(The following correspondence was submitted for inclusion in the record:) BURLINGHAM, UNDERWOOD, BARRON, WRIGHT & WHITE, Representative THOMAS N. DOWNING, Committee on Merchant Marine and Fisheries, DEAR CONGRESSMAN DOWNING: I have just received from Mr. Vincent A. Demo, who testified before your committee last week, the enclosed letter with the documents referred to. Mr. Demo's letter and the documents attached relate to the testimony of Mr. John Smith, the last witness. Mr. Demo feels, and I agree, that the documents which he sent me, as well as his covering letter, should in the interest of completeness be made a part of the record. I sincerely hope that this can be done as in the case of the late-filed Honseatic document. Very truly yours, BURTON H. WHITE, Esq., BURTON H. WHITE. THE CUNARD STEAM SHIP CO., LTD., DEAR MR. WHITE: As a spokesman for the 16 foreign lines on whose behalf Mr. Harris and I testified at the recent hearings on cruise legislation, I have received certain documents bearing on the testimony of the last witness, Mr. John E. Smith. These documents, which are enclosed herewith, are as follows: 1. A letter regarding the Riviera Prima dated March 13, 1965, addressed to the Speaker of the House of Representatives and Congressman Mailliard from the Confederation of Italian Shippers: 2. A letter dated September 8, 1965, from Swedish American Lines; 3. A letter dated September 8, 1965, from Norwegian America Line; 4. A letter dated September 3, 1965, from Hamburg-Atlantic Line. I believe that these documents, which are at some variance with Mr. Smith's testimony, should be included in the record, and I would like to have you see if this can be accomplished. I believe these documents will lend perspective to Mr. Smith's testimony and assist the committee in evaluating his suggestion that financial risk to cruise passengers can be eliminated merely by the bonding of foreign steamship lines. Contrary to the implication of Mr. Smith's testimony, the steamship lines have not always been able to collect the full amounts due from charterers or contractors before the scheduled sailing date. Indeed, I understand several of the 16 principal European and other foreign steamship lines for whom Mr. Harris and I spoke at the hearing, having chartered vessels to one or another of the companies with which Mr. Smith is or was connected, found themselves unable in some instances to obtain full payment prior to sailing. Nevertheless, the lines in each and every case honored all tickets and sailed the vessels on schedule. For example, as you will note from one of the enclosures, the Swedish American Line sailed such a cruise on schedule despite the fact that for that cruise the line was owed more than $137,000. There is thus nothing in the experience of the lines on whose behalf I testified that would suggest the necessity of bonding shipowners. (We are not, of course, in a position to comment on the responsibility of other shipowners, be they American or foreign.) We have found, however, that cruise charterers or contractors can be and in some comparatively few instances have been a source of potential financial risk to prospective passengers-as well as shipowners and we, therefore, believe that Congressman Garmatz' bill, H.R. 10327, as Mr. Harris stated in his testimony, "addresses itself to a real problem and offers a constructive solution." Sincerely yours, VINCENT A. DEMO. [Translation (Italian)] ROME, March 13, 1965. To the SPEAKER OF THE U.S. HOUSE OF REPRESENTATIVES, and Hon. WILLIAM S. MAILLIARD, U.S. House of Representatives, Washington, D.C. SIRS: In No. 10 of the [publication of the] Congressional Information Bureau of January 14, 1965, of which I just received a photocopy, I read the report of the statements made by Hon. William S. Mailliard upon introduction of H.R. 2836. The report states, among other things: "Foreign-flag vessel operators," the Congressman declared, "have obviously focused their attention on the profitability of this business and, while some of them are engaged in legitimate business on seaworthy vessels, unfortunately this area of tourism has been plagued by 'sail-by-night' operators who have been financially irresponsible. "For example, only recently several hundred cruise passengers, who had paid their fares on a foreign-flag cruise ship, were left waiting at the dock when one such vessel was forced to sail in order to avoid its creditors. These American vacationers, who had paid their hard-earned dollars to the foreign-flag operator, were left with no greater souvenir of their Caribbean cruise than a receipt for passage from a bankrupt corporation. And today, Mr. Speaker, this same ship is back in business, only her name has been changed to protect her shady past." Those statements refer quite obviously to the case of the Italian vessel Riviera Prima, which was reported, however, in terms not corresponding to the truth and clearly injurious to the prestige and reputation of the Italian passenger carrier fleet as well as of the Italian maritime authorities which are in charge of the safety of the passengers aboard our vessels. The statements seem even more serious in that they refer to an extremely sensitive traffic sector such as cruising. We feel, therefore, we must briefly recall the facts as they really happened, for your opportune knowledge and for whatever possible corrections would be deemed proper: The liner Riviera Prima was chartered at the time by the Caribbean Cruise Lines, Inc., of Washington; The Caribbean Cruise Lines, Inc., owed, at the time of the incident (August 14, 1964) a few hundred thousand dollars to the company owning the Riviera Prima, for freights due and not paid; besides, it had collected the money for the tickets from the cruise passengers, without however, paying