(The telegrams referred to follow :)

WIRE SENT BY AMERICAN MARITIME ASSOCIATION TO THE MARITIME ADMINISTRATOR, JANUARY 22, 1964

Hon. ROBERT GILES,

Acting Maritime Administrator,

Maritime Administration, Washington, D.O.:

AMA members were told yesterday afternoon by Fred Turling, of MARAD, via conference call from New York that Klosty's pro forma of January 17 was subject to further negotiations by owners. We are advised by one owner that Turling told him privately by phone earlier yesterday that Klosty's terms are final. The owner fixed two U.S.-flag ships yesterday on that basis. Please advise us immediately whether Klosty's January 17 terms are final and binding, or whether owners have right to negotiate further. We are further advised today that Klosty has rejected two ships offered on fair and reasonable terms and has notified owner that Continental will seek other tonnage after 2 p.m. today if owner refuses terms of Klosty's pro forma of January 17. Owner offered the ships on January 9 and has tried unsuccessfully since to conclude fixture on fair and reasonable terms. Klosty's telex sent 12:52 p.m. today to Simpson, Spence & Young broker for that U.S.-flag owner, follows:

"Re your telex of even date (January 20) referring to your firm offers and our firm counterbids for the Niagara and Chilore and to your concluding sentence that owners conclude that charterers are not interested in endeavoring to conclude fixtures of these vessels grain to Russia. Please be advised that charterers wish us to point out that they categorically deny your allegation and direct your attention to the fact that these vessels have been conscientiously traded over a period of several days evidencing their desire to conclude fixtures. However we point out that you have continuously countered the firm bids with terms which charterers cannot accept and until owners are willing to accept charterers termswhich terms Maritime Administration has agreed are fair and reasonable to both parties and in accordance with pro forma dated January 17, 1964, which has received Maritime Administration's endorsement. We are concerned as to how long we can continue these negotiations without progress before reverting to other tonnage. We again renew our firm bid of yesterday afternoon and respectfully request owners' confirmation thereof. Alternatively their advices that owners are no longer interested in this business on fair and reasonable terms. The foregoing renewal of bid is for reply 2 p.m. today."

Please be advised that American-flag owners consider several terms in Klosty pro forma of January 17 as unfair and discriminatory. U.S.-flag owners are prepared, however, to offer amendments and conclude fixtures on fair and reasonable terms. Please be advised further that if Klosty's terms of January 17 are declared final and binding, American Maritime Association will protest vigorously should terms still be open for negotiation. American owners propose following amendments to January 17 pro forma for dry-cargo vessels and tankers. Additional amendments for tankers will be submitted tomorrow: Page 2, next to last paragraph (Klosty pro forma), to read as follows: Overtime is for account of party ordering same: However, if ordered by elevators or port authority, then for charterers' or receiver's account, officers and crews overtime always for account of the vessel, page 2, last paragraph: At discharging ports, any assessments, including dues or taxes against the vessel and/or the cargo shall not be for account of the vessel. Page 3, paragraph 6: Delete the following: "Any extra insurance on cargo owing to vessel's age, flag or ownership to be for account of owners and deductible from freight."

MAX HARRISON,

President, American Maritime Association.

TELEGRAM SENT BY THE MARITIME ADMINISTRATOR DATED JANUARY 22, 1964 Mr. J. MAX HARRISON,

President, American Maritime Association,

New York, N.Y.:

This is in response to your identical telegrams of January 21 sent separately to Under Secretary Roosevelt, Captain Goodman, and the undersigned. Under Secretary Roosevelt is not in the country at this time and I am replying for him

39-375-64-4

as well as myself. I have checked thoroughly various points you mentioned in your telegram and say: (1) My staff advises that in their telephone conversations about these matters they have recommended owners make all reasonable effort to negotiate with charterers on any items at issue. No member of staff has advised any owner contrary to this.

(2) Klosty's pro forma of January 17 covers several details not included or covered in any previous Maritime Administration statement or release or decision. As I informed shipowners and representatives at conference last week Maritime Administration does not wish to be called on to make decisions on every point involved in chartering a vessel. I have said same to grain exporters. Therefore, when Maritime personnel advise shipowners to endeavor to negotiate with charterers on any points in issue they are acting in accordance with my instructions. (3) The Maritime Administration has given its advice on several major points which would be involved in a charter, such as rates, and the several details covered in our release dated January 17, copy of which has been sent to you and several points of which were covered with you by telephone prior to our making final decision and publication last Friday. So there will be no misunderstanding, I would like to say again that if vessels are offered to a grain exporter in accordance with those particular terms and conditions we have been asked to pass on and as to which we have made public releases, then the charterer will not be able to obtain a waiver from this agency on the grounds that an American-flag vessel was not available on reasonable terms and conditions. This statement of course applies only to those specific terms and conditions on which this agency has already ruled and notified both exporters and shipowners. If some other item is in controversy and the question at issue is whether an exporter was justified in turning down a vessel then we will pass on that point when it is presented to us. (4) To state an obvious fact, a grain exporter is of course entitled to attempt to get better terms and conditions than those which the Maritime Administration has indicated are reasonable and if the exporter is successful in getting Americanflag vessels at better terms than those which we have ruled on and does not have to apply for a waiver of the American shipping requirement, there is no issue for this agency to rule on. Under such circumstances there is no basis for valid complaint by any American shipowner.

