the ground rules, if I have to use that term, that we will have to go by. Captain Goodman, do you have some specific items? Mr. GLEASON. I am just reminded here now more than 200,000 tons of foreign tonnage bought before tender issued for one American ship by Continental. Mr. GILES. Would you repeat that? Mr. GLEASON. More than 200,000 tons of foreign tonnage was booked before tender issued for one American ship by Continental. Before they at least booked for one American ship they booked 200,000 tons foreign ships. In no other country in the world could you do this. Mr. GILES. Mr. Stoval, will you respond to that? As I recall, Mr. Gleason, we got with Continental very soon after we knew they had a contract. Now, will you respond to this particular point? STATEMENT OF L. C. STOVALL-Resumed Mr. STOVALL. I would like to preface my remarks by saying under the Public Law 480 program and ICA program the foreign missions are allowed to book foreign or American as long as they balance off at the end of the shipping period. Mr. GLEASON. I am not interested in Public Law 480. I am interested in this Russian stuff. Mr. STOVALL. This contract was concluded on January 2, which was a Thursday, late in the afternoon. Friday was January 3. It was practically done by a transatlantic telephone call becoming a transatlantic handshake. The American market, since the Government has put ceiling rates on it, cannot move, consequently there is little fluctuation. The owner is entitled to ask the ceiling without any trading. We can't negotiate on rate. We must pay maximum rates if he sees fit to request. The foreign market on the other hand has been extremely erratic and it has been very volatile since last August and September. We have experienced increases and decreases, as much as two and a half dollars a ton over a short period of 3 to 4 weeks. Considering the size of this program, 500,000 tons of foreign and 500,000 tons of American, we deemed it prudent the minute the business was concluded to protect ourselves by getting at least 100,000 or 200,000 tons of foreignflag tonnage booked where owners were willing to fix before the market moved or additional business came along and the market took a jump which would create a tremendous loss on our freight operation. It was on the 3d of January that about 80,000 tons was booked. The following week we booked another 30,000 or possibly another 50,000. Shortly thereafter, within a day or so, we were in Washington to sit down with these gentlemen to work out the contract terms and tender terms for the American-flag ships. Believe me, our first tender, the responses were nil. Our second tender, the responses were nil. It was the owner's option under the guidelines set forth by the Maritime Administration to work any business he saw fit and to still keep us hanging until the last minute and come in and book this cargo. Consequently, there was no advantage to the American owner to come in and book right away unless he specifically wanted to. We were successful in booking a few ships in the very early stages. Then there was practically no activity. Then there was another brief period of activity. Then the owners sat back and said, "We have until 5 p.m.' We did not come in and apply for the waiver after the 5 days as we could have. We postponed that for some 8 or 9 days. We agreed with the Maritime Administration even during the 5-day period we would solicit trade as prescribed by current export Bulletin 883-we would continue to negotiate and did so. These owners had the opportunity and exercised their option of holding off until the last minute and then coming in and saying "we book, book, book." Mr. GILES. What was the date of your contract? Mr. STOVALL. January 2 it is dated Mr. GILES. What was the date of your first tender? Mr. STOVALL. The first tender was January 7-I am sorry, January 7 we were in Washington, January 6 we were in Washington and we went back and prepared the tender. Mr. KLOSTY. January 8. Mr. GILES. Do you have the information? Do you have the information how much foreign tonnage did you book between January 2 and January 8? Mr. STOVALL. I would say approximately, Mr. Gleason's figure, of 200,000 tons. I believe it was 180,000 to be exact. I don't say it was all chartered during that period. I believe the first 3 days we chartered 110,000 and then we took a ship here and there. We took a couple of time-chartered boats to maintain some flexibility in the business. Then we withheld chartering foreign flag. We could not hold off forever and since American tonnage did not respond immediately we could not hold off chartering foreign flags because we knew we would require 500,000 tons of foreign flags. Mr. GLEASON. You made the ground rules for the 500,000 tons. There was not any ground rules made with the American union when we were requested to move this grain, about 500,000 tons going into foreign ships and 500,000 tons going into American ships. We were of the opinion that all the American ships