The CHAIRMAN. In that connection, I think you stated in effect that unless we have the labor arrangement made, or some provision made for the settlement or adjustment of labor disputes, it would not be worth while to build any ships? Mr. KENNEDY. I quite agree with that; I see no sense in spending the Government's money and then having them in the precarious state that we have today. The CHAIRMAN. We are going to follow this up, of course; but this is just for the sake of the preliminary hearing. There has been during the past year or two very considerable interference with the operation of American ships? Am I correct? Mr. KENNEDY. Yes, sir. The CHAIRMAN. And with such power as you now possess or as now exists, you feel it is hopeless to attempt to deal effectively with those disputes? Mr. KENNEDY. We have no powers at all, under the Maritime Act, except to fix wages, maintain scales, and improve maritime condiditions. We have no power beyond that. The CHAIRMAN. Let me go beyond that, Mr. Kennedy: Does that power exist anywhere? Mr. KENNEDY. No, sir. The CHAIRMAN. Therefore, if we are going to have an effective and efficient American merchant marine, then beyond and in addition to the economic features proposed by the legislation there must be some. way to have the labor disputes settled so that these ships may operate? Mr. KENNEDY. Yes, sir. The CHAIRMAN. Are there any other questions? Senator PEPPER. Mr. Chairman, I suppose all of us desire a general labor policy which will be generally satisfactory. Mr. KENNEDY. That is right. Senator PEPPER. In other words, we hope there will be labor conditions which will be satisfactory to honest laboring men, and that there will be orderliness in the rendition of labor which will be satisfactory to honest shipping men. Mr. KENNEDY. That is right. As far as we are concerned, the only thing, as I say, that we have had to do is that we have already established the minimum wages, which have gone out. We found conditions on most of these ships really very bad, and justification for complaints from all the seamen. We felt so badly that we have taken each ship and have gotten a committee of three, going on board of every one of the subsidized vessels and making suggestions of what could be changed. But when you consider that under the act 85 percent of those subsidized vessels have merely 5 more years during which they can be operated under the subsidy, it becomes apparent that you cannot do all you would like to do, because of the age of the boats. But with regard to the new ships, their plans have been submitted to the people in charge of the labor unions, to see whether they meet all the requirements for the comfort of the sailors and all the people working on the ships. The CHAIRMAN. Mr. Kennedy, I understand that you have followed the recommendations of this committee as regards construction of the new ships? Mr. KENNEDY. That is right. The CHAIRMAN. And in so doing you have provided not only for safety, but also for the comfort of the crew? Mr. KENNEDY. That is right. And they have all been passed, by everybody considering them. The CHAIRMAN. Further as regards your recommendations for labor, you do not propose anything revolutionary, as I understand; you admit the right to strike and the ordinary rights of labor? Mr. KENNEDY. That is right, sir. The CHAIRMAN. But you are seeking some method merely of dealing with the problem so that there will not be serious interference with the operation of the ships while the disputes are being settled? Mr. KENNEDY. That is right; that is all. The CHAIRMAN. Are there any other questions? Senator GUFFEY. Do you think the labor troubles on the ships are not entirely due to labor, but also in part to the operators? Mr. KENNEDY. That is right. The CHAIRMAN. And do your recommendations include suggestions of steps that the employer may take in handling his labor? Mr. KENNEDY. We feel that with the recommendations of this proposed legislation, that will be eliminated, as it has been in railroads. The CHAIRMAN. I think everyone feels that the objection is that there is not a recommendation of the collective bargaining agreements. Mr. KENNEDY. But I think every effort is being made to meet reasonable demands. The CHAIRMAN. To quote from some speech at a dinner which, I understand, you attended last night, your recommendations would require that the employer "take at least one foot out of the trough"? Ís that right? Mr. KENNEDY. Yes, sir. Senator GIBSON. Does your recommendation