will succeed. If however the cost of operation of ships under the American flag is higher than the cost of opera- tion of similar ships in the same trade under foreign flags, it requires no argu- ment to prove that either one of two things must be done (1) have the Govern- ment pay the owner or operator the amount of that excess cost of operation, if there be any, which can be readily ascertained by the Shipping Board or some other governmental agency, and thus start the American ship and the foreign ship in the race from the same line and carrying the same load, or (2) have no merchant marine under our flag, and go back to the same position (or worse, if possible) that we were in before the war began. The foregoing comments refer only to Mr. Hurley's suggestions but if his plan is to be considered as a complete one, then it is necessary to call attention to several features as to which he makes no reference whatever and which are of great importance in the successful operation of our merchant marine such as disposition of the wooden ships and any steel ships not sold, provision for manning the ship with American officers and crew, and the revision of our navigation and inspection law r s and the regulations under them so that all handi- caps, if any, exist as is continually asserted by owners of American vessels, shall be removed. EXHIBIT C. SUGGESTIONS FOR A GOVERNMENTAL POLICY HAVING FOR ITS OBJECT THK PERMA- NENT UPBUILDING AND SUCCESSFUL OPERATION OF AN AMERICAN MERCHANT MARINE. [Submitted to the National Merchant Marine Association, by Emil P. Albrecht, president of the Philadelphia Bourse, April 7, 1919.] In formulating a policy for the upbuilding, maintenance, and operation of an American merchant marine, using as a nucleus thereof the vessels now con- trolled by the United States Shipping Board, it must be kept in mind that the Shipping Board, under the act of September 7, 1916, which created it, has done practically nothing toward the creation of an American ma reliant marine, but its work and operations were carried on under the instructions and directions of the President of the United States and with moneys appropriated to be used by him for the purpose of securing the tonnage necessary in the prosecu- tion of the w r ar to transport troops, munitions, and supplies. All the vessels requisitioned from private owners, built and building, seized from enemy nations, . commandeered from neutrals, or built under the direc- tion of the' board in the new yards hastily constructed were for this One pur- pose and they served that purpose well. 99 The question of cost was of secondary consideration. What was needed was shins, more ships, ships of any kind that could carry the needed supplies of inoii and munitions on the other side of the world. The moneys spent were for war purposes alone. The result of that expenditure was material of war, and had that material been absolutely used up, with nothing remaining, the expenditure would have been fully justified so long as it assisted, as it un- doubtedly did, in shortening the duration of the war. If .-is has been stated the war was costing the United States $40,000,000 a day, a prolongation of the conflict for 100 days more would have meant the expenditure of $4,000,000,000. By spending that sum in the creation of ship- yards, in the building of ships and their operation (even if there were no salvage) we are no poorer because without the shipping program the war would certainly have lasted 100 days longer and \ve would have had losses of life far greater than we did suffer for which no money could adequately pay. Therefore, I contend that in considering the disposition which is to be made of the vessels belonging to the United States and controlled by the Shipping Board, vessels constructed for war purposes, they should be looked upon as salv;.ge from the scrap pile of unused war material and money obtained from them by their sale, at whatever price they may bring, as so much money saved and not talk about a loss because they cost more as a .war production than they bring for peace uses. In my judgment, the upbuilding of an American merchant marine to adequately serve the needs of the United States permanently, in times of peace when conditions become more nearly normal than at present, can only be accomplished by the adoption of a policy which shall have behind it legisla- tion on the par*- of the Federal Congress which will insure its commercially successful operation in competition with the merchant fleets of other nations which have for years with great success been doing the carrying trade of the world in overseas commerce. Unless the vessels of the United States can be operated as cheaply or make as good a return to their owners or operators as do the vessels under other flags it needs no argument to prove that we can not hope to have a merchant marine under^the United States flag to carry our foreign commerce, but we will have to be content to go back to the same or a worse position, if it be possible, as we were in prior to the war. American initiative, skill, business judgment, is as high as any in the world, but there is no sentiment in business and neither our own people nor those of other Innds will pay one cent more per ton for carrying their goods because the vessel flies the United States flag. To accomplish the desired end I submit the following suggestions. They are not original, perhaps, but arrived at after a study of other plans from an un- biased standpoint having no monetary interest either in ships or in importing or exporting. 1. Government ownership and operation of vessels to ,be discontinued as quickly as possible. 2. The Shipping Board should return to their owners as quickly as possible the vessels requisitioned from American owners, including any seized while building, and pay for them a proper compensation based upon their earning power during the period they were out of their owners' control. 3. The Shipping Board should sell all vessels owned by it, both built and under construction, which are suitable for foreign trade, to private owners on the fol- lowing terms : (a) Sales should be made to American corporations, firms, or individuals now established in the foreign shipping business and to such others as appear to the Shipping Board to be responsible and qualified to operate in such trade at a valuation per ton to be determined by the board, not exceeding, however, the lowest cost of construction of similar tonnage in standard shipbuilding yards of our principal competitor nations at that time ; usual allowance for depreciation to be made in the case of used ships. Ships in course of construction either to be completed by the board or by the purchaser so as to permit changes to be made if desired, the price to be adjusted on the basis of the price established for new finished vessels. (/>) Payment to be made 25 per cent in cash, balance to remain on mortgage at the then prevailing rate of interest paid by the Government. The mortgage to run for a period of 15 to 20 years and to provide for a sinking fund to pay off the mortgage in fixed installments, but with the privilege to the purchaser of pay- 100 ing off any part or all of the remainder due on any interest date. Mortgage also to provide for full insurance in American companies with the obligation on the part of the Government to carry its own insurance on the vessel to the extent of the balance due it on the mortgage if the entire amount can be placed by the owner in American companies, the same rate of premium to be paid to the Government on such insurance as is paid to the insurance company. (c) The sales should all be made subject to the restriction that no transfer to foreign owners or to foreign registry be permitted without express consent of the Government. 4. Any vessels suitable for foreign trade not purchased as above should be distributed for management and operation, as far as practicable, to those who have purchased ships in proportion to their purchases, due regard being given in such distribution as to the type of ships suitable to the trade of the several purchasers. The operators of such ships should be paid a fair commission for their manage- ment and operation. The earnings of such ships should be pooled w T ith the earnings of all the other ships owned by the operator and the same proportion of the combined earnings should be paid to the Government as the tonnage of operated ships bears to the tonnage of the ships owned by the operator. The Government should reserve the right to sell such ships at any time and to withdraw them on proper notice for delivery to the purchaser, but the operator should be given the option to purchase them at the same price offered by any other prospective purchaser. 5. Legislation should be speedily enacted so as to constitute a mortgage on a ship a tirst lien subject only to liens for salvage, general average, and the wages of crew. 6. Legislation should be enacted so as to authorize the payment by the Govern- ment to the owner or operator of ships in the foreign trade under the American flag such sum as may be found to be excess cost (if any) of operation of such vessel over the cost of operation of a similar vessel in the same trade under the flag of our closest competitor in the same trade. The Shipping Board or other governmental authority should be given, if it does not now possess, the authority to make the necessary investigation in order to determine the amount of such excess ; also to enable it to be satisfied of the accuracy of the sums to be paid as the proportionate earnings of vessels operated for the Government under clause 4. 7. The establishment of regular lines of passenger, mail, and freight steamers to certain countries in which our interests are considered paramount and to our dependencies is of great importance. Such vessels must at least equal in speed, comforts, and general adaptability to these routes the foreign lines now serving those countries, and it will be necessary in all probability to run such vessels at a loss while the trade is being built up. Therefore,* legislation should be enacted which will encourage and provide for the building and profitable operation of vessels perfectly suited for such lines, either or both by building subventions, payments for carrying mails, or in some similar form. 8. An American merchant marine to be of value as an auxiliary to the Navy and Army and to build up a strong Naval Reserve Force should be officered and manned by Americans. The permission at presented granted to foreigners to officer American vessels should be withdrawn as quickly as possible, and it should be made mandatory until this is done that American officers, both deck and engine-room, should be given preference. Legislation should be enacted making it mandatory that at least one-fourth the crew in each department shall be American citizens, said proportion to be increased as more men become available. It should be made mandatory now that in shipping crews for American vessels Americans be given preference, if available. 9. An immediate investigation should be made, as the Shipping Board is au- thorized to make, or a conference be called of Government officials, steamship owners and operators, officers of vessels and representatives of seamen to dis- cuss the navigation and inspection laws, regulations and practices thereunder, in order to ascertain fully what, if any, handicap is placed on American ships by those laws, regulations, etc., so that they may be corrected, modified or abro- gated if possible, but without reducing the safety of the vessel, its passengers or crew or sacrificing their health or comfort. 101 10. Legislation .should be enacted to permit railroads to make special rates on export and import goods between inland and seaboard points for shipments on or from American vessels. 11. Legislation should be enacted to provide for Federal incorporation of steamship companies engaged in foreign or interstate commerce. 12. As far as possible restrictions and limitations upon shipping should be removed, so that there shall be every encouragement given to enterprise and initiative in the operation and building of ships on the part of those who have made this business their chief aim and study, who have not and will not hesitate to still further invest in it, as well as those desirous of entering the Held as soon as they can see under national policy firmly established a reason- able chance for the commercially successful operation of a merchant marine under the American flag. Mr. HURLEY. Mr. F. E. Robertson, State College of Agriculture, Ithaca, N. Y. Mr. KOBERTSON. Mr. Chairman, I have nothing to say. I just came in to listen to what is going on. Mr. HURLEY. P. A. S. Franklin, of the International Mercantile Marine, New York City. Mr. FRANKLIN. Mr. Raymond said, "The American Steamship Owners' Association." [Laughter.] Gentlemen, I have not had an opportunity of preparing any docu- ments to submit here in the way of a speech or statement, and there- fore my remarks will be very informal. The United States has for a number of years talked about the development of an American merchant marine, but prior to the war nothing tangible had been done in that direction. The developments during the war were such as to demonstrate the necessity for an American merchant marine, under the American flag, controlled absolutely by Americans. Dur- ing the early days of the war shippers, passengers, mail, and freight transportation facilities across the high seas were very much inter- fered with, and at times it was impossible to cross to the other side, clearly demonstrating the importance of a country of such a large production as this, and particularly with such a tremendous export business to all ports of the world, having its own delivery system, in order to enable its citizens to handle their own transportation needs before they got into the war themselves and independently of any of the belligerents. Now, the United States very properly adopted a policy of active production of wooden, steel, and every other kind of craft that could be rapidly produced, and if these wooden and steel steamers had not been proceeded with in the way they were by the United States Ship- ping Board Emergency Fleet Corporation, and we had found our- selves with the troops in France and no way of getting our products over there, somebody would have been criticized. Therefore, I thor- oughly indorse the program of the United States Shipping Board Emergency Fleet Corporation. I feel quite strongly that the wooden steamers are not suitable for foreign business and should be disposed of as soon as possible. I. also think that the steamers under 6,000 tons should, to a very large ex- tent, be disposed of to foreigners as they, also, are not suitable for our foreign trade as we look upon it. As to the others, I think the building program should be continued. The program would do the United States credit. If the United States, prior to the war, had decided upon a building program for the merchant marine of 102 10,000,000 tons in ten years, I hardly think that the most sanguine person would have believed we could have accomplished it by 1920. I think we should deal with the ships as a whole from that point of view. It isn't a question only of manufacturing ships it is a question of building up individual corporations, banking facilities, sales depart- ments in foreign countries, and other things necessary to enable the traffic to be handled properly. I think it is exceedingly important, and we have given this matter a great deal of consideration and feel that the steel steamers should be sold to private corporations and private individuals and should be operated absolutely as private property, and not by the Government in any way, shape, or form. We also feel very strongly that a very comprehensive policy should be adopted by the Shipping Board and by the Government for the prospective buyers of these steamers, so that they may know what the future situation is going to be, and not feel that two years from now we are going to have a different policy, and in that time having Gov- ernment-owned ships competing with the privately owned ships. Without such policy it would be impossible to get people to put their money in the enterprise. They feel that if they would wait two years they will have a better opportunity than to-day. Again, we believe that it is essential that shipping houses should be built up in every port of this great country. Each port, each section of the country the Pacific coast, the Atlantic coast, New Orleans, Galveston, San Francisco, Seattle, and every other place should do their utmost to create shipping companies and corporations and build them up, and it is only by getting the public money into these enter- prises, and get the people of the section and the ports themselves interested all over the United States, that you are going to be able to absorb these ships that have been built by the Government during the period of the war. I am not an advocate of a New Orleans shipping house doing New Orleans business only. They should be equipped to handle business from all ports from Portland, Me., to New Orleans and from any other place in order to take their proper place in the shipping world. It is not necessary to confine this to any one district. It ought to be built up in every direction. Now, as far as the monopoly of the situa- tion is concerned, I do not see the slightest possibility of a monopoly. Large and small corporations may be formed and some may be more successful than ethers. But you are going into competition with the world. It is the shipowner of the world that you are going to deal with, therefore the more American people who go into the shipping business, the more firms that are established in the various ports, the better it will be for exports from every section and better for the American shipping business as a whole. If the hand of the Govern- ment is to be with the people, and the hand of the Government is going to be with them, this country can develop the ship industry just as well as it has developed the steel industry. There is no reason in the world why we should not go ahead with shipping on a large basis. We have the cooperation of the people, and the country and the Government will give its indorsement and assistance. As far as the laws are concerned, they need certain modifications and this is only with the object of putting a ship at as little disad- 103 vantage as possible the world over. As far as the seamen's act is concerned I do not think that any of us would wish the seamen to receive less pay than they do now. We are all heartily in favor of doing everything possible to see that the steamers are manned to a large extent and as far as possible with American officers, seamen, engineers, and firemen. It is essential to the trade of the United States that we do this, and this war has clearly demonstrated the im- portance of the national flag in each country. Xow, as far as the plan for the establishment of maximum rates is concerned, I would like to say this about Government-fixed rates. The rates in foreign countries are controlled by an association of business interests and our ships will have to meet this competition. It is practically impossible to fix a rate for a general cargo. You may have agreements from certain ports to certain ports, and a great many times you are unable to apply them. As to a monopoly. I do not see any danger of a monopoly as far as the selling of the steamers is concerned. We have always advocated that they should be sold to private individuals or corporations on the basis of 25 per cent in cash and 75 per cent due under favorable con- ditions, the mortgage in this case to be held by the United States. Of course a certain number of steamers would have to be retained for the Army and Navy and their service. Barring these, all steamers should be sold free and clear, just as the steamers of the other nations of the world are free from any encumbrances or handicaps. Our steamers should have this freedom, as they are in competition with the other nations of the world. In order to compete with them you have to be just as free as they are. The Government should come in and see that we get fair play in the foreign countries where we go. When these ships are sold they should be scattered throughout the ports of the United States, and this should be regulated by the United States Shipping Board, and they should do their utmost to see that they are scattered and not all congregated in any one place. Xow as regards a maximum rate, the United States Shipping Board should realize that in the majority of cases the freight rate is paid by the consuming country and not by the exporting country. There is no use in our attempting to handicap our steamers with rate condi- tions that are not applicable to the steamers of other countries coming to our ports. Our ships should be in a position to trade with other nations of the world and not be expected to make way for these foreign ships if we are are going to build up a general shipping business. And this is what the United States must do first. The big proposition to-day is to get into the world trade as other nations have gotten into it, and into competition with the other nations. (Mr. Hurley asked Mr. Franklin for his views on a Federal charter. Mr. Franklin replied that it would be a great deal better to have only one law in the shipping business, and a Federal charter would make it possible to get away from some of the difficulties that the railroads and other corporations have experienced, and if there are Federal laws for this, it would make for a sounder condition, and would enable the Government to deal with the question as a whole.) Mr. HURLEY. Then you recommend a Federal charter? 