Panama Canal from the west coast to the east coast was 6,723,000 tons.

Mr. SIROVICH. Is that lumber included?

Chairman DAVIS. Yes, that includes lumber. I am going first to give the totals. Now, the total cargo tons the same year, westbound, was 2,170,697, less than a third, you notice. Now, let us divide it up; we will leave lumber out of the picture. The total cargo movement eastbound was 5,164,000 and the total cargo movement other than lumber, westbound, was 2,140,834 tons. Now, you see that is considerably more than twice as much general cargo moving eastbound as moving westbound that year. You can take them all and they run about the same way, even if you leave lumber out of the picture. Mr. LEHLBACH. Does not that include the oil that goes in tankers? Chairman DAVIS. No; my information is that practically all of that oil is carried in industrial steamers, is it not?

Mr. MADIGAN. Yes, sir; that includes the total tonnage and oil [indicating]; this excludes oil [indicating].

Mr. LEHLBACH. I have the figures for the months of July, August, and September, 1931. The westbound tonnage for those months, which does not include lumber, is 345,442; the eastbound tonnage, excluding lumber, is 390,077 tons. It seems practically to balance; the east and westbound transportation of merchandise, exclusive of lumber, substantially balance.

Chairman DAVIS. Exclusive of lumber and petroleum.

Mr. LEHLBACH. Yes. These are figures furnished by the Dutton Co.

Chairman DAVIS. As you say, they practically balance, according to these figures for the last three months. But even then there was a little excess of the eastbound over westbound.

Mr. LEHLBACH. Yes.

Chairman DAVIS. Now, Mr. Madigan of the Shipping Board has just furnished me another table. We had asked for these tables to be prepared, I will state to the committee, and this is a table that leaves out the petroleum or, rather, it breaks it down showing the general cargo, petroleum and products, and the lumber. Now, let us take 1925. I have already given the total figures, 6,700,000 eastbound, and 2,134,000 westbound. That is everything, including lumber and petroleum. Now, let us take commodities other than lumber and petroleum.

Mr. SIROVICH. For the same year?

Chairman DAVIS. For 1925. The eastbound was 1,005,570 tons; westbound, it is 2,104,280 tons. That of course, shows that a large part of the movement shown in those other figures is petroleum. Mr. LEHLBACH. Let us have it for 1932.

Mr. LAMNECK. That just upsets it from what it was originally. Chairman DAVIS. While we are breaking them up, at the same time it is the whole movement.

Mr. LELHBACH. But the oil is carried in tankers, which do not carry any other character of cargo.

Mr. JOHNSON. I think you suggest a very interesting point there, that I would like to have some clarification of and it is suggested Mr. Henry might give us some reason why there is not such a contest for the freight plying west.

Mr. LEHLBACH. Mr. Henry is as competent to testify on that subject as anybody in the room.

Chairman DAVIS. Yes.

Mr. LEHLBACH. Mr. Henry is a traffic man of long experience.

STATEMENT OF SIDNEY HENRY, OF EDWARD P. FARLEY & CO., 90 BROAD STREET, NEW YORK, AND OF THE J. B. INDERRIEDDER CO., 514 WEST ERIE STREET, CHICAGO, ILL.

Chairman DAVIS. How about that, Mr. Henry? In developing this question under discussion, we will first take the total movement. The petroleum is carried in tankers, is it not?

Mr. HENRY. Yes, sir.

Chairman DAVIS. Most of those tankers are proprietary steamers, are they not?

Mr. HENRY. Most of them are; yes. There are quite a few that are privately owned, but the great majority are owned by the oil. companies.

Chairman DAVIS. And they are not members of the conference,. are they?

Mr. HENRY. No, sir.

Chairman DAVIS. In other words, so far as petroleum is concerned, that does not enter into the general picture?

Mr. HENRY. Not at all.

Chairman DAVIS. That is the reason we have not been talking. about petroleum.

Mr. HENRY. That is right.

Chairman DAVIS. That is the reason I overlooked it.

Mr. HENRY. The movement of petroleum is very large; it is probably the largest single item. It moves entirely in tank ships that can not carry any general cargo and it does not in any way affect the general transportation between the coasts.

Chairman DAVIS. Now, how about petroleum products?

