APPENDIX History of ship-sale bill and documents pertaining thereto: Report of Maritime Commission on H. R. 4486- 448 449 456 H. R. 5213, Seventy-eighth Congress. Report of Maritime Commission on H. R. 5213 Report of Treasury Department on H. R. 5213. Substitute text of H. R. 5213, Seventy-eighth Congress H. R. 1425, Seventy-ninth Congress Report of Maritime Commission on H. R. 1425. Report of War Department on H. R. 1425 Report of State Department on H. R. 1425. Report of Surplus Property Board on S. 292 (H. R. 1425). 457 460 463 463 Report of Treasury Department on substitute text of H. R. 5213. 468 468 473 478 480 483 486 Memorandum of questions and answers on H. R. 1425. Statements filed for the record by Maritime Commission: 505 509 525 Comparison of profits of subsidized and unsubsidized lines.. Number, gross and deadweight tonnage of American flag pre-war merchant vessels.. 697 Personnel of Post War Planning Committee. 697 Exhibits A through F of Waterman Steamship Corporation.. 544 549 Senate Document 60, Seventy-fourth Congress: Merchant Marine Policy and Shipping and Shipbuilding Policies.. 593 Lend-lease agreement with France. 636 Extracts from Public Law 457, Seventy-eighth Congress (Surplus Property Act)... Reports from' Foreign Affairs Committee on extension of lend-lease, Seventy-ninth Congress (H. Rept. No. 259, majority and minority reports). 644 655 Memoranda filed for the record by Mr. Roth, National Federation of Expansion of Japanese Shipping 655 Report on Rye Conference.. 662 British White Paper on Aviation (§. Doc. 29, 79th Cong.) 667 IV POST-WAR DISPOSITION OF MERCHANT VESSELS THURSDAY, MARCH 1, 1945. HOUSE OF REPRESENTATIVES, COMMITTEE ON THE MERCHANT MARINE AND FISHERIES, Washington, D. C. The committee met at 10 a. m. in room 1304, New House Office Building, the Honorable Schyler Otis Bland (chairman) presiding. The CHAIRMAN. The committee will come to order. We have met for the purpose of holding hearings on H. R. 1425. There was introduced last year the bill 4486. The report on that bill appears in the hearings that were held formerly, and will be incorporated in the record the bill H. R. 4486 and the report received thereon from the Maritime Commission. After the hearings were held there was worked out a modified bill, H. R. 5213. That will be incorporated in the hearings, and the report of the Maritime Commission will follow that. The bill H. R. 1425 will be shown in the hearings. There has been a report dated February 28, 1945, sent up by the Maritime Commission, and copies are available as committee print No. 9, to be incorporated in the hearings. There is also a report from the Department of State, dated March 1, 1945, which has not been printed. It came to me only this morning. That will be printed as a committee document and also incorporated in the hearings. [Committee Document No. 12.] The hearings on 4486, held May 25 and 26 and June 13, 14, and 15, will be available to members of the committee, but are not incorporated in the hearings. We thought at our last meeting, in arranging for these hearings, that it would be well for the Maritime Commission to appear. Admiral Land, we will be glad to hear from you. We have your report, which will be incorporated in the record. It is available to the members of the committee as Committee Document No. 9. (The documentary evidence will be found in the appendix.) The CHAIRMAN. We will probably have to adjourn at about 11:45 so as to attend the joint session this afternoon. Whether there will be hearings this afternoon, after the joint session, will be later determined by the committee. Admiral Land. STATEMENT OF VICE ADMIRAL EMORY S. LAND, CHAIRMAN, UNITED STATES MARITIME COMMISSION Admiral LAND. Mr. Chairman and gentlemen of the committee, I would like to preface my remarks and conclude by the same state 1 ment. In the consideration of this bill, neither the Congress nor the shipping industry can have their cake and eat it, too. I have no prepared statement. I have some notes, and with your permission I will address myself to the committee with the notes. The CHAIRMAN. That will be satisfactory. Admiral LAND. The importance of action on this bill I should like to stress to the limit of my capabilities. The ship disposal bill requires congressional determination of long-range policy, otherwise we may end this war with Government ownership and operation of our shipping, to which the Commission and its staff in general, and I in particular, are definitely opposed. We must pass this merchant marine now under the control of the War Shipping Administration and the Maritime Commission back to the control of private ownership and operation. This involves long-range planning by private operators and the Commission, and definitely refers to the pending negotiations and inquiries. Many of the operators are awaiting the action of the Congress in order to formulate their own plans with any kind of definiteness or commitments, rather than just conversation or letters. The bill has a very definite and concrete relation to the foreign shipping problems that will develop, some of them post-VE-day, the majority following the cessation of hostilities. We firmly believe that a price floor is necessary, otherwise the chaos that obtained following the last war, World War I, will surely occur, and quite possibly if not probably there will be a repetition of the errors and the very illogical and unsatisfactory results that took place following World War I. Price certainty is necessary to permit commitments and to protect buyers. Authority is needed to write off excess war costs. Congressional determination of a policy as to sales to foreign purchasers is necessary (a) for Commission guidance and (b) for the protection of domestic buyers. The lack of a foreign sales policy tends to stimulate competitive shipbuilding. Other nations, especially the British, are preparing for the rehabilitation of their merchant fleets. Without a ship sales policy other nations may get the jump and leave the United States at the post. Provisions for a reserve fleet are necessary. (a) Immediate steps are necessary to provide for lay-up, and (b) sterilization to protect buyers. We will not have the reserve fleet, whatever it may be, hanging over the market like the sword of Damocles. The War Mobilization and Reconversion Act, unless specially suspended, would prevent completion of vessels necessary to the merchant marine, such as special types, passenger vessels, and custom jobs. If this committee does not take action to carry out the policy and give the Commission its ideas of policy for the future of the American merchant marine, it is quite evident that other agencies will endeavor to take charge of the situation. Some evidence of that is already occurring at the present time. The CHAIRMAN. To whom do you refer as "other agencies?" Admiral LAND. The surplus commodities agency, the State Department, the Navy Department or any other departments that may be interested in surplus or analogous matters that pertain to shipping, with especial regard to surplus on the one hand and foreign policy on the other. Lack of legislation will mean that the Government must operate the merchant marine for an indefinite period. Those are my ideas and the Commission's ideas of the urgency of action on this bill. As we stand today, the Maritime Commission has submitted a bill to this committee which is now before you, and we stand pat on that bill with the one very important and vital exception of the sales-price base, with particular reference to sales price to foreign versus domestic. That is one of the most difficult problems that has ever been tackled. It has two broad sides, and we have attempted to reduce the matter to nine pros and nine cons, which I should like to read. The pros--reasons for one price policy: 1. Restrictions on foreign purchaser not practical. 