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small an amount of capital can reach so many fishermen as through their organizations.

The other thing I wanted to point out is that we would like in the near future to have consideration of a bank for fishermen's cooperatives. The bank for cooperatives that the farmers have is an exceedingly useful thing to the farmers through their cooperatives.

Mr. Tollefson has introduced legislation on the House side that we are very much in favor of. I don't believe it can be hurried or given much attention this year. But I am quite sure that we will be back next year asking your consideration of such a measure.

Senator PAYNE. That will probably go to the Banking and Currency Committee on this side.

Mr. CHAPMAN. Put the word "fishermen" in it. We have all looked to you and to Senator Magnuson on this committee as just the stanchest friends we have here. Actually, our problems should be dealt with by the Finance Committee and the Ways and Means Committee, because they are import problems. But the way the country runs these days you can't do it. So you people are saddled with problems that you have to go at obliquely here, and we think that you have done a tremendously fine job in trying to make these oblique approaches to what should be solved more directly in other fashions.

Senator PAYNE. Of course the Reorganization Act establishes what legislation shall go to what committee.

Mr. CHAPMAN. I was speaking in terms of government policy. I wouldn't want to get into the Reciprocal Trade Agreements Act before this committee.

In conclusion I would like to say that if you wish to ignore completely the economic interest of those of us who are now in the fisheries, there is still a very grave problem in my mind in a fishing country, of the policies which are being pursued by the Department of State and the Bureau of the Budget, which are leading directly to the complete sacrifice of our high seas fisheries.

I just put to you that this is not good for the country. Ignore the specific interest of my members. This is not good for the country, that at a time when all maritime countries-particularly including Russia-are giving very material subsidies to the expansion of their high seas fisheries, and during the period of time when the law of the seas is in a state of flux and there is some tendency at least toward establishing claims to resources in the high seas. We are just throwing them away, and I think it is just stupid, and I think that should be given some material consideration by the committe, by the Senate and by the Congress. We have no hope of any action from anyone except the Congress.

The Department of State should ride herd on these things, and they have no interest whatever in the fisheries; let them be wiped out. I don't think it is good for the country. I would like to leave on that note.

Senator PAYNE. Thank you very much, Doctor. You are always very, very helpful.

Mr. CHAPMAN. Thank you, sir. I hope to see you here next year and testify on this bank cooperative before you.

Senator PAYNE. Thank you very much.

At this point in the record I would like to have inserted a copy of a statement submitted by Senator John Kennedy, of Massachusetts, in support of this legislation that we are presently considering. (The statement follows:)

STATEMENT BY SENATOR JOHN F. KENNEDY

Mr. Chairman, 5 years ago I testified before the Tariff Commission urging relief for the ground-fish industry. Twice the Commission recognized the difficulties confronting this domestic industry and twice the Commission recommended duty increases. The second time was on October 12, 1956, when the Commission unanimously urged an increase in the tariff and in a public report called attention to the danger facing this important domestic industry unless their recommendation was accepted. Both times the President denied the increase in duty for foreign-policy reasons. In his 1956 statement refusing to implement the Tariff Commission's decision the President suggested that "bold and vigorous steps" be taken "to provide root solutions for the industry's problems."

Yet nothing has been done since then. I am encouraged by these hearings to hope that legislation will be reported by this committee and adopted by the Congress which will take those long overdue "bold and vigorous steps." There is a tendency in some quarters to ignore the fishing industry on the ground that it is of little economic significance. Nothing could be further from the truth. It has a major impact upon the economy of Massachusetts, upon the economy of New England, and upon the economy of the whole United States including what will be our 49th State Alaska. Until comparatively recently, the fishing industry was a major stabilizing factor in the economy. Today 1,500,000 people are still directly dependent upon it. Its gross annual sales are $1,100 million.

In the past 10 years foreign imports of fish have cut deeply into the domestic market. Imports of groundfish fillets have almost tripled since 1948, rising from 54 million pounds to 141 million pounds. The effect of this upon both the employees and the employers of the industry has been little short of disastrous. To the natural hazards of the industry have been added man-made financial dangers. The groundfish filleting firms in Boston and Gloucester are now operating at a loss. During the past 10 years, while prices, the cost of living, and most wage rates, have risen to the highest point in our history, the crewmen on trawlers in Boston and Gloucester have found their average net income constantly decreasing.

Mr. Chairman, groundfish are the most important marine resources of New England and the third most valuable in the United States. About 30 percent of the labor force in Gloucester is employed in catching, processing, or distributing fish; another 40 percent depend indirectly on fishing for their livelihood. In Provincetown the percentage engaged directly in fishing is nearly 35 percent. Similar conditions exist in other towns up and down the coast. In recent years New England has accounted for about 90 percent of a total domestic output of groundfish fillets.

