[P. 12] "Mr. RADNER. I would say that the Olsen case is peculiar only to the extent that we are dealing only with the charterer who took a licking in complying with our request. And those are relatively few. I do not know of any other case where a similar claim has been filed, but I suppose there may be some other cases where the people lost money.'

[P. 17] "Mr. RADNER. The position of the Maritime Commission and of the War Shipping Administration is that claims of this nature should not be allowed. On the other hand, we recognize that what we have here is really a question of policy on which the final determination is for the Congress and not for the administrative agencies

* * * ""

[P. 18] "Mr. RADNER. It is the well-established policy not to indemnify a man for the loss of profit that he would have made because the Government requisitioned in the war effort. We have a great many such cases * * *""

[P. 19] "Mr. RADNER. Mr. Olsen's argument is that he is not in that class, and it is unfair to classify him in that way. He is not complaining about the money that he would have made. He says, 'If I were allowed to carry on my business I might have made a hundred thousand dollars over the $49,000 that I lost. I am not asking for the $100,000, but just for the $49,000'."

[P. 20] "Mr. RADNER. What favorable action on this claim would mean, as I construe it and I think it is very important that if the committee does act it should narrow the significance of the precedent as far as possible. I take it that the committee's action would be effective in advising claimants that if by reason of the action of the Government they had actually sustained a loss and had actually gone into the red, as distinguished from a loss of profits, that claims of that kind would be favorably received."

[P. 21] "Mr. PITTENGER. Do you know whether or not there were any other people who were caught like Mr. Olsen was caught, where he was practically directed by the Maritime Commission to make this voyage, where the rate of money that you would pay for the rental of the ship was fixed by the Commission and where the charges that he could make for carrying the cargo were fixed by the Commission?"

[P. 21] "Mr. RADNER. I will say that I do not know of any case where the facts comparable to the Olsen case are also presented. The essential facts there are, first, that we are dealing with a time charterer and not with the owner; second, that the amount of revenus on the voyage that we directed him to take resulted in a loss."

[P. 27] "Mr. SAUTHOFF. The Government's position is that, in the first place, Mr. Olsen is not entitled to anything? Is that right?

"Mr. RADNER. Our position is that certainly he is not legally entitled to it. So far as the moral position is concerned, that is something for the committee to pass upon. But we recommend denial of the claim.

"Mr. SAUTHOFF. You take the attitude that in equity he is entitled to nothing, do you? "Mr. RADNER. No,, sir. We have not taken the position that he is not entitled

to anything in equity.'

[P. 28] “Mr. SAUTHOFF. Then you are merely standing upon the fact that the Government does not owe him legally, do you?

"Mr. RADNER. It is that the Government does not owe him.

"Mr. PITTENGER. There is no way in which he can go into the courts and collect, is there?

"Mr. RADNER. There is no way in which he can go into the courts. Possibly a fair interpretation of the position is that the official position is that regardless of the equities that there may be in favor of claimant, as a matter of policy we are not recommending that the committee approve this claim. That is a question of policy upon which the final judgment is for Congress and not for us. That is our position, gentlemen."

From the foregoing testimony it is quite obvious that the Maritime Commission did not want to go on record as having recommended the payment of a claim like this. On the other hand, Mr. Radner, chief counsel for the War Shipping Administration, repeatedly stated his opinion that this was a case where it was up to Congress to act as I had no legal rights on which suit could be brought in the courts. Mr. Radner also stated that so far as he knew this was the only claim of its kind which had been filed. It is reasonable to assume that if other charterers had been caught in a similar situation such as mine, a claim would have been filed long ago. In April 1942, almost 3 years ago, the entire American Merchant Marine was requisitioned, so that claims involving a time charterer

like myself cannot have occurred since that time. Congressman Anderson, in his statement to Congress (Congressional Record, p. 9619, December 14, 1944, exhibit 8), said:

"Fortunately it appears that this is the only case where a real inequity developed." It is my understanding that he made this statement on the basis of information he received from the Maritime Commission itself, so that as of the middle of December 1944, my claim was still the only one on file with the Commission and can hardly, therefore, be considered a precedent for similar claims to come from other charterers. I doubt, too, that passage of a relief bill, such as mine, would be considered a legal precedent by the courts.

B. DEGREE OF COMPULSION

The President, in his memorandum of disapproval, states, as one of his reasons for disapproving the bill, that I was not legally bound to make the voyages on which these losses occurred. I do not believe that even today, more than 3 years after these voyages were made, the courts have decided whether or not the Maritime Commission in 1941 had a legal right to compel a ship owner or operator to perform certain services. On the other hand, it is to the credit of the American shipping industry that the ship owners and operators placed the welfare of this country above legal technicalities. Whether or not the Maritime Commission had legal rights, they certainly talked and acted as if they had the necessary legal rights. Nowhere is there any evidence that the Maritime Commission merely asked me to volunteer to make these Brazilian voyages. They were most definite in their insistence that I make these trips.

