that are vital to other segments of the American economy, it greatly weakens us when we go around to foreign offices and protest, if they just point to our 50-50 provisions

Senator POTTER. If we got a 50-50 break with our so-called allies, I think we would be getting a good break.

Mr. KLEMMER. You wouldn't expect me to comment on that. That is why the State Department has felt they had to oppose this in the beginning.

Senator POTTER. I didn't mean to embarrass you on it. I do think you recognize the problem. I hope you will report it back to the policymakers in the Department of State, that I know as far as the thinking of this committee is concerned, and I think you will find it is as far as the Congress is concerned, that they will continue to insist upon a 50-50 percent requirement for the use of American bottoms.

Mr. KLEMMER. We are doing our best to live with it. If you continue the legislation, we will continue to try to live with it.

Mr. DREWRY. Mr. Klemmer, I don't recall whether you stated your capacity with the State Department or not.

Mr. KLEMMER. I am the Deputy Director of the Office of Transport and Communications. We ride three horses there, aviation, shipping, and telecommunications. Sometimes we think they are all going at different directions at different times.

If you get around to 50-50, the foreign countries are very eager to have 50-50 deals on aviation. They don't hesitate to use the 50 percent thing on aviation.

Senator POTTER. If they were sending the goods over to us free, maybe they could get it.

Mr. KLEMMER. We have tried repeatedly and consistently to point out that grants-in-aid are not foreign commerce.

Senator POTTER. No, as a matter of fact, you can't expect the American people to carry on a foreign-aid program which, in my personal view, has a great deal of merit, and some of that shipping would be shipping in normal trade which our own merchant marine would be carrying.

For our Government to be financing the program, and then to allow this transportation medium of our merchant marine to die out, doesn't make sense.

If you heard the Department of Defense people that testified befor you, we are lacking in our target of the merchant marine that we should have for national defense purposes. Certainly, we want to get all the commerce that we can to provide that defense. It is a big problem.

I know of no other transportation field which is faced with as serious problem today as the merchant marine. That is the reason for the subsidy program. Certainly, we are spending money on the one hand to maintain the merchant marine with a subsidy program, and the least we can do is to say that 50 percent of the goods that we are sending over there with the aid program be carried in American bottoms. I think that is the general conception of the Congress; it has been in the past.

Mr. DREWRY. Mr. Klemmer, you have been associated with the merchant marine problem for quite some time, haven't you?

Mr. KLEMMER. Yes; I think about 25 years, Mr. Drewry, including 4 years as a sailor. I am always proud of that. I think I am one of the few sailors in the State Department.

Senator POTTER. They are making more money today.

Mr. KLEMMER. They certainly are. We were glad to get $72.50 in World War I.

Senator POTTER. They tell me that an average merchant marine man today is getting about $600 a month.

Mr. KLEMMER. I don't think the average would run that high. But AB's are $5,000-a-year men, and possibly $6,000. It is going to cause us to come to a crisis, I should think, one of these days.

Mr. DREWRY. You remember the various elements that are subsidized for the purpose of operating subsidies, wages, maintenance and repairs, subsistence, insurance and stores?

Mr. KLEMMER. Yes.

Mr. DREWRY. Have you any comment to make whether or not, in your opinion, and from your experience in gathering this data on the other side, whether the reason for continuing to subsidize all of those items continues or could some of them be discontinued at this time? For instance, is subsistence more or less an expense here or abroad, in view of American production methods in the preparation of food,

and so on?

course.

Mr. KLEMMER. This doesn't concern the State Department, of But my personal views on that, having lived with this for many years, are that the differentials in the other fields besides wages aren't sufficiently important to justify the amount of work that has to go into the calculations of these differentials.

If we could get this thing down to a wage differential only, the cost-collecting problem would be greatly simplified, of course. Wages are quite easy to handle, the wage differential, that is. But when you get down into subsistence, you are really up against an impossible calculation, because we not only have to find out what cabbages, and whatnot, cost all over the world, and then that figure is meaningless unless you know where they buy them. It doesn't matter what a thing costs per pound in the United Kingdom if the man in the United Kingdom stops en route.

