corporated in the resolution. These provisions are entirely satisfactory to me, as far as I know, and the proponents of the measure to release these ships. The additional provisions give the Maritime Commission the power to insert in any sale or charter contract the terms which will regulate the further disposition of any vessel sold or chartered, and which can limit the time of chartering, as far as that is concerned. Consequently, Mr. Chairman, in order to incorporate these suggested changes I have introduced a new resolution, House Joint Resolution No. 519, which I ask be considered this morning in lieu of the original resolution. The CHAIRMAN. It is being considered. Mr. Buck. I want to call your attention to the fact very briefly that on September 1, 1939, there were in the Atlantic-Pacific intercoastal general cargo trade, and this does not include tankers, I may say, 135 ships of a deadweight tonnage of 1,337,353 tons. On April 8, 1940, there were only 86 of these ships left in this trade, with a deadweight tonnage of 881,359 tons, a loss to the trade of 49 ships, and a decrease in percentage of 36.3 percent, and a loss in tonnage of 455,994 tons, or a decrease of 34 percent in tonnage. Now, it is quite obvious that the general cargo trade, which is usually a westeast movement, as far as that is concerned, has been seriously hampered and impaired by the loss of that tonnage. It seems to us obvious that there will probably be, also, a further decrease in tonnage unless something is done to assist this movement. At the moment there appear to be no other means of replacing this tonnage than by utilizing this sterilized fleet. We feel that this matter is of sufficient importance to merit your earnest and immediate consideration. Mr. Chairman, that is all I have to say. I desire to present a number of witnesses here this morning, and no doubt there are others who will appear on their own behalf. If there are any questions, I should be glad to answer them. The CHAIRMAN. Are there any questions? Mr. Buck. I should like to add that this resolution has been endorsed unanimously by the delegations of the three Pacific Coast States in the House. Mr. WELCH. The principle was endorsed? Mr. Buck. Yes, the principle was endorsed. Mr. WELCH. I desire to state that the resolution now under consideration, which is House Joint Resolution 519, is a vast improvement over the prior resolution, 509, in this respect, that it is more specific. I refer to the language commencing on page 2, line 5 [reading]: be sold or chartered by the Commission, upon competitive bids and after due advertisement, upon such terms and conditions (including with respect to charters the charter period) and subject to such restrictions (including restrictions affecting the use or disposition of the vessel by the purchaser or charterer). That question was raised by me at the conference of the west Coast representatives referred to by Congressman Buck, that care should be exercised to see to it that the resale of laid-up ships to people who might acquire them for speculative purposes, was brought about by 1 or left in the hands of the Commission. I feel perfectly safe in leaving that provision in the hands of the members of the Maritime Commission, knowing that they will not permit the resale or pyramiding of these ships for high prices during the period of the war, which may last much longer than we realize. The CHAIRMAN. Are there any further questions? We will try to get through with the Members of Congress first. Representative Smith. STATEMENT OF HON. MARTIN F. SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON Mr. SMITH. Mr. Chairman, and gentlemen of the committee, I appreciate the privilege of appearing in behalf of Mr. Buck's resolution as modified, H. J. Res. 519. I am certain all of us who are from the Pacific Northwest appreciate the promptness with which your committee has called these hearings. This is a matter of utmost importance throughout our entire section of the country, and it particularly affects the industries in my district. Unless we can obtain some of these vessels for our intercoastal trade it is going to cause serious curtailment of employment in the lumber, wood pulp, flour milling, canning, and other industries throughout the entire Pacific Northwest. Congressman Buck has outlined very clearly, I think, the purposes of the resolution and the situation which it is intended to meet. There is very little that I can add to what he has said. I merely want to emphasize the emergency which exists and which, of course, is thoroughly familiar to at least two members of your committee, Mr. Chairman, my colleague from the State of Washington, Mr. Wallgren, and the gentleman from California, Mr. Welch, who has served so ably for so many years on this committee. It is a real emergency. I know that your committee is going to give it very sympathetic consideration, and, of course, this is one case where time is of the essence. If we are going to be relieved, and if the emergency is going to be met it will have to be done soon before we have too many of these industries curtailing their operations. I am very hopeful that the matter can be acted upon soon in the House so that the Senate will have time to act on it before Congress adjourns. I am in hearty accord with what Mr. Welch has stated in regard to the importance of providing in this legislation, which, it seems to me, is now covered by the amendment proposed by the Maritime Commission, proper safeguards to absolutely obviate and certainly prevent, if possible, any speculation or any profiteering in the sale or chartering of these vessels. I