The proclamation of a national emergency of May 27, 1941, gave the Commission specific control over all American merchant shipping. From that time on all operators were required to submit all freighting contracts to the Maritime Commission for approval. On exhibit 3 you will find a complete abstract of all the voyages which were made by me subsequent to May 27. The system was for me, or for my brokers, to make tentative arrangements with prospective shippers of cargo and submit the contract of affreightment, or whatever form these charters took, to the Maritime Commission for approval. Mr. Vincent Ajello, then of the States Navigation Co., New York, now with the War Shipping Administration in Washington, was at that time my authorized broker and recognized as such by the Maritime Commission. If you will refer to Mr. Ajello's affidavits you will note that the Maritime Commission did not seem to have any doubt about their legal authority. For example, Mr. C. H. Helmbold in a telegram quoted in one of these affidavits (exhibit 7, p. 2, italics supplied)

says:

11* * * It is understood that following discharge of sugar vessel will be available carry full cargo coal Rio de Janeiro returning with full cargo ore.

* * *

That was in connection with the Stanley Griffith. It was only after other cargo proposed by the Commission, not me, was found to be unavailable that the Commission permitted us to carry sugar from Cuba to Philadelphia, and then only on condition that the vessel would immediately thereafter be sent to Brazil. In connection with the James Griffith a similar situation arose. I had closed the vessel for a cargo of phosphate but I was compelled by the Maritime Commission to cancel these arrangements and in lieu thereof to take sugar to the North Atlantic, again with the understanding that the vessel would be made available immediately thereafter for a voyage to Brazil. Illustrative of the stand being taken during this period by the Maritime Commission, I quote below excerpts of teletype messages exchanged by Mr. Ajello's office in New York and my Head Office in San Francisco:

October 15, 1941, Mr. Gibson, assistant to Mr. Ajello, to our San Francisco office; "Heres the story we closed Jamg (James Griffith) for phosphate however at noon today Washington (Maritime Commission) called Vince (Vincent Ajello) and notified him that ship (James Griffith) would only be allowed to take sugar from northside Cuba to Philadelphia therefore Vince conferred with Cap (Capt. S. Olsen) and as result he just left office going to Washington to battle it our personally with Commission

And again, no November 10, 1941:

* * Mike Darr (Maritime Commission) stated Commission would not approve consecutive trips on sulfur And again, in the same teletype:

H. Repts., 79-1, vol. 1- -51

"However Mike Darr states that the James G is scheduled to load ore from Rio in December * *

And, once more:

66*

back

* * Mike Darr
* * * ""

said ship earmarked for coal to Rio and ore

The authority vested in the Maritime Commission for the control of merchant shipping through the National Emergency Act was further amplified by the passage of the Ship Warrants Act on July 14, 1941. Under this last-named act the Maritime Commission was authorized to withdraw from a noncooperative ship operator all essential ship services; tugs, pilots, stores, fuel, etc. It should be quite clear to anybody that withdrawal of such services could have only one effect; namely, the complete immobilizing of the vessel. The Commission had a further right to requisition the ships, but as you will note from the testimony I am quoting below, the Commission was keeping this authority as a club in the closet and, in fact, did not want to exercise this power until they had accomplished a general rate revision downward.

Admiral Land, in his report of February 15, 1944, to the House Committee on Claims (H. Rept. 1579, p. 7, par. 4) says:

"He could have refused to undertake the voyages in question as requested by the Commission, and the vessels were, of course, subject to requisition by the Maritime Commission at any time subsequent to the Pesidential declaration of unlimited national emergency of May 27, 1941."

At the hearing before the House Committee on Claims, March 30, 1944, attended by Mr. William Radner, general counsel for the War Shipping Administration, and Mr. James L. Pimper, assistant legislative counsel, considerable testimony was devoted to this phase of the claim. I quote a few examples from the copy of the transcript (exhibit 6, italics supplied):

[P. 6] "Mr. RADNER. Other actions of the Commission caused him to loss more than the amount he saved."

[P. 7] "Mr. RADNER. The Presidential declaration of unlimited national emergency gave the Commission the power to requisition ships. That was the club in the closet. * * *""

[P. 8] "Mr. RADNER. The requisitioning was delayed purposely in order, among other reasons, to take advantage of the reducing market value that were being established in the manner I have outined.

