you are of course familiar with the fact that this bill provides for the sale of ships that may not even be in the blueprint stage. It provides for the sale of all ships that may be put under contract, even, in the next year, 2 years, or 3 years, depending upon when the war finally ends. The legislation now provides for the sale of unknown ships, so to speak.

Have you given any consideration to the bill being limited to ships that are actually in existence, or under contract as of the time of the passage of the bill?

Mr. ROTH. I have, and I think the Commission has treated that matter on page 7 of the memorandum which was suggested yesterday, and if I could call attention to that, they point out that the uncompleted contracts existing at the time of termination of the war may need to be carried out in order to provide the more important trade routes with necessary competitive vessels. Shortage of this type of vessel will arise, and the need of maintaining converted vessels as military auxiliaries, the unduly high expense of reconversion of radically converted vessels, and the necessity of fulfilling commitments to operators in cases where vessels under construction for an operator were taken away for military needs.

Now, no ships can be added, I understand, under the present law, to those already contracted for, without the approval of Mr. Byrnes, who has charge, or has authority, at least, to say what property shall be contracted for or completed at the end of the war, and I assume that no ships will be contracted for unless they have value for the prosecution of the war or use as auxiliaries, or are needed to replace tonnage taken out. It seems to me all those reasons would be reasons for continuing.

Now, if a ship is only partially completed, it would seem to me possible that the Government would lose less by completing the ship and selling it under the provisions of this bill than it would by scrapping it if it were partially completed. I do not think there will be many ships contracted for on which construction would not have been begun by the end of the war.

Mr. HERTER. Do you think we would be safe in trying to apply a fixed formula for the sale of unknown ships that may be built in the future?

Mr. ROTH. I do not think they are unknown. The types are pretty well determined, I think. They will all be built with a view to war use or they will not be authorized. That is certain under the existing law. There is no doubt about that.

Mr. HERTER. One other question, Mr. Roth: Yesterday Admiral Land made quite a radical suggestion from the point of view of the Maritime Commission, in that he suggested that the committee amend the existing bill so as to make the penalties, I think he put it, for operating on essential trade routes under the direction of the Maritime Commission, 20 percent instead of 100 percent, as it appears in the bill. Would you are to comment on that?

Mr. ROTH. I would prefer not to comment on any of the matters which go to the matter of restriction on use, for this reason. The industry has held scores of meetings on those matters which go to these problems. We have had honest differences of opinion, and I think that is understandable when you realize that no two operators. are exactly in the same position. Some have lost more tonnage than

others; their replacement problem is more difficult. Some will be able to obtain vessels from our present war-constructed fleet which will be adaptable to their needs; others will not. That again is a question of degree. Some are concerned with foreign competition and some are not. All these factors impinge in different manners and to different degrees upon the individual operator.

Now, we have felt that the most intelligent thing to do, in view of the different viewpoints, would be to have the various interests present their viewpoints to this committee, and they will do that. That does not mean that the Federation is not still trying to find the answer to some of these problems. We do not expect to fold up our tents at the end of this hearing today. We expect to continue to meet, and we might say we are very grateful for the fact that we were given an extension of 2 weeks, because we have met many times during those 2 weeks in an attempt to find the answer. I think that the whole problem has been approached from the standpoint of what is for the best interest of the American merchant marine. On the other hand, I think it is quite unfair to intimate that because the individual companies differ that they are selfish or that there is anything they should be criticized for in that.

We had a good deal of discussion, and I may say frankly that we have been pleased at the amount of light and absence of heat we have had in our discussions. We have tried to get at these things objectively, and I think the presentations which will follow here in the course of this hearing will probably shed a good deal of light on this matter, but personally, because the Federation has not reached a decision on these matters, I am not in a position to express an opinion.

Mr. WEICHEL. With reference to the future operation of the shipping industry and these stories you read in the newspapers concerning restoring the other maritime nations to their former status before the war, do you think or do you feel that there is any attempt by our Government to have a so-called planned economy with reference to the shipping interests after the war, or is there anything that would lead one to think that? What is your opinion on that?

