Such an organization is available in the National Cargo Bureau, Inc., he said, going on to explain that, while private marine surveyors were available

the Coast Guard contends that it cannot guarantee the completeness and efficiency of inspections of bulk grain cargo loading if these inspections are performed by surveyors who operate individually or as members of organizations on a competitive profit basis*** under these conditions, the necessary high degree of attention to safety standards may suffer in order to maintain friendly relations with the shipowners.

"In the National Cargo Bureau," Admiral Shepheard said

the Coast Guard believes it has an organization *** which can be safely trusted with responsibility for conducting grain cargo stowage inspections.

On this basis, he said, the Coast Guard has included in its "rules and regulations for bulk grain cargo" a provision that certificates of loading of the National Cargo Bureau, Inc., may be accepted as prima facie evidence of compliance with the regulations.

Among those who testified at the March 23-24 hearings in support of S. 602, as introduced, were representatives of the American Merchant Marine Institute, Inc., the Pacific American Steamship Association and the National Cargo Bureau, Inc.

Communications asking enactment of S. 602, as introduced, were received from the Conference of American Maritime Unions, the Board of Marine Underwriters of San Francisco, the Seafarers' International Union of North America, the National Merchant Marine Committee, American Region, and a number of west coast surveyors affiliated with the National Cargo Bureau, Inc.

OPPOSING ENACTMENT OF S. 602 AS INTRODUCED

The Pacific Coast Conference, Marine Surveyors, Inc., of San. Francisco, as the group most immediately affected by the Coast Guard sponsorship of the National Cargo Bureau, Inc., for grain loading inspection work, led the opposition to passage of the bill, as introduced. Through David L. Dunlap, Esq., counsel, and Capt. R. H. Wetmore, secretary, this organization gave approval to the purposes of the bill with regard to establishment of rules and regulations governing the loading and stowing of grain cargoes in bulk, but strongly opposed the action of the Coast Guard in having already accorded to the National Cargo Bureau, Inc., the official sanction for which authority is now requested in section 4 of the bill as introduced.

In a printed "Protest of Pacific Marine Surveyors Against Government-Sponsored Monopolistic Activities of National Cargo Bureau, Inc.," and in testimony before the subcommittee the conference representatives made the following arguments, as quoted from their testimony or written statements, or summarized:

(a) "For more than half a century cargo surveying on the Pacific coast has been carried on by a group of private marine surveyors whose integrity, experience and capability in their chosen profession has been thoroughly established among all concerned in the shipping industry. The very livelihood of this group is now challenged by a Government-sponsored private organization operating as a 'nonprofit corporation' under the name of National Cargo Bureau, Inc. As a result of governmental favoritism, this corporation, engaged in direct competition with private surveyors in the cargo surveying field, now threatens to monopolize that established field of private endeavor."

(b) "The private marine surveyors do not object to National Cargo Bureau, Inc., as a competitor on equal footing with them. They do most strenuously object, however, to any action, regulation, statute or promulgation whether of governmental or private authority which discriminates against them and affords a preference to their competitor."

(c) "The membership of National Cargo Bureau, Inc. *** includes certain officials of the United States Coast Guard, the Maritime Administration, and the Department of State. The Directors must, according to the bylaws, include a representative of the Coast Guard, and a representative of the Maritime Administration *** most of the members and directors are, however, representatives of various

marine underwriters and ship operators *** when * * * such a

combination is able to secure preferential treatment from responsible officials of the Government, the impetus toward monopoly becomes irresistible."

(d) Captain Wetmore testified that "we are very friendly with the American steamship operators, the port captains, the marine superintendents, all officers of the various departments of various steamship companies.

"Their argument, of course, is that it is to their advantage-and I say this in all due respect to Admiral Shepheard and the United States Coast Guard, which I have tremendous respect for in their delegated duties. It is to the advantage of the shipowner not to have the military on board his ship. He indicates that, and he will do almost anything to keep the military off of his ship, so that the National Cargo Bureau then becomes an attractive alternative to the ship operator as the lesser of two evils, and that is the answer to any possible lack of support that the private surveyor might have in his fight with the National Cargo Bureau."

(e) Among instances of alleged "preferential treatment by the Coast Guard of National Cargo Bureau, Inc.", were:

(1) The Coast Guard Regulations published October 18, 1952, in the Federal Register providing that "certificates of loading of National Cargo Bureau, Inc., may be accepted as prima facie evidence of compliance with ** requirements." Certificates of other marine surveyors are not so accepted.

