I am attaching hereto photostat copies of all communications received by the Shipping Board from the State Department and typewritten copies of all communications sent to the Department of State by the Shipping Board. I am also attaching copy of a report made by Mr. R. L. McDonald, a member of our staff, which gives further information on this subject.

JAMES TALBERT.

Now, here I wish to read the resolution of the Shipping Board adopted October 11, 1922, agreeing to sell her for this $60,000. I will ask Mr. Richardson to read this.

Mr. RICHARDSON (reading):

Whereas the steamship Martha Washington, being then an interned vessel belonging to the Cosulich Line, an Austrian company, was requisitioned by the United States on August 31, 1917, and was thereafter operated and used for and on behalf of the United States; and

Whereas the Navy Department has fixed the sum of $822,000 as being the value of the said steamship Martha Washington at the time the vessel was requisitioned; and

Whereas Cosulich Line, through the Department of State, has offered the sum of $60,000 cash and release of all claims against the United States, the United States Shipping Board, and/or United States Shipping Board Emergency Fleet Corporation in payment for the said vessel; and

Whereas, after diligent effort, the board has been unable to obtain from an American citizen an offer for the steamship Martha Washington as valuable to the United States as the offer of Cosulich Line herein referred to, and after careful investigation the board deems said vessel unnecessary to the promotion and maintenance of an efficient American merchant marine; and

Whereas the Department of State has advised the board, by letter to the chairman thereof dated September 30, 1922, that the Cosulich Line lost its Austrian status and became an Italian company upon the transfer of Trieste to Italy in pursuance of the treaty of St. Germain; that it is probable that the United States will be called upon to compensate the former owners for the use and retention of the said vessel by the United States; and that for reasons of policy it is desirable that the offer of the Cosulich Line above referred to be accepted: Be it

Resolved (five members of the board being present and voting in the affirmative), That the sale of the steamship Martha Washington to the Cosulich Line, an Italian organization, "as is, where is" without warranty against. liens, for the sum of $60,000 cash be and it hereby is approved, provided that the said Cosulich Line shall execute and deliver to the United States Shipping Board such general releases saving and holding the United States of America, the United States Shipping Board and/or the United States Shipping Board Emergency Fleet Corporation free and harmless from any and all liens or claims of whatsoever nature arising out of the requisition, taking of and/or use of the steamship Martha Washington by the United States of America and/or the United States Shipping Board and/or the United States Shipping Board Emergency Fleet Corporation as counsel for the board may require: and be it

Further resolved, Subject to the foregoing conditions, that the proper officials of the United States Shipping Board and/or the United States Shipping Board Emergency Fleet Corporation be, and they are hereby, authorized to execute and deliver, subject to the preparation and/or approval thereof by the legal department, such instruments and take such other actions as may be necessary and proper to carry the foregoing action of the board into effect; and be it

Further Resolved, That the transfer of registry of the steamship Martha Washington to alien registry and flag be, and it hereby is, approved.

October 11, 1922.

Mr. DAVIS. One of the features of the preamble in that resolution is:

Whereas, after diligent effort, the board has been unable to obtain from an American citizen an offer for the steamship Martha Washington as valuable to the United States as the offer of Cosulich Line herein referred to, and,

after careful investigation the board deems said vessel unnecessary to the promotion and maintenance of an efficient American merchant marine.

Had any specific efforts been made through your department to find an American purchaser for that vessel ?

Mr. PHILBIN. My recollection of it is that when I got the first copy of the board's resolution on this vessel, of October 11, I called the attention of the chairman to the fact that the board could not sell to foreigners, no matter whether they got 10 times as much money, without first making an effort to sell it to Americans. Mr. COOPER. Did you give that notice in writing?

Mr. PHILBIN. No; but I think I got a written notice to the Secretary relative to it.

Mr. COOPER. Have you got it there?

Mr. PHILBIN. No, sir; I have not. I do not think I have got that with me. It runs in my mind I did, and I will produce it if I have it. (Exhibit No. 107-1.) But at any rate, I called it to the attention of the chairman and said that I had an offer from an American concern, which I had presented to the board as of June 23, 1922. I will be very glad to read my statement if you want it.

Mr. DAVIS. Yes, we would be glad to get that.

Mr. PHILBIN. That is an interoffice memorandum from J. Harry Philbin, manager department of ship sales, to Vice President Farley, for presentation to the ship sales committee and Shipping Board. [Reading:]

66

OFFER OF FRANK AUDITOR FOR THE STEAMSHIP MARTHA WASHINGTON'

Mr. E. F. Colladay, an attorney of Washington, has submitted a proposal on behalf of Frank Auditor to purchase the ex-enemy combination cargo and passenger steamer Martha Washington for $210,000, payable cash upon acceptance. The bid is accompanied by certified check for $5,250. The offer to purchase is made subject to inspection on dry dock, the cost of said inspection to be for the buyers if vessel is accepted and for the board if vessel is rejected. The Martha Washington is a twin-screw steamer of 7,412 gross tons, built at Glasgow in 1908. She is equipped with two reciprocating engines and six Scotch boilers and is designed to steam about 17 knots on a consumption of 85 tons of coal. At the present time she is outfitted to carry 75 first-class passengers and 92 second class, but could be readily altered to carry a substantial number of third-class passengers.

