Mr. PAYNE. I inserted mine, Mr. Chairman. I do not know about Mr. Taylor.

Mr. TAYLOR. I would be glad to insert my copy.

Admiral LAND. Here is a complete set of the America France letter and the American Hampton Roads letter, and the letters and bid of the United States Lines. I think this is complete.

(The matter referred to will be found in the appendix.)

Senator OVERTON. Senator Barbour asked me to say he could not be here today, and asked me to propound some questions to Admiral Land, which he has submitted.

Senator GUFFEY. Who?

Senator OVERTON. Senator Barbour. I see no objection in doing so. The first one is: Please give us more information on the countervailing subsidy to which you referred yesterday. I think you covered that in your statement.

Admiral LAND. I certainly would like some advice from some of you gentlemen as to how this should be treated here. This is not the proper place to get it, but I wish you would think about it, because it is a problem that has seriously and deeply troubled us.

Senator GUFFEY. The countervailing subsidy?

Admiral LAND. The countervailing subsidy, this idea of matching dollar for dollar what one country does for another company.

Senator WHITE. And if you do not you are dropped out of the game?

Admiral LAND. In some cases that is pretty clearly correct, Senator. Senator BAILEY. Suppose you make a formal report to us and lay all the facts before us for some proper action. We cannot take that

up now.

Admiral LAND. It is not a question of action, Senator Bailey, because the action is on the statute books. It is a question of advice. I will bother you for that at some other time.

Senator BAILEY. We might give you some advice.

Admiral LAND. I think I have answered that as fully as I can. Senator OVERTON. The next question: Is there any countervailing subsidy included in the subsidy for the America France Line announced on this call for bids?

Admiral LAND. No, sir; there are no countervailing subsidies allowed to any line at the present time by the Maritime Commission. Senator OVERTON. I think you answered the third question, which is as follows: Has the Maritime Commission decided to grant no countervailing subsidy to the operator of the America France Line? Is that definitely known now? I understood you to say that no decision has been reached.

Admiral LAND. No decision has been made. We were stymied. Senator OVERTON. The next question is: Have you held any hearings upon the subject?

Admiral LAND. Not with the America France Line; no, sir.
Senator OVERTON. With some other line?

Admiral LAND. We had the hearings on the Matson Line last summer, and it is so controversial, it is so difficult, and requires, as I say, five votes plus the Secretary of State, that we have just done nothing except talk to date, and we have done a lot of that.

Senator OVERTON. Now has the Maritime Commission decided upon a countervailing subsidy under section 604 of the Merchant Marine Act of 1936 for any American steamship line?

Admiral LAND. I did not catch the first part.

Senator OVERTON. Has the Maritime Commission decided upon a countervailing subsidy under section 604?

Admiral LAND. No, sir.

Senator OVERTON. Ís the subsidy now paid to the United States Lines based upon German or French operating costs?

Admiral LAND. It is based on the weighted differential, depending entirely upon the competitors that they have and the lines that they run, following the standard procedure of the Commission which emanates from the Research Division, which probably has the oldest inhabitants down there in that division, and on that basis we weight these differentials against the competitors and arrive at a percentage which is finally approved by the board. So I will say I cannot give you a detailed answer there. All I can say is wherever the competition is it is weighted.

Senator OVERTON. Are not German costs lower than French costs and therefore require a higher subsidy rate?

Admiral LAND. I would answer that in the affirmative, to the best of my knowledge. They may have competition with both, but it is a weighted differential.

Senator OVERTON. Does not the higher subsidy rate paid under the German costs to the United States Lines result in a preference to the United States Lines over any other bidder on the America France Line alone?

Admiral LAND. I do not see how there is any preference there, because the percentages are in the advertisement. It is open to the world.

Senator WHITE. Substitute the word "advantage" for "preference." Is not the meaning of that question just this, that the subsidy granted the United States Lines boats, which run up into the German area, is based on the German cost in part, while the subsidies granted to the vessels running to the French ports are based on a higher French cost so they would be lower?

Admiral LAND. That would be true, but the subsidy is based on where the boats run.

