seamen on vessels subjected to extreme and immediate danger of destruction as a result of enemy action.

In view of the unconditional surrender of Germany and the consequent change in war hazard in the Atlantic and adjoining waters, decision 2C was issued, effective July 15, 1945. The decision provided for the establishment of two new bonus areas in the North and South Atlantic Oceans and adjacent waters:

(a) An area in the North Atlantic and Arctic Oceans and adjacent waters east of 12° west longitude to its intersection with the northwest coast of Africa (including the Mediterranean and adjoining seas) in which a voyage bonus of 66% percent ($80 monthly minimum) is paid.

(b) An area in the North Atlantic and Arctic Oceans and adjacent waters west of 12° west longitude and in the South Atlantic Ocean and adjacent waters west of 18° east longitude in which 33% percent ($40 monthly minimum) is paid. These areas are in lieu of the areas in the North Atlantic Ocean and adjacent waters east of 9° west longitude and in the Mediterranean and adjoining seas in which $5 per day and the voyage bonus of 100 percent ($100 monthly minimum) were paid and in lieu of the areas west of 9° west longitude in the Atlantic Oceans and adjacent waters in which 66% percent ($80 monthly minimum) were paid.

The Board has made no changes in the area bonus and voyage bonuses paid in the Pacific and Indian Oceans and adjoining waters. Bonus in these areas remains as specified in the previous decision, 2B.

Nor has the Board changed the vessel attack bonus which continues applicable in all waters.

For reference, we are attaching copies of all bonus decisions and amendments thereto.

Very sincerely,

JOHN M. CARMODY, Chairman.

MARITIME WAR EMERGENCY BOARD,
March 26, 1943.

Hon. S. O. BLAND,

House of Representatives, Washington, D. C,

MY DEAR CONGRESSMAN BLAND: This will acknowledge the receipt of your letter of March 4, 1943, to which were attached enclosures from seamen's organizations on the west coast protesting recent decisions of the Maritime War Emergency Board.

You will recall that shortly after the outbreak of the war between the United States and the Axis Powers, a series of conferences was held between the various maritime unions and the steamship operators of the American merchant marine. These conferences culminated on December 19, 1941, in the execution of an agreement known as the Statement of Principles, copy of which is attached.

The Statement of Principles provided for the creation of the Maritime War Emergency Board, the members of which were to be designated by the President of the United States. The signatories gave mutual assurances against strikes, stoppages of work, and lock-outs; and agreed that all disputes relating to war risk compensation and war risk insurance would be settled on a uniform basis by the Board. In accordance with the request made in the Statement of Principles, the President designated the undersigned as Chairman of the Board, with John R. Steelman and Frank P. Graham as members.

The Maritime War Emergency Board has issued nine decisions concerning the payment of war risk compensation (port and voyage bonuses, and detention and repatriation benefits), concerning reimbursement for loss of personal effects, and concerning insurance benefits (loss of life and disability). These decisions have been modified from time to time to meet changes arising in the course of the war. The Board has also issued several thousand interpretations or rulings with respect to matters involving specific situations. The Board is pleased to report to you at this time that its decisions and rulings have met with general acceptance by the maritime industry.

History

In the December 1941 conference, the representatives of the steamship operators and the maritime trade-unions stated that the employers and the unions were in agreement in all matters in the collective bargaining agreements except war risk compensation and war risk insurance. It was stated that

(a) The bonus provisions in the collective bargaining agreement were based on inaccurate information supplied by seamen employed on vessels which had returned from war zones, and information published in the press or broadcast on the radio.

(b) Three systems of war risk compensation and war risk insurance prevailed: Atlantic, Gulf, and Pacific coasts.

(c) Because of (a) and (b), the machinery for settlement of disputes provided for in collective bargaining agreements was inadequate.

It was generally agreed therefore that it was of utmost importance to the war effort of the industry that a system of war risk compensation and war risk insurance be established which contemplated:

(a) payments in accordance with the risk involved.

(b) uniform provisions for the three coasts, and

(c) machinery to adjudicate disputes between steamship operators and the maritime trade-unions.

Statement of Principles-powers of the Board

The Maritime War Emergency Board has been requested by the parties signatory for a statement of the Board's authority to issue decisions of general application in the fields of war risk insurance and compensation of the personnel of the American merchant marine.

