Now, in every instance during the last 10 years, where such sales have been made, a preference, which is expressly given by law under the act of 1920, has been given the managing operator, who, when he received a contract as a managing operator, was recognized in express language as a potential purchaser. Some of the sales made under this system, particularly in recent years, have been very bitterly attacked by papers, such as the Herald-Tribune, of New York, and the Journal of Commerce. They have attacked this policy editorially only within this week. Also, as I have said, these attacks have been made by responsible Members of the House, such as Mr. Wood, and by Members of the Senate, such as Mr. McKellar. In view of that, it is certainly the duty of Congress to ascertain the truth as to whether those sales were made without due regard to the interests of the United States, or whether they were properly made, in conformity with the policy laid down, in a reasonable, fair, and equitable exercise of the discretiln vested in the Shipping Board in the making of these sales.

Mr. MICHENER. Just suppose, as a result of an investigation, it should be found that those sales have not been properly made. Would that presuppose the prosecution of those responsible for the improper sales?

Mr. LEHLBACH. Not necessarily. That depends upon whether it was due to laxity or lack of zeal, or whether it involved a criminal transaction. It would depend upon whether it was shown that those sales were made wrongfully, or were induced by corrupt motives, and so forth.

Mr. MICHENER. We have always opposed investigations of the award of contracts unless there was something to come of the matter or unless there was an ultimate object other than a mere investigation followed by a speech on the floor, or a report at the end of the row Mr. LEHLBACH. The purpose of this proposed investigation is to find out whether this policy as to sales heretofore adopted, if carried out under the law, results in such a lack of protection to the interests of the Government as to require a change. If so, then we might modify it by legislation, or we can vest the power elsewhere, so that we can hedge it about by needed restrictions. We could do that, or we night clarify the language of the law that has caused the controversy as to how the sales should be made. Now, here is a situation that is right in point. It is not the sole reason for the resolution, but it is one of the factors that make it highly desirable that there should be such an investigation. There have been sales, as I have said, to managing operators under section 7, which gives a preference to managing operators in the sale of those lines. Now, certain members of the board have doubted whether that preference ought to be extended to managing operators, although nobody had questioned it before-that is, whether the preference was substantial, or

not.

Mr. THURSTON. You mean the extent of it?

Mr. LEHLBACH. Yes; the extent of it. The Shipping Board asked its general counsel for an opinion. He rendered an opinion which supported the contention of the Merchant Marine Committee and the policy of the past, that a preference, and a substantial preference, which shall mean other things being equal, the line be sold to the operator. That opinion was challenged by certain members of

the Shipping Board, and they deputed one of their members to go with the general counsel to the Attorney General of the United States for an opinion. The Attorney General of the United States supported the opinion rendered by the general counsel of the Shipping Board. Then the question was brought to the attention of the Committee on the Merchant Marine and Fisheries, and we asked them to defer any sales until we could look into the question and have an examination made of it. We had the Shipping Board before us in a series of hearings, and thereafter the Merchant Marine Committee unanimously adopted a resolution in regard to the matter. Nobody disputed the conclusion that under the Merchant Marine Act operators were entitled by law to the preference that they were insisting upon and which had been accorded to other operators in the past. The next thing the Shipping Board did was to have a conference with the Interdepartmental Committee, which is composed of the Secretary of Commerce, the Postmaster General, the Chairman of the Shipping Board, and the Secretary of the Navy. After an extended conference and after an exhaustive investigation of the subject by a subcommittee of the Interdepartmental Committee, the Interdepartmental Committee arrived at the conclusion that not only under the law but as a matter of sound business the operators were entitled to buy those lines.

Mr. THURSTON. Would this hold up further sales until December, or until Congress could act?

Mr. LEHLBACH. Not necessarily, but they are held up for this reason: The Shipping Board indicated that they would disregard the advice of their general counsel, disregard the advice of the Attorney General, disregard the construction placed on the act by the committee of Congress that had reported out the act, and which for a decade had been considering legislation amendatory of it or supplementary to it. Then a move was made, which fell short of culmination, of incontinently firing the general counsel for having rendered an opinion not in accordance with the desires of the board. The matter was then laid before the President, and the President requested the Shipping Board to hold in abeyance the sales of those two lines in question until he could go through the matter and ascertain what it was all about.

