delivery had been held up pending a decision from the Attorney General as to the validity of the contract. Meanwhile, the company had been employing two of the vessels under a charter arrangement, approved by the Secretary of Commerce. As required by the Merchant Marine Act, the Commission assumed this charter arrangement when it came into office. Shortly afterward, however, the Attorney General upheld the legality of the sales contract and the Commission at once opened negotiations with the company for the delivery of the vessels. These negotiations, which will terminate the charter arrangement, are now in progress. During the period September 26, 1936, when three members of the Commission took the oath of office, to December 24, 1936, the Legal Division rendered 43 formal opinions and prepared 51 contracts and other legal instruments. In addition it handled, in cooperation with the Department of Justice, the litigation of the Commission. On October 26, 1936, when the Merchant Marine Act, 1936, became effective for most purposes, there were 324 cases in litigation involving $66,869,282.02. Between that time and December 24, 1936, 13 new cases involving $83,376.73 were filed and 15 cases involving $608,454.77 were closed; so that on the latter date the total number of cases pending was 322 cases involving approximately $66,344,203.98. The litigation handled for the most part comprised cases arising out of the activities of the former Fleet Corporation and Shipping Board Bureau of the Department of Commerce, although the foregoing figures include other litigated cases involving Government-owned vessels handled for other departments of the Government. In addition all of the litigation covered by protective and indemnity insurance placed with outside underwriters received supervisory attention by the Legal Division. There follows a statement of the Commission's assets and liabilities as of October 26, 1936, the day it was officially organized. These figures are subject to certain adjustments and revaluations to be made by the Commission. Assets: Cash (not including appropriations to be transferred from Accounts receivable and claims.. Notes and mortgages receivable and securities Stores, supplies, and equipment_-- Fleet (appraisal value of 242 vessels and 21 barges and launches). Other properties Deferred accounts_-_. Total From the above assets provision must be made for the settlement of the following liabilities and claims outstanding at Oct. 26, 1936: Accounts payable and unclaimed wages_. Deposits on sales and other contracts not consummated.... Reserve for protection and indemnity insurance claims and expenses_ Reserve for claims and unearned premiums-insurance account Total $88, 117, 780. 51 2, 463, 290. 04 101, 269, 890. 65 1,099, 357. 24 17, 764, 615. 00 9, 990, 416. 66 503, 156. 00 221, 208, 506. 10 2, 426, S66. 16 38, 089. 93 2,388, 113. 25 2, 325, 194. 19 7, 178, 263. 53 Following is a record of the receipts and disbursements of the Commission from October 26 to November 30, 1936. Receipts and disbursements for December will approximate the same amounts. A detailed analysis of these figures will be presented in the Commission's Annual Report for the Fiscal Year 1937. Appropriation transfers on hand Oct. 26, 1936: Transfers from U. S. Shipping Board Merchant Fleet Corpo- $88, 117, 780. 51 10, 000, 000. 00 Chairman, Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: In your communication of February 5, 1937, you requested the views and recommendations of the Commission concerning H. R. 4207, a bill to amend section 704 of the Merchant Marine Act of 1936 (49 U. S. Stat. L. 2008-2009). Section 704 of the Merchant Marine Act, 1936, reads as follows: "All vessels transferred to or otherwise acquired by the Commission in any manner may be chartered or sold by the Commission pursuant to the further provisions of this Act. All vessels transferred to the Commission by this Act and now being operated by private operators on lines in foreign commerce of the United States may be temporarily operated by the Commission for its account by private operators until such time and upon such operating agreements as the Commission may deem advantageous, but the Commission shall arrange as soon as practicable to offer all such lines of vessels for charter as hereinafter provided and all operation of the Commission's vessels by private operators under such operating agreements shall be discontinued within one year after the passage of this Act." It will be noted that it is provided that all vessels transferred to the Commission and now being operated by private operators on lines in foreign commerce may be temporarily operated by the Commission for its account by private operators. This temporary operation is required to be upon such operating agreements as the Commission may deem advantageous. It is further provided that the Commission shall arrange, as soon as practicable, to offer all such lines for charter and, finally, that all operation of the Commission's vessels by private operators under operating agreements shall be discontinued within 1 year after the passage of this act. If the amendment proposed to section 704 should be adopted, the only change effected would be to extend the maximum permissible time allowed for operation of the Commission's