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Therefore, the initial bid of $17 was made without having any idea what a fair and reasonable rate to fix this vessel was but it was merely to start negotiations with the owners, knowing full well that the final figure, whether it be $18.02 or somewhere in between, would be determined by the Maritime Administration.

Mr. GILES. I think I should make it clear, also, Mr. Hall, that to my knowledge the owner of the vessel did not come in and say I want to work this out on a separate rate, taking into account all of these because I really want to be sure that I make an offer that Continental will have to accept.

I am not criticizing the owner because I think the owner there, as in many cases they had a choice of business and a choice of business other than this particular program and were not always in a position to make a decision as early as I thought at one time they would have.

Now, sir.

Mr. HALL. Thank you. First of all I would like to direct my remarks to the gentleman across the aisle here. I don't intend to go into full detail but to recite one fact.

In all of the various areas of the Federal Government the one area in which they do business without secret bid to my knowledge—and I don't suggest there might not be others but to my knowledge I know of no other-is in this business. This is the only business that the Federal Government does where it lets bids in the fashion it does in the maritime. The greatest defenders of this system obviously are the brokers. This open system which I have just very briefly touched, and before described, I don't have to tell you what it allows a broker to do. It allows him to ruin a market. I would point out further to you that relating to the question of fair and reasonableness, Mr. Chairman, again I am no expert or authority on the Federal Government nor on contracts but I am told by some of my friends and colleagues from other parts of our society that this is the only industry in which what the Federal Government has determined as fair and reasonable is never met after the letting of a bid.

But a great part of the picture falls far short of that. This is peculiar only to maritime.

Now there are those who say it has to be this way because maritime is unique. Our position, Mr. Chairman, is that this is not true at all. The most vociferous argument for this system comes from the broker, from the big grain merchants, who obviously have the most to profit from the very system they are defending.

So to go into the area of rates, and so forth, Mr. Chairman, I am not sure I would be in front of the proper committee though I would love it if it is the proper committee to go into the whole area of what this whole thing leaves as a possibility, for manipulation.

Obviously it leaves very possibly a setup for manipulation just on the very surface. I do not intend to belabor it. This is my reply to the gentleman here. I am not impressed at all with his quotations of this matter because the system is faulty:

It is a system they have defended. It is a system which has proved to be a guillotine on which the American operator has been executed. It puts a man with one or two ships in an extremely difficult place when they are placed against one another.

In the old Nazi camps they would feed you at least on the second day and let you fight for the loaf of bread. When you say take all three together, and say what am I bid, this is not a good system that allows for this. As to my feelings relative to this, this is my impression.

As far as you are concerned, Mr. Chairman, I think that, relative to the whole question, I would let the record rest precisely where it lies. I think I have made the points I have to make. Where I have not made them I believe some of the operators have made them where I may not have done as well.

I will let the record rest at this point.

Mr. GILES. Thank you very much, Mr. Hall. I appreciate your coming. Again I am sorry you had to wait so long but you have undoubtedly heard some educational matters.

Mr. Hall. I certainly did. I did not mind waiting at all, Mr. Chairman.

Mr. GILES. At this point I would like to recognize the representative of the shipping association after which I would like to recognize any other labor union officials who may be here and would like to say something for the record and after that I will then recognize any. body else who has anything to say. We will follow that general procedure.

I would like first to call on the AMA if their representatives have anything to say in general or specifically about the Continental waiver application. I would be most interested on that and then if they have any general remarks on the whole subject, why we would like to hear that. I would suggest in the interest of time that if each person could sort of aim

for about 5 minutes, no more than that, that would be desirable. But I don't want to be too restrictive in that connection.

Now the AMA.

STATEMENT OF RAY MURDOCK, LEGISLATIVE DIRECTOR,

AMERICAN MARITIME ASSOCIATION

Mr. MURDOCK. I don't believe I have anything to add to the record. I believe I have expressed my views to you and Captain Goodman often enough that you know what they are. I agree with one of the previous witnesses that however much good will we have, we have got a hell of a mess and somebody has to straighten it out.

