the committee. First, however, we desire to call the attention of the committee to one particular phase of Admiral Shepheard's testimony. Admiral Shepheard states that one of the Coast Guard's grounds for its opposition to licensing is that: "It would be a most difficult thing to police on our part. We can police what the National Cargo Bureau is doing because they have a centralized agency (p. 39).

This, we submit, is the real explanation of the Coast Guard's opposition to licensing and to fair and equal treatment for all qualified surveyors. Obviously, it would be far more simple for the Coast Guard to have the grain loading functions confined in the hands of a single association such as National Cargo Bureau, Inc., so that Coast Guard policing could be limited to periodical checks at the top level through the New York office of that concern. But simplicity in Government administration is certainly not a justification for Government favoritism to one private concern to the exclusion of others with the impetus toward monopoly which such favoritism provides. If Congress were to sanction any such attitude we would soon become a country of monopolies. The mere fact that a private business must be regulated or policed does not mean that that business must be concentrated in the hands of a single organization so that it will be easier for the Government to do the policing. If private enterprise, as we know it, is to continue, Government regulation must be on the basis of equal opportunity for all who are qualified and not merely on the basis of expediency in Government administration. Clearly, the licensing of qualified, independent surveyors is the answer in the present case.

2. Mr. McDowell has accused us of presenting a "distorted and beclouded version of the situation" to the committee. We owe it to ourselves and to the committee to set the record straight with respect to these matters. In the first place, we respectfully request a careful analysis of Mr. McDowell's own testimony. Although he makes broad charges about distortions, when he gets down to stating actual facts, his broad charges boil down to little more than a quibble over words. For example, Mr. McDowell asserts that our statement that National Cargo Bureau, Inc. "has taken" the accounts of a particular private surveyor is a "ridiculous distortion" because, he states, one of the accounts subsequently went out of business anyway, and because the other account was not "taken" by National Cargo Bureau, Inc., but came "voluntarily" from the ship operator (p. 110). Where National Cargo Bureau, Inc., holds itself out to perform the same cargo survey services as the private surveyor, and when the shipowner, although fully satisfied with the services received from the private surveyor, transfers his account to National Cargo Bureau, Inc., most certainly that account has been taken. This is exactly what happened. We refer the committee to the statement, heretofore filed with the committee, of Capt. Robert Owen, who was an established Los Angeles surveyor. We also refer the committee to the statements of Captains J. A. Jacobsen, G. E. Lapsley, I. N. Hansen, and John Hayes which have been previously filed with the committee. The following is a partial list of the shipping lines whose accounts have been lost by the private surveyors to National Cargo Bureau, Inc., at one or more Pacific ports: Mitsui Line, N. Y. K. Line, Maersk Line, Orion Steamship Co., American President Lines (grain and other bulk loadings), American Hawaiian Steamship Co., Luckenbach Steamship Co., Johnson Line (grain), and Pacific Far East Line.

3. Mr. McDowell says time and again that National Cargo Bureau, Inc., "has not solicited business" (pp. 106, 112). He does not deny, however, that National Cargo Bureau, Inc., is willing to accept any and all cargo survey business which comes its way, so that whether or not there is active solicitation is not the vital issue. With the favoritism which National Cargo Bureau, Inc., has received from the Coast Guard and the Maritime Administration, with National Cargo Bureau's reputation for flexibility of regulations and with its membership of representatives of the shipping industry, National Cargo Bureau has enough competitive advantages so that it does not have to solicit actively. As a matter of fact, however, notwithstanding Mr. McDowell's assertions, National Cargo Bureau has engaged in active solicitation. In San Francisco, for instance, Captain Kane, its chief Pacific coast surveyor, called on all or a great majority of the ship operators. The persons called upon included Mr. Ed. Senter, who was marine superintendent for Grace Lines, Colonel Briggs, of the Army board of embarkation, and many

others.

There has been an understandable reluctance on the part of operators who were called upon to disclose the extent of Captain Kane's solicitation, but we have been advised by the two mentioned above that Captain Kane, when he called upon them, stated in substance that he represented National Cargo Bureau,

Inc.; that this organization, working with or sponsored by the Coast Guard, had the inside track on cargo survey work; and Captain Kane indicated that the operators would be well advised to give National Cargo Bureau, Inc., their business. Captain Kane, when questioned by a private surveyor with respect to these interviews, stated that he was just renewing old friendships; but some of the people on whom Captain Kane called had never met the gentleman before. 4. Mr. McDowell states that in the protest we distorted the facts when we stated that National Cargo Bureau, Inc., had "expanded" its staff of surveyors on the Pacific coast (p. 111). This committee should know if there is any misleading here, it is by McDowell. We refer first to a statement made by Joseph Cerina, secretary of National Cargo Bureau, Inc., in a letter of July 14, 1953, to Congressman Allen:

