think there should be a burden of proof put on the man who wants to operate on the free seas and these free waterways which were built to give freedom of commerce-the burden of proof should not be put upon him to show that public necessity requires that he operate that service.

The CHAIRMAN. Is not that really essential to the stability of the service, or rather to prevent competition which would bring such instability that the whole industry would be demoralized?

Mr. FULBRIGHT. The best answer to that, Mr. Chairman, is what. are the facts today on the river. A number of gentlemen who are in this business here as contract carriers and common carriers have come before you and said that they are able to carry on; there is no such chaotic condition that they are complaining of losing money. They are not here asking you to regulate them; they want that business; they want to continue in the business, and the competition is regulating them.

The CHAIRMAN. Yes; but when we ran into such a chaotic condition in the intercoastal business, when we passed the Intercoastal Act of 1933, although there was a serious contention than to have minimum rates, too, we found the necessity of doing something, and a similar condition may exist in the coastwise.

Mr. FULBRIGHT. I happen to know that it was a fact in the intercoastal traffic there were rates quoted so low that they did not pay the terminal charges and the canal tolls.

But you

The CHAIRMAN. The contractors did not know how to contract. Mr. FULBRIGHT. There were such conditions there. have provided for that and have given the Shipping Board-and I hope you will have a permanent administrative body and not just a part of the Department of Commerce to administer this—you have given to the Shipping Board in the 1933 act the power to regulate that situation. I am not complaining of that; it is there. We are simply asking that you do not add a whole lot of other powers in here and put it over in the hands of the Interstate Commerce Commission. I do not mean to imply we do not believe the Commission would not sincerely and honestly try to administer any law you might have, but my own idea about it is you should have a separate body that would instruct itself and become expert in problems of water transportation as contrasted with the very different problems of any other agency of transportation. It seems to me it is common sense that should be done.

The CHAIRMAN. Have you very much more, Mr. Fulbright? Mr. FULBRIGHT. That is all I have, I believe. Thank you very much.

The CHAIRMAN. If there are no questions, the further hearings on this bill will be suspended subject to the call of the chairman and the committee will adjourn until Monday morning at 10 o'clock.

BRIEF OF HON. GEORGE BURNham, Member OF CONGRESS FROM CALIFORNIA

Having been informed that your committee will today commence hearings on the bill (H. R. 5379) to amend the Interstate Commerce Act, as amended, by providing for the regulation of the transportation of passengers and property by water carriers operating in interstate and foreign commerce, and for other purposes, I had hoped that I might appear in person to present a situation that exists at the port of San Diego, Calif. Owing, however, to urgent and important. meetings of the committees of the House on which I am serving I find that I.

cannot do this, so I respectfully submit, and make a part of this, my appearance, a statement outlining the "Basic principles justifying the amendment to the Shipping Act of 1916 proposed in H. R. 4525 and H. R. 4526."

The above-metnioned two bills are now in your committee, having been introduced by me on January 23, 1935, either of which, if adopted, would correct the condition existing at San Diego, As one of these bills, H. R. 4725, might discriminate against certain inland ports, the bill, H. R. 4526, should now be given consideration in connection with the present hearings on bill H. R. 5379. A copy of said bill, H. R. 4526, is attached.

I also attach hereto, and make a part hereof, a list of suggested amendments to the bill now under consideration by you (H. R. 5379) together with a reason for each such proposed change, which I trust will be given the careful and thoughtful consideration of your committee that they deserve, as the present situation may mean the death of shipping to the port of San Diego, as shippers cannot pay the additional terminal rates and arbitraries now charged them. This situation becomes still more acute, as the bill now under consideration (H. R. 5379) by repealing the Intercoastal Shipping Act of 1933 and failing to bring foreward all of its provisions, places the port of San Diego and others similarly situated back in the position they were prior to the Intercoastal Shipping Act.

BASIC PRINCIPLES JUSTIFYING THE AMENDMENT TO THE SHIPPING ACT OF 1916 PROPOSED IN H. R. 4525 and H. R. 4526, INTRODUCED BY CONGRESSMAN GEORGE W. BURNHAM, TWENTIETH DISTRICT OF CALIFORNIA, SAN DIEGO

1. The provisions of H. R. 4526, in part, are now a law as to intercoastal steamship lines only through the Panama Canal. Experience has proved their value in connection with the intercoastal operators, and it has been found that the proposed law is absolutely necessary for the port of San Diego and ports similarly situated as protection from discriminatory practices by lines plying between foreign ports and ports of the United States and its possessions and by lines plying in the coastwise trade.