the freight to the shipowner; On August 7, therefore 7 days before the scheduled departure of the cruise, the Caribbean Cruise Lines filed for settlement in bankruptcy with the district court in Washington; As a result of the preceding, the owners of the vessel were forced on August 13 to notify the Caribbean Cruise Lines, Inc., that they had no other alternative than to exercise the contractual right to take the vessel out of service as of August 14, 1964; Notwithstanding the fact that the vessel was not to carry passengers, it was submitted to inspection by the U.S. Coast Guard, which issued a certificate attesting that everything was all right. The vessel, therefore, left in ballast, but with the certificate, although there was no need for it. The Coast Guard inspection was known to have been related to several complaints which the authorities had received from passengers abroad another vessel chartered by the Caribbean Cruise Lines, Inc.; The Riviera Prima enjoyed at that time, and enjoys now, the highest classification in the Italian as well as American registers, and has since its first inspection always been recognized by the U.S. Coast Guard as absolutely eligible for the transport of American passengers. In light of the above, the statements made with reference to the Riviera Prima and the shipowner company seen obviously unfair and unfounded, since the later company too has just like the American passengers remained the unpaid creditor of an American company, the Caribbean Cruise Lines, Inc. However, as unpleasant it may be for passengers, who were to leave on a cruise, to be left waiting at the dock, it does not seem that a foreign company, in order to make up for the shortcomings of a national company, can be expected graciously to assume the honor of transporting those passengers free of charge. As pointed out above, we felt it our duty to state how displeased we are that such comments, morally and commercially harmful for a foreign company and fleet, have been made on the basis of obviously erroneous information. DEAR MR. DEMO: After hearing the testimony of Mr. John E. Smith, Jr., past president of Caribbean Cruise Lines, Inc., before the Merchant Marine Subcommittee of the House Merchant Marine and Fisheries Committee, we would like to submit the following remarks for the record: In 1962, the United States Travel Agency, Inc., of which John E. Smith, Jr., was president, chartered the MS Gripsholm from the Swedish American Line for a period beginning October 15 and terminating November 14, 1962. The United States Travel Agency did not live up to its financial obligations under this charter party as it failed to make payment of $137,500-which balance of the charter hire became due on November 1, 1962, the day before the last scheduled cruise. According to the agreement in the charter party between United States Travel Agency, Inc., and the Swedish American Line, the Swedish American Line had every right not to sail the Gripsholm on this cruise. However, in order to protect the American passengers who had booked passage and to maintain the goodwill and fine reputation of the Swedish American Line, the line agreed to let the Gripsholm sail as scheduled. United States Travel Agency, Inc., still owes the Swedish American Line $64,000. Re Mr. John E. Smith, Jr. Joint General Manager, JOHN M. FRASER, Jr.. Vice President. NORWEGIAN AMERICA LINE, New York, N.Y., September 7, 1965. DEAR MR. DEMO: Regarding the testimony of Mr. John E. Smith, Jr., on pending cruise legislation, the Norwegian America Line's MS Bergensfjørd was on charter to one of Smith's corporations-the Bancroft Navigation Co., Ltd., a corporation organized under the laws of Liberia with its principal office in Pembroke, Bermuda-for a series of short cruises during the autumn of 1962. Our records indicate that the Bancroft Navigation Co., Ltd., failed to pay the final installment of $93,200 when due November 1, 1962. On November 8, they paid $20,000 on account. On November 29, Mr. John E. Smith, president of Bancroft, offered us a series of notes instead of cash payment for his company's past due obligations. It was then decided to start court proceedings, and suit was begun in Washington, D.C., on November 30. Subsequently, we made an arrangement with Mr. John E. Smith, under which his company was to pay $15,000 in monthly equal installments, beginning Janu ary 15, 1963, against our promise that the admiralty suit against Bancroft Navigation remain dormant, provided the payment schedule was met. We eventually received payment in full, but it cost us long delays and some $10,000 in legal fees. When the Bancroft Navigation Co. failed to meet the final payment of $93,200 on November 1, 1962, there were still two cruises to be performed, both from Charleston, S.C., sailing November 6 and November 10, respectively, which, under the charter party, we could have canceled, and even though payment was not made, we did not withdraw the vessel or cancel the charter, in consideration of the American public, who otherwise would have been stranded or would have had to make last-minute changes in their vacation plans. Yours very truly, CHRISTIAN J. MOHN, Resident Director for North America. Mr. VINCENT A. DEMO, HAMBURG-ATLANTIC LINE, HOME LINES AGENCY, INC., New York, N.Y., September 3, 1965. Joint General Manager, the Cunard Steam-Ship Co., Ltd., DEAR MR. DEMO: We refer to testimony of Mr. John E. Smith, Jr., before the Subcommittee on Merchant Marine of the House Merchant Marine and Fisheries Committee on August 31, 1965, in connection with legislation proposed by Representatives Mailliard and Garmatz. Facts are facts, and we would like, therefore to acquaint you with the following as the subcommittee may have gained the impression from Mr. Smith's remarks that all steamship companies which had agreements with organizations or corporations for which Mr. Smith acted in concluding arrangements for the hire of accommodations on board vessels had always received payment in full "2 to 6 weeks before the scheduled sailing date. (The shipowner gets 100 percent of his charter hire at this time, the balance going to the cruise operator for commissions, etc.)