Senator OVERTON. Yes.

Admiral LAND. So there is no advantage.

Senator WHITE. I do not think the word "preference" is the right word there.

Senator OVERTON. The United States Lines get the larger subsidy on the vessels that would go to the German ports as against the America France Lines' vessels that go to the French ports, because the costs are lower, the German costs are lower than the French costs?

Admiral LAND. That is right. If they go to both, the thing is weighted, according to the best judgment that we can find.

Mr. WILCOX. There is one point that ought to be put in there, that is it is based on not only where the ships go, but it is based on the competition which those ships have in addition to where the ships go.

Admiral LAND. That is right.

Senator OVERTON. Was the United States Lines acquired by the International Mercantile Marine as the result of public competitive bidding after the Chapman Co. had failed?

Admiral LAND. I am unable to answer that question. I can find out and put it in the record. Can you answer that?

Mr. WILCOX. No; but we can get the answer to that.

Admiral LAND. That antedates my time by a good many years. Senator OVERTON. We will pass that. What percentage of cargo does the United States Lines carry in its German trade?

Admiral LAND. What percentage of cargo?

Senator OVERTON. What percentage of cargo does the United States Lines carry in its German trade? I assume that means what percentage of the German cargo as against cargo to other ports. Admiral LAND. I will have to furnish that from our files in the Commission.

Senator OVERTON. That information may be supplied later.
Admiral LAND. Yes, sir.

Senator OVERTON. What percentage of passengers does it carry in the European trade? Does the United States Lines carry passengers? Admiral LAND. Yes, sir.

Senator OVERTON. What percentage does it carry in the European trade?

Admiral LAND. We can furnish that with a reasonable degree of accuracy. I do not carry it in my head. I saw the figures just the other day, but I do not remember what they were.

Senator WHITE. Is the inquiry directed to the percentage of passengers that are carried on American ships, or does it mean the percentage of capacity of the particular ship?

Admiral LAND. I do not know.

Senator WHITE. You can answer it both ways. I mean in the material you furnish you can tell us whether these ships are going out with 50 or 75 or 90 percent capacity.

Admiral LAND. Oh, yes.

Senator WHITE. And you can also indicate what percentage that total of passengers was to the passengers moving in that trade? Admiral LAND. Yes, sir; I understand.

Senator OVERTON. What did Paul Chapman and associates agree to pay when they acquired the United States Lines in 1929?

Admiral LAND. I do not know. I can furnish that.

Senator OVERTON. On what basis was the United States Lines turned over to the International Mercantile Marine in 1932 ?

Admiral LAND. All of this is so far ahead of my time here that I haven't any accurate data on the subject, and I would not answer it without having accurate data.

Senator GUFFEY. You will find it all in the Black Committee report. Senator OVERTON. What is the present amount now owed to the United States Government by the United States Lines?

Admiral LAND. I can get that from the books. That is one of the things I would not, if I could, and I could not if I would, carry around in my head.

Senator BAILEY. You can supply this?

Admiral LAND. Absolutely. I think I can give you the answer to all of those questions.

Senator OVERTON. I will give you the memorandum.
Admiral LAND. I would be much obliged if you would.

Senator OVERTON. Did not the Cosmopolitan Shipping Co. bid in 1937 more than twice the bid now offered for the America France Line by the United States Lines?

Admiral LAND. I would not be able to answer that question. All I know is there were anywhere from 10 to 14 strings to the bid in 1937. I would be very glad to furnish the actual data submitted by the America France Line in 1937. That is available.

Senator OVERTON. Were there any other bids for the America France Line at that time, in 1937?

Admiral LAND. I think not. I think there was only one bid. I am not sure, but I think that is correct.

Senator OVERTON. Are there any further questions to ask of the Admiral? Do you wish to ask him any questions, Senator Bailey, in executive session?

Senator BAILEY. Yes; I want to talk to him.

Senator OVERTON. Now, before that is done, Mr. Gray asked me if he could be permitted to make a very brief statement, and if there is no objection on the part of the committee, we will hear from Mr. Gray.

