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We are familiar with language contained in section 27 of subject act of 1920, and recognize the degree of protection sought in those immediate post-World War I years. However, changing times bring need for revising and giving currency to our laws, statutes and regulations.

In 1954, the domestic company purchased, through an affiliate, 12 barges for the purpose of transporting its pulpwood from points in Georgia, Tennessee, and Alabama to its Calhoun plant. This affiliate submitted an application to the Interstate Commerce Commission and obtained from the Commission an order exempting it from certain provisions of the Interstate Commerce Act to permit it to transport its pulpwood. No question was raised concerning the applicability of the merchant marine laws to this corporation. Subsequently, the company learned of the application of these laws to its barge operations, forbidding the ownership of such barges. It promptly informed the Maritime Administration of the situation and, with its permission, disposed of the barges. It has been advised by the Maritime Administration that nothing short of congressional action will remedy the company's position.

May I point out, emphatically, that this company is not interested in going into the business of shipping, or transportation for hire. It is the intention of this company and others similarly situate to use the inland waterways, and that for a distance of only a few miles. It seeks the legislations only in connection with the utilization of barges and towboats. Wood would be moved in, and newsprint would be moved out.

The effect of this legislation, if enacted, would make more wood available to the plant in Tennessee, which, in turn, would make wood available to the South Carolina plant, and stimulate plans for plant expansion.

The United States is now importing much of its newsprint from Canada, and the newsprint producers in Canada can ship to the United States, in Canadian vessels, cheaper than the Tennessee mill can get its products to the same markets in the United States. Such an inequity, I know, should not be imposed upon an industry, with the great investments, employment potential, raw materials utilization, and economy promotion which Bowaters Carolina Corp. and other subsidiaries of the Bowaters organization present.

In this time of business concern, with the considerable unemployment that exists, the removal of row crops because of the soil bank, and other business conditions, or problems of a similar nature, I hope this committee, in its wisdom, will see its way clear to take this step in the promotion of more business and more employment. As this operation expands, not only will it increase business generally in the areas having hardwoods available, but it will, of course, be subject to taxation and contribute to the support of this Government through taxes. The honesty of this company, its obvious intent to participate in the American scene and in the American way, the good will it has created, and the recognition which my own State has given its multiple business purposes, all speak for consideration from this great committee and the Congress. I am proud to add my voice in this testimony to try to help eliminate a provision which I believe should be eliminated

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from the Merchant Marine Act, and help these people, and others similarly situated and that is the purpose of my bill.

I am grateful to the committee for its time and attention.

May I say that I got the Treasury report this morning about 9:15. I got caught in traffic and did not get a chance to thoroughly digest it. With leave of the chairman, I would like to file a statement regarding that within the next 3 or 4 days, sir.

The CHAIRMAN. I think in the case of the coal situation that that was because the testimony was that there was no other way of transporting it.

The exemption in the Alaska situation was the same thing, that there was no other available transportation. I would merely point that out.

I wish to compliment you because you have given some study to this matter. I see that they are the two exemptions that have been made up to the present.

Mr. HEMPHILL. I want to be perfectly honest with the chairman, sir. We make no claim that this is the only method.

The CHAIRMAN. I want to to ask one other question, if you will permit. What was your statement with respect to imports and exports through the port of Charleston? How was this material brought to and from Charleston and from where?

Mr. RIVERS. By rail, sir.

Mr. HEMPHILL. By rail, sir. It came from Calhoun, Tenn.

The CHAIRMAN. It was brought down by rail and now it is proposed to bring it down by barge?

Mr. HEMPHILL. Yes, sir. This legislation would permit us to ship by barge not only wood pulp into the plant in Tennessee as raw material but would permit us to ship to the ports of the United States by inland waterway.

The CHAIRMAN. I just wanted to keep to this point of this import and export at Charleston and how the material was brought there. You say it was brought from Tennessee?

Mr. HEMPHILL. Yes, sir.

The CHAIRMAN. Now it is proposed to barge it from Tennessee by some available waterway. I wanted to get that clear in my mind. Is that what you meant by that statement?

Mr. HEMPHILL. Yes, sir. I hope I understand the chairman clearly, sir.