Mr. ROTH. Well, I can only base my opinion on what I glean from contacts with the Commission and other people. I think the Commission is quite openly committed to the resumption of free enterprise at the earliest possible date. It is going to be very difficult to find a formula, under this agreement for the extension of this joint operating pool, which will be equitable to all the countries. We are obligated to resume operations as and when ships become available for private operation, and we will have some tough problems to settle between these other countries, but as I said yesterday, we thought maybe there would be a tendency to hold on. I think the difficulty of finding an answer will tend to encourage Government operation, but I do not find, I am happy to say, any concerted move to substitute Government operation for private operation.

Mr. WEICHEL. I mean controlled operation, not necessarily Government operation but controlled operation, and does not this bill, if one is finally enacted, go a long way in the determination with reference to future operations by private owners as to how many ships they might be able to operate?

Mr. ROTH. That is right.

Mr. WEICHEL. And how many the Government might operate? Mr. ROTH. That is right. Obviously, if operators find they cannot operate with a reasonable return, ships will continue to be operated by somebody, either foreign countries or the Government or someone, during the period when they are required to rehabilitate the world and carry world commerce.

Mr. WEICHEL. In other words, this bill can make a so-called planned economy in the shipping industry to the detriment of free enterprise in the operation of shipping?

Mr. ROTH. I think, frankly, there are so many uncertainties in the picture-I do not like to use that phrase that nobody can say how many people can operate or even what the Government could do, and that is the decision that we will have to face.

The CHAIRMAN. We went through that from 1922 to 1936.

Mr. ROTH. It is not easy to explain the Einstein theory, and it is not easy to explain what we are up against in shipping.

The CHAIRMAN. And that is the reason the old Shipping Board was done away with, with its regional appointees in various sections of the country, and the Board that was made up of men who, the law provided, should have no interest in shipping.

Mr. ROTH. I may say that there was a feeling in England some months ago that Government operation might be the answer over there, but in recent months that item seems to have been cleared up in debates in Commons, and as I read their proceedings over there they feel they would rather trust the difficult problem of maintaining the British merchant marine to private enterprise than tackle it themselves.

The CHAIRMAN. That is very largely controlled under the Board of Trade over there.

Mr. ROTH. That is a quasi governmental agency.

The CHAIRMAN. The Board of Trade operates very much as does our Maritime Commission.

Mr. ROTH. I think it is a little more quasi public. It has the various shipping interests brought into it a little bit more closely than we have here.

The CHAIRMAN. Mr. Mansfield?

Mr. MANSFIELD. Mr. Chairman, I do not know what took place yesterday. I could not be with you. Has there been any discussion as to what extent the ships now in war service will be applicable for post-war trade? For instance, the Liberty type.

Mr. ROTH. There was not much discussion yesterday on that. We have pointed out in previous hearings, Mr. Mansfield, that a great percentage of our tonnage will not be adaptable for many commercial uses. The Liberty has too deep a draft to go into our coastal harbors; the hatch arrangements are not suited in the lumber trade and other specialized trades, and we know that the passenger vessels which we will have do not meet the requirements of many of our passenger lines for one reason or others. Sometimes it is the ratio of cargo they can carry in relation to the number of passengers which makes it impractical to operate them. But for various reasons this tonnage which was built for war purposes and served that purpose very well is not entirely adapted to the needs of the trade, and that is true of England, as I read in a report over there, in which it was

stated that they felt even the war tonnage they had built should be scrapped as soon as possible and be replaced with a more suitable specialized vessel. It is a question of specialized vessels, rather than quality of a vessel. It is a question of tailor-making a ship to fit the requirements on a particular route; custom made as against ready made.

Mr. MANSFIELD. They are proposing now to have tankers of deeper draft than any that have been heretofore in use, and they are calling on us now to deepen nearly all the ports and harbors of the United States to take care of them. Do you anticipate that there will be any material increase in the draft of the post-war shipping trade?

Mr. ROTH. I doubt whether there will be any increase in the draft. The fact is that the tankers which have been built have been built largely for transoceanic service and are of deep draft, and it is a fact that in some instances-for instance on the Columbia River, I am advised-it will be impossible to operate some of these newer tankers due to the fact that if you loaded them full you could not get up the river, therefore your option is either to load them light, with less than a pay load, or unload your oil somewhere else, or build yourself a tanker which can get into some of these places where we have more shallow harbors. That is one reason some of the tanker groups are actually thinking of building themselves specialized tankers in the future, even though we have this great surplus of tank ships.