including fixing the minimum wage scale? Mr. KENNEDY. That is right. Senator GIBSON. What has been the reaction of labor to that wage scale? Mr. KENNEDY. We have not had any complaints. They are still trying to work out an agreement on the east coast. Because the scale we put into effect was approximately that agreed upon between the operators and unions of the west coast. The east-coast men now are in process of trying to arrange agreements with the operators in the East. But we only fixed the minimum; and it is from there on that they are considering it. And we so stated, definitely. Of course that only relates to the subsidized ships. The CHAIRMAN. Thank you, Mr. Kennedy. The CHAIRMAN. Is the Navy representative here this morning? Senator CLARK. Mr. Chairman, before he presents his statement, may I say that I have no objection to proceeding with the statements to be given by the representatives of the Navy, but it seems to me that Commissioner Moran should appear before the committee to state his views on the matter. The CHAIRMAN. Is Commissioner Moran here? (No response.) The CHAIRMAN. He seems not to be here. Of course, we shall hear him later. STATEMENT OF COMMANDER V. R. MURPHY, UNITED STATES NAVY, REPRESENTING THE CHIEF OF NAVAL OPERATIONS The CHAIRMAN. Commander, what have you to say about the general subject of the merchant marine and the proposals which have been made here today? Are you officially representing the Chief of Naval Operations? Commander MURPHY. Yes, sir; the Chief of Naval Operations. The CHAIRMAN. Yes. Commander MURPHY. The Chief of Naval Operations has no formal statement to make on the subject of the Merchant Marine Act. We are in substantial agreement with the Maritime Commission's proposals. However, we should like to add to the proposed amendment to section 215, which is that section dealing with the Maritime Commission's taking over the aircraft engaged in foreign commerce. That section as it now stands reads: The provisions of this act, insofar as they are practically or appropriately applicable, are extended to the construction and operation of aircraft used in transportation for hire of passengers and property in overseas trade And so forth. We should like to have that extend to the requisition of aircraft, as it now exists regarding the requisition of ships in time of national emergency. That apparently is intended; but the restriction to "construction and operation" might seem to eliminate that. The CHAIRMAN. Do you have a substitute amendment including the wording you suggest? Commander MURPHY. No, sir. I think the words "and requisition" would cover it. The CHAIRMAN. Very well; we shall make note of that. Commander MURPHY. Also, in connection with section 901 of the act, which deals with the requisition of ships during a national emergency, we have a suggestion to make, sir. The CHAIRMAN. Are you speaking of the act itself or of the proposed amendments? Commander MURPHY. The act itself, sir. The CHAIRMAN. Yes. Commander MURPHY. I do have the suggested wording for that. The CHAIRMAN. Did you say section 901? Commander MURPHY. I beg your pardon; section 902. The CHAIRMAN. Yes; section 902 (a). What is it you propose? Commander MURPHY. We should like to have the language: Whenever the President shall deem that the security of the national defense makes it advisable, or during a national emergency. In other words, the present wording of the act seems to restrict that to "during a national emergency," whereas it may be advantageous to have that authority when a national emergency is imminent. In other words, we may have to act before a national emergency occurs. The CHAIRMAN. Then, you make your second suggestion, that section 902 be amended as you stated? Commander MURPHY. Yes, sir. The CHAIRMAN. What was the other section about which you spoke? Commander MURPHY. In the new bill, it is section 215. That is the proposal to include aircraft. Those are all the suggestions I have. The CHAIRMAN. Thank you very much. Are there questions from the members of the committee? (No response.) The CHAIRMAN. We are very much obliged to you, Commander. The CHAIRMAN. Are there other witnesses here from any Government body? Lt. H. W. CHANDLER. Yes, sir, Mr. Chairman. The CHAIRMAN. Do you care to be heard? STATEMENT OF LT. H. W. CHANDLER, UNITED STATES NAVY, ON BEHALF OF THE BUREAU OF NAVIGATION, NAVY DEPARTMENT The CHAIRMAN. Lieutenant, you are from the Bureau of Navigation? Lieutenant CHANDLER. The Bureau of Navigation