The thing has gotten so complicated that we are now trying to find out not only what they pay, but the different ports from which they buy them, the percentage that they spend in the different ports, and, it seems to me, it is just too complicated.

Senator POTTER. You mentioned about discrimination, that you were asked to work with other governments in an effort that they don't discriminate against our shippers. Are you familiar with the insurance program? I think the Department of State has been asked, in the past, to work with foreign governments to eliminate the discrimination on insurance.

Mr. KLEMMER. I am not familiar with that, Senator. I wonder if Mr. Mann might have worked on it in London?

STATEMENT OF JOHN MANN, MEMBER OF SHIPPING POLICY STAFF, DEPARTMENT OF STATE

Mr. MANN. I didn't work on that in London. I have heard some of the sound and fury. I think the trouble is by reason of certain countries stating that insurance on cargo would have to be purchased in their market. I believe the Argentine is one. Although I have been abroad, I can only speak to you from what I have read.

Senator POTTER. I don't know how prevalent it is. I have heard that some of the countries require the insurance to be placed in their own country. Normally, you consider shipping insurance as a worldwide market on a competitive basis. I was just wondering if you had any contact in that field.

Mr. KLEMMER. I haven't worked on that. We have a little statement here which you might want to have in the record. It deals with what the Department has done since April 1952, when Senator Magnuson held his hearings on discrimination.

I had a brief statement prepared on what we have done during this ensuing year about some of these discriminations that he was concerned about.

Senator POTTER. We will be glad to have that.

Mr. KLEMMER. This is a summary of efforts made by the Department of State since April 1952, to obtain the removal of foreign discrimination against United States shipping:

Argentina: Discussions with Argentine officials on May 8, 1952, revealed that previous representations by the Department had effected the removal of certain discriminatory Argentine port charges. Decree No. 26224, effective January 1, 1952, established the same level of fees for Argentine and foreign vessels in entrance fees, light and health dues, permanency dues, and wharfage and anchorage-in-road dues. This fact was not brought out at the 1952 Senate hearings on foreign discriminations against United States shipping. This information was furnished by letter from the Department to Senator Magnuson on June 18, 1952.

In February 1953, the Department concurred in the Maritime Administration's denial of a waiver to the provisions of Public Resolution 17 with respect to a $5 million loan by the Export-Import Bank to the Sociedad Minera Argentina. This action was taken in view of the remaining Argentine discriminations against American shipping.

Brazil: On April 2, 1952, the American Embassy at Rio, upon instructions from the Department, strongly protested the renewal of discriminatory Brazilian berthing regulations. As a direct result of these representations, the berthing privileges accorded to Brazilian vessels were suspended on April 4, 1952.

Prolonged negotiations with Brazil have resulted in a recent understanding aimed at resolving outstanding shipping problems between the United States and Brazil. On January 6, 1953, berthing preferences and the exclusive use of warehouses for Brazilian vessels were cancelled by administrative action. There is reason to believe that the Brazilian Government will seek to permanently eliminate berthing as well as other discriminations by the initiation of necessary legislative action.

Canada: On April 30, 1952, the Department instructed the American Embassy at Ottawa to protest once again the compulsory assessment of pilotage dues at ports in the British Columbia pilotage district. The Canadian Department of External Affairs reiterated its previously expressed views that its pilotage regulations do not depart from the principle of parity of treatment and therefore do not constitute a discrimination against American vessels.

Ecuador: Efforts to eliminate Ecuadoran discriminations against United States shipping by negotiation of a treaty of friendship, commerce and navigation have not been successful.

In July 1952, the question of Ecuadoran shipping discriminations was brought to the attention of the Minister of Foreign Affairs by the American Embassy at Quito. On May 1, 1953, the Department instructed the American Embassy to make known to the new Ecuadoran Government this Government's concern over the discriminatory consular fee regulations enforced by Ecuador and to request their removal.

France: In July 1952, the Department instructed the American Embassy at Paris to bring once again to the attention of the French Government this Government's concern over the compulsory use by American vessels of "courtiers maritimes," or licensed customs brokers at French ports. These representations were renewed by the Embassy in December 1952.

