Amending the Merchant Marine Act of 1936

Section 804: We recommend this section be amended to read:

"SEC. 804. It shall be unlawful for any contractor receiving an operatingdifferential subsidy under title VI or for any charterer of vessels under title VII of this Act, or any holding company, subsidiary, affiliate, or associate of such contractor or such charterer, or any officer, director, agent, or executive thereof, directly or indirectly, to own, charter, act as agent or broker for, or operate any foreign-flag vessel which competes with any American-flag service determined by the Commission to be essential as provided in Section 211 of this Act: Provided, however, That under special circumstances and for good cause shown, the Commission may, in its discretion, waive the provisions of this section as to any contractor, by affirmative vote of a majority of its members, except as otherwise provided in subsection 201 (a). Anu further provided, that this section shall not apply to any such contractor or other person above described who or whose predecessor in interest directly or indirectly owned or chartered or acted as agent or broker for or operated any foreign flag vessel or vessels or service or services prior to 1936, which competes with any American flag service determined by the Commission to be essential as provided in Section 211 of this Act, unless such operations extend substantially to services other than services in which such contractor, person, or predecessor thus chartered or acted as agent or broker for or operated such foreign flag vessel or vessels prior to the year 1936. Under special circumstances and for good cause shown, the Commission may waive the provisions of this Section as to any other contractor, by an affirmative vote of a majority of its members, except as otherwise provided in subsection 201 (a).”

We asume that the Commission will take into consideration the effect on established steamship organizations presently handling both American and foreign ships and the possible resulting replacing of American personnel of such established organizations by foreign employees through foreign companies opening their own offices. Some of our most competent and experienced American shipping concerns have for many years operated or acted as agent for foreign vessels and their experience and skill should not be lost to the American merchant marine. Foreign competitors have no such restriction upon them. Section 805: (a) We recommend that section 805 (a) be deleted in its entirety. Provision is made in section 607 for the disposition of all earnings. Therefore, such restrictions as contained in this section are unnecessary, and they will tend to prevent the development of strong shipping companies with diversified interests, such as is the case with the foreign companies referred to earlier in this report. There should be no trouble under the provisions of the act to segregate earnings of subsidized ships; and inasmuch as the disposition of all such earnings is to be provided for by the act in regulations to be issued by the Maritime Commission, there seems no valid reason for such a provision.

(b) No comments.

We believe it is not possible to fairly place by statute a limitation upon the salary value of any individual's services to the industry. There are no such statutory limitations upon the salaries paid in any other form of transportation in the world of which we have knowledge. The American-flag ships under the provisions of this act cannot secure any advantage over foreign competitors. We believe they will be distinctly at a disadvantage under the act and as they will nevertheless be in competition with the most experienced shipowners and operators in the world, the latter with no restrictions whatever upon their ability to employ the best brains obtainable and pay any salary necessary to secure them, a further serious handicap is placed upon the American operator by such a provision. We know that salaries greatly in excess of the $25,000 limitation are paid to the officers of some of our foreign steamship competitors, notwithstanding the generally lower scale of living costs and wages abroad, and if we are compelled to compete and be restricted to a lower scale of salaries than foreigners pay, we will be put at a substantial competitive disadvantage. We are therefore unalterably opposed to any salary limitation being placed in the act. We observe that the limitation now in section 805 (c) is more onerous than the limitation placed upon salaries in the shipbuilding industry (section 505 (c)) when building vessels that will secure the construction differential. That is to say, there is no limitation upon the salary that may be paid to any shipbuilder, although there is a limitation upon the amount of salary that can be charged as an item of cost. It is therefore obviously unfair to

shipping operators where the experience of private enterprise shows it will be economy to pay higher salaries to obtain cheaper and more efficient operation to place an absolute limitation upon the total amount that can be obtained from any or all the specified sources. We repeat we do not think there should be a limitation of any kind placed upon salaries and cannot see the slightest reason why the same principle should not be applied (if despite our views a limitation is placed), as applies to shipbuilding, namely, that in calculating the operating or other differentials required by the shipowners, no salary in excess of $25,000 paid by the contractor shall be figured in arriving at the operating differential required. The act itself contains so many other restrictive features such as prescribed accounting methods, supervision, etc., that it is in our opinion impossible for any charges to be properly incurred in this act that are in any respects unreasonable.