She has been operated for the account of the board in the South American service for the Munson Line and was laid up November, 1921.

She has been surveyed and appraised quite recently, and she is reported to be in very fair condition. She is stated to have a present-day value of $425,000.

In view of the disparity between the amount of Mr. Auditor's proposal and the vessel's appraised value I recommend that this bid be rejected. Furthermore, Mr. Auditor is one of the principals in the Susquehanna Steamship Co., pioneer purchaser of Shipping Board tonnage, and with whom a former pioneer purchase settlement has been under negotiation. The board recently directed that no sales be made to pioneer purchasers until their old accounts have been settled.

Mr. COOPER. That is important, that last statement.

Mr. DAVIS. Will you read that last paragraph again?

Mr. PHILBIN (after reading the last paragraph). That is signed "J. Harry Philbin."

Mr. DAVIS. But he offered to pay $210,000 cash for the Martha Washington, did he not?

Mr. PHILBIN. Yes, sir.

Mr. DAVIS. So any previous transaction was a matter of no concern in that.

Mr. COOPER. And we sold it for $60,000 as a matter of policy.

Mr. DAVIS. Yes. And you recommended that that offer be rejected because the $210,000 was inadequate, and did the Shipping Board reject that?

Mr. PHILBIN. Yes, sir.

Mr. DAVIS. And then in October following they sold it for $60,000 under the representation in this resolution.

Mr. PHILBIN. Not October the year following, October of that same year.

Mr. DAVIS. Yes; that is what I meant. They sold it for $60,000 under the representation that

Whereas after diligent effort the board has been unable to obtain from an American citizen an offer for the steamship Martha Washington as valuable to the United States as the offer of Cosulich Line herein referred to.

Now, the next representation is this--and before I get to that I also again want to call attention to the fact that the International Mercantile Marine had offered $1,100,000 for her before she was reconditioned. Then this resolution says:

After careful investigation the board deems said vessels unnecessary to the promotion and maintenance of an efficient American merchant marine.

As has been heretofore stated, it is generally recognized in the Shipping Board and Emergency Fleet Corporation, and in shipping circles, is it not, that what we are most deficient in is these large passenger or passenger and cargo vessels, as distinguished from cargo vessels?

Mr. PHILBIN. Especially that speed--17 knots.

Mr. DAVIS. That was a speedy vessel, generally speaking?

Mr. PHILBIN. Yes, sir.

Mr. DAVIS. Now, let us read another part of the preamble:

Whereas the Department of State has advised the board by letter to the chairman thereof, dated September 30, 1922, that the Cosulich Line lost its Austrian status and became an Italian company upon the transfer of Trieste to Italy in pursuance of the treaty of St. Germane.

With regard to that, that was subsequent to and as the result of the war, as shown by the records, was it not?

Mr. PHILBIN. Yes, sir.

Mr. DAVIS. And could not change the status or title of what occurred previous to that, as we have shown in the record, and as was admitted by the attorneys for this company

that it is probable that the United States will be called upon to compensate the former owners for the use and retention of the said vessel by the United States, and that for reasons of policy it is desirable that the offer of the Cosulich Line above referred to be accepted.

On the question that we probably-that is, the United Stateswould be called upon to make reparation, Mr. Chairman, I want to insert in the record a copy of the treaty with Austria, in which, in substance, it shows that we are not responsible for the payment for any such property.

(The paper referred to was marked " Exhibit No. 107-2.")

And then I want to also insert in the record certain parts of the peace treaty which are specifically referred to and embraced as a part of that treaty, which does the same thing.

Mr. COOPER. Give the dates of the treaties and the portions shown, so we can identify them accurately.

Mr. DAVIS. The treaty with Austria was signed on behalf of Austria on August 24, 1921, and was signed by Warren G. Harding, President, and Charles E. Hughes, Secretary of State, on behalf of the United States, on November 17, 1921.

In that same connection I wish to call attention to the further fact that within the past few weeks the United States Court of Claims has dismissed the suit by the Hamburg-American, the North German Lloyd, and other German shipping companies against this Government to recover $350,000,000 on account of German vessels seized in American ports at the outbreak of the war. Twenty-nine corporations were parties to the suit, which was thrown out by the court in sustaining the Government's demurrer. In other words, the question was raised directly there as to whether or not this Government was liable to the former owners of seized enemy ships, and the court held that this Government was not liable, and in so far as seized ships and other properties were concerned the treaty that we made with Austria was the same as that made with Germany, and as evidence of that fact I wish to also insert in the record a copy of our treaty with Germany, which is in this same document, to show that. Mr. COOPER. Is that the peace treaty?