Now, as I have said, this particular situation is only one part of the general picture. The Postmaster General went so far as to tell the Shipping Board that should they sell these lines to an outsider, or the United States Lines, he would refuse to advertise a mail contract on those routes. Now, it is generally understood that it is impossible to sucessfully operate those lines, or to operate them without a substantial loss, unless they have such a mail contract.

Mr. MICHENER. In other words, we have set up a board, or Congress has, giving it control over a certain activity, but as soon as they commence to function, we assume they are wrong, or that, at least, there is a suspicion that they are crooked and need investigating. We assume that they are not doing their duty. Does this mean that whenever we have a commission to do a thing, then we must have another commission to check up on them and see whether they are honest?

Mr. LEHLBACH. What other commission? I do not consider a committee of the House a commission.

Mr. MICHENER. I mean this, if Congress sets up a commission or a board to do a certain thing, must it then create another board or commission to check up on the first one to see whether, or not, they are honest? I do not care whether it is a committee or commission that comes from the House or the outside, it is in effect a commission or a committee to check up on the honesty of the other people.

Mr. LEHLBACH. If a committee of the House, having legislative jurisdiction of the subject matter, and having created that board to deal with Government property which is of value not only to the Government itself, but which is essential to the well-being of our economic and industrial system-if that committee has sound reason to believe that the board is not functioning to the interest of the country, or to the interest of the merchant marine, do you mean to say that under such circumstances Congress should not check up on the situation, and ascertain what the facts are?

Mr. MICHENER. I do not mean that at all, but I happen to be one of those people who feel that when you select a commission of that type, or men of that caliber and standing in the community, there is, at least, a fair presumption that they are using common sense and are acting honestly. I do not believe in appointing commissions or investigating committees to investigate something unless there is some definite ground on which to investigate. That is what I mean. I assume that men in such positions are honest until something indicates that they are not honest. When that thing does develop, and when the charge is made, then I believe it is a good thing to investigate. I do not like to appoint commissions to investigate. You had as well appoint a committee to investigate the Senate, if the rules permitted such a thing, upon the ground that they vote wrong, are dishonest, or one thing or another.

Mr. LEHLBACH. I thought I had laid a specific basis for it. Here is an avowed purpose to dispose of two of the most important steamship lines operating under the American flag, contrary to law and contrary to what is alleged to be the best interests of our merchant marine and of the Government. Now, if we say, or even if we believe this to be the evidence; even if we have knowledge of those facts, and even if the question naturally arises, why go counter to the law, why go counter to the advice and opinion of everyone associated with them in other aspects of the function, or with respect to the whole question, as, for instance, the Interdepartmental Committee if that be true, must we say that we have got to keep our hands off? I do not think that it is necessary at all to attack the integrity of the members of the board, but if it is a deviation from the sound policies which have been written into the law, and which for a decade has been almost our traditional policy, we are entitled, as the creators and fosterers of that policy, to search for the motives underlying this departure from it.

The CHAIRMAN. Well, you have all this information that you disclosed here this morning; you are the legislative committee that has control of the Shipping Board, if there is any committee of the House that has, and, that being true, why do you not get your legislation in shape and put it in at once? You have the information, and what more information could an investigating committee get than your committee has the power to get at the present time? You can summon the members of the Shipping Board before you and discuss the whole proposition with them.

Mr. LEHLBACH. It is because we can not get that information by the voluntary testimony of individual members of the Shipping Board; but if you give us this resolution, we will have the right to subpoena books and papers of the concerns who are interested in and who are seeking to acquire this property. We would have the right to summon witnesses and summon documents.

The CHAIRMAN. Has the Shipping Board refused to give you any information you needed?

Mr. LEHLBACH. The Shipping Board does not have possession of the information that we need, but other people have it.

Mr. PURNELL. Would the other people object to surrendering it? Mr. LEHLBACH. Undoubtedly they would. They would not let us walk into their offices and cross-examine their employees and agents who may be here, abroad, or somewhere else. Besides, we could not function in a recess of Congress.

Mr. Pou. You could summon the Shipping Board, or they might come voluntarily, but you would get only one side of the picture?

