52 1,054, 092. 00

428, 262.50

Mr. McKellar obtained the floor.

Mr. KING. Mr. President

The VICE PRESIDENT. Does the Senator from Tennessee yield to the Senator from Utah?

Mr. MCKELLAR. I yield.

Mr. KING. I ask unanimous consent following the statement presented by the Senator from Florida to have inserted in the Record a letter which I have received from Mr. Nicolson, a paragraph from which I read a few moments ago.

The VICE PRESIDENT. Without objection, it is so ordered.
The letter referred to is as follows:

LETTER FROM MR. JOHN NICOLSON CONTAINING PRELIMINARY REPLIES TO SOME OF MR. PLUMMER'S STATEMENTS

Hon. WILLIAM H. KING,

WASHINGTON, D. C., February 5, 1931.

United States Senate, Washington, D. C.

MY DEAR SENATOR: A reply is in preparation to the communication of Mr. E. C. Plummer, vice chairman of the United States Shipping Board, which was published in the Congressional Record for January 23, but is not yet completed I am sorry to say, for it can readily be demonstrated that the attack on the Senate Document No. 210 entitled "The Truth About the Postal Contracts" leaves that document unimpaired as a statement of the facts of the case. Under the circumstances I have prepared this letter this morning that you may have some idea of the criticisms which have been made.

Mr. Plummer's obvious purpose is to impair faith in the statement of convincing facts presented in the Senate document, and to that end a large part, if not most, of the communication is directed against its author, alleging, e. g., inconsistency on his part when the Senate document is compared with earlier declarations by me. I will not attempt, in this letter, even to point out the many instances mentioned of alleged contradictions, nor deal adequately with several I will mention only to indicate that the criticisms are inaccurate and unfair.

1. In the attempt to discredit the Senate document in its reference to two contracts given the Robert Dollars for their two lines to Manila (under which they will receive $27,000,000 and yet neither contract requires the building of a single vessel) the commissioner says the fact is they are building two fine large vessels, meaning, of course, they are doing so incident to these contracts the Senate document criticized; and he applies the $27,000,000 to the construction handicap the owners suffer in respect to these vessels, which handicap he puts at $9,000,000, wanting to justify the $27,000,000 to that extent.

The vice chairman fails to mention that the two vessels are being built for the postal route the round-the-world service covered by a third contract, which contract is not mentioned at all in the criticism of the Senate document. Under this third contract the Dollars are receiving $14,000,000 more, in addition to the $27,000.000 paid under the two contracts criticized. Of course, that $9,000,000 handicap for the two vessels they are now building, are chargeable to this $14,000,000 subsidy; thus leaving the $27,000,000 untouched and payable under two contracts which we repeat do not require any new vessels to be built, thus leaving the Senate document intact and true.

2. In another instance, the commissioner quotes from the 1925 annual report, and attributes to the author an alleged recommendation, în 1926, under the 1920 act, of $1,000,000 per annum to the Munson Line, and then says the contract under the 1928 law is only $200,000 more. It is superfluous to say the head of a department who merely prepares the text of a report under instructions from superior officials, e. g., a commissioner of the board, as to the conclusions to be presented is not chargeable or responsible for them; the measure of his responsibility is to be ascertained from what goes on behind the scenes, e. g., the 1927 annual report mentions a contract under the 1920 act, to the Grace Line, and that $2.25 per mile had been recommended; I probably prepared the text of that statement, and would have, even had $3 been mentioned. The report does not reveal that the commissioner was told the company's own statements showed

they were earning dividends, and certainly were not entitled to much subsidy, if any. He nevertheless directed $3 per mile for this rate, the maximum ever granted under the old law. I ardently protested-even to the point of delaying administrative action until later, then renewing the subject, and the commissioner came down to $2.25. Yet, notwithstanding the earnings of the company the amount was increased under the 1928 law to $4 per mile.