that were available would be used to carry this grain. But you made the ground rules that 50 percent of this cargo to the foreign bottoms. gave Mr. GILES. Mr. Gleason, that is not right. Such ground rules as we have here today Mr. GLEASON. I am talking about originally. Originally when Mr. Reynolds came in to us, Mr. Rosell followed through when a ship was picketed in Albania. I believe Cargill got a waiver on that ship. Came in again. We told them we were not anxious to move this grain but we wanted the American ships to handle it. Now we got plenty of American ships who are in the passenger business. We don't have too many American ships in the freight business. It was probably our understanding and our belief that many of the American ships were to be taken out of mothballs and put American seamen to work to carry this grain to Russia. This is what we were attempting to do and by creating some jobs for the American seamen, not to create jobs for some other people because we had a firm policy that we did not want. to handle it. We only handled it because we were requested by the Maritime Union to do it. Mr. GILES. I don't think there was any suggestion on the part of this agency that I know about or the Department of Commerce or the Government that ships would be taken out of the mothball fleet. The average cost of taking a vessel out is about $200,000. We are talking about a program here Mr. GLEASON. Would that be too much? Look at what we gave Tito, Kadar, Gomulka, and those guys. Would that be too much to give to the American seamen ? Mr. GILES. It depends on how many owners you could find who would have that much money to spend to take the ship out. Mr. GLEASON. I am talking about the Government. You are subsidizing 17 of the lines already. Would it be any more trouble to subsidize some of those ships to take the ships out of the mothballs! Mr. GILES. We have a subsidy in the Public Law 480, too. That is quite substantial as you know. Mr. Gleason, you have heard the comments here and as to these reasons there is certainly room for disagreement on honest disagreement on many of these items. I would say again, because it is my job to try to do the best we can here. I do think on these basic issues where our Government has taken a position, I do think there is an obligation on the part of all of us, whatever is our position, private or in the Government, to try to help the Government to carry out these basic decisions. That means primarily with respect to our foreign trade, international policy. I would like to say again that if we could find, or if I am told of a specific case where we have manipulated or been in "collusion"-that is a pretty rough word to bandy about and get in all the newspapers-you know, "collusion" in the dictionary says that is a secret agreement or cooperative effort for a fraudulent or deceitful purpose. Mr. GLEASON. I did not look it up this morning. Mr. GILES. I was so impressed with that word that I looked it up. You know, the ironic thing about this is no longer ago than the day before yesterday Mr. Johnson back there of Continental Grain was by and he as much as charged me with the same thing, as being in "cahoots" in the shipowners. He did not use the same word, he was far more polite. He said it in private. His words were, "Well, I just can't help but feel that you people here are going over the line and you are just too zealous-zealous-about getting these American ships." I confess I had an interest in getting them but I also told him we were trying to administer the thing with due regard for the exporters' interest and the shipowners'. That is what we are going to do, what we have tried to do, and will continue to do it. I do appreciate your being here. Do you have a further statement? Mr. GLEASON. I wish you would take a little interest in the seamen, too, besides the shipowners and Continental Grain Exports. I was hopeful by the time that statement was put in the paper that Bobby Baker would be involved in this grain situation. He is in everything else. I am very happy to have been here, Mr. Administrator. That is, for the privilege. Mr. GILES. Thank you, Mr. Gleason. We now have next, still in issue on the Continental waiver, two ships, Transbay and Transhartford, owned by Mr. Joseph Kahn. This is Hudson Waterways Corp. Someone has suggested to me that we should take a 5-minute break. I am amenable to that if that is the general desire. It is the general desire, so that we will break for 5 minutes only. (Short recess.) Mr. GILES. Mr. Kahn. We appreciate Mr. Kahn's being here. There are two vessels owned by his company, the Transbay, a T-2 tanker, and the Transhartford, a T-2 tanker, each of these, I believe, Mr. Kahn, with a tonnage of 16,000 deadweight. Mr. KAHN. That is correct. Mr. GILES. We would like to hear first from Mr. Kahn concerning his offer and his understanding as to why it was not accepted, and his comments as to his present position, and then we will hear from Continental