Commerce Commission has over railroads. You ask me a rather

difficult question.

Senator CAPEHART. Is there anyone here from the Maritime Commission?

Mr. NICHOLAS. Yes, sir.

Senator CAPEHART. What about the rate structure? Could the Maritime Commission reduce it?

Mr. NICHOLAS. That is under investigation under this 661. There was an investigation for 2 weeks, and there was an oral argument. Now the Commission has that decision pending.

Senator CAPEHART. Give us the procedure that a steamship company goes through in establishing rates.

Mr. NICHOLAS. There is now under the Administrative Procedure Act, the procedure that all complaints go to the examiners, and the examiners are independent of the Commission, and are not to be influenced by the Commission, and the examiners make their report. But it must be approved by the Commission the same as the Interstate Commerce Commission approves or disapproves by a vote.

Mr. RIVERS. You are referring to the report.

Mr. NICHOLAS. They approve the examiner's report or disapprove. Senator CAPEHART. Then the steamship companies set their own rate and file their tariffs?

Mr. NICHOLAS. Yes.

Senator CAPEHART. And that tariff automatically becomes the rate unless the Maritime Commission disapproves of it over what period— 60 or 90 days?

Mr. NICHOLAS. It goes into what we call the 9-S proceeding, and they determine whether to put the new rates in effect or suspend them. Mr. RIVERS. Pending the outcome of the hearing.

Mr. NICHOLAS. Yes.

Mr. RIVERS. In this case, they allowed them to be in effect pending the outcome of the hearing. The hearing has taken a year, and they are still in effect.

Senator CAPEHART. The thought I wanted to get over, and I do not know whether I have it or not, and maybe I do not understand the problem myself, is that the rates, railroad rates and maritime rates and tariffs, must be approved by the Maritime Commission as by the Interstate Commerce Commission.

Mr. RIVERS. There are distinctions between the United States Maritime Commission and the Interstate Commerce Commission on that.

Mr. NICHOLAS. The administrative procedure today is the same. It comes under the Administrative Procedure Act. There used to be a big difference before, but all the examiners come under the Administrative Procedure Act today.

Senator CAPEHART. My thought is: the Alaskan people are claiming the rates are too high. I am under the impression that the Maritime Commission, if they wanted to, could adjust those rates. Is that correct?

Mr. NICHOLAS. They can recommend the adjustment of the rates. Senator CAPEHART. And could adjust them either upward or downward?

Mr. NICHOLAS. If, after their finding, they make the vote on it.
Senator CAPEHART. That is right.

Therefore, maybe part of your trouble, Mr. Rivers, is here in Washington.

Mr. RIVERS. Yes; that is correct.

My point was the Maritime Commission does not initiate any rates. though. It waits for the carrier to submit a schedule and, if nobody objects, under the 30-day rule, those rates go into effect.

If someone objects, they let them go into effect or suspend them pending outcome of the hearing.

Therefore, the Maritime Commission cannot dictate a lowering of rates on cars from Juneau to Haines because the Maritime Commission, if, on its own motion, it wanted to do something like that, would have to call a hearing under the Administrative Procedure Act, and so forth.

So, strictly speaking, the rates are initiated by the carriers and the Maritime Commission, when protests are entered as a lot are, in the course of events, can rule on whether they are lawful or exorbitant. Shall I go on with the Jones Act?

Senator CAPEHART. Of course, that is the only procedure that we have of reducing the rates.

Mr. RIVERS. That is right.

Senator CAPEHART. And there is nothing in the present legislation or the proposed legislation, meaning the two bills we are considering at the moment, that would lower the rates other than competition with the Canadian vessels, which might induce the American shippers themselves to file a tariff automatically lowering their own rate.

Mr. RIVERS. Yes, Senator Capehart. And since they are all booked full on the long haul from Vancouver to Seattle, competition would be restricted pretty much to a little interport competition.

Senator CAPEHART. Do the Canadian vessels have the same rates as the American vessels?

Mr. RIVERS. I have not inquired lately, but the passenger fares, I believe, are comparable on the fare between Vancouver and Alaska, and Seattle and Alaska.

Mr. LONG. The Canadian Pacific and Union Steamship Co. are the same.