"It might be of interest to mention that the NCB has in its employ on the Pacific coast 8 surveyors, 4 of whom were cargo surveyors, prior to the formation of the NCB and the other 4 former members of the Pacific coast shipping industry." Although Mr. McDowell asserts that our use of the word "expanded" is misleading, it may be noted from a careful study of his testimony that he does not specifically deny the expansion. He states, however, that National Cargo Bureau, Inc., now has 8 surveyors on the Pacific coast, as compared with 9 who were employed by its predecessor, the San Francisco Board of Marine Underwriters. If this statement is intended to convey to this committee the impression that National Cargo Bureau has not expanded from the San Francisco board, then it is itself a misleading distortion if there ever was one. The eight surveyors employed by National Cargo Bureau, Inc., are engaged practically full time in cargo survey work (except to the extent of the administrative and other functions of their deputy chief surveyor). On the other hand, the nine formerly employed by the San Francisco board devoted a large portion of their time to survey work other than cargo survey work. In addition to cargo survey work, the San Francisco board surveyors undertook a variety of marine survey business, including yacht surveys, surveys of pier damage, fishing boats, etc.

Mr. McDowell's own statement demonstrates that cargo surveying work was only a portion of the work of the San Francisco board surveyors. He states that National Cargo Bureau employed one of the board surveyors at Seattle; that the board preferred to keep the "other men" (p. 111). The other surveyors were kept to carry on other types of survey work which the board conducted and still conducts. The same thing, according to Mr. McDowell's statement, occurred in San Francisco. National Cargo Bureau, Inc., took one of the board surveyors and the board kept the others for its other work.

Also, the board had no cargo surveyor at all in Los Angeles, and National Cargo Bureau, Inc., now has one who is obviously doing work formerly handled by private surveyors (p. 111). It is interesting to note in this connection that Los Angeles ships practically no grain, so that the work of this surveyor is in other fields of cargo work. It should also be noted that Mr. McDowell, in his statement, specifically refers to "expansion of some of our activities in Los Angeles Harbor" (p. 116), and that the National Cargo Bureau business in Los Angeles has expanded to the point where a single surveyor cannot handle it all and National Cargo Bureau, Inc., has requested assistance on a part-time basis from at least one private surveyor (p. 116).

Thus, National Cargo Bureau, Inc., has in fact expanded substantially beyond the cargo survey work of the San Francisco board. The cargo survey work of the San Francisco board did not utilize more than half of the time of its staff of surveyors. Hence, with the number of National Cargo Bureau surveyors devoting full time to cargo survey work, being approximately the same as the total number of surveyors of the San Francisco board who did not devete more than half time to this work, it is clear that National Cargo Bureau, Inc., on the Pacific coast has approximately doubled the cargo survey business of its predecessor. 4. In response to one of the committee's questions Mr. McDowell stated that passage of the proposed bill would not result in any enlargement of the staff of National Cargo Bureau, Inc. His basis for this statement should be called to the committee's attention. National Cargo Bureau has already enlarged its staff as set forth above and has already taken over all or most of the grain loading survey work pursuant to the regulations and directives which the Coast Guard has issued even without the congressional approval which Senate bill 602 in its present form would provide for. For these reasons it is fairly apparent that passage of the proposed bill would not require any further enlargement. It is interesting in this connection, however, to note Mr. McDowell's precise answer to the committee's question. It was:

"For the purpose of S. 602, which is limited to grain, the answer to your question is 'No'" (p. 113).

Here again we see the handwriting on the wall. Grain is only the first step. In addition, the Coast Guard has also favored National Cargo Bureau, Inc., with respect to dangerous cargoes. Soon there will be nothing left for the private

surveyor.

5. Mr. McDowell accuses us of distortion with respect to the number of marine surveyors engaged in cargo-survey work. In our written statement to this committee we refer to approximately 35 surveyors engaged in such work. In our protest we stated that cargo survey work provided a business for more than 25 full-time surveyors. This is no discrepancy, since some of the 35 mentioned in our statement to the committee engaged in other forms of marine survey work besides work on cargo. The 45 surveyors who joined in the original protest included some not actively engaged in cargo survey work, but who recognized the danger to the whole marine surveying profession.

These figures were not intended to indicate the number of surveyors who have to date been put out of business completely by National Cargo Bureau, Inc. So far as we know there have only been three who have been put completely out of business. But whether 3 or 300 or 30,000, the principle is the same, and the danger to the others who have so far managed to hang on is clearly demonstrated.

We

6. Mr. McDowell takes exception to our statement that the membership of National Cargo Bureau, Inc., is composed largely of shipping and underwriting interests. This, he indicates, is a distortion. He bases this assertion upon the fact that the membership of the corporation under New York law is composed of individuals rather than shipping companies and underwriting concerns. wonder who pays the dues or assessments levied upon these individuals if it is not the underwriters and the operators whom they represent; or, if the dues and assessments are nominal, how are the multitudinous operations of National Cargo Bureau, Inc., financed except out of the proceeds of its cargo-surveying operations?