I am glad it is your responsibility and not mine. Thank you very much.

Mr. GILEs. Thank you, Mr. Murdock. This is Mr. Ray Murdock, legislative director for the American Maritime Association. Is there any other representative of the AMA? I saw Mr. Kushner.

Mr. KUSHNER. Yes, I think we will rest on what Mr. Murdock has said. Mr. Giles. Now the AMMI. Ed Phillips. Mr. PHILLIPS. I have no comment to make, Mr. Administrator.

Mr. Giles. Thank you, Mr. Phillips. The American Merchant Marine Institute.

The CASL group? Mr. May was here earlier. Is Mr. May still here? I believe no representative of CASL is here. So we do not have any remark there.

The PASSA group, Mr. Thurman.

STATEMENT OF JOHN N. THURMAN, WASHINGTON COUNSEL AND

VICE PRESIDENT, PACIFIC AMERICAN STEAMSHIP ASSOCIATION

Mr. THURMAN. For the record, my name is John Thurman. I am Washington counsel and vice president of the Pacific American Steamship Association. It will be very easy to hold my remarks to 5 minutes. I only want to discuss one little facet that developed today which came as a complete surprise to me and that was the mention that tankers cannot go into Nakhodka. Captain Goodman read a telegram that Continental Grain had received on the 21st of January, I believe. This I am afraid will destroy your whole program for moving grain from the west coast to Nakhodka in that you have a 31- or 32-foot draft limitation at the most.

Supertankers are cut out, and super bulk vessels are cut out. Now if we can't tanker in we either have to put the Niagara on the shuttle run or we won't have any U.S.-flag participation. Perhaps the west coast facet of this program will have to be looked into again.

I would like to say that our organization would like to work with you any way we can. At the break this afternoon I sent a teletype to the coast and asked our people to kindly check through out contacts in the Far East as to what could be done to carry ou Mr. Dowd's suggestion for an educational program that would be helpful to the Russians, learning the procedures of using evacators and tankers. I do not represent any tankers but if we don't use any tankers in this lift I don't know who else can carry it.

The only thing I would like to say further in this regard is, as I mentioned this came to me as a surprise, and I am under the impression that Maritime did not know about this very long either.

Sometime back in our earlier discussions, the draft issue came up rather suddenly too. It is almost as though Continental Grain is pulling rabbits out of a hat. I would like to request Maritime to keep a good eye on the magicians and ask them to put all their cards on the table so that we will know whom we are dealing with on this matter.

Also I would like to make a further comment unsolicited. I know how terribly hard your staff has worked on this very, very difficult situation. Captain Goodman and all these people are good friends of mine. So what I have said about them cannot be taken as anything other than friendship. They have worked very hard on a very difficult situation.

I think you have been given an almost impossible task. I don't believe the Government has been asked to do anything like this before. Many of the criticisms by our organization that we have made to the administration have been in our view misguided.

We wanted to make that point with you the other day when we were unable to be with you. We would like to do everything we can to help you get the program moving forward.

Mr. GILES. Thank you very much, Mr. Thurman.
Does Continental have any comment at this point?
Mr. STOVALL. No; I left my magic cards

at home. Mr. GILES. Thank you very much, Mr. Thurman. We appreciate your being here with us.

Now is there anyone else? STATEMENT OF TAL SIMPKINS, AFL-CIO MARITIME COMMITTEE

Mr. SIMPKINS. Tal Simpkins, AFL-CIO Maritime Committee. I have a similar comment.

Mr. GILES. Yes, sir, have a seat, please.

Mr. SIMPKINS. I will be very short. We too are one of the unhappy groups that the foreign-flag ships are carrying this grain. I can simpÌy state that our opinion coincides with the previous union witness. We think the real problem here is going to come in particularly with foreign-flag ships, the runaways carrying this grain which will be on board in New York. We have to take what action they do.

