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. KAHN. 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. KAHN. 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

gill must have its ground rules now in order that the American-flag participation will be possible when the grain starts moving.

Mr. GILES. As far as programs, I would regard whatever sales are made within these next few weeks, of the first half of this year, as a program. As far as I can tell, the Government is not in a position, and presumably will not be, to make any basic change in the announced policies. Therefore, I would assume that any further contracts would be along the same lines, and substantially in the same basis as the Continental, as far as our efforts.

On terms and conditions, we will, assuming Continental has that sale, Cargill has that contract, we will have them in promptly next week, if not tomorrow, and go over what they have. We will start, of course, with the terms and conditions that have been published already, unless there is a good, valid reason to make some change, either favorably to the shipowner, or unfavorably, and then we'll have to stay with that. I see no choice on that. I will say to Cargill, as I said to Continental, I will not, in administering my portion of this responsibility, accept the premise that whatever is in your contract of sale will govern. I have not accepted that premise. That doesn't mean that we will not consider it as well, but where the Soviets have had certain shipping restrictions then, in addition to making known, that there is some obvious, valid argument for it, then we are not in a position to tell the exporter that he must do something else, because, obviously he cannot, under his contracts, unless he has a real good reason. If we took the position that we were doing this as a government, as I view it, we would be in a position of making the major issue the Soviet Government, and saying this is so important to us that it stands or falls on this.

Now, that doesn't mean we should not take that position in the proper case. I haven't seen anything in Continental that was of that nature. If any exporter comes in with a draft limitation of 29 feet, which you mentioned as an example, I would not imagine that I could have any trouble with it at all in saying that is not a reasonable limitation.

We have a lot of 10,000 tonners, a lot of Liberty ships at the top rate that come well within that limitation. That would be my attitude. I have so previously indicated to Continental in connection with this draft matter. My attitude has been, and it will continue to be with other exporters, as it has been with Continental, we want to see your contract and what it says about shipping. We will be reasonable, but as to the points in controversy we will have to make a judgment. That is the best we can do.

STATEMENT OF EARL SHEPARD Resumed

Mr. SHEPARD. I would like to make an observation. Like my colleagues, I have been sitting here all afternoon. I have heard a lot of things about changing the ground rules and procedures. Unless I misunderstood you, you just said that the Government doesn't intend to change its policies. This means we are still faced with the same ground rules for Cargill or Continental, or anybody else. It also means that we would be faced with the same situation with the next million tons as we have been faced with this million. Nothing has been

altered. It means this: that if we hadn't applied, and let's face it, we wouldn't have gotten this other tonnage unless somebody had started hollering, it would still have been 213,000 tons versus 232,000, whatever the tonnage.

We would still be faced with the same situation when Cargill gets their tonnage. Are you telling us that we are going to be faced with carrying 40 percent of this grain, or 25 percent of this grain, is that what you are telling us?

Mr. GILES. I did not say that, Mr. Shepard. I did not say that the Government would not change these ground rules. Let's refer to them as charter conditions. I said I see no basis for changing these conditions which we have published unless there is some good reason brought forward.

Keep in mind these conditions that we worked out, and have had to publish here, they are in general the same conditions that we have worked out over a period of years in the Public Law 480 shipments, except they have very definite improvements for shipowners, for example, demurrage 2,500 versus 1,500 rate of discharge 2,000 tons a day versus 1,000. This latter point is very important. If the shipowner doesn't have that 2,000 tons discharge he gets demurrage right there.

There are other points in our terms and conditions that we have published here on this Continental matter. They have been the same or better in several particulars. Do you recall any information

Mr. GOODMAN. No.

Mr. GILES. Better than on the Public Law 480.

Now, when it comes to the question of a draft limitation, all I can say, as I said to Continental, you've got to make your case. There cannot be a general limitation on draft. You cannot just say we are not going to consider anything over 31 feet. You are going to have to make your case. Then, if it comes around to a waiver application, we will at that point look at that documented case. If there are other shipments, let me say this, and this is an important point, I was asked some months ago, before Christmas, "What about the matter of shipments, of shipping dates?"

Our answer to that has been that the question of shipping dates, loading, delivery, and so forth is a matter for the buyer and the seller. You must keep in mind that American-flag shipping will have to have, and will have, the same shipping schedules offered them as is offered to foreign flags.

I don't know whether I have seen it in the paper if there are other sales or shipments in February, in March, or whatever, or April, then obviously with the American merchant marine busy as it is now, it is not going to be able to carry anything. It is not going to be able to get a reasonable portion of that.

Well, that may be, but I don't see how our general rules, or general statement there could be any different than to say that the question of loading and delivery will have to be between the buyer and the seller. It ordinarily is. We cannot, as a Government policy, say to somebody else that you are going to have to buy and have delivered at definite times.

I would also assume that a buyer and seller would have the good business judgment in their own self-interest not to make a contract

which they can't physically meet or can't meet without substantial delays on the unloading or loading side. I cannot see how that would be to the interests of either the buyer or the seller.

