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thereto, under the Government to which detailed: Provided, The President may, in extraordinary circumstances, extend the period of such detail for one or more additional periods of not to exceed six months each: And provided further, That while so detailed, such person shall be considered for the purpose of preserving his rights and privileges as such, an officer or employee of the Government of the United States and of the Department or agency from which detailed and may continue to receive therefrom compensation, and such allowances, if any, as he is authorized to receive, under the Act of June 10, 1922 (42 Stat. 625), as amended, but he shall receive only such compensation from the United States as, added to the compensation received from the foreign government, shall not exceed one and one-half times the compensation he was receiving as an officer or employee of the United States at the time of detail, and may receive from the United States reimbursement for travel expenses to and from the place of detail when such reimbursement is not provided by the foreign government concerned.

DEPARTMENT OF STATE,

Washington, April 12, 1938. Hon. ANDREW J. MAY, Chairman, Committee on Military Affairs,

House of Representatives. My Dear Mr. May: I desire to request your assistance in effecting a committee amendment to the bill H. R. 10193, which is pending before your committee and is explained in House Document No. 570 of the present session. This bill is to authorize temporary details of employees of this Government having special qualifications to assist the governments of the American republics and the Commonwealth of the Philippine Islands and was submitted to the Congress by the President at my request.

The original draft of H. R. 10193 was formally approved by the War Department, but several changes that were considered desirable were made in this draft at the suggestion of the Acting Director of the Bureau of the Budget; and as the result of one of these changes the bill as now pending would appear to make it necessary for the Secretary of War to obtain the recommendation of the Secretary of State before seeking the President's approval for the detail of any employee to the Government of the Commonwealth of the Philippines. In view of the present relationship between the Government of the Commonwealth of the Philippines and the War Department, this is not considered a necessary or desirable procedure and I therefore request that your committee amend the bill by inserting in line 3, page 1, after the words “on the recommendation of the Secretary of State" the words "or, in the case of the Government of the Commonwealth of the Philippine Islands, on the recommendation of the Secretary of War,"

I am assured that the amendment requested has the approval of the Secretary of War and also that the bill thus amended has his approval. Sincerely yours,

CORDELL HULL.

MERCHANT MARINE ACT, 1938

APRIL 20, 1938.—Committed to the Committee of the Whole House on the

state of the Union and ordered to be printed

Mr. BLAND, from the Committee on Merchant Marine and Fisheries,

submitted the following

REPORT

(To accompany H. R. 10315)

The Committee on Merchant Marine and Fisheries, to whom was referred the bill (H. R. 10315) to amend the Merchant Marine Act, 1936, to further promote the merchant-marine policy therein declared, and for other purposes, report it back to the House without amend ment and recommend that the bill do pass.

GENERAL STATEMENT

The committee held extensive hearings on the bill H. R. 8532, and after considering and amending that bill the chairman by direction of the committee introduced the bill H. R. 10315 now reported, which is the bill H. R. 8532, as amended by your committee. The purpose of the bill as set forth in the title is to amend the Merchant Marine Act, 1936, to further promote the merchant-marine policy therein declared, and for other purposes. A summary of the bill by sections appears later in this report. (See p. 16.)

Under date of November 10, 1937, Joseph P. Kennedy, Chairman of the United States Maritime Commission, pursuant to the Merchant Marine Act of 1936, transmitted to the Congress the Economic Survey of the American Merchant Marine which had just been completed by the United States Maritime Commission (hereinafter designated as Commission). The survey deals with many perplexing problems affecting the ocean-going shipping industry. It is the Commission's belief that the survey will be helpful to the Congress in dealing with problems confronting the industry, and the survey undertakes to point the way for the development of an adequate and well-balanced merchant fleet.

H. Repts., 75-3, vol. 237

The Commission reported that in undertaking the survey every effort was made to secure the cooperation of the best-informed persons in the country; that university professors were sought out and asked to make specialized studies; that ship lines were persuaded to lend members of their operating divisions; that experts on labor relations were retained; that the aid of Government officials were enlisted and experts were borrowed from various departments, and that the efforts of these persons were buttressed, finally, with the entire staff of the Commission, an organization of experts with years of experience in the development of American shipping.

