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between ports (exclusive of ports in the Dominion of Canada other than ports in Nova Scotia) between which it is lawful under the navigation laws for a vessel not documented under the laws of the United States to carry merchandise: Provided, That the Postmaster General shall not enter into any such contract with any person, firm, corporation, or association which is, directly or indirectly, through any subsidiary, associated or affiliated person, firm, corporation, or 2880ciation, or as a holding company or through stock ownership, or otherwise, operating, or controlling the operation of, any foreign-flag ships in competition with any American-flag ships. If the Postmaster General hereafter enters into any contract under this title for carrying mail and the holder of the contract thereafter violates the terms of this proviso, said contract shall thereupon become null and void. The Postmaster General shall submit to the Shipping Board the question of the eligibility of each applicant for a mail contract under the terms of this proviso; and, if after the award of such a contract, any question arises as to whether the holder of such a contract is violating the terms of this proviso, the Postmaster General shall likewise submit such question to the Shipping Board. The Shipping Board shall determine and certify to the Postmaster General its findings with respect thereto. Such findings and certification by the Shipping Board shall be conclusive upon all parties.

He shall include in such contracts such requirements and conditions as in his best judgment will insure the full and efficient performance thereof and the protection of the interests of the Government. Performance under any such contract shall begin not more than three years after the contract is let, and the term of the contract shall not exceed ten years.

For many years prior to the commencement of the World War an average of only about 10 per cent of our foreign commerce was carried in American ships, we being dependent upon foreign-flag ships for the transportation of 90 per cent of our commerce. The extreme gravity of such a situation became acutely manifest during the World War, when the bulk of the foreign-flag ships were withdrawn from the carriage of American commerce, either to meet the needs of the nations whose flags they were flying or to prevent capture or sinking on the high seas. Even before the United States became involved in the World War our foreign commerce suffered immeasurably because of such a situation. After we entered the war the situation became serious indeed, as we were wholly without adequate means to transport our soldiers, supplies for their maintenance, equipment, munitions, etc. The United States could not requisition the ships of other nations, although, of course, we could seize the few ships of enemy nations which had been interned in our ports.

In order to meet the precarious situation then existing and impending, the Congress enacted the shipping act, 1916, in September, 1916. Thereupon, the United States engaged in a program of ship purchase and construction unparalleled in the world's history; merchant ships were the crying need of the hour. However, our Government was compelled to pay exorbitant war prices for the purchase and construction of ships. As a result of this program, after the World War

. our Government was the possessor of a tremendous number of merchant ships, and the major portion of our foreign commerce was being carried in American bottoms.

In order to utilize these ships and “to provide for the promotion and maintenance of the American merchant marine,” the Congress enacted the merchant marine act, 1920. Section 1 of said act contained a declaration of policy as follows:

That it is necessary for the national defense and for the proper growth of its foreign and domestic commerce, that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated by private citizens of the United States; etc.

Again the Congress enacted the merchant marine act, 1928, “To further develop an American merchant marine, to assure its permanence in the transportation of the foreign trade of the United States, and for other purposes.'

This act confirmed "the policy and the primary purpose declared in section 1 of the merchant marine act, 1920.”

The merchant marine act of 1920, and to a greater extent the merchant marine act of 1928, embraced various provisions designed to effectuate said purposes, among these being the establishment of the construction loan fund and the provision for ocean mail contracts.

None of the aids were made available to any except American citizens and for ships documented under laws of the United States and flying the American flag, and as to what constitutes an American citizen in this connection is very clearly and strictly defined in the law.

It is further provided that a vessel for service under such a mail contract shall be either, first, a vessel constructed according to plans and specifications approved by the Secretary of the Navy, with particular reference to economical conversion into an auxiliary naval vessel, or, second, a vessel which will be otherwise useful to the United States in time of national emergency, and that ships which are operating under mail contracts or granted loans which have not been fully paid may be taken over by the Government in case of national emergency. In such event the owner shall be paid the fair actual value of the vessel at the time of taking, or paid the fair compensation for her use based upon such fair actual value, but in neither case shall such fair actual value be enhanced by the causes necessitating the taking—the owner shall not be paid for any consequential damages arising from such taking and purchase or use." When we recall the enormous prices our Government was compelled to pay during the World War for the purchase or use of ships, the importance of this provision is readily seen.

It is further provided in the law that all licensed officers of vessels documented under the laws of the United States shall be citizens of the United States, and that for a period of four years after May 22, 1928, one-half of the crew shall be citizens of the United States, and thereafter two-thirds of the crew shall be citizens of the United States.

In other words, various provisions have been enacted to insure the establishment and maintenance of a real American merchant inarine.