104 Mr. FRANKLIN. Yes ; that is what we have felt, so that you would have but one Government agency to deal with instead of leaving it open so that it would be necessary to deal with the several State governments. It affords opportunities for every State to get into the business, so that no one State could pass laws not favorable to the other States. But what we are most anxious for is to make it a national movement and not to localize it. As far as we are concerned, we feel that your plan generally is the plan to work from. We are not, however, in favor of the Government director on the board. There is no more reason for this than, if we could buy or lease a house, that someone should live there to see what you are going to do in the premises. Mr. E. L. BOGERT, of the University of Illinois. Mr. Chairman, I am here simply as a visitor. I Avas not able to be here yesterday, and I have not formulated any opinions, nor have I got any instruc- ' tions. I should like to make one suggestion, however, on one point that has been brought up, and that is the sale of these wooden ves- sels. There is undoubtedly a market for wooden vessels in the South American coastwise trade, and if they ar.e to be sold, there isn't any question but what they could be placed there, probably with advantage, and that the development of that South American* coast- wise trade, which up to this time has been sadly neglected, would afford both a market for the ships which probably would not be> marketed for our oAvn coastwise trade, and would also greatly stimulate the trade of those countries, and would lead later to the further development of the ocean trade in which we would share. Mr. HURLEY. Thank you very much. May I state for your in- formation and for the information of the other gentlemen present that we are selling wooden ships every few days. We are selling them as fast as we possibly can, and we allow the flag to be trans- " ferred to any foreign nation. That has been going on for a month. We would like to hear from Mr. E. D. Bowen, of Texas, of the Division of Agriculture, Mississippi Valley Association. Mr. K. D. BOWEN, of Paris, Tex., representing the Division of Agriculture of the Mississippi Valley Association. Mr. Chairman, I don't know of any class of our citizens any more interested in the transportation problem than the agricultural masses. The Ameri- can people have not had a merchant marine for so long that there are many mooted questions to be considered. There is one thing cer- tain, that an American merchant marine can not be successfully maintained by American citizens or by the American Government unless it is upon a basis where it can compete with the foreign- owned merchant marine. I am not an authority on this subject, and I don't know of anyone else engaged in agricultural pursuits who is an authority on the "sub- ject. In fact, I know very few people engaged in any other line of business who are an authority on this subject. A great many people seem to think they are, and give suggestions, some of which would prove disastrous if carried out*. Just about the time that the armistice was signed our ports on the Gulf were jammed with commerce largely of the agricultural class. 1 was requested to come up and urge in securing tonnage. I found 105 everyone apparently trying to do his best. I found great confusion. I happened to be here on the llth of December last, and the record of that hearing ought to be read by every American citizen, as there were some representative exporters, mainly from New York City, in this room, who gave a report of the existing conditions which every American citizen ought to read and know before they advocate the Government turning loose these ships too quickly. We are fortunate in having a Shipping Board that opened its great, big, generous hearts and gave us our first ships that were turned loose for com- merce turned to the Gulf for cotton. I recall the case of one steamer, the Zirkel. That steamer was sent to Galveston at the re- quest of its owners. Before that steamer loaded her cargo and sailed for its destination, the freight rate had changed 3 times. When that ship was first allocated to Galveston for cotton, the freight rate prevailing was $6.25 per hundred pounds. The normal rate is 35 or 40 cents a hundred pounds. Before she had been loading very long the rate changed to $4.75 per hundred pounds, and before she finally sailed the rate was $1.50 per hundred pounds. Now, will you please tell me what company could stand such a change as that fluctuation in that time? I am convinced that normal conditions must return to our country before the ships are turned over to private ownership. I don't believe the ships ought to be owned by the Government in pub- lic commerce. There is great pressure against ship subsidies. I un- derstand that foreign Governments if they did grant ship subsidies have ceased it. I have been reliably informed that they give a sub- sidy all the same in the way of higher charges for the mails and other Government service. I know nothing about that. It has been a long time since I pulled on the lee main brake; I have pulled on it, and I recall the freight conditions that existed then and the very brief experience I had in that line, the experience I have had since then convinced me that we must go slow and return to normal conditions before it would be safe for these ships to be turned over to private parties to operate. I believe they should be owned by private concerns. Our Government should cooperate not only in the merchant marine but in other lines of business, commerce and otherwise, as I happen to know foreign governments do. When the ships are completed and it will take some time to com- plete all of those contracted for and normal conditions are resumed all over the world, I believe then it will take quite a while before pre- war conditions return. That they will return we are all satisfied, but until that time does arrive I don't believe it would be to the interest of our citizenship generally, and especially to the agricultural inter- ests, for the Government to turn these back to private owners ; and when that time does arrive, the ship should be sold in such a manner that all sections of the country would have a fair deal. A sugges- tion has been made by some gentlemen that a cash payment of 2t> per cent should be made. I dare say there are some companies in some sections who could readily afford to pay 100 per cent down. I don't think the terms should be so stiff. I know when the war broke out that a move was started to buy some steamers in 1914 and 1915. None of us knew anything about the steamship business and we soon found we had struck a snag. We wanted to buy those steamers to ship farm products across the water, as they were then badly needed. We 106 agreed upon a price for those steamers from the Gulf ports and arranged the purchase, but our Government, for some reason, some good reason I dare say, would not assure us that the Stars and Stripes would be protected on the seas. So we abandoned this. Other par- ties, perhaps a little more bold, undertook this work and, I have been told, their steamships paid for themselves in one or two trips. I don't know anything about that, but I understand that it is true. Now I am satisfied that down in the Gulf ports there are not very many companies there are a few who are in a position to establish at once and maintain a line of steamships, which must be drawn from the Gulf ports, so as to reach all ports of the world and get return cargoes as well as outgoing cargoes. The reason that we took the interest we did from the farmer's standpoint is the fact that you can't export a lot of grain, a lot of live stock or live-stock products, a lot of cotton, without it creating a vacuum, and the only thing that can fill that vacuum again will be products of a like nature, and the more of these that are exported, the greater market there will be for farm products, whether they are raw or in a finished state; and while the mass of the farmers have not considered this, I know it is a fact from a fairly intelligent stand- point, I mean to say from the standpoint of a fair knowledge of all the intricacies relating to the merchant marine. Those few who have studied it the overwhelming majority of those who have studied it and have discussed it have expressed similar views, but as a body they have taken no general action. Now, Mr. Chairman, in operating these ships and disposing of them, the first consideration should be given to the effect it will have on the agriculture of the United States, from the fact that without agriculture you won't have any ships; that is, you won't have any- thing for the ships to do. The farmers can get along without ships ; they can exist without ships. The reason I say that is because they have done it. It is true it was before the time of Columbus, but they have done it once, but I will be hanged if the ships can get along without the farmers. You have got to have farm products, and those farmers must be cooperated with upon a basis of equity and upon a "tote fair" basis. And that is the way the shipping question should be and must be solved. I am convinced that private ownership at the proper time will be the way to solve it. I notice that quite a number of gentlemen say, " When that time arrives." Now each one has been very careful not to state when that time will arrive. That reminds me of an oil expert down our way. If you wanted to hire his services in order to tell you how much oil there was in the ground and where it was, he would tell where the oil could be found. One man hired him and he looked around and said, "There is oil here." "How far?" "Well, if you go deep enough." " How far?" He wouldn't say how far it would be necessary to go. If a man went 5,000 feet or 10,000 feet and didn't strike oil, this fellow would say, " You didn't go deep enough." It was a very safe proposition. Now, I don't know when the proper time will arrive, and I don't believe there is a man in this room who does know. I believe that possibly some people in this country want the ships turned loose right now, but if they are, they are not in the position to handle them. I don't believe it would be to the interest of our people at large, and I am quite sure it would 107 not be to the interest of the agricultural masses, in which class I have cast my lot for many years past, as the chairman is well aware. But I don't believe that it would be to the interest of any commercial enterprise of this country for the Government to turn loose those ships right away, before normal times return. I thank you. Mr. GREGORY. I Avould like to know what you mean by " turning loose right away." Mr. BOWEN. I mean that this Congress ought not to pass a law right now authorizing the sale of these ships now. Mr. GREGORY. You mean they should be turned over to private operation that is, that the Government instead of selling them ought to charter them or allocate them to private firms ? Mr. BOWEN. Yes, sir. Mr. GREGORY. Or do you mean to have them operated by the Gov- ernment ? Mr. BOWEN. I think that private firms should operate them. Now, Mr. Chairman, I was requested to file a resolution that was adopted by the American Cotton Association recently formed in New Orleans. I was not present at the meeting. That resolution reads as follows : NEW OKLEANS, LA., May 14, 1919. Resolved, As it is correctly reported that the United States Shipping Board is preparing to sell the steamships built by the Emergency Fleet Corporation, we hereby enter our vigorous protest against such action. We consider the present time inopportune for the general sale of these ships. The country is not prepared to absorb them, and their sale now would mean their falling into the hands of unfriendly and possibly alien interests. Provision should be made by the Government before selling these boats to see that all exporters and all United States ports have adequate ship tonnage to take care of their exporters and importers. Gulf and South Atlantic ports have not had sufficient ships to take care of export cotton and other export traffic for many months. Cotton, grain, lumber, and other products are now being offered at Gulf and South Atlantic ports far in excess of ships necessary to move it. Resolved, That the Shipping Board ships should be utilized to build up Ameri- can foreign trade, and allocated on a fair basis to all American ports. The representatives of the cotton States here assembled demand proper recognition of Gulf and South Atlantic ports, and the assignment of ships of standard effi- ciency sufficient to move their foreign commerce. We realize that it has been necessary to assign a certain proportion of Shipping Board steamers to European food relief, and we have patiently refrained from protesting against this. We feel now, however, that it is vital that ships be furnished to move our export cotton still on hand and that steps be taken to assure adequate ships to move next season's crop. While ships have been furnished from time to time by the Shipping Board, this method has been very uncertain and unsatisfactory. They should be allo- cated sufficiently far ahead to assure us in advance that our export requirements will be taken care of. Resolved, That a copy of these resolutions be sent to the Hon. Mr. Edward N. Hurley, chairman of the United States Shipping Board, and to all the Senators and Representatives of the States represented here, with the request that we be given immediate relief. The foregoing resolution was presented by Mr. John M. Parker, of New Orleans, to the cotton convention in session in New Orleans May 14, 1919, and unanimously adopted. R. G. PLEASANT, Chairman. LEON STEINBEEGEE, Secretary. Mr. ROSSETER. Mr. Chairman, the question of subsidy is one of which we are all very gun shy, but nevertheless it is one of so many parts and of such great importance to every pursuit in the 108 United States and to all parts of the country that it is one that must also be somewhat considered. Now, for the purpose of making the record right, I should like to say at this time with respect to the maritime policy of foreign na- tions in connection with Mr. Bowen's statement, that the policy of at least three great nations has been and still is aiding the merchant marine under their respective flags. Of these, probably the most notable is Japan, which has been for years and is still paying an. indirect subsidy of as much as $10,000 a day in support of "regnfar lines, and that this subsidy is aided and directed in such a mamier that its citizens abroad as well as those at home are very considerably aided in the daily operations of their business. Mr. C. E. PLUMMER. Mr. Chairman, for the purpose of prevent- ing any misunderstanding of what the gentleman has just saul,-l think we would like to have it go into the record may I ask him whether or not, say during the 10 years preceding the World War, you found tonnage to ship your goods across ? Mr. BOWEN. Adequate tonnage? Mr. PLUMMER. Yes. Mr. BOWEN. As a rule, yes. Unfortunately it was not American ships. Mr. PLUMMER. That is what I wanted to bring out, that before the war there was tonnage ; there will be tonnage after the war. The question is, Will the tonnage fly the flag of this country ? Mr. ROSSETER. Right. Mr. HURLEY. Mr. Emerson Lucas. I have got it wrong here on my pad. He represents the foreign commerce service of the South- ern Railway lines. [There was no response.] We would like to hear from Mr. E. M. Herr, of the American Manufacturers' and Exporters' Association, New York City. Mr. E. M. HERR, of the American Manufacturers' and Exporters' Association, New York City. Mr. Chairman, I am here from the American Manufacturers' and Exporters' Association, but as our president is also here and is in very much closer touch with these affairs than myself, I would prefer to have you call on him, Mr. George E. Smith, president of the American Manufacturers' and Exporters' Association, New York City. Mr. GEORGE E. SMITH, president of the American Manufacturers' and Exporters' Association, New York City. Mr. Chairman, the manufacturers are interested, of course, in this proposition, not from the standpoint of being experts on shipping. We feel that that is much better in the hands of those thoroughly acquainted with it. but we are interested in the service to these ports and these markets which you are trying to build up, and we are interested in com- petitive rates. The committee on shipping went into the matter quite thoroughly and we reported back to the board of directors, and with your per- mission I will read just briefly these matters which sum up our resolutions. On March 5 the board of directors adopted the following resolu- tion: Be it resolved, That the board of directors of the American Manufacturers' Export Association, after consideration of the problem, recommend the fol- lowing means of utilizing the ships now built and building by the United 109 States Government, to the end that a permanent and available American merchant marine may be established. First. All ships owned by the United States Government, or building or con- tracted for by the Government, should be sold to American ship operators at the earliest moment after a proper basis for such sale can be established. Second. The price at which these ships are sold should not exceed the cost of foreign-built ships of the same class and tonnage. Third. The Government should exercise control to the extent of establishing maximum rates. Fourth. Some guaranty should be given to operators of American ships that under certain conditions and for a limited time they will be reimbursed for losses sustained in handling business at competitive rates where the revenue is not sufficient. On April 2 another board meeting was held, and a resolution was adopted as follows: Resolved, That the board of directors of the American Manufacturers Ex- port Association indorses the general features of the plan advanced by Chair- man Hurley of the Shipping Board lor the operation of the ships now built and building by the United States Government, namely, the sale of these ships to private American operators at prices reflecting the current world market for similar tonnage, the fixation of maximum rates by the Government, and pro- vision for the reimbursement of private operators under certain conditions, and for a limited time for losses sustained in handling business at competitive rates where the revenue is not sufficient to cover operating cost. On May 22, after further consideration of the situation as brought up to date, this resolution was passed: In view of the passing of the emergency requiring the building of ships by the Government in large numbers, the Government should now allow private enterprise and competition to assume this work as contracts and obligations already assumed are fulfilled. EXHIBIT D. RESOLUTIONS ON OPERATION OF AMERICAN MERCHANT MARINE. [Resolution adopted Mar. 5, 1919.] Whereas the Nation's foreign trade can not be successfully developed without an American merchant marine able to transport American products as cheaply, as regularly, and as efficiently as products of other countries are carried. Our naval authorities have declared that both for the training of American seamen, and for the necessary victualing and supplying of the Navy when operating in foreign waters, an auxiliary merchant marine is essential. In fact, the Secretary of the Navy, in a letter to this association, said, " I feel that the proper enlargement, the influence, and the wise use of such a merchant marine is the biggest question now to be solved by the American people." The establishment and maintenance of an American merchant marine is, therefore, a matter in which every citizen of the country is vitally interested. Be it resolved, That the board of directors of the American Manufacturers Export Association, after consideration of the problem, recommend the follow- ing means of utilizing the ships now built and building by the United States Government to the end that a permanent and available American merchant marine may be established. First. All ships owned by the United States Government or building or con- tracted for by the Government, should be sold to American ship operators at the earliest moment after a proper basis for such a sale can be established. NOTE. There is substantial agreement in all well-informed quarters that Government operation of our merchant marine is not desirable. The complexities of ship operation demand an intimacy with changing trade conditions, and the ability to make instant decisions, which would place the Government at a disadvantage in C9mpeting with privately-owned ships of other nations. Chairman Hurley of the Shipping Board has emphatically stated that our merchant marine should be privately operated. Private enterprise and responsibility, alone, will enable us to build up a permanent and profit- able American lleet, in the face of energetic competition. Once private operation is admitted, private ownership follows as a matter of course, to place the entire responsibility upon the operator. 