"If the proposed advertisement, instructions to bidders, and contracts meet. with the approval of the board, it is recommended that authority be granted to advertise these lines and vessels, bids to be received on February 1, 1928. "The above have been submitted to the Bureau of Law and have been approved as to form. "A. C. DALTON."

The attachments referred to in the foregoing memorandum are in the files of the Secretary.

Commissioner Smith asked that the question as proposed to-day be carried over for a meeting of the board when more members are present and for opportunity for due consideration, stating that that sort of request by a commissioner has heretofore been recognized by the board.

Commissioner O'Connor stated that those requests were not recognized when a day had been set on which to act on a particular matter. He further stated that the present board members were not responsible for the other two members being absent at this time on a vacation, and did not propose to see the business of the board held up on account of the absence of some of the members. He also stated that the record shows that this matter was to be taken up at this meeting.

To which Commissioner Smith answered that the matter as now proposed was never before the board.

The chairman then offered the two following resolutions as substitutes for the plans and specifications presented by the Merchant Fleet Corporation and moved their adoption:

"Whereas the board is desirous of securing the best offers obtainable for purchase of all its lines of cargo ships now operated in established trade routes from Pacific coast ports and to provide for the continuance of such operation in such routes in a manner that will be profitable to the purchaser and of the greatest benefit to the public; and

"Whereas it is the judgment of the board that those objectives would be furthered by permitting purchasers of said lines to have the privilege of calling at all Pacific coast ports to take on or discharge cargo, irrespective of the home port from which the trade route is now operated and to be operated, provided always that the minimum number of sailings from the specified home port be made: Be it "Resolved, That proposed advertisements of sale of all of said lines of cargo ships now operated by the board from Pacific coast ports and the sales contracts made pursuant to accepted proposals received on such advertisements shall contain provisions as follows:

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(a) Requiring the purchaser or purchasers of each and all of said lines to guarantee the maintenance thereof in the trade routes in which they are now operated for a minimum period of 10 years;

(b) Giving the purchaser or purchasers of each and all of said lines the privilege of calling at all American, Canadian or Mexican Pacific-coast ports or ports in the Philippines or at any Oriental foreign port to load and discharge cargo, provided the required minimum number of voyages to and from the present home port of said lines is strictly maintained;

"(c) Requiring the purchaser or purchasers of each and all of said lines to guarantee a stated minimum number of sailings as follows: American Oriental Mail Line not less than 24 round voyages per annum, not less than 12 such voyages to be by monthly sailings from Seattle to ports in Japan and ports in China north of and including Shanghai, and not less than 12 such voyages per annum to be by monthly sailings from Seattle to China ports south of and including Shanghai and Philippine ports; American Australia Orient Line, not less than 48 round voyages per annum, of which not less than 12 such voyages shall be by monthly sailings from Los Angeles and San Francisco to ports in Japan and ports in China north of and including Shanghai, not less than 12 such voyages to be by monthly sailings from Los Angeles and San Francisco to ports of China south of and including Shanghai and to ports in the Philippines, not less than 12 such voyages to be by monthly sailings from Seattle, San Francisco, and Los Angeles and when cargo offerings warrant from Portland to New Zealand ports, and not less than 12 such voyages per annum to be by monthly sailings from Seattle, San Francisco, and Los Angeles and when cargo offerings warrant from Portland to Australian ports; Oregon Oriental Line, not less than 36 round voygages per annum of which not less than 12 such voyages shall be by monthly sailings from Portland to ports in Japan and China north of and including Shanghai and not less than 24 such voyages per annum to be by two monthly sailings 87604-28- -4

from Portland to ports in China south of and including Shanghai and to Philippine ports;

"(d) Requiring each bidder to accompany each proposal with a bank cashier's check or certified check for 22 per cent of the proposed purchase price for each vessel, which deposit shall be returned within five days from date of rejection if the bidder's proposal is not accepted;

"(e) Requiring the purchaser or purchasers of each and all of said lines of ships to make payment therefor as follows: (1) Twenty-five per cent of the purchase price of each vessel to be paid in cash upon delivery thereof, on which amount the 21⁄2 per cent deposit accompanying the accepted proposal shall be applied, or 2212 per cent of such purchase price may be by an irrevocable letter of credit, satisfactory to this board, payable on or before two years from the date of delivery of each vessel with interest thereon at 44 per cent per annum payable semiannually; (2) balance of purchase price of each vessel to be paid in 10 years from the date of delivery thereof in annual installments of 72 per cent of said purchase price, the said installments to be evidenced by the purchaser's 10 negotiable promissory notes, payable to the order of the United States of America, bearing interest at the rate of 44 per annum payable semiannually, said notes to be secured by a first preferred mortgage on each vessel, executed by the purchaser: And be it further