*

[P. 9] "Mr. RADNER. The Maritime Commission was charging the merchant fleet in a manner consistent with the intersts of the United States, which meant that it was charged with the duty of directing the movement of ships so as to bring into the United States cargoes which were necessary for national defense purposes first * *. That is why, when Mr. Olsen came to the Commission and said that he wanted to carry sugar and coffee, I believe, or some higher-paying cargoes, the Commission said, 'No; we have enough of these higher-paying cargoes in the United States now, and it is your turn now to carry some coal and some ore.' Had Mr. Olsen refused to do so, of course the Commission had the legal power to requisition the ships. That would have frustrated effectively his charter and terminated it at that date. I do not think Mr. Olsen even threatened to refuse if I might put it that way. I think his disposition was to cooperate. I was not here at the time, but the record does not show that he indicated any lack of cooperation in the matter of these commodities that he was to transport."

[P. 23] "Mr. PITTENGER. When does that general supervision start? "Mr. RADNER. It is rather difficult to trace it. I do not have the exact figures, but I would say the end of the first quarter of 1941 would probably be a good starting date. It started informally and then developed gradually.

"Mr. PITTENGER. In other words, it was all off the record, but everybody knew that they would better behave and do what you folk told them to do?

"Mr. RADNER. That is right. As a matter of fact, that is how it was."

[P. 35] "Mr. RADNER. The Ship Warrants Act became effective on October 2, 1941. There is no question about our legal authority from that date on.

I cannot understand by what reasoning the memorandum of disapproval (example 9) makes the assertion that I was not legally bound to make these voyages. The testimony quoted above seems to indicate that there was no question of legal authority and, that in fact my concurrence was not asked and that I had no choice.

C. OVERHEAD

In their report to the Committee on Claims dated February 15, 1944 (H. Rept. 1579, p. 7) the Maritime Commission in paragraph 5A takes exception to my having included in my claim overhead for the period of the Brazilian voyages at

the rate of $75 per day per ship. In my statement of March 11, 1944 (H. Rept. 1579, p. 11, par. VI), I have already stated my reasons why I think overhead is a legitimate item of expense. Since then considerable testimony was brought out on this subject during the hearings before the House Committee on Caims on March 30, from which I quote (exhibit 6, italics supplied):

[P. 15]" Mr. PITTENGER. Do you folk have any definite figures on that or do you accept the audit made by the certified public accountant?

"Mr. PIMPER. There are two questions. The first question is as to the amount of overhead which for the most part, does not seem to be out-of-pocket expenses. The rest of it is.

"Mr. RADNER. He has charged $75 a day overhead, which works out at about $10,800 in his claim. That might be a debatable item.

"Mr. PITTENGER. Does not that amount represent the actual expenses on this trip as covered in the audit of the certified public accountant?

"Mr. PIMPER. No, sir. That is just a figure which he took as an estimate of what the amount of the overhead should be with reference to these two ships. It is not a specific sum of money which was actually expended by Mr. Olsen. "Mr. MURPHY. It is not an out-of-pocket expense?

"Mr. PIMPER. No, sir; it is not entirely an out-of-pocket expense.

"Mr. MURPHY. It is loss of profit which he expected to make?

"Mr. RADNER. Yes, sir; it is partially.

"Mr. PITTENGER. You say 'partially.' Does not that $75 a day represent incidental expenses or money paid out by Mr. Olsen?

"Mr. RADNER. Undoubtedly Mr. Olsen had some overhead expense. know what it was.

I do not

"Mr. PIT TENGER. It might be entertainment, might it not? "Mr. RADNER. Yes, sir; or office rent, executives and all that sort of cost. Under sound accounting practice a fair proportion of his total overhead should be charged to the voyage results in order to determine whether or not there was a profit or loss. On the other hand, you can say that this overhead expense would have gone on whether or not he had engaged in this venture. So from the point of view of giving the man relief you might question the advisability of using that item.

"Secondly, as to the amount of that item, he has taken $75 a day because that is a figure universally recognized as being a fair overhead during 1941 for freighter operations. But some companies operate at less and some at more. Whether

or not that is a fair actual overhead for his company I do not know; and I do not know that the auditors have certified what their figure for actual overhead would be.

"Mr. PITTENGER. I do not know that they have.

"Mr. RADNER. I do not know either way.

"Mr. MURPHY. We are off on a tangent, I think, since we are discussing the amount of the claim instead of whether or not there should be a claim.

"Mr. RADNER. It seems to me that the committee, assuming that it decides to recommend the claim favorably, should determine, first, whether or not overhead costs should be allowed at all.

"Mr. PITTENGER. But you did say a little while ago that this was the practice in these contracts.

"Mr. RADNER. It is sound accounting practice to charge a fair amount for overhead for each voyage in order to determine the net result.

"Mr. PITTENGER. You mean by other shipping companies?

"Mr. RADNER. Yes, sir; for accounting purposes.