vessels by private operators under existing or substituted operating agreements to a date 2 years after the passage of the act. The amendment would leave in effect the other provisions of section 704 referred to above which prescribe that the lines may be temporarily operated by the Commission and upon operating agreements deemed advantageous and the further requirement that as soon as practicable the Commission shall arrange to offer all such lines of vessels for charter as provided for in the act. The duties of the Commission in respect to the disposition of its vessels are further set forth in section 705, Merchant Marine Act, 1936, which reads as follows: "As soon as practicable after the passage of this Act, and continuing thereafter, the Commission shall arrange for the employment of its vessels in steamship lines on such trade routes, exclusively serving the foreign trade of the United States, as the Commission shall determine are necessary and essential for the development and maintenance of the commerce of the United States and the national defense: Provided, That such needs are not being adequately served by existing steamship lines privately owned and operated by citizens of the United States and documented under the laws of the United States. It shall be the policy of the Commission to encourage private operation of each essential steamship line now owned by the United States by selling such lines to citizens of the United States in the manner provided in section 7 of the Merchant Marine Act, 1920, and in strict accordance with the provisions of section 5 of said Act, or by demising its vessels on bare-boat charter to citizens of the United States who shall agree to maintain such line or lines in the manner hereinafter provided." and in the second proviso of section 7, Merchant Marine Act, 1920, which reads as follows: "Provided further, That where steamship lines and regular service have been established and are being maintained by ships of the board at the time of the enactment of this act, such lines and service shall be maintained by the board until, in the opinion of the board, the maintenance thereof is unbusinesslike and against the public interests.' On June 29, 1936, at the time of the passage of the Merchant Marine Act, 1936, the following lines of vessels transferred to the Commission by the provisions of that act were being operated by private operators under operating agreements for the account of the Commission: American Pioneer Line, American Republics Line, Oriole Lines, America-France Line, and American Hampton Roads Line-Yankee Line. As some of the vessels in the above lines are engaged in voyages that last approximately 4 months, it is necessary for the Commission, in order to terminate operations within the period prescribed, either to lay up the vessels or to offer them for sale or charter. The Commission since its appointment has been engaged, among other things, in making a study of the steamship services, routes, and lines, in order to determine what services, routes, and lines are necessary and essential for the development and maintenance of the foreign commerce of the United States and the national defense. While the Commission has not concluded its study of the essentiality of the privately owned services, routes, and lines in the foreign commerce of the United States, it is of the opinion that it would not be advisable at this time to completely abandon the Government-owned lines and has offered them for charter on a bare-boat charter basis for a temporary period. The bids are to be opened March 1, 1937. In offering the lines for charter, the trade routes and ports to be served by the American Republics Line, American Pioneer Line, and Oriole Lines are substantially the same as those heretofore served in those three lines. The service formerly offered by the America-France Line has been combined with the service previously offered by the American Hampton Roads Line-Yankee Line and the combined service will be operated under the name of America Hampton Roads Yankee-France U. K. Line. Because of the excessive losses incurred in the operation of the vessels of the America-France Line and the vessels of the American Hampton Roads Line-Yankee Line, it is expected that the consolidation of those two lines will result in much more economical operation and at the same time provide adequate service for the ports now served. Upon the conclusion of the temporary operation under bare-boat charters, the Commission will have doubtless determined the necessity for the further operation of the Government-owned vessels. The Maritime Commission is convinced that the proposed extension of time for Government operation of ships will serve no useful purpose, and is not in the public interest, and would not be in accord with the policy of the United States upon which existing shipping laws are based. It recommends, therefore, that H. R. 4207 be not passed. Faithfully yours, 126584-37- -11 (Signed) H. A. WILEY, Chairman. DATA SUBMITTED BY MR. SCHELL Frequency of service to foreign ports-America-France Line and American Hampton Roads-Yankee Line compared with the proposed "America Hampton Roads Yankee-France U. K. Line" These cargo services are not operated on definitely fixed sailing dates, and this frequency is only approxi mate. |