Dear Hal, 7, 2948 bureau to soud copies of such minutes of nor We were under the impression that the Bureau had been law. Mr. Tibbett pointed out that most Conference agreemsate 925 SIR: LP PEM UNITED STATES LINES 80, 8. I. Richter Stofnan so-ir. Valber, Manila e-Mr. Ayres, Hang Leng The CHAIRMAN. Are minutes, tariffs, and circulars perused by Board employees to check for possible evidence of the use of unfiled ments? Mr. MORSE. Yes. agree The CHAIRMAN. How can the all such minutes and circulars? ferences to send you all this data? Mr. TIBBOTT. The conferences are instructed to send these data to us. As far as minutes are concerned, the minutes normally are numbered in sequence. Board be assured that they receive If there is a number missing, we write for it. We presumably didn't get it. And I believe our records are complete. The CHAIRMAN. Do you ever make a check on the minutes to see whether the minutes are full and complete, and reflect the exact transactions? Mr. TIBBOTT. Well, we endeavor to make a check. But I must confess that we get from 200 to 250 minutes a month, and we have only 1 or, at the outside, 2 people that can devote their time to going over the minutes, and they have other duties. We have been very short handed in that respect. The CHAIRMAN. So the answer would be that because only two Board people do that, and they have other chores, if it is done, it is done in rather a minuscule manner? Mr. TIBBOTT. That's right. The CHAIRMAN. Does the Board employ any investigators for the purpose of discovering the existence of unfiled agreements? Mr. MORSE. We have three investigators that devote most of their time to section 15 problems. Have we given them instructions to find out if there are any unfiled agreements-I don't think we have given them any instructions as such. But certainly if they hear of anything of that sort in their general investigations, they would obviously follow up on it. The CHAIRMAN. Have they ever given any evidence of discovery of unfiled agreements? Mr. MORSE. Not as far as I can recall. Mr. MEADER. Mr. Morse, the Maritime Board does not have subpena power, does it? Mr. MORSE. Yes, we do have-but when we have a pending formal investigation. The CHAIRMAN. Has the Board ever used its subpena power under section 27 of the Shipping Act in order to investigate possible violations of section 15? Mr. MORSE. Mr. Aptaker recalls one situation when we used the subpena power for that purpose. That was in the Pacific Coast European Conference, an f.o.b.-f.a.s. problem. The CHAIRMAN. On January 10, 1951, a memorandum from the then Chief of the Regulation Office was sent to the then Chairman of the Maritime Commission concerning the shortcomings in the Regulation Office, and making a number of suggestions for improvements. Has this memorandum ever been brought to your attention? I refer to Board Document B-82. Mr. MORSE. I don't think so-not as I recall specifically. But I do know that within the last year I did set up a group of four or five people in our office to survey the activities of the Regulation Office-also to take a look at what is being done at CAB and ICC and make recommendations as to how our activities could be improved. And we are endeavoring to carry this out. The CHAIRMAN. In this memo, the Chief of the Regulation Office recommends among other things the appointment of additional examiners and investigators to carry out the duties of the Office under section 15. Can you tell the subcommittee what action was taken on these recommendations? Mr. MORSE. I wasn't present. Maybe Mr. Tibbott can answer that. Mг. TIBBOTT. My recollection is that we got no results at the time, but that as the years went by, the Board developed a staff of three investigators who were originally engaged in other tasks, and eventually, instead of designating any investigator, such as the Chief of the Regulation Office asked for, the Board stated that the Regulation Office could use this investigating staff of three employees for following up various investigations. And since then, this staff has been used pretty regularly—most of their time I would say is spent on various regulatory aspects. Mr. MEADER. Mr. Tibbott, has a search been made for any of these understandings or gentlemen's agreements such as the examples that have been shown to you today? Mr. MORSE. I would say in answer to that question, if I may volunteer, that they have been directed to make investigations of matters which we knew might be violations of the '16 Act, of which we are aware. Their time has been devoted almost entirely to examining known-not known, but at least where there was some indication that there might be section 15 violations-rather than some unknown, completely secret thing on which we had no information at all. Mr. MEADER. Well, what rather disturbs me is that these documents which the committee staff apparently had no difficulty in obtaining from the files of the shipping lines themselves, come as a complete surprise to you gentlemen of the Board here, and apparently your investigators didn't uncover any of these agreements. Mr. TIBBOTT. Our investigators go out on specific instances of violation of the act. If they run into anything in the course of their investigation, they make a report on that, and follow up. But they do not go into the offices on a general hunt or review of correspondence or anything like that. They go in on specific instances where we have some reason to believe that a violation may be taking place. Mr. MEADER. But apparently in the course of whatever investigating they have been doing, they have not run across any of these agreements, some of which have now been shown to you, is that correct? Mr. MORSE. That is correct. Mr. MEADER. And yet this is a matter of grave concern to the Board, whether or not agreements are in existence which are not on file with the Board as required in section 15. The CHAIRMAN. Supplementing that, I want to say, Mr. Morse, we had 2 investigators for this subcommittee assigned to shipping. They labored most diligently. They went through over 100,000 documents, and they unearthed a great deal of very valuable information. It will be discernible as we go on, to see how valuable that information was. Now, it strikes me that your investigators ought to have been able to do far more than what has been indicated and made manifest here. It may be that they felt there was a lack of interest, in the top echelons, perhaps a desire to maintain the status quo and a lack of determination or fixity of purpose to go on with this matter. Possibly they sort of took a leaf out of the book of those higher up, and thus didn't do too much. But maybe you would want to hire our investigators. However, that latest document will be offered for the record. (The document referred to is as follows:) To: Chairman. FEDERAL MARITIME BOARD, From: Chief, Regulation Office. Subject: Supervision by Regulation Office of Practices of Steamship Conferences. The Federal Maritime Board does not have a power comparable to that exercised by the Interstate Commerce Commission over railroads to require the carriers to adopt a prescribed