The fact is, the amount recommended by the board in the Munson case was $3 per mile or $490,000 per annum; and yet under the 1928 law, this was increased to $8 per mile, or $1,300,000 annually-i. e., $810,000 more annuallyand not merely $200,000. So the Munsons will get $13,000,000 and yet are not required to build even one new vessel.

Any statement that the writer at any time or in any form ever recommended $1,000,000, actually or approximately, be paid the Munsons, either under the 1920 act or the 1928 law, is a very inaccurate statement of fact; he did not.

3. The commissioner comments on the criticisms made by the Senate document (p. 17) of the two contracts awarded the Oceanic & Oriental Navigation Co., and also based on an erroneous statement that these lines are building "three magnificent ships "-notwithstanding the two contracts do not require them to build any. They are doing nothing of the kind. The commissioner is mistaken. He probably has this line, the Oceanic & Oriental Navigation Co., confused with the Oceanic Steamship Co., which also has a postal contract, one under which it will receive nearly $10,000,000, and this contract does require the building of new vessels-and they are being built. What has that got to do with the criticisms made by the Senate document of the two contracts in fact criticized? Yet the commissioner says, "Why does he the author-leave the impression no such facts exist?" The answer is simple: The facts do not exist. The Senate document is accurate and true.

4. The commissioner refers to the great advance during the past 10 years in the propulsion machinery of ocean vessels; a fact which makes more surprising the unfortunate omission from many of these contracts of any requirement for new vessels-to have the subsidies keep the American merchant marine abreast of the times. Further seeking to impair faith in the Senate document, he says the author "ought to have known, and if he did not he never should have attempted to comment on these mail contracts; that the advent of the Diesel engine has caused such a development in the efficiency of steam propulsion that the machinery of any steamer built 10 or more years ago is to-day obsolete."

The author knew it, and Senate Document No. 210 reveals he knew it; for it states (p. 12) in criticizing the failure to require replacements that, apart from the exhaustion of the old vessels from age, there remained the fact “ they will probably have become obsolete for competition in foreign trade, so rapid has been the movement in recent years for new types of vessels, both in speed, capacity, and general efficiency-especially in the development of Diesel engines."

Hence, in this respect also, the Senate document is not found wanting. The failure to give recognition to this well-known fact in the shipping world is one of the reasons-but one only-why The Truth About the Postal Contracts was written.

5. The vice chairman quotes an attitude and opinion from the 1926 annual report and attributes them to the author. He overlooks entirely, however, that the provisions of law on which they were based, and which is even quoted in the opinion, was repealed by the 1928 act; furthermore, that the Senate document points out the serious consequences of its having been repealed. Thus to compare views expressed under very different provisions of law is not exactly fair criticism.

The many new statements of facts in the commissioner's communication are challenged, and I gladly assume responsibility for proving the substantial accuracy of the statements and criticisms in the Senate document.

Very respectfully,

JOHN NICOLSON.

Mr. NORRIS. Mr. President, while the resolution as modified has been adopted, I want to call attention in answer to some of the statements which have been made here as to new vessels being

constructed that the subsidies which the shipping interests are getting from the Government have as yet not all been referred to. For instance, when it is said that the law requires the building of new ships, nothing is said about the fact that practically the new ships are built with Government money. The shipping companies borrow money from the Government of the Unted States at a very low rate. For instance, within the last year loans of Government money have been made to some of the shipping concerns on 20 years' time at less than 2 per cent interest.

Mr. MCKELLAR. At 1% per cent.

Mr. NORRIS. I think the rate was 1%, was it not?

Mr. MCKELLAR. I think the Senator is correct; it was 1.8 per cent.
Mr. NORRIS. Yes; 1.8 per cent. At least, less than 2 per cent.
Mr. JONES. Mr. President, will the Senator yield?

The VICE PRESIDENT. Does the Senator from Nebraska yield to the Senator from Washington?

Mr. NORRIS. I yield.

Mr. JONES. My recollection is that we have corrected that condition by subsequent legislation providing a rate of not less, I think, than

Mr. MCKELLAR. Not less than 32 per cent, as I recall.
Mr. JONES. Yes; something like that.