Among the outside experts who contributed to the survey were men each of whom was recognized as an authority in some field of shipping. Among them were Dr. Grover G. Huebner, professor of commerce and transportation at the Wharton School of Finance; Dr. Thomas H. Healy, dean of the School of Foreign Service, Georgetown University; Herbert L. Seward, professor of mechanical and marine engineering, Yale University; Dr. Elmo P. Hohman, associated professor of economics, Northwestern University; Dr. Theodore J. Kreps, associate professor of business economics at Stanford University; Grover Loening, noted aeronautical designer and manufacturer; Dr. M. Ogden Phillips, School of Commerce and Administration, Washington and Lee University; Capt. Felix Riesenberg, authority on the training of seamen; Rear Admiral W. P. Robert (Construction Corps), United States Navy, retired, formerly general inspector of the Bureau of Construction and Repair; Col. James M. S. Waring, industrial analyst of New York; and James Reed, of San Francsico, a former nava constructor and shipbuilder,

Those working on the survey were instructed to take nothing for granted, not even the desirability of having a merchant marine under the American flag.

The economic survey constitutes an invaluable handbook on the merchant marine. It is an outstanding contribution to the literature of the merchant marine, a summary of many of its difficulties, a comprehensive study of its problems, and a complete answer to five major inquiries which cover the entire maritime field. These inquiries are:

(I) Should the United States attempt to compete in the international carrying trades?

(II) What are the requirements of the United States?
(III) What is the present status of the subsidized merchant marine?
(IV) What should be the policy of the United States?
(V) What will it cost to maintain an adequate merchant marine?

In answering the first inquiry the Commission found that there are two sound considerations that justify the expenditure of public funds to maintain a foreign-going fleet by the United States. The Commission said:

One of these considerations is the importance of shipping as a factor in the preservation and development of foreign commerce; the other is the relationship that exists between merchant vessels and national defense. l'pon these two considerations must rest the case for the maintenance of a subsidized shipping establishment in the international carrying trade.

1

FOREIGN TRADE NECESSARY

The importance of foreign trade to the United States is demonstrated. The conclusion follows:

The United States is the greatest exporting nation on earth, and is exceeded only by the United Kingdom in the value of its imports. Our trade has been on the upgrade for several years. Exports and imports combined stood at $4,878,000,000 for 1936. For the first 9 months of 1937 our trade reached a total of $4,807,000,000, indicating a figure for the year of approximately $6,500,000,000.

Exports normally amount to approximately 10 percent of all movable goods produced in the United States. While this may seem to be a minor proportion, it must be remembered that a 10-percent drop in demand can easily mean the difference between prosperity and depression. On individual items, such as cotton, exports may account for 50 percent or more of the entire production. Elimination of the foreign market for cotton would cripple the entire South, ruining half the cotton growers, and seriously affecting railroads, banks, shippers, brokers, and many other individuals and businesses dependent upon this vital commodity for a living. The consequent loss of purchasing power would have repercussions on every section of the country. In the case of Texas, far more than half of the crop is exported, so that the State's dependence on foreign markets is even greater than that of the rest of the South. What is true of cotton in the South is true to a degree of many other commodities of importance to various parts of the country.

The United States is dependent upon foreign nations for many commodities which either do not exist within our own country or can be produced only at prohibitive cost. More than a quarter of our imports are accounted for by five commodities-rubber, sugar, coffee, silk, and tin-of which only sugar is produced domestically. Other important products for which we must look abroad include tea, bananas, spices, and cocoa.

To service our trade requires a network of ship lines connecting our ports with some 600 ports in approximately 120 foreign countries. As was ably pointed out by the Commission the success or failure of our foreign commerce will determine whether we enjoy prosperity or depression.