2. Combinations in restraint of trade are illegal in all lines of business except ocean shipping, as permitted by the Shipping Act of 1916.

3. The Shipping Act recognizes combinations of steamship companies, permitting combines, conferences, or associations to initiate action either in service or rates, subject to approval by the United States Shipping Board Bureau; however, if such actions are considered discriminatory, or otherwise unlawful and objectionable to certain ports and shippers, a long drawn-out hearing and subsequent briefing of facts and arguments are necessary to correct the situation, notwithstanding the fact that a member line of such conference may desire to extend its service to additional ports at rates the same as it charges its nearest regular port of call. To date conferences have not permitted individual members the prerogative of following their desires in this regard.

4. The United States Shipping Board Bureau authority over foreign and coastwise rates (interstate) is limited only to maximum rates, which are required to be filed with the Board by the carriers, thereby enabling conferences to dictate to individual members rates at variance as between different ports.

5. The Intercoastal Shipping Act of 1933, in which there is incorporated the provisions of H. R. 4526 in part, confers regulatory powers on the Shipping Board Bureau only as to intercoastal shipping through the Panama Canal, and does not remove the right of conferences, etc., to establish rates, rules, and practices in foreign and coastwise services in variance as between different ports.

6. The Shipping Act of 1916 does not require the establishment of service, leaving such action in the hands of combinations of shipping companies, or individual shipping companies when permitted by conferences, etc., thereby making it possible for combinations, conferences, and associations to prevent establishment, which they do, of service to ports additional to those already served at rates charged the nearest port of call to the added port.

7. The Federal Government, on recommendations of the War Department, Board of Army Engineers, are continually approving new harbor and waterway projects which are, for the most part, justified by a result in saving in transportation cost, relieving congestion, and providing additional national defense. However, the shipping act, as amended to date, is an instrument tending to nullify the full value of Federal expenditures on new port and waterway projects through absence of prohibition of combinations, conferences, etc., to prevent members of such agreements, combines, associations, and conferences from using the new

facilities at rates permitting their use as contemplated by the War Department, Board of Army Engineers, when the projects were recommended.

8. Unquestionably it is wrong for the Federal Government to expend the taxpayers' money on harbor and waterway improvements and at the same time permit private steamship companies through agreements, combines, conferences, or associations to nullify the full value of these expenditures.

9. For the purpose of serving certain areas better than are, or may be, served by existing facilities, are new harbor and waterway projects recommended by the Board of Army Engineers and authorized by Congress, thereby assisting in the development and prosperity of area concerned. However, this purpose may be, and is, defeated and development and prosperity greatly retarded through the combination of private interests which are unsound and not in the public interest. 10. The Shipping Act of 1916 should be amended, making illegal these practices permitted by law and actually done by groups of shipping interests, thereby allowing any member of combines, conferences, associttions, etc., who so desires, to extend service to any terminal or port at rates which it charges for service to it snearest regular port of call.

11. Present practices and policies of conferences preventing individual members from extending service to additional ports and charging rates the same as charged their nearest regular port of call retards the development of certain ports of this country, and such business as can withstand the practice and policy of the conferences, causing higher transportation cost, is forced through competing ports, and from the port to which it naturally belongs and should move through.

12. The port of San Diego, Calif., experiences at the present time a case in point-that of the Pacific Westbound Conference prohibiting member lines calling ships at the port to lift cotton and general cargo at terminal rates, or rates which are the same as in effect at Los Angeles Harbor, with the exception of gypsum and scrap iron for Oriental ports. The trans-Pacific Line calling at the port at present to lift gypsum and scrap iron is a member of that conference and desires to lift cotton and other general cargo at the rates applied at its nearest regular port of call, Los Angeles Harbor; but the conference has prohibited this, and requires that tonnage lifted at the port of San Diego, with the exception of these two commodities, be assessed an arbitrary of $2.50 per ton over and above terminal rates, which are the rates charged at the nearest regular port of call of the line, notwithstanding the fact that vessels may be in port loading one or the other or both of these commodities, and the cotton and general cargo could be taken by said vessels. In addition, handling charges averaging 60 cents per ton are exacted, which are double like charges at the nearest regular port of call of the line, or are not exacted at all at said port or other ports or call of the line's vessels.

