between a 5-year proposal and the one I have advocated of expiring February 28, 1949, provides that it should expire December 31, 1949. The President says 1 year, which would make it June 30, 1949. Mr. Bartlett has just recited here that the Special Subcommittee on Alaska of the Merchant Marine and Fisheries Committee of the House is willing to extend it to September 30, 1949.

I believe that it might be very helpful, Senator, to have some additional interim provisions here because we are nearly reaching the end of June 30 of this year anyway.

But in doing so, I want to be frank and state that I think the predicate of any such legislation is unsound.

Senator CAPEHART. May I ask you this question: If Public Law 12 should be extended just as written for 1 year, 18 months or 2 years or a longer period, that would mean the contracts you now have with the operators would remain as they are?

Mr. MELLEN. Not necessarily, because they terminate June 30, too. Senator CAPEHART. And you have the right to change them? Mr. MELLEN. Yes, sir. In fact, I strongly advocate changing them.

Senator CAPEHART. Have you discussed changes with them and are the changes that you suggest satisfactory to them?

Mr. MELLEN. Senator, we have reached no conclusions yet, but I think the gentlemen of the steamship industry have been-well, I have been very outspoken with them and my view is that the contract as presently written should be modified. I think the modus operandi of the character of the activities between the various steamship companies, to some extent, should be modified.

I think within reasonable limits, we should do what we can to have some degree of competition up there, and yet we cannot have unbridled competition which means to say if any of tnese companies were to ask for 50 ships or 25 ships, we would have the waters overtonnaged, and there would be chaos, and the steamship companies would cease operations, and Alaska would be without ocean transportation.

Senator CAPEHART. I believe there are three companies operating in Alaska?

Mr. MELLEN. That is right.

Senator CAPEHART. Plus the barge line?

Mr. MELLEN. The barge line came in, I think, several months after Public Law 12 was passed.

Senator CAPEHART. And 1 believe those three companies have, under the terms of the contract with the Maritime Commission, divided up the ports?

Mr. MELLEN. I do not know that they have divided them up. I am told that some special arbitrators, or committees, previously appointed by the Maritime Commission a year or so ago, did that. Senator CAPEHART. Would it be wise to permit those three companies to make calls at all the ports if they wished to do so?

Mr. MELLEN. You have a degree of duplication there. It is a question of a compromise there again, Senator, between unbridled competition and monopolistic practices.

If we permit unbridled competition, you can easily see that could lead into the stronger exterminating the weaker.

To get back on the question about the barge that Mr. Bartlett makes mention of, about this combined service, I still insist it ought to be on combined service if barges are to be considered at all, for the following reasons. What I mean by combined service is not as has been implied in part at least, a self-propelled barge. But it means that a barge in conjunction with a tug is the carrier. They have in mind having a lot of loose tugs floating around getting the benefits of these subsidies and allowances for earnings, and things of that kind, which would be limited. And I just think it is unsound. I think the barge operated by a tug is a unit. There is no reason for excluding a selfpropelled barge, however, if one exists.

Now, the idea that they have about making these things available. It may be available to the Commission or made available to the Commission. I do not know what the word "made" is in there for.

Senator CAPEHART. Do you feel that the barge line, meaning the one that is there at the moment, and any others that might care to enter the field, should be subsidized to the same extent by the Government as the three present operators?

Mr. MELLEN. If and when they submit themselves to operate the barges wherever they are asked to operate them, not limited from port A to port B and back to port A. That is a direct route. They can be loaded heavily and they are not, or that type of operation is not the same that is not only expected but exacted of other steamship companies who have runs to numerous ports.

Senator CAPEHART. Do you set rates for barge lines?

Mr. MELLEN. No, sir, we do not set rates at all, Senator. What we do, persons engaged in business conclude what they think their rates need to be. They are then submitted to the Commission. Negatively, we can disapprove them.

Senator CAPEHART. That is what I meant.

Mr. MELLEN. That is right.

Senator CAPEHART. You do have jurisdiction over their rates?
Mr. MELLEN. Yes, sir.

Senator CAPEHART. You can set the rates if you wish to?

Mr. MELLEN. Indirectly.

