ships idle awaiting for gangs. But insofar as labor relations between the ILWU and the shipowners are concerned, they are peaceful and constructive. Senator BARTLETT. And it used to be the contrary? As I recall, it was the most vexing area insofar as labor-management difficulties were concerned. Mr. KILLION. That is true. Senator BARTLETT. Now, did this peace come about-was it because of this automation agreement arrived at between management and the unions? Mr. KILLION. I think so, Senator, yes. Senator BARTLETT. Now, I am wondering whether you in the industry have any plans at all directed to when this automation program will come into being, or perhaps you wouldn't care to discuss it? Mr. KILLION. I wish I knew the answer to that. We hope it will be within a reasonable period of time. It is the answer to the Government's problem of increased appropriations to permit Americanflag operators to meet foreign competition. It is the answer of the operators to meet foreign competition straight across the board, and I think in the long run it is the answer to the labor unions, too. Of course, some provision must be made to take care of displaced persons. When you throw several thousand men off the ships and off the docks something has to be worked out to provide them with employment or to take care of them during a period of time. Senator BARTLETT. This automation agreement entered into between industry and labor was a tremendous impact for industry, but even so has it paid dividends? Mr. KILLION. I am sorry, I was talking about the industry. Senator BARTLETT. I was talking about the ILWU. What I want to get at is the transferring of what was done on the dock to the workers at sea, to this automated ship that is going to come into being. Perhaps there is no way out; perhaps it is a better system. Mr. KILLION. I see. What you mean requires considerable study. What we did with the ILWU was in effect sort of balance the books. The ILWU agreed to do certain things if we agreed to do certain things. We set aside what we call a "mechanization fund" of about $25 million and they increased the size of the sling load. They permitted us to have the number of men needed in the hatch rather than four on and four off that was compulsory; we could have what we needed, but we had to pay into this fund. Actually, it was a removal of things that have crept into these contracts over a period of 25 or 30 years. But the techniques and the solutions that could be applied, I don't know. It would require an exhaustive study of all the aspects of shipboard automation. Senator BARTLETT. You would have to inquire into this as an industry, and labor would do so on its side, very actively in the years immediately ahead? Mr. KILLION. Yes. Senator BARTLETT. I only wish you could have given the answer, Mr. Killion, as to the means and methods and manners by which we might increase coastal trade, but I quite understand that you can't do that. Mr. KILLION. Yes. Senator BARTLETT. Before you entered the room, I read a statement relating to the competitive position of American exports in the Pacific area and pointed out that it has been suggested that the export rate is higher than the import rate. I won't ask you to comment on this at the present time, because you haven't even read the statement. I would appreciate it very much, however, if, with the chairman's permission, you would submit at a later date, if you so choose, a written statement bearing on this matter. Mr. KILLION. I would be very happy to do so, Senator. Senator ENGLE. Without objection, it will be placed in the record if you want to prepare a statement on this. Mr. KILLION. I shall be glad to do so. Senator ENGLE. Senator Douglas got up on the floor and made quite a hurrah about this problem. We can get you a copy of this for your information. When we had the dual rate bill up, Senator Kefauver was fussing about the same matter, and it seems to me that the shipping people have to be prepared to come up with some answers as to why inbound traffic bears a lower rate on comparable commodities than the outgoing rate. Now, there may be some very good reasons. I can see that sometimes rather than deadhead back it is just as well to try to get something to bring back even if you have to take it for less. I know very often the airlines do this. Flying Tiger, for instance, will fly an airplane to Europe and if they can pick up something that will help them pay the gas bill they will take it for less. Senator BARTLETT. That happens, but I think this matter ought to be analyzed with some care because this is a sticky problem with regard to the dual rates in the conferences. Senator ENGLE. Yes, and Senator Douglas and Senator Kefauver will be there with their guns oiled and loaded on this very point. Senator BARTLETT. And the Senators draw very fast. Senator ENGLE. They won't even bother; they will have it out in the open. Mr. KILLION. I will be very happy to prepare a statement. A while ago when Mr. Schuman was testifying, I commented on what I considered to be the lack of importance the State Department attached to the fishing industry. They have knowledgeable people engaged in fishery matters, but they are not on the policymaking level and they didn't tell all the stories. However, due principally to the efforts of Senator Magnuson, chairman of the Commerce Committee, President Kennedy appointed a former colleague of ours, Ben Smith of Massachusetts, to undertake the responsibility of negotiating first with Japan and then Canada in the matter of the North Pacific Treaty and then to engage in other democratic conversations relating to the fisheries. At the hour of high noon yesterday in San Francisco-the hour of 3 p.m. in Washington, D.C.