110 Second. The price at which these ships are sold should not exceed the cost of foreign-built ships of the same class and tonnage. NOTE. Private ship operators will naturally not purchase an American ship if they can buy a similar ship for less money from other countries. American owners can not successfully compete with foreign owners if the foreign owner's initial investment is from $300.000 to $500,000 less for each ship operated. Unless this equal basis is provided, American ship operators can not be expected to buy, and the boats will re- main on the Government's hands. Third. The Government should exercise control to the extent of establishing maximum rates. NOTE. Since the ships have been built at national expense, the ships should be operated in a manner to bring the greatest possible return to the nation. Such return is to be found in the stimulation of the nation's foreign trade which means added markets to the manufacturer and farmer, added employment to the workingman and added business .prosperity to the merchant. For proper development of foreign trade, American goods should be carried at the lowest rates consistent with a reasonable return to the private investor in American ships. The Government, therefore, has the right and the duty to fix maximum rates. Fourth. Some guaranty should be given to operators of American ships that under certain conditions and for a limited time they will be reimbursed for losses sustained in handling business at competitive rates where the revenue is not sufficient to cover operating cost. NOTE. Under the La Follette Act and our other existing navigation laws and because of the American wage scale, private ship operators are dubious of their ability to meet the competition of foreign-owned ships when normal conditions return and available cargo space equals or exceeds the cargo offered. Furthermore, our commerce requires the opening of new ocean routes which can hardly be profitable for some time to come. Both these conditions require that the Government make provision to compensate private owners for operating losses sustained through no fault of the operator whenever they occur, until the present disparity in navigation laws here and abroad is altered, and conditions become more favorable to American shipping. [Resolution adopted April 2, 1919.] ResoJrcd, That the board of directors of the American Manufacturers' Export Association indorses the general features of the plan advanced by Chairman Hurley of the Shipping Board for the operation of the ships now built and building by United States Government ; namely, the sale of these ships to pri- vate American operators at prices reflecting the current world market for simi- lar tonnage, the fixation of maximum rates by the Government, and provision for the reimbursement of private operators under certain conditions, and for a limited time for losses sustained in handling business at competitive rates where the revenue is not .sufficient to cover operating cost. [May 22,] Resolved, In view of the passing of the emergency requiring the building of ships by the Government in large numbers the Government should now allow private enterprise and competition to assume this work as contracts and obliga- tions already assumed are fulfilled. Mr. HURLEY. Mr. H. H. Raymond, of the American Steamship Association, New York City. Mr. RAYMOND. Mr. Chairman, my position here to-day is really as a substitute for a member of the committee which the American Steamship Association appointed, of which committee Mr. Franklin was made the chairman. He has so ably and so thoroughly covered this situation and covered the views of the members of that associa- tion, and I unqualifiedly endorse them, that anything I might say would appear superfluous, and I beg to be excused. Mr. HURLEY. Mr. E. S. Goodsell, representing the South American Commission of California, and the island growers of Porto Rico. Mr. GOODSELL. I do not know whether you realize it or not, but I think this is really a very historical conference in the history of the United States. This is the first time that official Washington has recognized the agriculturists of the, United States. [Applause.] I think it is due to the men who are responsible for the calling of this meeting and the agriculturists should show their appreciation of their Ill judgment and acumen in giving us this opportunity to present our views. At the request of the Harrisburg Agricultural Commission; also the growers of perishables on the island of Porto Rico, and of the same bodies of men in the West Indies generally, I want to call the attention of the Shipping Board to two essential policies which I believe the agriculturists are entitled to present for the carrying out of the future policies of construction of ships of the Emergency Fleet Corporation to meet their needs. One of these is speed. Shipping men all know, and I know, be- cause I have a wide experience in shipping, that you can go into every part of the world and find the 9 and 10 knot carriers. Fifty years ago sailing ships were quite acceptable to the trade ; 25 years ago 10-knot ships were considered as suited to the needs of the shippers, but to-day agriculture has become such a great power in tonnage, that we must consider the needs of the agriculturists and the agriculturists do not want any 10-knot vessels. Agricultural products, to be moved profitably and successfully, must be done expeditiously. Therefore, I say the policy of the Shipping Board should be con- fined to building 12-knot ships to meet the needs of the agriculturists and to do just a little better than the tonnage producers in any other part of the world. You may say, " It costs money to build a 12-knot ship." You must remember the turn around of a 12-knot ship partly compensates for the cost of its building. The other essential that I would like to call the attention of the board to is that of refrigeration ; which should be installed in a large number of American ships. Just think of it; Great Britain to-day has 247 ships with 40,000,000 cubic feet of refrigeration, capable of carrying 500,000 tons, gross tons, of frozen meat. 'The Emergency Fleet Corporation has 14, according to its records up to May 1. When I say to you that in California there are where the aver- age crops are produced in the Northwest, as well as California there are ninety million tons of perishables that could be aided very ma- terially by refrigeration in the carrying of these products safely and landing them in sound condition ; in Cuba there are twenty million ; in Porto Rico, thirty million; in the perishables produced nearby the port of Xew York Philadelphia and Boston there are fifteen mil- lions of cubic feet required for the transportation of these perishable products, making a total about 200,000.000 tons which will require refrigeration, you can understand there is a w y ide field afloat for this support of American ships. In addition to this, please remember that the better facilities the agriculturists are given the more encourage- ment they receive to produce. I want to state one incident which took place in Port Rico; because it is a good illustration of w y hat prevails in all parts of the world, particularly the west coast of this country. Port Rico with about 750 mostly Americans engaged in producing these perishables from that island have an average crop of about a million and a half packages. When they put these on the steamer, under the present ar- rangement without refrigeration, on a five-day voyage to New York, their experience has led them to expect that of the total value of the million and a half packages they will receive back, in less dollars than would be the case with refrigeration, about $500,000. That is stag- gering, because if you were producers and had given all your years 112 to producing perishable products, you would hope to get about ninety cents on the dollar, but they only get about sixty cents ; and they have gone along year after year hoping that something would turn up to help them out in the moving of their crops properly. So that, I say one of the greatest benefits which will come from this conference will be the adding of capable carriers to take care of the handling of the perishable products, and which will conserve the waste that has been estimated, so far as the port of New York is con- cerned I am talking about the imports of all countries, of course. There is sufficient waste in one year in the port of New York to feed the entire population of New York for one month. These figures are staggering, and should not continue, and it is our point of view that the policy of the Emergency Fleet Corporation should be such that the producer can be encouraged rather than discouraged as he is under the present conditions. In order that these facts and figures may be before the Emergency Fleet Corporation, I am leaving a rough brief, stating what I have just said. TWO SUGGESTIONS SUBMITTED FOR CONSIDERATION AS DESIRABLE POLICIES TO ADOPT FOR AMERICAN EMERGENCY FLEET STEAMERS. 1. Build only 12-knot freighterers. 2. Equip 100 with insulated refrigerated holds. In shipping, the operator possessing advantages of speed, size, or equip- ment his competitor does not invariably lifts the offering tonnage. There are comparatively few 12 to 14 knot freighterers afloat. Why not adopt as a future policy of the E. F. Co. the building of this class? One Spanish com- pany is doing so. American shipping, outside of lines engaged in banana carrying, possesses not more than a dozen partly equipped insulated refrigerated steamers. In the British mercantile marine are 229 steamers with a refrigerating capac- ity of 45,000,000 cubic feet, equivalent to nearly 500,000 frozen-meat tons. In addition, 23 steamers of over 7,000,000 cubic feet are building. To meet the competition it would appear desirable to equip not less than 100 steamers with insulation space of 100,000 to 200,000 cubic feet in each. These are needed for trade from the Pacific coast, through the Panama Canal, to the Atlantic coast ports, America to South America, America to England, to France, to Italy, and to Spain, with perishables not possible to ship now for lack of these facilities. Return cargoes of perishables can always be lifted from all the above countries, except from England and South America. From New York, Boston, and Philadelphia, in normal years, 15,000,000 cubic feet of apples have gone to England and Scotland. These would be conserved by refrigeration facilities, which are limited. These figures do not include the very large cubic refrigerated tonnage required for the transportation and ex- portation of meat, butter, and eggs from America to England, capable of large expansion with proper shipping facilities. As to the requirements of Porto Rico, Cuba, Florida, and California refrig- erated tonnage to New York : The soil of Porto Rico is suitable only for growing fruit, sugar, and tobacco crops. There are about 750 fruit growers engaged in the industry, mostly Americans. About 500,000 boxes of oranges, 500,000 of grapefruit, and 500,000 of pineapples constitute an average crop, with increasing yield promised each year hereafter if better transportation is promised. Each box measures about 3 cubic feet. There is a heavier movement of fruit from February to September than be- tween September and February. There is, however, at all times abundant other tonnage offering. A weekly service is regularly maintained now on a five-day scnedule to New York. There are other 'irregular sailings from time to time. From records accurately and carefully made up, we find that due to none of the steamers having refrigerated holds, great loss to growers results from the decay which takes place during the five-day voyages to New York. 113 The Porto Rico Fruit Exchange in 1918 shipped in sound condition from San Juan to New York 216,360 boxes of grapefruit of a value of $574,000. On ar- rival the decay was removed, as required by the board of health, and 10,322 box.es (5 per cent) were put on board the same steamer and dumped at sea. The loss to the growers in money was $32,766. The same year, of 87,560 boxes of oranges with a value of $279,000, 13,590 boxes or about one-sixth loss, hav- ing a cash value of $46,604 to the growers. Of 140,346 crates of pineapples valued at $444,426, 14,231 (10 per cent) with a cash value of $40,644 were lost in removing the decay. Thus in the three commodities in one year the ex- change members fruit-growers were out of pocket $114,054, which steamers equipped with refrigerators would have saved. It is estimated that all the Porto Rico fruit growers lost by decay $300,000, in audition to the foregoing, with a depreciation in values as a result of prejudice from decay of $150,000. Hence the fruit-growing interests 'of the island re- spectfully request the Emergency Fleet Corporation to equip forthwith four 12 Q 14 knot steamers of 3,000 to 4,000 tons each, with not less than 100,000 cubic feet in each steamer of insulated space to encourage the fruit growing industry of the island, to conserve waste and thereby supply consumers with these foods at a less cost than will ever be the case with continued depletion of supplies by unnecessary waste. Similarly Cuba needs four steamers, Florida six, and California not less than twelve (7,000 tons gross) to carry the fruit products of each of these im- portant fruit growing sections by waterway commerce to Atlantic ports. Cuba produces about 1,000,000 (4,000,000 cubic feet) boxes of pineapples and perishables annually. Florida ships about 8,000,000 (24,000,000 cubic feet) boxes of citrus fruits yearly. California and the Northwest fruit crops, citrus, deciduous, and apples aggregate annually about 90,000,000 cubic feet. There is a good proportion of the total of 200,000,000 cubic feet of perishables from Cuba, Florida, and California and Atlantic ports awaiting the facilities for shipment by properly constructed, insulated, refrigerated hold space in American emergency fleet steamers. Mr. HURLEY. Mr. P. H. W. Koss, president of the National Marine. Mr. Ross. Mr. Chairman and gentlemen, it gives me very great pleasure indeed to have the honor of addressing a body like this. I do not known that I can add very much to the details of the profes- sion which you yourselves so ably represent, but I think I can, per- haps, be of use in this way. For going on nearly 10 years we have been trying to instill into the minds of the voters of this country, especially the Middle West, that this matter of shipping is something more than an industry per se. That it is a key industry or a pivotal industry on which the total success of every branch of industry in the United States depends. Until the war came there were probably very few men in this coun- try, and probably very few who are now in this room, who ever heard of the words " key industry or pivotal industry," and we found our- selves deprived of dyes and chemicals and certain elements in metals. Not until, certainly, the lack of dyes came did we understand the full significance of the words " key industry or pivotal industry," an in- dustry that did not begin and end with itself, but the lack of which element affected every industry. All the textile industries, wool, silk, cotton, everything you can think of wall reaper was affected by the lack of dyes, so that we then came to realize that there was such a thing as a key industry. Now we are getting into the heads of the voters of the Middle West, upon whom you had to depend for your legislation, that the conduct of the shipping industry is something upon which their own pros- perity depends. The results we have obtained have been satisfying indeed, and I am particularly proud of the fact that in some parts in the city of St. 12103419 8 114 Louis there came the wonderful order a few days ago for 20 ships from the United States Shipping Board. Also, another thing that has caused us satisfaction is that in the Legislature of the State of Missouri they have a nautical training bill introduced, and this would be an eye opener to our forefathers, that 100 years ago they would not have believed, they could not have conceived that in the middle of this great continent a State legislature could endeavor to pass a bill for the training of young men to become efficient on the high seas. If we bear in mind this great fact that shipping is an industry which affects every other industry, then I think we can get the same attitude toward "shipping that the country has so wisely taken toward agricultural interests of the country. You know that the Govern- ment has guaranteed a price of $2.26 per bushel for wheat until June, 1920. That really was a very wise move. Many people thought it was a concession to the farmers' vote. But it was not. The Govern- ment understood perfectly well that the matter of encouraging, of stimulating, agriculture was really a question that would reach far beyond the range of the farmers' operations and affect the country itself at large. The thought that I would like to put before the Shipping Board is that the operation of ships should be made attractive and useful to every grade of citizens in the United States of America, because unless maritime securities are carried by the population at large in the same way as was done in Europe, and the same way as was done with the Liberty loans, because you all know the Liberty loans were not successful until the people got under them ; and so, this has to be made attractive to the masses, so that they will get under it and carry the load and not leave it to the few of you who are responsible for conducting the maritime business of this country. In order to do this certain concessions must be made. I think there are very few people outside of this room, and perhaps not many in this room, that understanding this fact, namely, that the