Admiral Shepheard was a great deal more frank with the committee than this. He stated specifically in his testimony that the directorships of National Cargo Bureau, Inc., except for representatives of the United States Government, are filled by representatives of the shipowners and underwriters.

7. As further evidence of Mr. McDowell's insincere approach to this committee we quote his statement:

"I would be very happy to submit full reports. Our life is an open book, Mr. Chairman. You may have anything you want just as the private surveyors may" (p. 117).

Last year, at the meeting with Mr. McDowell in San Francisco, the private surveyors requested information as to certain internal reports and records of National Cargo Bureau, Inc. Frankly, this request was made because certain private surveyors had received information which indicated that such records definitely disclosed the expansionistic intentions of National Cargo Bureau, Inc. This request for information was denied by National Cargo Bureau, Inc. Of course, National Cargo Bureau, Inc., as a private concern, had a perfect right to deny such information to any outsider, particularly a competitor. We merely cite this fact to demonstrate that Mr. McDowell is not wholly sincere when he says that National Cargo Bureau, Inc., is "an open book" and that the private surveyors can have anything they want.

8. Mr. McDowell takes exception to the statement in our protest that he, McDowell, refused to put out a memorandum which would correct abuses and avoid misunderstandings as to the functions and purposes of National Cargo Bureau, Inc. He does not deny that he did refuse, but takes exception on the ground that "we don't recognize that there are any abuses.” We submit that Mr. McDowell has his tongue in his cheek when he makes any statement such as this.

The marine surveyors' protest stated:

"Mr. McDowell was requested to give his assurance that National Cargo Bureau, Inc., would not seek to use its ties with its ship-operator members to solicit surveying business formerly handled by private surveyors. Mr. McDowell

refused to make any such commitment" (p. 11).

Although Mr. McDowell, in his testimony, quibbles about this on the ground that National Cargo Bureau does not solicit anyway, he does not deny that it is a correct recitation of precisely what happened.

9. Mr. McDowell states that he is convinced that with time the problems can be worked out without further damage to the private surveyors in a spirit of goodwill (p. 114). This spirit of goodwill as exhibited by National Cargo Bureau, Inc., requires some examination. As an example of this goodwill, Mr. McDowell refers to discussions with private surveyors on the Pacific coast in an asserted effort to work out some solution to the difficulties. Mr. McDowell then seeks to imply that Captain Wetmore, by failing to transmit certain information broke up negotiations (p. 107). The negotiations on the Pacific coast were in the latter part of July 1953 and Mr. McDowell refers to a letter which he wrote to Congressman Alle under date of August 10, 1953. This letter mentioned the negotiations and mentioned the fact that certain information was expected from Captain Wetmore and then went on to state:

"In the meantime the directors of National Cargo Bureau met on August 6. After reviewing the 10-point proposal and hearing a report by Mr. McDowell on his discussion with Captain Wetmore, it was the sense of the meeting that there does not exist an area of agreement between Captain Wetmore's group and National Cargo Bureau."

Certainly Captain Wetmore's failure to transmit the requested information during the week or so elapsing between the last part of July and August 6 could not have been the reason for this termination of negotiations by National Cargo Bureau, Inc. Prior to the time of that letter a further meeting in San Francisco had been scheduled between Captain Wetmore and Congressman Allen with Mr. Maitland S. Pennington, who at that time was a west coast spokesman for National Cargo Bureau, Inc. Upon receipt of the advice set forth in the letter, however, Mr. Pennington advised Captain Wetmore that the meeting was canceled because in view of the position taken by National Cargo Bureau, Inc. it would be futile to pursue Captain Wetmore's suggestions any further.

10. Mr. McDowell goes on to state that again "in this same spirit of good will" (p. 116) and as a result of certain expansions of National Cargo Bureau's activities in the Los Angeles Harbor, National Cargo Bureau approached Captain Lapsley, a senior private surveyor in Los Angeles, and suggested that he undertake work for National Cargo Bureau on a part-time basis. Thus, in effect, this spirit of goodwill was manifested by an offer to give Captain Lapsley a job doing work (possibly even for the same companies) he had formerly served as a private surveyor. This might be classed as a spirit of goodwill in countries which do not recognize the vital importance of private enterprise, but certainly not in America. Suppose that a chain store, through various competitive advantages, is able to secure the customers of a corner grocery. It is not saved from possible charges of monopoly by the fact that it may offer the grocer who had been put out of business a job in one of its stores. Captain Lapsley has written us as follows about this episode:

"Captain Kane and Captain Rasmussen (Los Angeles surveyor for National Cargo Bureau) called on me about the second week in January 1954. Captain Kane asked if I would help Captain Rasmussen, should he need any assistance, in view of the amount of work he was getting. This was on top of the National Cargo Bureau taking the NYK account from me on January 1, 1954. I declined the offer, and as Captain Kane stated, he expected I would, under the circumstances. It appeared that with the measuring vacant space and also the discharging and condition surveys in addition to the loading survey was more than he could handle."

