ists. Consequently, Senator Morton, a discontinuance of the Georgian Bay Line would mean the end of many careers devoted to the Great Lakes passenger business. Mr. SAMPLINER. These professional American men and women should not be penalized for the failure of foreign operators to provide proper safety precautions on foreign vessels. Thank you. Any questions, sir? Senator MORTON. Your testimony is predicated on the fact that the Georgian Bay Line, will go out of business, is that correct? Mr. SAMPLINER. That is correct, they will go out of business on July 1, 1966, if S. 3250 were passed as she stands. They need time. Senator MORTON. All right. No questions. Does counsel have any questions. Mr. COLE. The earlier testimony by the owners of the Georgian Bay Line, indicated they would like to have an extension of time; the first time mentioned was November 5, 1967, then they said 1968 would be better. Is this what you are advocating here, some type of extension? Mr. SAMPLINER. Yes, I am; mainly for the reason that if these people have to relocate as far as their jobs are concerned, it is not fair to cut them off with less than 30 days from now. I mean, if they have more time, why they would be able to take care of themselves. Senator MORTON. It is your position that this extension should be to permit the Georgian Bay Line to make such alterations or changes as might be necessary to continue operations, or is it just to give these people more time to find jobs? Mr. SAMPLINER. No, it is twofold, Senator Morton. First of all, I think that this bill, S. 3250, is applicable to two vessels, one plying the Ohio and the Mississippi Rivers, that is the Green Line steamer, and the only other passenger liner that it would affect is the only one we have on the lakes, it is the SS South American. Those are the only two passenger liners that we have, and I think that we have many ship repair facilities, careful analysis of these vessels that have been in existence for several years. They are not young vessels, but they are not too old vessels. They have been maintained very well; and Šenator Morton, I think that if the period of a couple of years was given to them they could come up to the standards that the U.S. Coast Guard wants. In other words, we all want safety, but to preclude and put a deadline on them, July 1, 1966, not only throws the public out of business, but throws out all of these people that have made a profession as far as the Great Lakes are concerned. Thank you. Senator MORTON. You would not object strenuously if the Congress decided to pass this bill and confine it to the high seas and not necessarily in the waterways, fishing, and yachts and so forth? Mr. SAMPLINER. Well, I think all vessels should have safety measures. Senator MORTON. Oh, there is no question about that. Mr. SAMPLINER. But I do think as far as 3250 is concerned, I think that your limitation of time is too much. Senator MORTON. Thank you very much, sir. Mr. SAMPLIER. Thank you, kindly. Senator MORTON. The hearing is now adjourned. I might say that the record will be kept open for 2 weeks so anybody who wishes may file a statement. (Whereupon, the hearing was adjourned at 11:20 a.m.) (The following statements were received for the record:) STATEMENT BY ARTHUR J. BROSIUS, PRESIDENT, PITTSBURGH COAL EXCHANGE My name is Arthur J. Brosius of Pittsburgh, Pennsylvania. I am President of the Pittsburgh Coal Exchange. The Exchange, organized in 1870, is composed of water carriers and industrial concerns which are heavy shippers by water. Its members originate more than 90 per cent of the water commerce in the Pittsburgh area. It has a direct and vital interest in the maintenance of the integrity and efficiency of inland water transportation. It appears that the proposed legislation would drastically curtail the historic limitation of liability privilege by denying that privilege entirely in cases involving injury or loss of life. And it would apparently be applicable in this regard not only to passenger vessels, but also to cargo carriers, both sea going vessels and "*** vessels used on lakes or rivers or in inland navigation. **** (Title 46 USCA Sec. 188) The Exchange fully shares the widespread concern generated by recent disasters involving passenger vessels on the high seas, but for lack of competence in the matter, we do not attempt to suggest a remedy. Nor do we feel qualified to discuss the problems of deep sea cargo operations where since 1935 liability with respect to loss of life or bodily injury may be as much as $60 per ton of the vessel's tonnage when the value of the owner's interest in the vessel and her pending freight is less than that amount. With regard to inland waterway cargo carriers, however, we most strongly urge that the long established privilege of limitation of liability as embodied in existing law be retained fully intact. Modern, efficient inland waterway transportation is the lowest cost surface means for transporting massive quantities of industrial materials and fuels over great distances. It serves primarily the mass transport needs of basic industry such as coal, electric power, petroleum, iron and steel, aluminum and chemicals. These are the industries of most crucial importance to economic growth. Thus, the economic soundness of the inland water transportation industry is vital to the industrial development of the nation. Nowhere is this relationship more graphically demonstrated than in the Pittsburgh area where the vast steel complex rests squarely on a base of low cost water transport. Inland waterway transportation, however, is an intensely competitive industry, not only within the mode, but intermodally. It is characterized by a multiplicity of small units with narrow operating margins. It has maintained its position through increasing efficiencies and improved technologies in a constant battle against rising costs of labor, materials and equipment. The use of tow boats up to six or eight thousand horsepower and higher, capable of pushing in a single tow cargoes up to 40,000 tons, or the equivalent of 20 trainloads of 100 cars each, is the direct result of this highly competitive structure. Any prospect of a significant increase in operating costs must, therefore, be regarded with extreme concern. For the ability of the