laws of this country constitute American ships, in fixed routes, as common car- riers. Now, the law of Great Britain designates that ships are not necessarily common carriers. You know what that means; the rail- road is a common carrier. They receive certain privileges ; the exer- cise of the right of eminent domain ; lands may be taken from you and me and given to the railroads. They have received these advantages at the expense of the community at large. That does not apply in the shipping business. Under the United States law the very first clause of the shipping act provides that the tramp ship shall not be a common carrier, but that the ships which have a definite route and definite destination are common carriers. Now, mark what the differ- ence means; in 1913, at the first meeting of the National Foreign Trade Council, I recall that Mr. Franklin gave us some wonderful figures; some marvelous figures. He told us that at that time, roughly speaking he made this statement in 1914, and referred to the tonnage of 1913 our last normal year for 1913 there were 25,000 vessels practically carrying the tonnage of the world. Of these 1,555 only were regular-route vessels, 23,455 were tramp ; 23,455 vessels then would be excluded from the privileges of the shipping act and only 1,555 would be subject to it. Isn't that startling? Espe- cially when you consider that we American citizens have to run these 115 tramps. How, then, are we going to make conditions attractive to the average American citizen? We know perfectly well it is legisla- tion which controls conditions under w r hich a business may or may not be profitable; and that we must go to the people of the Middle West, because they constitute 51 per. cent of the voting strength of this country. Now, I would suggest if we are to stimulate agricultural production by any artificial and fixed process, and you must also remember that the profits in the shipbuilding industry have been predicated upon the excess-profits tax then in force, consequently any yard turning out a respectable number of ships would return through the Treasury of the United States Government a very substantial sum which would bring down the cost of these contracts considerably. We believe that all taxes and excess-profits taxes charged to shipbuilders should be remitted by the Government on exactly the same principle as that which the Government recognized and pursued with regard to guar- anteeing a minimum price of $.2.20 a bushel on wheat. In the case of wheat price protection the Government very wisely recognized the fact that the stimulation of agriculture was something far more than merely favoring the farmers. They saw r that the life of the Xation was dependent upon the encouragement of farming during the war. Now, that tltat particular crisis has passed we are facing the fact that American industry will be prostrated unless the key or pivotal industry of shipbuilding and ship operation is firmly established. All things hang on the control of the oceanic transpor- tation of American goods being in American hands. In any event whatever taxes shipyards pay should not go into the general funds of the Government, but should be returned to the Shipping Board to aid in the further development of the shipping business. The business can only be developed if made more than ordinarily profitable at the start because the oceanic jitneys, the tramps of the world, will speedily regulate freight rates. Mr. Franklin showed you that unless you make it strongly interest- ing to men to come in they won't come in at all, but shipping is so fascinating, is so elusive, and so complex experience has proven that if a man goes into it he will hang to it, life or death. I do not know why. So if you once get a large body of men throughout the country to engage in the shipping business yau may not need to be afraid that you are going to create a monopoly or make them permanently rich by any encouragement you give them as an initiative because the freight steamers, the tramp steamers, the ocean jitney, as I said before, of the world, will very speedily reduce the freightages as time goes on, but to get them started you must do for the shipping men what 3 7 ou have done for the farmers you must encourage them to put their money into the enterprise. I did not expect to speak to-day at any length. I thought perhaps I might be allowed to speak tw r o or three minutes, and I think that is all that I have taken up, but I do want to say this that I think the shipping fraternity on the whole can congratulate itself on the atti- tude of the country. I know that eight or nine } 7 ears ago when we started on this work they laughed at us. They used to call me ;i John the Baptist,*' a voice calling out in the wilderness. They said, "' We 116 hope 3 7 ou will live long enough to see your dreams come true." Those who have followed our work since that first convention in 1914, right here in this city, have found that the current of events have justified us in our predictions, and we have done this great thing; we have worked tooth and nail, and will -to the end of our days in getting the appreciation of the country in getting them to appreciate the fact that shipping is as vital to the regularity of employment in the inte- rior and it is the one great thing on which their success or failure depends, and they must participate in shipping, and by every means in their power they must help Mr. Hurley, or if there should be any change in the administration they should come in and give their help to the administration in power, instead of wasting their time attack- ing the personnel or the events which have happened in the past or bewailing this or bewailing that. The mill will not grind with water that has passed beneath it, and it is up to us to be optimistic and industrious and make the shipping people welcome and do every- thing we can for them in every mortal way we can think of. [Ap- plause.] Mr. HURLEY. Mr. Marsh. Mr. MARSH. The National Farmers' Council, that is the union of about three-quarters of a million farmers. Mr. Chairman, the point has been raised by two or three speakers here that the farmers have been subsidized. Now of course that statement was made in order to justify the appeal for subsidy for ships. I would like to challenge any one of these gentlemen here to point out in what way the farmers have been subsidized. On wheat they were getting $1.25 a bushel more when the price of wheat was set. If wheat were an open competitive proposition now we would be paying a great deal more, all of us, probably $3 a bushel. I think Mr. Hoover said $3. There has been no subsidy to farmers, and we very much regret that that statement and some other exposi- tions of economics as applied to economics have been equally coll a - tioned. I want to tell you right now that the farmers don't believe in it, and let me add, gentlemen, that I am deeply grateful for the statements made at this conference, for they will be sufficient to defeat the sale of ships to private companies, I am pretty confident, when we get these facts into every agricultural paper among farm leaders, and that will be in a few days. We are grateful to you. When we write the farmers, the bankers' associations, the Harvester Co., what their opinion is regarding a ship trust they will be pretty nearly unani- mous against it. They will say, " gentlemen, nothing doing." I want to express my appreciation for this discussion, and also that the chair- man has specifically stated that this matter is to go to Congress, and this conference is not to bind the Shipping Board in its policy. Mr. HURLEY. I will say further that the records of this meeting wall be printed and given to each member here so that they may have them as a matter of record. Mr. MARSH. Of course, we appreciate that, but the point is we want this question of policy to go up to the duly elected representa- tives of the people of America and let them decide the policy in the light of all the facts. Now, I am constrained to, at the request of the gentlemen who were here yesterday, two of whom have left for the West, representing the Farmers' National Council, to state that 117 the farmers do not regard farm bureaus as really farm organizations without any detriment or discourtesy to the gentlemen here rep- resented. Mr. HURLEY. Will you define what they do? Mr. MARSH. The farm bureaus are subsidized by the taxes which we pay to provide appropriations for the Department of Agriculture and the farmers don't believe in subsidy to their own organizations any more than they do to the shipping industries of America. We w^ould like to know at what meeting the members of the farm bureaus authorized the gentlemen who spoke yesterday on behalf of the Illinois and the Iowa farm bureaus, to attempt to represent their attitude, if I correctly understood their statements, the farmers of those two States as opposed to the plan which the Farmers' National Council has proposed. (Mr. Marsh reads statement of Mr. Howard of Mar. 23.) The American Society of Equity is one of the strongest farm organizations in Iowa, and they are affiliated with the National Farmers' Council. I note that in passing, because I think it is only fair, and may I also read this letter from Mr. Matthew Wald,' as- sistant to Mr. Gompers. Mr. Wald was also, if I am correctly in- formed, secretary of the committee on reconstruction of the American Federation of Labor. The letter is as follows: It is evident that your association and the American Federation of Labor are in accord in the essential features relating to the American merchant marine. I do not know that this speaks sufficiently for the American Fed- eration of Labor ; it is under date of February 24. Gentlemen, the cat is out of the bag.. The shipping industry wants subsidy. Elihu Root made a splendid speech a few years ago for a ship subsidy and the farmers woke up and you didn't get Ji ship subsidy and you are never going to until the farmers turn up their toes and go into shipping business to make money. Inciden- tally they charge that the farmers are making too much money. If you are not making money why in the name of heavens don't you go into the farming industry and get rich? [Faint applause.] That is a proposition respectfully submitted. Gentlemen, in devious ways Government help has been suggested for the merchant marine. The farmers trust the Government. I am mighty sorry that so many of you gentlemen have such a terrible opinion of your Government. We farmers do not share it. It may be necessary to change both political parties and substitute them by neAv ones, but to return to the status quo. It Avas to herald the birth of a new day, and apparently the farmers realize that the new day is not only born but it is a lusty infant who is not going to any great extent by precedents. The farmers insist that these ships shall remain in the hands of the Government and be democratically operated, probably in some such hands as we suggested to Mr. Hurley, a holding corporation administered alongr the line of the brotherhoods for the railroads, but with this distinction we think the public should have an equal voice in the management. But I want to tell you if they are to run athwart of the organized policy of the farmers, they will be in the same condition as the packers. Swift spent $1,800,000 in advertis- ing last year, but there is a recoil of judgment. I have orders from most of the leading farm journals for articles on the public 1 side 118 versus the packers. A packer attorney was president of the United States Chamber of Commerce. They wanted to turn the Federal Trade Commission out. The farmers went to the bat and the com- mission is still there. Gentlemen, it is a good thing that the agricultural interests were invited here. The point was made the first time, I believe, by this board. I want to tell you right now if this administration and pre- vious administrations had kept in closer touch with farmers of America, both political parties, and the people of America to-day would not be praying to God that they might segregate Bolshevism and keep it within the bounds of Europe. You would have done better to follow the farmers' advice. [Fragments of applause. ] Mr. HURLEY. Mr. J. R. Howard, Iowa Farm Bureau. Mr. HOWARD. I didn't intend to take up any further time at this conference. I have been very much interested in all of the discus- sions. It has been a privilege to hear the talks from the various rep- resentatives here. But since the statement or the authority by which I am here has been somewhat challenged in the way of an intimation that I represent a subsidy of the Department of Agriculture. I wish to say that I absolutely do not. I presume you are all familiar with the farm bureau and the work of the county agents. The State Fed- eration of Farmers, which I represent, has nothing to do with any na- tional funds, tolerates no interference in any way whatever, and refuses even to receive suggestions from any part of the Government. I wish to say that as farmers we consider that one department of this Government especially I might as well name it but I will not has been Avholly functioning for increasing agricultural production. I wish to say on behalf of the farmers that I know of hardly a single instance where they have given us any economical consideration. Hence, we are taking the organization of the farm bureau and cut- ting it apart from the Federal and State funds and taking up the economic side of agriculture ; and it is that organization which I rep- resent here to-da}^ in this meeting and not any subsidized organiza- tion. I say that in the way of correction. Now, I wish to say that I have much in common with the gentleman who has just spoken. I assert positively, gentlemen, that the price fixing of the past two or three years has been absolutely against the agricultural interests of the country. We have been losers. By that price fixing there is no use to go into the reasons or details of this at this meeting, for it is not the function of the meeting but so far as the question before this meeting is concerned, I would like to reiterate in a way some of the things which I said yesterday. First, we as farmers, in Iowa, believe in American markets for American products and American products for American markets as long as the supply and demand runs even. When our products increase, then we want them put into the markets of the world at the lowest possible rates, most expeditiously to our own best advantage, and for that reason we are studying the question of shipping and the merchant marine carefully. I think I made the statement yester- day that because of Government control of railroads we are opposed to the merchant marine. It was stated after I spoke, by a gentle- man from another State, that shipping had been entirely satisfactory in that State under Government control of railroads. I wish to say that I myself am a farmer giving my entire time and attention to 119 farming and feeding of stock. Not in a big way, but I always feed out the grain which I raise on my own farm, and last year I think I shipped some 8 or 10 carloads of stock to the Chicago market, and I want to give you my testimony that our freight service was never as bad as it was last year or has been continually since the Government took control of the railroads. I think any man who has been identi- fied with the live-stock interests of this country will tell you the same thing. That doesn't mean that the Government has had a fair chance in Government operation; we understand all that. It is not necessarily a parallel that because Government control of rail- roads has been unsatisfactory that Government ownership and opera- tion of the merchant marine would be unsatisfactory, but the under- lying principles of Government control of public utilities is not ap- proved by the farmers of the Middle West, as represented in the membership of the organization which I represent, and I am sorry that Mr. Thompson, of the Illinois Agriculture Association, is not present at this morning's meeting, but he authorized me to make a similar statement if occasion demanded en behalf of the farmers of Illinois. Just a further word. It is supposed srenerallv that the farmers' profits have been very great exhbrbitant, in fact. I know it is a very wrong impression. We are not getting wonderfully rich. We are making a fair living, but in considering the income of the aver- age farmer you must remember that our business is like yours. We must make a fair return upon our investment, a fair labor return for ourselves and our families, and we must provide for the upkeep of our plant, and this upkeep means the maintenance- of the fertility of our soil, and that is the big problem to-day, economically, of the American farmers of the corn belt. We are compelled of necessity if production increases to have prices which will enable us in the Middle West to buy fertilizer as the East has bought it, or we will have to submit to the competition of the coolie labor of cheaper agricultural products. Xow as to the question of merchant marine we certainly, as farm- ers, have not arrived at any definite, irrevocable conclusions further than my own sentiments, the sentiments of those whom I represent, which include the economic organizations of Iowa farmers, the Grain Growers' Association, meat producers, and the Wool Growers' Association, as well as the federations, so far as I was able to get a referendum of opinion, and I have several telegrams from other organizations against a Government-owned merchant marine. We are opposed to a subsidized merchant marine also, and I would have been glad to hear the matter of subsidies discussed. I simply make these statements, gentlemen, and take this valuable time in order to make as clear as I can the position which I hold. I thank you. [Applause.] Mr. MARSH. May I apologize for having misunderstood what the gentleman represented and repeat that farm bureaus and county agents are subsidized by the Government. [Cries of " sit down ! "] Mr. CROWLEY. Mr. Chairman, I would like to answer that ; he said the farmers won the war. Tell me how the farmers won the war. The sailors and the ships won the war. Mr. HURLEY. Everybody won it. 120 Mr. CROWLEY. If it wasn't for the sailor and the ships, where would we be to-day ? (Meeting recessed at 1.05 to reconvene at 3. o'clock.) AFTER RECESS. The meeting reconvened at 3.20 o'clock p. m.. Chairman Hurley Mr. HURLEY. We will hear from Mr. F. W. Lincoln, of the Ameri- can Exporters and Importers Association. Mr. F. W. LINCOLN, of the. American Exporters and Importers Association, New York City. Mr. Chairman and gentlemen, I have made no preparation for an academic discussion of this subject. Our committee represents the American Exporters and Importers Asso- ciation. It is comprised of many of the larger and smaller shippers of the country, both export and import, and we have made our sug- gestions in written form at Mr. Hurley's request, entirely from the point of view of the shippers of the country. Many of the members of the Association are the successors of the old merchant firms which formerly sent their cargoes in clipper ships, purchased re- turn cargoes, and sold them on the market here. All this is now changed, but in approaching the -subject from a shipper's point of view it has been our object to make suggestions to enable our shippers to forward products of the manufacturers of the country with the utmost dispatch to such markets as require them. We feel that the Government under a crisis became the owner of a vast fleet. We should deplore continued Government ownership We believe that private ownership is more pliable, that it will work more quickly and that private owners can adjust themselves to for- eign competition more energetically than it is possible under our form of Government. We are therefore desirous that the Govern- ment should dispose of all their fleet as rapidly as is resonable under business conditions. We believe it is utterly impossible for the Gov- ernment to unload their tonnage on private interests within a short period, and that they must perforce continue ownership for some considerable period. I think none of us can say how long that will be necessary. In the meantime those ships must have employment. We are urging that those ships be given employment to establish shipping interests from the west and the east coast on such terms as the law of supply and demand must, perforce, make possible or necessary. The committee drew up a memorandum for the Shipping Board at Mr. Hurley's request in February. We have looked it over recently at the further request of the committee and we have seen no reason to change the suggestions we made at that time. With your permis- sion, Mr. Chairman, I will hand a copy of the memorandum to the re- porter and request that it be incorporated in the record. EXHIBIT F. SHIPPING VIEWS PREPAEED BY THE SPECIAL COMMITTEE OF THE AMERICAN EX- PORTERS AND IMPORTERS ASSOCIATION. 