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TO AMEND THE MERCHANT MARINE ACT OF 1936,

AS AMENDED

FRIDAY, FEBRUARY 24, 1939

UNITED STATES SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON
COMMERCE ON MERCHANT MARINE,

Washington, D. C. The subcommittee met, pursuant to call, at 10:30 a. m.,

in Commerce Committee room, Senate Office Building, Senator John H. Overton, presiding.

Present: Senators Overton (chairman), Bailey, Guffey, Radcliffe, White, and Gibson.

Also present: Senator Barbour.

Senator OVERTON. The subcommittee will come to order. We have before us for consideration as members of the Subcommittee on Merchant Marine, a bill, S. 1516, introduced by Senator Barbour. At this point we shall have the bill incorporated in the record.

(S. 1516 is as follows:)

[S. 1516, 76th Cong., 1st sess. ]

A BILL To amend sections 704, 705, 706, and 707 of the Merchant Marine Act of 1936,

as amended

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 704 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp. IV, title 46, sec. 1194), is amended to read as follows:

"SEC. 704. All vessels transferred to or otherwise acquired by the Commission in any manner may be chartered or sold by the Commission pursuant to the further provisions of this Act. Pending such charter or sale the Commission, under such agreements as it may deem advantageous, is authorized to operate such vessels for its account on lines in foreign commerce of the United States. 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. Before advertising any such line for sale or charter, and notwithstanding any advertisement prior to February 1, 1939, for such sale or charter, the Commission shall negotiate with the agent who on such date was operating such line for the account of the Commission for sale or charter of such line to said agent, and may negotiate with any other person for sale or charter of such line to such person. The Commission, pursuant to such negotiation, may enter into an agreement or agreements for such sale or charter upon such terms and conditions as will give preference to the operator who was operating such line on February 1, 1939, insofar as it may be possible to do so consistent with the purposes and policy of this Act and with carrying into effect the requirements of said section 809 of this Act: Provided, That if any such line shall be disposed of by negotiation, a full report thereof with reasons therefor shall be made to Congress at the earliest opportunity. Except as in this section otherwise specifically provided, nothing contained herein

1

shall be construed as limiting or affecting the power of sale under the provisions of section 705 of this Act."

SEC. 2. Section 705 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp. IV, title 46, sec. 1195), is amended to read as follows:

"SEC. 705. As soon as practicable after the passage of this Act, and continuing thereafter, the Commission shall arrange for the employment of its vessels in steamship lines on such trade routes, exclusively serving the foreign trade of the United States, as the Commission shall determine are necessary and essential for the development and maintenance of the commerce of the United States and the national defense: Provided, That such needs are not being adequately served by existing steamship lines privately owned and operated by citizens of the United States and documented under the laws of the United States. It shall be the policy of the Commission, except as otherwise provided in section 704 of this Act, as amended, to encourage private operation of each essential steamship line now owned by the United States by selling such lines to citizens of the United States in the manner provided in section 7 of the Merchant Marine Act, 1920, and in strict accordance with the provisions of section 5 of said Act, or by demising its vessels on bare-boat charter to citizens of the United States who shall agree to maintain such line or lines in the manner hereinafter provided."

SEC. 3. Section 706 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp IV, title 46, sec. 1196), is amended to read as follows:

"SEC. 706. (a) Except as otherwise provided in section 704 of this Act, as amended, the Commission shall not charter its vessels to private operators except upon competitive sealed bids submitted in strict compliance with all the terms and conditions of a public advertisement soliciting such bids. Each and every advertisement for bids to charter the Commission's vessels shall state the number, type, and tonnage of the vessels the Commission is offering for bare-boat charter for operation as a steamship line on a designated trade route, the minimum number of sailings that will be required, the length of time for which the charter will be given, and all other information the Commission shall deem necessary for the information of prospective bidders.

“(b) The Commission shall have authority to and shall announce in its advertisements for bids that the Commission reserves the right to reject any and all bids submitted."

SEC. 4. Section 707 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp. IV, title 46, sec. 1197), is amended to read as follows:

"SEC 707. Except as otherwise provided in section 704 of this Act, as amended

“(a) The Commission shall award the charter to the bidder proposing to pay the highest monthly charter hire unless the Commission shall reject such bid for the reasons set forth in subsection (b) of this section.

