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OCEAN MAIL CONTRACTS
• RELATIVE TO ITEMS IN THE RECORD OF DECEMBER 20, 1930, UNDER
THE TITLE: TREASURY AND POST OFFICE APPROPRIATIONS
Mr. King. I want to ask the Senator if the greater part of that appropriation is not a pure subsidy, and is in excess even of the operating expenses of the ships?
Mr. Moses. Mr. President, the latter part of that question I can not answer, and I do not think anybody in the Post Office Committee of either House or Senate can answer it.
As to the first part of the question, undeniably a certain portion of this sum is in the nature of a subsidy. I have never sought to conceal my view about that, but inasmuch as the Congress has apparently determined that this is the method in which it will undertake to encourage ocean-borne commerce, I accept it, although for myself I would much rather frankly appropriate money for a subsidy, and call it such.
Mr. KING. Mr. President, will the Senator let me have the floor for a few minutes?
Mr. Moses. I yield the floor to the Senator.
Mr. KING. Mr. President, I have a letter written me by one of the most distinguished Senators upon the floor, one who has perhaps given more attention to merchant-marine problems than any man in public life. I refer to the senior Senator from Florida [Mr. Fletcher). In that letter he directs my attention to an important publication presented by the Senator from Tennessee [Mr. McKellar) on June 30, 1930, and printed as a public document. The publication is entitled “The Truth About the Postal Contracts." In the letter to which I refer appears:
The facts revealed in this Senate document relate to a field with which I am fairly familiar, and the document itself has been carefully examined by me. It is a splendid piece of work, and the author has rendered a fine public service. The abuses not only obviously possible under the present law but which have been actually committed in existing contracts are so flagrant that we should be prompted to review and give consideration to all legislation employing postal contracts as an aid to our merchant marine. I am speaking as a friend of the merchant marine, and it is needless to mention to a colleague that I have been a firm supporter in the Senate for many years in aid of our merchant marine.
When we find, for instance, such contracts on the Atlantic as that with the Munson Line, between New York and Buenos Aires, where the company not only received an initial subsidy of many millions in being sold four magnificent vessels for about one million each, which cost the Government over seven million each to build, and is then given a mail contract which will yield it over $13,000,000, and without any obligation whatever to build a single new vessel in return for this munificent bonus from the Public Treasury, and when we find a still worse illustration in dollars, though not in principle on the Pacific in two contracts with the Dollar Steamship Co, for services between the Pacific coast and Manila, P. I., from which that company will reap over $27,000,000, and also without any contract obligation to build any new vessels, you will understand why I consider the matter so important and as calling for prompt action.
Mr. JONES. Mr. President, will the Senator permit me a word there?
Mr. Kixg. I vield.
Mr. Jones. I think it is fair, in connection with the statement the Senator has just made and read, and which I am not questioning, as far as that is concerned, to state that I am sure the Senator knows that we had quite a controversy over the Dollar contracts and after a long controversy they were approved, and while they were not required under the contract to build new ships, I think I ought to put into the Record the fact that they are building two of the finest up-to-date ships to engage in that Pacific trade that we will have.
For information about these two ships, and statements that they were not being built under the contracts involved, see pages 24, 44, and 48.
Mr. King. But they borrowed the money from the Government at 112 per cent or less for a period of 20 years.
Mr. MCKELLAR. One and eight-tenths per cent.
Mr. Jones. They are probably taking the same course others have taken. I am not excusing any of those things, but I am just calling attention to the fact that they are actually building two fine, new, up-to-date ships.
Mr. MCKELLIR. Mr. President, will the Senator from Utah yield to me?
Mr. King. I yield.
Mr. MCKELLAR. While that is true, that is just a means of getting another subsidy from the Government to pile on that which they already have.
Mr. Moses. Mr. President, will the Senator from Utah yield to me?
Mr. King. I yield.
Mr. Moses. Before the Senator leaves the subject of the ocean mail pay to steamships, I think it wholly pertinent to say that much of the difficulty in which we found ourselves regarding the problems which the Senator from Utah now presents has come from the fact that two different departments of the Government have been dealing with this question. We had the Fleet Corporation and the Shipping Board on the one hand, and the Post Office Department upon the other. The result was that Congress has found itself confronted by mail contracts made in pursuance of the statute, and unless Congress intends to repudiate the acts of executive officers, which are carried forward under statutes supposedly deliberately adopted by Congress, there is no recourse for us except to make these appropriations.
I want to make this suggestion to the Senator from Utah in connection with this matter. There happens to be at the minute in existence in the Committee on Post Offices and Post Roads a subcommittee which is dealing with another branch of postal transportation, and the functions of that subcommittee can be readily enlarged in the Committee on Post Offices and Post Roads so as to take up this other question also. If that were done, I think without question we could then secure a set of facts upon which in another year, when the post-office appropriation bill comes here, we will have a structure of information upon which to base our action.
Mr. McKELLAR rose.