Up until a decade ago the New England groundfish industry produced 90 percent of the frozen groundfish fillets consumed by the American public. Now because of the phenomenal growth in imports the market available for domestic groundfish fillets has been reduced to 35 percent of the American consumption. Boston accounts for about 40 percent of the domestic output of groundfish fillets; Gloucester for about 30 percent; Portland and Rockland together for about 25 percent and New Bedford for about 5 percent. It is apparent that fishing is not only the oldest industry in New England but one of the most important. Today that industry is facing its most critical period. Every one of the studies I have seen shows

(1) The vessels are in a rundown condition and poorly maintained. This is not for lack of private initiative, but because of insufficient financial

resources.

(2) The vessel owners are in serious financial difficulty. Composite earnings for the industry show a net loss.

(3) The fishermen receive only a base subsistence income.

(4) The processors have inadequate working capital.

The causes for this condition are complex but two times stand out. First, the national policy has contributed to this condition by continuing the tariff upon imports at too low a rate. Secondly, the Federal Government, therefore, has a responsibility toward the industry which can only be met by helping initiate a constructive program to prevent it from collapsing.

The best program is one which encourages an industry to help itself The best program is one which encourages an industry to help itself. That is what is contemplated by S. 3229. The substitute for S. 3229 has a similar purpose. The original bill makes a comprehensive attack upon the basic problems. It does this by

(1) Offering vessel owners an incentive to increase their safety precautions by providing for a Federal contribution to the cost of safety and lifesaving equipment. Insurance costs are so high they cost 15 percent of the income. An increase in safety would be reflected in reduced insurance rates. (2) Offering an incentive to the modernization and reconditioning of vessels by providing for a Federal contribution toward the cost of the necessary alterations. This provision not only makes it good business to make the necessary changes in our fishing fleet, it makes it economically feasible.

(3) Offering a grant to cover a portion of the cost of reconditioning the holds of fishing vessels.

(4) Offering an incentive to the purchase and installation of facilities for freezing the fish at sea by authorizing a Federal contribution toward the cost of the purchase and installation of neecssary equipment. Freezing fish at sea is over a decade old. It is cheaper, leads to a higher quality product, and reduces spoilage. Due to financial circumstances, our fishing fleet has been unable to acquire these facilities.

(5) Offering an incentive for the modernization of fish-processing plants by providing for a Federal contribution toward the cost of the necessary facilities.

(6) Paying any fishing-vessel owner the difference between the cost of construction of a new fishing vessel in American yards and the estimated cost of such construction in foreign yards. Such a program has long been

in effect with regard to other types of vessels.
(7) Establishing a loan fund for improving and modernizing processing
plants.

(8) Authorizing incentive payment to fishermen for observing improved methods of handling fish and for conducting exploratory fishing operations. (9) Authorizing incentive payments to processors for greater operating efficiency in handling fish.

The bill, in addition, would establish a system for reporting insurance claims, institute inspecting and grading services, and authorize the Secretary to contract for or to design improved methods for unloading and handling fish from fishing vessels.

The substitute bill offered by the senior Senator from Massachusetts, and cosponsored by the distinguished chairman of this committee, Senator Magnuson, as well as by Senator Smith and Senator Payne, of Maine, and by me, is directed at most of the same objectives. It achieves them in a little different form.

I am convinced that this program contains within it what is needed to make the fishing industry a healthy, progressive, self-sustaining feature of the economy. Once again it would become an important stabilizing factor in our economy. Foreign governments and foreign fishing industries have already embarked on one or more of these programs. We can no more afford to be second best in this field than we can in any other.

I strongly urge that this committee report the bill favorably. Some action at this session of Congress is essential if the employees, the owners of the vessels, and the fishing communities are to survive as important national assets.

Senator PAYNE. Now we have our old friend, Charlie Jackson, who I understand would like to be heard on this legislation, also.

STATEMENT OF CHARLES JACKSON, GENERAL MANAGER, NATIONAL FISHERIES INSTITUTE, INC., WASHINGTON, D. C.

Mr. JACKSON. The board of directors of the National Fisheries Institute, its governing authority, concluded their annual meeting in San Francisco on April 23, 1958. Recognizing the serious problems confronting the New England ground-fish industry, the situation which developed for reasons beyond its control, and recognizing its dire need for assistence if this basic New England industry is to survive, the board of directors gave careful study to S. 3229 and by an overwhelming vote adopted the following recommendation of its legislative committee:

The legislative committee, after considering the debates before the board of directors in regard to the need of relief by certain segments of the fishing industry, respectfully recommends that in order for the fishing interests of the United States to be competitive with the fishing interests of other countries, that legislation should be enacted to take care of the construction differential in fishing vessels similar to that which is done by other types of maritime construction in this country.