*

(2) Letter of Vice Adm. Merlin O'Neill, Commandant, United States Coast Guard, a director of National Cargo Bureau, Inc., printed in the Federal Register of October 17, 1952, expressly authorizing National Cargo Bureau, Inc., to assist in administering the provisions of the Dangerous Cargo Act, and providing that certificates of the bureau should be accepted as prima facie evidence of compliance with the provisions of that act.

(3) Circular letter of Chief of Office of Shipping Operations, National Shipping Authority, dated February 18, 1953, to all general agents, authorizing them "to contract for the loading inspection service of the National Cargo Bureau, Inc., for all loadings of NSA ships."

(4) Instances of losses by private marine surveyors of accounts of long standing to the National Cargo Bureau, Inc., because, allegedly, the bureau was permitted by the Coast Guard to load ships in regard to which similar permission had been refused the private surveyors. (See letter to Senator William F. Knowland, appendix A, and letter

of L. C. Perry, surveyor, to the Pacific Coast Conference of Marine Surveyors.)

Individuals and groups urging consideration of the appeal of the Pacific Coast Conference of Marine Surveyors include United States Senators William F. Knowland, of California, and Karl E. Mundt, of South Dakota; the Marine Exchange of San Francisco; and L. C. Perry & Associates, surveyors, Seattle, Wash.

Senator Knowland, in a letter to Senator Payne, stated:

It is only too obvious that the National Cargo Bureau has been placed in an advantageous position, not only in surveying grain cargoes, but also in the rest of the cargo-surveying field. Since the regulation (of the Coast Guard) many of the surveying firms have lost customers who now do business exclusively with the National Cargo Bureau, for there is no reason to have one man survey only part of the cargo when he could just as well do the whole job. If the language of section 4, as suggested by the Coast Guard, is enacted into law, it will not be long before all the private surveyors will be out of the cargo-surveying business.

SUGGESTED REVISION OF SECTION 4

Following the conclusion of the second day's hearing on the bill, Senator Frederick G. Payne who had presided, prepared and sent to Rear Admiral Shepheard "a possible substitute for section 4" of the bill as introduced, and invited his comment. The proposed new section 4 reads as follows:

In the establishment, administration, and enforcement of the rules and regulations hereunder, the Secretary of the Treasury may avail himself of the advice, services, and facilities of any organizations or persons whose services he may deem helpful, or, with the consent of the head thereof, of any executive department, independent establishment, or other agency of the Government. To the extent that provision is made in any regulation of the Secretary of the Treasury for inspection of the loading, stowage, or securing of bulk grain or other similar bulk cargoes, or the issuance of any certificate in connection therewith by any private organization or person, the Secretary of the Treasury shall give due consideration to all organizations and persons qualified and willing to perform such work.

Senator Payne also sent copies of his substitute proposal to all interested parties. Admiral Shepheard replied, under date of April 6, 1954, that

as testified to before your subcommittee and reiterated in the accompanying statement, the Coast Guard is opposed to the principle of delegating functions directed to the safety of life and property at sea to private organizations and individuals, to be performed on a competitive basis for profit.

In an 18-page statement accompanying his letter, Admiral Shepheard replies to a number of statements made at the hearings, finally concluding that—

the Coast Guard, for reasons already cited, and as a matter of policy, considers that this amendment is not in the best interest of enforcement of the safety-at-sea laws. Accordingly, this or any similar amendment will not be viewed by the Coast Guard as a mandate compelling the Coast Guard to entrust any of its functions to any individual or organization other than those which fulfill its essential and specified requirements.

Senator Knowland's comment on the proposed substitute, as expressed in his letter to Senator Payne, was as follows:

if the present language of section 4 is rejected, it seems quite improbable that the Coast Guard will take over this function itself, as it neither has the will nor the present ability to survey grain cargoes. Nor does the possibility of licensing the private surveyors seem desirable as pointed out in the Coast Guard's testimony. It is not at all clear who would be able to check the qualifications for licensing.

The best method of handling this problem that I know of is the draft language of section 4 which appears in your letter of April 1 to Admiral Shepheard. Under this the Coast Guard must give "due consideration to all organizations and persons qualified and willing to perform such work." In addition to the language changes, there is good reason to write a strong report which will make clear the desire to keep faith in our system of free enterprise and oppose Government action which sacrifices private business for a Government sponsored corporation. It should be equally clear that no retaliation is intended against the National Cargo Bureau which offers and performs necessary services on both the east and west coasts. There should be no further discrimination by the Government in discharging its responsibilities under the International Convention for the Safety of Life at Sea. Senator Mundt replied as follows:

I have read section 4 as set forth in your letter and feel that if it was incorporated as part of Senate bill 602 that it would very materially solve the difficulties which now confront the private marine surveyors of the west coast who contacted me. In their discussions with me, they merely requested that legislation be so worded and adopted by the Congress that it would provide them with equal opportunities with all competitors. I feel that section 4 as worded in your letter of April 1 makes this provision.