-Senator Smith was flown into office with the rank of Ambassador. He will be in the State Department, but happily for the whole fishing industry he is going to be directly connected with the White House and so will be subordinate to the President rather than to others. I think this is going to be most helpful. Perhaps we will do this for the merchant marine industry. Senator ENGLE. I am glad Senator Smith was appointed. He made one of the most illuminating speeches on the floor of the Senate. I think it was his first speech he made on it. Senator BARTLETT. It was one of the best speeches ever delivered in my time. Senator ENGLE. Thank you, Mr. Killion. A large part of the destiny of the merchant marine industry lies within this committee, and I want to advise you that it is very comfortable for the future. Mr. KILLION. Thank you. (Letters and supplementary materials submitted by Mr. Killion :) AMERICAN PRESIDENT LINES, Hon. CLAIR ENGLE, Washington, D.C. DEAR SENATOR ENGLE: It was a distinct honor and privilege for me to appear before the Senate Committee on Commerce during its recent hearings in San Francisco on the Pacific trades. I thank you for the opportunity to express my views on behalf of the Pacific American Steamship Association. Since my appearance before your committee. I have had brought to my attention the opinions of several of our shipper-traders on the role of the American businessman in the foreign trades of the United States In view of the relationship of these opinions to the objectives of the committee, I felt they might be useful to you. Hence, I am outlining some of the more important ones herein. It is the contention of our citizen shipper-traders that the American businessman is gradually being eliminated from participation in an important segment of foreign trade by alleged discriminatory practices by certain branches of our own Government. In the disposition of various surplus agricultural commodities; for example, it is their feeling that unrealistic and artificial minimum bid price levels are being established by the Department of Agriculture in the guise of "world market prices." It is the opinion of one trader that bid prices which require a higher west coast differential unnecessarily discriminate against west coast traders. They also object to direct government-togovernment dealings in the disposition of surplus commodities which they contend constitutes unfair competition with the trading services from which they derive their livelihood. They also feel quite strongly that the bidding privilege on surplus agricultural goods, which have been paid for out of public funds, should be reserved exclusively to U.S. citizens operating in the name of bona fide U.S. companies and denied to foreign interests doing business in the United States. I have touched on only a few of the problems which are the concern of the U.S. trader. There are, I am sure, many more. I would respectfully suggest that you might find it worthwhile to call upon a number of prominent U.S. shipper-traders and obtain their views at first hand. If you should decide on such a course, I would be pleased to suggest several responsible individuals who are prepared to provide factual information and constructive suggestions to your committee on what can be done to increase our foreign trade. Please accept my thanks and appreciation again for inviting me on behalf of the Pacific American Steamship Association to appear before your committee. In the event I can be of any further service, you will find me ready to do whatever is necessary. Very truly yours, Hon. CLAIR ENGLE, U.S. Senate, Washington, D.C. GEORGE KILLION. AMERICAN PRESIDENT LINES, LTD., DEAR SENATOR: You supplied me with a copy of the statement made by Senator Bartlett during the San Francisco hearings May 23, and asked if I would review his statements and give you any pertinent data as rebuttal. I am attaching a very detailed report prepared by our freight traffic department, which I hope is of sufficient substance to assist you considerably. The Senator discussed the trade patterns both eastbound and westbound. A valid comparison is not possible, since historically several times as much commercial cargo moves outbound to the Far East as is available homebound. For example, in 1961 there were 9,261,000 long tons which moved from the Pacific coast of the United States to the Far East, while we imported but 1,600,000 long tons. As a result there has been heightened competition among the tramps and the nonscheduled liners with the scheduled carriers for the meager homebound tonnages. This has had an understandably serious influence toward depressing the eastbound rates. In other words, this resolves itself to a clear-cut example of the fundamental economic principle of supply and demand. The Senator in particular refers to the differential of export versus import rates on automobiles, electric motors, scrap iron and steel. The most glaring discrepancy is in the field of electric motors. We shipped to Japan in 1961, the last year we have full Department of Commerce figures, 65,700 electric motors valued at a little over $1 million, or an average price of $16 each. In contrast, Japan shipped to us almost 4 million motors valued at $740,000, or an average of 19 cents per motor. Clearly these are not "identical" items. Our exports are motors for commercial use, while the Japanese have shipped to us motors of less than one-tenth horsepower, and as described in the attached