13. This conflict or lack of coordination in the merchant marine policy affecting the development of United States ports and waterways is not in the public interest, or the interest of the merchant marine, and should be promptly rectified. Nearly a million dollars has been expended by the Federal Government in the past few years in deepening and widening the San Diego Harbor entrance channel, the value of which is at least partially nullified by the action of the Pacific Westbound Conference. $1,800,000 more has been recommended by the War Department, Board of Army Engineers, and the Rivers and Harbors Committee, for widening the inside channel.

14. The Congress recognized the policy of providing for equalization of rates to new or additional ports with rates applying at the nearest port of call în passing the Intercoastal Shipping Act of 1933, applying to the intercoastal trade through the Panama Canal, by withholding from the Shipping Board Bureau the right to prevent equal rates, which act also prevents combinations of private interests from preventing members to accord equal rates, leaving the individual members free to do as they wish, but the law does not apply to foreign and coastwise operators. The proposed amendment is designed to correct this evil and lack of regulation.

15. At the committee hearing on the Intercoastal Shipping Act of 1933, an amendment was requested recognizing the soundness of allowing no one to prevent steamers from going to additional ports at the rates they charge at their nearest regular port of call, and amendment was made in view of the fact when the amendment was presented, representatives of shipping companies (who strongly urged passage of the intercoastal bill) were asked whether they saw any objection to the amendment, and it is understood their replies were they did not see any objection, and others not asked interposed no objection; consequently, it is felt they would not now oppose the proposed amendment, which simply makes effective the amendment already incorporated in the Intercoastal Shipping Act of 1933, applicable to foreign and coastwise lines.

16. Problems of the port of San Diego, in addition to the trans-Pacific arbitrary, already outlined in paragraph no. 12, which the proposed amendment will solve, include

A. The Pacific Coastwise Conference, covering the carriers in the Pacific coastwise trade, prevents member lines according San Diego the same rates as Los Angeles Harbor, or a more equitable relationship of rates, notwithstanding certain members of the conference desire to do so. Such practices are not permitted in the Interstate Commerce Act applying to the rail carriers, each carrier being free to do as they like and prohibited from interfering with another only through complaint to the Interstate Commerce Commission.

B. Handling charges exacted by steamship lines calling at the port of San Diego, through the guise of the San Diego Steamship Association, which is unknown, the lines calling in reality being dictated to by the Los Angeles Steamship Association to which they and many others not calling at San Diego are members, are double like charges at Los Angeles Harbor. No handling charges at all are exacted at San Francisco. The Port of San Diego is endeavoring to handle inland tonnage tributary to the port and has found it very difficult-in fact, practically impossible due to the steamship lines calling at San Diego also calling at the port of Los Angeles, which is able to serve practiclly the same tributary territory cheaper than the port of San Diego, due to the handling charge there being one-half of the amount exacted at San Diego.

17. The Federal Government expenditures on San Diego Harbor approximates $4,000,000 to date, and the community expenditures, $6,000,000, with the 5-year plan of the San Diego Harbor Commission calling for the expenditure of approximately $1,000,000 for general improvements, including piers and bulkheads, etc., all of which will be nullified to a large degree by rates, rules, regulations, and practices of steamship conferences, associations, combines, and agreements.

18. It is a deplorable situation, where one arm of the Federal Government is responsible for the expenditure of large sums for harbor and waterway improvements, and another arm of the Federal Government is either without authority and power to, or will not, initiate action to prevent private shipping interests through combines, conferences, associations, or otherwise to nullify the full value of the expenditures made through the arm of the Federal Government first mentioned. The proposed amendment will coordinate and rectify this situation. 19. The amendment is not meant to, and will not, force any steamship company to extend service. The amendment simply makes it possible for any steamship company to extend service and apply rates for such service according to the desires of the particular steamship company without interference from any other steamship company, either directly or indirectly.

[H. R. 4526, 74th Cong., 1st sess.]

A BILL Amending the Shipping Act, 1916, as amended, for the purpose of further regulating

common carriers by water

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it shall be unlawful for any common carrier by water, either directly or indirectly through the medium of an agreement, conference, asscciation, understanding, or otherwise, to prevent or attempt to prevent any other such carrier from extending service to any port located on any improvement project authorized by the Congress, at the same rates which it charges at its nearest regular port of call, provided that said improvement project and said nearest port of call shall both lie within one of the following coastal areas of the United States, to wit: The Pacific coast from the Canadian border to the Mexican border; the Gulf coast from the Mexican border to and including Key West; the Atlantic coast from Key West (exclusive) to Cape Hatteras; the Atlantic coast from Cape Hatteras to the Canadian border.

