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From one port of loading to one port of discharge.

Loading and trimming expenses for account of vessel-discharging expenses for account of charterer.

Bunkering at loading port and intransit.

Posted spot bunker fuel oil prices in effect March 5, 1957.

No provision for war-risk insurance or war zone bonus.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: March 5, 1957.

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From one port of loading to one port of discharge.

Loading and trimming expenses for account of vessel-discharging expenses for account of charterer.

Bunkering at loading port and intransit.

Posted spot bunker fuel oil prices in effect March 19, 1957.

No provision for war-risk insurance or war zone bonus.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: March 19, 1957.

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Rates are based on following conditions:

From one port of loading to one port of discharge.

Loading and trimming expenses for account of vessel-discharging expenses for account of charterer.

Bunkering for round voyage at loading port.

Posted spot bunker fuel oil prices in effect May 9, 1957.

No provision for war-risk insurance or war zone bonus.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account.

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Rates are based on following conditions:

From one port of loading to one port of discharge.

Loading and trimming expenses for account of vessel-discharging expenses for account of charterer.

Posted spot bunker fuel oil prices in effect May 13, 1957.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: May 13, 1957.

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From one port of loading to one port of discharge.

Loading and trimming expenses for account of vessel-discharging expenses for

account of charterer.

Posted spot bunker fuel oil prices in effect May 14, 1957.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: May 14, 1957.

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From one port of loading to one port of discharge. Loading and trimming expenses for account of vessel-discharging expenses for account of charterer.

Posted spot bunker fuel oil prices in effect May 27, 1957.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: May 27, 1957.

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Loading and trimming expenses for account of vessel-discharging expenses for account of charterer.

Posted spot bunker fuel oil prices in effect June 19, 1957.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: June 19, 1957.

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Rates are based on following conditions:

From one port of loading to one or two ports of discharge as listed above. Loading and trimming expenses for account of vessel-discharging expenses for account of charterer.

Posted spot bunker fuel oil prices in effect June 27, 1957.

The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: June 27, 1957.

OFFICE OF SHIP OPERATIONS.

Mr. TOLLEFSON. Mr. Chairman, may I just ask one question at this point?

The CHAIRMAN. Yes.

Mr. TOLLEFSON. Has there been any great change in the rates since 1957 ?

Mr. GILES. No overall change, no fundamental change.

Mr. TOLLEFSON. Fundamentally, the rates were the same in 1963 as they were in 1957?

Mr. GILES. That is right; yes sir.

Mr. DOWNING. But haven't the costs gone up since 1957?

Mr. GILES. The costs have gone up some.

Mr. DOWNING. Why isn't that reflected in the rate increase?

Mr. GILES. The rates that were originally set up in our computation allowed for approximately a 10-percent profit margin, net profit margin, and many of these vessels in the Public Law 480 cargo, a large number of them, have relatively low, very low, capital investment. Of course some of them, the newer vessels, have relatively high capital investments.

Over the years the actual experience under that program showed that these vessels were being chartered at rates under our published guidelines. There was a degree of competition in the American market. I know that a good many of our shipowners have said, and they have said in the last several months to me, "Well, we should have had our rates revised," and "We have had these since 1957," and so on. My answer to them was this: "I have been here since January 1961, and others in the Department in the policy positions, and this question has not been raised with us a single time, about revising these rates. It hasn't come up until our present situation. Of course, when we get into this in October and November, we don't feel that it is practical for the Government at that time to revise these rates upward because that certainly would be calculated to make our sales more difficult to the Soviet Union," and it would have pinpointed the entire blame in my opinion on the shipping industry if we had done that.

Everybody would have come back and said, "Well, if this falls through it is all because of shipping," so I think the answer to your question, sir, is that, while there very well could be some justification for some revisions in some of these categories, the shipowners have not really come forward to my knowledge in the last 3 years and made this a point of issue. This hasn't come to the Commerce officials' attention, anyway.

Mr. HAGEN. Mr. Chairman?

The CHAIRMAN. Yes.

Mr. HAGEN. I am sorry I wasn't here when you

started.

The CHAIRMAN. Since the witness does not have a prepared statement, I think we ought to make some notes and let the witness go over his 10-minute statement and then we come back with any questions.

Mr. HAGEN. I notice in the document you have with a cover of November 14, you have guidelines from North Atlantic and gulf ports but none from the Pacific coast ports. What is the reason for that?

Mr. GILES. That is right. We had not had a request at that time, sir, for Pacific port rates.

Mr. HAGEN. That has been accomplished subsequently?

Mr. GILES. Yes.

Captain GOODMAN. Yes, it has been given out. We just haven't published it yet.

Mr. GILES. Mr. Chairman, on November 8 then, after discussion with representatives of the four shipping associations, we announced our conclusion to publish this minimus 20-percent rate. We discussed with them at that time the basic idea that, in order to enable the grain exporters to count on the lowest American costs that we could make available for the shipping, the larger ships would be available at this minimus 20-percent rate.

I am simply referring to an article, which I believe was in the Baltimore paper, and one also in other papers, where I think the owners indicated at that time that this approach seemed to them to be reasonable. That was the general sentiment at that meeting. That doesn't mean that they fell over with joy because we were suggesting a minus 20-percent lower rate there. I don't mean to give that implication. What I do mean to say is that we discussed this out with the shipping people. We explained our reasons. We considered their advice and counsel, much of which was very helpful to us, and I think it is very fair to say that we met with them in a spirit of reasonableness, and at that time they felt that what we were doing was reasonable and was supported by the facts.

It was an effort to make American-flag shipping available to handle at least 50 percent of this shipment to the Soviet Union. We had arrived at that 50 percent also in consultation with representatives of the shipping groups and it was generally agreed-I think there was a general sentiment among the group-that that was a reasonable percentage to peg it at. I don't have it before me, but I would just like to mention that within the last 3 or 4 weeks I have seen an item in some New York paper quoting some shipping source-I don't believe it was identified which indicated that they didn't think there would be physically enough American shipping available to handle even the 50 percent if we made the contemplated 4 million ton sale to the Soviet bloc countries, but, nevertheless, we have set the 50 percent because we felt that we had to have a guideline.

We had to have something certain for the exporters to count on. Now, sir, I would like to refer to another export bulletin of November 13, and our basic authority for handling these shipping arrangements of course goes back to the Export Control Act.

As the committee may wish to just have this put before them, the President made a basic policy decision with regard to the conditions on these exports, and the Export Control Act provides that the Presi

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