1. We urge the prompt return to private ownership of all American vessels taken over by the Government from private owners during the war. Also, that all vessels now under military and naval control suitable for commercial re- quirements, shall be released for such purposes as quickly as p.ossible. 121 2. We urge that all restrictions shall be at once removed so that tonnage, foreign or American, seeking business, may be chartered for foreign trade in free competition for private requirements, and that all regulations with respect to trading routes, cargo, etc., be forthwith rescinded. 3. We recommend the sale to proved American citizens, firms, or corpora- tions, of all vessels, wooden, iron, or steel, now owned or to be owned by the Government, which are not suitable for commercial purposes or for operation in deep sea business, or required for immediate Government necessities. Ves- sels to be sold on easy terms of payment, to be fixed by the United States Shipping Board, and on a parity of cost at which such vessels could now be built abroad, or less if necessary. 4. We emphatically urge, in view of the enormous financial sacrifices al- ready made through war requirements, and so as to secure as great a saving of the people's money as possible, also to aid our shipyards and protect our labor market, and to create a merchant marine to protect our foreign com- merce that the building program of the Government shall be promptly con- tinued and completed. We strongly urge that no more wooden ships shall be contracted for, or even finished unless the contracts are so far completed that not to finish the work would entail practically a loss of the entire outlay. W T e advise that all steel vessels not completed or still to be built under con- tract, shall be finished or built on the best possible lines suitable for foreign trade, these plans to be settled by experts; and that no vessel, unless already largely finished, shall be less than 8,000 to 10,000 tons dead weight capacity, or of less speed than 10 to 12 knots per hour except a reasonable number of steamers of about 2,500 to 5,000 tons dead weight capacity for requirements in the West Indies, for short voyages, or for shallow-water ports. 5. We recommend that our coastwise trade shall be restricted to American- owned and American-built vessels. 6. We advocate that no vessel holding an American registry shall be allowed to be transferred to a foreign flag without Government permission. 7. We object to the Government relinquishing ownership in vessels taken over during the war, which were partially completed or contracted for at our ship- yards, whether contracts were for foreign or American interests. 8. We urgently advocate 'the immediate establishment by the Government of strictly American lines, fast mail, passenger, and freight lines, with regular sailings from such ports of the United States n>- may be for the best interests of our commerce, to the principal markets of the world, under supervision of the United States Shipping Board. These lines to be handled under liberal Government terms of contract for agreed periods by American firms or cor- porations The management of the vessels allocated, after an agreement has been arrived at between respective parties, to be entirely in the hands of the private firm operating ; the Government, however, to have the right to supervise all freight rates to be charged. Parties operating these lines not to handle foreign tonnage on any of the routes established. Parties handling the lines to have the right, under liberal provisions as to price and time of payment, to take over vessels assigned, so that the Govern- ment would be gradually relieved of ownership. Although we are not advocates of permanent Government ownership, we be- lieve that, due to the world's present shipping condition, and in view of the fact that the United State ; now owns a large fleet and proposes to build addi- tional tonnage, also because we do not think American capital can at present largely invest in shipping, it is essential that the ownership of all vessels un- sold shall be retained by the Government for Mich periods as shall be found necessary to protect our commercial and freight interests. 9. It is well known that American ships are handicapped in securing return cargoes from foreign markets.' Therefore a careful study of this question should be made by the United States Shipping Board, and everything possible done to change such conditions. 10. We urge such alterations in our shipping and navigation laws, and in the so-called La Follette legislation, as will tend to place American shipping on a better footing in competition with foreign countries ; and that we should ar- range with maritime nations a uniform scale of measurement to apply to all steam and sailing tonnage. 11. To permit of the successful development of the American mercantile marine, it is of vital importance that we provide for the establishment in for- 122 eign parts, and particularly thoe on the great ocean trading routes, of fuel depots, whereby our vessels can obtain supplies of American fuel at lowest prices. 12. We advocate that Government vessels not available for or allocated to permanent trade routes, shall be lea> ed or chartered to American individuals, firms, or corporations, on favorable terms which will enable them to be handled successfully for special commercial necessities ; but such ships not to be placed on the loading berths by operators to take general cargo to any ports to which the Government has established a regular line. 13. We ask that henceforth, recognizing the fact that a strong competition between all nations will exist in the carrying trade, a firm, determined Ameri- can policy shall be inaugurated, to the end that rates of freight from this country to foreign markets shall not be again fixed abroad, as was the case be- fore the war, when rates were largely settled in London and Hamburg; and that the manufacturers, producers, farmers, and exporters of our country shall have equal facilities with any other nation in handling our goods abroad and in competing with the world's markets. Mr. STEVENS. We will hear Mr. W. H. Douglass, of the American Exporters and Importers Association, New York City. Mr. W. H. DOUGLASS, of the American Exporters and Importers Association. Mr. Chairman and gentlemen, after four or five gen- tlemen have spoken on this subject, which has been so thoroughly ventilated for the last 30 years, it becomes largely a process of repe- tition which any speaker must take up, no matter what phase of the subject he discusses. I therefore propose to try and get away from that as far as I can, although it isn't possible. There is one thing which we all recognize as now absolutely essential and necessary and that is the demand of the American people that we shall have American lines to all the leading markets of the world. I think that is one thing which we can all agree on, and as we go along I am going to say that I shall let them simply point out the various phases of this subject which we do agree on, all of us, really in a funda- mental way, there is only one or two points where we are at variance. Having established the fact that we want these lines, we then neces- sarily must reach a conclusion as to how we are going to arrive at those lines. By reason of the great war we have acquired this fleet, a fact which we all admit. We also admit that this fleet is .entirelv different from what the railroad problem is. There we had efficient service satisfactory to the American people, and we will all be glad probably when that service is returned to private ownership, but now we have to face a problem that is different. The American Nation has acquired these vessels, and it is an unknown quantity as to whether they can operate them to advantage or whether they can not. But operation under some system has to be arrived at. Per- sonally, it seems to me that there are only two solutions. You have got to sell all these ships and trust to luck that American enterprise and capital will operate without reference to any other considera- tion; or you have got to sell some of those ships, a statement on which we all again agree on, that are npt useful or necessary in the deep-sea trade of the country. There we stand. Everyone on that basis. Now that leaves us with a large amount of shipping, probably by 1920, which must be operated in some way. Eliminating the fact that we don't want to sell those ships, all of them, and I want to say here, gentlemen, frankly, that after 40 years' experience, not in the shipping business, but in watching the shipping interests of the country, I say, 123 without hesitation, that if you cast the die and sell those ships with- out reservation to any man who wishes to buy them, if there is Ameri- can capital to buy them (and I doubt that), I don't believe you are going to get the lines which the American public demand and which they wash. Therefore, unwillingly. I admit, but nevertheless conscientiously, I believe that the Government must retain the title of those ships for a reasonable period. One gentleman this morning stated that none as yet had had the courage to say how long that title should rest with the Government. It is very reasonable to say that no man said that, because no man could properly and wisely decide that point. There- fore I don't see that there was anything in his argument, but I do believe that the retention of that title of those ships, which go on the berth for the different ports of the world, will have to be held by the Government for a period of from 5 to 10 years for the protection of American commerce. I believe that there can be a system devised, and perhaps the brain work will be done in this convention, by which those vessels can be acquired by those who furnish the capital and the facilities and also have the brains and the knowledge to run them, so that those ships can be taken over by purchase of those lines, and gradually, without friction or without trouble, the United States Government can be relieved of the responsibility of handling the tonnage of the country. I think there is no question that that can be worked out, and of course we can not, in a convention of this kind, go into the ways and methods of accomplishing that result. Therefore, I reach this conclusion finally on that point, that we must retain for a period a certain amount of those ships under Government title and that those ships shall then be given over to private operation with the right to take those ships over from time to time under such plan as will be feasible and will be proper, and such plan should be liberal. Do you mean to tell me there is anybody in this country, even the farmer when this Nation has spent some three or four hundred million dollars to acquire this fleet who will take any exception to the expenditure of one or two hundred million dollars to put on the ocean the flag that we haven't seen there for 45 or 50 years ? I don't believe so. I am too good an American citizen to be in any way upset by a statement that any man may make to the contrary. When we come to the large number of vessels which has been re- ferred to that will have to be sold to private owners by reason of the fact that they may not be the type of tonnage and as speedy as will go on the regular lines, then, of course, we will have to adopt an- other system so that the difference of the cost of operation can be maintained. I asked Mr. Franklin a few minutes ago whether he thought that Xo. 6 clause in the statement which he read would cover that point. If it does, gentlemen, I should say we all would be will- ing to adopt that and that the taxation for, say, a certain period of years would be eliminated so far as those ships are concerned. If that is sufficient, let us subscribe to that. If that is not, let us give them something that is sufficient. Those ships must run ; they must be handled by private owners and seek trade all over the world. That is another matter of detail which we can leave to the Shipping Board to investigate and also other points of interest which will bring about those results. 124 There is one thing that I want to mention, however, that was not touched on this morning. That is the question of the division of the allocation of these ships to the different ports of the country. Now, that is something which you have got to do very carefully and very judiciously. If you try to change the trade routes of goods going to the seaports you enter into something that is a dangerous proposi- tion, because you can not change those trade routes. If goods natur- ally flow down the Mississippi River to New Orleans, I take no excep- tion to have the goods shipped from New Orleans. Or, if they flow in any other direction, let them be shipped from there. But just so sure as you try to divide the allocation of the different lines to parts of the country which are not properly equipped to carry the cargoes, gentlemen, you won't have the cargoes, and the result will be that the goods will flow the same way as they do now. Those points on the seaboard which are the natural flow of the goods, and they there- fore will be carried by alien lines. So that you have got to be very careful about that. Further, I do not think it is necessary to allocate these ships even in the way of lines to all the ports of this country. It is not good business. We can have some coastal interchange of those lines. For instance, let a boat start at Boston that is going to load to Buenos Aires or Montevideo, and stop at New York for further cargoes. What is the reason why she doesn't? If she has cargo there, put it on in Boston and let her come to New York. It is a very feasible proposition, so don't let us have any jealous ideas about this matter. Let us sink all these ideas of sections and unite on some plan which will give us what we desire, and it is perfectly feasible and perfectly possible to arrive at these results if we will all be level minded in this matter. When it comes to the question of regulation of rates, I believe again that my friend Mr. Franklin is right. I don't think we ought to fix on these lines maximum or mini- mum rates. I think, however, where the Government has any control at all by reason of ownership, that they should keep their hands entirely off operation and let the operators have an absolutely free hand, simply retaining the right under some cooperation with that line to step in and perhaps not control, but perhaps to supervise rates when it may be necessary for the protection of our commerce not otherwise. There is one danger I would like to point out in reference to that paper and that was the danger of allocating ships in accordance with the purchase of ships. That is, if one large and powerful com- pany with an immense amount of capital should buy 50 or 60 ships, I don't think they should be allocated any number of ships ; I think that ought to be avoided as it might be a dangerous thing. That is only a detail, however, which I mention simply because it attracted my attention when the plan was ready. There is the question of whether these ships can make money or whether they can not. Per- sonally, I see no reason why these various lines established under any plans are not able to make money. Whether that money will be made by the Government or whether it will be made by private individuals is a matter of detail under the arrangements which are entered into. The only thing which prevents our ships from making money is the return voyage. On the outward voyage we all know they can make money. We all know, gentlemen, it is a well-known fact, that 125 for 30 years our commerce has not been carried by alieu snipping at a loss. We all know it has been carried at a very handsome profit, and therefore by reason of the fact that those were alien ships largely they have their other routes, which of course they could combine and didn't lose. Whereas in loading American ships we have to face that contingency. It will be the effort to get those ships back be- cause we haven't the back cargoes and we have to compete with the world to get them and the world is very much better equipped to hold those cargoes than we are by reason of the fact that they have been in those straits many years and they are now through their ramifications, the controllers of the homeward freight. We must not fail to look at that point. Therefore we must guide our ships when they arrange these lines with all the more care, all the more liberality, because they have to face that condition which it will take a number of years to build up ; that is the returning cargo. I might go on at considerable length on these various subjects, but I think we have now got right down to those questions, and it is for Mr. Hurley and his committee or some other authorized committee to decide whether those ships shall be owned and operated by the Government for a series of years or whether they shall be held by the Government for a reasonable period and then under private operation shall be grad- ually absorbed ; and under those plans I am unquestionably in favor of a reasonable retention of title and then have the ships eliminated as fast as possible and taken out of Government hands so at the end of 10 years or whatever period may be decided upon we will have the commerce we need and I believe that with any reasonable con- clusion by Congress we will at last reach a result which most of us had almost lost hope to see, the flag again on the ocean. [Applause.] Mr. ALBRECHT. May I ask Mr. Douglas a question; I would like to ask whether he, in referring to Mr. Franklin's suggestion of the interest to be taken by the various sections of the country in the pur- chase of these ships, has thought that the ships which are brought with the moneys, whether it be of New York, Boston, Philadelphia, New Orleans, etc., will only run from those ports. My thought has always been that regardless of where the ships were owned they were to sail from those ports where there were cargoes. Mr. DOUGLAS. I had no intention of giving a wrong impression. Where you start a line if it is Government owned, it must be char- tered where the Government determines. On any other plan, of course, those ships are free to come and go anywhere they please on the ocean. Mr. HURLEY. Mr. W. M. Jardine, president of the Agricultural College of Kansas: Mr. JARDINE. Mr. Chairman, I am here without instructions from farmers or any other organization of my State. I am very glad to accept the invitation to come down here and get some information on a question that is very vital to Kansas farmers and farmers wherever they may be located in this country. During the war we have increased production in this country about 20 per cent with considerably fewer men on the farms, and we have shipped abroad millions of tons of animal products and cereal prod- ucts, products of the farmers generally. We are probably going to have an open market, a big demand, for the next year or so for about 126 all we can produce with the present man power on the farms. The Government has one branch spending a lot of money w T ith thousands of men employed in increasing agricultural production. It has an- other branch that is framing legislation which will likely pass very soon for the establishment or sending to the land more tillers of the soil. The price of farm products is going to be determined ac- cording to the law of supply and demand. I think we have reached the point in our thinking now where we must regard ourselves no longer