Resolved, That if the officials charged with the administrative duty of preparing the advertisements for sale of said lines and the sales contracts resulting therefrom, shall have any doubts concerning the scope and effect of these resolutions, the question so arising shall be promptly submitted to this board for its decision. Whereas the board is desirous of securing the best offers obtainable for purchase of all its lines of cargo ships now operated in established trade routes from Pacific coast ports and to provide for the continuance of such operation in such routes in a manner that will be of the greatest benefit to the public; and

Whereas it is the judgment of the board that those objectives would be furthered by permitting purchasers of said lines to have the privilege of calling at all Pacific coast ports to take on or discharge cargo, irrespective of the home port from which the trade route is now operated and to be operated, provided always that the minimum number of sailings from the specified home port be made; and Whereas in former sales of lines operated in regular trade routes it has been the policy of the board to require the purchaser of such lines to guarantee the operation of such lines on such established routes for a minimum period of five years: Be it

Resolved, That proposed advertisements of sale of all of said lines of cargo ships now operated by the board from Pacific coast ports and the sales contracts made pursuant to accepted proposals received on such advertisements shall contain provisions as follows:

(a) Requiring the purchaser or purchasers of each and all of said lines to guarantee the maintainance thereof in the trade routes in which they are now operated for a minimum period of five years.

(b) Giving the purchaser or purchasers of each and all of said lines the privilege of calling at all American, Canadian, or Mexican Pacific coast ports or ports in the Philippines or at any oriental foreign port to load and discharge cargo, provided the required minimum number of voyages to and from the present home port of said lines is strictly maintained.

(c) Requiring the purchaser or purchasers of each and all of said lines to guarantee a stated minimum number of sailings as follows: American Oriental Mail Line not less than 24 round voyages per annum, not less than 12 such voyages to be by monthly sailings from Seattle to ports in Japan and ports in China north of and including Shanghai and not less than 12 such voyages per annum to be by monthly sailings from Seattle to China ports south of and including Shanghai and Philippine ports; American Australia Orient Line, not less than 48 round voyages per annum, of which not less than 12 such voyages shall be by monthly sailings from Los Angeles and San Francisco to ports in Japan and ports in China north of and including Shanghai, not less than 12 such voyages to be by monthly sailings from Los Angeles and San Francisco to ports of China south of and including Shanghai and to ports in the Philippines, not less than 12 such voyages to be by monthly sailings from Seattle, San Francisco, and Los Angeles and when cargo offerings warrant from Portland to New Zealand ports, and not less than 12 such voyages per annum to be by monthly sailings from Seattle, San Francisco, and Los Angeles and when cargo offerings warrant from Portland to Australian ports; Oregon Oriental Line, not less than 36 round voyages per annum of which not less than 12 such voyages shall be by monthly sailings from Portland to

ports in Japan and China north of and including Shanghai, and not less than 24 such voyages per annum to be by two monthly sailings from Portland to ports in China south of and including Shanghai and to Philippine ports.

(d) Requiring each bidder to accompany each proposal with a bank cashier's check or certified check for 22 per cent of the proposed purchase price for each vessel, which deposit shall be returned within five days from date of rejection if the bidder's proposal is not accepted.

(e) Requiring the purchaser or purchasers of each and all of said lines of ships to make payment therefor as follows: (1) Twenty-five per cent of the purchase price of each vessel to be paid in cash upon delivery thereof, on which amount the 22 per cent deposit accompanying the accepted proposal shall be applied, or 222 per cent of such purchase price may be by an irrevocable letter of credit, satisfactory to this board, payable on or before two years from the date of delivery of each vessel, with interest thereon at 44 per cent per annum payable semiannually; (2) balance of purchase price of each vessel to be paid in seven and a half years from the date of delivery thereof in annual installments of 10 per cent of said purchase price, except the last installment, which shall be 5 per cent of the purchase price, the said installments to be evidenced by the purchaser's eight negotiable promisory notes, payable to the order of the United States of America, bearing interest at the rate of 44 per cent per annum, payable semiannually, said notes to be secured by a first preferred mortgage on each vessel, executed by the purchaser; and be it further