And further, that there is a dire need of credit to the fishing industry, and the United States Government, in order to preserve this industry and maintain the American fishing fleet so as to be available for defense needs, should make available an adequate quantity of credit on reasonable terms and at low-interest rates in order that plants and vessels could be modernized, and that the American fishing industry could become truly competitive with the fishing interests abroad, all of which are subsidized by their respective governments.

We recommend that the general manager be instructed to support S. 3229 and similar House bills with the exception of sections 7 and 8, which are the subsidy provisions, and that he use his best efforts to procure legislation to carry out these recommendations.

Mr. Chairman, I have not had an opportunity to study Senator Saltonstall's substitute as carefully as I would like, since it was only made available this morning. None of the officers or members of our board of directors has seen this substitute, and I would like the privilege of submitting a further statement, if necessary-and I rather doubt that it will be-after consulting my officers.

Nevertheless, my study of it up to this moment gives me the impression that it is in accord with the suggestions included in the report of our legislative committee. This report was adopted by a huge vote. In fact, there was only one vote against it.

Our principal objections, as stated, on the original S. 3229, were sections 7 and 8, which have been removed from the substitute bill. There may be some areas in the fishing industry where there is no need for new fishing vessels to date. In fact, there may be too many in some instances. In these cases it would be unwise to encourage new construction until the situation warrants it.

However, it occurs to me that the language which safeguards this situation leaves the matter to the Secretary of the Interior. It does place quite a responsibility on the Secretary, as we all know.

I believe Senator Saltonstall's substitute comes within my instructions to use my best efforts to secure relief legislation for the fishing industry. It is encouraging that the members of this committee recognize the serious plight of the American fishing industry, and I sincerely hope that we in the industry can find it possible to unite our efforts and to give undivided support to our chairman and to Congress on this bill.

Senator PAYNE. Thank you very much. If there is any statement that you should desire to have made a part of the record, as I announced previously, we will hold this record open until Wednesday for any statements to be added to those already made.

It is my understanding that William E. Farrar, Federated Fishermen's Association, would like to be heard, also.

We are very happy to have you with us, Mr. Farrar.

STATEMENT OF WILLIAM E. FARRAR, FEDERATED FISHERMEN'S ASSOCIATION, TERMINAL ISLAND, CALIF.

Mr. FARRAR. My name is William E. Farrar. I am with the Federated Fishermen's Association of San Pedro, Terminal Island, Calif. I am speaking on behalf of the Fishermen's Cooperative Association of Seattle, Wash., and the California Commercial Fishermen's Association of Terminal Island, Calif. The Seattle co-op is primarily a salmon-fishing organization. However, during the months of July, August, September, and October, approximately three or four hundred of those boats migrate south and fish for albacore tuna.

The California commercial co-op are mainly albacore tuna fishermen. These two fleets are both very old, most of the boats are very old. I own one of the boats myself, and it was built in 1948. It is one of the newer boats in the entire fleet.

One thing that was brought out in the investigation of the Tariff Commission, that in 1950 there were 3,583 boats fishing for albacore tuna. In 1957 the figure had shrunk to approximately 1,425 boats. A lot of that can be laid to the fact that they weren't efficient, many of the boats that were forced out of business.

You have to compete now with foreign imports. You have to have good equipment, fine refrigeration. In fact, the only boats remaining in fishery now is what we call the high-line boats, the biggest part of them having been forced out.

That will continue as time goes on unless we get help through legislation of this type. Our two organizations that I representboth of these organizations belong to our federation-are strongly in support of this bill with the suggested amendments of Mr. Case and the other boys.

Senator PAYNE. Thank you very much.

We now come to Donald McKernan, Director of the Bureau of Commercial Fisheries.

We will be very happy indeed to have you enlighten us as to your views, and the views of the Department in connection with the legislation.

STATEMENT OF DONALD L. McKERNAN, DIRECTOR, BUREAU OF COMMERCIAL FISHERIES, FISH AND WILDLIFE SERVICE, DEPARTMENT OF THE INTERIOR

Mr. McKERNAN. Thank you, Senator. As was quite aptly mentioned by Senator Saltonstall this morning, the Department does not have an official view on the legislation at hand. But I thought perhaps that the committee might like to have some of the facts which had been mentioned this morning, perhaps brought out in slightly more detail. The Department is very much concerned about the plight

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