isolated as farmers as well as business men, and that we must look to the world at large for our markets. The question, then, is how is the best way, what is the best plan of opening up new mar- kets and from the farmers' point of view of opening up new markets in particular for the things we have to sell. ]\ow, we have three or four big things to sell. In Kansas there are about 175,000,000 bushels of wheat to sell this year. We prob- ably harvested 200,000,000 of wheat and will "consume about 25,000,000 for ourselves and for seed. We are large producers of meat products, whether they be cows, sheep, etc.: we are therefore interested in particularly opening up markets for our animal pro- duction. We are far more interested in opening up markets for our animal products than we are for our cereal products. In my judg- ment we are far more interested, all of us, as Americans in opening up markets for our manufactured products and our animal products than w r e are in opening up markets for raw products. If we can de- velop a large export freight trade or a large market for live-stock products we will be able then to double the capitalization in this country. While a man may not be able to get more than 80 acres of land he may put another 80 in capital and have that much more capital to work on, and he may be able to maintain permanent agri- culture in this country which ought to be considered in any far- reaching plan that might be considered by the Shipping Board or any other governmental agency. We ought to stimulate animal pro- duction in America, and we are all over the country now, but where are we going to sell it after the European countries return to normal ? We weren't doing it before we entered into the war. How are we going to continue to keep open markets for our surplus materials that are now open because of the chaotic position which Europe finds herself in ? Eight here I would like to say that what views I am expressing here are views that I hold as a result of my contact with the farmers of that section of the country. The agricultural college of Kansas lives very close to the farmers of that State. It is probably the closest of any agricultural college of America. We are right close to the grass roots. We had 500 live-stock men in there a week ago. We are close together. While I haven't the authority to speak for them in general, I believe I am voicing the general opinion which they feel at this time. It isn't- clear in my mind what plan would be the best or most practicable to open up new fields for our products. It looks as if we must do some pioneering, and, as I understand it, pioneering is expensive. It is going to be carried on the shoulders of private concerns to open up new fields. They cer- tainly can not expect to make much out of those new fields within the next few years, but any plan adopted should be far-sighted enough 127 to look into the future for not 5 years, but 10, 15, or 20 years. We must go out in the sections we haven't traded in in the past and par- ticularly into the sections that are not producing the goods we offer for sale, but are producing that which we can readily produce here and not he in competition. In other words, if we can develop our trade in the Argentine we are going to have to bring back meat products and cereals probably, or come back empty. Our farmers are afraid of that. The tropical countries generally are using products that Avoirt be in competition. On the other hand, we could develop a market for many of the products that we grow in this country and create a larger market for those products. Now, if these ships are turned over to private ownership, can't we expect them to open up these new lines of trade to expand our business, or is there a relationship that might be worked out between Federal authority and the private owners whereby that could be accomplished to a better end ? I believe if our farmers were to vote on this question they would vote almost unanimously that the Government shouldn't operate the merchant marine and the railroads, and I am not so sure that they would vote to turn them over without any strings on them or without anything to say for the time being at least, until we know where we are. I am pretty sure they would vote against that propo- sition. I am confident they want the merchant marine and railroads to be handled by private individuals. I am opposed to Government operation of any of the railroads or of our merchant marine, for the reason that it stifles initiative. It is the initiative, the inventive genius of America, that has put us ahead of all others with whom we are asso- ciated in this war. You put a man under civil service I have been there and you take from him all the inspiration to develop the ag- gressive and promote our industries. For no other reason than that I am for private ownership and private operation. Don't get this mixed up with private ownership and private operation. I don't know how far to go before we turn them over. I am not an expert. We have our experts in those lines, and we have confidence in them. This conference is fine for us to come here and express our thoughts with the idea that we are all honest in this conference. As one man said, " I hate that man." His companion said, " How long have you known him " ; he says, " Oh, hell, I don't know him or I couldn't hate him." If we get better acquainted with the farmers we are all made up of the same kind of flesh and blood ; we are all human. We are all a little selfish. We are all for ourselves first, and that is right. Naturally, the farmers to-day are asking themselves these two questions : What are we going to bring back in these ships in these bottoms? If we maintain to-day a merchant marine, how much is it going to cost us ? I am one of those who believe we have to subsidize this industry if we are going to be able to compete with countries which have cheaper labor. If we are going to man our ships in a measure with American boys, I hope we do in a large sense. We want them to be paid a good substantial wage ; if we want to do that we have got to subsidize, be- cause we are competing otherwise with unequal conditions. The Welshman, the Scotchman, and the Irishman don't have a big coun- try to develop, to open up wider opportunities for young men, and they need the merchant marine to furnish emplojmient for those men, and we are going to be in competition. The Asiatic people again of 128 course, their standards of living are below ours. If we are going to compete with those people it looks to me as if we must pay the bill and protect them in some sense. I believe if the farmers of the country are opposed to this it is because largely they haven't the facts. You must remember it takes time to get facts out into the country, and you want to remember they are more or less isolated. We had our experi- ence in this war. It took a little longer to arouse enthusiasm out in Kansas than in the Atlantic coast, because the information was later in getting to us. But as soon as the information got there, they were going strong right to the finish. [Applause.] The American farmer, wherever he is, is a pretty good business man, square, fair thinking, and fair in what he wants, fair acting, but we must give him this information. He is without the informa- tion, gentlemen ; it is not being talked out in our country, and we want to be sure that the facts are presented to him absolutely and not given out by some one who is hysterical. This is a time for straight think- ing and not stampeding. You get the facts across to the farmer and show him both sides of this question and show him that we must develop our trade and our manufactories to run at full speed and more of them, which will give labor more wages, that in turn will demand more agricultural products, and then if we can open up these new fields and trades we will be able to put more boys on the land and we will be able to increase our agricultural production. But together with a policy of trying to put more men back on the land to increase our agricultural output and then a short-sighted policy in opening up new fields of trade, it will be bad for agriculture inter- ests. For, unless we do open new fields for our products, we don't want any more men on the land. We have shown what we can do with a small population on the land these last two years. We have shown we can increase the production 20 per cent, and now we are coming back to normal. Obviously, we must have outlets for these products. We simply must have them, and every American, from a sentimental point of view, wants, to have our products carried in American bot- toms. We are asking questions, " How can we do it ? " and " How much are we going to pay for it?" I, for one, believe we must pay, and personally I am quite willing to assume my portion of it. I don't know what our Kansas farmers want to do about this matter, but I believe if they have all the facts they will be liberal minded in their decisions. They are pretty fair-minded people, and I hope you will try to get the facts before them. [Applause.] Mr. HURLEY. Mr. John B. Smull, representing the New York Chamber of Commerce of New York. Mr. Smull, we would like to hear from you. Mr. SMULL. Mr. Hurley, Mr. Ring, and I were sent to this confer- ence by the New York Chamber of Commerce. Mr. Ring presented to the conference yesterday afternoon a resolution which the chamber adopted in January. Neither Mr. Ring nor myself have authority from the chamber other than that contained in those resolutions. There are a few things I would like to say with regard to some of the recommendations proposed by the advocates of Government ownership. If the Shipping Board steamers remain in the custody of the United States Shipping Board, they are United States Govern- ment property, and will be treated as such in all ports of the world. 129 Being United States Government-owned property, they will not be subjected to the laws and rules of foreign lands, which will very largely interfere with the chartering of these vessels with full car- goes of commodities from this country to Europe. Being Govern- ment-owned, no company or foreign citizen can claim for damage or short deliveries of cargo. They can claim, but they can not enforce their claims as the vessels will' not. be subjected to any libeling laws in those countries. A vessel carrying a cargo of grain to New York or Philadelphia from Europe, arriving there in a damaged condi- tion, the consignee of that cargo can not libel the vessel, as it would be the property of the United States Government. A foreign im- porter in chartering, if given the choice between a United States Gov- ernment boat or a boat owned by a private individual, will take the privately owned boat every time. That was very forcibly brought out during the war by the sending of this country of two transports owned by the Peruvian Government. There were also tw r o transports owned by the Argentine Government. One of the Argentine vessels did not comply with the regulations of the Shipping Board, and we endeavored to force that boat to do as a privately owned boat would have done, and it was found the United States Government could not do anything with it. She was owned by the Argentine Government and was free from libel. We could not enforce our claim for nonful- fillment of the charter. That point, I think, should be very carefully considered when discussing the merits of Government ownership or private ownership. It has been stated here that the shipping business during the war was very well run, and the gentlemen saw no reason why the Govern- ment could not go ahead to run the boats of the Government after the war as well as a private corporation could. I want to say that Mr. Hurley, during the war, surrounded himself with the best steam- ship men in the country. There was no prominent steamship man that did not give up his business and sacrifice his personal business for the sake of running the Shipping Board steamers as he would have run them for himself. Now, for the Government to continue to run steamers, it could not expect to get these same men to give up their own business and remain in the Government employment. The majority of them do not care for Government employment. The young men growing up in the business do not want to go into Gov- ernment employment ; they want to get into some private corporation where they can get ahead ; where their initiative and knowledge will get them ahead, and where they can make more money. The Board has endeavored to get more experienced men since the armistice but found it extremely difficult to increase their staff, or to get men with any experience in the steamship business to enter the Shipping Board. Now, there have been some gentlemen who advocated putting off the selling of these vessels until some future time, not to sell them now ; just let the Government run them until the markets are normal. The Government would probably be criticized if it sold the boats to- day at $120 a ton, as it would show an enormous loss over the cost of construction, but if you delay the sale of these vessels until the markets are normal, the market for tonnage will go back to where it was before the war, to $40 or $50 a ton, and you will then have an 12103419 9 130 additional $70 or $80 loss over what you could get to-day. Then, the advocates of Government ownership must bear in mind that there is a possibility of the shipping industry being in the same condition as it was seven or eight years ago. I would not like to say how many steamers were laid up all over the world; but I presume if I said there were 7,500 steamers, I would not be far wrong. I know that there were over 400 steamers laid up in the River Thames, and some were in there for 12 months, owing to lack of cargo, and the low rate of freight which would not allow the owners to pay their running charges, insurance, and labor. There has also been some argument that the Railroad Admini^ni- tion has been well run, and there is no reason why the Government could not run the steamship business as well. A man who makes the claim that the railroads could be run in the same profitable way by the Government, and the steamship business could be run in the same manner, does not understand the steamship business. It is without a doubt the most intricate business in the world. Every day things come up where decisions have to be made immediately. I have been in the business for 25 years and daily questions come up that have no precedent. You have to make up your mind from your experience in the business, and it is only a knowledge of the trade that allows you to come to a conclusion that will work out profitably for the steamship owner. Some men claimed yesterday that they saw no reason why the Government could not run the steamship business as well as a private individual could, but when you consider that the board in a very little while will have over 2,000 steamers they would have to operate through many departments, and it is easily conceivable where they could not run it as well as a private company. A private com- pany with 40 or 50 boats can have one man who can keep track of them ; the allocation of them and the discharging of them, but when it comes to 2,000 boats, you have to have, as you have in the Shipping Board now, four large departments to cover the allocation, the chartering, the loading and discharging, and a certain trade is offered to the board ; there are three or four departments which must be con- sulted before they know what ought to be done and what price to make, and instead of deciding the question as a private owner would decide it, and have to decide it, or lose the business to a foreigner, and decide it in a half hour ; it will take the board three or four days to decide what to do with that ship and what rates to take. [Ap- plause.] Mr. HURLEY. Mr. A. N. Lumas, of the National Grange. Mr. LUMAS. Mr. Chairman and gentlemen, after the statement here yesterday by Mr. Atkinson, the Washington representative of the National Grange, it is useless for me to say anything on this subject, excepting to emphasize, perhaps, for the benefit of those here to-day who were not here yesterday, the organization which we represent. The National Grange is a 53-year-old organization of producing farmers with 600,000 paid members, easily representing twice that number of producing farmers. It is an organization which has delegated representation from subordinate divisions to county granges, to State granges, to National granges, and, conse- quently, what Mr. Atkinson said here yesterday is not a conclusion which has been arrived at in the frequently resorted to methods of questionnaires or anything of that sort, but represents the policy 131 and precedent of years of experience and study of this delegated representation, and consequently we feel that we speak, although without definite instructions on this particular subject, for a very large majority I can emphasize that still more strongly; a large majority of the 600,000 membership of this order. When we say, and when I repeat what Mr. Atkinson said yester- day, that there are some definite principles in this proposition on which the Grange stands; that we do not favor and do not stand for a Government ownership or operation of the merchant marine. We do not stand for a subsidy in any form. Further than that, we hope we can go as far as any man here in the indorsement and the effort to carry out a policy which will give this Nation a merchant marine of the size and character to which it is entitled. I feel that it is an honor to indorse the position which has been taken here by President Sheldon, of the Kansas City Agricultural College. The details as to the trade routes to be developed, the amount of Govern- ment assistance to be furnished and the other matters of that sort are things in which we can agree and go as far as it is possible along those lines. I have only one other thought which I might add here. I do not believe that the American farmer is afraid that the brains and the initiative and the energy of America will fall down in this problem. I do believe that the American farmer is afraid his business will be exploited in the long run in this proposition at the expense of other American businesses. The American farmer has a long recollection, and he remembers that this has happened, in numerous instances in the past in the development of big American businesses; and, conse- quently, we add to the other things we have said on this subject, the statement that we believe in as strong a governmental control of the operation of the merchant marine as it is possible to insist upon. In conclusion, I want to say that the American farmer, through this organization and representation by us, I feel sure, will take the posi- tion that it was not only a hearing, which has been very graciously given at this conference, but in the future conferences and in the fu- ture determinations which are made of this problem. [Applause.] Mr. HURLEY. Are there any other gentlemen here representing farm organizations? I have not all the names, but I would like to hear from them. They have taken so much time and trouble to get here that I am particularly anxious that they should be heard. Mr. F. E. KOBERTSON, of the State College of Agriculture, Ithaca, N". Y. Mr. Chairman. I came here entirely uninstructed, with the re- quest to bring back a report to the Farm Bureau Organization, rep- resenting 65,000 farmers, and I agree with some of the other men here who have mentioned the fact that the farmers do not understand all that is going on in connection with the development of the mer- chant marine in this country and they do want this information, and they want it straight, and I should say that it should be the duty of this body to see to it that the people who live on the farm in the coun- try get this thing straight, so that they will understand it. 