Senator CAPEHART. Are they the same as the American?

Mr. LONG. The Canadian Pacific and Union Steamship are the same as the American rates.

Mr. RIVERS. But the American vessels themselves have no phasis on passenger service and the Canadians get preference from the public pretty much as far as passenger service is concerned.

Senator CAPEHART. You may proceed.

Mr. RIVERS. Regarding the Jones Act, which is the Merchant Marine Act of 1920, the Governor has given you some history about it. Section 27 of that act contains the portion that discriminates against Alaska by requiring all shipments originating in eastern or central United States sent across the continent by Canadian railway to be carried north in American bottoms, though similar shipments, destined for the Pacific coast ports in the States may be hauled south in Canadian ships.

There is a lot of history. That discriminatory language did not appear in the original bill, but no one was paying a great deal of attention to it back there in 1920.

Mr. Clark, from Seattle, went back and managed to get that inserted in the bill. There was nobody from Alaska to object.

In 1921, Delegate Sutherland introduced the amendment to change the words "excluding Alaska" to "including Alaska," and his amendment failed, and so the discrimination is still on the books.

Changing this exclusion of Alaska would permit cargoes shipped across Canada in Canadian trains inbond and in carload lots to come north by Canadian vessel. That is, the Canadian haul could be completed in a Canadian bottom.

That will not mean the Canadian vessels could go down to Seattle and load up cargo in Seattle and come north to American ports in Alaska.

I have noticed a little confusion on that. It would merely mean as to shipments sent across Canada by northern rail, the water portion of the haul could be in Canadian bottoms as well as is the case when the cargo is destined for Seattle, for San Francisco, or Hawaii, for that matter.

Senator CAPEHART. If a car was shipped from Chicago to Seattle, a carload of nails, could a Canadian vessel in Seattle pick it up and take it to Hawaii?

Mr. RIVERS. No. Even the way I construe your bill here, that could not be the case.

Senator CAPEHART. That is not the case now?

Mr. RIVERS. No. If they ship it to Vancouver or Prince Rupert, a Canadian vessel cannot haul it to Alaska now.

I would like to say that the purpose of this Merchant Marine Act of 1920

Senator CAPEHART. Let me ask this, if you do not mind: If you ship a carload of nails from Chicago to Seattle, can a Canadian bottom pick it up at Seattle, and take it to Portland?

Mr. RIVERS. No; because the general provisions of the Jones Act, do not permit a foreign vessel to pick up goods in one American port and haul them to another American port.

Senator CAPEHART. In this instance, you maintain since Prince Rupert is a Canadian port, they should be able to pick up and haul to an American port?

Mr. RIVERS. That is the rule on the entire Pacific coast except in Alaska.

If nails are shipped from Chicago to Vancouver, a Canadian bottom can take them to Seattle, Portland, or San Francisco.

But if they are destined to Juneau, a Canadian vessel cannot bring them up to Juneau.

No Canadian vessel can stop at an American port and haul American cargo to an American port.

All your bill would do is to put us on the same basis as the rest of the Pacific coast, and let the cargo proceed to destination in Alaska in a Canadian bottom.

The Governor has pointed out that is discriminatory, and I agree. I am trying not to duplicate material, Senator Capehart.

Congress recognized the Alaska problem was rather serious here a year ago when it passed Public Law 12, the Eightieth Congress. Congress attempted to give an indirect subsidy to carriers so that they would not have to increase rates any more than absolutely necessary because Congress felt that it would retard the development of the

Territory if rates went up to a prohibitive level and the Government has a very definite interest in seeing the Territory developed.

Here is what I have in mind: When the Jones Act was first put into effect, the emphasis was on encouraging the American merchant marine.

At the present time, there is much emphasis in many governmental departments for encouraging the development of Alaska.

. Now, we feel that opening up shipping to the Territory so that we could order for shipment from the eastern part of the country in carloads across Canada having that cargo brought up in Canadian bottoms would only tend to open up the Territory all the more.

I would like to point out that such device would only be of interest to the merchant in the Territory who is prepared to buy certain commodities in Chicago or Minneapolis in carload quantities. Do not forget Seattle is the port which breaks up the transcontinental carload orders into less-than-carload orders and ships them to our merchants in Alaska who are very accustomed to buying in small dabs, less than carloads.