industry either to absorb or to pass along cost increases is strictly limited. And a serious impairment of inland water transport resulting ultimately in higher transportation costs would threaten the very foundations of community welfare and the prospects of economic growth throughout vast regions of the country. It is submitted, therefore, that no legislative proposal involving a substantial increase in the costs of inland navigation should be approved in the absence of considerations of overriding importance. To the best of our knowledge, no such compelling justification for denial of limitation of liability as to bodily injury or death is present in the case of inland waterway cargo carriers. On the contrary, the industry's safety record is outstanding. In this connection, reference is made to the testimony submitted last year by the American Waterway Operators, Inc. at the hearings before the House Committee on Merchant Marine and Fisheries in opposition to H.R. 156 and H.R. 723. Denial of the limitation of liability privilege to the extent contemplated would substantially increase operating costs, notably by adding materially to insurance costs. Such a repudiation of long established policy deeply embedded in the cost structure of a highly competitive transport mode might well impair the efficiency of water transportation and curtail its ability to provide adequate, low cost service upon which future prospects for industrial growth are directly dependent. So grave a risk is not, in our judgment, justified by the evidence and we respectfully urge that the present law remain fully in effect as to inland waterway cargo carriers. We wish to express our appreciation to the Committee for this opportunity to present our views on these vital issues. STATEMENT OF CAPT. ROLLA R. JOHNSON, PRESIDENT OF THE GREAT LAKES DISTRICT, INTERNATIONAL ORGANIZATION OF MASTERS, MATES AND PILOTS The Great Lakes District, International Organization of Masters, Mates and Pilots, represent the licensed Masters, Mates and Pilots employed on the Great Lakes, Rivers and the St. Lawrence Seaway. As such we are vitally interested in the continuance of passenger boats on these waters. It is our feeling that if S-3250 is passed in its present form without giving the two companies involved ample opportunity to bring their boats up to the new requirements, it could easily be the end of such service on these historical waterways. These passenger boats have become a tradition on the Great Lakes. It is not a case of "if they don't haul them someone else will". This service will just cease to exist. Our organization and its members have cooperated in keeping these lines in operation and we feel the Government should take steps to provide time for them to conform to the new regulations or to replace their present equipment. We feel their safety record speaks for itself. We respectfully suggest S-3250 be amended as requested by the Chicago, Duluth and Georgian Bay Transit Company and the Greene Line Steamers Inc. STATEMENT OF JOHN C. J. SHEARER, ON BEHALF OF THE LONDON GROUP OF PROTECTION AND INDEMNITY ASSOCIATIONS, THE LIVERPOOL AND LONDON STEAMSHIP PROTECTION AND INDEMNITY ASSOCIATION, AND THE SCANDINAVIAN PROTECTION AND INDEMNITY ASSOCIATIONS Mr. Chairman and Members of the Committee: My name is John C. J. Shearer. I am a Partner of the Firm of Thos. R. Miller and Son, who are Managers of the United Kingdom Mutual Steam Ship Assurance Association Limited, 14-20 St. Mary Axe, London, E.C. 3., England. I make this statement on behalf of the members of all the mutual Shipowners' Protection and Indemnity Associations herein designed. The United Kingdom P. & I. Association is the largest of a number of mutual Protection and Indemnity Associations, which are often referred to as the London Group of P. & I. Associations. The other Associations which comprise the London Group are: The Britannia Steam Ship Insurance Association Limited. The London Steam-Ship Owners' Mutual Insurance Association Limited. The North of England Protecting and Indemnity Association. The Standard Steamship Owners' Protection and Indemnity Association Limited. The Steamship Mutual Underwriting Association Limited. The Sunderland Protecting and Indemnity Association. The West of England Steam Ship Owners' Protection and Indemnity Association Limited. The Liverpool and London Steamship Protection and Indemnity Association, with its head office in Liverpool, is a very prominent mutual Association in the United Kingdom. The Scandinavian Mutual Associations for whose members I speak also are Assuranceforeningen Gard, of Arendal; Assuranceforeningen Skuld with its Head Office in Oslo and offices in Copenhagen and Stockholm; and Sveriges Angfartygs Assurans Forening, of Gothenburg. 65-535-66- -23 The members of the Mutual Protection and Indemnity Associations for whom I speak own tonnage approximating 100,000,000 gross registered tons, being almost two-thirds of the World's entire gross tonnage. These Associations comprise hundreds of shipowners of practically all of the maritime nations of the World. Among these shipowners are a large number whose liner passenger ships trade to and from the United States. Examples are: American Export Isbrandtsen Lines. Cunard Line. French Line. Greek Line. Holland America Line. Home Lines. Italian Line. Moore-McCormack Line. Zim Israel Navigation. The Associations consist of shipowners of various nationalities. For example. the United Kingdom P. & I. Association consists of 15% British flag tonnage and 85% tonnage of other flags. The Board of Directors of this Association is composed of 29 members, of whom three are French, two are West German, three are Greek, one is Italian, one is Swedish, and 19 are British, some representing foreign interests. Included are vessels flying the flags of more than 60 maritime nations. All of the Associations for whose members I speak are non-profit-making Associations whose members mutually protect each other against liabilities of various types including death of and injury to passengers, crew members and others. The Associations' affairs are conducted by experienced professional managers. but the Boards of Directors, who are invariably shipowners, give general directions to the managers as to how they require the Associations' business