Without detailing any specific reasons therefor, after nearly two years' experience under the merchant marine act, 1928, it appears to this committee that it is wise to take the further step embo-lied in this bill.

The aids provided in the merchant marine act, 1928, were not designed to grant favors to American ship owners and ship builders, either individually or collectively, but must be considered as a means toward an end, that is, for the development and maintenance of an American merchant marine to carry the greater portion of our foreign commerce and to serve as a naval or military auxiliary in time of war or national emergency. We believe that these valuable ocean mail contracts should be awarded only to those American citizens who are devoting their time, energies, talents, and resources ko the promotion of an American merchant marine; to grant such contracts to those who are dividing their allegiance and efforts between American-flag ships and foreign-flag ships, operating in competition with American-flag ships, would be aiding the merchant marines of other nations rather than our own. However, it appears to us that this bill will work a hardship in but

я few, if any instances; we are convinced that the ultimate result will undoubtedly be in the interest of all American shipbuilders and ship operators.

The hearings on this bill were widely advertised and attended by a large number of representatives of the shipping interests as well as other organizations. All who desired to do so were given ample opportunity to be heard. A considerable number of witnesses made statements with regard to the bill. Not a witness testified against the bill, all indorsing it in principle. While a few suggested amendments, most of those appearing indorsed the bill unqualifiedly and without amendment. The committee amendment covers the amendments suggested by some.

Among those who indorsed the bill were all 7 members of the Shipping Board, 5 of whom indorsed the bill unqualifiedly, and 2 of whom suggested minor amendments; the Mississippi Valley Association; the Middle West Foreign Trade Committee; the International Seamen's Union of America; the editor of Marine News, the largest American shipping journal; the representatives of various American steamship lines operating in the foreign trade, all except 2 of whom indorsed the bill unqualifiedly, these 2 indorsing the bill in principle but suggesting certain amendments. The American Steamship Owners Association indorsed the bill in principle; this association did not recommend any amendments, but requested the committee to give careful consideration to certain phases of the problem and left it open for any of the different members of the association to appear before the committee and express their individual views.

This bill was drafted, introduced, and urged upon the attention of the committee by Congressman Davis, of Tennessee. It comes to the House with the unanimous approval of the committee.



FEBRUARY 8, 1930.—Referred to the House Calendar and ordered to be printed

Mr. McFadden, from the Committee on Banking and Currency,

submitted the following


(To accompany H. J. Res. 227)

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The Committee on Banking and Currency, to whom was referred the joint resolution (H. J. Res. 227) authorizing the erection of a Federal reserve branch building in the city of Pittsburgh, Pa., having considered the same, report it back to the House with the recommendation that the joint resolution do pass without amendment.

The joint resolution authorizes the Federal Reserve Bank of Cleveland to contract for and erect a building on a site now owned by it in the city of Pittsburgh, Pa., for its Pittsburgh branch, and to spend in the erection of such building a sum not to exceed $875,000, exclusive of the cost of valuts, permanent equipment, furnishings, and fixtures. It provides that the character and type of building to be erected, the amount actually to be expended in the construction of such building, and the amount actually to be expended for vaults, permanent equipment, furnishings, and fixtures for said building shali be subject to the approval of the Federal Reserve Board.

The Pittsburgh branch of the Federal Reserve Bank of Cleveland is now housed in a building located at Ninth Street and Liberty Avenue. This building was not especially designed for this purpose, and, therefore, is not arranged in a suitable manner to provide for the economical, efficient, and safe transaction of the business of the branch. The building is 36 by 112 feet and the usuable floor area on each floor is only about 3,000 square feet. Consequently, certain departments of the bank must be located on two or more different floors, seriously interfering with the proper transaction of business. The vaults provide the maximum protection but are too small to accommodate the bank's increasing business. The present quarters do not provide for safe delivering of money or securities, the building not being constructed in such a manner as to provide for a security

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court. The absence of such a security court has been criticized by the Secret Service Division of the Treasury Department. Owing to the increased volume of business handled by the Pittsburgh branch, these deficiencies in the present building constitute a serious problem.

It is proposed to erect a new building on the site now owned by the Federal Reserve Bank of Cleveland at the corner of Grant Street and Ogle Way. This proposed new building will be designed especially for the purpose of housing the branch and will greatly increase the efficiency and economy of its operations.

In view of the importance of Pittsburgh as a banking center and the volume of business handled by the branch there and the real need for the erection of a new building, the expenditure proposed to be authorized by the joint resolution is entirely reasonable and proper. The proposal has been submitted to the Federal Reserve Board and has received its approval.


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