Mr. DOWNING. Let's assume for the minute that the superships, as I call them, can go into these Russian ports. The price which you set for your berth liners and tramps under one guideline is not sufficient for them to make that trip profitably, is it?

Mr. GILES. Mr. Downing, I would like to say that we have set no price for the berth liners. If the berth liners haul this wheat they haul it at the minus 20-percent rate, and I will have to say, contrary to this letter I was dealing with yesterday, that most of them ought to be ashamed for quoting that rate on the basis of their own experi

ence.

Mr. DOWNING. Then you only have one guideline and not two?

Mr. GILES. We have one guideline for the Soviet transactions, that's right. It is the minus 20 percent.

Mr. DowNING. And that is the supership rate?

Mr. GILES. Is the guideline rate for ships that haul that wheat.

Mr. DOWNING. So you have effectively eliminated the smaller ships. Now, with respect to this ship of Waterman's, I understand they applied to Continental Grain and were turned down. They had rates for 7,000-ton parcels at $17 per ton to Nakhodka. This, according to my information, has resulted in the layup of two vessels.

Mr. GILES. I don't know whether Captain Goodman has any information on the layup of the vessels, but I would say they should have been turned down by submitting that rate.

Mr. DOWNING. Why?

Mr. GILES. Because it was about $3 above our published rate.

Mr. DOWNING. When you went into this ratemaking did you consider the fact that the Russians charge us about three times more wharfage than they do other countries?

Mr. GILES. About three times more wharfage?

Mr. DOWNING. Yes.

Mr. GILES. I don't have information that they charge us three times more wharfage than they do other countries and if we ascertain that there is any discrimination against the United States on that basis, then we will take appropriate action to try to do something about it. Mr. DOWNING. You did not consider that when you set the rate? Mr. GILES. We took into account the usual wharfage fees that usually apply, standard throughout the world.

Mr. DowNING. Suppose these wharfage fees actually turn out to be three times more than they are throughout the world?

Mr. GILES. If we find they are discriminatory against the United States, on a discriminatory basis, we will try to do something about

it.

Mr. DOWNING. But you have already set the rates.

The CHAIRMAN. Will you yield to me?

Mr. DOWNING. Yes, sir.

The CHAIRMAN. Let me see if I can get clear about this.

You started off with two rates, the superrate, the one rate the super could charge, 20 percent less, and the small ship to carry at their rate. Now, have you eliminated the two-rate system and come down to one rate and said to the little ship, "You have to carry it at the same rate the supership carries it."

Mr. GILES. Mr. Chairman

The CHAIRMAN. Just answer yes or no on that.

Mr. GILES. There are two answers.

The CHAIRMAN. Let's see if that isn't correct now. With what all you have said isn't that just where you get down to?

Let me interrupt here and call on Mr. Dewey in the back there.

Isn't that about what it has come to, Mr. Dewey?

STATEMENT OF RALPH B. DEWEY, PRESIDENT, PACIFIC AMERICAN STEAMSHIP ASSOCIATION, SAN FRANCISCO, CALIF.

Mr. DEWEY. I was distracted.

The CHAIRMAN. The one-rate system now instead of a two-rate system.

Mr. DEWEY. That seems to be the problem. We can't qualify for the carriage of this cargo unless we carry it at the single rate of the supership.

The CHAIRMAN. That was the case of these three vessels on the Pacific coast?

Mr. DEWEY. That is right, sir.

The CHAIRMAN. It got down to one rate.

Mr. DEWEY. We started in November with two rates.

The CHAIRMAN. But it has come down now to one rate.

Mr. DEWEY. When orders came out finally in January they only had one rate in them.

The CHAIRMAN. One rate; and the small vessel is required to carry the cargo at that rate as well as the supervessel.

Mr. DEWEY. That is the advice that Continental tells the carriers that offer their ships; yes, sir.

The CHAIRMAN. That is the way I get this thing.

STATEMENT OF HON. ROBERT E. GILES, ACTING ADMINISTRATOR, FEDERAL MARITIME ADMINISTRATION, DEPARTMENT OF COMMERCE-Resumed

Mr. GILES. Mr. Chairman, let me see if I can clarify it. There has been only one rate from the beginning on the Soviet shipments. The CHAIRMAN. That is the less 20 percent?

Mr. GILES. Less 20 percent.

