prejudice and unfair practices; but do not include authority to disapprove a fare unless discriminatory. The Commission has had no occasion to invoke these sections with regard to passengers. Because we do have a statutory responsibility under the above sections for some aspects of passenger travel, the Commission has kept informed generally on passenger trade. Since its establishment in 1961, the Commission has received only a dozen or so complaints regarding the treatment of passengers. Most complaints received by the Commission involve service, accommodations, and safety. I would like to point out here that the Federal Maritime Commission has no statutory jurisdiction with respect to safety or comfort of passenger vessels regardless of the flag they are flying. Safety of vessels comes under the jurisdiction of the Coast Guard in the Department of the Treasury. Last summer a great deal of publicity was engendered about the cancellation of the cruise on the ship Riviera Prima. As a result of that cancellation, disappointed cruise passengers were left without any recourse to recover moneys paid for cruise passage. The Commission undertook consideration of means of protecting cruise passengers against losing passage money because of the cancellation of a cruise. The legislative recommendation is embodied in H.R. 10327. This bill would require chartered vessel operators offering and conducting ocean cruises from the United States to file a bond or other security which would protect passengers from losing their passage money in case of nonperformance of an ocean cruise. Certain identifying information would also have to be filed with the Federal Maritime Commission. The security intended by this bill would be in the nature of a performance bond written by an American bonding company. However, the Federal Maritime Commission would be authorized to establish the form of the bond and to accept other security that would accomplish the intended protection. The Commission is authorized to act as a repository for the information required by the bill and to satisfy itself that the financial security has been accomplished. The Commission would not, however, be authorized to act on claims arising out of the nonperformance of a cruise. Some investigation would be necessary to assure the Commission that the terms of the act were being carried out. The class subject to the bill consists, in the main, of those who operate a cruise without sufficient financial means and responsibility which protect the public from the consequences of being stranded. The bill exempts operators who have a proprietary interest in a vessel employed in such cruise operation, because such an interest would indicate a sufficient degree of financial responsibility and because incidents leading up to this legislation have involved operators of chartered vessels. We believe this legislation is the solution to the problem raised by the cancellation of the Riviera Prima cruise. We have found that, generally, the cruise industry is trouble free. Lines that offer cruises for American passengers are generally reputable and financially stable. This legislation is designed to give a cruise operator using a chartered vessel an element of financial responsibility which can be tapped should the cruise be canceled. At this time I would like to present some clarifying language in connection with H.R. 10327. While the present language of section 2 calls for no one to advertise an ocean cruise by a chartered vessel without first having filed with the Federal Maritime Commission, we believe that the same result can be accomplished by changing lines 11 and 12 on page 2 after the word "without" on line 11, substituting the words "there first having been filed" for the words "first having filed." Admiral HARLLEE. I am starting on page 3, the first complete paragraph. It is clear from the legislative history of the Shipping Act and subsequent amendments thereto that Congress was primarily interested in the practices of common carriers and other persons as they relate to the carriage of cargo rather than passengers. However, Congress did consider the passenger problem and in addition to section 15 the sections which relate to passengers are sections 14, 14(a), 16 first, and 17. These sections have to do with discrimination, prejudice and unfair practices; but do not include authority to disapprove a fare un less discriminatory. The Commission has had no occasion to invoke these sections with regard to passengers. Because we do have a statutory responsibility under the above sections for some aspects of passenger travel, the Commission has kept informed generally on passenger trade. Since its establishment in 1961, the Commission has received only a dozen or so complaints regarding the treatment of passengers, including complaints involving the Riviera Prima and Yarmouth Castle each affecting about 325 people. Mr. DOWNING. You say the Yarmouth? Admiral HARLLEE. Yarmouth Castle. Mr. DOWNING. Is that the vessel outfitted in Tampa that was referred to earlier? Admiral HARLLEE. The Yarmouth Castle was chartered by the Caribbean Cruise Lines, Mr. Chairman. Most complaints received by the Commission involve service, accommodations, and safety. I would like to point out here that the Federal Maritime Commission has no statutory jurisdiction with respect to safety or comfort of passenger vessels regardless of the flag they are flying. Safety of vessels comes under the jurisdiction of the Coast Guard in the Department of the Treasury. Last summer a great deal of publicity was engendered about the cancellation of the cruise on the ship Riviera Prima. As a result of that cancellation, disappointed cruise passengers were left without any recourse to recover moneys paid for cruise passage. The Commission undertook consideration