'Mr. HURLEY. Mr. Henry Sterling, representing the American Federation of Labor. Mr. STERLING. Mr. Chairman, I desire to thank you for the privi- lege, and through your kindness and courtesy I have enjoyed listen- ing to the discussions on this matter. I felt yesterday morning when 132 you gave your instruction, Mr. Chairman, that you gave us the key word of the whole subject, and that one word was " efficiency." It was a matter of very great regret to me that we seemed to drift away from that word. The question before the house, it seemed to me, was which of the two systems private or Government owned operation would be more efficient. It has not been discussed from that stand- point very much. We have had numerous declarations that Government operation would be less efficient, but my point of regret was that almost imme- diately we drifted away, and all yesterday forenoon we discussed the matter of private profit for the operation of a merchant marine and it was insisted upon that there must be a margin of profit for those who entered the business, and that the Government - owned ships would be inefficient ; and for that reason we must have private owner- ship and the Government must see that they were put under such circumstances as would give them a profit. Now, Mr. Chairman, this word profit is an unfortunate word to use. It carries two distinct meanings ; one of which is entirely com- mendable, and the other may or may not be commendable. If any one of these gentlemen engaged in a business enterprise during the coming year and attended faithfully to its details, and found at the end of the year that the income exceeded the output by about $1,000, there would be some ground for saying that it would be profit; but it is not. It would simply be actual pay for a service rendered to the community. But suppose under the same circumstances he made an excessive income of $50,000 over the output. Then there would be $40,000 or $45,000 that could legitimately be called profit; and where did it come from ? It anticipates more than a fair return for a service rendered to the community; and where did it come from, and how is he entitled to it, and can it be universal ? It was stated here, and it has run through all the discussions, that there must be a private profit. Now, must there be a private profit ? Can there be a private profit? There are about forty millions of us that work in various enterprises in the United States, and it is the usual thing that not 1,000,000 of us less than 1,000,000 of us ever received a dollar of private profit, and the profits that less than a million of us received can not have come from any other source but a reduction from the earnings of those who never have received a dollar of private profit ; and so the claim that was made yesterday, and which is being assumed as correct to-day, falls of its own weight. Such a thing can not exist in so far as we are all concerned, and if it exists in so far as a few are concerned, then we have a vio- lation of the fundamental principles of our Government "equal rights for all and special privileges for none." The word "efficiency," Mr. Chairman, lends itself to a double meaning. There is such a thing as efficiency of service in regard to transportation; promptness, speed, absolute reliability, and all that is considered the essentials of efficient service. But, most of us use the word ordinarily in the sense that we are getting something done cheaper than somebody else could, and one of the speakers yesterday illustrated that by saying that no good business man ought to get^his profits out of the difference between his operation of a certain project and the cost for the Government to operate that same project. 133 That is an interesting view, too, and in that acceptation it is a fact that private enterprise is often much more efficient than the Government. I remember the case of a large city in Vermont which established its own printing office to do its own work. It bought out an old shop and scrapped all the stuff and furnished it anew and went on to do its own printing its own reports and everything that the departments needed. It was not very long before there was scandal attached to it. It was plain to be seen graft being carried on. It was plain to be seen there was a certain amount of inefficiency and a certain amount of mismanagement, and an investigation was ordered. Several of them have been ordered in different years and the investigations turned on this point : Was the city making or losing by doing its own printing? And each time the investigation showed by comparison of class prices that if that work had gone to a private contractor it would have been done for substantially the same figure. Sometimes the investigation showed a little above and sometimes a little below, but it was essentially the same figure. The city was neither making nor losing. Now, was there any gain to anyone on that? Perhaps not, unless you consider it a little deeper. There was this difference, that a private concern would certainly have printed that stuff cheaper and charged the city about the same amount, and where would the difference have gone to ? It would have gone into the hands of a private concern for a limosine or a trip to Europe, and as an actual fact one of the private concerns which had been doing it before and had accumulated quite a large amount of money and a very desirable business the head of it died and left two sons into whose hands it fell and they scattered it in riotous living, and it was only a few years when the shop was scrapped entirely. Now, that is one difference between what a private concern and the Government can do. That is one phase of the disposal of that subject. Another phase is that that difference in cost first was obtained by driving the men harder and paying them less. As to whether there were better methods or not it can not surely be said. Certainly the Government printing had better printing machinery and better facili- ties and more machinery and more facilities. It is fair to say that private OAvnership and management and driving as hard as possible would have done that work for less money, but the money that under the private management went to the one individual concern to waste, under the public management was diffused amongst several hundred laboring people and went to their families for better food and better clothing and better shelter and better education. Through their hands it went to the merchants in the cities and the manufacturers in the cities and, as wages always do, it simply fructified to a certain extent the entire industry of the community. Whether that is the desirable result or not remains to be seen. Now, Mr. Chairman, let us get the facts in our minds that we are here discussing the problem of trans- portation. That is the subject we have before us. We have confined ourselves to one feature or one phase of that subject of transportation, and not the most important phase at that. And I think everyone here, Mr. Chairman, will agree with me when I say that the one essential thing, the one altogether desirable thing, the one superla- tively needed in this country is a complete unification and coordina- 134 tion of all the means of transportation, whether overseas, whether coastal, or whether inland waterways or railroads all ways should function together as one unit and one branch should be of assistance and coordinate with all the other branches just the same as the right hand coordinates, assists, and cooperates with the left. Now, Mr. Chairman, is it possible to bring that desirable result under private ownership ? If it is, then the matter of private owner- ship and public ownership becomes a subject for discussion. But if it is not, Mr. Chairman, and your board is hastily or otherwise dis- posing of the overseas-marine facilities which j ou have created before that final unification and coordination of all the means of transpor- tation takes place, or before the Congress of the United States de- termines that it shall not take place, then, Mr. Chairman, you are proceeding faster than you ought to proceed ; faster than the interest of the farmer ; faster than the interest of the merchant or the shipper or any individual in this country warrants going. And so I say, Mr. Chairman, while I do not want to pronounce judg- ment between public ownership and private ownership at the pres- ent time, I would urge that the Shipping Board retain the ships it has until such a time as Congress makes a final conclusion on this whole matter. Mr. E. L. BOGERT, representing the University of Illinois. Mr. Chairman, may I say a word ? Mr. HURLEY. Certainly. Mr. BOGERT. I would not venture to take your time except I would like to amplify slightly some of the remarks of the last speaker. He got down to fundamentals on conditions and definitions, and, with his permission, I would like to define a little further the definition of " profits " of which he spoke. Profits are not necessarily always a deduction from wages. It is true that sometimes profits are profiteering profits. They are perhaps the result of exploitation of the workers. We have illustrations of that, possibly, in the sweat of industry. But profits as ordinarily defined are the results not merely the wages of superintendents they are the result of a better and a more efficient organization of an industry, so that that industry produces not merely as much for the wage workers as it would with a less efficient manager but it produces a great deal more. In that case the services of the enterpriser, or the interpener, or whatever name you give him, has resulted in a larger production of wealth for society as a whole. It is not, there- fore, to be counted as a deduction of potential wages which might otherwise have gone to labor. Labor has shared equally with all society and with the men who conducted the enterprise. It seems to me that it is essential that this distinction should be made clear, because it has a very definite bearing on the very problems which the last speaker brought up, the question of the desirability of public ownership versus private ownership, not only ownership but management and operation. And while the profits in that sense may be a thoroughly just reward, it may be also the necessary inducement to bring out that high order of efficiency of enterprise, of initiative, which shall give us the best service possible. Mr. HuRLEr. We would like to hear from Mr. M. H. Koyston, rep- resenting the Galveston Chamber of Commerce, Galveston, Tex. 135 Mr. M. H. KOYSTON. Mr. Chairman, I was requested by Mr. Seely to come here in his behalf as a member of the Mississippi Valley Com- mittee. He was unable to be here. Galveston is a port that was built by the United States Govern- ment, created at the behest of the people of the Middle West and the Mississippi Valley. They desired an additional port. The United States Government made the port of Galveston at a cost of $7,000,000. Xow the position of Galveston is the same as that set forth in the resolution by the Mississippi Valley Committee. We are very much interested in the establishment of a merchant marine, but we are, as I understand it, not in favor of Government ownership. Now, there is one idea, that strikes me, should be the cousre pursued, and that is private ownership and operation, but that can only be ac- complished by the sale or transfer of these vessels. Some reference has been made to the loss which will be sustained by the Government in making a sale, but I do not believe that the Shipping Board should be charged with any dereliction of duty or at all criticized in making that sale, because we must remember that these vessels were not built primarily for the establishment of a merchant marine, but that that was a secondary purpose. These boats were contracted for and built, first, to serve during the war. Now they are not going to be sold for anything like what it cost to build them, and I believe that our attitude is that we would like to see the Shipping Board operate these vessels for a while. We believe that Government ownership of rail- roads or Government operation of railroads, has been a failure, and we believe that the operation of these vessels has been largely handi- capped by Government operation of railroads, because we believe that the railroads under Government control have diverted com- modities from their natural course, to the great confusion of shipping matters, and laid an additional burden on this board. There was something said about going in and making a merchant marine that would be lasting. I think in that connection it would be well to consider the idea that when these vessels are sold the Gov- ernment should make some regulation, some provision in the sale whereby those vessels can not be transferred to a foreign Government without the permission of the United States Government. There passed under my observation a transaction during the war where $16,000,000 was offered for nine Spanish vessels, and they were of ancient vintage, the majority of them. The deal was about to be consummated when the Spanish Government produced a law which forbade the transfer of Spanish vessels without the consent of the Government, and took the attitude that with that number of vessels sold to foreigners it would seriously impair the Spanish marine, and they declined to permit the sale. I think if it was good for Spain, then it would be a good policy for this country. I also believe that when they are considering a mercantile marine they will also have to bear in mind marine insurance com pa lies. They are largely foreign controlled. I don't mean by that that there are no American insurance companies, but the foreign marine insur- ance companies can make it very interesting for American-owned vessels, and there are instances of their having done so. But I do not believe that I can add anything to this discussion. I have en- joyed it very much. I feel very lonesome, because I belong to a 136 profession that is modest about discussing matters they know nothing about. I am a lawyer. [Laughter.] Mr. HURLEY. Mr. Frank C. Munson, representing the Munson Steamship Co., of New York City. Mr. FRANK MUNSON. Mr. Chairman and gentlemen, I am here as a member of the committee of the American Steamship's Association, and I have listened with great pleasure and great interest to what has been said by the various speakers. The question which I think deserves the greatest consideration from your Government officials is the lack of proper discrimination of knowledge to the farming members of our great country. The em- phasis laid on this by the leaders, the heads of these granges and farmers' associations proves conclusively that they do not know Avhat is going on in the Shipping Board and in our Houses of Congress re- garding marine legislation. And I think that Mr. Hurley, who has been one of the greatest publicity managers the Government has ever seen, should see to it that these men are posted. [Laughter and ap- plause.] Mr. Hurley's publicity management, by the way, means much to the merchant marine because the country as a whole, those people who read the papers, know more about the needs for steam- ers than they have ever known in our history before. There were two or three matters which I had in mind to speak of. I was a member of the War Trade Board appointed by Mr. Hurley's recommendation in September, 1917, and that board was composed of a group of men who were each experts in a different line of business. That group represented the different Government departments, and around the table where they met every day were discussed the prob- lems of trade. The impression which was left on me from that serv- ice was a very strong one for the need of cooperation between Govern- ment departments. That cooperation is a vital necessity if we are going to go on and expand as a country properly should. We have had some great constructive ideas put forward recently, one by Sec- retary Lane regarding the reclaming of the arid lands of the West That idea carried to fruition, which it probably will be, means more for our returned soldiers, means more for their employment, than any other single proposal that has been brought to the public. We need constructive work here in the Shipping Board in the way of building ships, and Mr. Hurley has on his hands the prob- lem of who shall have charge of that constructive work under the Emergency Fleet Corporation. I would like to recommend that some practical shipbuilder be put in that position of Director Gen- eral of the Emergency Fleet Corporation for 'this peace-time work, Such a man could determine whether some of the ships which are now being constructed had not better be scrapped, and whether the contracts which are in existence could not be canceled with good results for the future of the merchant marine. We need as a country, in order to increase our merchant marine, the good will of every other country in the world, and the coopera- tion between the Shipping Board and the State Department tend- ing toward the realization of that good will will be productive of good results. The cooperation exists, but I speak of it because I believe it can be improved. Norway as a country chartered to England and to the United States about a million and a half, all of which ships had the privi- 137 lege of trading in the war zone, and Norway lost by submarine sinkings during the period of the war over 1,000,000 tons of her ships and a large number of her sailors, because she was a friend of the Allies, and desired to see us win the war. And Norway should be treated with every consideration and every justice regarding ships that were taken over on the ways when we began to enter into the war in 1917. Norway as a friend will help us move forward in the expansion of our commerce. The neutral countries of the world will take our ships and our goods in larger measures than ever be- fore if we continue to have the best relations with them; and those neutral countries of the north which have previously had German foods and bought German supplies are going to send to the United tates and to England for their supplies, and there is a great mar- ket for the farmers and the manufacturers of this country to look forward to in the future. I thank you, gentlemen. Mr. E. C. PLUMMER, of Bath, Me. Mr. Chairman, may I have a word, in view of some of the things that have been said and in order that there may be no misunderstanding of the Shipping Board's course after the war? I want to call the gentlemen's attention to a fact which is not public, because it is something which is known at present only to a few, those who have made it their business to under- stand it. We have in my home city a great company, the Texas Steamship Co., and it is doing business, and it is for their interest to know what is going on abroad. I was talking with one of their officers the other day, and he told me this: "The English builders all are considering contracts to build freighters such as we are building, at $100 per ton." Now that is for future construction. I want to call your attention to the significance of that. If we are going to sell these ships, and in my opinion at least two-thirds of them should be sold and would be disposed of by private corporation, because the other two-thirds are not what we need for the business the time to sell them is now, while the selling is good. That is a fact which we must remember. If we hold on to them too long, the price is going down. I have held on to one or two things too long, and I know what it cost me. Mr. HURLEY. We will hear Mr. J. P. Magill, of Harris-Magill & Co., of New York City. Mr. MAGILL. Mr. Chairman and gentlemen, I am in rather a pe- culiar position. I have been listening with a great deal of attention and interest to what our farmer friends particularly have had to say, and although I am in the steamship business, I am also claiming kin- ship with these gentlemen. I occupy a peculiar position in that respect. In New York State I am an agriculturist; in Pennsylvania I am a farmer, and some of the interests with which I am affiliated are planters in Texas. Now, the difference, as I understand it, between an agriculturist and a farmer and the planter is in the same category as the farmer is that the agriculturalist makes his money in the city and blows it in the country, the farmer makes his money in the country and keeps it there. So in that sense I am in the goat class. I simply mention this in passing, as I want to ex- plain to our friends, who are perhaps not so well posted on the de- velopment of the shipping