Mr. NORRIS. It is probably true that in the future the rate is going to be 32 per cent; but I remember of one particular loan made a few months ago of a million dollars at less than 2 per cent interest on 20 years time. Almost anybody could do business if he had that kind of money.

Mr. MCKELLAR. Yes, Mr. President, and if the Senator will yield

Mr. NORRIS. I yield.

Mr. MCKELLAR. In the appropriation bill for independent offices this year there is provided $35,000,000 more to be loaned the shipping interests on these very liberal terms.

Mr. NORRIS. I want to call attention also, Mr. President, to the argument made by the Senator from Colorado [Mr. Phipps]. I am not finding fault with what the Senator said. As I understand the circumstances, he stated them correctly but he probably misapprehends and I am afraid that some other Senators here misapprehend the object of a few of us in calling attention to the resolution in the effort to prevent the Postmaster General from pursuing a course that it is admitted he had a right to pursue under the law. There is no criticism, so far as I know, from anyone of us of the Interstate Commerce Commission. The Senator says they are peculiarly equipped properly to investigate matters of this kind and I agree with him as to that; I think that is absolutely correct; but here are the facts: The Post Office Department is running behind a good many million dollars every year. That has been true practically every year in our history. One of the particular branches of the Post Office Department that causes a deficit every year is the parcels post; but, as the Senator from Tennessee has shown, the facts are that the deficit growing from the parcel post in the last fiscal year was about $5,000,000 less than it was for the preceding fiscal year; so that the parcel-post business is showing a tendency to pay its own way, and it is a poor time to start to increase rates.

If the Interstate Commerce Commission makes an investigation and wants to establish rates that would prevent a deficit, I think it would follow that they would have to increase the rates. I am not doubting but what they would, and I would not criticize them if they did.

Mr. McKELLAR. Mr. President

The VICE PRESIDENT. Does the Senator from Nebraska yield to the Senator from Tennessee?

Mr. NORRIS. In a moment. However, the parcel post is not the only postal business which is causing a deficit; other branches of the Postal Service are causing deficits; they have been referred to; but nobody proposes to increase the rates on other classes of mail matter; nobody proposes to interfere with the deficits along any other line except as to the parcel post. I submit that is not fair. I submit that it has been shown here that some of the very large items that go to make up this deficit-and I would be glad if it did not exist, but it is there are the subsidies which are paid to shipowners and large shipping corporations, not only for carrying the mails but for building new ships.

Mr. NORRIS. Do you realize that, Senators? Some of these poor political outcasts years ago called attention to the fact that that very condition would exist if we passed the law under which the Postmaster General is now attempting to operate. It applies to nothing else. He has not authority to reduce or increase the rate on letters or on any other branch except the parcels post. It is a peculiar thing, it seems to me, that after that law has been passed, when in my poor, weak way I called attention to the danger that was lurking in it to parcels post on the day we passed it, now we are confronted with the argument on the part of Senators, "The Postmaster General is operating under the law. What business is it of ours!" they say. When we passed the law, however, when attention was called to the fact that that very thing would happen, they said, as the Senator from Tennessee has narrated to-day, Why, it will never be called into effect in that way. It will just correct some little discrepancies that may creep into the service. There never will be an attempt made by a Postmaster General to increase these rates as a whole."

66

So the law went through. Now we are confronted with the result of it. This is the only case where the Postmaster General has authority under the law to reduce or to increase rates in the Post Office Department without first coming to Congress; and now we are reminded, "Why this is the law. It is not any of our business. He will not pay any attention to our request if we ask him to desist until we can investigate the matter. He will disregard our request." Maybe he will. He can, under the law, I concede. He does not have to pay any attention to the resolution we have just passed. I think he will, however. I think he is a gentleman and will be courteous enough to respect the wish of one of the legislative bodies, which has expressed a desire to investigate before these rates are increased. I think the request will be effective, but we are reminded to-day that we are helpless because of the law that was put over on us under a sort of false pretense. Now we are reminded of it in the name of the express companies of the United States.