The Statement of Principles provides:

“1. Insofar as areas, war bonuses, and insurance are concerned, it is regarded as desirable and necessary that a uniform basis for each covering the entire Nation and the entire industry be reached."

The third paragraph of page 1 of exhibit A of the Statement of Principles provides:

"Under present war conditions, however, neither the unions or the steamship operators will at all times be in a position to obtain adequate information with regard to the extent of war risks in order to enable them to bargain intelligently with regard to questions relating to war risk compensation and insurance of the personnel of such vessels."

Under these provisions of the Statement of Principles, the Board is expressly charged with the duty of establishing a uniform basis of war-risk insurance and compensation based on information available to the Board and not available to the signatories. In the exercise of this authority, the Board has heretofore issued 9 decisions and 23 amendments without challenge until now. The first decisions of the Board gave advantages to some signatories and took advantages away from others as any fair uniform basis must. With the subsequent spread of the war over the world, all of the subsequent decisions and amendments have been advantageous to the union signatories. The inequalities and inequities developed by more than a year's experience of administration under the Board's decisions, and the substitution of Government-as employer, insurer, and owner or charterer of the American merchant marine-have indicated the necessity of revision of all of the Board's decisions and amendments. Under a belief that these revised decisions are less favorable to seamen than the superseded decisions and amendments-a belief which the Board does not share-the authority under which the Board has been acting for more than a year is now for the first time challenged.

In establishing uniformity by its decisions, the Board has sought, and will continue to seek, a stabilized system of war-risk insurance and compensation. Two factors are evident, however, and must be constantly borne in mind:

1. In the field of war-risk compensation, the Board is guided by confidential information available to it as to areas of risk. Such areas constantly change, and therefore uniformity in this field requires constant consideration of change of bonus areas. Such uniformity, therefore, must consist of uniform application of decisions of the Board which can be changed from time to time in accordance with increase or decrease of the risk involved in particular areas.

2. In the field of war-risk insurance, the Board is guided by the consideration of establishing the maximum protection possible to seamen and their dependents. In this regard, the Board, by the supplement to decision No. 1, established certain requirements as to insurance coverage to be provided by steamship operators. At that time, War Shipping Administration was not empowered to write insurance and consequently all such insurance was written by private insurance. companies with resulting lack of uniformity in settlement of claims under such policies. It has become apparent that provisions designed to set up a framework for private insurance are inadequate to cover such insurance now provided by

War Shipping Administration. Therefore, the second seamen's war-risk policy has been approved by the Board to carry out its obligation to provide a complete, expeditious method of payment of insurance benefits in all cases.

The Statement of Principles also provides for the settlement of disputes:

"4. To provide machinery for the settlement of disputes without interruption of service or stoppage of work during the period of the war and to insure the application of the maximum war effort and coordination of all war activities coming within the purview of the maritime industry, the Maritime War Emergency Board with the powers and purposes set forth in exhibit A, attached hereto, will be created.

In exhibit A of the Statement of Principles, commencing with the fourth paragraph on page 1 of that exhibit, the procedure for the settlement of disputes is set forth.

Under these provisions of the Statement of Principles the Board is therefore expressly charged with the duty of settling disputes arising in connection with war-risk insurance and compensation. Since settlement of a dispute binds only the parties to such dispute it is obvious that uniformity cannot be achieved through the settlement of a dispute between the two signatories. The authority to settle disputes given to the Board under the Statement of Principles, therefore, necessarily relates only to questions of interpretation of its decisions of general application.

Under the Statement of Principles the Board, therefore, has authority

1. To provide a uniform and stabilized system of war risk insurance and compensation based on available information to which the Board has access. 2. To settle disputes in such fields, when submitted by a signatory, on questions of interpretation and application of the provisions of such uniform system of war risk insurance and compensation.

Secondly, in formulating the initial decision on war risk insurance (decision No. 1, issued December 22, 1941), the Board made a statement relative to the right to act on its own motion, in the preamble:

"This is an interim decision made to govern the relations of the operators and their employees in the emergency pending further consideration and, if necessary, revision."

The Board asserted the right to act on its own motion in the initial decision on war risk compensation (decision No. 2, issued January 10, 1942). At that time, the Board was warned by authoritative sources of information in the United States Government that the strategy of war was still developing and that war risk would shift intermittently from zone to zone before the end of the year.