Senator CAPEHART. Yes.

Mr. MELLEN. That is correct, excepting this, that if we seek to set rates up, even by negative action, at the level that the operators consider nonremunerative, they can cease to function.

Senator CAPEHART. Do you believe that the President should be given the authority in case of emergency to permit Canadian ships to take part in that trade?

Mr. MELLEN. My answer is "Yes." The reasons, however, are in addition to those that have been enumerated here.

I cannot feel, with respect to Canada, they should be regarded as remote parts. In the first place, it should be borne in mind at all times that Canada is a landed area between the United States and Alaska. We make use of that landed area with highways to connect the United States with Alaska. It is hard for me to tell a Canadian from an American, frankly, and I agree with that myself.

Whether or not the majority of the Commission would feel as I do about it, I do not know, because some of them feel rather extremely, I think, about foreigners or noncitizens and what not. But I think it is a sound procedure. But I doubt it should be included in these

bills. I think you have some other bill up here that should deal with this and not these bills.

Senator CAPEHART. I think the amendment to the Jones Act deals with it.

Mr. MELLEN. Yes, sir.

Senator CAPEHART. At this point, without objection, I will place in the record a letter from Clarence R. Miles, department of governmental affairs, of the Chamber of Commerce of the United States of America, in which, among other things, they say they are opposed to Canadian vessels engaging in service between Alaska and other points in the United States, and between Alaskan points.

And they say:

The long established policy of the United States to reserve our domestic commerce for United States flag carriers, in respect both to air transport and coast wise water-borne commerce, should be preserved.

Mr. MELLEN. I do not agree with that.

Senator CAPEHART. The letter will be made a part of the record, (The letter is as follows:)

CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,

Hon. HOMER E. CAPEHART,

DEPARTMENT OF GOVERNMENTAL AFFAIRS,

Washington 6, D. C., June 4, 1948.

Chairman, Subcommittee of Interstate and Foreign Commerce Committee,

United States Senate, Washington 25, D. C.

DEAR SENATOR CAPEHART: The Chamber of Commerce of the United States is opposed to section 3 (c) of Senate Joint Resolution 222, which would permit, under certain conditions, Canadian vessels to engage in service between Alaska and other points in the United States and between Alaskan points.

As a result of thorough consideration and recommendation by our transportation committee, the annual meeting last month adopted the following policy declaration in this regard:

"The long established policy of the United States to reserve our domestic commerce for United States flag carriers, in respect both to air transport and coastwise water-borne commerce, should be preserved."

We should appreciate your subcommittee's consideration of the chamber's views in this connection and hope that this letter may be made a part of the record of the hearings on the joint resolution.

Cordially yours,

CLARENCE R. MILES.

Mr. MELLEN. I think that is rather provincial, to say the least. I happen to have been a member of the Chamber of Commerce of the United States for the last 11 years, but I do not think we should embrace a doctrine of foreign aspects and make it applicable to Canada with respect to Alaska.

Senator CAPEHART. Would you recommend that Senate Joint Resolution 218 or 219, and they are both the same, be amended to give the President the right, in case of emergency, to permit Canadian ships to handle passengers and freight?

Mr. MELLEN. Yes, sir.

Senator CAPEHART. What time limit do you recommend on this legislation?

Mr. MELLEN. Congress saw fit to limit our general agency and our chartering authority to February 28, 1949.

I reiterate my statement before the House committee that I believe that the extention, if made, should expire with our over-all authority to charter, which is February 28, 1949.

Senator CAPEHART. That would be 8 months.

Mr. MELLEN. That is right. The shorter you make the time within reasonable limits, it is my view, Senator, we should begin to work at once now.

If this bill were passed today and extended to February 28, all of us should not cease working to find an appropriate solution to this thing. If a longer time is given, they will wait until the last 2 or 3 months to do something.

Senator CAPEHART. As a matter of practicability, if limited to February 28, 1949, you would almost have to continue existing contracts as they are, would you not?

Mr. MELLEN. I would not. I do not see the necessity for it. I think the shipping companies, themselves, are agreeable to their modification.

