COMMITTEE ON FOREIGN RELATIONS.

HENRY CABOT LODGE, Massachusetts, Chairman.

HENRIK SHIPSTEAD, Minnesota.

C. F. REDMOND, Clerk.

TREATY OF COMMERCE AND CONSULAR RIGHTS WITH

GERMANY.

TUESDAY, FEBRUARY 19, 1924.

UNITED STATES SENATE,

COMMITTEE ON FOREIGN RELATIONS,

Washington, D. C.

The committee met, pursuant to call, at 10.30 o'clock a. m., in the committee room, Capitol, Senator Henry Cabot Lodge presiding. Present: Senators Lodge (chairman), Moses, Wadsworth, Willis, Pepper, Swanson, Shields, and Shipstead.

STATEMENT OF E. C. PLUMMER, VICE CHAIRMAN OF THE UNITED STATES SHIPPING BOARD.

Mr. PLUMMER. Mr. Chairman, I may state for the record that my official work in connection with the problem of developing an American merchant marine began 35 years ago, when I became secretary of the Bath (Me.) Board of Trade, my home city, then having two merchant fleets engaged in "round-the-world" trade.

In 1892 I was abroad, and in the British Board of Trade rooms in London secured much valuable information.

For 21 years I was secretary and attorney for the Atlantic Carriers' Association, a voluntary association of American shipowners and ship operators.

For two and one-half years I have been a Shipping Board commissioner, Mr. Thompson and I having charge of traffic for the board. Here is a certified copy of the resolution directing me to appear before this committee:

UNITED STATES SHIPPING BOARD,
OFFICE OF THE SECRETARY,
Washington.

"In connection with this same matter the secretary was directed to communicate with the Senate Foreign Relations Committee requesting on behalf of the board the privilege of Commissioner Plummer's appearing before the committee to discuss the provisions affecting shipping which are included in the proposed commercial treaty with Germany.'

I hereby certify this 19th day of February, 1924, that the foregoing is a true and correct copy of an extract from the minutes of a meeting of the United States Shipping Board on February 12, 1924, as shown by the official minutes of the United States Shipping Board in the custody of the secretary. CARL P. KREMER, Secretary.

[SEAL.]

163

I presume you have received a copy of our resolution. I have it here, and will read it:

UNITED STATES SHIPPING BOARD,
Washington.

"Whereas the Committee on Foreign Relations of the United States Senate now has before it for consideration a commercial treaty proposed for adoption by the Government of the United States of America and the Government of the German Republic; and

"Whereas certain provisions of that treaty, if approved and accepted by the Government of the United States of America, will have the effect of making it very difficult for the Government of the United States of America to give preferences to its nationals in the building of an American merchant marine, as contemplated by section 34 of the merchant marine act, 1920: Now, therefore, be it

Resolved, That it is the sense of the United States Shipping Board that the right of the United States of America to grant preferential treatment to its ships and shipping, when Congress shall deem it wise, ought not be surrendered; and be it further

"Resolved, That the United States Shipping Board express its belief that it will be unwise for the Government of the United States of America to enter into any agreement or arrangement with any foreign government which will in any manner restrict the United States of America in the complete and full authority to enforce or put into effect any or all of the provisions of the merchant marine act, 1920." I hereby certify this 19th day of February, 1924, that the foregoing is a true and correct copy of a resolution adopted by the United States Shipping Board at a meeting held February 12, 1924, as shown by the official minutes of the United States Shipping Board in the custody of the secretary.

CARL P. KREMER, Secretary.

Senator SWANSON. Was that vote unanimous, Mr. Plummer?
Mr. PLUMMER. Yes.

Senator SWANSON. Did you have a full discussion in the board?
Mr. PLUMMER. Yes.

Senator SWANSON. How long and how often did you hold meetings? Mr. PLUMMER. As I shall refer to later on, we have discussed this matter from time to time ever since we have been a board, because this question of discriminating duties came up in the very first meetings; and I have here a resolution, which I will incorporate in the remarks I am about to make, which covers that subject. Here it is. I thought I would not read it out of order, but I will if you gentlemen wish to hear it now.

Senator SWANSON. I think we might just as well have both of the resolutions together.

Mr. PLUMMER. It will appear in my remarks in a moment.

To continue, this resolution is not and is not intended to be a resolution in favor of discriminating duties. Its purpose is, by elimination of restrictions from this treaty, to leave Congress free to pass such legislation for the benefit of American shipping as it may deem best and at any time it may desire. I may say that there are some commissioners on the Shipping Board who do not favor discriminating duties, but they do favor the elimination of this restrictive feature of the treaty so far as it affects American shipping.

Shipping being an industry, it should be in the same position as every other American industry; in a position to be aided in whatever method the legislators may desire. Doing away with prohibition against discriminating duties does not necessarily call for the enactment of discriminating duty legislation. Our proposition is to take the matter of legislation affecting the shipping industry from the treaties and put it in th etariff bill, where it belongs, with the legislation affecting other industries and where it originally appeared.