Mr. HENRY. The bulk of those move in tankers. There is a relatively small movement in common carriers of lubricating oil and other petroleum products that are moved in barrels, or other than in bulk. Chairman DAVIS. Now, is all of the petroleum movement eastbound?

Mr. HENRY. No. The great bulk of it is, but there is some movement of lubricating oils west.

Chairman DAVIS. That is Pennsylvania oil?

Mr. HENRY. I imagine, largely.

Chairman DAVIS. Now, how about the Gulf petroleum; none of that goes west?

Mr. HENRY. Not in bulk; no, sir. California oil is too cheap to permit of eastern oils to come in there.

Chairman DAVIS. Now let us see about these figures excluding petroleum from consideration.

Mr. HENRY. If you will permit me, I think there is one element that has not been brought out in the testimony. When you speak of tons of cargo moving, you undoubtedly visualize weight tons.

The move

ment of ships is largely a matter of measurement tons, so that you might move the same weight tons both ways and still have the ship full one way and only half-full the other way. Now, the normal.

But what they are naturally afraid of-and they have every reason to be, from the past experience is that this conference is not going to last very much longer; none of them have-and, as soon as the conference breaks, the rates become open and everybody cuts the rates and makes any deal he can with the shipper, and they all lose heavily in cash. I do not mean profits, or interest, or depreciation, and then they go along that way until they have lost so much money that they just see the end in sight, and then they get together and make the best compromise they can. They have gone through that cycle four times now, since this trade started, after the war.

Chairman DAVIS. Referring to this lumber situation, it is shown that the greater percentage of the lumber is carried in the steamers owned by or controlled by member companies proprietary steamers. This bill does not purport and no effort is made and perhaps could not be made to regulate that, could there?

Mr. HENRY. Well, as I understood the testimony of the last witness, it was that, of the so-called lumber industrial carriers, 75 per cent of their lumber was not their own. Whether that is accurate, or not, I do not know.

Chairman DAVIS. He said at the present time.

Mr. HENRY. Yes; at the present time; but there is a very large amount of lumber that is carried by the common carriers. While I would not be sure of the figures, my judgment would be there is much more lumber carried by the common than there is by the lumber industrial carriers.

Mr. SIROVICH. The testimony showed the reverse.

Chairman DAVIS. The testimony from one of the witnesses is that 58 per cent of the lumber has been carried in industrial steamers; that is, the lumber of the owners of the steamers.

Mr. HENRY. That was for what period?

Chairman DAVIS. I forget what period was given.

Mr. HENRY. I think in approaching the subject, if you just assume for the moment that, roughly, half is carried each way, it might be a reasonable picture of the situation.

Mr. LEHLBACH. At that point, Mr. Chairman, may I clarify something? When you speak of a certain proportion of lumber being carried by industrial steamers, do you include among the industrial steamers those who are privately owned or who carry the commodities of their owners, including steel as well as lumber; or are you limiting it merely to lumber industrial carriers?

Mr. HENRY. I am limiting it entirely to lumber industrial carriers. Mr. LEHLBACH. Then as far as that is concerned, your steel industrial carriers you treat as common carriers?

Mr. HENRY. As far as lumber is concerned, they are common carriers.

Chairman DAVIS. There is one question I had in mind to get the interpretation of some of you on. You are familiar with this bill, Mr. Henry?

Mr. HENRY. Yes, sir.

Chairman DAVIS. I will ask you whether or not, in your opinion, this regulates the transportation of cargo between two ports on the Atlantic, or two ports on the Pacific, by a steamer that is engaged in the intercoastal commerce? Doesn't it do that? Doesn't it authorize that?

Chairman DAVIS. Now, as bearing upon this subject, has there been more difficulty, friction, and inability to agree upon rates and alleged rate cutting and rebates on the eastbound or westbound traffic?

Mr. HENRY. My recollection is that the cause of the breakdown of the first conference was due to the westbound movement. I believe the last two conferences that broke down were more the result of the lumber than of the westbound movement; but either one is likely, depending on the general condition of the trade at the time, to produce the same result.

Chairman DAVIS. Now, one controversy and inability to reach a conference agreement was primarily due to the westbound situation, did you say?

Mr. HENRY. I think that caused the first breakdown of the original conference.

Chairman DAVIS. When was that?

Mr. HENRY. That was 1921, I think.

