и

15 556

AIR MAIL

UNITED STATES NES OPERATIONS NC

MR.FRE
MR. FREEL

SOPALL MALL. LONDON SW

Fe

MGENERAL MANAGER

MR WALL BYRNE

MR. DIVINE RETURN TO•

117

This item appeared on the docket for the first time at the Stresa Meeting in Oetober and concerned the Black Diamond Line who we had accused of granting concessions in passenger rates to the Dutoh Bulb shippers and also offering redused rates on the motor gars of these same people. The Minutes for the Stresa Booting reflected the discussion and it was picked up by Llord Tibbett, who then wrote our Conference Secretary, as per copy of letter enclosed.

Tibbott's letter gave us the opportunity of re-opening
the discussion at last week's Meeting. We again pressed
Black Diamond as hard as we could, hoping that they would
change their attitude and give some assurance to the membership
that they will discontinue the practice of offering free
rides or granting reduced rates, but, as you will see from
the Minutes, their position remains the same. The membership
was polled and all Lines, except Black Diamond, expressed
their disapproval. Black Diamond tried to squirm out by
saying:

Black Diamond Line never indulged in the practice of
granting reduced or free passages and/or reduced or
free transportation expenses for passengers' belongings
FOR THE PURPOSE OF INFLUENG ING THE ROUTING
Furthermore, the Black Diamond Line consider the question
of passenger fares and transportation expenses to be
outside the scope of our Conference Agreement and
Consequently they intend to continue their policy."

Contd.

Mr.P.E.McIntyre.

USJJ6 F.

January 17th, 1950.

Granting of Concessions (Contd.)

They also tried to bee loud the issue by asserting that their actions were no worse than the practice of the other passenger lines in entertaining large groups of shippers on their passenger liners.

Perhaps you could arrange to have someone discuss this situation with Mr.TIbbott as we would like him to follow-up with the Conference because we feel that Black Diamond's action is a flagrant violation of our Conference Agreement,

One other angle, my understanding is that all common carriers of passengers by sea must file a so hedule of their rates with the Authorities in the States and it might well be that the granting of reduced passenger fares by Black Diamond oould be construed as a violation of the rate sehedules which they file.

We know now why Black Diamond has been so successful in the Bulb traffic and if at all possible we want to stop them.

Minute No.280 Pre-Paid Freights in relation to Czechoslovakian
Traffic.

This does not reflect what actually took place.

This is where we forced Holland America Line to admit that on the Czechoslovakian traffic which they were lifting at Hamburg they were accepting guilders in Rotterdam in payment of the freight.

This is a downright violation of our Conference Agreement, which provides that Prepaid freights must be paid either in dollars or in the currency of the country from which the goods are shipped, in this oase Deutsche Mark.

Not only did we force them to admit this practice but also to agree that they would discontinue the acceptance of Czechoslovakian traffic at German ports until they had as an opportunity of discussions with the Netherlands Bank, but we would not permit them to stall for time.

Our people in the Hamburg and Fremen offices, as well as in Prague, have been alerted to watch the situation closely and if we find that they are still lifting Czech. traffic we will raise the issue again immediately.

Penalty Clause:

We also brought up for discussion the question of insertion of a Penalty Clause in our Conference Agreement. We do not know how far we will get with this but perhaps we can obtain unanimous agreement for adoption of some mild form of clause.

Con

H

The CHAIRMAN. Mr. Tibbott, that was a rather boldly worded communication. Did you take any action on it, or you, Mr. Morse?

Mr. MORSE. I was unaware of the existence of this situation.

The CHAIRMAN. Have you any present recollection of having any action taken on it?

Mr. TIBBOTT. It do not recall whether that was followed up by the United States Lines.

I would have to check our records to see what happened.

(Subsequently, the Board supplied the information, which appears at p. 907.)

The CHAIRMAN. Doesn't this letter indicate that at least with respect to this case other members of the industry felt that this was a rebate case?

Mr. MORSE. Yes, sir. But I am sure there is a penalty provision provided in the basic agreement itself. And in my opinion, the conference members are at fault in failing to apply the penalty against one of their own members.