representatives. Mr. Kahn. STATEMENT OF JOSEPH KAHN, PRESIDENT, TRANSEASTERN SHIPPING CORP. Mr. KAHN. Yesterday we were trading three vessels with Continental. One of them was fixed, the Transerie. Incidentally, I might say that I received notice of this meeting at 8 o'clock last night. I don't have any of the records with me since I didn't visit my office, so I will ask for Continental or Mr. Goodman to correct my mistakes. Be that as it may, we fixed the Transerie. The Transbay is presently in a shipyard in Galveston. In the case of the Transbay, we could not possibly give them the option of gulf or U.S. North of Hatteras, so that we excluded U.S. North of Hatteras on the Transbay. She is March 1-15, U.S. gulf ports only. In the case of the Transorleans, she is coming out of the Mediterranean. Although initially we offered that ship with March 1-15 laydays, we have to correct our Telex to Continental and state that if U.S. North of Hatteras is declared, that the position of that ship north of Hatteras is the 23d. I will ask Mr. Stovall or Mr. Klosky to say whether that is correct. Mr. STOVALL. It is the Transhartford. Mr. GILES. Do you have any comment? Mr. KAHN. That is the story. Mr. GILES. These two ships were offered gulf only? Mr. KAHN. No. In the case of the Transbay, it is gulf only because she is in a U.S. gulf shipyard presently. In the case of the Transhartford, she is coming out of the Mediterranean. We have to change the laydays for that to be February 23 if U.S. north of Hatteras is declared. If it is U.S. gulf, then it is February 1-15. I believe these are the facts. Mr. GILES. All right, Mr. Stovall. Mr. STOVALL. We chartered two of Mr. Kahn's boats; namely, the Transerie in March 1-15 position and the Transorleans in the February 14-29 position. The Transbay, which he offered, as he stated, was offered gulf only. He wasn't interested in giving the range option in March 1-15. We declined the vessel on the grounds of no USNH option. Mr. GILES. That is the only point there; in other words, it was gulf only. Mr. STOVALL. I believe so. I don't know of any other points. Otherwise the tender was in accordance with the terms. He said he could not give USNH option. Unless we could agree gulf only, he preferred other business. The Transhartford was offered, as he stated. He advised she was ballasting from the Mediterranean and he would require split dates of February 23 and I believe March 5 on her. We said we regret, unless he could do a clean February 14-29 or March 1-15 position, we would have to decline her. So we declined the two and to my knowledge there was no protest of the declination. It did not fit into his position and did not fit into our position. Mr. GILES. Now, Mr. Kahn, on what basis can I say that Continental should take your ship? Mr. KAHN. Mr. Giles, I am not here to recommend any basis to you. I think that the offers and the declinations or the acceptances speak for themselves, and I just as soon leave that to you to make the decision on that. Mr. GILES. On the Transbay, it is not possible for you to give the North Atlantic option? Mr. KAHN. Yes; it is possible if I were to spend $20,000 going to the North Atlantic, but I would not do that and then accept a rate of $1.50 lower. I mean, I am in the gulf. It is impractical, Mr. Administrator, to move a ship that is in a shipyard, in a higher paying area, and then spend 6 days ballasting when you are in an area that normally pays a higher rate and, in addition to spending $20,000 for the ballast voyage, to receive a rate of $1.50 less or thereabouts. We would not, to answer your question specifically, we would not ballast the Transbay from U.S. gulf to U.S. north of Hatteras. Mr. GILES. Captain, do you have any questions? Mr. GOODMAN. Also, Mr. Kahn, because I am not clear on your offer, is it correct that the Transbay you have offered March 1–15? Mr. KAHN. Right. Mr. GOODMAN. On the Transhartford, and I can't tell from your wire, you gave no laydays, just February 23. Then I am confused. Then you say gulf March 1-15. Am I interpreting this right? The Transhartford you offered firm gulf March 1-15, which is in accordance with the tender. What does this February 23 mean here? Mr. KAHN. That means that if I were to fix this ship and if they were to nominate the ship to load in north of Hatteras, say Norfolk, I would tender on the 24th and not on the 1st of March, and expect to be accepted. I cannot wait 7 days awaiting for the laydays to commence. Mr. GOODMAN. Mr. Stovall, aren't you still short a very considerable amount of tonnage in the February 14-29 range? Mr. STOVALL. Yes; we are. Mr. GOODMAN. Either North Atlantic or gulf? Mr. STOVALL. Yes; we are. Mr. GOODMAN. What makes it so difficult to fit this ship in with this great amount of tonnage that you are short? Certainly you don't have it scheduled because you don't have it. There are 93,000 tons that are open. Mr. STOVALL. 93,0000 tons? Where do you get that? Mr. GOODMAN. 93,000 tons, February 14-29; isn't that it? |