to be run. The shipowner members of the various Associations contribute at the commencement of each year such sums as are deemed to be necessary to meet the Associations' anticipated obligations. From time to time the shipowner members are called upon to contribute such further sums as may be required to meet the Associations' actual obligations for that year. The funds thus provided by the members of the Associations are available to pay claims in all the countries of the World including the United States. The Associations in their long history extending over more than 100 years have never failed to meet their obligations. I have been engaged in the Management of the United Kingdom P. & I. Association for 14 years, and for the last four years I have been responsible, among other things, for assessment of the annual contribution to be paid by each member of the Association. Such contributions fairly reflect the type and age of the ships, the law of the flag, the efficiency of the management, the actual loss record of the shipowner, and on the basis that the laws of the countries to which the ships may trade will allow the shipowner to limit his liability in the absence of his personal fault. Protection and indemnity coverage, and particularly that provided by mutual Associations is an important existing factor in the promotion of maritime safety in that the contributions of the members and the calls made upon them are calculated on the basis of their experience records. Vessels and fleets which have poor records have to contribute more than those vessels and fleets with better records. This is an obvious and powerful incentive to members to maintain and operate their ships safely and well. The Managers and Boards of Directors of the Associations exercise great care as to whom they accept as members and as to whom they continue to keep as members of the Association. Quite apart from any national standards the Managers and Boards of Direc tors of the Associations are particularly anxious to see that the highest standards are maintained so as to keep casualties to a minmium. This policy directly benefits passengers, crew members and others who sail on the seas and indeed anyone who ships his goods by sea. I have been authorized to present to the Senate Committee on Commerce this statement on behalf of the Associations for whom I speak in a most earnest and sincere effort to show that if the United States were to repeal its laws which since 1851 have given to shipowners the right, in the absence of their personal knowledge or fault, to limit their liability for the death of or injury to passengers, crew members and others, then very heavy burdens will be imposed on shipowners not only of the United States but of all maritime nations whose ships trade with the United States. 1. Protection regarding claims for death of and injury to passengers, crew members and others There are three separate means by which protection is arranged regarding claims arising out of death of and injury to passengers, crew members and others, for which shipowners may be responsible: (a) by the shipowner becoming a member of a mutual Protection and Indemnity Association; (b) by the shipowner taking out a policy with a commercial Insurance Company; (c) by the shipowner being a self-insurer. The great majority of the World's shipowners elect to become members of a mutual Association because: 1. The reserves of the Associations are in effect the assets of the shipowner members of the Association; 2. The shipowners have available the special expertise of the Managers of the various Associations; 3. The Associations assist in promotion of safety measures at sea insofar as passengers, crew, and others are concerned. 4. The Associations accumulate expert knowledge and advice which they distribute to their shipowner members regarding how to avoid accidents to passengers, crew members and others and how to carry cargo safely; 5. The Associations provide at short notice and all over the World surety bonds and other forms of security to ensure payment of proper claims of passengers, crew members and others; and 6. The Associations provide world wide representation and facilities to deal with problems arising out of marine casualties. Few shipowners elect to take out policies with Insurance Companies. The number of shipowners who are self-insurers must necessarily be few. In general, only some of the very largest private shipowners and some Government fleets do act as their own self-insurers. 2. Heavy burdens would be imposed upon all shipowners engaging in United States trade if the laws allowing limitation of liability, when the owner has no personal fault or knowledge, were to be repealed If the United States were to repeal its laws, in effect for more than 100 years, providing for limitation of liability when a shipowner has no personal fault or knowledge, all shipowners who trade with the United States would have heavy burdens imposed upon them, whichever one of the three means they had elected in regard to protection concerning claims for death of and injury to passengers, crew and others. (a) As regards mutual Associations, it would be necessary for the management of the Associations to increase substantially the annual contributions payable by members trading with the United States, in order to take into fair account, as among all members of the Associations, the fact that vessels of members trading to the United States would be subject to greater exposure. (b) The very few shipowners who had elected to take out policies with Insurance Companies would presumably be subjected, for the same reason, to higher premiums with respect to vessels trading with the United States, and for the further reason that most Insurance Companies operate on a profit-making basis, unlike mutual Associations and self-insurance funds. (c) For the same reason, it would be necessary for the few shipowners who operate self-insurance funds to allocate substantially larger amounts to those funds with respect to vessels trading to the United States. 3. Increase in cost of trade and passenger services with the United States It is virtually certain that shipowners of all nationalities trading with passenger and cargo vessels to the United States would have to increase passenger fares |