With reference to the Kenkoku Maru incident related by Captain Wetmore, Mr. McDowell states that Wetmore had been advised by him more than once that he was free to consult National Cargo Bureau, Inc. on the problems which the loading of that vessel presented, apparently without charge (p. 109). This, frankly, is news to Captain Wetmore. He has never been so advised before this. Also, it may be noted that it presents a very odd situation in Government administration for Captain Wetmore, with a lieutenant commander of the Coast Guard at his side, to have to call in a private concern in order to find out how the regulations of the Coast Guard should be applied.

Before leaving the subject of the Kenkoku Maru we desire to note Admiral Shepheard's cryptic statement at the conclusion of the hearing that the San Francisco Office of the Coast Guard "made an honest mistake" (p. 119). But whether the Coast Guard's mistake was honest or otherwise, the private surveyor lost the account.

11. Mr. McDowell refers to his paper presented to the Propeller Club in Los Angeles in October 1952 in which he stated that it was not the intention of National Cargo Bureau to overlap or conflict with existing private or Govern

ment agencies. He says that it is a distortion to contend that this was intended to refer to the private marine surveyor (p. 114). In other words, he now states in effect that "I never promised that National Cargo Bureau would not interfere with the business of the private marine surveyor; when I gave my paper to the Propeller Club I was referring to other types of private agencies." Mr. McDowell's protestations that he made no promise against interference are exceedingly interesting. We have great difficulty reconciling them, however, with his protestations that he had not interfered. If there has been no substantial interference, then why does Mr. McDowell go to such pains to point out that he never made any promises that there would not be?

Mr. McDowell was asked whether or not he took exception to the argument of the private surveyor that the Coast Guard preferences gave National Cargo Bureau a competitive advantage in other cargo-survey work. It is significant to note that he failed to answer this question (p. 119). His statement in asserted response to the question was merely a repetition of his general charges of distortions, etc. Here again Admiral Shepheard was a great deal more frank. In response to the question of whether or not official recognition with respect to grain work gives National Cargo Bureau a competitive advantage in other fields, the Admiral stated: "It definitely would" (p. 21).

12. The burden of Mr. McDowell's argument is that National Cargo Bureau doesn't solicit business (we have demonstrated that it does); that it is really just a friendly big brother to the private surveyor, anxious to live and let live. But when National Cargo Bureau accepts, as it has, accounts formerly handled with complete confidence by the private surveyor, it becomes clear that the private surveyor might just as well try to live with an octopus, friendly or otherwise.

In addition to this memorandum we are transmitting to the committee as supplemental material factual statements of additional incidents in which the Coast Guard policy of encouraging the use of National Cargo Bureau, Inc. has resulted in the private surveyors' loss of his accounts.

Copies of this statement and of the additional material have been transmitted to National Cargo Bureau, Inc. and to the Coast Guard. We have not received from the Coast Guard or from National Cargo Bureau, Inc. any of the supplemental material which they are furnishing to the committee and this statement does not purport to be a reply to any such supplemental material. If this supplemental material raises any question in the mind of the committee as to the position of the private marine surveyor with respect to this bill, we respectfully request that such question be called to our attention.

Dated: April 2, 1954.

PACIFIC COAST CONFERENCE OF MARINE SURVEYORS, By R. H. WETMORE, Secretary.

PACIFIC COAST CONFERENCE MARINE SURVEYORS, INC.,
San Francisco, Calif., April 9, 1954.

Re Senate bill No. 602
Mr. DONALD D. WEBSTER,

Special Counsel, Subcommittee on Water Transportation,
Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

DEAR MR. WEBSTER: We are enclosing herewith, for such consideration as the committee may see fit to give it, a copy of a letter of August 24, 1953, received from L. C. Perry, cargo surveyor in Seattle of 24 years' experience. This letter describes another example of the manner in which the Coast Guard has encouraged use of National Cargo Bureau, Inc., by refusing to approve loadings handled by the private surveyor, even though the Coast Guard recognized that such loadings would be approved by the National Cargo Bureau, Inc., and was perfectly willing to leave the ship and let National Cargo Bureau, Inc., do this.

We regret that time has not permitted the assembling of complete data with respect to other instances. If possible, we request that the enclosed letter be made a part of the record.

Sincerely yours,

PACIFIC COAST CONFERENCE OF MARINE SURVEYORS, By R. H. WETMORE, Secretary.