question as some of us who have been 138 brought in closer contact with it, the struggle of my own people with respect to this question. When this great war broke out our people were cotton growers and exporters in a very large measure. The embargo placed on cotton by this condition left us with enormous committments and nothing to forward them in. We were, as they used to say in the song, "All dressed up with no place to go." And it was a very serious predicament, not only for us, but for the country at large, and particularly for the South, because, if you will remember, at that time, gentlemen, the papers were flooded with requests " Buy a bale of cotton and save the South." They were talking 6-cent cotton, like we had back in the early nineties down there and everybody was so blue that they couldn't see sunrise. And with very good reason, because the outlook was anything but flattering. About this time our Secretary of State came out in an interview in which he stated that Americans had a perfect right to trade in any of the seas, as we were a neutral people. Now, that information was not given under a bushel; it was spread broadcast. Every man in the coun- try interested, I presume, saw that at some time or other. The peo- ple with whom I am associated, however, were the first to act on that. They wired to Washington to ask if the report in the paper was correct, and got an immediate reply confirming in toto the principles as laid down by our State Department. On that assurance, and on that bare assurance, they went into the market and chartered and bought everything that they could get hold of. They stretched themselves just about as wide as they could go without breaking their skin and they started to move cotton abroad. In order to do that they were forced to buy and charter vessels wher- ever they could get them, because if you will remember at that time our overseas tonnage was largely conspicuous by its absence. We went down into the eastern country here, and we bought fore-and- afters, and everybody up there did the hootchy-kootchy because they thought the fool-killer was dead when we went up there and paid the prices we had to pay for those old fore-and-afters. Then they said nobody but crazy people would undertake to send those things across with any kind of cargo. We didn't stop to figure that out; we didn't have time. We brought them down here and started to load cotton in them. Then they told us that we could not " screw " cotton in wooden ships; it was impossible. We screwed it into wooden ships and sent them across, and they made satisfactory voy- ages, most of them. We went out to the Pacific coast and bought steamers there. Some of them were good and some of them were not so good. In our ex- perience we lost seven vessels through perils of war, torpedoes, mines, etc. I am thankful to the good Lord to say we never lost one through a marine accident. As an illustration for the benefit of these gentlemen particularly, because we shipping men have been brought in contact with it, and it is no news to us when you strike an instance of the terrific apprecia- tion in those properties as the result of the enormous demand and the very limited supply. In January, 1915, we had offered to us for sale a steamer on the Pacific coast, formerly known as the Algoa. My friend here remembers that she dragged an anchor there in the 139 bay for about seven years because there was. nothing doing. She was offered to us she was about 11,000 tons berthfor $300,000, and we very promptly declined it because we thought it was too much. We couldn't see our way out. Then in December, 1916, we bought that same steamer and gave $1,450,000 for her. Now, gentlemen, we are glad I am glad to have the opportunity of talking to some of you gentlemen, especially those of you who are open-minded ^and I know from personal contact and observation that the farmer in the last analysis is open-minded, and he is the backbone and sinew of the country after all, and we want him to know just exactly what we have been up against here. A great many stories have gone abroad about the enormous profits made by these profiteers in the East, and all that kind of thing. They say : " If ou buy a ship to-day and you put a million-dollar cargo in it. There is almost a million dollars profit on the voyage." They for- get that we have our banking friends to contend with ; we have got our insurance friends to contend with ; we have our labor friends to satisfy; the coal merchant must get his out of it; and our humble but persistent stevedore is a constant blessing. It is not all beer and skittles, gentlemen, by any manner of means. Notwithstanding that, many of us persevered and went through, and when this corporation was formed it was a godsend, not only to us, but to the world at large, because it was the first ray of hope. It was the big way out, and I hope that 'all of you gentlemen will get the opportunity, or take the opportunity, to go over to Hog Island to-morrow and see that wonderful development there. If that don't convince you, the Lord help your soul; you are past redemption. If that don't show to you that this organization is a live one, I don't know what will. But to get back to the subject, now this shipping business, as I said before, is not all beer and skittles. You don't put in a nickel in the slot and take out a $2 bill every time; you are just as liable to put in a $2 bill and take out a nickel. I know^that by experience, and it cost me a lot to find it out and I am not the only one. The expense of operation in the steamship business is a constantly increasing thing, and it is bound to increase. I can't see where there is going to be any material reduction in operating costs, which after all is the bulk of the proposition, because we can't pay billion-dollar interest with million-dollar incomes, gentlemen. There is no getting away from that. It seems like a fundamental proposition to me. Now, the shipping business is just like blacksmithing or merchandising or any other form of business. A man goes into it and invests his money in it because he thinks he sees a chance to make a reasonable profit, or a profit that will bear a proper relation as between his investment in the risk he assumes to make a reasonable return on that investment. And I know of no business in the world that is as highly technical and as highly specialized and in which you can as readily lose everything you have as in this business. I am sure that these gentlemen here who are in the business will vouch for that in toto. Now, if that is a fact, this question of the distribution of this fleet of ours, which cost us, we are led to suppose, such an enormous sum of money why, gentlemen, it is not such an enormous sum of money. We have gotten away from the spirit of billion dollars ; we are thinking now in hemispheres. We are not thinking of locali- 140 ties and dollars and cents ; we are too big for that. It is not such a big investment after all when you figure the enormous extent of this A few gentlemen over here a few years ago organized a million and a quarter corporation, and they didn't ask the Government or anybody else for any part of the financing. They took it out of their own jeans, so that the million-dollar idea is absolutely nothing terri- fying. It is only a matter of relative values. If we can get that fixed in our minds the rest of it don't scare us. But to operate ships re- quires, first, of course, capital. You can not operate them on any- thing else. In order to properly safeguard that capital you, before going into any business, will endeavor to find out what the risk is and what the chances are of getting out alive with it. Now if the Government, as I see it and I am open-minded on the question we will play it anyway, we are not seeking charity ; we are willing to take our end of the burden and are prepared to take it, but my humble opinion of the proposition is that if this fleet were to be disposed of immediately it would cause a very great confusion, in that many people have gone into the shipping business, and their policy to-day I find, in the East at least, is that where a market looks pretty good everybody jumps into it. Somebody will come along and tell you that trans- Atlantic is a good place to berth a boat for. About the time you get your lines fixed to berth a boat there, four or five other boats are in there. Then somebody suggests Antwerp, Rot- terdam, Scandinavia, and the Mediterranean, and so it goes they jump from one port into another. Now, in order to obviate that and to afford a reasonable means for protection to the investor, we have got to get our forces lined up so that we can systematically proceed with regular lines and regular service. We must not only run lines from our own United States ports to the ports of the world, but we must take a leaf out of the old book and hurry from Africa to Asia, from Asia to Australia, from Australia to the Pacific, from there to wherever the business is. We must get away from the thought after all that this is a limited busi- ness. The fact remains, however, that in the continental business, or in the European business, the bulk of the business is carried by the regular lines, the freight and passenger vessels, vessels that are equipped to carry both. I don't believe there is any shipping man who has any idea in the world that in the last analysis a tramp ship has any more sho\v than a snoAvball, berthed alongside of a steamer of a well-established line, well-organized and commanding low in- surance and all of the things that go to a good organization. So that I believe we, in order to get a fair start, must have a sort of a physi- cal division of the business. Now, I am not looking for any monopo- lies at all, because I am convinced absolutely that monopoly and water-born transportation are in no way related. I don't see how it is possible. It never has been done at least successfully. But we must have a controlling hand, or mind, that will keep us out of these rough waters, so that we won't be cutting one another's throats while the other fellow, who is well organized and is controlled by several compact, big organizations in Europe, while he stands back with 141 an expression on his face that I can only liken to the old caricature of the smile on the face of the tiger that you are familiar with in years gone by he will just eat us up. This is not child's play; it is not a business that any man or men can go into without knowing definitely every detail of that business, unless they want to lose everything they have on earth, including their reputations as busi- ness men. In view of this fact I believe that the control of the vessels might better be chartered, if you please, to approved American operators on, say, bare boat form, with whatever modifications necessary to prop- erly safeguard the Government's interest. Let the ultimate dispo- sition of these vessels rest with the future and with what development those handling them are able to show. We don't need to be distressed about what is going to happen to these things 10 years from now. We may all be dead then, and somebody else will have the problem to work out. But let us take it reasonably and decently, a day at a time, but let us get started with as little opportunity to be trimmed by the other fellow as we possibly can. I believe firmly that if rea- sonable supervision, not in the shape of rates neither maximum nor minimum rates, gentlemen, are practical; it is unthinkable in this business. Any shipping man, any man that is familiar with the problem: any of these traffic men who are handling these proposi- tions I mean traffic men for industrial corporations who have studied these things will agree with me that maximum rates are impossible, because you may have a line of steamers running from A to B, and from B to D; A to B may be doing right well; the other line ma} 7 be losing right along. Now suppose somebody comes along and says: " Well, the rates between the first two points are too high." Well, you can sit down and argue until you are black in the face, but the evidence is all against you ; you are making a profit that may be excessive. They cut those rates and you hold the bag on the other end of it. You can't regulate these rates, gentlemen. They have got to regulate themselves. And they will. For these reasons, I am in favor at least my present opinion is as I said before I am open-minded and not bigoted on the question, my present opinion is that we can better get this matter established if the Government retains its interest, because the very fact of itself is a warning to our foreign friends that they are not bucking you and me. There are plenty of those big organizations on the other side not plenty of them, but probably five that control the business, but who are enor- mously capitalized and would not hesitate, it has always been their policy and is recognized as ethical to use whatever means are avail- able, I mean in fairness through rebates or whatever other methods they may deem right to get the price that they are entitled to. But if they know that they are bucking the United States Government, they know that it is a pretty long purse to pull against. Now, I think its moral effect, if nothing else, would have a beneficient effect, and for that reason I am in favor, for the moment at least, of the Government retaining these vessels under some such idea as I have suggested, bare-boat form; that you will eliminate very largely the extravagance in management and operation of the vessels by the Government. Any man who has handled these Government vessels after handling his own vessels will tell you with all candor and 142 honesty that they are very wasteful. If you take these boats on bare boat; that is, we furnish crews and everything else, the Government simply turns the boat over to us, for which we pay them a reasonable amount, safeguarding their interests, if you please, as well as our own, and giving us a chance to spread with the moral support of the United States Government back of us, I think we have a pretty good start, and without that I am from Missouri. I ana not closed on it, but I would like to be shown. Mr. HURLEY. Before we adjourn, gentlemen, I would like to hear from Mr. John L. Hamilton, American Bankers' Association, of Co- lumbus, Ohio, for a few minutes. Then we will adjourn after that, unless there is some other gentleman who would like to talk. Mr. HAMILTON. Mr. Chairman, I don't want to take much of your time, but I have listened with a great deal of interest to the discus- sions that have taken place in this meeting. It seems to me that we are not very far apart. There seems to be a general opinion that these ships should be privately owned. There is a general opinion that there should be some form of Federal control. I agree with both of these propositions. I think we have in this board here the foundation for an organization that can meet this situation. We have, as you know, the Federal Reserve Banking System which has proven to be a success. The Federal reserve banking organization is nothing more or less than a privately owned enterprise operating under Federal control. We have in addition to that an organization for the development of the agricultural interests of the United States, namely, the farm land bank. That is nothing more or less than an organization privately owned and its aim is to assist the farmers in developing the agricultural interests of the United States. We have here brought together all the different interests of the United States: Agriculture, manufacturing, mining, labor, financial, and shiping interests. We must get together on some form of an organiza- tion which will protect the interests of each of this element. If you disturb one of these elements you disturb the whole business element of the United States. It makes no difference which end of the prop- osition you take hold of. Now I will suggest, not a definite plan, but a plan drawn out of the meeting here to-day, that all shipping in- terests be chartered under a Federal statute ; that this Shipping Board be the Federal reserve board for such an organization and direct its management, direct the management of its institution. I recom- mend still further that the United States be divided into 12 zones, contiguous with the 12 zones of the Federal reserve bank, for the reason that this whole proposition will fail unless you have back of it some means of extending credit to the would-be purchasers of American products, and the best way to obtain that credit is for the interests of the Federal reserve districts through their banking facilities be able to extend a credit to the purchasers of American products. I believe a plan of that kind can be worked out. I be- lieve the different interests can be represented in such an organiza- tion and I believe that the Shipping Board should be the controlling factor in that organization the same as the Federal Reserve Board is the controlling factor in the banking organization. [Applause.] Mr. TAYLOR. May I ask a question before closing? Mr. Smull brought up the question of the right of recoveries as against the 143 United States Government as the Shipping Board Fleet. Is that correct ? Are not the titles of those vessels vested in the corporation ? Mr. HURLEY. The Emergency Fleet Corporation has the full authority to control that. In behalf of the Shipping Board I desire to thank you gentlemen for coming here, and the meeting stands adjourned. Mr. MUNSON-. I just want to say a word of appreciation. Every one of us has welcomed the soldier home from Europe but most of us don't realize the degree of criticism and lack of appreciation that has been the lot of the members of the Shipping Board. I wanted to say a word if I may about Mr. Hurley's unselfish devotion and about Mr. Steven's work and the other members of the board work- ing early and late in their country's interest in the building of our merchant marine. I want to propose a vote of appreciation for what they have done to win the war and to move that we rise in voting our appreciation and thanks for what they have done. (All those present rose.) Mr. MARSH. May I ask you two questions for information? I think two points were not brought out here. Mr. Charles M. Schwab said , "Ships can't be built without money in war times. It takes a great deal of money. Undoubtedly, after the war is over the ships we are paying for now will pay for themselves many times over." Now, did Mr. Schwab mean that those ships could be made to do this under Government ownership, do you think? Mr. HURLEY. I don't know. Mr. MARSH. May I ask you the second question ? I have read with great care your pamphlet on the world's shipping facilities. In your judgment, in view of the enormous amount of tonnage now con- structed, what proportion of the contemplated shipbuilding program is essential in the next five years ? Mr. HURLEY. I couldn't give you an answer offhand. I don't re- member all those figures. Mr. MARSH. Will you put that in the records that we might have it? Mr. HURLEY. Certainly, I will be delighted to do so. The following telegram from Frank M. Myers, secretary, Farmers Grain Dealers Association of Iowa, was requested to be incorporated in the records : Farmers of Iowa are of opinion that granting of subsidies to promote merchant marine would be inadvisable and impractical. A merchant marine would handle cargoes both from and to the United States and deal with countries exporting agricultural products. Large imports of agricultural products into United States woud be an immense handicap to American agriculture. FARMEKS GRAIN DEALERS ASSOCIATION OF IOWA, FRANK M. MEYERS, Secretary. Meeting adjourned at 5.10 o'clock p. m. RETURN TO the circulation desk of any University of California Library or to the NORTHERN REGIONAL LIBRARY FACILITY Bldg. 400, Richmond Field Station University of California Richmond, CA 94804-4698 ALL BOOKS MAY BE RECALLED AFTER 7 DAYS 2-month loans may be renewed by callinq (415)642-6233 1-year loans may be recharged by bringing books to NRLF Renewals and recharges may be made 4 days prior to due date DUE AS STAMPED BELOW AUG111989 APR 5 1989 Santa Cruz J!tny SENT ON RJ JUL 1 3 1995 U. C. BERKELEY ~ 736056 cu UNIVERSITY OF CALIFORNIA LIBRARY