“(b) The Commission may reject the highest or most advantageous or any other bid, if, in the Commissioner's discretion, the charter hire offered is deemed too low, or the Commission determines that the bidder lacks sufficient capital, credit, or experience to operate successfully the line; but the reason or reasons for rejection of any bid, upon request of the bidder, shall be stated to such bidder in writing.

"(c) If the highest bid is rejected, the Commission may award the charter to the next highest bidder, or may reject all bids and readvertise the line: Provided, however, That the Commission may operate the line until conditions appear to be more favorable for a reoffering of the line for private charter."

Senator OVERTON. A similar bill was introduced in the House and considered by the Committee on Merchant Marine and Fisheries. That committee held rather full hearings on the bill and submitted a report. In view of the fact that the full committee has requested us to consider this bill and to make a report thereon at the next regular meeting date of the committee, which is next Tuesday, and in view of the fact that the House held rather full hearings, I suggest that the report made by the Committee of the House on Merchant Marine and Fisheries be made a part of our record, if there is no objection.

(The report referred to is as follows:)

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Mr. O'LEARY, from the Committee on Merchant Marine and Fisheries,

submitted the following

REPORT

[To accompany H. R. 2382)

The Committee on Merchant Marine and Fisheries, to whom was referred the bill (H. R. 2382) to amend section 704 of the Merchant Marine Act of 1936 as amended and to amend section 706 (a) of the Merchant Marine Act of 1936, having considered the same, reports favorably thereon with amendments and recommends that the bill as amended do pass.

The amendments are as follows:

Amendment No.1: Strike out all after the enacting clause and insert in lieu thereof the following:

That section 704 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp. IV, title 46, sec. 1194), is amended to read as follows:

“Sec. 704. All vessels transferred to or otherwise acquired by the Commission in any manner may be chartered or sold by the Commission pursuant to the further provisions of this Act. Pending such charter or sale the Commission, under such agreements as it may deem advantageous, is authorized to operate such vessels for its account on lines in foreign commerce of the United States. 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. Before advertising any such line for sale or charter, and notwithstanding any advertisement prior to February 1, 1939, for such sale or charter, the Commission shall negotiate with the agent who on such date was operating such line for the account of the Commission for sale or charter of such line to said agent, and may negotiate with any other person for sale or charter of such line to such person. The Commission, pursuant to such negotiation, may enter into an agreement or agreements for such sale or charter upon such terms and conditions as will give preference to the operator who was operating such line on February 1, 1939, insofar as it may be possible to do so consistent with the purposes and policy of this Act and with carrying into effect the requirements of said section 809 of this Act: Provided, That if any such line shall be disposed of by negotiation, a full report thereof with reasons therefor shall be made to Congress at the earliest opportunity. Except as in this section otherwise specifically provided, nothing contained herein shall be construed as limiting or affecting the power of sale under the provisions of section 705 of this Act.'

shall be construed as limiting or affecting the power of sale under the provisions of section 705 of this Act."

SEC. 2. Section 705 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp. IV, title 46, sec. 1195), is amended to read as follows:

"SEC. 705. As soon as practicable after the passage of this Act, and continuing thereafter, the Commission shall arrange for the employment of its vessels in steamship lines on such trade routes, exclusively serving the foreign trade of the United States, as the Commission shall determine are necessary and essential for the development and maintenance of the commerce of the United States and the national defense: Provided, That such needs are not being adequately served by existing steamship lines privately owned and operated by citizens of the United States and documented under the laws of the United States. It shall be the policy of the Commission, except as otherwise provided in section 704 of this Act, as amended, to encourage private operation of each essential steamship line now owned by the United States by selling such lines to citizens of the United States in the manner provided in section 7 of the Merchant Marine Act, 1920, and in strict accordance with the provisions of section 5 of said Act, or by demising its vessels on bare-boat charter to citizens of the United States who shall agree to maintain such line or lines in the manner hereinafter provided.”

SEC. 3. Section 706 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp IV, title 46, sec. 1196), is amended to read as follows:

“SEC. 706. (a) Except as otherwise provided in section 704 of this Act, as amended, the Commission shall not charter its vessels to private operators except upon competitive sealed bids submitted in strict compliance with all the terms and conditions of a public advertisement soliciting such bids. Each and every advertisement for bids to charter the Commission's vessels shall state the number, type, and tonnage of the vessels the Commission is offering for bare-boat charter for operation as a steamship line on a designated trade route, the minimum number of sailings that will be required, the length of time for which the charter will be given, and all other information the Commission shall deem necessary for the information of prospective bidders.