"In making this decision the Board has given due consideration to the existing conditions at Sea and in port, based upon the latest and best information available, and to existing collective bargaining agreements. As a result of authentic information of important changes or developments in war conditions, the board may modify, extend, or revoke any of the provisions of this decision either on its own motion or after written petition and careful consideration of evidence presented by the parties affected."

Such is and has been the Board's understanding of its authority under the Statement of Principles, and such has been the Board's unchallenged practice over the year and more of its existence. The Board fully recognizes, however, that whatever power or authority it has is derived from the signatories to the Statement of Principles. Therefore, if the signatories differ with the Board's conclusions as to its powers and with the Board's past practices, any amendment or clarification of the Statement of Principles on the part of the signatories will, of course, be welcomed by the Board, and the Board will, of course, likewise act henceforth in accordance with any such amendment or clarification.

War risk insurance

Prior to the formulation of the decisions to replace the provisions in the respective collective bargaining agreements which the parties signatory had placed in dispute, the Board endeavored to learn the philosophy of the parties signatory. The discussion revealed a basic conflict between the operators and the unions on a fundamental question: war risk. The representatives of the maritime unions stated that insurance and bonus were compensation for war risk; and war risk was defined as a universal peril which threatens seamen employed on a vessel venturing to sea during the war period, including enemy action, inadequate lifesaving gear, proceeding without benefit of convoy and absense of navigational aids, etc. The representatives of the steamship operators corroborated the statements of the union that bonus was compensation for war risk, but qualified their

statements by declarations that war risk had been defined by court decisions, maritime law, and insurance law.

The benefits in the decisions which the Board promulgated are presently limited to war risk as defined by admiralty law, insurance law, and court decisions. The limitations imposed by law have worked considerable hardship on the seamen, as well as the beneficiaries of deceased seamen. For example, stranded vessels such as the Independence Hall, transporting military cargo and proceeding on a course, in unfamiliar waters, set by the Navy Department, have been placed in the category of marine peril by definition. The narrow definition of war risk has been unsatisfactory to the party signatories as a whole. In fact, the operators joined the unions in protesting that injustices are benig done daily by the narrow definition. As in matters having to do with war risk compensation, certain parties signatory have petitioned the Board to waive the legal definition of war risk and redefine war risk in the light of present war conditions without waiting for a dispute to develop.

The Board has revised decision No. 1 twice, without protest from the parties signatory but acting on authentic information, such revisions increasing the benefits for the seamen. The first decision, which was revised twice, insured seamen against loss of life and disability due to risks of war, in the amount of $5,000.

The second seamen's war-risk policy, which superseded decision No. 1, revised, as of March 15, 1943, greatly increases the scope of the protection afforded and nicreases certain of the benefits particularly under those provisions increasing the aggregate amount of installments payable in case of total disability from $5,000 to $7,500.

Risks of war against which a seaman is protected have been greatly broadened under the new insurance policy. The old life and disability policy covered only perils directly arising out of enemy action and collisions in convoy.

Under the new policy the definition of war peril is extended uniformly to cover a number of situations defined in article 3 of the new policy which were not covered under the old decisions, such as absence of navigational aids, collisions in convoy, absence of pilot, etc. The coverage under the new policy goes as far as is possible at this time under the legal authority of the War Shipping Administration to insure seamen for periods arising out of the war. The Board expects to broaden the risks covered to an even greater extent if in the future the War Shipping Administration becomes authorized to write insurance covering further perils.

Such

The Board has the power to amend the second seamen's war risk policy. amendments can be made retroactive, provided the War Shipping Administration concurs therein as underwriter. It is believed that any modifications which appear to the Board to be clearly warranted will be concurred in by the War Shipping Administration provided retroactive application of such changes is considered by the Board to be necessary in the interests of justice.

War risk compensation

The decisions on war risk compensation and war risk insurance which the Maritime War Emergency Board has promulgated from time to time have been based on authentic information obtained from authoritative sources within the United States Government. The Board has under constant study the questions of areas of risk and has been on constant communication with authoritative sources of authentic information within the United States Government. Once a month, a representative of the Board consults with responsible persons in the Government who are familiar with the most recent developments of the war and the decisions of the Board are studied in the light of the report of the conclusions reached in the consultation.