Another point on that, keep in mind that in terms of making these sales, the buyers the Soviet represents, they couldn't care less, according to what they have told us, what ships are used. They have told us it is all right to use 100 percent American flag. The only thing is they have raised the question about the rates. That is, they are not going to pay above world shipping rates. If world shipping rates are $25 a ton, they will pay that rate. If world shipping rates are $12 that is the rate they will figure into the price that they are willing to pay the exporter. So, if there are further contracts, we will get with the exporter as promptly as we receive the definite knowledge of that contract of sale, we will go over what we have, and I will also do something that we didn't do with Continental, which I now wish we had. I will arrange a very early meeting between the charterer or the exporter and representatives of the shipowners and have it put out, "Here is a contract we have got. Here are the terms and conditions as far as our contract of sale. Now here is the whole picture." We will go over and see if there are any problems that we don't foresee or cannot foresee now. That will be our general approach.

According to the newspaper article, as I recall it, I guess it was yesterday or today, Cargill is supposed to have made arrangements for a sale of 700,000 tons, rights?-200,000 of that is Durum. As I recall it, the delivery on that is, April and May, but there was some reference to the other as being March. I don't know whether any of it is in February. We are already in February, but certainly a good portion of that is scheduled in March.

Now, that on the face of it is not the desirable spread that I would like to see as far as maritime interests are concerned, but our problem here is to try to administer these things.

Just as Public Law 480-you have got shipping schedules and dates there, which are not always set up for the sole convenience of the American shipping industry.

My answer to your question is "No." I am not saying we will not change anything, but "yes" we cannot change without a good reason, and without considering fully the position of the exporter and the shipowner groups. My further point, as far as the pushing of business on any further sales, I would urge, and keep in mind that we have substantial sales on the markets, substantial demands for American shipping which is not filled, this 50 percent requirement, a fundamental reason is going to be, any way you cut it, the fundamental reason is going to be because the American merchant marine right now, which could be in the grain trade, is busy.

Mr. SHEPARD. Can I get back in the barrel? Shepard is my name. I have a suggestion. Why don't you go negotiate with these grain people before they negotiate with Moscow? We have got to be guided by hindsight. We saw what happened in Cargill. You've referred to that a couple of times today. I assume the reference you made was to the conversation you and I had.

Mr. GILES. Not as such. My reference, Mr. Shepard, was to my information that the SIU personnel went to Albany and put up a picket line.

Mr. SHEPARD. Yes, sir.

Mr. GILES. That meant, according to my interpretation and according to my information, that one or two shipowners who were dissatisfied thought we had done wrongly, and they must have talked to the labor union officials.

Mr. SHEPARD. No, sir. The shipowners don't influence us a bit when it comes to picket lines.

Mr. GILES. Not on that. When it comes to saying, or giving the information or the indication, that with American shipping this waiver was improperly gained.

Mr. SHEPARD. Sir, I would just like to point out to you that in the Cargill grain shipment, there were 200,000 tons, 100,000 tons to American bottoms and 100,000 tons to foreign bottoms. How much did the American bottoms get?

Mr. GILES. 60,000 tons.

One-half of the first 100,000 tons-and on the second, over the period of time they got

Mr. SHEPARD. Nine percent.

Mr. GILES. Then we had it ourselves, and we've had it for several days looking for American shipping on the rates we put out. It just wasn't there.

Mr. SHEPARD. Sir, you called me at 4 o'clock one evening. You explained to me that you were going to issue waivers to foreign flags on this cargo. If I recall correctly, you wanted me to give you an answer before 5 o'clock on what your position was going to be, or could we go along with you.

Mr. GILES. No, sir. I telephoned you in response to a telegram I received from Mr. Paul Hall that day. It was just the way I was handling it. I called you, Mr. Shepard, in response to Mr. Hall's telegram. That is the reason I called you, to inform you what our situation was. I did ask you if you had information indicating that American shipping was available within our guideline rates. That was the big issue in Cargill. Several ships were offered, but not at the published rate for the shipments. Cargill had no choice or alternative for turning it down. I called you to inform you of it, and ask you if you had different information.

Mr. SHEPARD. I assume, sir, at that point this was when the shipowners had misled union officials?

Mr. GILES. I am assuming, perhaps improperly, sir, that some shipowner at least so I was informed-and this is hearsay, that some shipowner had talked with the SIU officials prior to this Cargill matter in Albany, and indicated they were improper. On that basis the SIU officials thought to take the action they did.

(Discussion off the record.)

Mr. GILES. Does anyone else, a visitor-I am not going to recognize Maritime Administration personnel-does anyone else, either labor union or official or shipowner, here present, like to say a word?

Mr. Down. One of the major issues has been the question of loading range. Before discussing programs with other grain exporters, consideration should be given to American shipowners, to load only in the U.S. gulf. An American tanker does not have the flexibility of some foreign vessels. Today I would like specifically to mention that fact before any meetings with Cargill, and shortly after the Cargill meeting the shipping dates, you call the owners.