do, however headstrong we may appear, or whatever we may say, that we will be fighting for the preservation of our livelihood, and this segment of America.

I think, Mr. Chairman, that pretty much covers the point I wanted to make today. In closing, I urge you to look at these rules again before this thing deteriorates any further. In closing, I would say just one more thing: In such an open hearing as this, Mr. Chairman, subject to the reservations I have taken earlier, I think this might be a very healthy thing because it gives a chance to put it out in public, you see. I think maybe if you did this frequently, it would be tremendous. I tell you why. It takes an area, a corner of the industry that generally is not too well known. It is a dark corner. It puts it out in the open where everybody can look at it and hear. I congratulate you for it. I would earnestly request that you consider doing it again. Next time you give us a little more time so that we can come documented and prepared.

Thank you for your time.

Mr. GILES. Thank you. I certainly subscribe to your latter sentiments about getting the things out in the open. I am frank to say that I am not anxious that we will have occasions similar to this one for frequent public hearings. Perhaps we can have other and different occasions other than a waiver application.

I would like to make just a few brief comments on some of the points you have made, Mr. Hall, and then you may have an opportunity to make any final, further remarks you wish to make.

On the matter of the rules, the ground rules that we have been mentioning, that term really means to me the terms and conditions of these charters. That is what we have been dealing with. That is what is giving us the trouble.

Now, it never occurred to me. Very frankly, my present reaction is that I don't see on what basis this Government agency would have to say to the owner and to the charterer that they should bring in or that we should bring in, say, the labor union representatives. Now, I will say that as far as I am concerned, I have no objection to it, and would welcome the presence and knowledge of all of our groups. I do look on that as essentially the sort of business transaction which the shipowner makes on any charter. I don't believe it is the general practice on most of these charters or any of them to have that.

Now, this is the Government. This is the point on which you have a valid basis and that is that this is not simply private industry. This is the Government acting. Therefore, all of our citizens have an interest. On that I have been assuming that the owner was in the position and would look out after his own financial interest. Now, that is simply my comment on that point.

I certainly would have no personal objection, myself, if we got down to something like this in the future. Whatever we have in the way of hearing or whatever, we want to be open, frank, and communicative with all groups. That is my own personal attitude.

Now, you mentioned Mr. Calhoon's telegram. He mentioned five ships, the fact that two of them during the course of today's hearing have been tentatively brought within the fold rather than left out. That is correct, but to me it overlooks the main point of Mr. Calhoon's telegram where he says that these vessels have been declined, in substance, on ridiculous reasons or for transparently ridiculous reasons.

Now, I did disagree with the judgment of Continental on two ships that we have mentioned, a tentative disagreement because I want to reserve my final decision on all of these. I do not think on the facts that I have heard that I could agree at all that Continental has turned down these ships for transparently ridiculous reasons. It is just a matter of degree of how much emotion you put on it.

Again, I like to approach these things on the assumption that there is a lot of room for a difference of opinion and that we ought to be able to tolerate that difference of opinion without imparting to it the charges of immoral conduct or stupidity which have been attached. Your point, to me, about my statement here about Mr. Calhoon in absentia is well taken. It has some validity to it. You have a point. My only reason, if I have one, is that Mr. Calhoon spoke publicly about me in many papers, about the staff and the agency here, and I felt that it was not entirely improper although perhaps humanly weak for me to indicate that I have some show of feeling on that matter. That is why.

If this had been a private statement, or a statement made in private conversation, such as you mentioned your group having the meetings earlier, in the last year or two, I think that would have been different and I think my own reaction would have been different.

On the matter of supplementing the foreign-flag ships, I heard the explanation here given by Continental as to why they fixed foreignflag ships in those earlier days. It seemed to be reasonable. I don't regard that we have handled this in such a way as merely to supplement the foreign-flag ships. I am impressed with this very frankly and that is during this particular period, during December, during January, February, March, and April, happily the American merchant marine is pretty busily employed. This is a good season.

Now, the unfortunate thing or the bad thing, you might say, is that we can't count on having a similar good season next year. But we have to take our seasons as they come, as you know far better than I do, the peaks and valleys of the merchant marine.

So we have got a good, busy season now. To me, the fundamental point that comes out in all of this, and I frankly had no way to guess as late as 4:30 or 5 o'clock yesterday afternoon what we would finally come up with on this particular Continental shipment, I read as many rumors as anyone else. I thought a few times that we would have more than enough American-flag shipping to cover all of this 500,000 tons. As I remarked to some of my colleagues yesterday morning, and the day before, if that is the case, we will have a rather short and, for me, a very sweet meeting because I will have no waiver applications to pass on.

But that was not the situation. The vessels simply were not offered in, even in controversy, to cover the full 500,000 for whatever the reason. So certainly underlying all of that is a fortunate circumstance that this is a good, busy season generally. It is much better than last year. I think that all of us, the shipowners, the labor union leaders who have a very valid interest, should recognize that. I would have it in context with some of these technicality points.

It is true when you get down to trying to administer a program of this sort and you have to keep inching into each and very little detail on which somebody can take issue, the Government quite often is put

in almost an impossible position; that is, the position to decide the details of business transactions where you don't have the problem except for the fact the Government is in it.

I simply mention that point again to put it in context.

I don't think our ground rules or our terms and conditions and our approach on that, I don't think our approach has been inflexible. We have tried to regard the realities of the situation and to work out what we thought were proper decisions. I could not do my job and accept every recommendation of the shipowners any more than I could the other. I made it plain to Continental. I first met them in connection with this that we had a 50-percent shipping requirement. My job was to police that and to see that it was accomplished, if it was there. That is the approach we have made. I am sure we have made some mistakes measured by any good, high, standard of achievement, intellectual achievement, anyway. We are bound to have made some. But I guess we will just have to stick with them.

So I sum it all up by saying this in connection with our whole effort: I am going to have to make a decision here on this particular waiver application. There is going to be some of the shipping lacking. The biggest amount here, the 50,000 tons of the National Defender, is still in question, but certainly there is a strong possibility that that cannot be worked out by the owner. That means that there will be for our consideration, say, tomorrow, whenever we get to it and have all the facts, the possibility of a waiver on a fairly substantial amount of tonnage. To me a substantial amount is 100,000 tons. It may not be as much as that. I don't know.

When we come up with that again I will just have to deal with these specific cases regardless of the general result and do the best we can with it. I hope that you and your associates, in the maritime labor movement, who do have such a vital interest in this, will consider what we have tried to do, will consider our explanations and the basis of our decisions, and then make your own judgments accordingly.

Mr. GILES. Does Continental have any comment you would like to put on the record in connection with any of these remarks by Mr. Hall or myself?

Mr. STOVALL. I would like to make one statement, Mr. Giles. I can well appreciate Mr. Hall's partisan viewpoint. I don't believe for one moment that he would let this assembly believe that ours is a pushbutton operation, where the operation of the steamship has many complexities. I would submit that this operation has as many, if not more complexities as the steamship owners do.

Consequently, we at this late stage of the game must be as inflexible in some respects as the steamship owners are. With respect to the rates paid, for Mr. Hall's information, we have paid the full Maritime rate for every vessel which has been chartered in this program and the $17 figure of the vessel mentioned before, the Mount Washington, is a matter which Maritime and Maritime only would settle in accordance with their guideline rates.

A vessel of this size 40,000 tons with a 50-foot draft-when they offer against this business the rate is subject to consultation. We were informed at the beginning of these proceedings-rather at the beginning of this operation-that Maritime Administration had a formula which would be applied against these vessels taking into account construction cost and many, many other factors.

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 anybody 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.