The CHAIRMAN. What is the date of that communication, Mr. Harkins?

Mr. HARKINS. January 17, 1950.

Mr. MORSE. That is one of the difficulties I find with the conferences. They hesitate to penalize one of their own members. I think a few penalties applied at appropriate times and places would correct a lot of these things.

The CHAIRMAN. If they don't take any summary action of that sort, the Board ought to.

Mr. MORSE. We surely should.

In fact, where there is a flagrant violation, I think the Board should disapprove a basic agreement, if the conference won't police it properly.

Mr. MEADER. Mr. Morse, what is the usual penalty provided for in these conference agreements, for violating the conference agreement? Mr. MORSE. They will vary, some of them impose a penalty of $25,000.

The CHAIRMAN. Section 20?

Mr. MEADER. NO; I am talking about the penalty provided in the conference agreement.

Mr. MORSE. They will vary. Some of them proposed a penalty up to $25,000.

The CHAIRMAN. That is the conference itself.

Mr. MORSE. Yes, sir.

Mr. MEADER. Can they expel a member for violating the terms of the conference agreement?

Mr. MORSE. Yes, they can. And all is subject to our right of review. The CHAIRMAN. Do you-is it not in order for the Maritime Board to make a check on this situation to see whether this practice takes place even today?

Mr. MORSE. Yes, sir'; we should and will.

The CHAIRMAN. You will conduct some sort of inquiry?

Mr. MORSE. Yes, sir.

The CHAIRMAN. Under section 20 of the Shipping Act, it is a violation of law for any-of course, we have given you a lot of work to do, Mr. Morse.

Mr. MORSE. We will have to ask for an increase in staff, I am sure. The CHAIRMAN. I am one of those who thinks you should have an increase.

Mr. MORSE. I think we should also.

The CHAIRMAN. We would be very glad to help you.

Under section 20 of the Shipping Act it is a violation of law for any carrier or person subject to the act, or his officer, agent, or employee who is authorized to receive information, knowingly to disclose to or permit to be acquired by any person other than the shipper or consignee without consent, or "to solicit or knowingly receive" any information concerning the nature, kind, quantity, destination, consignee, or routing of any property tendered or delivered to such common carrier or other person subject to the act, "for transportation in interstate or foreign commerce which information may be used to the detriment or prejudice of such shipper or consignee, or which may improperly disclose his business transactions to a competitor or which may be used to the detriment or prejudice of any

carrier."

Now, Mr. Morse, I take it that this section is intended to protect shippers and carriers from unauthorized snooping into their business relationships with each other; is that not correct?

Mr. MORSE. Yes, sir.

The CHAIRMAN. Under section 32 of the act, a violation of section 20 would be a misdemeanor, punishable by a fine of not more than $5,000 for each offense; is not that right?

Mr. MORSE. Yes, sir.

The CHAIRMAN. Would you say that Congress intended that this section protect independent carriers as well as conference lines? Mr. MORSE. It protects all carriers.

The CHAIRMAN. Is it your view that the acquisition by any means by a conference chairman of information concerning the nature, volume, shipper, or consignee of shipments, carried by nonconference competitors without their consent, would be a per se violation of this act?

Mr. MORSE. Mr. Chairman, your question is, Would it be a prima facie violation to receive the information from any source? I am not sure it would be a violation

The CHAIRMAN. I don't say from any source. I say, Is it your view that the acquisition by any means by a conference chairman? Mr. MORSE. No, that would not be a violation-by any means.

I am not sure that would be a violation. For example, many of these rate statistics are published in the papers.

The CHAIRMAN. I mean ordinarily, if he gets it privately-would that be a violation?

Mr. MORSE. I think under the section it depends on the source of the information.

The CHAIRMAN. Well, let's assume he gets it privately.

Mr. MORSE. Well, again, merely because he obtained it privately is immaterial, in my mind. It is the source, I think.

The CHAIRMAN. It doesn't limit the source. At the very end of the first paragraph, section 20, it says:

shall also be unlawful for any person to solicit or knowingly receive any information which may be so used.