Mr. GILES. I would simply like to say that there again, as I expressed to Mr. Gleason, I think it is in the interest of the maritime Îabor, regardless of its personal feelings or past position- I think it is fundamentally in the interest of maritime labor to not frustrate the basic Government policies that the President has established, whether it is good or bad. I do not think anyone should be made to work if he doesn't want to. I do think it is not right, and it is not in the selfish interest of the maritime industry, or the maritime labor to take action to prevent anyone working where the objective is really to frustrate or to oppose basic policy, basic foreign policy of international trade. I am simply expressing my own personal view.

I can understand the various feelings on that. I think Mr. Hall is perfectly right in one of the remarks he made, we have got a situation with sort of scrambling over the bones, or something to that effectscrambling over dollars, fighting about dollars. That is true, but it seems to me that maritime labor and industry is in this position. It has an extra burden of responsibility which calls for an extra burden of restraint perhaps. That is in order to see through the woods to the trees to a better public policy or better Government policy, whether in terms of financial support or otherwise.

I believe it would be in the interest of maritime labor to see that we have less of these disputes. I understand in the future, because I am always hearing questions raised about that, and “Why should we get into this, or that ?” “Why should we build another ship?" "Why should we have another big experimental ship?” “Why should we get into that program or this one”

I've heard that with respect to this 50-percent requirement, "Why should we get into it?”

I think it is because of the difficulties, and you would get right down to it, and the administering, the handling of it in such a way, and communicating with all concerned so that they will know what is going on and so we will not have dissension and outright strife. It is a matter of restraint and using judgment and imagination, which applies to Government officials and to owners as well as labor. Some labor unions are not set out apart on that. I do think, again emphasizing my opinion here, it is in the interest, the selfish interests of the maritime industry for maritime labor not to seem to be in the position of usurping the policies and the authority of the President of the United States and the Congress as to what is going to be our laws and our foreign trade policy.

That is my personal view.

Mr. SIMPKINS. We had hoped that the ground rules that we were stated would say “50 percent" and that would be "period.” If the sale would hinge on this, perhaps the sale wouldn't come off, the ground rules being 50-percent American-flag ships. If that would have been the ground rules "period” perhaps the problem wouldn't have arisen.

Mr. GILES. Mr. Simpkins, I do not see how we can say it is possibly as simple as that. We don't say it is simply the ground rules.” We have got a lot of detail, not nearly as much as back over the years, that the Government, in effect, has made decisions on it because of the nature of that program.

There was a degree of competition among American ships themselves that we had disputes more or less on these details. It should be unnecessary. This is not merely a matter where you say that you've got to have 50 percent and that is it. Once you make that basic decision, you find the Government having to go steps further, and the shipowners, and the charterers demand it. They couldn't get questions resolved. We have been into it for the several weeks, because I took the position, the attitude that I should not just sit here and refuse to express views on these details. I should not sit here and wait until the waiver application got in. At that point I would inform the shipowners and the charterers, what these terms and conditions would be for purposes of passing on a waiver. That is really the only official basis that I have. One thing has led to another.

Any further comments?
Mr. SIMPKINS. That is our opinion.
Mr. GILES. Thank you very much for being here.

Anyone else have any comments! Any other labor officials that I have not recognized have a comment?

Mr. Shepard ?
Any owner?

Mr. Kaun. One question, Mr. Chairman. I appreciate that at this stage of the game it is impossible, or close to impossible, to make any change of what we have been talking about, ground rules for Continental. They have made a business deal with certain ground rules as a basis for the business deal. The inquiry that I have, and I don't know if I made it clear when I sat in that chair, is how and which way are the ground rules going to be changed for the future programs which are about to take place, particularly in connection with Cargill and other grain houses ?

Mr. GILES. Mr. Kahn, that is a future sale. Is there a definite sale there? I gather from the papers there is a definite sale by Cargill. They have a definite contract for a sale, is that right?

Mr. Kain. This is my understanding, sir, and the thing that I am worried about is you must understand that it is possible for Cargill to go to Moscow and conclude a sale with the 29-foot draft, and come back and document it to you and say, "Yes, it is. This is it.” Car

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