If any such provision is retained, we suggest that this subdivision (c) read as follows:

"In computing the amount of aid to be given under this Act to any contractor holding a contract authorized by title VI or title VII of this Act, only salary, wages, and allowances for compensation up to $25,000.00 a year to any one individual paid by the contractor shall be considered as a part of the cost of the operation of any vessel or vessels receiving the benefits of title VI or VII of this Act: Provided, That in no event shall the charges made to the Contractor for services rendered by its subsidiary or affiliate on account of such subsidized operation exceed the reasonable value thereof."

(d) No comments.

(e) No comments.

(f) To be amended by deletions and additions so that it will read: "Any wilful violation of any provision of this section determined by a court of competent jurisdiction shall constitute a breach of the contract or charter in force under this Act and upon such determination the court or the Commission may forthwith declare such contract or charter rescinded."

Section 806: (a) The first sentence should be amended to read: "Whoever shall knowingly and wilfully consult with," etc. The words "knowingly and wilfully" are inserted for the reason that obviously to be punishable the act should be knowingly and wilfully done as these words are frequently used in sections of the United States Criminal Code.

(b) To be substantially amended. As amended it would read:

"(b) Whenever any natural person or corporation is found guilty in any district court of the United States of any act or acts declared in this Act to constitute a misdemeanor, he or it shall be punished by a fine of not more than $5,000 and not less than $1,000."

Obviously someone might innocently inform another bidder as to the conditions of any bid submitted to the Commission. To render such an act or acts punishable by 5 years in prison or a fine of $25,000 savors more of the rigorous punishments of early times and does not comport with the present enlightened

era.

Section 807: This section in our opinion should be eliminated. It is undignified in our opinion and unnecessarily burdensome. Any citizen should have the right to petition Congress or any governmental agency or committee or consult a Congressman or Senator, without complying with the complicated requirements required by this section.

Section 808: This section should be amended to rend:

"It shall be unlawful for any contractor receiving an operating-differential subsidy under title VI or for any charterer under title VII of this Act wilfully and unjustly to discriminate in any manner so as to give preference directly or indirectly in respect to cargo in which such contractor or charterer has a direct or indirect ownership, or purchase, or vending interest; and whosoever shall violate this provision shall be subject to injunction in a suit brought in a United States District Court of competent jurisdiction by the Commission to enjoin such violation."

Section 809: No comments.

Section 810: Your committee believes that this section should be eliminated in its entirety for the reason that the matters therein contained are covered by section 14 of the Shipping Act of 1916. These provisions have provided ample protection for more than 20 years and we see no need of any change in the public interest.

TITLE IX. MISCELLANEOUS PROVISIONS

Section 901: No comments.

Section 902: (a) Strike out the last sentence "the owner shall not be paid for any consequential damages arising from such taking or use.", and substitute: "Provided, however, That the United States shall indemnify the owner for and against all losses and liabilities caused by such requisition."

(b) This section should be amended by striking out the first word "Except"; also the words "in which case." After the words "such taking or use" add the words "including any losses and liabilities caused by the requisition." As corrected it would read:

"(b) In cases of vessels where a construction differential subsidy has been allowed and paid, the value of the vessel for the purposes of this section shall be established as provided in section 802. The Commission shall ascertain the fair compensation for such taking or use, including any losses and liabilities caused by the requisition, and shall certify to Congress the amount so found by it to be due for appropriation and payment to the person entitled thereto." Section 903: (a) No comments.

(b) No comments.

(d) No comments.

Section 904: No comments.

Section 905: (a) No comments.

(b) No comments.

(d) No comments.

Section 906: No comments.
Section 907: No comments.

THE MARITIME ASSOCIATION OF THE PORT OF NEW YORK.