The compulsory use of "courtiers maritimes" has also been brought to the attention of French authorities with respect to a request for a waiver to P. R. 17 in connection with a $45 million Export-Import Bank credit to France for the purchase of cotton. Extensive negotiations have been carried on by the Maritime Administration and the Department in this regard. As a result of these efforts, the French Government recently made a slight modification of this regulation. The Department is continuing its efforts to entirely relieve American ship operators from the extra expense of this practice.

Spain: In April 1952, the Department concurred in the Maritime Administration's decision to deny a waiver to P. R. 17 in connection with a $12 million Export-Import Bank loan to Spain. This position was taken in view of the failure by Spain to eliminate certain discriminatory exchange regulations.

Following prolonged negotiations by the Maritime Administration and the Department with Spanish authorities, a waiver was granted to P. R. 17 in June 1952, in view of a Spanish decision to permit American carriers to collect freight in pesetas to the extent of their annual port and administrative expenses in Spain. However, this decision was not implemented by Spanish authorities until December 1952, and only after representations were made by the American Embassy at Madrid. The Department is continuing its efforts to achieve equitable treatment for United States shipping in Spain.

Mr. DREWRY. I think Senator Magnuson is sorry not to be here and to be able to go into that with you.

Mr. KLEMMER. Discrimination is one place where the State Department agrees with you 100 percent. We are very much against them. We would do everything humanly possible to get rid of them. Senator Magnuson pointed out in his hearings, you stop one here and it pops up somewhere else. We have it in other fields, too. We have

it in the aviation field. We just resist these things everywhere. As soon as you get one cured, somebody thinks up another one.

The final answer, of course, and the best answer, is in the negotiation of treaties of friendship, commerce and navigation with as many American countries as possible. We are going ahead and continuing to negotiate additional treaties. Those move very slowly.

Senator POTTER. We are allied with several Western European countries in our NATO agreement to pool resources for defense purposes in Western Europe. Have we done anything about poolingin the case of an emergency-our merchant marine fleet?

Mr. KLEMMER. Yes; we have this North Atlantic Planning Board for Ocean Shipping project. If you would like, I have a short statement, a page and a half, that I could give you on that. It is unclassified.

Senator POTTER. We will be glad to have that.

Mr. KLEMMER. In accordance with its directive from the North Atlantic Council, the North Atlantic Planning Board for Ocean Shipping (PBOS), which was created by the Council in May 1950, has agreed on an outline plan for the mobilization of oceangoing shipping in a single pool and its allocation on a worldwide basis in time of war or wartime emergency, and for the establishment in such circumstances of an international organization of a civilian character to be known as the Defense Shipping Authority.

The objective of the Defense Shipping Authority would be to insure that shipping is so organized as to achieve the greatest possible economy in its employment and to render it effectively and readily available to meet the needs, both military and civil, of the cooperating nations.

The main principles which would govern the operation of the Defense Shipping Authority are that each participating government should, in war or wartime emergency, take all the oceangoing merchant ships of its own flag under its own control and place them in a central pool for allocation to employment by the Defense Shipping Authority. Each government would insure that the ships under its control carry out the tasks allotted to them by the Defense Shipping Authority. The arrangements between each government and its shipowners would be the domestic concern of that government, but would be of such a nature that individual owners would have no direct interest in the financial results of the employment to which their ships were allocated. For the purposes of day-to-day allocation, 2 branches would be established, 1 in Washington and 1 in London, with all participating governments having the right to be represented in both branches. While the pool of shipping would be operated as a single unit, the branch in Washington would deal primarily with shipping and the demands for shipping services of the Western Hemisphere and the London branch would deal primarily with shipping and the demands for shipping services of the Eastern Hemisphere. It is intended that, should the Defense Shipping Authority be brought into being, non-NATO countries which participate in the common effort should be invited to place their oceangoing merchant ships in the pool and become members of the authority.

The underlying principles of this plan, which have been carefully studied and analyzed in the Planning Board for Ocean Shipping by the