owned ships and is especially qualified to speak with respect to the conditions and necessities involved in the shipping industry between the United States and the Republic of France.

When, in the Merchant Marine Act of 1928, aid was provided for American ships sold to private interests, the company bid for the purchase of the America-France Line. In support of the bid, under section 7 of that act, there were submitted some 300 letters by the principal exporters and forwarders of the country, and about the same number from France, expressing their complete satisfaction with the service therefore rendered by this company and expressing their continued full support in the future as long as the operation of the line continued under its management.

I have those letters here. If anybody cares to read them or to see them, they are available to the committee.

The CHAIRMAN. That is when you were trying to buy the ships and get an ocean-mail contract under the act of 1928?

Mr. PAYNE. That is correct, sir.

We are particularly influenced to give our wholehearted support to this bill for two important reasons: (1) The Maritime Commission is proposing to combine this old-established line with another line which was organized to serve an entirely different trade (United Kingdom, Ireland, and Germany) and (2) is offering the combined services under bare-boat charter for the term of a single year only.

The evils that may be expected to follow such a course are so serious and far reaching that we are confident a discussion and explanation of this twofold plan will convince this committee of the necessity for the prompt passage of the bill (H. R. 4207) under consideration.

A consolidation of these lines was suggested in 1935; but the plan was thoroughly investigated by the Department of Commerce then and definitely rejected. We know of no change of circumstances that can require a reversal of that decision.

If this plan should be attempted and the consolidated line falls for the short space of 1 year into the hands of an inexperienced bidder with no organization in France and with the handicap of the proposed sailing schedule for the line, a serious loss of goodwill on the part of the French shippers must inevitably result, as well as the demoralization of the line as far as American shippers are concerned, with a deplorable disruption of a service that has required over 20 years to perfect, at heavy cost to the Government in establishing and maintaining this essential trade route.

The matter of disposing of the America-France Line by sale was carefully considered, among other subjects, by an impartial committee of five outstanding businessmen appointed by the President in 1930, and headed by Mr. Edward N. Hurley, former Chairman of the Shipping Board.

The CHAIRMAN. That was not the Interdepartmental Committee, was it?

Mr. PAYNE. No, sir; that was the committee that was appointed to study the sale of these lines in 1929.

The committee, in the report submitted, reached the conclusion that the America-France Line should be sold to the Cosmopolitan Ship

ping Co., and, among the many reasons stated as the bases for that conclusion, the following are quoted:

The present America-France Line was established by the Shipping Board in 1923, and the Cosmopolitan Shipping Co., which had been operating owned and chartered ships in the same service since 1916, was made the operator. It has been continued as the operator without, so far as we can ascertain, any criticism or any suggestion of change in management.

The Cosmopolitan Shipping Co. has a good organization in the United States, with its principal office in New York, and agencies in other cities from which comes the largest part of its business. It has an unusually fine and active organization in France, with agents in every important commercial center from which it draws its foreign business.

The officers and agents of the company have devoted their efforts largely to the development of this particular service extending over a period of 14 years. The company has built up a goodwill in the trade. This is evidenced not only by the way it has developed and held its business but also by the very excellent letters of endorsement which have been presented to us.

Those are the letters I just referred to, Mr. Chairman.

So far as we can ascertain, no criticism has ever been made of the efficiency of the Cosmopolitan Shipping Co.'s management. The Shipping Board has recognized its efficiency by rating the company at its highest classification as an operator. If it had not been efficient, undoubtedly the Board would have changed the management long ago, for it could have turned it over to the United States Lines, which was operating to Cherbourg, or to other operators.

At that time the United States Lines was owned and operated by P. W. Chapman & Co. before it was taken over by its present operators.

The CHAIRMAN. It is practically operated now by the International Mercantile Marine, is it not?

Mr. PAYNE. That is correct; yes, sir.

These findings I have referred to were made by a committee who had no reason to favor the Cosmopolitan Shipping Co. The present intention of the Commission, therefore, to put into effect a plan which might easily disrupt this organization and throw it into the market for foreign-flag vessels, we submit, does not commend itself to anyone with business experience or with a patriotic interest in the future of American foreign commerce.