Mr. Moses. I am glad to see the Senator from Tennessee on his feet as I make that suggestion, because he knows the subcommittee to which I refer; he knows the proposal before the committee upon which that subcommittee is to act; and he, with his great experience in the committee and his knowledge of all these matters of postal transportation, I think will readily see the point of the suggestion which I am making.
Mr. McKELLAR. Mr. President, I want to say to the Senator from New Hampshire, if the Senator from Utah will yield, that I do see the point of that suggestion. I think it is a very wise suggestion, and I hope the Senator will enlarge the motion he has heretofore made, which has already been passed, so as to give the subcommittee jurisdiction over these mail contracts, and all mail contracts, to examine and report to the next session of Congress.
Mr. Moses. Mr. President, I chance to be chairman of that subcom. mittee, the Senator from Tennessee is the ranking minority member of the subcommittee, and I have no doubt that he and I can readily agree upon a form of words which will make possible a complete and accurate informative study of this whole subject.
Mr. MCKELLAR. I will be very happy to cooperate with the Senator from New Hampshire.
Mr. King. Mr. President, the work which will be done by that subcommittee, however, does not cover past transactions. It will not invalidate, and can not, perhaps invalidate, some of the long-term contracts under which subsidies have been and are being paid, far in excess of what would be legitimate subsidies, even though we believed in subsidies and adopted their payment for the purpose of aiding the development of a merchant marine.
Mr. Moses. That is true, Mr. President, but, of course, the Senator from Utah recognizes that situations like that are constantly arising; and while we may not be ex post facto in what we do, we certainly can close the door against abuses in the future.
Mr. KING. Mr. President, I want to ask the Senator whether this large appropriation of $36,000,000 carried in this bill was investigated by the committee with a view to determining whether the contracts under which subsidies are paid are valid; whether the contracts were in harmony with the spirit of the law, even though perhaps they may have been in most instances in harmony with the technical construction of the law? My information is that some contracts were entered into wherein shipping lines had been established, and where no subsidies were required, under the claim that they were necessary in order to build up operating lines.
Mr. McKELLAR. Mr. President, will the Senator yield ?
Mr. MCKELLAR. Of course those are subsidies, and, as everybody knows, under the law which has been passed, subsidies to which I never agreed and do not agree now, but they were subsidies never
theless. In that connection I want to ask the Senator from New Hampshire, if I may in the time of the Senator from Utah, whether he can give any estimate as to about how much these subsidies paid by the Post Office Department amount to. The purpose of the question is this: As the Senator knows, there was a very large deficit in the Post Office Department for the last two or three years, perhaps for several years. How much of that deficit is due to the subsidies granted to the steamship and aircraft carriers, just in a general way?
Mr. Moses. Mr. President, I can not answer that in terms of dollars, and even at the risk of stimulating the Senator from Utah to another line of inquiry, I can only recall to the Senator from Tennessee an episode which took place as the conferees were discussing the items in this bill, when the allegation was made and pretty well supported by some of the House conferees, that at least 70 per cent of one item of appropriation in this bill constituted a subsidy.
The Senator from Tennessee will forgive me if I try to state his position—he and I, who had been actively cooperating at the beginning of the appropriation for air mail service, took the position that we had to encourage the aircraft industry.
Whether the percentage of encouragement under these appropriations for the ocean-borne mail is too great or not I do not know. But I am firmly convinced that the Congress ought to have the information, and I hope that in view of the ready acquiescence which the Senator from Tennessee has indicated in the suggestion which I advanced a few minutes ago, we may have that information before another Post Office Department appropriation bill comes here.
Mr. McKELLAR. Mr. President, my recollection is, if the Senator will permit me, that we fixed a limit for the Postmaster General in fixing a rate both as to air mail and as to steamship companies, and that he has given a limit in making the contract.
Mr. Moses. That is my recollection.
Mr. KING. Mr. President, I have an engagement and am compelled to now leave the Chamber. There are further points I should like to discuss, but can not do so at this time. I ask permission to insert in the Record as a part of my remarks excerpts from page 3 of this public document (No. 210) entitled “Monopoly in Bidding," and from pages 8, 9, and 10, under the heading “Subsidies very excessive."
The PRESIDING OFFICER. Is there objection?
There being no objection, the matter was ordered to be printed in the Record, as follows:
II. MONOPOLY IN BIDDING
COMPETITION WAS EXCLUDED, INTENTIONALLY EXCLUDED, BY SPECIFICATIONS, COM
PLIANCE WITH WHICH WAS POSSIBLE BY ONE PERSON ONLY
The monopoly in bidding resulted, primarily, from the certifications made by the Shipping Board relative to kind, size, and speed of vessels “required" for the postal route involved. The exclusion of all bids other than the preferred line was perfected by two limitations imposed by the Postmaster General, viz: (a) The short time allowed within which to present a bid and (b) the very early date by which the operation of the service was required to commence.