of means of protecting cruise passengers against losing passage money because of the cancellation of a cruise. The legislative recommendation is embodied in H.R. 10327. This bill would require chartered vessel operators offering and conducting ocean cruises from the United States to file a bond or other security which would protect passengers from losing their passage money in case of nonperformance of an ocean cruise. Certain identifying information would also have to be filed with the Federal Maritime Commission. The security intended by this bill would be in the nature of a performance bond written by an American bonding company. However, the Federal Maritime Commission would be authorized to establish the form of the bond and to accept other security that would accomplish the intended protection. The class subject to the bill consists, in the main, of those who operate a cruise without sufficient financial means and responsibility which protect the public from the consequences of being stranded. The bill exempts operators who have a proprietary interest in a vessel employed in such cruise operation, because such an interest would indicate a sufficient degree of financial responsibility and because incidents leading up to this legislation have involved operators of chartered vessels. I would like to emphasize, Mr. Chairman, that I think this is quite an important point. Our New York district manager participated in some rather extensive investigations of this subject, along with a good many other persons, and we investigated it here. I have with me, which I would like to submit for the record, all of the incidents that we could find where cruise operators defaulted. I am speaking of the subject of financial responsibility. There are some six of these incidents if you go back to 1930. The information on the earlier ones is skimpy but I think it is quite important to note that in each and every case of these, these were not steamship lines that owned their ships. They were charterers, companies which had chartered ships and got themselves in difficulties. That is why H.R. 10327, the bill that we favor, Congressman Garmatz' bill, goes to protection of the public from irresponsible charterers of ships. We do not think that either the American-flag lines, such as United States Lines or Grace, or the foreign lines like Cunard or Holland-American, need to submit any bonds, because there is no record of defaulting problems with them. To make them have to license themselves in the matter of financial defaulting would be clearly overregulation. So with your permission, I will submit this for the record. 1 Claims in bankruptcy suit (approximate). Ship withdrawn by owner for failure of Caribbean to pay charter hire. Vessel in need of repairs. Dispute between Caribbean and owner as to extent of repairs required and responsibility for such repairs. Cruise canceled because of alleged bad weather. Refunds refused. Company went out of business. $ No record of reason. Not a cruise, regular transatlantic service. 7 Libeled by creditors and sold for $400,000. All this money went to crew wages, suppliers, and shipyard, Court said shipowner and not the ship was the common carrier and obligation was that of the carrier and not the vehicle. 8 No record of reason. Mr. CASEY. You say Mr. Garmatz' bill excludes? Admiral HARLLEE. Owners of vessels. Persons who charter vessels are included. Mr. CASEY. Does it exclude them? Admiral HARLLEE. I am discussing H.R. 10327, Congressman Casey. Mr. CASEY. I know, but I cannot find that it does exclude owners of vessels. I would object to excluding owners of vessels because prior to the creation of your Commission, if my memory serves me correctly, we had the Shrine in Houston putting up deposits for a vessel on a trip for the future and that vessel was impounded in Italy or somewhere and never did make its cruise. Admiral HARLLEE. That case did not come to our attention but there must have been somebody in Houston that arranged for it and accepted the money. Mr. CASEY. As I understand it, it was paid direct to the owners of the vessel, it was supposed to sail from New York and they were supposed to make the next trip but the boat never made the next trip. It seems it was mortgaged to the hilt and also had a lien on it for repairs. The last I heard they were going to get nothing. Admiral HARLLEE. Do you recall the name of the ship? Admiral HARLLEE. We made as exhaustive an investigation as we could and did not run across such a case. Do you recall the year that happened? Mr. CASEY. About 1959 or 1960. Admiral HARLLEE. In 1959 there was the case of the Arosa Sun, which was a chartered vessel. I can only say our investigations did not reveal that as a case of a nonchartered vessel. Mr. CASEY. I am not for excluding anybody myself. Admiral HARLLEE. The American-flag lines have very appreciable assets in their various reserve funds. The foreign-flag lines, the reputable type such as Holland-American and Cunard have definite assets in the United States that can be relied upon. Mr. CASEY. You have plenty of broad authority, bond or other security with the Commission. I would not think that is a major problem. Admiral HARLLEE. We believe this legislation is the solution to the problem raised by the cancellation of the Riviera Prima cruise. We have found that, generally, the cruise industry has been trouble free. Although I suppose it is possible that it may be potentially full of troubles. The actual record as far as the complaints with us, and incidents that we have investigated, indicate a very small amount of trouble. Lines that offer cruises for American passengers are generally reputable and financially stable. This legislation is designed to give a cruise operator using a chartered vessel an element of financial responsibility which can