George W. Morgan, president, Association of American Shipowners, expressed agreement of the association with the supplementary statements filed with the subcommittee on this point by Rear Admiral Shepheard, and Carl E. McDowell, executive vice president of the National Cargo Bureau, Inc.

Mr. McDowell, in his reply to Senator Payne, stated that the broader language of the proposed substitute section 4, to include more than bulk grain cargoes, was not necessary

since S. 602 is specifically drawn to supplement other legislation that already grants the statutory authority to a Government agency for purposes of regulating and of enforcing regulations applicable to controlled cargoes other than bulk grain.

"In conclusion," he stated, "the proposed amendment would appear to nullify the fine purposes of section 4 as drawn.”

CONCLUSIONS

Certain hearsay statements and various intemperate arguments advanced by some of those who testified, and by others who submitted written documents for the record, have been disregarded or given little weight by the committee.

It is beyond dispute, the committee is convinced, that the Coast Guard and Rear Admiral Shepheard in particular-have done a splendid job over the years in advancing the cause of safety of life and property at sea.

With all due regard, however, for the Coast Guard's proven competence in this field, the committee considers as too narrow the provision in section 4 which would limit delegation of this inspection responsibility to organizations of a nonprofit sort. We therefore have amended section 4 accordingly.

Thus, while the committee does not view its proffered amendment as a "mandate" compelling the Coast Guard to entrust any of its functions, we do intend it to constitute a mandate that if the Coast Guard decides to delegate the inspection function in question, it must not disqualify an applicant for such inspection authority merely because he is not a member of a nonprofit organization.

While the committee does not deem it advisable to attempt to enunciate the many factors which the Secretary of the Treasury should take into consideration in acting on the applications of organizations or persons who seek his authorization to do bulk grain or other similar cargo surveying, it believes that prior cargo surveying experience and present physical and mental condition of the applicants should be given great weight.

APPENDIX

Hon. CHARLES W. TOBEY,

THE SECRETARY OF COMMERCE,
Washington 25, May 28, 1953.

Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

DEAR MR. CHAIRMAN: This letter is in reply to your request of January 26, 1953, for the views of this Department with respect to S. 602, a bill to provide for greater safety of life and property at sea by authorizing the Secretary of the Treasury to prescribe rules for the loading, stowage, and securing of grain and other similar bulk cargoes.

The bill would authorize the Secretary of the Treasury to make such rules and regulations and to prescribe such conditions as he deems necessary for the loading of grain and similar bulk cargoes which present hazards to the stability of vessels by shifting. The provisions of the bill would apply to all vessels, domestic or foreign, loading such cargoes at any port of the United States, except vessels operating in inland waters or on the Great Lakes.

The rules are to be in conformity with regulation 2, chapter VI of the International Convention for the Safety of Life at Sea, ratified by the Senate on April 20, 1949, which deals with this subject. Suitable penalties are provided for violations of the act or rules issued thereunder. We recommend enactment of S. 602. The proper stowage of cargo in the hold of a vessel is essential to the safety of the ship, the passengers, the crew, and the cargo, and permits the unloading of the cargo with the least possible cost and delay at the ports of discharge.

The enactment of S. 602, which will enable the Secretary of the Treasury to require proper stowage of bulk cargoes, will, therefore, promote the safety of life and property at sea.

We have been advised by the Bureau of the Budget that it would interpose no objection to the submission of this letter.

If we can be of further assistance in this matter, please call on us.

Sincerely yours,

SINCLAIR WEEKS, Secretary of Commerce.

COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, February 2, 1953.

Hon. CHARLES W. TOBEY,
Chairman, Committee on Interstate and Foreign Commerce,

United States Senate.

MY DEAR MR. CHAIRMAN: Reference is made to your letter of January 26, 1953, acknowledged by telephone January 28, enclosing a copy of S. 602, 83d Congress, entitled "a bill to provide for greater safety of life and property at sea by authorizing the Secretary of the Treasury to prescribe rules for the loading, stowage, and securing of grain and other similar bulk cargoes," and inviting any comments this Office may wish to make concerning the proposed legislation. Since the provisions of the bill do not affect the functions of the General Accounting Office and we have no information as to their merits, I have no recommendations to make.

Sincerely yours,

E. L. FISHER, Acting Comptroller General of the United States.