Resolved, That if the officials charged with the administrative duty of preparing the advertisements for sale of said lines and the sales contracts resulting therefrom, shall have any doubts concerning the scope and effect of these resolutions, the question so arising shall be promptly submitted to this board for its decision. The chairman's motion was seconded by Commissioner Myers. The vote was then taken as follows:

Commissioner Smith. No; because this substitute resolution is only now offered, affording no opportunity for even reading over once. The substance of the resolution now offered suddenly and incorrectly drawn was proposed to the United States Shipping Board only this morning. Hurried effort has been made

to correct it for this adjourned meeting of the board this afternoon but without opportunity for due consideration and it is still contrary to the November 29 resolution of the board directing the Fleet Corporation to prepare specific tenders for advertising for sale the lines in question. The proposed forms for advertising for purchasers who will agree to operate in accordance with the merchant marine act, 1920, American-Australia-Orient Line, American Oriental Mail Line, Oregon Oriental Line, submitted by the vice president and general manager of the Merchant Fleet Corporation with his letter of December 13 to the president of that corporation, are not in accordance with the board's resolution of November 29, 1927. No explanation is in evidence as to why that resolution has not been observed. If it should be the purpose to thus abruptly force the issue at this time with but four of the legal board of seven commissioners present, I question the propriety of less than a majority of the board ruling on this question, of so great importance to the whole country.

Commissioner Myers. Yes.

Commissioner Plummer. Yes.
Chairman. Yes.

Three commissioners voting in the affirmative, the motion was carried. The chairman stated that he wanted to go on record as reiterating his previous statement.

The chairman then moved that the resolutions just adopted be referred to the Merchant Fleet Corporation with instructions to draw up advertisements and specifications, with the assistance of the legal department as to form. This motion was duly seconded and carried, Commissioner Smith voting in the negative.

Mr. GOODACRE. That is the end of the minutes of December 28 so far as that matter is concerned.

The minutes of the meeting of January 4, 1928:

There were present Chairman O'Connor, Vice Chairman Plummer, Commissioners, Myers, Smith, and Teller.

(Mr. Goodacre then read the minutes of the morning session of January 4, 1928, as follows:)

[Extract from proceedings of the United States Shipping Board, January 4, 1928]'

PROPOSED SALE AMERICAN-AUSTRALIA-ORIENT LINE, AMERICAN ORIENTAL MAIL LINE, AND OREGON ORIENTAL LINE

There was presented the following memorandum from the vice president and general manager, Merchant Fleet Corporation, dated December 30, 1927: “To: President, Fleet Corporation.

"Subject: Advertisement, West Coast Lines.

"There are transmitted herewith drafts of advertisements, instructions to bidders, and drafts of contract covering the proposed sale of the AmericanAustralia-Orient Line, American Oriental Mail Line, and the Oregon Oriental

Line.

"The drafts of contract, as herewith submitted, have been drawn to cover the board action of December 28, 1927, relative to the number of round voyages, interchangeability of ports, and terms of payment.

"The advertisement, instructions to bidders, and drafts of contracts have been approved as to form by the bureau of law.

"It is proposed to have the advertisement appear simultaneously in newspapers in the principal cities of the country on January 5, 1928, bids to be received by noon, Eastern standard time, February 6, 1928.

"A. C. DALTON."

The drafts of advertisement, instructions to bidders, and drafts of contract referred to in the foregoing memorandum are in the files of the secretary.

Commissioner Myers submitted the following proposed resolution and moved its adoption:

Resolved, That the board's resolution concerning the contemplated sale of all its lines of cargo ships operated from Pacific coast ports adopted on December 28, 1927, is hereby amended as follows:

After the word "Seattle," wherever the same appears in subparagraph (c) of said resolution, insert the words "and Tacoma and when cargo offerings warrant from other Puget Sound ports"; and be it further

Resolved, That the Fleet Corporation is authorized and directed to prepare and publish advertisements for the sale of all the lines of cargo ships now operated by the board in established trade routes from Pacific coast ports in strict compliance with the board's resolution of December 28, 1927, as hereby amended, inviting sealed bids for such lines to be addressed to the President of the Fleet Corporation for opening at 10 o'clock a. m., Friday, February 10, 1928. Such advertisements shall be given wide publicity, particularly in the daily newspapers of Pacific coast cities.

This motion was seconded by Commander O'Connor.
Commander Smith made the following statement:

"The buyer should be properly protected against competition as far as the board can furnish this protection.