method of bookkeeping and the right to inspect the books to assure compliance with the orders and with the provisions of the act. The Board does have the right to issue section 21 orders requiring the filing of regular or periodic reports, etc. This, however, is cumbersome and, unless an open investigation is ordered in which subpenas duces tecum are issued. there is no way to compare the facts in the ordered report with the books of the carrier. There is no section of investigators comparable to that maintained by the Interstate Commerce Commission and one of comparable size could not be justified, but there is need for sufficient personnel to investigate on the ground such practices as arise and seem to require such close scrutiny. At the present time the Office has seven sources of information which assist in keeping it informed of the practices of the carriers. These are: (a) The tariffs and rules and regulations. (b) The practices of carriers, members of other conferences in related trades as shown in their tariffs, agreements and elsewhere. (c) The copies of their contracts which they make with shippers and others. (d) The minutes of their meetings and the circulars and memos sent to the shippers and others. (e) Conversations with shippers, carriers and others dealing with them. (f) The Board's information circulars received from the common carriers. (g) Complaints, formal and informal. These sources of information disclose many matters requiring further information to determine whether they are matters which should be condemned and altered. Without trained investigators, the Office is restricted to taking the matter up with the conference and demanding explanations. This places the Office at a disadvantage in being compelled to rely largely upon the carriers to admit and retract(?) their practices. Shippers are hesitant to come forward with complaints for fear that they will find the services they need restricted or otherwise weakened in retaliation. Some examples of such matters are as follows: (a) Determination as to effect on shippers of acceptance of freight payments in currencies other than that of United States of America. (b) The effect on shippers of rules and conferences limiting the period within which claims for overcharges of freight may be filed. (c) Periodic scrutinies of U.S. practices of conferences in the handling of disputes as to freight rates. Study the possibility of the establishment of a unified procedure. (d) Collection of data with respect to the practice of appointing shippers as carriers' agents and the effect of such practice. (e) Granting of delivery allowances or other advantages such as free time to different shippers and the effect of same on other shippers, ports, or carriers. (f) Independent study of the effect of conference rules restricting application of base rates to specified ports and establishing minimum tonnage offerings for calls at other ports. (g) General investigation of practice of conferences and outside carriers to publish their rates as applying from ship's tackle to ship's tackle, whereas the rates may include handling and other services. (h) Investigation of possible discrimination arising from the assessment of varying handling charges by the same ship on the same commodity shipped by the same shipper but destined to different ports covered by different conferences. (i) Possible detriment to commerce of the United States arising out of the close relationship between the carriers serving Canadian ports and those serving U.S. ports and the rumored limitation to British carriers of membership in the Canadian conferences. (j) Determination of lawfulness of practice of carriers' soliciting agents abroad, splitting their commissions with the consigners located abroad in return for their designating a certain carrier. (k) The policing of the practices of carriers with respect to exclusive use contracts and the enforcement of the provisions covering violations, including exceptions applicable to shippers who also operate ships such as tankers. Most of these matters can only be developed in the field to assure the presentation of an adequate amount of evidence at any hearing. However, this list is not comprehensive of all matters that might be discovered from a more careful and extended examination of the sources of information now available. Such examination would undoubtedly cut down materially the number of complaints. The present personnel available to check the information is not sufficient to give that examination and many matters needing correction come to light only after they have injuriously affected shippers and complaints have resulted. New tariffs and changes in old ones come in at an average rate of 1,400 per month. These have to be processed by removing the tariffs they displace, filing both the displaced and the new pages in their proper places. All rules and regulations contained on the pages should be studied to determine whether there are any inconsistencies with other provisions of the tariff, and all rates should be studied to determine ambiguities, duplications, or violations of the act. Including the chief of the section, there are only three examiners on this work. With the calls made upon them by other Departments and different divisions of the Board and Administration for existing rates, for trends in rates or for rates long ago canceled, these three are not in a position to give the incoming rates the scrutiny necessary to assure the elimination of improper tariff practices nor are they in a position to make regular periodic rate studies for the guidance of this office and the Board. An average of 220 minutes of meetings and circulars is received every month. To handle these there are two agreement examiners and one clerk. If they could spend all their time on these minutes, etc., they could probably give them the study necessary to get their full import. Conferences seldom put down all the reasons for their actions, nor do they record all the debates which arise. It is only becoming accustomed to the approach which the different conferences make to the different problems and becoming imbued with character of each trade, that an examiner can read between the lines and sense a matter which seems out of the ordinary and to be, therefore, subject to inquiry. A minimum of two more tariff examiners and two more agreement examiners will be necessary to utilize to the full extent the information at the command of the office to assure an ample protection of the shipping public from unfair practices (often unintentional) of the carriers. This added personnel, together with the investigators who can make on-the-spot examinations of complaints, or of matters sent to them by the office, should assure a much more complete and satisfactory administration of the regulatory provisions of the act pertaining to conferences of carriers. This report does not apply to forwarders, to terminal operators, carriers engaged in offshore domestic trades, nor to the docket work. R. H. HALLETT, Chief, Regulation Office. ce: Gatov, Member of Board; Mr. Williams, Member of Board; Secretary. |