The proposed sailing schedule for the consolidated line-in the preparation of which the company has had no part-provides further food for thought and constitutes an immediate danger-involving delays in delivery of cargo, so important an element in foreignflag competition that simply cannot be disregarded.

We submit that the numerous questions involved in this proposed consolidation cannot logically be resolved without a prior exhaustive investigation of many details by the Commission through public hearings, at which all of the operators affected, as well as disinterested ship operators, can be heard, and through the collection and examination of data gathered by the Commission itself.

The important questions are: (1) The advisability of the consolidation in the first place; (2) the determination of the proposed sailing schedules; (3) the advisability of incurring the risk that the consolidated line might fall for the short period of a year into the hands of an unfamiliar operator; and (4) the amount of operating differential subsidy to be granted.

Incidentally, Mr. Chairman, that seems to be one of the most important, because it means we are simply gambling as they are offered today.

The CHAIRMAN. Is not that true of the entire merchant marine, that unless the Merchant Marine Commission does something with respect to the terms on which ships will be operated, that July 1 will probably find the American merchant marine off the seas?

Mr. PAYNE. I think that is probably correct, sir.

Within the spirit of the Merchant Marine Act of 1936, the decision to resort to the course now about to be taken should be an ultimate decision reached as an element of a final, definite, correlated policy involving American foreign commerce as a whole; but in view of the short time which has elapsed since the present members of the Maritime Commission were appointed, and the mass of information which must be digested in order to arrive at this ultimate policy, we submit that the decision to resort to 1-year bare-boat charters can be no more than a temporary expedient to secure the additional time to reach a final decision which is not now and has not been available to these Commissioners under the terms of the act.

The CHAIRMAN. Will you explain a bare-boat charter to the committee, as some of the members of the committee may not know what a bare-boat charter is.

Mr. PAYNE. Well, I have a copy of a charter here, sir; and it is extremely involved, because it gives very little information to the aid which may be expected under the act and it means the operator will have to do on awful lot of guesswork in addition to the guessing, he will have to do on the amount of business he will be able to secure over the period of the next year and a half.

The CHAIRMAN. A bare-boat charter means you rent the boat? Mr. PAYNE. You rent the boat, and the operator would have to assume all the operating expense, such as crew hire and the payment of the crew, victualing of the ship, and all insurance, repairs, and all of the kindred and allied requirements.

The CHAIRMAN. Does that involve also the question, under the Merchant Marine Act, for the determination by the Commission of the wages that shall be paid, and the amount that shall be paid to the crew and officers?

Mr. PAYNE. I do not think we can determine that in advance, sir; because that is going to be a question the Maritime Commission will have to decide later.

The CHAIRMAN. But it does depend upon the determination by the Maritime Commission of those factors?

Mr. PAYNE. Yes, sir; very much so.

Mr. NICHOLS. Mr. Payne, I do not know whether any other members of the committee are in the same shape I am, but I do not understand what you mean when you say unless this act is extended that the Maritime Commission may consolidate you with some other line. Is that what you did say?

Mr. PAYNE. Yes, sir; I did say that.

Mr. NICHOLS. All right if it is not too much trouble, I would like to have that explained a little.

Mr. PAYNE. Briefly, sir; they have asked for charters on the basis of consolidating services; hence

Mr. CULKIN. Who has asked?

Mr. PAYNE. The Maritime Commission.

The CHAIRMAN. Would it not be well right there, for the information of Mr. Nichols and other members of the committee, also

to bring out the action of the Comptroller General with respect to the payments that are made, on which the Maritime Commission is predicating its action at this time?

Mr. PAYNE. Mr. Chairman, if I may be permitted to finish my statement, I think it may answer some of the gentleman's questions. If not, then I will answer any other questions which are put to me, afterward.

Mr. SIROVICH. I think for the benefit of many of our new members on the committee, to whom what you are saying may be all Greek and they cannot follow you, even with your explanation, that it would be interesting to call the attention of our committee to the fact that when the Merchant Marine Commission was formed, many, many years ago, various lines were assigned to different groups, so that many steamship companies took over the agencies of the Government and their ship departments.

Mr. PAYNE. That is correct, sir.