"Mr. PITTENGER. And in making that sort of claim, Mr. Olsen was following the general practice?

"Mr. RADNER. Yes, sir. I am not saying that Mr. Olsen departed from sound practice. You have to have overhead.

“Mr. PITTENGER. Otherwise actually you would have lost the rental of office or employment of expert help, and all that stuff?

"Mr. RADNER. Yes, sir. If the committee decides to allow overhead and follow accounting practice in that connection, then the next issue is whether or not the $75 a day represents a fair actual overhead for Mr. Olsen. That matter can be determined by a C. P. A. audit."

From the above testimony it would appear that the Maritime Commission in effect admits that overhead is a necessary item of expense. They even go so far as to say that $75 a day was a reasonable overhead charge for freighter operations in 1941. Mr. Pimper, on page 15, said that the overhead included by me was not a specific sum actually expended by me. To get at the gist of this matter I have

prepared an analysis of 1941 overhead, copy of which is attached (work sheet No. 5, example 5). This analysis gives us a total charter operation for 1941 of 1,379 days, 3 hours, 55 minutes. I have also shown from my auditor's 1941 financial statement the items which would apply on overhead. The total 1941 overhead is $136,955.56. All of it is actual out-of-pocket expenses with the exception of some $2,165.23 depreciation.

This $136,955.56 total actual 1941 overhead for the 1,379 days, 3 hours, 55 minutes total 1941 charter operations results in an average actual overhead of $99.30 per ship per day. This is considerably more than the theoretical or arbitrary overhead of $75 per day I included in H. R. 2825 and to which some of the testimony took exception. Computing my total 1941 overhead at the rate of $75 per ship per day I get only $103,437.24, some $33,000 less than our actual 1941 overhead. Prorating actual and theoretical overhead over the month by month charter days, my analysis shows that for the Brazilian voyage months, beginning September 1941, the disparity of the theoretical $75 per ship per day overhead to what undoubtedly was the actual overhead, is even much greater. Having gone into these figures myself very carefully, besides having them checked by my certified public accountant, I am sure they are right and, therefore, feel confident that a study of my overhead analysis (exhibit 5) will convince the Maritime Commission that my charge of overhead at a theoretical rate of $75 per ship per day was, under the circumstances, just and reasonable.

D. PROFIT, OTHER VOYAGES

In paragraph 6 of their letter to the House Committee on Claims dated February 15, 1944 (H. Rept. 1579, p. 7) the Maritime Commission say:

66* * * If Mr. Olsen is to have relief because of compliance with Government orders in one case, all similar operations should be taken into consideration * * *

This matter was fully covered by me in my statement of March 11, 1944 (H. Rept. 1579, p. 12, par. VIII). The subsequent testimony at the hearings before the House Committee on Claims seems to indicate that the Maritime Commission is not at all specific about these so-called related ventures. The testimony is also conflicting about the exact date when the Commission assumed control of voyages, the profits of which, in their opinion, should be used as offsets. Perhaps the reason for this uncertainty lies in what Mr. Radner said in his letter to the San Francisco Marine Exchange dated November 15, 1943, and I quote (italics supplied:)

"The report is being delayed because of the press of more urgent business and the difficulty in building up a more complete record during the hectic 1941–42 operations."

The report to which Mr. Radner refers is the one of February 15, 1944 (H. Rept. 1579, p. 5). This report was requested by the Honorable Dan R. McGehee, chairman of the House Committee on Claims, May 28, 1943, but was not completed until February 15, 1944. On December 1, 1943, the War Shipping Administration requested me to submit to them operating results for the other voyages of the two Griffith ships and also for another steamer, the Lake Frances. Not knowing what the purpose of the request was, I gave them the information exactly as it appears on our voyage account books. It is our accounting practice and I believe that is true of most other shipping companies--not to debit each particular voyage with a fixed theoretical overhead or with a percentage of the actual annual total overhead. Instead my accounting department charges off overhead as a single annual item on the profit and loss statement without regard to any particular vessel or to any particular voyage.

It seems now that the Maritime Commission, in accordance with their report of February 15, 1944, have an idea that one certain voyage-more specifically, James Griffith voyage 2-Panama Canal-Peru-New Orleans with sugar-was made, to again quote from their report of February 15, 1944 (H. Rept. 1579, par. 6, italics supplied):

"In the opinion of the Maritime Commission and the War Shipping Administration all of Mr. Olsen's operations pursuant to the warrants issued by the Maritime Commission should be considered in determing the extent of relief in connection with this claim of Mr. Olsen,"

The facts, however, are that for this particular voyage arrangements were made entirely without the knowledge of the Maritime Commission and certainly not pursuant to any special warrants or orders from the Maritime Commission. Strictly in the course of our routine operations, our brokers negotiated with the