STATEMENT OF HORACE M. GRAY, ATTORNEY, COSMOPOLITAN SHIPPING CO.

Senator OVERTON. Mr. Gray, will you give your initials to the reporter?

Mr. GRAY. Horace M. Gray, 42 Broadway, New York; counsel for the Cosmopolitan Shipping Co., Inc.

There are two or three subjects which I do not think have been clarified completely for the benefit of this committee, which I would like to clarify. Senator Guffer yesterday asked Admiral Land a question upon section 706 of the proposed amendment, and I think the Admiral was mistaken in his reply. As I recollect it, Senator Guffey asked if section 706 as now proposed to be amended would not eliminate all ships of the United States from bidding, and I should like to point out to the committee what the facts are. I think Admiral Land stated that in his opinion it did, but if the committee will refer to the second page of the bill, S. 1516

Senator GUFFEY (interposing). How did you state my question? I have got what I said right here. I asked Admiral Land this question: Do you agree with me that, as so written-that in this section. 706 you refer to all the provisions as to competitive bidding for charters are rendered useless and of no meaning?

Mr. GRAY. That is my understanding of the question, sir.
Senator GUFFEY. That is right.

Mr. GRAY. If the committee will refer to page 2 of bill S. 1516, lines 1 to 5, in which it is stated:

In the case of any line being operated by the Commission on February 1, 1939, preference in the operation, sale, or charter thereof shall be given to the agent operating such line for the account of the Commission on such date.

It limits the ships which would be subject to the provisions of this act to those which are now in operation, and the Maritime Commission would have it within its power to withhold all of its new tonnage

from operation by any of the present agents and would, therefore, eliminate them from the provisions of section 704, and would, therefore, make all the provisions of section 706 as to competitive bidding strictly legal and required.

Now, there is another important subject which has been referred to both by Senator Bailey and Senator Guffey with respect to the policy. I do not think, and it is not the intention of the Cosmopolitan Shipping Co., Inc., to ask for any preference in respect of these bids other than a preference which applies as a matter of law. We are really asking here for equality of bids, and this proposed bill, in my opinion, and also in the opinion of the House Committee on Merchant Marine and Fisheries, does not change the fundamental governmental policy of competitive bidding when we come to analyze the situation.

On page 7 of the report of the House committee, report No. 71, on the O'Leary bill, it stated as follows:

The proposed bill raises no fundamental question as to the changing of the principle and policy of the Government in respect to the disposition of public property by competitive bidding in favor of the present agents of the Government who are now operating the lines. There is nothing in the proposed bill that gives the operators any advantage or preference that does not exist under the present law, and in fact, has existed for many years. There is nothing that compels the Commission to accept terms by negotiation that are not in the interest of the Government, and your committee believes that the same Commission which has rendered valuable service in protecting the Government's interests in the matters outlined above involving many millions of dollars may render as eminent service in solving these problems.

Now, the question of equality, which has been alluded to by Senator Bailey

Senator BAILEY (interposing). Before you get away from that, I would like to ask you a question.

Mr. GRAY. Yes, sir.

Senator BAILEY. Do you represent a company that had an opportunity to bid here?

Mr. GRAY. Yes, sir.

Senator BAILEY. Did you bid?

Mr. GRAY. No, sir.

Senator BAILEY. You did not bid because you did not wish to go into competitive bidding?

Mr. GRAY. No, sir.

Senator BAILEY. Why did not you bid?

Mr. GRAY. We did not bid because we could not tell what we were bidding on, and no one else could tell what they were bidding on under the proposal for bids, and that is the reason why we think this proposed legislation will cure the defect which now exists and make bidding on these lines really accurate.

Senator BAILEY. Would not the cure for that be the specifications in the advertisement for bids?

Mr. GRAY. Certainly.

Senator BAILEY. That is not the remedy proposed here. The remedy proposed here is private negotiation, is not that right?

Mr. GRAY. Yes, sir; private negotiations before bids rather than private negotiations with a successful bidder after the bid has been awarded.