AMENDING SECTION 704, MERCHANT MARINE ACT, 1936 THURSDAY, FEBRUARY 18, 1937 HOUSE OF REPRESENTATIVES, COMMITTEE ON MERCHANT MARINE AND FISHERIES, Washington, D. C. The committee met at 10 a. m., Hon. Schuyler O. Bland (chairman) presiding. The CHAIRMAN. We will resume the consideration of H. R. 4207. Admiral Wiley is present. Admiral, I know you are extremely busy. Would you prefer to take the stand now and finish, or go on later? Admiral WILEY. Whatever the pleasure of the committee is, sir. The CHAIRMAN. We want to conserve your time as much as possible. Admiral WILEY. I would be very glad to go on now, sir. STATEMENT OF ADMIRAL H. A. WILEY, CHAIRMAN, UNITED STATES MARITIME COMMISSION The CHAIRMAN. Just state your name and the position you hold, Admiral. Admiral WILEY. H. A. Wiley, Chairman, United States Maritime Commission. The CHAIRMAN. The suggestion was made by some members of the committee that we should have you appear this morning, Admiral, in order to answer inquiries we might submit. Have you any statement you wanted to make about the bill, in addition to the report which has been filed? Admiral WILEY. None whatever, sir. Mr. O'LEARY. Mr. Chairman, may I ask Admiral Wiley some questions? The CHAIRMAN. Yes. Mr. O'LEARY. Admiral, do you believe in competition between Government aided steamship lines? Admiral WILEY. Do I believe in what? Mr. O'LEARY. Competition between Government aided steamship lines? Admiral WILEY. NO. Mr. O'LEARY. In view of Mr. Schell's statement that the Government is arranging to eliminate competition and is now starting on the Pacific coast, do you not think that the whole matter should be disposed of at once, covering all lines, including the Atlantic? Admiral WILEY. No. Mr. O'LEARY. Why? 95 Admiral WILEY. Because I do not think you can dispose of all of them at once. Mr. O'LEARY. Well, why did you pick on the Atlantic? Admiral WILEY. Well, that is a rather difficult question to answer. Mr. O'LEARY. I do not think so. You should know. Admiral WILEY. You are just taking it for granted we did pick on the Atlantic, are you not? Mr. O'LEARY. Well, it is demonstrated. I would like to know why. Admiral WILEY. Because we had given this matter full consideration and felt we were in a position to act. We are only carrying out the law. Mr. O'LEARY. I appreciate that, but I cannot understand why you picked on the Atlantic and your answer is Admiral WILEY. We did not pick on the Atlantic; that is my answer. Mr. O'LEARY. Well, what is the difference between the bases used by foreign lines in paying their American agents under the contracts now in force, by which the Commission pays the present operating agents of Government lines? Are not the two systems practically identical? Admiral WILEY. I cannot answer that. Mr. O'LEARY. Is not the determination of the essentiality of private services part and parcel of the determination of the essentiality of the present Government-owned lines, or present Government-owned services? Admiral WILEY. Yes. Mr. O'LEARY. That is included in your report, is it? Admiral WILEY. Yes. Mr. O'LEARY. Why has the Commission not yet determined the necessity for the future operations of the Government-owned lines? Mr. WILEY. Why has it not determined? Mr. O'LEARY. Yes. Admiral WILEY. The future necessity for Government-owned lines? Mr. O'LEARY. Yes. Let me clarify that for you. Admiral WILEY. Now, as I understand the matter, we are told to do a certain thing with the idea that after experience in the charter we would know more about what to do. We will gain experience by doing just what we are doing. Mr. O'LEARY. Then this charter party arrangement is just a makeshift sort of arrangement until such time as you gain the experience? Admiral WILEY. No; I would not call it a makeshift arrangement at all. This is an arrangement that is made after very due consideration. Mr. O'LEARY. In view of the statement in your report, I think in the next to the last paragraph, that "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", do you not require the additional time proposed to be afforded in my resolution, H. R. 4207, to reach such a determination in accordance with the finally established Government policy in respect to American foreign commerce? Admiral WILEY. I do not think so, if I understand your question. Mr. O'LEARY. In view of Mr. Schell's statement that the Commission does not wish to sell the lines now, because they wish to sell them finally as trade routes with overlap eliminated, will you explain why you offer them for charter, if they are not established trade routes? Admiral WILEY. Why we offer them for charter? Mr. O'LEARY. Yes. Admiral WILEY. Because we think that is the best thing to do with them. Mr. O'LEARY. Why not sell them to the present operators? Every operator here yesterday testified they would be very, very happy to buy them if the operating subsidy differentials were promulgated. Admiral WILEY. Well, I do not know what they had in mind. We deemed this as the wiser course. Mr. O'LEARY. Well did you consult with the operators? Mr. O'LEARY. Yes, partially. Did you consult with the operators at the time? Admiral WILEY. Why, the operators have consulted us; that is the better way, perhaps, of answering it, sir. We did not seek the operators, if that is what you mean, but they have consulted us. I know of no offer to buy these lines. We were not going to sell them, anyway. Mr. O'LEARY. What do you intend to do with them? Admiral WILEY. Charter them. Mr. O'LEARY. Continually? Admiral WILEY. Charter them for 1 year. Mr. O'LEARY. Why 1 year, instead of 3? Admiral WILEY. Because I think the intent of the law is that the charter should be made for not a greater period than 3 years, and the spirit is to make it for a short time. Mr. O'LEARY. What advantage is there to be gained by making it for 1 year, instead of 3? Admiral WILEY. Well, to give us an opportunity at least to see how it will work out. Mr. O'LEARY. In other words, you have not come to a final determination, and this is a make-shift arrangement? Admiral WILEY. We have come to a final determination to charter these ships for a year, if that is what you mean. The CHAIRMAN. Does not section 704, in your opinion, mandate