port a violation of the law, and the merchandise would be subject to forfeiture.

There was a certain indulgence granted in the proviso in that act, however, that in certain situations they permitted such an operation to be held open for the people up in northern Vermont who had rates over Canadian rail lines in connection with their own bottoms. But I call your attention, gentlemen, to the progressive exclusion of foreign bottoms.

To be sure, that movement I mentioned by foreign bottoms from Duluth to Sarnia violates no coastwise law, but the fact it participates in part of a movement between two places in the United States created the prohibition in the statute.

Section 27 of the Merchant Marine Act does not place a penalty upon the vessel, because that operation is legal under your coastwise law; but it makes the merchandise subject to forfeiture; the point being that the American merchant can control his shipment, you see; he can control his own shipment, and the policy is that if you ship over that kind of line your merchandise will be subject to forfeiture. So much for the freight situation, gentlemen. You get the philosophy of it from those few remarks.

To turn our attention now to passenger matters, that has been a prohibition since about 1886, when the prohibition was against the transportation of passengers between two ports in the United States and the penalty was for each passenger so transported and landed, and it remained in that form with a $2 per head penalty until 1898, when there was an increase in the penalty to $200. And the legislative history of that is significant; because in explaining upon the floor of the House the reason for the insertion of the $200 penalty in place of the $2 fine, the chairman of the committee stated as follows. This was the chairman of the Committee on Shipbuilding and Shipowning Interests of the House, and this appears in the Congressional Record of the Forty-ninth Congress, first session, volume 17, part 2, page 1108. Section 8 reads as follows, and that is the one that contains the prohibition against the transportation of passengers on foreign bottoms

The CHAIRMAN. Where is that section in the United States Code? Mr. SULLIVAN. In the United States Code, sir, it is in title 46, section 289. The explanation given for the increase in the penalty is as follows:

Section 8 imposes a penalty on a foreign vessel for transporting passengers between two ports of the United States. This has been rendered necessary by the construction which has been given to our laws imposing a penalty on foreign vessels for transporting merchandise between ports of the United States. "Merchandise" has been construed by the Department to cover simply goods transported. In view of the construction which has been given, there seems to be no penalty provided for the conveyance of passengers between ports of the United States. There have been found no difficulties in this respect except with the Canadian vessels on the Lakes, which have been accustomed, during the summer season, to come to the American side and convey excursion parties, and it has been suggested by the Treasury Department that the penalty which is provided by this section will be sufficient to break up the practice.

That is the categorical reference I said I would make in connection with the increase in the penalty.

Mr. CULKIN. What is the penalty provided in that section?
Mr. SULLIVAN. In 1898 it was made $200 per passenger.

Mr. CULKIN. The same as this proposes?

Mr. SULLIVAN. That is right, sir. That merely carries the existing penalty and the changes I will discuss in a moment, with some further suggestions, if I might be indulged.

The Attorney General, in an opinion in 1910, quoted that language from the Congressional Record which I just read you. Following that in 1912, there was propounded to the Attorney General a request for an opinion, which has been the cause of our troubles on the Lakes, which has been a deterrent every time the Bureau of Navigation has sought to restrain what looked like a substantial violation of the spirit of the act. And I would like to read to you the paragraph which furnishes the predicate of fact upon which that opinion was rendered; because, as I will show you later, the practice which was inveighed against by the Department, when it asked for this opinion, was mild compared with what I will show you has happened since this opinion was rendered. On page 319 of that opinion, the Department of Labor and Commerce set forth the following state of facts

The CHAIRMAN. That is page 319 of the Attorney General's opinion?

Mr. SULLIVAN. Page 319 of 29 Opinions of the Attorney General:

A custom has grown up within recent years upon the St. Lawrence River and the Great Lakes whereby foreign vessels of Canadian ownership have been permitted to take on passengers at United States ports and to transport them on excursions through domestic and foreign waters, returning them to the port of departure. Sometimes these vessels clear from an American port for a Canadian port, in which case the vessel usually makes a call at the latter port long enough to obtain clearance therefrom. When such calls are made at the Canadian port passengers are in some cases permitted to land for a short time, and in other cases no opportunity to land is afforded. But in either case the voyage is practically continuous and the passengers virtually remain with the vessel until her return to the port of departure in the United States.

The traffic in question is principally domestic since it originates and terminates in the United States and is supported by the American public, and is only foreign insofar as it passes through foreign ports or waters and is permitted to move in foreign vessels.