AMERICAN MERCHANT MARINE ESSENTIAL TO AMERICAN FOREIGN

TRADE

The findings of the Commission confirm many previous conclusions on the need for an American Merchant Marine for trade promotion and protection. Especial reference is made to the report of this committee submitted on June 20, 1935, in the Seventy-fourth Congress, reporting the bill H. R. 8555, which subsequently became the Merchant Marine Act, 1936. Attention is directed to the report of the Select Committee of Inquiry into the operations, policies, and affairs of the United States Shipping Board and Emergency Fleet Corporation, consisting of seven Members of the House of Representatives, appointed under the authority of the Sixty-eighth Congress, and to the following statement contained in that report of the select committee:

In fact, had it not been for the American merchant marine at the close of the World War the United States would probably have paid out in increased oceanfreight rates alone more than the total cost of the Government fleet. It was the Shipping Board which brought about, through the control of its tonnage, constant reductions in ocean-freight rates which inured to the benefit of American producers, industries, and shippers. This tremendously important fact cannot and should not be overlooked in estimating what the American merchant marine is worth to the people.

American ships serve to stabilize rates in the transportation of cargoes. It has been estimated that the possession of American ships after the World War protected the American people from exorbitant rates over which they could have had no control if there had not been American operators in trade conferences and American ships to secure reasonable rates.

The Commission found that the possession of a domestic-flag marine provides insurance against possible interruption of service. The Commission said:

For more than half a century, prior to the World War, the bulk of our exports and imports was carried by foreign vessels. Several times during that period we were deprived of a considerable part of the foreign fleet which customarily served our trade. In the present unsettled condition of international affairs the United States should avoid undue dependence upon foreign carriers likely to be withdrawn at a moment's notice.

In the event of war, even with the United States remaining neutral, dependence on foreign ships would place our overseas trade at the mercy of other nations. During the World War the withdrawal of alien vessels resulted in a serious dislocation of our foreign trade at a time when we enjoyed an unprecedented opportunity to expand our business with other nations. Total world tonnage was reduced by the destruction of vessels, idleness of the tonnage of the Central Powers, and the use of ships for military purposes by the Allies. American overseas trade was further affected by the diversion of tonnage to the imperative commercial needs of other countries.

The most serious reduction in foreign-flag tonnage occurred in trade routes far removed from the war zone. Direct trade with the Allies was maintained and even improved since these nations looked to the United States for increased supplies. It was necessary, however, for the United States to secure foreign vessels, to recondition old vessels and build new ones, to divert coastwise steamers to overseas trade routes, and to press into service sailing ships and antiquated steamers in order to provide service to foreign markets.

Today we are faced with the threat of a recurrence of the conditions of the last war. Political uncertainty and international tension are on the increase. If the present antagonisms should result in war, we would be confronted again with the problems which beset our commerce in 1914. The disruption of our trade probably would be much greater in the future as a larger percentage of our trade is now being transacted with nations not having their own shipping facilities.

For these reasons it is important that we maintain a merchant marine of some proportions in the international carrying trade. [Italics ours.)

One of the strongest statements to sustain the necessity of an American merchant marine in the promotion and protection of our foreign trade is contained in the message of President Franklin D. Roosevelt, transmitted to the Congress on March 4, 1935. In that message the President presented to the Congress the issue of whether or not the United States should have an adequate merchant marine (H. Doc. No. 118, 74th Cong.).

The President answered:

To me there are three reasons for answering the question in the affirmative. The first is that in time of peace, subsidies granted by other nations, shipping combines, and other restrictive or rebating methods may well be used to the detriment of American shippers. The maintenance of fair competition alone calls for American-flag ships of sufficient tonnage to carry a reasonable portion of our foreign commerce.

Second, in the event of a major war in which the United States is not involved, our commerce, in the absence of an adequate merchant marine, might find itself seriously crippled because of its inability to secure bottoms for neutral, peaceful foreign trade.

Third, in the event of war in which the United States itself might be engaged, American-flag ships are obviously needed for naval auxiliaries but also for the maintenance of reasonable and commercial intercourse with other nations. We should remember lessons learned in the last war.

The Maritime Commission, in its economic survey, found that our foreign trade falls roughly into some 20 major trade areas, and that it is necessary to the development of our foreign commerce to be represented in each of these areas.

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