The idea was fairly well expressed by Walter C. Teagle, president of the Standard Oil Co., in his letter of July 21, 1921, to the chairman of the Shipping Board, which closes as follows:

If, as we understand it, the Underwood tariff bill contained a declaration in favor of preferential tariff duties, then it would seem highly desirable, under present world conditions, that the new bill now prepared by Mr. Fordney and his committee should carry a similar declaration, although we all appreciate that the enforcement of such discriminatory measures is in most cases impracticable.

Impracticable because of the attitude of the Department of State. Shortly after the receipt of this letter the Shipping Board adopted the following resolution on July 26, and that is the resolution in favor of enforcing section 34.

Senator SWANSON. What is the date of the resolution?
Mr. PLUMMER. July 26, 1921.

Senator SWANSON. Was it presented to President Harding?

Mr. PLUMMER. Yes; and I may say that at the close the record

says:

The chairman directed the secretary to transmit the foregoing resolution to the President of the Senate and the chairman of the Committee on Commerce of the Senate.

Senator SWANSON. Was that presented to President Harding or to the Secretary of State?

Mr. PLUMMER. It was sent to President Harding by Mr. Lasker, the chairman.

Senator SWANSON. Will you read the resolution, please.
Mr. PLUMMER (reading):

Whereas the United States tariff law now provides that

"A discriminating duty of 10 per cent ad valorem in addition to the duties imposed by law shall be levied, collected, and paid on all goods, wares, or merchandise which shall be imported in vessels not of the United States," etc.; and Whereas the above statute was but the transforming into law of emphatic declarations which had been made by both great political parties; and

Whereas the retention of this law was clearly contemplated when the provision in section 34 of the Jones bill, so called, was enacted; and

Whereas such legislation is necessary to enable American vessels to meet the higher operating expenses and maintain the higher standard of wages paid on American vessels and thus enable such vessels successfully to engage in the foreign carrying trade of this country; and

Whereas the making effective of such provision should tend to raise the market value of American ships to replacement figures and should cause shipping men to invest in the ships now owned by the United States and thus put the Shipping Board fleet into private hands, as Congress and the public desire:

Resolved, That the Shipping Board recommends that the above quoted statute of the United States be made a part of the tariff bill now before Congress.

With regard to Mr. Teagle's letter, he believed, as we believe, in the power to use the power; that a club is of little protection if it is locked to the wall and one must go to police headquarters and get a key with which to unlock it before he can make use of it for his own defense.

The bulk of those objections which have been urged against the elimination of this restrictive provision of the treaty have been based on the assumption that it affected merely tariff regulations. Objectors overlook the very important feature of preferential tonnage duties, the aids to be given through preferential rail rates, proposed export and import certificates, and the like; furthermore, discussion

of our merchant marine act of 1920 by foreigners brought out the fact that they consider their treaty provisions to put them in a position where they can rightly object to subsidies as well as preferential tariff and tonnage duties; that is, as was so clearly stated in an editorial of the Marine Journal of last Saturday, it "nullifies the merchant marine act of 1920, binds us never to resort to any form of the old plan of preferential customs and tonnage duties, and apparently forbids us to apply any other form of national assistance to our shipping industry.

The provisions affecting shipping contained in this treaty will be made the basis upon which all maritime nations will rest objections to any aid whatever to our shipping in foreign trade; and there are those who see in the language of section 9 an entering wedge for the opening up of our coastwise trade to foreign vessels.

The CHAIRMAN. Article 9 refers to tonnage, harbor, pilotage, lighthouse, and quarantine duties. Those are port dues. That is a different thing.

Senator SWANSON. Is it article 9 which you say bears on this matter?

The CHAIRMAN. Article 9 says:

No duties of tonnage, harbor, pilotage, lighthouse, quarantine, or other similar or corresponding duties or charges of whatever denomination, levied in the name or for the profit of the Government, public functionaries, private individuals, corporations, or establishments of any kind shall be imposed in the ports of the territories of either country upon the vessels of the other, which shall not equally, under the same condition, be imposed on national vessels. Such equality of treatment shall apply reciprocally to the vessels of the two countries, respectively, from whatever place they may arrive and whatever may be their place of destination.

Those are what are known as port dues. They are entirely different from discriminating duties.

Senator SWANSON. I should like Mr. Plummer to point out the language that bears out what you indicate.

Mr. PLUMMER. These are the words; and I may say that from my reading they are as strong a foundation as was found in the ClaytonBulwer treaty for objecting to our coasting vessels being exempted from duties there, "from whatever place they may arrive, and whatever may be their place of destination." At present a foreign ship can not load at New York and take its cargo to San Francisco; it can not load at Savannah and take its cargo to Boston. It has not in that respect the equality of treatment which our own ships have. I am not saying that I believe that to be the meaning of that paragraph; but I do say that that has been picked up by some men who have been studying this subject a good deal, and that they believe that is intended to be an entering wedge. That, however, is merely incidental, as I say here.

The CHAIRMAN. If there is any such danger, that of course should be attended to. I think it is well to keep in mind just what the real trouble in this treaty is to us, and that is what occurs after the favorednation clause, which of course is the same to every one. Then comes

this special thing:

All the articles which are or may be legally imported from foreign countries into ports of the United States, in United States vessels, may likewise be imported into those ports in German vessels without being liable to any other or higher duties or charges whatsoever than if such articles were imported in United States vessels.