the charter? Admiral WILEY. Undoubtedly. The CHAIRMAN. Or disposition-and that is what we are trying to obviate by this bill. Mr. O'LEARY. Since Mr. Schell states that these lines are not yet in condition for sale, why do you offer them for charter in view of the requirement in the act that the lines represent finally established trade routes? Admiral WILEY. Would you mind repeating that, sir. Mr. O'LEARY. Since Mr. Schell states that these lines are not yet in condition for sale, why do you offer them for charter, in view of the requirement in the act that the lines represent finally established trade routes? Admiral WILEY. Well, that is the other alternative, to charter them. We think that is a wiser course-to charter them. Does that answer your question? Mr. O'LEARY. Well, Admiral, what experience did you have in the operation of the merchant marine? Admiral WILEY. None whatever. Mr. O'LEARY. Have there been any experts appointed by your Commission, as yet and, if so, how many? Admiral WILEY. We have not made any appointments, except of a temporary nature. Mr. O'LEARY. And the fact you have not had any experience in the merchant marine, you are accepting the recommendations, I assume, of subordinates of the old Shipping Board; is that right? Admiral WILEY. Well, you are making a wrong assumption. We may not have had any experience, but I have a lot of common sense and a fair amount of intelligence, and am perfectly capable of interpreting the act of Congress and perfectly capable of carrying it out. Mr. O'LEARY. How old are you, Admiral? Admiral WILEY. Seventy years. Mr. O'LEARY. Is not this bare-boat charter a temporary expedient to allow you more time to make further investigations of the establishment of the trade routes that they now serve? Admiral WILEY. It may or may not confirm our view. Mr. O'LEARY. If the Commission must have more time in which to perfect the routes for sale, why should it not devote more time to perfecting the routes for charter? Admiral WILEY. I do not quite understand your question. That is only putting the question I have already answered in a different form, is it not? Mr. SIROVICH. I would like to have him put it to you again. Mr. O'LEARY. Is not this bare boat 1-year charter a temporary expedient to allow you more time to make further investigations of the establishment of trade routes they now serve? Admiral WILEY. No; it is to give further experience; that is all. Mr. O'LEARY. Now, I follow through with my next question: If the Commission must have more time in which to perfect the routes for sale, or more experience, why should it not devote more time to perfecting the routes for charters? Admiral WILEY. I have not said that, Mr. Congressman; I have not said anything about more experience. Mr. O'LEARY. Well, what was your answer to my previous ques tion? Admiral WILEY. Well, you asked me-you were practically saying that somebody else had said something. Now, I have not said that at all. Mr. O'LEARY. I will repeat the question: Is not this bare-boat charter-that is, this bare boat 1-year charter-a temporary expedient to allow you more time to make further investigations of the establishment of the trade routes they now serve? Admiral WILEY. No; it is not for that purpose alone. That is a secondary matter. The idea is to carry out the law. That is the reason we are doing that, and our year's experience will give us more data, of course, and we will know more where we are going. That stands to reason. There is nothing obscure about that. Mr. O'LEARY. All right. Now, if the Commission must have more time in which to perfect the routes for sale, why should it not devote more time to perfecting the routes for charter? Admiral WILEY. Because we devoted a good deal of time to this question of charter and not for sale. Mr. O'LEARY. Now there is one little thing in that contract there I would like to know about. In the contract for charter, did you make any provision that the personnel would be 100 percent American? Admiral WILEY. Well, now, I would have to look at that. It is a pretty extensive instrument. Mr. O'LEARY. Possibly Mr. Schell can help you. Admiral WILEY. It is a pretty extensive thing and I do not carry all those things in my mind. We have a good many things to think about. I have no doubt that whatever was done was in accord with the law; because we do not do these things, you know, carelessly. A great deal of thought was given to this charter party. Mr. O'LEARY. What do you consider is the length of the useful life of cargo vessels of the type now operated by the Government, or owned by the Government? 1 Admiral Wiley. Well Congress has prescribed 20 years. I have no view different from the view of Congress in that matter. Mr. O'LEARY. Will not all of these vessels now under Government ownership be approximately 19 years old at the conclusion of the proposed 1-year charter party? Admiral WILEY. I think you are right about that, sir. Mr. O'LEARY. With the result that they will be entitled to an operating differential subsidy for 1 year only thereafter, unless the Commission reaches a definite conclusion? Admiral WILEY. Well, now, what do you mean by "definite conclusion"? In regard to what? Mr. O'LEARY. To your operating subsidy, after the boat is 20 years old? Admiral WILEY. We can extend that, you know. It is not reasonable to suppose that Congress expected to throw these lines out of service. Mr. O'LEARY. But you have to reach a definite conclusion on it. Admiral WILEY. You know, we have to face facts. If we could begin building some ships when these ships are 20 years old, I think that would meet the wish of the Congress, meet the desire of the Congress. Mr. O'LEARY. Have you come to any conclusion? Admiral WILEY. Of course, if we cannot do that, why then we cannot carry out the law, or at least the intent of the law. Mr. O'LEARY. Have you come to any conclusion as yet as to the subsidy for these boats that are about to reach the 20-year limit? Admiral WILEY. Well, now, I have to ask you to explain just what you mean, sir. We have come to this conclusion, that they will be entitled to an operating differential. Mr. O'LEARY. Have you come to the conclusion when a boat is 20 years old |