ISSUES It is possible that the shipping interests may oppose this plan, but there are indications that the industry is apprehensive lest the whole question of subsidies be brought into the debate if they appear before the committee in opposition to the plan. Large shipping interests may ask to appear against the plan, but in that event the small shipping lines may ask to testify in favor of the plan (in order that their interests may be more sympathetically considered by the Federal Government). One specific question has arisen as to the application of that part of section 106 (p. 3) providing for the administration of functions, under which the Chairman "shall be guided by the general policies of the Secretary of Commerce with respect to such functions." It is contended that this provision is in conflict with the language of the same section, which states that the Chairman "shall be independent of the Secretary of Commerce," and that "general policies" might encroach on the functions of the Chairman. COMMENTS BY THE CHAIRMAN AND OTHER MEMBERS OF THE MARITIME COMMISSION In 1949, when the Hoover Commission report was received by Congress, the Maritime Commission was requested by the chairman of this committee to comment on the recommendations contained therein. The Chairman of the Commission opposed the recommendations affecting it (pp. 261-263, S. Rept. No. 1158), concluding that "The so-called business or executive operations of the Commission are in fact so closely interwoven with the regulatory and subsidy activities of the Commission that to separate them would only compound the alleged difficulties in the present administration of the law. * * * * "The Commission is convinced that the belief (which is hardly more than a hope) that the administration of nonregulatory, or executive, or business operations of the Commission can be separated from the regulatory and subsidy functions without serious complications is without foundation. * * The Commission cannot emphasize too strongly the undesirability and danger of attempting to establish separate administrative agencies for governmental activities in respect of the oceangoing merchant marine. Historically and basically the continuance of promotional or operational or business functions concerned with the merchant marine in the same agency charged with the regulatory activities is a fundamental necessity for the successful administration of the merchant marine policy for the United States. Any other method would simply be a case of letting one hand function without the required amount of coordination with the other hand. * * * "The Commission is unanimously and vigorously opposed to any proposed splitting of the functions now vested in the Maritime Commission with respect to the merchant marine." Recently the Chairman and two member of the Commission stated to the press that they would support the President in his efforts to improve the merchant fleet and promote efficiency in the administration of maritime affairs, and that they would not oppose the plan. The fourth Commissioner (Mr. Mellen) stated that "he was highly in favor of the President's Reorganization Plan No. 21." Approved: GLENN K. SHRIVER, Professional Staff Member. WALTER L. REYNOLDS, Staff Director. SENATE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, May 5, 1950 Staff Memorandum No. 81-2-57. This m 28, 19 sum lum is supplemental to Staff Memorandum No. 81-2-44, of March n to this plan which has developed since that date may be VS: 1. The railroads and transportation group will support the resolution of disapproval, not on the primary issues involving the Maritime Commission but on a broader base of opposition to the inferential consolidation of all regulatory functions (including Interstate Commerce Commission) in the Department of Commerce. 2. The transportation industry is apprehensive that this plan may set a pattern for transferring all transportation matters to centralized control under a newly created Under Secretary of Commerce for Transportation provided in the plan. 3. The industry and others are somewhat concerned as to who will be appointed to the position of Under Secretary of Commerce for Transportation, Chairman of the Maritime Board, and other Board members. From the information received, it is obvious that the maritime industry is not opposed to this plan as strongly as the railroads and other transportation groups, since their opposition might involve a full review of the subsidy issue, and is apprehensive that the whole question of Government subsidies will be brought into the hearings on the plan. HOOVER COMMISSION The Hoover Commission recommended in its report on the Department of Commerce that a Transportation Service be established in the Department of Commerce under which the Civil Aeronautics Administration, Coast and Geodetic Survey, Weather Bureau, and Inland Waterways Corporation be consolidated within the Department and the following agencies be transferred to the Department, under a centralized service: The Maritime Commission (Independent). National Advisory Committee for Aeronautics (Independent). Interstate Commerce Commission (Independent). The Public Roads Administration (Federal Works Agency).1 The Office of Defense Transportation (Executive Office of the President). The Coast Guard (Treasury Department). The Bureau of Customs (Treasury Department). The staff has received information that the Transportation Association of America has released several news letters from which the following is quoted for the information of members of the committee: "Plan 21 violates the long-established congressional policy that regulatory agencies must be independent of the Executive and directly responsible to Congress." "Plan 21 is an adroit step to transfer complete control of transportation into the executive branch of the