"So far as competition by the vessels of the board is involved, the board should by resolution instruct the Fleet Corporation that it shall not operate vessels in competition, and if by accident or otherwise the instructions are violated, the buyer should be made whole as to any damages sustained.

As to competition resulting from a subsequent buyer operating vessels in that service; the obligation of the board should not extend further than inserting in its subsequent contracts of sale definite provisions that the buyer shall not operate vessles in competition and if he should, that he and not the board will be responsible."

Commander Smith then offered the following substitute motion:

"It is moved that the proposed forms be referred back to the Merchant Fleet Corporation and the general counsel with instructions to recast the provisions of article 11 so that the duty of the board shall be limited to the action of the board itself, with respect to instructions to be given for the control of the fleet and in respect to provisions to be inserted in subsequent contracts, and that in no event shall the rights of the buyer exceed the right to indemnity for damages sustained."

“And for any other revision of make-up or substance as may appear from a too hurried drafting of the forms."

He also called attention to certain ambiguities in article 9 and other articles of the form of contract of sale.

Commissioner Myers stated that he would accept Commissioner Smith's motion as an amendment to his proposed resolution, said motion to be substituted for

his second "Resolved" clause. This was agreed to by Commissioner Myers's second, Commissioner O'Connor.

Without objection, the resolution as amended and reading as follows was adopted:

Resolved, That the board's resolution concerning the contemplated sale of all its lines of cargo ships operated from Pacific coast ports adopted on December 28, 1927, is hereby amended as follows:

After the word "Seattle", wherever the same appears in subparagraph (c) of said resolution, insert the words "and Tacoma, and when cargo offerings warrant, from other Puget Sound ports"; and be it further

Resolved, That the proposed forms be referred back to the Merchant Fleet Corporation and the general counsel with instructions to recast the provisions of article 11 so that the duty of the board shall be limited to the action of the board itself, with respect to instructions to be given for the control of its fleet and in respect to provisions to be inserted in subsequent contracts, and thạt in no event shall the rights of the buyer exceed the right to indemnity for damages sustained.

And for any other revision of make-up or substance as may appear from a too hurried drafting of the forms.

It was agreed that the forms as corrected would be resubmitted for further consideration at a meeting of the board to be held at 2.30 p. m. to-day. General Dalton was then excused from the meeting.

Mr. GOODACRE. The afternoon session of the meeting of the board of January 4:

The board reconvened at 2.30 p. m., present, Chairman O'Connor, Vice Chairman Plummer, and Commissioners Myers, Smith, and Teller.

(Mr. Goodacre then read the minutes of the afternoon session of January 4, 1928, as follows:)

EXTRACT FROM PROCEEDINGS OF THE UNITED STATES SHIPPING BOARD

JANUARY 4, 1928.

Vice President and General Manager Dalton submitted a redraft of article 11 in the form of contract of sale for the three Pacific-coast services, and also referred to slight changes which had been made in articles 8 and 9.

After discussion, it was agreed that the word "during" be substituted fort he word "for" after the words "in the maintenance of said line" in article 9.

Commissioner Teller pointed out that the draft of General Dalton as regards section 11 was so indefinite as to leave everything wide open, and suggested that that portion be redrafted so that there could be no question as to what should be considered as competition between the lines, and that the general counsel should O. K. the change made.

General Counsel Parker, Assistant General Counsel Long, and Assistant Counsel Skinner were asked to be present, and they entered the meeting at 3.05 p. m.

Several changes were suggested in the draft of article 11 as submitted by General Dalton, and after discussion, the general counsel submitted a redraft of the article. Commissioner O'Connor then moved the adoption of article 11 as redrafted by the general counsel. This motion was seconded by Commissioner Myers and duly carried, Commissioner Smith voting "No."

Commissioner Meyers submitted the following proposed resolution and moved its adoption:

"Resolved, That the Fleet Corporation is authorized and directed to prepare and publish advertisements for the sale of all the following lines of cargo ships: American Oriental Mail Line, American Australia Orient Line, and Oregon Oriental Line, now operated by the board in established trade routes from Pacific-coast ports, in strict compliance with the board's resolutions of December 28, 1927, as amended this day, inviting sealed bids for such lines to be addressed to the president of the Fleet Corporation for opening at 11 o'clock a. m. Friday, February 10, 1928. Such advertisements shall be given wide publicity, particularly in the daily newapapers of Pacific-coast cities."

This motion was seconded by Commissioner O'Connor.