Mr. LEHLBACH. Yes. We did that very thing. We summoned the Shipping Board, and they responded to the invitation. We passed a formal resolution, and we passed it unanimously, setting out that this was the policy under the law, that this was a fair construction of it, and that this was the way it had been uniformly construed for the past 10 years. This was the construction that the General Counsel placed upon it, and it was the construction of the Attorney General.

We set out that that was the way the committee construed it. That is the way the Interdepartmental Committee construed it, and that is the way those various members of the Cabinet construed it. Then, after all that, they in effect tell us to go to hell. That is what they tell us. Now, what is the use in going through that performance again, and having them walking off laughing up their sleeves? That is what will happen. We want to know why they have this attitude. We want to know what is behind it. Are we going to wake up some morning and find that they have put all of the passenger and freight business on the North Atlantic to every important port in Europe in the hands of one concern, and are we to find that that concern has surreptitiously put it in the hands of the merchant marine of some foreign nation? That is a question that we may develop if a searching investigation is made.

Mr. PURNELL. What power does the Attorney General have in the premises?

Mr. LEHLBACH. The position of the Attorney General, I take it, would be like that of the district attorney in New York, when he said, "I am not a detective; I take evidence that is brought to me, and if the evidence justifies a prosecution, that is my job." That, I think, would be the attitude, and the proper attitude, of the Attorney General.

The CHAIRMAN. Does the President have any control of it?

Mr. LEHLBACH. The President, of course, would have no inquisitorial powers. He could not send for books and papers.

The CHAIRMAN. Has he any executive powers over them?

Mr. LEHLBACH. No, sir; they are absolutely independent of the President.

Mr. THURSTON. He can not discharge them?

Mr. LEHLBACH. Except for cause. Of course, if Congress contemplated the creation of an independent board or commission, with responsibility to nobody, they can not be touched. If they were under an executive department of the Government, they would be amenable to the President, who represents the people through the heads of the departments. But they are independent, and nobody can control them at all.

The CHAIRMAN. They have absolute power in these matters, regardless of the law and everything else?

Mr. LEHLBACH. Yes, sir.

Mr. MICHENER. And that is information which you can not get under the existing law?

Mr. LEHLBACH. That is true.

Mr. MICHENER. Of course, you can not subpoena anybody. Any committee of the House could not have the power of subpoena. It is a voluntary group of men listening to those who want to talk. That is all that an ordinary committee could do.

Mr. LEHLBACH. And the committee would get what the people believed to their interest to tell them. Of course, as a general proposition, I am very much of the opinion that the chairman has outlined and that Mr. Michener has outlined. I would not be here if I did not believe there was real substance to it. I am not at all anxious to spend a summer on this job. I would a good deal rather not, but I think that this is of such serious importance to the future of the merchant marine that we ought to do this.

The CHAIRMAN. Was your committee unanimous for this?
Mr. LEHLBACH. Yes, sir.

Mr. THURSTON. You say that the President has no control over the personnel of this board?

Mr. LEHLBACH. No, sir. I will tell you what the President did: He had no authority over their action, but he requested the board to hold in abeyance any further action with respect to the sale of these two lines from ports on the North Atlantic shores of the United States to ports in France, Holland, and Belgium, until he could apprise himself through a committee of the situation. The result is that the board says, "Certainly; we will wait until this committee has investigated and found out nothing. So it is a matter of functioning in accordance with the best judgment of the board, and while the President might intimate to them along the lines that his Secretary of Commerce, Postmaster General, and Secretary of the Navy, have intimated, the board has revealed its attitude at the present time to proceed as stated.

The CHAIRMAN. It is a rather peculiar situation that you have a board with absolute authority to act independently of the law, of the Interdepartmental Board, of the Executive, of the committee, and of everybody else who is responsible to the American people.

Mr. LEHLBACH. They want to do a certain thing, or certain members do. They are told that it is against the law to do that. They are told by their own counsel and by the Attorney General that it is contrary to law, and then one of the shipping companies in interest goes to the firm of Wickersham & Taft and buys an ex parte opinion. Then a member of the board receives that opinion from the shipping company and says that that is the true view of the law, and ignores the legal officers of the Government. They receive that ex parte