The Attorney General found that the statute being penal in nature must be strictly construed and that a strict construction evidenced the fact that what was there being frowned upon was the transportation of passengers from one American port to another and different American port where the passenger is landed permanently and definitely. So that opinion has stood in the way of attempts to prevent on the Great Lakes the practices which were common long before the ocean West Indies trade sprang up and which is continuing now in what is virtually a regular service.

In the old days, these excursions by Canadian ships from Cleveland on a "voyage to nowhere" and back to Cleveland were indulged in before the season opened and after the season closed. You see, the passenger season on the Great Lakes is very short, about a couple of months; but, since the licensed officers are hired for the whole year, the companies on the Lakes try to get back a little money before the regular season opens or after the regular season has closed, because the officers are paid all the year around. But in the competition for these excursion parties, the Canadians put on those excursions and, as I shall how you later, are extremely successful and have arrogated that business almost exclusively to themselves.

Before the introduction of this bill, I assert the practices of those Canadian companies were these: They would carry these excursion

parties, big conventions, if you please, of two, three, four, or five hundred people, on a 2- or 3-day trip around the lake from a port and back to the same port of the United States. But since, then, they have become much bolder, and now, for some years, the Canadian lines, knowing they could not transport passengers between two American ports, would do this. If you will look at your map you will smile at this circumvention. You will notice Windsor and if you will look at Detroit you will see that right across the river is Windsor. So, to circumvent this prohibition against transporting between two American ports and knowing of the considerable business between Detroit and Duluth, the Canadian lines would sell a ticket in Detroit on their ship reading "From Windsor to Duluth", and the ship would actually operate in this way: The Canadian ship would start from Windsor and then would cross the river to Detroit and pick up the baggage of the traveler. He would not take his baggage across to Windsor; he would leave his baggage in Detroit. Then the ship would proceed from Detroit to Duluth, there discharge both passenger and baggage. Now the fact that the man was encouraged to leave his baggage at Detroit was a great help to the Canadian lines; because, otherwise, the passenger seeking to travel on their line would have to tote his baggage to Windsor and then his baggage would have to go through the Canadian Customs, and it was a great bother to him. So, to avoid that and still escape the consequences of the law, they indulged in that practice of picking up his baggage at Detroit.

Now I have this suggestion, if you please, that if this bill should become a law and the Canadians were driven from the kind of trade I am going to show you later, they could resort to this old practice of handling the baggage in that way. Therefore, if you want to make effective for us on the Great Lakes a strong prohibition against that Canadian trade, I suggest you insert in line 7, after the word "passengers", the words "or their baggage", and then, in line 6, on page 2, after the word "passenger", the words "or unit of baggage", and placing a penalty there.

Mr. CULKIN. Where does that go in?

Mr. SULLIVAN. Page 2, line 6, after the word "passengers."

Mr. CROWE. And what are the words you suggest be inserted? Mr. SULLIVAN. "Or unit of baggage", so that there is a penalty of $200 for each passenger or unit of baggage so transported.

Before introducing you to the actual regular operations of these lines, I would like to show you that the invasion by the Canadians of the excursion business is considerable. There is one body, the Board of Commerce of Detroit, which has taken an excursion on the Lakes every year since I can remember, except one year during the depression and they always ask bids from various lake lines for a 32-day excursion. There was only once that an American lake line ever got that party, and that was once when the party was so big that the Canadian lines could not carry it and when an American ship could, and so he got the job. Their parties run about four hundred each and, as I say, only in one year did an American lake line ever get that party.

Their excursion is from Detroit for 31⁄2 days around the Lakes and back to Detroit. They also, after the season, in some years, run eastbound from Detroit to Toronto and return, stopping only 3 hours

at Toronto, and in 1923, before the opening of the season, they had six special excursions. No American ship bidding on that could get it.

Now, gentlemen, I make the categorical statement that that situation where an American lake line has succeeded in bidding_competitively upon those excursions is rare. I do not think I should impinge upon your time by reading all of these various excursion parties that were lost to the American lines nor the details of their voyages. I think if I could supply a list of them later, that would satisfy you; would it not?

The CHAIRMAN. Yes.

Mr. SULLIVAN. If I give the name of the party, the date and the route, and the number of passengers; because it would merely be cumulative. But this thing dominates every situation and that is that the route traveled by the Canadian boat on that excursion is from an American port on the Lakes and back to the same port, in order to quadrate itself with that opinion by Attorney General Wickersham. Mr. HART. What is the reason for their being able to underbid the American companies on these excursions?

