of fact, at that time there was no tender. Later on I adjusted my offer very close to the terms of the tender, all within $18.02.

At no time at all did Continental concede the rate of $18.02 but insisted all along, I believe as late as a few days ago, on $17. In that respect and may I offer this as advice perhaps to the grain merchants, I think this rate of $18.02 has been established by the Administration after very, very careful determination of all factors.

I believe there is no one who will complain that the owners are getting rich on it. As a matter of fact, I can assure you that if we had carried this cargo at $18.02 on basis of the tender terms we would have incurred a loss of several hundred dollars a day based on our running expense and debt service only provided everything would have been anywhere near normal during the voyage. If we would have had any bad surprises, and I would like you to bear this in mind because I would want to revert to this point in connection with the rate of demurrage, our loss would have been increased very sharply. Now, I do not think that the grain companies do themselves a favor in holding out on the rate. As a matter of fact I don't think they should have the right to do that. I think there is only one authority who will decide whether the rate of $18.02 is too high for any given ship and that should be your office, Mr. Administrator. That is one point I would like to make.

Second, there were two more items that were open for negotiation as far as the tenders were concerned. As I said in the beginning I "tried to get away with something" and I was bold enough to ask for 33 feet draft on arrival at discharge port. As captain Goodman will bear me out, the tender stated maximum draft on arrival 32 feet but also stated that offers on increased draft would be given fair consideration. Well, Continental turned me down on that and insisted on 32 feet and came back and offered me $17. I went back at the time and tried to explain in my counteroffer that I could not possibly consider anything below my rate since I was supposed to carry about 10,000 to 11,000 tons of cargo less than than the ship actually was able to carry. However if charterers insisted $17, I was willing to accept it provided charterers would arrange that the ship may arrive at discharge port with a draft of 36 feet. And in order to be fair and in order to give Continental a fair chance to investigate this properly I stated that I would leave our offer on basis of $17-and 36 feet draft-with charterers long enough to give them a chance to check on the draft with the receivers.

I believe the telegraph line offer was made on a Friday afternoon and I stated I was willing to leave the ship with them until Monday morning. In the end we offered the ship time and again on the same basis. Continental always came back with a counteroffer of $17. In addition they told us that our offer was not responsive to the tender, probably because we were still holding out for higher demurrage. In addition they also stated that the draft and dimension of our ship were not acceptable.

That I could not understand. We had agreed to 32 feet draft as the basis of $18.02 freight rate. Furthermore, I believe, as Captain Goodman knows, one Italian vessel, the Primo, was accepted last October by the Russians through their agency in London with 32 feet arrival in the Black Sea but otherwise with dimensions larger than our vessel.

So I do not think that the charterers had a valid reason to reject our vessel.

Now, I am coming to the demurrage rate, Mr. Administrator. I put in a very urgent plea to you that this be reexamined. Our friends Continental Grain stated that they have to protect themselves against demurrage they are incurring for the grain if the ships do not keep exactly their readiness date. In this regard, if I have your permission, I may briefly quote what I Telexed yesterday to Captain Goodman:

As it is well known, demurrage rates are supposed to compensate vessels for delays during loading and discharging operations over and above the laydays allowed as per charter terms. Any demurrage rate in order to be realistic and equitable therefore must allow the vessel approximately the same daily return as inherent in the agreed charter rate and such is only an extension of freight. In the case of our vessel as you are probably aware our daily running expense amounts to more than $6,000 without any allowance for overhead.

Now the rate of $18.02 was determined based on an estimate which Captain Goodman has prepared and I have no quarrel with it. We were not supposed to get rich with this program and we don't get rich as I pointed out. But this means that Captain Goodman allowed in his estimate precisely the loading and discharging rate which we are supposed to get under the charter.

Let us say that such allowed time for loading and discharging totals 20 days for a specific vessel based on this size. What business do we have, or rather why should we be expected to allow that our ship be retained at port, so to speak, as a storage vessel over and above the allowed rate at a demurrage of $1,500 per day if the vessel costs about $6,500 a day? That makes the agreed freight rate absolutely useless. We heard from our friends at Continental Grain that they have information relating to a serious congestion in the Black Sea. We know if this program develops we will probably encounter serious congestion in our own ports.

Why, since we are supposed to and we are willing to accept a ceiling rate which is a very low one, why are we supposed to accept demurrage rates which have no resemblance to the freight rates?