report, are of the type that gladden the hearts of small boys in their model toy cars or boats. Our freight traffic department has supplied detailed information on the automobiles we ship to the Far East compared to those we import. The numbers of exported and imported American and Japanese cars in 1961 were comparable. However, the American cars were valued at $3,800,000, while the Japanese cars were valued at less than half, or $1,873,000. On the question of iron and steel, you will note from the attached that Japan during the year 1961 shipped to us 13 tons while we exported from the United States to Japan 6 million tons. This tremendous move from the United States took place not because the freight rates were lower but because we had the scrap Japan needed. Our rates from the United States did not keep us from being competitive since Japan imported but 7 million tons in 1961 from all countries. I hope the following pages will give you solid material which can be used to advantage by you and your committee. It was a privilege for me to appear before you on May 23 and a pleasure, as always, to have a few brief opportunities to see you and discuss subjects of mutual interest. Sincerely, GEORGE KILLION, President. Senator E. L. Bartlett of Alaska, member of the Senate Commerce Committee, submitted a statement at the San Francisco hearings May 23, regarding various factors which influenced the competitive position of American exports/imports in the Pacific area. We are pleased to present factual material which may be of value to your committee. It is noted particularly that some of the freight rates quoted in Senator Bartlett's statement needed revision in light of today's tariffs. Historically, several times as much commercial cargo has moved outbound in dry cargo vessels between the Pacific coast of the United States and the Far East as moved inbound. The following is a statement of thousands of long tons of commercial cargo moving for a few representative years: Because of the preponderance of outbound commercial cargo in this transpacific trade, we find U.S.-flag vessels (for which we have the figures) operate outbound on this route with relatively little unused capacity but inbound with relatively large unused capacity. Statement following shows the percentage of unused space in six of the regular U.S.-flag freighter services operating exclusively between the Pacific coast and the Far East. Foreign-flag carriers operating on this route average about the same as U.S.flag vessels. Returning to the U.S. Pacific coast less than half full makes it natural for these carriers to set relatively lower rates to attract more cargo. Most of the outbound tonnage on this route has moved in tramps. After discharging their outbound cargo, some find charter employment beyond, others return to the Pacific coast in ballast but others offer themselves on the transpacific inbound trade as berth operators, operating outside the conference. Their fixed charges are the same returning home in ballast as with cargo, so time permitting, they seek cargo, for instance, in Japan at cut rates on which they can net a few dollars per ton after handling costs and they are that much ahead. This has a depressing effect on the conference rates as they try to meet this outside competition. Specifically, these cutrate operators have been on the Japan berth and the rates have been quite seriously depressed since 1953. All of this explains what the Senator has called a general tendency toward higher export ocean rates than import rates in the Pacific. It is fundamentally based on the universal basic law of supply and demand. But the Senator has asked as to "the effect of this high rate pattern on our exports," while calling attention to some 20 comparisons between transpacific export and import rates, inferring they may be on "identical items." In the first place, though the same name is used, the items are not usually the same. For example, using U.S. Department of Commerce trade figures for the latest full year available in the annual form, 1961, we see that though the name is the same, the export and import products are not always competitive. For instance, in 1961 the United States exported 1,728 automobiles to Japan valued at $3,810,219. We imported from Japan 1,843 automobiles valued at $1,873,187. These values do not include ocean freight rates, but are the value at the port of export in the manufacturing country. The average price of the U.S. manufactured car at the port of export was $2,205 while the average of the Japanese export was $1,016 at, say, Yokohama. In the first place, it is evident these cars are not competitive because of the relatively big difference in value. But it must also be seen that if the inbound freight rates of $23 were applied to the car manufactured in the United States it still would not be competitive pricewise with the Japanese manufactured car in Japan. If the exporting line carried the U.S. car to Japan freight free, it still would not be competitive in Japan with the cars they shipped to the United States. Not being on identical items we fail to see any relevance in the difference between the export and import freight rates quoted by him. The export rate to Japan has a bearing on how competitive the particular U.S. product will be in the Japanese market. We have figures of Japanese imports of "automotive passenger cars" in 1961. They are from the Japan Ministry of Finance and are on a different basis than the U.S. Department of Commerce figures quoted above. They are based on imports into Japan during 1961 which, of course, will |