Mr. SIROVICH. And they formed lines which they have been operating as trade routes all over the world.

Mr. PAYNE. That is correct.

Mr. SIROVICH. With the exception of a few agencies like yourself, that did not get to purchase the ships, or get a trade route, but you got the trade route with the understanding you would run it and the Government would give you a certain percentage for running that route, and you would have to pay all the expenses. Is that right?

Mr. PAYNE. That is correct.

Mr. SIROVICH. And the great trouble with your proposition, and that of a few other groups like you, in the 39 groups which have lines all around the world which they have been operating, is there are a few lines like the America-France Line, which you represent, that have not received any consideration, and you do not know where you are; your money has been invested, and your time has been invested, and the Maritime Commission, which was supposed to go to work, has not done a damn thing, and it is leaving you people in the position today where you are groping in the darkness and do not know where you are going; your money has been invested, your time has been invested, and the Maritime Commission has been sleeping and hibernating and doing absolutely nothing.

Now, you have 42 contracts that will expire by the 30th of June, and unless some action is taken by the Maritime Commission in going over all of the contracts to see that they live within the operating schedule, and within the strict principle of the law, your people will be ruined and destroyed; and the purpose of this bill, introduced by Congressman O'Leary, is to extend the time of you people; because in the next 120 days that are left for the Maritime Commission to act it is impossible to form a contract in 3 days, and to go over your books, schedules, and everything else. Is that right?

Mr. PAYNE. I think that is substantially correct.

Mr. CULKIN. I call the attention of Dr. Sirovich to paragraph in this report no. 11 in which the Maritime Commission, Admiral Wiley, goes squarely on record against this proposed legislation, because it appears there is no question about the attitude of the Commission as to their disposition.

Mr. SIROVICK. My point is that the Maritime Commission has done. absolutely nothing. It is a disgrace the way the Maritime Commission is running its work at the present time and means ruination of the American merchant marine and the wiping off of the American merchant marine from the seas of the world unless a commission is appointed that is going to operate and function properly.

Mr. CULKIN. My point is that the Commisison, through its chairman, goes squarely on record as against this proposed extension. So the operators of the boats are not in the dark as to an extension. Mr. O'LEARY. Mr. Chairman, may I ask if the Chairman of the Maritime Commission is going to appear before the committee so that he can sustain his position?

The CHAIRMAN. We can request his appearance.

Mr. O'LEARY. I think it would be a good idea to do that.
The CHAIRMAN. Suppose you go ahead now, Mr. Payne.

Mr. PAYNE. Congress obviously intended that the Maritime Commission should have ample time to give this broad subject deliberate consideration, and therefore provided the Commission with a full year from the passage of the act within which to decide what its action should be. Congress, no doubt, contemplated that the Commission would be appointed without unreasonable delay so that the members of the Commission would have the benefit of the full time allotted.

As a matter of fact, this was not done, and the present members were not appointed until September, nearly 3 months after the act was approved. This delay left them but 9 months in which to act. Again, this 9-month period was further reduced-in respect to the study of the America-France Line-by the emergency created by the unanticipated "outlaw" strike of the seamen, which has only just been settled. Of the 5 months now remaining to the end of June 1937, which is the dead line fixed by the act, more than 2 months have been suddenly lopped off-as far as the America-France Line is concerned by the ruling of the Comptroller General just handed down that forces the Maritime Commission to execute the complete bareboat charter at least 60 days before the dead line of June 29 fixed in the act, so that no voyages may be commenced by the present operators which would terminate after June 29, 1937. Round voyages of the vessels operated in the America-France Line occupy approximately 50 days.

Thus we see that the intent of Congress has been frustrated by the unforeseen circumstances to such a point that the Maritime Commission has been deprived of practically all time to study the serious problems relating to the America-France Line and the final establishment of the trade route involved, before taking a definite step, by reason of the above facts.

Mr. SIROVICH. Does that mean that none of the merchant-marine lines are receiving any mail-contract moneys whatsoever?

Mr. PAYNE. I do not know about the mail lines, sir; I am not familiar with that.

The proposed bill, H. R. 4207, when passed, would again place at the disposal of the Commission the full year intended by Congress within which to dispose of these questions.