These are the points I think where we could tighten up the program. Mr. GILES. Thank you very much for those suggestions. They will be carefully considered again, Mr. Spalding. I think on your demurrage pont you are talking primarily of your larger vessels, 36, 40? That is where your real problem comes in, your larger tonnage. You said $6,000 a day. What size vessel?

Mr. SPALDING. The vessel we are talking about is the Mount Washington, or similar type vessel like Montpelier Victory.

Mr. GILES. Keep in mind and this is a point that I know there has been some confusion on. Under our rate guideline sheet that we put out we clearly specified, we clearly set out there that the rate for vessels over 30,000 tons is subject to consultation. That is not specifically set. We had in mind trying to work out the same general arrangements or considerations for larger vessels that we customarily do on the Public Law 480.

It just so happened that for one reason or another we never got to that specific situation where we could say, "Well, here is a 36,000tonner or 45,000, now let us sit down and work it out."

All of your suggestions are well made and certainly will be given our consideration in any future activity that we have on this. Mr. SPALDING. Thank you very much.

Mr. GILES. Thank you very much for coming.

Now I am very happy to make this announcement which some of you may note, which is news, good news to the shipowners. You recall that there has been a question about the tonnage used, the tonnage used on the Soviet side and whether or not the preferential or most-favored-nation treatment would apply to these U.S. ships.

The background on that, just to summarize it briefly, is that in 1934 we had an agreement between our two Governments, an executive agreement which in literal terms seemed to provide for this mutual most-favored-nation treatment for our ships.

During the war years many American ships went into Soviet ports. and this lower tonnage rate applied. During the war years many Soviet ships came into U.S. ports and the same applied. The few Soviet ships that have been in the U.S. ports since 1945 have received, as a matter of fact, the lower tonnage due rate. The situation factually has been spotted on the American side during the last few years. Some American ships that have gone into Soviet ports and there have not been many of them, apparently simply did not raise the issue and they went ahead and paid on the Soviet side at the higher rate. It was against that factual background that the State Department had a quite difficult situation to work out to get the agreement. This was a matter which had to be worked out government to government.

I just have a note put before me from the State Department that they do now have this resolved and the Soviet Government has definitely agreed that all U.S.-flag ships will have this most-favorednation treatment on the tonnage dues.

That means quite a bit of potential income to many of our vessel owners because the higher dues are quite a bit, several times the regular

rate.

Just to summarize, ladies and gentlemen, on the ships in controversy. As you will recall, the last one we mentioned, the large ship from Victory Carriers, Mr. Spalding has had to withdraw that because he got other business. I will not enumerate-maybe I should as a matter of information.

We started out this morning definitely with 311,900 tons fixed. I indicated as a tentative conclusion that the marine vessel owned by Mr. Dowd should be worked out. I indicated as a tentative conclusion that the Elimar owned by Mr. Dowd could not be worked out.

That was the tanker to Nakhodka. I indicated that the Bincarrier vessel, a T-2 tanker owned by Mr. Obershol, because of the Gulf Sea limitation could not be worked out. I indicated that the National Defender, 50,000, is still open, subject to further checking on this size and draft. I indicated that the Transbay, 15,700, owned by Mr. Kahn, could not be ruled acceptable as a tentative decision because it was limited to the gulf. But that the Transhartford, though not strictly within the time schedule, would seem to be acceptable and that was a tentative conclusion.

That is the summary as I understand it on all of these that are still open. The record is open and I will reserve, I would like to reserve the right to discuss these further tomorrow morning with the shipowner or his designated representative and with Continental.

The National Defender is the only one on which there is a possibility we may have to reserve a decision on that for a few days. But that will be governed by the shipowners' desires there to make a further physical check.

I will say as my prior tentative conclusion on that, on the basis of the record that we have before us, unless the owner of the National Defender chooses to make some effort to go to Soviet Union and attempt to work that out it seems to me that the charterer has met his burden on the basis of his information and the correspondence that he has not been able to persuade the Soviets to do that.

Well, if the owner of the National Defender desires to make any further independent efforts he can through diplomatic channels to verify further facts and so on.

Now, gentlemen, I inform not only the owners of these ships that might be in question but also the representatives of the four shipping associations, AMA, AMMI, CASL, and PASL, that we would have this meeting and that we would be happy if they could have representative present. We also informed Mr. Hall, Mr. Gleason, and Mr. Calhoon. If it is all right, Mr. Hall, just to get all of the shipowners' views before him, I will give an opportunity to each of these associations, if they have a representative and would like to say anything specifically but suggest that in view of our time we limit each one to, say, 3 minutes.