(5) On the other hand, the Maritime Administration is not saying to any vessel owner that he is required to participate in commercial shipments of grain to Soviet-bloc countries. Obviously, if a shipowner does not desire to participate in this business or any other business, that is his prerogative.

(6) We have had various complaints from individual members of your association whose individual interests are in conflict. Owners of vessels under 15,600 TDWT have complained to us that because of our guideline rates they are effectively eliminated from participation in commercial shipments which vessels of larger size can participate in and for this reason no vessel over 15,600 TDWT should participate in Public Law 480 shipments. At the same time we receive complaints from owners of the larger vessels that they should be entitled to bid on Public Law 480 shipments and to do otherwise is discriminatory against them. In accordance with Government policy announced last November it was determined that vessels 15,600 TDWT and above would be the most practicable to utilize for commercial shipments of grain and our guideline rates were set accordingly, as a practical matter excluding participation in such shipments by smaller vessels. In keeping with this determination, shipowners were informed last November that preference on Public Law 480 shipments would be given to vessels under 15,600 TDWT size inasmuch as these smaller vessels are effectively excluded from participation in the commercial shipments to the Soviet bloc. This is still our policy. I will be glad to consider exceptions to this policy in a specific case where there is Public Law 480 cargo which can be handled on either a small vessel or a large one but not enough for both if you, representing your entire association, advise with respect to that specific case that we should inform the Agriculture Department that preference should be given to the larger vessel rather than the smaller.

(7) You stated in your telegram that American-flag owners consider several terms in Klosty's tender of January 17 as unfair. Insofar as January 17 tender is consistent with terms and conditions ruled on by Maritime Administration and covered in our release of January 17 and any previous official release on this subject, the January 17 tender by Klosty is fair and reasonable for purposes of our ruling on any future application for a waiver. As to any item on which this agency has not expressed an official position, I would emphasize again our hope and desire that such items can be settled in normal business nego

tiations between owners and charterer. If the Maritime Administration has to do so in processing waivers we will make a ruling on each and every point involved in these charters under question. But neither the shipowners nor the grain exporters should desire that this agency be involved in these matters to such an extent.

(8) In your telegram you say that tender should be amended to provide that if overtime is ordered by elevators or port authority, then such overtime should be for the charterer's or receiver's account. According to my best information this is contrary to established shipping practice. Ordinarily overtime ordered by elevators or the port authority is for the account of the vessel. This is so because ordinarily it is to the advantage of the vessel owner to expedite his loading and his discharge and for that reason the owner is usually willing to load or unload his vessel on an overtime basis. However, we have requested Continental to consider this item and Continental agreed to have the tender amended to provide that any overtime ordered by elevators or port authority at the discharging port will be for the account of the charterer but any overtime ordered by elevators or port authority at loading port must remain for account of vessel. This appears to me eminently reasonable and this condition is hereby adopted by the Maritime Administration.

(9) Regarding your request that assessments, dues, or taxes at discharging ports should not be for account of vessel. According to our information this provision is standard worldwide shipping practice. However, we are endeavoring to get more complete information on what taxes or dues are applicable at Russian ports. In addition, ask your association (to) use its resources to get all available information it can and we will give further consideration to this specific item in light of all facts that can be obtained.

(10) Your telegram objects to provision in Continental's tender to effect that any extra insurance because of vessel's age, flag, or ownership, should be for account of vessel owner. According to my information, this provision is standard commercial shipping practice, and I hold that it is reasonable. However, we have checked with the Continental Co. and they have agreed to delete this provision from the tender.

ROBERT E. GILES, Acting Maritime Administrator.

The CHAIRMAN. If you don't mind we will take a recess and be back here in 15 or 20 minutes because the committee will run until about 1 o'clock today.

(A brief recess was taken.)

The CHAIRMAN. The subcommittee will come to order.

The witness will continue.

Mr. GILES. Mr. Chairman, just two other items to refer to, and I believe these are before you, a copy of the telegraph from Mr. Harrison to me and a copy of my answer to him dated January 22. In his telegram to Mr. Harrison refers to some possible confusion as to the advice as given out by staff people in the Department. I think we straightened that out. The specific points where he is taking some issue with the terms and conditions are referred to in the last paragraph of his telegram, where he indicates that he believes there are some terms that are unfair and discriminatory.

The only two items he specifically mentions are the reference to overtime and whether that should be for the account of the vessel, or for the party ordering the same where this is ordered by elevators or port authority, and his suggestion in this telegram is that where the overtime is ordered by elevators or port authority, whether on the loading or the discharging end, then that should not be for the account of the vessel.

The standard shipping rule, the standard shipping practice, is that overtime in such cases is for the account of the vessel, and the reason for that is ordinarily it is to the vessel owners' advantage to have his

loading and his unloading handled with dispatch and the quicker it is done, the better off he is, even if he is called on to pay overtime.