The CHAIRMAN. Read that part of your statement again.

Mr. HEMPHILL (reading):

The Bowater Paper Co. is one of the world's great paper companies. During December 1957, they lifted through the port of Charleston, S. C., their 70th cargo of woodpulp, produced in their Calhoun, Tenn. plant, for export to Europe.

The CHAIRMAN. You say it is brought there by rail?

Mr. HEMPHILL. Yes, sir.

The CHAIRMAN. If this is permissible, you now propose to bring it by water?

Mr. RIVERS. NO. This will keep them competitive on the other end because if they cannot be competitive on the other end in production of that pulp it will seriously affect that export.

The CHAIRMAN. You propose to transport it by barge in some other route, do you, instead of bringing it by rail to Charleston?

Mr. HEMPHILL. Yes, sir; if the barges were available it would be available for two purposes.

The CHAIRMAN. Where would the diversionary route be from the source of supply? Instead of bringing it by rail to Charleston, how would it go otherwise if this bill were passed?

Mr. HEMPHILL. It would go entirely by Inland Waterway, sir.
The CHAIRMAN. Where?

Mr. HEMPHILL. It would go around the gulf and up the east coast. The CHAIRMAN. It would come down through the Mississippi you mean?

Mr. HEMPHILL. Yes, sir.

The CHAIRMAN. Now, are there existing barge transportation firms on that waterway that are operating under existing law?

Mr. HEMPHILL. There are some; yes, sir.

The CHAIRMAN. So that these would be competitive to existing American operators on that route.

Mr. HEMPHILL. They would not be competitive, Mr. Chairman, because of the fact that these people are not asking for a license to do general shipping.

The CHAIRMAN. I understand. It is to make them an industrial carrier.

Mr. HEMPHILL. Yes.

The CHAIRMAN. So therefore this cargo would not come through the port of Charleston.

Mr. HEMPHILL. Yes, sir; it would come to the port of Charleston in part and go to other ports, I assume.

Mr. RIVERS. There would be no intention of shipping pulp into Charleston by barge.

The CHAIRMAN. You say you are shipping it through now by rail. Mr. RIVERS. That will not affect the pulp. The thing they ship by barge will be pulpwood and newsprint.

The CHAIRMAN. I understand.

Mr. RIVERS. The pulp itself will not be shipped into Charleston by barge.

The CHAIRMAN. I did not care whether it was pulp or wood. I was trying to find out what you mean by that statement. That is all right. Mr. HEMPHILL. Actually, Mr. Chairman, I might say that the reason I made that statement was to show the effect on the economy and the amount of export which this company had participated in, sir.

The CHAIRMAN. Under what flag does this material go out of the port of Charleston?

Mr. HEMPHILL. I honestly do not know the answer to that, sir. I do not want to make a statement when I do not have the answer, sir.

The CHAIRMAN. Are there any further questions?

Mr. YOUNG. Mr. Chairman, I would like to compliment our colleagues on the very fine and impressive presentation of this very important problem.

I would like to ask Mr. Hemphill this question: As I understand it, the Departments do not object to the purpose of this legislation. There is some suggestion as to the form of it. Is that true?

Mr. HEMPHILL. Mr. Young, when I read the Treasury report this morning I could not tell whether they objected from a policy standpoint or whether they objected to the form of the legislation.

Mr. YOUNG. It was my impression it was chiefly to the form, as I understood it.

The CHAIRMAN. Mr. Thompson, do you have questions?

Mr. THOMPSON. Mr. Chairman, I would like to apologize to the committee and members who are testifying.

I might give you this bit of information. Louisiana, which has the great fortune of draining 42 percent of the United States through its rivers is encountered with a huge flood this morning. A bridge was washed out, and I have been busy trying to get the engineers in there on stopgap maintenance on some of our facilities.

The CHAIRMAN. This proposition will not help you.

Mr. THOMPSON. This will not help me personally, but I have a great interest in it.

The CHAIRMAN. I am trying to get something on the record here, gentlemen.

Mr. THOMPSON. I have a great interest in what H. R. 9833 is trying to accomplish. I have discussed it at length with our colleague, Mr. Rivers, and I fail to find any reason why the American Merchant Marine Institute should find any objection to the bill.