be tapped should the cruise be canceled. (The following letter was forwarded to the committee for inclusion in the record:) Hon. ROBERT Casey, House of Representatives, Washington, D.C. FEDERAL MARITIME COMMISSION, DEAR CONGRESSMAN CASEY: During the course of the August 24 hearings before the Subcommittee on Merchant Marine of the House Merchant Marine and Fisheries Committee concerning cruise legislation, you stated the following: "We had the Shrine in Houston putting up deposits for a vessel on a trip for the future and that vessel was impounded * * * and never did make its cruise." As reported in the course of my testimony on August 25 our preliminary inquiries led us to believe that that cruise had been on a chartered vessel and that when the charterer went bankrupt the Shrine lost the money which it had advanced. We were led to that conclusion by reason of certain references to an organization known as "Caribbean Cruises, Inc.," which was to receive the deposits for the cruise. Following is a result of the investigations undertaken by the Commission and the conclusions reached : On August 24, 1965, I ordered our New York and New Orleans offices to immediately institute an investigation into the entire matter, and to report the results to me as soon as possible. In addition, an investigator from our Washingon office interviewed a former executive of Caribbean Cruise Lines in order to ascertain what, if any, role had been played by that company in the Shriners' cruises. The investigators, after personal contacts with parties in New York, Fort Worth, Houston, Miami, and Washington, D.C., have now submitted their reports. In the summer of 1958 the Fort Worth and Houston Shrines planned cruises on the Panamanian-flag vessel Arosa Sun, owned by Arosa Lines, Inc., a Swiss company. Both the Houston and the Fort Worth Shrines in August 1958 put up a total of $75,000 (Houston $25,000 and Fort Worth $50,000) deposited with Arosa Lines, Inc., for three Caribbean cruises on the line's Arosa Sun to leave from Galveston in March and April of 1959. However, the Arosa Sun never arrived at Galveston because the ship was libeled at Bremerhaven, Germany, on October 27, 1958, by the ship's mortgagor. Liens, including the mortgage, amounted to some $3,850,000. According to Shrine officials, neither the Houston nor Fort Worth Shriners had the deposits refunded. (You may be interested to know that Caribbean Cruise Line, Inc., which had chartered the vessel but for other than the Shrine cruises, did obtain a substitute vessel for the Shriners, the cost of which was over and above the amounts deposited by the Shriners with Arosa Lines.) I have attached to the original of this letter a copy of the investigative report and pertinent papers relating thereto. Please feel free to make any use which you may desire of these materials, including insertion in the record of the recently concluded hearings. We appreciate your bringing this matter to our attention because, by knowing the identity of the stranded passengers we were able to conduct a more meaningful inquiry into the Arosa Sun incident than would otherwise have been possible. Do not hesitate to call upon us if there is anything else we can do regarding this matter. Sincerely, JOHN HARLLEE, Rear Admiral, U.S. Navy (retired), Chairman. Admiral HARLLEE. At this time I would like to present some clarifying language in connection with H.R. 10327. While the present language of section 2 calls for no one to advertise an ocean cruise by a chartered vessel without first having filed with the Federal Maritime Commission, we believe that the same result can be accomplished by changing lines 11 and 12 on page 2 after the word "without" on line 11, substituting the words "there first having been filed" for the words "first having filed." This would make it unnecessary for more than one person to file with the Federal Maritime Commission, once the information and bond called for has been filed. For example, after an acceptable filing each and every travel agent who advertises a cruise would not have to file the same information. Mr. Chairman, I would like to make a number of comments on the testimony this morning, if I may on other problems even though they are not in our jurisdiction. I would like to do this in an effort to be helpful. I think the other bills proposed, in addition to Congressman Garmatz', have a very excellent purpose and with certain modifications could in our opinion be useful. I think they are deserving of the most careful thought. For this reason, I am going to make a number of comments, not so much in the spirit of opposition or adverse criticism, but in the hopes that it might possibly be helpful. Mr. DOWNING. Go right ahead, sir. Admiral HARLLEE. With regard to the promotion of the American merchant marine, to which part of these bills go, the Commission, of course, is interested, as is any American citizen, in the American merchant marine. The Commission attempts to promote and does promote the American merchant marine by seeing that American-flag carriers are admitted to conferences, that malpractices are reduced, that there is a free flow of commerce, and that there is not discrimination by other countries against our merchant marine, which is covered by section 19 of the 1920 act. Discrimination is a problem with which we have had a great deal of difficulty, especially in Latin America, over a number of years. We have threatened and issued offsetting measures. There are troubles of this sort looming in Indonesia which could be important to American President and Lykes Lines. I think we help to promote the American merchant marine by seeing that there is not discrimination anywhere and that there is a free and open marketplace. I will discuss further some of the clauses in these bills in that connection. |