My impression is there are only 18 or 20 basic commodities that are produced in Chicago and Minneapolis, and in the East, that the shippers in Alaska are in a position to ship by carload in carload lots.

Therefore, it is only as to that limited number of commodities where our shippers are going to avail themselves of having merchandise brought across Canada to Vancouver or Prince Rupert to be hauled north in Canadian bottoms.

There is no percentage in hauling across Canada on a less-than-carload arrangement, and I do not know but what a shipment must be a carload in order to be bonded.

Therefore, Seattle is not going to suffer the serious blow that the people have represented, the people from Seattle. They are only going to be competing with the Canadians on certain commodities which the Alaskans feel they should have the freedom to go out and purchase from any part of the country they wish to purchase from and have it delivered to them in the most economical way.

My second point is that since Congress declared this policy of encouraging the merchant marine in the Merchant Marine Act of 1920, and since many Government departments are now emphasizing the development of the Territory of Alaska, that that means the exclusion language of section 27 of the Jones Act is now at crosspurposes with the desire of the Government to most rapidly develop the Territory.

You can see, back in 1920, the Territory was of no account. It was not recognized to be of strategic importance.

The merchant marine was considered of paramount importance. But it happens now that the Territory is as much an instrument of national policy as the merchant marine is an instrument of national policy. And I should say that it is all right to have our Jones Act with our general merchant marine policy covering the whole seven seas, but you have Alaska, which is not even under the general rule on the Pacific coast excluded-a little special favor for the port of Seattle, and the people that operate steamships out of Seattle.

It is surely time now that Alaska has gotten bigger than those five old vessels owned in Seattle. It is time to eliminate that discrimination against the Territory and to say "including Alaska," instead of "excluding Alaska."

Not only is it fair, but it is not going to be serious. Our country lets Canadian air companies operate between Fairbanks and the States, and there is no reason why the Puget Sound area should be coddled now at the expense of the country as a whole.

Senator CAPEHART. Do you feel that we should try to get some agreement out of Canada to permit American shipping to pick up interport in Canada?

Mr. RIVERS. I think the Canadians would be perfectly willing to do that in exchange for giving us interport service, but I do not see that it is necessary at all.

Our problem is not to shake down a reciprocal concession with Canada. Our problem is to solve our present difficulty.

Senator CAPEHART. I well understand your position there. But, likewise, our problem also is to build up our own merchant marine, and I presume that if in your opinion and the opinion of what seems to be hundreds of other Alaskans, the present lines were giving adequate service from your standpoint, you would not be recommending what you are. You are only recommending what you are through virtue of the fact that the American lines are not giving what you consider, and hundreds of others, adequate service.

Mr. RIVERS. For our particular situation in Alaska. We are merely asking for a waiver as to passengers and removal of a discrimination as to freight.

Senator CAPEHART. If the rates were what you think they should be, and if the service is what you think it should be on the part of our American lines, then there would be no occasion for recommending what we are recommending, would there?

Mr. RIVERS. I think we still would object to being excluded.

Senator CAPEHART. I can well understand that, but as a practical matter?

Mr. RIVERS. If the service is that good, and adequate, and the price that reasonable, I think we would be so tied to these carriers by good will and the need for service, we would not be looking for anything else.

Senator CAPEHART. That is true. So I think we might well have a reciprocal agreement with Canada.

Mr. RIVERS. But I would not hinge the outcome of this bill on that, because I am not sure that Vancouver ships very much coastwise cargo up to Prince Rupert. I think in all probability both Prince Rupert and Vancouver receive their goods directly from eastern Canadian points, and they have interlocking roads and highways and trucking and trains and everything else.

So the intercoastal between Vancouver and Prince Rupert would be negligible.

But the intercoastal service involved in our tourist business, and all, in Alaska, is important, I assure you.

Senator CAPEHART. We have a reciprocal agreement with Canada which permits them to ship in Canadian bottoms to Skagway and up into Canada, do we not?

Mr. RIVERS. Yes; because they serve the Yukon territory that way. Senator CAPEHART. Under that arrangement, are American bottoms permitted to haul merchandise from Prince Rupert or Vancouver to Skagway, then to go on in?