Government." "Under the pretext of complying with the Hoover Commission proposals, the President has submitted Reorganization Plans 7, 13, and 21 to Congress. These proposals deal with questions of Federal promotion and regulation in a piecemeal fashion and with no regard for the projection of a sound, permanent structure of Federal policies for transportation as a whole. They go far beyond the Hoover recommendations. Their adoption would open the door for Executive manipulation of functions which should be completely removed from the play of power politics." The association further contends that plan 21- "can lead straight to Government ownership of transportation and the collapse of the system of competitive free ownership. This association holds no brief for the Maritime Commission or its record. Whatever is done about the transportation problem within the next few years will set the stage for a progressive economy under the competitive enterprise system, or open the door for state socialism." In this connection, the staff has been informed that Senator Warren G. Magnuson, chairman of the Senate Subcommittee on Merchant Marine and Maritime Matters, forwarded a letter, dated April 5, 1950, to the Secretary of Commerce in which he requested information on the following questions: 1. Whether the Maritime Board in the regulatory field is to continue to be an independent arm of Congress, or report to the Secretary and become a part of the executive branch? 1 This agency was transferred to the Department of Commerce by Reorganization Plan No. 7 of 1949. 2. Whether the Maritime Board will have authority to make decisions on subsidy contracts without prior consultation with, or direction from the Department of Commerce? 3. What duties will be assigned to the Under Secretary of Commerce for Transportation? In reply to this inquiry the Secretary is reported to have stated that the Maritime Board would be independent of the Secretary of Commerce and "free to report directly to the Congress," and that "In the exercise of the powers with respect to the award of subsidies which are delegated to the Board under the plan, the Board is to be guided by the general policies of the Secretary of Commerce under section 106 of the plan, but its actions with respect to making, amending, and terminating subsidy contracts under section 105 (1) are to be final. "The proposed Under Secretary for Transportation would act as my deputy with respect to the programs and activities embraced wtihin the proposed Maritime Administration, Bureau of Public Roads, Civil Aeronautics Administration, and the Inland Waterways Corporation. It would be the responsibility of the Under Secretary for Transportation to exercise general policy supervision on my behalf over all transportation activities in the Department, and to assure program consistency among these several transportation agencies." Approved: GLENN K. SHRIVER, Professional Staff Member. WALTER L. REYNOLDS, Staff Director. The CHAIRMAN. Senator Brewster, the committee will be very glad to hear you. STATEMENT OF HON. OWEN BREWSTER, A UNITED STATES SENATOR FROM THE STATE OF MAINE Senator BREWSTER. The resolution dealing with transfer of the Maritime Commission, and to which I would invite the committee to address their attention, follows two rather definite steps in the direction of concentrating and coordinating the Maritime activities: One, in 1948 when there was by administrative action certain concentrations. Those did not seem to go far enough. In 1949 under plan 6, the Chairman of the Commission was given the administrative powers which the Hoover Commission had indicated were desirable. That is in process of implementation. It has been in effect now less than a year, and I am sure everyone agrees that it is accomplishing many of the results that were desired. The CHAIRMAN. That plan was not opposed, was it? The CHAIRMAN. As I remember it, it was not opposed. Senator BREWSTER. That was very general and gave to the Administrator, General Fleming, these powers of administration, which I think we all recognize it is desirable to lodge in one executive head. So that the general philosophy of the Hoover Commission report has been accomplished so far as the coordination of functions there are concerned. Now, this proposal takes a further step, and one that is recognized by the Citizens Committee for the Hoover Report, which I am sure the committee will recognize as most sympathetic with the reforms that are proposed. They characterize it in their report, and I refer to page 3 of the circular letter dealing with it: Plan No. 21, substituting a Federal Maritime Board and a Maritime Administrati hin the Department of Commerce for the present independent Maritime Commission, is in part consistent with and in part goes considerably further than the Hoover Commission's program. Transfer of business operations of the Maritime Commission to the Department of Commerce and retention of a considerable degree of independence by the proposed new regulatory agency accord with recommendations of the Hoover Commission. There is a question, however, whether the proposed Federal Maritime Board within the Department would have the extent of independence of a separate regulatory agency recommended by the Commission. I cite that because there might be perhaps an inference that those of us who are so very greatly interested in the maritime affairs of our country might possibly be a little prejudiced in the situation. However, historically the committee will find that very much of the proposal here now presented was actually in effect back in 1933 to 1936, when under the legislation at that time the maritime affairs were under the Department of Commerce, and it did not work well, so badly, in fact, that in 1936 the act was adopted which created that independent agency. During