I found the ship companies, Senator, very practical businessmen. I think they have been very fair-minded in all of our conferences that led up to the content incorporated in Resolution 396.

We do know there is always a tendency, it is human nature, to give the best deal they can, and that always will be so.

Senator CAPEHART. Do you see a possibility that rates may be reduced?

Mr. MELLEN. Yes, sir.

Senator CAPEHART. For the rest of the people?

Mr. MELLEN. I see possibility now. I stated before the House and would like to repeat here, Senator, that I have not yet had time since I have been assigned to the Alaska problem by the Commission, sitting in with these numerous conferences, for weeks and months, to really get into an exhaustive study of the factual data that revolves around the rates that have been made applicable for the past year. I have certain data but the data is not yet complete.

Senator CAPEHART. I believe the chief complaint of the Alaska people, and I do not say all, but my observation has been in holding these hearings, on amending the Jones Act and the general observation, that they object primarily to two things:

One is the high rates, and secondly is the poor service.

Mr. MELLEN. But, on the other hand, the complaint I have received is that the service has been made too frequent. Trips have been made too frequent. I do not know what they mean by poor service or good service. They contend the sailings have been too frequent.

That would lead to the belief that the service has been more than adequate.

Senator CAPEHART. You mean, Alaska shippers?

Mr. MELLEN. The Alaska representatives stated the sailings have been too frequent. I have not heard any complaint about the service not being satisfactory.

In fact, if I am to interpret the complaint made about too frequent sailings, I would be led to believe that they feel the ship companies are using too many ships or using them too frequently.

Senator CAPEHART. If we give the President the right to permit Canadian vessels to carry passengers and freight in Alaska in case of an emergency, could you tell us what might constitute an emergency? Mr. MELLEN. My view of an emergency would be anything that interferes with transportation to Alaska.

That is what the emergency is with respect to the officials of Alaska. In that, I agree.

Senator CAPEHART. Would a general strike that immediately tied up shipping to Alaska be an emergency, and the President then be justified in immediately notifying all Canadian ships that they could do that?

Mr. MELLEN. I do not know whether the President would feel justified, but if I were President, I would feel justified in doing it; yes, sir.

Senator CAPEHART. That would be one of the categories of emergency, in your opinion?

Mr. MELLEN. Yes, sir.

Senator CAPEHART. What other emergency might exist there?

Mr. MELLEN. Let us assume that concurrently a strike would occur with I am informed, and I believe, rather authoritatively, of activities going on in the area across the narrow strip of water from Alaska, and I feel that if the President felt that a strike would occur concurrently with perhaps some kind of a plan that might be in contemplation, or there might be good cause to fear, I think then we ought not to have Alaska without transportation, and I think we would then consider that the Canadians would be fine allies to have. Senator CAPEHART. Well, of course, in case of an international incident, the President would have the right, under "other powers," to invoke any sort of an order of that kind.

Mr. MELLEN. The main point, Senator, is that I do not think we should regard Canada as a remote foreigner with respect to the Territory of Alaska. I am limiting my observations here with respect to foreign-flag operations to Canada, and with respect to the Territory of Alaska.

Now, we can also go even beyond that from another point of view: that an American-flag ship, when it enters a foreign port, also becomes a foreign-flag ship in that port to the citizens of that country.

Senator CAPEHART. How many ships are there in the three companies that now serve Alaska?

Mr. MELLEN. Including what is owned and what is chartered, I understand it is 29.

Senator CAPEHART. Twenty-nine?

Mr. MELLEN. Yes; a rather preposterously high number.

Senator CAPEHART. And the number applies as well to what they own as it does to what the Government owns?

Mr. MELLEN. No, sir; only indirectly. The ships that the Government owns, we charter to them for a nominal consideration-I think it is a dollar a year. But in addition thereto, the insurance is underwritten.

With respect to ships that they own, we allow them to make, out of the over-all revenue, an earning on the investment that they have in that ship as determined by the Maritime Commission as a fair value for that ship, and not any value that they shall prescribe. We also underwrite insurance with respect to those ships. We do not guarantee them the return. That they must earn. But we do permit them to make an earning on their ship before there is any participation by the United States Government in any profits that result from the operations.