Mr. SULLIVAN. Lesser crews, lower wages, lesser sustenance expense. And you recall Mr. Marr of the Lake Carriers Association, testifying here on a previous occasion-at the last hearing there was quite a rush and he did not speak orally but filed a memorandum later, although you do have his oral testimony in some of the other hearings-referred to the fact that in the case of freight the Canadian vessels have such a crew as in the judgment of the master he thinks proper for navigation. Here in the United States our crews are fixed by the steamboat inspectors.

Mr. CULKIN. That is to man the boat?

Mr. SULLIVAN. To man the boat; yes, sir.

Mr. CULKIN. And it is a fact that some lines give the captain a lump sum and let him run the boat?

Mr. SULLIVAN. That is true. And you can see how his judgment is affected in a situation like that.

Mr. CULKIN. And does he contract also for the subsistence?

Mr. SULLIVAN. I do not know how it is on the Canadian ship; I do not know about that. It is not so on the American ship, and I understand the Canadian ship does not do that. I can give you some striking examples in connection with the freight situation. The freight boats operated by my client run from 3,000 to 3,500 and 4,000 tons and operate with a crew of 33 men; the Canadian boat of the same type operates with a crew of 22. And our wage scale is higher and our subsistence expense is greater-not only in the aggregate, but per man.

Mr. Marr gave some striking examples down here. There is a 50-percent increase in the freight boats of the character we operate, and Mr. Marr has some striking illustrations here showing the percentage of increase in the cost of operation of American bottoms over Canadian bottoms on various classes of vessels graduated by size, and those excesses of American cost over Canadian run, according to his figures, from 51 percent in the one class to 88 percent in the class-A boat-88 percent more to operate an American bottom than to operate a Canadian bottom. And we have some figures that will be

presented later showing you the situation with respect to wages in connection with the American and Canadian passenger operations.

I would like to put in the record here, in connection with my client alone, the wage scale that we pay and you will have some figures later from some of the others who are operating lake passenger lines. lines. We have some Canadian figures also, and I would like to intruduce that table, if I may, showing the aggregate.

(The table above referred to will be found at the conclusion of Mr. Sullivan's statement.)

On the passenger lines, the three ships that are passenger ships, sister ships, require a crew of 168 men. You will see that some of the Canadian passenger crews are much less than that.

The CHAIRMAN. Ships of comparative size?

Mr. SULLIVAN. Yes, sir. The list of those charter parties which we lost, which were numerous, will be furnished. It would merely tire you for me to discuss them at this time.

I might say to you gentlemen, to show you there has been a little amelioration in the severity of that old opinion by Attorney General Wickersham, that Attorney General Stone, just before his elevation to the Supreme Court, was called upon to give an opinion-I think in December of 1923 or 1924, and reported in 34 Opinions of the Attorney General-upon this state of facts: The British ship Voltair was chartered to a fraternal organization for a trip from Philadelphia to Boston, where the trippers debarked for 4 days and attended a convention and, thereafter, they boarded the vessel which steamed on to Halifax, Nova Scotia

The CHAIRMAN. Where did they embark?

Mr. SULLIVAN. Philadelphia to Boston; stayed ashore 4 days; then boarded again and went to Halifax, Nova Scotia, on the trip, touched there and returned to Philadelphia. The propriety of that operation was laid before the Attorney General and he found the real purpose of the voyage was transportation from Philadelphia to Boston; that was their job; and what was done thereafter was just an excrescence which was intended to circumvent the violation that had already occurred.

A penalty was imposed by the Bureau; but, inasmuch as the ship had approached the Bureau of Navigation before they made the trip and were told they thought it was all right because it was from and back to some American port, Philadelphia, under the old opinion, the British said: "We would not have made this trip if you had not said it was all right. Now you have the right to remit fines; the violation was not intentional; so please be good to us." And the fine was remitted.

And now we find the Northern Navigation Co., a Canadian line which I will talk about later, is already bidding today and has bid $62 a head to carry a shipload of passengers from Duluth to Cleveland for a 3-day stopover at a convention, in the face of that opinion, and back to Duluth. That is the trip.

These evasions, gentlemen, that I mentioned of operating from and back to the same American port used to be occasional, conducted before a season opened and after a season closed, and such machinations as they indulged in during a season to carry business to and from American ports were trips involving picking up the baggage at Detroit and things like that. But, in that Detroit situation, they