believe that the amendment as proposed by the Maritime Commission as now incorporated in Mr. Buck's modified resolution certainly should cover that very effectively. I would like the privilege, Mr. Chairman, to read into the record at this point a brief statement issued by a group of the largest manufacturers and shippers in the State of Washington, setting forth cogent and compelling reasons for the immediate enactment of this legislation, and also a letter from one of my constituents. The CHAIRMAN. Without objection, it is so ordered. Mr. SMITH (reading): MEMORANDUM ON INTERCOASTAL SHIPPING SITUATION All industries in the Pacific Northwest which use intercoastal shipping to domestic markets on the Atlantic and Gulf coasts are seriously affected by the withdrawal of ships from those services-for more profitable employment created by the European war. Twenty-seven ships, or 25 percent of the fleet plying between the Pacific Northwest and the Atlantic coast, will be out of the intercoastal service by May 1940. It is probable that the bottoms available for this vital domestic trade will be further and progressively depleted as long as war continues. The tidewater sawmills of Oregon and Washington, which have heretofore shipped their product largely to intercoastal markets, are now being compelled to reduce such shipments to less than 60 percent of their normal volume; and face imminent curtailment in production and employment. The wood-pulp industry to the Pacific Northwest normally ships each year 300,000 tons intercoastally by water. These shipments have now been reduced to a rate of 120,000 tons anually. Oregon and Washington have shipped up to 300,000 tons of flour annually through the Panama Canal; but today this industry is unable to obtain adequate space for the firm orders now received. This directly cuts down the market for northwestern grain. A similar curtailment to intercoastal outlets runs through all the waterborne commerce of the Pacific Northwest. It is causing unemployment which is rapidly growing to serious proportions. The joint resolution introduced by Representative Buck (H. J. Res. 509) and Senator Johnson (S. J. Res. 246) is designed to relieve this situation. It would suspend, for the duration of the proclamation of the President under the Neutrality Act of 1939, the section of the Merchant Marine Act which reserves from use Government-owned ships which have passed an age limit of 20 years. The joint resolution would make this fleet of some 109 old ships available for disposition by the United States Maritime Commission, for either foreign or domestic trade, as the Commisison may find the vessels needed. The joint resolution does not propose any wholesale releasing of the reserve fleet; and would not imperil the stability of the existing commercial water carriers or their rate structures. It would simply authorize the Commission to make these boats available, individually or in small groups, for designated trades, when and as satisfied of the need for additional ships. To accomplish the purposes of the joint resolution, it is believed desirable to provide authority for the Maritime Commission to make the ships available for commercial use under charter as well as through sale; and to give the Commission full authority as to the terms and conditions of chartering which may seem advisable in arranging for the use of these old vessels under the present emergency. The legislation should be drawn in broad and simple terms which place these reserve boats under control of the United States Maritime Commission, as to the extent of, and the ways and means by which, they may be placed in commercial service. I would also like to read to you a letter received by me from Mr. C. H. Kreienbaum, executive vice president of the Simpson Logging Co., Shelton, Wash., bearing date March 7, 1940, which also describes the present emergency as it affects one of the largest operators and employers of labor in my district. The letter is as follows: Hon. MARTIN F. SMITH, Member of Congress, Washington, D. C. SIMPSON LOGGING CO., Shelton, Wash., March 7, 1940. DEAR CONGRESSMAN SMITH: The lumber industry is fast feeling the effects of a situation which has been more or less of a theory but is now realized to be a fact. It is a problem that will affect every employer and employee in the industry, to some extent. Your help in the past has always been promptly and cordially given, although my requests have been small. The problem I am putting before you now is of so great importance that I am sure you will give it your best thought and every possible assistance when the time comes. Of course you are aware of the fact that a good many steamships have been taken out of the intercoastal as well as the coastwise routes, and sold or chartered into the trans-Atlantic trade. Consequently many of our sawmills on Puget Sound and Grays Harbor are finding it difficult to move lumber, and therefore are faced with the drastic curtailment of their operations and the enforced idleness of much labor. We feel there is a possible partial solution to this problem, and our group is moving in the direction of that solution. We have a sales company on Puget Sound, owned by 18 operators who employ upwards of 4,000 men in their plants, besides the 4,000 or 5,000 men involved in producing the logs which these plants cut. This sales company has been shipping between 17 and 19 percent of all the lumber that is shipped into the Atlantic coast market by the sawmills of western Washington and Oregon. It has chartered upwards of 200,000,000 feet of steamship-carrying space per year for the past 2 years, besides