In the course of the 14 months, the Board was forced to revise the bonus decision four times in order that the system accurately reflected the war risk involved. For example: while formulating decision No. 2, the Board was informed that the Atlantic Coast of the United States and the Gulf of Mexico were ree of danger. Ten days after the decision was issued, submarines struck on the Atlantic coast and in the Gulf of Mexico, with such force that the Board was forced to revise its decision immediately. In the spring of 1942, the Board was advised that the Indian Ocean was relatively free of hazard and fixed bonuses accordingly. Thirty days later, a task force of the Japanese Navy invaded the Gulf of Bengal and drove virtually all shipping from that area. To illustrate further, there are relatively few sinkings in the Caribbean area, but the Board, has been advised that sinkings "may start at any time." At such

time the Board will consider the bonus decision and weigh payments in the light of the war risk.

Bonuses have in the past taken two forms; first, voyage bonus, based on a percentage of wages to compensate for risk undergone during the voyage through hazardous waters. At the present time, 100 percent voyage bonus is payable on all voyages except voyages between ports on the Pacific coast of the Western Hemisphere, where 40 percent is payable, and except while vessels are in inland waters of the Western Hemisphere where no bonus is payable. No changes have recently been made in rates of voyage bonus, upon advice of authoritative sources within the Government.

Secondly, the Board decisions have heretofore provided for payment of a flát sum of $125 to each seaman entering a port within 10 fixed areas where there has been increased danger. These port bonus areas have been enlarged from time to time and new areas have been added as hazard increased in connection with spread of the war. I am enclosing a copy of amendment No. 7 to decision No. 7, revised, issued by the Board on August 22, 1942, which sets forth in paragraphs the various port bonus areas as they applied up to March 1, 1942, with the exception that on January 14, 1943, ports on the Atlantic coast of French Morocco were added to the Mediteranean area.

During the last few months of last year, the Board came to a realization that the existing port bonus system was faulty in that it did not truly reflect actual risk involved. In the first place, a number of glaring examples of inequality developed due to the practice of placing a vessel in shuttle service between two port bonus areas so that a large number of port bonuses became payable within a short period of time. I am enclosing herewith a copy of a report to the Board showing the pay roll on a typical "shuttle" situation during a voyage of approximately 7 months to Australia, and between Australia and the island to the north. The Board on its own motion corrected the situation on February 16, 1943; amendment No. 10 to decision No. 7, revised, was promulgated canceling all previous port bonus decisions and amendments and establishing a new system. I am attaching a copy of the amendment for your information. In the opinion of the Board, the amendment provides seamen in the actual danger area with the maximum protection.

I note that the resolution attached to your letter refers to two divisions of the War Shipping Administration; namely, the Recruitment and Manning Organization and the Division of Maritime Training. The records of these divisions are open to you or to members of the Committee on the Merchant Marine and Fisheries at any time. It may be stated categorically that if it had not been for the Division of Maritime Training and the Recruitment and Manning Organization, it would have been impossible for the War Shipping Administration to operate the vessels of the American merchant marine.

Sincerely yours,

EDWARD MACAULEY, Chairman. The CHAIRMAN. Again I ask if there is anyone else present who desires to be heard.

Mr. BONNER. Mr. Chairman, I would like to place in the record at this point an extraction from a publication, The Navy as a Peacetime Career. These two sections that I wish to place in the record are titled "It's Not What You Make, But What You Salt Away That Counts," and "Navy Pay versus a Civilian Salary."

The CHAIRMAN. Without objection they will be incorporated at this point.

(The statements are as follows:)

IT'S NOT WHAT YOU MAKE BUT WHAT YOU SALT AWAY THAT COUNTS

The strange thing about Navy pay is that so many Navy men only seem to consider the base pay. They look at the $50 a month cash for an apprentice seaman and take it for granted that he is much worse off financially than his civilian buddies earning several times that sum. Actually, he is much better off, as a rule.

Big salaries in themselves do not mean a thing. What really counts is how much money a man is able to salt away after all expenses are paid. And here a Navy man is lucky, for all the major items of his living expense are provided free of charge, whereas a civilian has to pay for these items out of his own pocket.