2. Construction subsidy is subsidy to shipbuilders. 3. Subsidized operators have tax exemption advantage. 4. Tax advantage may be subject to attack. 5. Discrimination may limit sale of ships. 6. Foreign price for domestic is already departure from act. 7. Distinction between 1936 act subsidy and price of vessels already spent for. 8. Discrimination encourages Americans to purchase foreign ships. 9. National defense considerations, not industry desires, should govern. The cons-reasons for retaining discrimination: 1. Operators agreeing to essential services should be protected. 2. Subsidized operators undertook obligations on basis of 1936 act. 3. One price policy may lead to future subsidy for all commerce. 4. Insufficient evidence that essential services do not need full 1936 act help. 5. Arguments submitted to the Chairman are generally without merit. 6. Increased American-flag fleet does not necessarily need particular service on essential routes. 7. Price differential is minor consideration compared with wages. 8. Undesirable to open up 1936 act. 9. Greatest good to American commerce rather than to operators should determine. Now, those are about six-word pros and cons for each argument. It is as wide open as a barn door, and there are two solutions. There may be many others. We have discussed this for hours, and the two solutions which I propose to present are: (a) Have a one-price base, and put in restrictions analogous to the restrictions on the subsidized operators, both as to your domestic and your foreign. (b) Put a price on these restrictions, and fix that price at some increment above the price where there are no restrictions. To be specific, on a one-price base we would say you would sell at $100 a ton to the subsidized operator, nonsubsidized operator, and foreign. The nonsubsidized operator who runs free, entirely independent, should be willing to pay a price to avoid restrictions, because the subsidized operator has very definite restrictions. So the proposal for consideration is, on this $100 basis, that the subsidized operator pay $100; that the foreign operator and the run-free, untrammeled operator pay 20 percent, or $120. That, in brief, is a result of a great many discussions, and states the problem as definitely and concretely as I am able to state it. It is very unfortunate that the industry does not come here with a spearhead of unanimity. I do not see how industry in the United States can successfuly operate or properly come before Congress if they cannot agree amongst themselves. They should not come here and ask help unless they can agree amongst themselves, and there are a good many pocketbook nerves, selfish attitudes with regard to these matters, that I think ought to be threshed out, not here but by the operators, in order to make a proper presentation of the matter to the Congress and to the people of the United States. There is one thing that has not been mentioned that has been submitted to you and has been submitted to us, that there are no restrictions on the domestic and intercoastal commerce. Some people seem to have forgotten the I. C. C. Act of 1940 when, much to my chagrin (and I hope to the committee's) certain regulations and rules were taken away from this committee and put under I. C. C., and the power is in the I. C. C. to regulate the domestic and intercoastal commerce. It exists very definitely there under the act, and it also requires a certificate of convenience and necessity, and may require pretty close to what is required in the Merchant Marine Act of '36 with regard to routes, lines, and services, ports, and so on. If it will help the committee I will be very glad to read that section of the act. I think maybe some of you know all about it. That is apparently entirely overlooked by the objectors to the bill. Now, I think the committee might very properly ask, Why did not the Maritime Commission consider these things in advance? Frankly, my answer to that would be a certain amount of sentiment and appreciation of what the Congress did in 1936, and that we have some respect for what we consider and what we believe to be the policy and intent of the Congress in passing this act. We therefore hesitated to advocate or to recommend breaking it down. I have stated many times to this committee, and to others, that the act did very little for domestic commerce. Nevertheless that was Congress' will and Congress' intent. The idea of the proponents or the opponents is to read something in about the intent of Congress. I do not propose to do it. It is a very difficult thing to do to go behind the returns and attempt to read the intent of Congress in the act. But, as I repeat, the Commission is very hesitant to attack what we believe to be, erroneously or not erroneously, what is the intent of the Merchant Marine Act, where the subsidized operators were restricted very definitely and very tightly. Now, there is one other point I want to make and I am through. Any American operater has the right and the privilege to accept all of the restrictions and all of the advantages of the Merchant Marine Act of '36 or leave them. That is entirely up to him. He can ride with them or he can ride without them. The CHAIRMAN. Are you through? Admiral LAND. Yes, sir. The CHAIRMAN. May I say what I said before, that the Commission's report has been received on this bill this morning and it is Committee Document No. 9, on the desks of the members. The report from the State Department has not yet been printed. It was handed to the committee just half an hour ago. One of the principal objections I hear, Admiral, is the fact that we are selling to foreigners at pre-war foreign cost, and putting them in competition with our people at the same or a higher price. Admiral LAND. That is true, as the bill is presented. That is quite correct. And again I repeat that we exercised our best efforts and the best judgment to get away from that insofar as we could |