using approximately 200,000,000 feet of tonnage of other carriers. After the end of March, this sales company will find itself with practically no tonnage available. This briefly is our problem. This situation affects the McCleary interests, our logging operations, and our sawmill, as well as the other operators previously mentioned. The Simpson Logging Co. is now in the process of curtailing its logging operations, which will affect both Grays Harbor and Mason counties. The solution to this problem, we feel, lies with the Maritime Commission, and the ability we may have in convincing our steamship people that they should risk taking over several surplus ships of the Maritime Commission, which now lie in the so-called Boneyard. The Maritime Commission has about 20 vessels which are less than 20 years old, and which they can dispose of in an emergency. They have, I believe, about 109 vessels which are more than 20 years old, which they cannot sell without an act of Congress or Executive order from the President. We are interested principally in 4 or 5 of the 20 vessels which are less than 20 years old and which the Maritime Commission can sell. The Commission has indicated reluctance to sell these vessels without an emergency which would warrant the placing of these vessels in the intercoastal trade. Inasmuch as our sales company and its sawmills are not in the steamship business, it will be necessary for us to convince our former steamship connection that they should risk the hazard of taking four or five of these vessels and placing them in the intercoastal trade. Mr. Robert E. Seeley, the president of the Puget Sound Associated Mills (which is the sales company of which I speak), is leaving here Monday for New York to discuss this situation with our steamship people. If the steamship people are disposed to take the risk, they will go to Washington. If they should do so, I have requested that they call upon you for whatever help you may be able to give us. In fact, it is quite possible that I might fly east to assist in their efforts before the Maritime Commission. If so, I will again have the pleasure of personally discussing our mutual problems. In case I do not have the opportunity to go east, I know that you will do everything in your power to be of assistance to Mr. Seeley. With kindest personal regards, I am, Very truly yours, C. H. KREIENBAUM, Executive Vice President. In conclusion I would like, with your permission, to also present the statement of the Puget Sound Associated Mills, Mr. R. E. Seeley, president, which contains a fair analysis of the entire shipping situation in our section of the country, which is most critical. Col. W. B. GREELEY, PUGET SOUND ASSOCIATED MILLS, Secretary-Manager, West Coast Lumbermen's Association, Stuart Building, Seattle, Wash. DEAR COLONEL GREELEY: The situation confronting us due to removal of vessels from the intercoastal trade is of such a serious nature that we urge the West Coast Lumbermen's Association to take every step possible to stave off a major catastrophe in the northeast lumber-producing region. The Puget Sound Associated Mills, Inc., is a Washington corporation, organized in June 1931 by a group of the smaller type of water-front sawmills located on Puget Sound. The duties of this concern consist of selling and transporting by vessel through the Panama Canal that portion of the product of its 18 sawmills which is suitable for the Atlantic coast market. The purpose of this cooperative grouping was to aid these small mills in the marketing of their product in the Atlantic coast market in competition with larger competitive concerns. During the 9 years of its operation, according to statistics compiled by the West Coast Lumbermen's Association, 16 percent of the total movement of lumber by vessel from the Pacific Northwest to this market has been accounted for by the shipments from this cooperative group of small operators. These shipments have been distributed through the various ports from Jacksonville, Fla., to Portland, Maine. An example of shipments over the various intercoastal lines taken from our records for the years 1937, 1938, and 1939 is as follows: American Foreign Steamship Corporation__ 196, 068, 000 10, 343, 000 21,091, 000 2, 109, 000 9, 269, 000 27, 903, 000 527, 000 10, 190, 000 278, 170, 000 The above movement has been on steamer space contracted direct by the Puget Sound Associated Mills. The quantity represents approximately 50. percent of the sales and shipments made by this firm during the past three years. The other 50 percent has been sold to various concerns on an f. a. s. vessel basis for movement on steamer space operated or controlled by the buyer. The reduction in the total number of vessels operating in the intercoastal route has seriously reduced the amount of steamer capacity controlled by these buyers. Some of the largest operators have been forced to discontinue entirely their purchases from our mills. The total movement, therefore, from this cooperative group of small mills during the three-year period mentioned, approximates 556 million feet, equal to 41 full cargoes per year. We have been notified by the American Foreign Steamship Corporation and the Quaker-California & Eastern Line, our two main transportation outlets over the past 3 years, that after this month their fleets would be entirely withdrawn from this service. We have canvassed each of the six other lines, operating a service from Puget Sound, for lumber space on their vessels and have been advised that they have no space available which can be used for the transportation of our lumber to the Atlantic Coast market. |