The CHAIRMAN. On big ships?

Mr. GILES. On any ship. We didn't specify that small ships couldn't handle it. We said this is the rate, the minus 20-percent rate. If the small shipowner wanted to come in on it they could.

This was not announced in January. This was announced last November, and I just quoted from the newspaper item which he is going to have in the record, so Mr. Dewey is wrong in saying that this was only done in January. It was announced last November that if the ship rates offered in were above the minus 20 percent, then there would not be available American shipping on that basis. That was made clear.

There were and there are now two rates on the Public Law 480. The top rate, which we had before we got into all of this, is for those vessels up to 15,500 tons. They can charge that top rate on Public Law 480.

The minus 20-percent rate on Public Law 480 applies to vessels over that size where they are hauling Public Law 480 cargo. That was stated and was fixed last November and there has been no change in that.

The CHAIRMAN. With regard to those three vessels that didn't get this cargo on the Pacific, I understand that they bid $17, we will say, and you say the figure should have been $13. Is that right?

Captain GOODMAN. About $13.45.

The CHAIRMAN. Approximately right.

Mr. GILES. Yes, sir.

The CHAIRMAN. That $13 rate was the rate for the large ship, was it?

Mr. GILES. It was the rate for any ship.

The CHAIRMAN. I mean it was the rate for the large ship.

Mr. GILES. It was the rate based on our larger ships.

The CHAIRMAN. It would be 20 percent less than the $17.

Mr. GILES. That is right; yes, sir.

The CHAIRMAN. I think that clears it up that there is a difference, that the small ship isn't getting the cargo with elimination of the 20-percent discount.

Mr. GILES. Yes, sir; that is right. That is exactly right.

The CHAIRMAN. Then I thought the large ship had to have 20 percent discount from a Public Law 480 rate, which would be about this $13.

Mr. GILES. That is right.

The CHAIRMAN. And the small ship wouldn't have to have this 20 percent.

Mr. GILES. It wouldn't have to have it on Public Law 480.

The CHAIRMAN. But you kind of patterned this after Public Law 480, though.

Mr. GILES. Yes, but we had only one rate for the Soviet shipments. The CHAIRMAN. Go ahead.

Mr. DOWNING. It is difficult for me to understand. I am reading here from the November 8, 1963, publication of the CIB which is the usual reliable Maritime periodic:

The rate from U.S. ports to Odessa, it was explained, will work out at $22.50 per ton based on Liberty ships while for the T-2 tankers at 15,000 deadweight tons there will be a 20-percent reduction. This, it was stated, would work out at $18 per ton.

Then in an official release from the Secretary of Commerce issued November 14, 1963, it reads:

Secretary of Commerce Luther Hodges today announced the Maritime Administration had extended previously established Public Law 480 guideline rates to shipping rates for the charge of wheat to the U.S.S.R. from North Atlantic and gulf ports of the United States on vessels from 10,000 to 15,500 tons. For vessels from 15,600 deadweight to 30,000 deadweight the fair and reasonable rate has been determined to be 20 percent below those for the smaller ships.

So there were two rates, and only one rate was to be used, which was the supership rate, and it must have been with the knowledge that you are not going to use these smaller ships.

Mr. GILES. That is right and the reason, sir, we stated it in that way; that is, we stated the smaller vessel rate, was to show to the larger vessel owner how we arrived at a specific dollar figure. It was 20 percent below what it would have been.

At that time we didn't have published guidelines to Soviet ports because we hadn't been shipping Public Law 480 cargo to them.

Mr. DOWNING. You couldn't determine the rates really with any accuracy. You had no historical experience.

Mr. GILES. It is not a matter of historical experience. We would have no difficulty in determining rate levels on the basis of our 480 levels.

It is a matter of adding in distances, and taking into account the greater distances, and such factors as that.

Mr. DOWNING. But we never had 480 in Russia.

Mr. GILES. Of course.

Mr. DOWNING. So how could you determine those rates?

Mr. GILES. We know the distance to the ports. We know the distances involved.

Mr. DOWNING. You did not know about wharfage. You had no historical experience to back up these rates and I think the rate for the berth liners and your smaller ships has been set too low for them to allow them to compete and I think you should open these rates to allow them to compete with their competitors.

Mr. GILES. To compete on the Soviet shipments?