“(b) The Commission shall have authority to and shall announce in its advertisements for bids that the Commission reserves the right to reject any and all bids submitted."

SEC. 4. Section 707 of the Merchant Marine Act, 1936, as amended (U. S. C., 1934 edition, Supp. IV, title 46, sec. 1197), is amended to read as follows:

"SEC 707. Except as otherwise provided in section 704 of this Act, as amended

“(a) The Commission shall award the charter to the bidder proposing to pay the highest monthly charter hire unless the Commission shall reject such bid for the reasons set forth in subsection (b) of this section.

“(b) The Commission may reject the highest or most advantageous or any other bid, if, in the Commissioner's discretion, the charter hire offered is deemed too low, or the Commission determines that the bidder lacks sufficient capital, credit, or experience to operate successfully the line; but the reason or reasons for rejection of any bid, upon request of the bidder, shall be stated to such bidder in writing.

"(c) If the highest bid is rejected, the Commission may award the charter to the next highest bidder, or may reject all bids and readvertise the line : Provided, however, That the Commission may operate the line until conditions appear to be more favorable for a reoffering of the line for private charter."

Senator OVERTON. A similar bill was introduced in the House and considered by the Committee on Merchant Marine and Fisheries, That committee held rather full hearings on the bill and submitted a report. In view of the fact that the full committee has requested us to consider this bill and to make a report thereon at the next regular meeting date of the committee, which is next Tuesday, and in view of the fact that the House held rather full hearings, I sug. gest that the report made by the Committee of the House on Merchant Marine and Fisheries be made a part of our record, if there is no objection.

(The report referred to is as follows :)

mission operating such line on February 1, 1939, and may negotiate with other persons, for the sale or charter of the line. The Commission, after such negotiation, may enter into an agreement for sale or charter upon such terms and conditions as will give preference to the agent operating the line on February 1, 1939, insofar as it may be possible to do so consistently with the purposes and policy of the Merchant Marine Act, 1936, including section 809 thereof. In case such negotiation does not result in an agreement satisfactory to the Commission, the Commission may call for bids for the sale or charter of such lines in accordance with the provisions of the Merchant Marine Act, 1936.

If any sale or charter is negotiated, the Commission is required to make a full report thereof, with reasons therefor, to Congress at the earliest opportunity.

A clarifying amendment is inserted in the proviso referring to section 705 in order to make section 704, as amended, and section 705 conform.

Section 705 is amended by the insertion of the words "except as otherwise provided in section 704 of this act, as amended” in the last sentence of the section. The purpose is to make these several sections conform.

Section 706 is amended by inserting in subsection (a) the words "except as otherwise provided in section 704 of this Act, as amended". This explanation is the same as above and the amendment is made for the purpose of harmonizing the sections affected by the amendment to section 704.

Section 707 is amended by the insertion of the words "except as otherwise provided in section 704 of this Act, as amended” so as to make that section apply to subsection (a), (b), and (c). The same explanation obtains for this amendment.

Amendment No.2: The bill as originally referred to your committee amended only sections 704 and 706 (a). The amendments proposed above, however, effect changes in sections 704, 705, 706, and 707 and the title has been amended to show changes in all of these sections.

PURPOSE

The purpose of this bill is to provide more effective means of disposing of Government-owned lines in the best interests of the United States; to give full force, vitality, and effect to the provision of existing law whereby it is provided that in disposing of Governmentowned lines under this act, preference shall be given to persons who are citizens of the United States and who have the support, financial and otherwise, of the domestic communities primarily interested; to give full force, vitality, and effect to the provisions of existing law whereby it is required that Government-owned vessels which, at the time of the enactment of the Merchant Marine Act, 1936, were being operated by private operators on lines in foreign commerce of the United States, should be chartered or sold, but that preference should be given to the operators then operating said vessels, and to require contracts under said act to be entered into so as to serve equitably, insofar as possible, the foreign-trade requirements of the Atlantic, Gulf, and Pacific ports of the United States.

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