Mr. DAVIS. No; it was the separate treaty that we made with Germany and Austria. We made separate treaties with them. Mr. COOPER. Is that the same date?

Mr. DAVIS. No; the date of the treaty with Germany, which I wish to insert in the record, was signed by the representatives of the German Government on August 25, 1921, and signed by President Harding and Secretary Hughes, on behalf of the United States, on November 14, 1921.

(The paper referred to was marked "Exhibit No. 107-3.")

So that the decision of the Supreme Court would inevitably be the same in case of an Austrian vessel that we captured when we were at war with her as it would with those that we captured from Germany.

Mr. COOPER. The Government simply demurred to the complaint, and they sustained the demurrer?

Mr. DAVIS. The court sustained the demurrer.

I wish to call attention to the concluding paragraph of this Shipping Board resolution, which is as follows:

Further resolved, That transfer of registry of the steamship Martha Washington to alien registry and flag be, and it hereby is, approved.

Mr. Talbert, who, as we all recall, was appointed by the Shipping Board and Emergency Fleet Corporation to procure this data that was called for by this committee, referred to a statement in regard to this transaction furnished by Mr. R. L. McDonald. Who is Mr. McDonald, Mr. Philbin?

Mr. PHILBIN. He was assistant to Mr. Cremer, who was the financial assistant to the chairman.

Mr. DAVIS. I think it proper for me to say that we called for a full statement of all the facts pertaining to this transaction is the reason that these representatives prepared it in narrative form.

I want to insert that entire statement of Mr. McDonald's in the record as an exhibit (Exhibit No. 107-4), but not take time to read all of it now, but I do want to read some extracts from it. Among other things it states:

On May 20, 1920, Mr. Charles E. Hughes presented a petition of Cosulich Societa Triestina di Navigazione, an Italian corporation, addressed to the Congress of the United States:

To the Congress of the United States:

Cosulich Societa Triestina di Navigazione, an Italian corporation, having its legal seat at Trieste, Italy, respectfully petitions the Congress of the United States of America to retransfer to it the title to the passenger steamship Martha Washington and to authorize and direct the United States Shipping Board to redeliver this steamship to it and to determine just compensation for the use thereof from May 11, 1918, to date of redelivery, and to award and pay the same. May 20, 1920.

Respectfully,

COSULICH SOCIETA TRIESTINA DI NAVIGAZIONE,
By OSCAR COSULICH, Director.

CHARLES E. HUGHES,
Of Counsel for Petitioner.

In a memorandum supporting the petition the action of the board in granting compensation was pointed out, and it was further stated that the board had no further power to make further awards because the President's order of My 11, 1919. vested title in the United States, and that Congess alone could divest the title so acquired and direct payment of just compensation for the use of the steamship after May 11, 1918. Hence the reason for the petition addressed to the Congress of the United States.

Mr. COOPER. Let me ask you right there, Judge Davis, did that come up before the Merchant Marine Committee? Mr. DAVIS. Yes; I am going to come to that.

Mr. COOPER. That is a very important thing.

Mr. Davis. I wish to introduce at this point H. R. 14895, a bill introduced in the Sixty-sixth Congress, first session, on December 10, 1920, by Mr. Greene of Massachusetts, which was referred to the Committee on the Merchant Marine and Fisheries and ordered to be printed, being a bill to provide for the transfer of the steamship Martha Washington to Cosulich Societa Triestina di Navigazione, an Italian corporation of Trieste, and directing the United States Shipping Board to make delivery of the said steamship and to determine, award, and pay just compensation for use of the said steamship. I want to insert that in the record, and I will ask Mr. Richardson to read it.

Mr. RICHARDSON (reading):

[H. R. 14895, Sixty-sixth Congress, third session]

In the House of Representatives, December 10, 1920. Mr. Greene of Massachusetts introduced the following bill, which was referred to the Committee on the Merchant Marine and Fisheries and ordered to be printed:

A BILL To provide for the transfer of the steamship Martha Washington to Cosulich Societa Triestina di Navigazione, an Italian corporataion of Trieste, and directing the United States Shipping Board to make delivery of the said steamship and to determine, award, and pay just compensation for use of the said steamship

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That all the right, title, and interest of the United States in and to the passenger steamship Martha Washington, steamship was taken over by the United States by virtue of an Executive order of the President dated May 11, 1918, made pursuant to the joint resolution approved May 12, 1917, be, and it hereby is, transferred and vested in Cosulich Societa Triestina di Navigazionė, an Italian corporation of Trieste.