." Bancroft Navigation Co., Ltd., a Liberian corporation with headquarters in Bermuda for which Mr. Smith was the chief negotiator, entered into a contract with Hamburg-Atlantic Line on May 23, 1961, for a program of cruises during the period November 2 to November 22, 1961, and the agreement provided that final basic payment of $104,000 was to be made to the line on October 31, 1961, the day on which the vessel was dispatched from New York to Port Everglades, Fla. By letter of November 9, 1961, from Bancroft Navigation Co., Ltd., to First National City Bank of New York, signed by Mr. John E. Smith, Jr., president, Bancroft transmitted four checks totaling only $79,000. Thus payment was not only considerably late but was $25,000 short of the amount due. Nevertheless, Hamburg-Atlantic Line sailed the SS Hanseatic from New York October 31, 1961, and from Port Everglades on November 2, 1961, on her first cruise of the program and honored tickets issued to 669 passengers. Very truly yours, JOHN J. NESTOR, Passenger Traffic Manager. HOUSE OF REPRESENTATIVES, COMMITTEE ON MERCHANT MARINE AND FISHERIES, Mr. JOHN E. SMITH, Washington, D.C. DEAR MR. SMITH: On August 31, 1965, you testified before the Subcommittee on Merchant Marine concerning several bills then being considered with respect to the operation of cruises. Since presenting your views, the committee has received several letters from various firms taking exception to some of your observations. These firms have requested that their letters be included in the record. 53-924-65-14 In view of the request of the several firms to include their letters in the record, you may wish to have an opportunity to review their comments and make a supplemental statement for the record. For this reason there are enclosed herewith copies of the several letters received by the committee. We would appreciate your early response, or an indication that you do not desire to submit a supplemental statement. Chief Counsel, Committee on Merchant Marine and Fisheries, DEAR MR. DREWRY: In answer to your letter of September 17 in which you enclosed letters from the various steamship companies who were taking exception to some of my observations, I would like to make the following comments. I. Mr. Vincent A. Demo's Enclosures: 1. Letter from the Confederation of Italian Shipowners dated March 13, 1965, Rome. The facts presented by the Confederation of Italian Shipowners in their letter dated March 13, 1965, are completely false and misleading. The Riveria Prima owners were not owed the sums referred to beyond the time when the owners of the vessel breached their contract. Furthermore, to this date, the Riviera Prima owners have not paid over to Caribbean Cruise Lines, Inc., the $150,000 indemnity (which was a clause in the charter party) if the vessel was sold during the term of the contract which was to expire in June of 1965. 2. Swedish American Line's letter dated September 9, 1965, signed by Mr. John M. Fraser, Jr., vice president. Out of the many hundreds of charters over a period of 18 years, the Swedish American Line has seen fit to base their refutation of my statements on the incident at the time of the Cuban crisis when Caribbean Cruise Lines chose to operate their vessel and to mitigate their loss instead of canceling the charter because of the "warlike" operations in the Caribbean at that time. Further, the amount owed to Swedish American Line is not $64,000, but actually $39,293.50 plus accrued interest to March 1965. The Swedish American Line accepted as security for this payment the assignment of a Lloyds of London policy, which, when settled, should reimburse them in full. 3. Norwegian America Line's letter dated September 7, 1965, and signed by Mr. Christian J. Mohn, resident director for North America. The Norwegian America Line as their letter indicated were paid in full. The incident similarly occurred at the time of the Cuban crisis when, here again, Caribbean Cruise Lines chose to mitigate their losses and operated the vessel with greatly reduced passenger lists. II. 4. Hamburg-Atlantic Line's letter dated September 3, 1965, and signed by Mr. John J. Nestor, passenger, traffic manager for Home Lines Agency, Inc., G.A.: Mr. Nestor's letter does not mention the fact that Caribbean Cruise Lines, Inc. had a substantial bank guarantee on deposit with the International Bank of Washington to cover any defaults of the charterers. All Hamburg-Altantic Line had to do was to call on the bank guarantee to make up the deficiency indicated. III. 5. Statement of Mr. Edwin W. Stephan, general manager of Yarmouth Cruise Lines, Inc.: In view of the fact that this case is now before the courts, it would be inappropriate for me to make any further comment other than what I have presented before your committee on August 31, 1965. To summarize, the only shipowner in our 18 years of chartering ships who has ever been in doubt concerning his full payment was the one sailing of the MS Gripsholm of the Swedish American Line on November 1, 1962, at the time of the Cuban crisis-and, even then, the Swedish American Line have an assignment of a $58,000 Lloyds of London policy to cover their debt of $42,833.53 (principal of $39,293.50 and interest of $3,540.03). I still urge the committee to give full consideration to the protection of the charterers as well as the American public in dealing with foreign-flag shipowners. |