If there is a time problem for Mr. Hall and his associates and if the ship representatives do not have the same time problem we would be glad to hear from Mr. Hall, first.

At this point I would like simply to get into the record the telegram that Mr. Calhoon sent me yesterday. This is the individual telegram. Many of you have seen it. It is a short one. I will read it:

This acknowledges your telegram of this date.
This is from Calhoon to me:

In the last 2 days the Continental Grain Co. has refused to hire five Americanflag ships that were offered at fair and reasonable rates to carry wheat to Russia in the next few months. Each of the ships met the terms and rates specified by the U.S. Maritime Administration. Each ship was rejected for transparently ridiculous reasons. Is is clear that Continental is still determined to make a windfall profit of $7 a ton by using foreign-flag ships for the rest of the program in complete violation of the Government stipulations that 50 percent of the wheat and wheat flour must move in American ships. The replacement of American ships with foreign tonnage as Continental plans will cost the United States large sums in foreign exchange. We are convinced from its failure to protect the public interest, the rates of the U.S. merchant marine, the Maritime Administration is either in collusion with Continental or the Maritime Administrator and that portion of his staff charged with supervising this program are completely incompetent. We advised there are enough American-flag ships available and interested to carry more than 200,000 of the 281,000 tons for which Continental has requested a waiver of the U.S.-flag shipping requirement.

We urge you to conduct an immediate investigation of this flagrant abuse. In my response to Mr. Calhoon yesterday, I told him I will put the full telegram in the record:

This is a very serious charge and I would greatly appreciate having from you today full particulars of specifle case to support that charge. We don't claim to be perfect here in the Maritime Administration but we do try to act honorably in good faith and we do try to do our job competently. I regret you felt it was necessary to send what appears to me to be a rather intemperate telegram. By separate wire I have informed you of our scheduled meeting

tomorrow. I will greatly appreciate your personal attendance at that meeting. We will make every effort to consider any specific case of any improper or wrong decision on our part which you may bring up and we will explain fully what we did and why.

I received a telegram today, this morning, from Mr. Calhoon in which he states that he is on the west coast and it will not be possible for him to appear here personally. I would like to ask at this point, is there a representative of Mr. Calhoon's present?

Mr. HALL. There is a mighty good friend of his here, that is me but I am not a representative.

Mr. GILES. Designated representative. I did not know whether he would have someone here or not. He goes on in his telegram to mention the SS Maren, 16,000-ton ship which was declined by Continental, the SS Maren which was owned by Mr. Henry Dowd. You have heard our discussion on that. You have heard my indicated decision which was that it looks to be acceptable. The SS Transorleans he has mentioned in his telegram, that is fixed.

STATEMENT OF L. C. STOVALL-Resumed

Mr. STOVALL. Yes.

Mr. GILES. The SS Oceanana is fixed. When was it fixed?
Mr. STOVALL. Tuesday morning.

Mr. GILES. This is Thursday. When was the Transorleans fixed?
Mr. STOVALL. Yesterday.

Mr. GILES The Mount Washington Victory, we have just finished. with that where it was withdrawn. Those are the specific cases he mentions.

I am sorry Mr. Calhoon is not here in person. So far as I am concerned the telegram that he sent in here is irresponsible, and it is libelous. I will not attempt and do not pass judgment on myself as to whether I am in collusion with anybody or whether I am competent or incompetent. I should like to say that I do make a finding for the record that Captain Goodman is not in collusion.

I also make a finding that he is not incompetent and his staff. And if anybody has any specific information that they can present in open meeting in an orderly way to be considered in a judicial fashion, I wish he would come forward.

I regard this telegram as being very unfortunate as representing too much what has happened too much in maritime labor. Not many but these are the specific examples. I can only say, expressing my own personal view, that there is a limit I think to what this country, what this Government, and what the public generally will tolerate from a few irresponsible labor union officials in the maritime industry. Last year it was the Savannah. This year, a few days ago, it was a so-called wildcat strike, again in violation of a contract. Well, I believe in the right of people to strike and not to work. I believe in their right to organize and I believe in the right particularly of the maritime laboring people and seamen.

I am not one of those who moans or groans about the high cost of American shipping. The high costs of American shipping for the most part are due to higher wages and I do not regard it as unwise or undesired that American seamen have the same living standard as other citizens of this country, in fact I think it is desirable.