I have not heard of any plan to increase them beyond the present draft.

Mr. MANSFIELD. Do you think speed will be one of the main things to consider in the post-war service and trade?

Mr. ROTH. Speed, of course, is not a factor in all carrying trades. If you were carrying wheat from Australia to London, speed would not be such a factor. As speed increases, of course, your cost of operation goes up. It is a matter, largely, of economy of operation, at what speed you can operate your vessel economically and profitably. On the other hand, some of our trades are more concerned with the possibility of decreasing their loading and handling charges, and in order to do that they need side ports in some of their vessels. They need hatch arrangements other than what these vessels have. They need different types of loading and unloading equipment.

As I have testified before, the cost of handling cargo in some of our trades runs as much as 40 percent of our total cost of operation, and it is in that field that we may be able to pick up efficiencies which will help offset some of the other differentials against us, and it is largely a question of adaptability from the standpoint of handling cargo that affects our coastwise and our intercoastal trade.

Mr. MANSFIELD. Will the rates be governed by agreements, as they have been heretofore?

Mr. ROTH. The rates in the domestic trade are now under the control of the I. C. C.

Mr. MANSFIELD. I know.

Mr. ROTH. As to the extent to which they will be governed in the foreign trade, to use a phrase which is familiar to Admiral Land, that is still in the lap of the gods. They are being operated at the present moment under agreements. The conference hears suggestions as to changes in rates at the present time. Under the Government supervision those go to the joint board, the United Maritime Authority,

and are approved or disapproved by them, so that we have right now, during the war, a continuation of the conference system.

Mr. MANSFIELD. Do you anticipate that the rates in the coastwise trade, for instance, are such that there will be an effort made to equalize them more with railroad rates?

Mr. ROTH. I think there are witnesses who will follow me who are prepared to go into that very difficult problem of regulation of rates in our intercoastal and coastwise trades. It is a field in which I have had no experience, and with your consent I would like to defer to those who know more about it than I do. I think it is quite essential that there be some relief given to our domestic group if they are going to be able to operate with any certainty of reasonable profits.

The CHAIRMAN. Mr. Roth, it may be interesting to say that we have heretofore announced, in previous hearings, and I again announce, that it is our desire to investigate very fully and very thoroughly-I do not mean investigate so much as study-in this committee conference agreements, the effect of conference agreements, the character of conference agreements that were in operation; and how far they worked a detriment to American trade, and how much they are under the control of foreign companies. At one time it looked as if they were very much under the control of foreign companies, but I think now the conference agreements have to be approved by the Maritime Commission, and we have been getting away from that.

Mr. ROTH. That is my understanding.

Mr. BRADLEY. Mr. Roth, where are the British getting the materials with which to build those ships? Are they getting them through lend-lease, do you suppose?

Mr. ROTH. I doubt that. I think they have sufficient steel, because I saw some months ago that they actually had exported some types of steel to this country.

Mr. BRADLEY. They have been exporting?

Let me ask you this. What is the post-war situation going to be with respect to so-called luxury liners, or large passenger ships? Are they pretty well glutted by the war? Have many of them been sunk, or are some of our transports subject to ready reconversion?

Mr. ROTH. I know of no transports which are subject to ready reconversion. It is my understanding, and I think Admiral Land so testified at previous hearings, that they have been very drastically converted for war use, and I also understand that in the case of several of the very large ones it is doubtful whether it would be wise to attempt to reconvert them to commercial use. It would probably be better to keep them as transport reserves.

We certainly, from previous testimony here, know that we do not have available, and will not have available, passenger liners of sufficient size or types suitable to resume our passenger trade.

Mr. BRADLEY. I notice here in a trade paper that there was recently commissioned in the Bethlehem Alameda shipyard, at Alameda, Calif., the new U. S. S. Admiral C. F. Hughes, which is designed to be a future luxury liner. Are you aware of that?

Mr. ROTH. Well, I would say that that word "luxury" is a relative matter. I do not think any of these are "luxury" in the sense of what we sometimes call superduper luxury liners. Some of these