Chairman DAVIS. But since that time the chief difficulty has been over the lumber situation-since that year?

Mr. HENRY. Well, I would think probably so; but I think the economics of the situation are such that your conferences are bound to break down, whatever the primary cause of each particular one is, for this reason: You have available for operation in this trade a very large number of ships that have no other outlet. Now, the only prospect I see that you could hope for the maintenance of a conference would be where no one is making any money, but nobody is losing so much that he is likely to go into bankruptcy in the immediate future. If conditions get better, so that there is any prospect of of making more than operating expenses, then some one else is coming into the trade, because the ships are there and they can be bought at nominal prices and on very long payments.

Chairman DAVIS. Well, one of the difficulties now and for the past two or three years has been, has it not, that there are too many ships in this trade, just as there are too many in every trade throughout the world, practically?

Mr. HENRY. That is right. Not only too many in the trade, but too many more potentially in the trade. If all of the ships that were available under the American flag were in the trade to-day, even if there were too many, there would be some hope for the trade; but if there are 100 ships or 50 ships that are suitable to go in the trade, if conditions ever get so that anybody will take in a dollar for the dollar that goes out, then people will come in the trade and that will break down the situation.

Chairman DAVIS. I know; but I understood you people were complaining about a situation and not a prospect. Is it the thought that you are guarding against future competition or undertaking to remedy past evils that this legislation is sought?

Mr. HENRY. Well, I should think both right at the moment. The conference is in effect now and I think all of the witnesses have testified that the rates are in general reasonable; that while they are not making money, nobody else is making money to-day. I do not think their interest is to try to raise rates as they exist to-day, or to hope to make money to-day, but that with the present rates and a better volume of business the trade on the whole will come somewhere near breaking even.

But what they are naturally afraid of—and they have every reason to be, from the past experience is that this conference is not going to last very much longer; none of them have-and, as soon as the con-ference breaks, the rates become open and everybody cuts the rates and makes any deal he can with the shipper, and they all lose heavily in cash. I do not mean profits, or interest, or depreciation, and then they go along that way until they have lost so much money that they just see the end in sight, and then they get together and make the best compromise they can. They have gone through that cycle four times now, since this trade started, after the war.

Chairman DAVIS. Referring to this lumber situation, it is shown that the greater percentage of the lumber is carried in the steamers owned by or controlled by member companies-proprietary steamers. This bill does not purport and no effort is made and perhaps could not be made to regulate that, could there?

Mr. HENRY. Well, as I understood the testimony of the last witness, it was that, of the so-called lumber industrial carriers, 75 per cent of their lumber was not their own. Whether that is accurate, or not, I do not know.

Chairman DAVIS. He said at the present time.

Mr. HENRY. Yes; at the present time; but there is a very largeamount of lumber that is carried by the common carriers. While I would not be sure of the figures, my judgment would be there is much more lumber carried by the common than there is by the lumber industrial carriers.

Mr. SIROVICH. The testimony showed the reverse.

Chairman DAVIS. The testimony from one of the witnesses is that 58 per cent of the lumber has been carried in industrial steamers; that is, the lumber of the owners of the steamers.

Mr. HENRY. That was for what period?

Chairman DAVIS. I forget what period was given.

Mr. HENRY. I think in approaching the subject, if you just assume for the moment that, roughly, half is carried each way, it might be a reasonable picture of the situation.

Mr. LEHLBACH. At that point, Mr. Chairman, may I clarify something? When you speak of a certain proportion of lumber being carried by industrial steamers, do you include among the industrial steamers those who are privately owned or who carry the commodities of their owners, including steel as well as lumber; or are you limiting it merely to lumber industrial carriers?

Mr. HENRY. I am limiting it entirely to lumber industrial carriers. Mr. LEHLBACH. Then as far as that is concerned, your steel industrial carriers you treat as common carriers?

Mr. HENRY. As far as lumber is concerned, they are common carriers.

Chairman DAVIS. There is one question I had in mind to get the interpretation of some of you on. You are familiar with this bill,

Mr. Henry?

Mr. HENRY. Yes, sir.

Chairman DAVIS. I will ask you whether or not, in your opinion,. this regulates the transportation of cargo between two ports on the Atlantic, or two ports on the Pacific, by a steamer that is engaged in the intercoastal commerce? Doesn't it do that? Doesn't it authorize that?