SEC. 2. Any common carrier by water who violates the provisions of this Act shall be punished by a fine of not more than $5,000 nor less than $1,000 for each act of violation, or for each day such violation continues.

SEC. 3. The provisions of the Shipping Act, 1916, as amended prior to this Act, shall in all respects, except as amended by this Act, continue to be applicable to common carriers by water.

Page 6, lines 3 to 16 inclusive, change to read as follows:

"The term 'wharfinger' means any person who or which operates or manages any wharf, pier, dock, or other space or facility for the accommodation of vessels, or any warehouse, yard, grounds, or other facility or equipment of any kind used in connection therewith, and holds himself or itself out to furnish any such facil

ity, at any place within the United States, or any territory or possession thereof, in or in connection with transportation by common or contract carriers of passengers or property, or any class or classes thereof in interstate or foreign commerce, whether the service, including handling, loading, unloading, storage, and all other services, equipment and facilities used or necessary in or in connection with transportation subject to this part are provided in part or in whole by one or more such wharfingers, including interstate water carrier or common carrier by water in foreign commerce, or railroads, separately or in conjunction with one another."

Reason for change. Undoubtedly, the various provisions of the bill relating to wharfingers are intended to apply to interstate water carriers or common carriers by water in foreign commerce, or railroads, insofar as they own, operate, manage, or control any wharf or pier, warehouse, facilities, etc., where they perform all the acts as a wharfinger or part of them only. For example, while another person, body politic or otherwise, may perform certain services and/or actually own, operate, manage, and control the port facilities, handling, car loading and unloading services are performed in some ports by the water carriers and railroads. The description of wharfingers should be sufficiently clear to provide regulation over water carriers and railroads as wharfingers where they perform handling, car loading and unloading, when the dock, pier, or other facilities operator or manager performs the balance of the service, dockage, wharfage, etc., and furnishes the facilities.

Pages 10 and 11, between paragraphs (f) and (g), add the following:

"No new improvement project which amounts to the creation of a new port shall be authorized by any department, board, bureau, or agency of the Government until submitted to the Commission for its approval and final action has been taken thereon by the Commission or the President:

"And the Commission shall submit to the Congress its recommendation in connection with any such new improvement project proposed by any department, board, bureau, or agency of the Government, or by the Congress itself, and the Congress shall give consideration to such recommendation of the Commission in carrying out is policy as defined in section 202 (a), including fostering and preserving in the public interest a transportation system properly adapted to the needs of the commerce of the United States and of the national defense."

Reason for addition. There is an oversupply of ports, to the same extent perhaps as the Federal Coordinator found in his investigation, and overexpansion of wharfinger facilities. The oversupply of ports has produced destructive competition between ports. New ports have sprung up all over the country in substantial number in the past decade. Others are planned. There is no reason for them in a good many cases. They invade territory already adequately cared for from the standpoint of water transportation. Except possibly from the standpoint of national defense in some cases, there is no reason for the creation and development of many of these new ports planned, which will only serve to divert traffic from regular channels without producing any economical benefit. This wide-spread and at random new-port development should be restrained. There should be very close cooperation between the War Department, United States Army Engineers, and the Commission, in consideration of requests for Federal appropriations, which mean the creation and development of new ports. There should be an absolute showing of public convenience and necessity where national defense is not the major reason for the development.

Page 12, line 23, add the following:

"Such carriers, in establishing and fixing individual and joint rates, fares, charges, and classifications, and just and reasonable regulations and practices relating thereto, may make equal rates, fares, charges, and classifications, and just and reasonable regulations and practices relating thereto, for similar service between all ports of origin and all ports of destination, and it shall be unlawful for any such carrier, either directly or indirectly, through the medium of any agreement, conference, association, understanding, or otherwise, to prevent or attempt to prevent any such carrier from extending service to any publicly owned terminal located on any improvement project authorized by the Congress, at the same rates which it charges at its nearest regular port of call: Provided, That said improvement project and said nearest port of call shall both lie within one of the following coastal areas of the United States, to wit: the Pacific coast from the Canadian border to the Mexican border; the Gulf coast from the Mexican border to and including Key West; the Atlantic coast from Key West (exclusive) to Cape Hatteras; the Atlantic coast from Cape Hatteras to the Canadian border."