the war the ineffectiveness of a five-man executive board was recognized and very large powers were lodged in the War Shipping Administration under Mr. Douglas, so that there was accomplished this concentration of administrative and executive responsibility which I think we all recognize is desirable. Now, under the actions of 1948 and plan No. 6 of 1949, we have taken a very long step in the direction of accomplishing what the Hoover Commission obviously had in mind, and those of us who have been a long time concerned with the shipping problem would urge, I think, very earnestly that the committee consider seriously whether this is the time to take this further somewhat extreme step, which, as the committee on the Hoover plan points out, goes beyond the recommendations of the Hoover Commission. It apparently envisions the accomplishment of a concentrated transportation agency that would cover all phases. We have seen the shipping interests in domestic shipping under the jurisdiction of the Interstate Commerce Commission in recent years in domestic shipping and the very grave decline in the domestic transportation by water along our coasts, I think, is a very poor recommendation to take a further step in that direction at this time. Where we shall eventually land, of course, only time can tell; but in this very critical period in the maritime field-we built, I think, some 23,000,000 tons of merchant shipping during the war; we have had to do this twice now-the First World War and the Second World War. We had to spend between 30 and 40 billion this last time to build up the shipping to take care of our absolutely vital war needs. That meant first creating the shipping facilities, and as you have doubtless learned, you cannot create those overnight. While we can fabricate buildings and docks, and so on, rather expeditiously, to train the men required to build the ships is not child's play, it is a highly specialized trade, and if our shipyards and our shipping decline again, as they have after each of our great wars— going back to the difficulties of the last century and the First World War-we saw our shipping practically disappear from the seas, then war comes and we have to go ahead at enormous expense, train the shipyard workers, train the merchant seamen, train all the facilities required both in time and money. It is very expensive, and I assume most everybody is of the impression that we shall never again have the time that we had heretofore, that if we have another difficulty in this world-which God forbid-time will be probably the most precious item, and if our shipyards have disappeared from the face of the earth and our shipyard mechanics and our merchant seamen, the delays will be far more stupendous than one desires to contemplate. Now, is this likely to happen if we take this further step? To those familiar with the shipping history of our country in the last century, there is very grave reason for concern. This is not because anyone is prejudiced against it, but because in the upper echelons of high policy there is frequently prevalent an opinion that one of the better ways for foreign countries to earn the essential dollar exchange is through their shipping services, and there has been grave reason to feel that there is in the minds of some of those concerned with our over-all policy the idea that to allow certain European countriesparticularly Britain and the Scandinavian countries to resume their former dominance of the seas in maritime transportation is perhaps a practical and logical step. We have made available billions of dollars and millions of tons of steel for the rehabilitation of their merchant marine. They are back far beyond what they were before the war. I visited last fall, because of my very great interest in this matter, most of the shipyards in northern Europe, in Britain, Ireland, Scotland, Norway, and Sweden, in Denmark, in Finland, and in Hamburg, Germany, and I saw something of what was going on. I talked with the shipping leaders and the same old pattern is being repeated of transferring maritime transportation to foreign flags. We have seen this operating in our own situation, we have had 6 months of intensive study of this in the Interstate and Foreign Commerce Committee as a result of the special authorization a year ago which authorized the Interstate and Foreign Commerce Committee to make a study of this under the very efficient leadership of Senator Magnuson of the committee, and we have had a very efficient staff composed of some competent men. Hearings were held all winter on this and accumulated certainly a vast amount of information, and I would urge very earnestly that until there is opportunity for this committee to report, until there is opportunity for the Congress to give considered study to that report during the next few months or a year, that it might be well to pause before transforming the whole character of the maritime set-up, which was a result of the experiences after the First World War, a result of experiences of transferring shipping to the Department of Commerce in the 1930's, and after 4 years of that, they found out it worked very badly, and they then enacted the present set-up. We have now improved it and streamlined it by the actions of 1948 and 1949, and it seems now there are very persuasive if not conclusive reasons we should pause before making this change which, as the Hoover committee points out, goes beyond the recommendations of the Hoover Commission. Those are the bases for my feeling, and I think that of many others who have studied the situation, as to why the committee may perhaps feel disposed favorably to recommend the resolution I have introduced, which uspend the operation of plan No. 21. y to answer any questions. I do not want to labor mmittee because of the gun under which I know you |