of the Navy Department; yes, sir. The CHAIRMAN. And have you a statement to make? Lieutenant CHANDLER. Only in regard to the interest which the Bureau of Navigation has in the training of the Reserves. In that connection we should like to have clarified the statements made in section 216 of the proposed amendment, concerning the training of the merchant marine. The Bureau of Navigation is primarily interested in the maintenance of the present status of the Merchant Marine Reserve and the development of it. But section 216 does not say anything about that. I was told to come down and ask if the committee had any definite suggestions. The CHAIRMAN. We should be glad to hear your suggestions, Lieutenant. Lieutenant CHANDLER. Very well, sir. Then, in that connection, may I make these observations: * * Under the provisions of an act of Congress entitled "An Act to encourage the establishment of public marine schools *, and for other purposes," and amendments thereto, four States maintain and operate nautical schools-Massachusetts, New York, Pennsylvania, and California. These schools bear a particular relationship to the Navy Department which, under the provisions of the act referred to, gives an annual cash grant of $25,000 and the loan of a vessel with all of its equipment and furnishings to each of these States. In addition, the Navy Department makes all of the necessary repairs on each vessel so loaned, and these repairs are chargeable to regular naval appropriations. These four schools are at present the only source of supply for merchant-marine officers especially trained with a view toward their usefulness as potential Naval Reserye officers. The commanding officers of the training vessels are retired captains of the Navy. In view of the very special and important personnel and material interest the Navy Department has in the school ships and the State school-ship system, information is desired as to the intent of the proposed amendment to the Maritime Act of 1936 contained in section 216 (a) and (c), pages 31 and 32 of the committee print of the Copeland bill, December 2, 1937, as related to school ships and the State nautical schools. Senator GIBSON. Those are State institutions to which you refer? Lieutenant CHANDLER. Yes, sir. Senator GIBSON. But maintained largely by Federal appropriations? Lieutenant CHANDLER. The subsidies from the Government to all four of these schools amount to $25,000 apiece, annually? Is that so? Lieutenant CHANDLER. Yes, sir. The CHAIRMAN. Yes; we have one of them in New York. Lieutenant CHANDLER. No, sir; I think not. Senator GIBSON. What happens to the graduates of these schools? Lieutenant CHANDLER. They go to sea in the lower ratings, although when they graduate they are given third-assistant engineer's licenses or third-mate's licenses. But when they go to sea, they seek employment with whatever company they can. And as soon as they can work their way up, they are given licensed positions in merchant ships. Senator GIBSON. Do they have any trouble in obtaining employment under present conditions? Lieutenant CHANDLER. I do not believe so; no, sir-not the graduates of those schools. Senator GIBSON. There is no opposition from the unions or from other sources? Lieutenant CHANDLER. I should like Captain Copeland to answer that question. STATEMENT OF CAPT. H. G. COPELAND, UNITED STATES NAVY, ON BEHALF OF THE BUREAU OF NAVIGATION, NAVY DEPARTMENT The CHAIRMAN. What is your full name, sir? Captain COPELAND. Capt. H. G. Copeland, appearing on behalf of the Bureau of Navigation, Navy Department, sir. The CHAIRMAN. Very well. Captain COPELAND. There has been some opposition in New York as regards the graduates of the New York school, in getting membership in the union. I understand that membership in the union has been denied them; therefore the graduates of that particular school, in some cases, if not in all cases, have been unable to get jobs, because they are unable to join the union. The CHAIRMAN. Have you any further statement that you would like to make, Lieutenant Chandler? Lieutenant CHANDLER. Captain Copeland has a further statement, I believe. The CHAIRMAN. Very well, sir. Captain COPELAND. The Navy Department's interest in the training program reflects an attitude that it very much favors the present set-up of training licensed personnel under the State schoolship system, under Navy auspices. And it is only interested in whether or not, under the Commission, it is intended to set up a training system |