AMERICAN REGISTRY FOR STEAMER "DAMARA."

MAY 4, 1912.-Referred to the House Calendar and ordered to be printed.

Mr. Post, from the Committee on the Merchant Marine and Fisheries, submitted the following

REPORT.

[To accompany H. R. 22907.]

The Committee on the Merchant Marine and Fisheries, having had under consideration H. R. 22907, report the same back with the recommendation that the bill do pass. This bill has the approval of the Department of Commerce and Labor, as will appear by the letter hereto attached, and which is made a part of this report, marked "Exhibit A."

This bill authorizes and directs the Commissioner of Navigation to cause the steamer Damara, rebuilt at San Francisco, Cal., from the wreck of the British steamer Damara, to be registered and enrolled as a vessel of the United States.

In order to fully understand the nature of this bill it is necessary to give a brief review of the legislative history of the United States statutes governing matters of this kind.

For more than 50 years a foreign-built vessel might obtain American registry in five ways:

(1) By act of Congress.

(2) By lawful condemnation as a prize of war.

(3) By judicial forfeiture for breach of our laws.

(4) By annexation of territory carrying, subsequent to it, legislation by Congress for the registration of vessels belonging to the annexed territory.

(5) By wreck and repair in the United States, under an act passed in 1852, incorporated in section 4136 of the Revised Statutes, which, as amended, reads as follows:

The Commissioner of Navigation may issue a register or enrollment for any vessel built in a foreign country whenever such vessel shall be wrecked in the United States and shall be purchased and repaired by a citizen of the United States, if it shall be proved to the satisfaction of the commissioner that the repairs put upon such vessel are equal to three-fourths of the cost of the vessel when so repaired.

DAMARA.

In 1906 it was urged that abuses and frauds had been practiced in the administration of section 4136, and that it would be better to have each case determined by Congress itself than to leave it in the hands of the commissioner; and for this reason, and no other, the section was repealed.

It will be observed that the repeal of section 4136 was not intended to be a departure from the time-honored and almost immemorial policy of our Government and our people to admit ships three-fourths American to registry, but was only to change the tribunal from the Commissioner of Navigation to Congress itself. This is clearly shown by the Congressional Record of the Fifty-ninth Congress, first session, pages 2617 to 2622, inclusive, the pertinent portions of which are herein incorporated, marked "Exhibit B."

As represented, an apparently adequate remedy remained, notwithstanding the repeal of this particular section, in the general power of Congress to grant a register for a vessel in a meritorious and honest case, and it is under this authority that H. R. 22907 is reported. The facts involved in this particular case, as shown by the unchallenged evidence offered to the committee and to the Commissioner of Navigation, are, briefly, as follows:

The British steamer Damara was built in Glasgow in 1910, insured by Lloyd's for £35,000, registered British, and sailed on her maiden voyage to San Francisco with a general cargo. Having discharged her cargo, she reloaded with a full outward cargo of barley, homeward bound for the United Kingdom. She was proceeding to sea out of San Francisco Harbor in a fog, in charge of a pilot, when she ran upon the rocks at Fort Point, and was grounded there from October 8 to October 19, 1910. The log of the vessel and the other records in the case show that, immediately on striking the rocks, at 1.53 p. m., her engines were reversed to full speed astern and continued so until 3.08 p. m. During this time the steamer was assisted by three United States Government tugs and one local tug, and two 7-inch hawsers and one 34-inch wire were parted in an effort to drag the steamer off, but of no avail. She began to make water rapidly in her tanks and bilges, and the same night stevedores commenced jettisoning and lightering cargo and bunker coal. These operations continued until the night of October 9, the vessel straining heavily on the rocks and making water faster than the steamer's pumps, going all the time, could keep it down.

The vessel was then taken charge of by the underwriters' agent in San Francisco, and the salvage of the vessel given over to the Union Iron Works Co., of San Francisco, under the immediate supervision of Lloyd's surveyors. The extent of her injuries and the difficulty of salving her were not realized or the underwriters would have abandoned her where she lay. The salvage operations cost $57,052.43, which was borne by the underwriters. On October 19, 11 days after stranding, the Damara was taken off the rocks and placed in dry dock in San Francisco by American crews and American ships, employed by the Union Iron Works Co. After the vessel was drydocked an examination by Lloyd's surveyors developed the fact that the damages sustained were so extensive that she was a complete wreck, her whole bottom being practically destroyed. The owners abandoned her to the underwriters, and the underwriters accepted the abandonment as a total loss, and paid the owners in full for the loss the total amount of insurance, £35,000, or $170,327.50.

Lloyd's agents at San Francisco, acting for the British underwriters, then sought to sell the wreck as she lay. The highest offer was that of the Union Iron Works Co., $22,500. The next best offer was from a firm of junk dealers, who bid $20,000, and expected to break her up for junk. (See Exhibit C.)