The CHAIRMAN. We will hear them.

Mr. THOMPSON. I only want to indicate that I am wholeheartedly for the objectives of this bill and anything that I can do as a member of the committee or a Member of this body I want to do to see it pass. The CHAIRMAN. Mr. Tollefson?

Mr. TOLLEFSON. I have no questions.

The CHAIRMAN. Mr. Allen?

Mr. ALLEN. I have no questions.

The CHAIRMAN. We are all Members of Congress. It is the duty of this committee to try to establish a record and get this clear on the record. I know every Member of Congress here is a fine distinguished gentleman, but the time will slip along if we do not get going.

Mr. THOMPSON. Mr. Chairman, I was as brief as possible. I am ready to go.

Mr. HEMPHILL. Mr. Chairman, I would like to make two comments, if I may, sir.

The CHAIRMAN. Yes, sir.

Mr. HEMPHILL. I notice in the report which was given to me this morning that the draft bill

might give rise to a situation in which merchandise transported by land and water, or to a point in a District, Territory, or possession *** would be subject to forfeiture * * *.

I might point out that the situation as it exists today is that the Canadian paper mills can ship the pulp and print into this country to the consumer cheaper in Canadian vessels than these particular people can get it to the consumer by rail, and that is one of the situations with which we are faced in connection with this legislation.

Another thing is that the objection of the Treasury Department, as I understood it, was that it says, "The purpose of engaging in coastwise trade"-there is absolutely no purpose, sir, in the Bowaters people engaging in coastwise trade. I think it would be presuming upon the judgment and experience of this committee for anybody to say that that was the purpose of this legislation and that this committee would consider anything like that to help even a company which is doing as much for the economy in this part of the country.

Finally, I would like to point out as my distinguished colleague did, that in 1954, when they began using the barges and found they were wrong, in their own honesty they went to the Maritime Commission and changed their way of doing, and, of course, have not been able to use those barges since.

The CHAIRMAN. They just got ahead of the operation that would have taken place.

Mr. HEMPHILL. Yes, sir. I assume that that is it.

The CHAIRMAN. The committee has no doubt that this is a very honorable corporation. That is not the question here. We do not question that at all, or I do not. I do not know how the committee may feel about questioning the character of the gentlemen who carry on this operation.

Mr. TOLLEFSON. A question occurs to me. Since they disposed of their barges, have they used any barges?

Mr. HEMPHILL. I will have to ask one of the gentlemen who is more familiar with the operation. I might say that when you questioned my colleague a while ago, you asked about the corporate setup. Bowaters South Carolina Co. is an existing South Carolina corporation subject to all the existing laws of South Carolina and the United States.

We are very proud to have these people. They have done so much for the economy. I have every confidence in the members of this committee to write such legislation as will be beneficial and yet will not be such legislation as will hurt the shipping industry.

It is not our intention to do that in any sense of the word. There is no hidden purpose in this legislation. We have tried to give you the

facts here.

For the purpose of the record, Mr. Chairman, my statement contains some excerpts from the statutes, and I might say, sir, that I studied it only from a legal standpoint.

In that connection, I will make this final statement. I notice that the Treasury Department report says that there are no penal provisions for the violation of section 27 if section 27 were amended to the extent that this legislation seeks to amend it I do not think this committee would have any trouble putting in any penal provisions or such other provisions that might be necessary to insure the protection.

With your leave, Mr. Chairman, I would like to submit for the record a statement in reply to the Treasury Department report, if I

may.

The CHAIRMAN. That is perfectly all right.

(The statement referred to follows:)

Mr. Chairman and members of the committee, I deeply appreciate your allowing me to reply to the Treasury Department's report. I find that the testimony is so positive to the effect that there is no possibility of fraudulence, that I believe it removes any objections they will have. There is no purpose of engaging in postwide trade.

I have every confidence in the ability of your committee to effect legislation which will accomplish the purposes which this bill seeks, and I know that after hearing the testimony and the brilliant questions asked by the members of the committee that all doubt is removed and that we can proceed to effect this very necessary legislation.

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