The other point that he mentioned specifically in this telegram was the point about assessments, and dues, and taxes against the vessels or against the charterer.

Now, I took this occasion to have a rather lengthy reply to Mr. Harrison because I wanted to help him as well as myself, and I would like to refer to paragraph (3), sir, in my response where I say:

So there will be no misunderstanding, I would like to say again that if vessels are offered to a grain exporter in accordance with those particular terms and conditions we have been asked to pass on and as to which we have made public releases, then the charterer will not be able to obtain a waiver from this agency on the grounds that an American-flag vessel was not available

On the other hand, if there is some item in controversy which we have not passed on, then we are not expressing any judgment about that.

Then paragraph (4):

To state an obvious fact, a grain exporter is of course entitled to attempt to get better terms and conditions than those which the Maritime Administration has indicated are reasonable and if the exporter is successful in getting American-flag vessels at better terms *** and does not have to apply for a waiver of the American shipping requirement, there is no issue for this agency to rule on. All I am saying is that we would do the same that we have done on the Public Law 480 program. Vessels have been chartered at better rates on the Public Law 480 program, for example, than we have published as guidelines. That is all right. The point is that some American-flag owner and the charterer have gotten together and they have negotiated a contract.

Paragraph (5):

On the other hand, the Maritime Administration is not saying to any vessel owner that he is required to participate in commercial shipments of grain to Soviet bloc countries. Obviously, if a shipowner does not desire to participate in this business or any other business, that is his prerogative.

Then perhaps, Mr. Chairman, the most important paragraph in this telegram, because I think it will indicate to the committee some of the underlying difficulties I believe we have in this whole matter, paragraph (6) on page 2 states:

We have had various complaints from individual members of your association whose individual interests are in conflict. Owners of vessels under 15,600 deadweight tons have complained to us that because of our guideline rates they are effectively eliminated from participation in commercial shipments which vessels of larger size can participate in and for this reason no vessel over 15,600 deadweight tons should participate in Public Law 480 shipments. At the same time, we receive complaints from owners of the larger vessels that they should be entitled to bid on Public Law 480 shipments and to do otherwise is discriminatory against them. In accordance with Government policy announced last November, it was determined that vessels 15,600 deadweight tons and above would be the most practicable to utilize for commercial shipments of grain and our guideline rates were set accordingly

namely, the minus 20 percent

as a practical matter excluding participation in such shipments by smaller vessels. In keeping with this determination, shipowners were informed last November that preference on Public Law 480 shipments would be given to vessels under 15,600-deadweight-tons size inasmuch as these smaller vessels are effectively excluded from participation in the commercial shipments to the Soviet bloc.

This is still our policy. I will be glad to consider exceptions to this policy in a specific case where there is Public Law 480 cargo which can be handled on either a small vessel or a large one but not enough for both, if you, representing your entire association, advise with respect to that specific case that we should inform the Agriculture Department that preference should be given to the larger vessel rather than the smaller.

Then I go ahead, Mr. Chairman, to cover some of the other points. Incidentally, on the two specific points made in Mr. Harrison's telegram about overtime for the account of the vessel or for the account of the party ordering it, we checked with Continental and notwithstanding the standard commercial shipping practice, we got Continental to agree that overtime ordered by the elevator or port authorities at the loading side would be for the account of the charterer, or at least would not be for the account of the vessel owner, but that the overtime ordered by the elevator or port authority at the discharging side should be for the account of the vessel.

I believe that is correct, or did I have it backward? I got it backward; that the loading side is for the elevator. The discharging side is for the charterer, so that the overtime ordered by the elevator or port authority at the Soviet ports is for the account of the charterer and not the vessel owner.

Then I say we now have this arrangement from Continental and this is an improvement. I will say very frankly, Mr. Chairman, if we had not been able to persuade Continental to agree to this departure from the standard shipping practice, I would have had to say that "we will have to apply the standard commercial practice," and "we would not have been able to get this because I didn't think it would be right," and I have tried to keep in mind that we have both major business interests here, and in using the best judgment I can, I will not go overboard to the prejudice of the exporters any more than I will to the prejudice of the shipping group. I don't think we should in the Department of Commerce use our authority in connection with these waivers to permit, in effect, the shipowners to impose unreasonable conditions.

Now, with regard to assets, dues, or taxes, in paragraph (9) I informed them that:

According to our information this provision is standard worldwide shipping practice. However, we are endeavoring to get more complete information on what taxes or dues are applicable at Russian ports

And we

ask your association [to] use its resources to get all available information

And we certainly will make every effort to see that there is no discrimination.

Paragraph (10). Mr. Harrison objects to the provision in Continental's tender to the effect that any extra insurance because of vessels' age, flag, or ownership should be for the account of the vessel owner.

According to our information that provision is standard commercial shipping practice and

** I hold that it is reasonable. However, we have checked with the Continental company and they have agreed to delete this provision from the tender. They agreed to delete it because they thought as a practical matter they weren't going to have to be asking anybody to put on extra insurance and that is the result of that exchange of telegrams. At this