The Damara account on the books of the underwriters then stood as follows:

Cost of salvage, paid Union Iron Works Co......

Paid English owners (£35,000)...

Total....

Received from sale of vessel to Union Iron Works Co..

Net loss to underwriters.....

$57, 052.43 170, 327.50

227,379.93

22,500.00

204, 879.93

Of this sum, over $57,000 had been paid directly to American labor, but said sum is not included in the repair bill of the Union Iron Works Co., although it might properly have been added thereto.

In addition to the terrific loss borne by Lloyd's on the vessel, the cargo of barley (of which less than 15 per cent was salved) was fully insured and was of the value of $185,478, as shown by the outward manifest filed at the San Francisco customhouse when she cleared for the United Kingdom.

These facts, coupled with the testimony of eyewitnesses who appeared before this committee, preclude the possibility or suspicion of the wreck being intentional, and make it certain that the unfortunate grounding of this fine new ship was a financial marine disaster.

Upon the sale of the wreck to the Union Iron Works Co. for $2,500 more than the junk dealers bid, the British consul general in San Francisco revoked her British register, she being a castaway, a complete wreck, and the property of an American corporation.

The purchasers undertook to repair the vessel, and the repairs were so extensive that they amounted to $135,000 in addition to the salvage charges of $57,052.43. The repairs were made under the constant supervision and upon the specifications of Lloyd's agents, following their survey of her injuries.

In addition to the other repairs, her whole bottom was rebuilt, as shown by the evidence adduced herein and by the exhibits hereto attached, marked Exhibits D, E, and F, a perusal of which convinces that, when her repairs were completed and she was restored to her former class, 100 A-1, eligible for reinsurance, she was in reality an American bottom.

Under the requirements of Lloyds's agent, every bent or injured plate, frame, or other part of the vessel was removed and, if susceptible of fairing or other treatment, was repaired and replaced; but much of her hull was beyond repair, and $14,000 worth of new steel from the Lukens Iron & Steel Co., of Coatesville, Pa., went into her. When her repairs were completed, she lay in San Francisco to all intents and purposes an American-built vessel, without register from any nation. The Union Iron Works Co. had invested in her $135,000, her repair account, plus $22,500, her purchase price, or a total of $157,500. June 24, 1911, the vessel was sold to James C. Eschen and Robert Minor, two American citizens, for the sum of $205,000, whereby the American shipbuilding concern realized a net profit, over and above their full material and labor account and purchase price, of $47,500.

The Union Iron Works Co. had then received, including salvage charges, the sum of $262,052.43, which was wholly profit to an American shipyard, wages to American labor, or purchase price for American material. Only $22,500 of the Damara was British, or, in reality, less than one-tenth of the investment in the vessel.

The fact that a part of this total was paid by English underwriters does not lessen the benefit derived by American industries.

Prior to congressional action, in order that the vessel might not be idle, her American owners incorporated a Canadian corporation, called the California Steamship Co., and with difficulty secured a limited and temporary Canadian register; but all of the stock of that corporation is owned by Americans, and it is proposed, if American registry is granted, as a condition thereto, that actual transfer of the vessel shall be made to American citizens.

The testimony and exhibits show that the Damara is now a splendid new steel steamship, 415 feet over all, drawing 25 feet of water, with a dead-weight capacity of 8,340 tons. She is designed and primarily adapted for the offshore and deep-sea traffic.

The question now presented by this bill is: Shall this vessel, over nine-tenths American, having produced for American industry over $260,000, owned by American citizens, a credit to any nation whose flag she might fly, sail under the British flag or be registered as an integral part of the American merchant marine and fly the American flag on the high seas?

The committee believes she should be granted an American register, because

(1) She is, in reality, an American-built vessel.

(2) No American shipbuilding industry has been or will be deprived of a single dollar's worth of business or profit.

(3) Her gross tonnage constitutes but one twenty-six hundredth part of the gross tonnage of American registered vessels with which she would come in competition.

(4) The building of nine-tenths of a vessel in the United States should be encouraged, as well as the building of a vessel entire.

(5) There have been presented to the committee petitions representing, in addition to the Union Iron Works Co., every other steelship builder on the California coast, praying that favorable action be taken on this bill.

(6) The owners of 75 per cent of the vessels on the Pacific coast have petitioned Congress to grant a register to the Damara.

(7) It appears that the repair account and other items making up the record in this case are bona fide, in no manner inflated, and the prices paid or charged for labor, dry-dockage, and material were in every case the current and reasonable charges therefor.

(8) It clearly appears and is uniformly conceded that the Lamara presents the most meritorious case ever coming before Congress in a similar application, and the admission of this vessel to American registry is in all ways desirable, and, while increasing the American merchant marine to the extent of the Damara's tonnage, will work a hardship to no American industry.

The Department of Commerce and Labor, having had under consideration this case, report that the case is much stronger than those favorably considered for many years by the department under the old law, and strongly recommend that the vessel be admitted.