of this country.

We were confronted, from time to time, with additional appropriations and additional funds to add to those surpluses, and we wanted to get rid of them as quickly as possible.

"Mr. LODWICK. Well, it was finally decided and agreed that the 3-year limitation was an estimate on the part of numerous people as to the time it would take to use up the $700 million. Whether it was good or bad I do not know, but we proceeded to use it up a lot faster than that. And that was one of the things that brought about the discussion on ceilings.

"The Japanese program was large, the United Kingdom program was large, and the Pakistan and Yugoslav programs were large and took up a very large percentage of the $700 million. So then some of the agencies involved made a piece of pie and they cut it into little pieces and attempted to ration, and did to some degree, what each country could obtain ***

"Well, there were divergent views on the subject, Senator. And the ceiling was put on and then we started cutting up this piece of pie in smaller pieces to take in more countries and eliminate some countries entirely. Naturally, we quit working with the countries that were left out entirely.

"There were differences of opinion as to what country should be on the list or should not be and in what volume they should be ***" [Italic ours.]

In the same hearings mentioned above, the State Department answered in writing a question asked by Senator Schoeppel as follows:

"Is it true that because of the ceiling, otherwise eligible countries were told that there were no more funds? Which countries? Are these considered friendly countries?

"Answer. Several countries were told that the fiscal year 1955 programing had been completed and that no program could be promised immediately. However, they were advised that any concrete proposals they wished to make would be considered in connection with further programing ** *”

To us it is clear from the above questions and answers that any delay in the disposal of our surplus agricultural commodities under title I can be charged to the confused administration of the various Government agencies involved. We believe that this program is so huge and complex that the Government administrators involved are eager to find a scapegoat for the troubles confronting our great agricultural industry. It is nothing new to us to discover that the scapegoat on many occasions has been and is our merchant marine.

NEED OF A UNITED STATES MERCHANT MARINE

Recently, when appearing before the House Merchant Marine and Fisheries Committee, Mr. Bernt Lund, managing director, Norwegian Shipowners Association, stated that the North Atlantic Treaty Organization ship-pooling arrangement will enable the United States to rely upon foreign merchant ships in the event of a national emergency. He emphasized this remark with his observation that in the event of another emergency we will be able to lean on foreign merchant marines as we had done in World War II. We must admit that we completely agree with Mr. Lund's statement that we will be able to rely upon foreign merchant marines to service us in a future war to the same extent that we did during World War II. As a matter of fact, we will briefly outline the nearly tragic consequences resulting from our Nation's past fallacious belief that we need not maintain an adequate American-flag merchant marine because our allies, consisting of the great maritime powers, can service us in time of war.

World War I

In World War I, we and the free world were nearly defeated because the United States did not have an adequate merchant marine. Even before we entered the war we learned of the high cost of depending on foreign ships to carry our commercial cargoes. That is, when we could get foreign ships to carry them.

Prior to World War I, the nearly defunct American-flag merchant marine was carrying only 9 percent of our export and import trade. Thus, at the outbreak of the war we were caught in the position of being a neutral nation without ships. The foreign maritime nations withheld their ships and our Nation's foreign trade was left high and dry on our docks.

The conditions existing in our Nation are best described by Mr. Alexander Noyes in his book entitled "Financial Chapters of the War," written in 1916, and "The War Period of American Finance, 1908-25," written in 1926. In his books Mr. Noyes points out that our foreign trade came to a virtual halt with the outbreak of World War I despite the fact that we were a neutral Nation. In 1913 the United States exported 8,609,000 bales of cotton or 60 percent of the

year's crop valued at $575 million.

In 1914 our cotton crop was 20 percent higher than any preceding year. In August of 1913 we exported 257,172 bales of cotton. However, 1 year later, in August 1914, after the outbreak of the war, our exports dwindled to only 21,219 bales of cotton. It was immediately clear that at least one-half of the 16 million bale cotton crop of 1914 would remain on the growers' hands. This was catastrophic because the planters had borrowed to the hilt in order to pay wages, rent, and materials. Consequently, they were facing immediate bankruptcy. Their plight can be illustrated by showing that the price of cotton per bale dropped from $62.50 in July 1914 to $36.25 in December 1914. It is also important to note that the December 1914 price of cotton was lower than any average price of any year since 1901 and was much below the cost of producing the cotton. The panic that resulted was of such proportions that a nationwide campaign took place under which charitable citizens would each purchase 1 bale of cotton in order to save the cotton districts of the South from complete economic destruction. Moreover, in a meeting held in Washington, D. C., the Nation's bankers pledged $135 million worth of aid to the cotton growers.

In the Financial Chronicle of October 24, 1914, page 1181, there is a report stating that the South Carolina Legislature was discussing a plan to prohibit the planting of cotton in 1915 in order to raise the market price.

At the outbreak of World War I the panic conditions confronting our agriculture industry spread to our manufacturing industries which were heavy exporting industries. Because there were no ships to carry their manufactured commodities, the copper, steel, general manufacturing, and oil industries were completely disrupted. Mr. Noyes points out that copper production was completely demoralized and the mills of the United States Steel Co. were down to 30 percent of capacity. Not only did we not have the ships to carry our exports to foreign nations, but we were also cut off from such needed and vital imports as manganese, dyestuffs, and chemicals.

The foreign shipowners who did send a few of their ships to our shores charged our shippers unbelievably gouging rates. In 1915 Senator Robert L. Owen, in an article appearing in the "Annals of the Academy of Political Science," stated that shipping rates increased up to 700 percent even before our Nation engaged in the munitions trade. After the war became a full-scale one, shipping rates increased up to 2,000 percent with the average rate on general cargo showing an increase of 1,117 percent.

Before World War I, ships were chartered for $1 a ton. Two short months after the outbreak of the war the charter rate was $13.88 a ton to areas outside of the war zone and $20 to $21 in war zones. These high shipping profits caused the demand for ships to soar. The sales price of ships rose to $300 a ton from the prewar price of $60 a ton. In fact, shipping profits were so high that many ships were completely paid for from the profits of one voyage.

In order to meet the crisis confronting our Nation, the United States Congress, in August of 1914, enacted a law which permitted Americans to register their foreign flag ships under the American flag. They also passed a law which provided insurance coverage for these ships. By July 1, 1915, 523,000 tons of shipping had been transferred to the American flag. By 1917 this total was increased to 650,000 tons. As soon as our ships increased in number our foreign trades were opened. This meant high prosperity for the American farmer as well as our manufacturing industries. We were saved from economic bankruptcy by our merchant marine.

By the end of World War I, the United States possessed 2,547 merchant ships aggregating a total of 14,705,281 dead-weight tons. Of these ships 2,316 were constructed by the Government at the high wartime cost of $2,951,807,000. The balance of 231 ships were acquired by purchases, seizure of enemy property, and transfer from other Government departments at a net cost of $126,194.

President Woodrow Wilson was greatly disturbed by the mistake out Nation had made in not maintaining a peacetime fleet adequate to service our foreign trade during war. In his third annual message to Congress given in May 1915 he declared:

"It is high time we repaired our mistake and resumed our commercial independence on the seas. For it is a question of independence. If other nations go to war or seek to hamper each other's commerce, our merchants, it seems are at their mercy, to do with as they please. We must use their ships, and use them as they determine. We have not ships enough of our own. We cannot handle our own commerce on the seas. Our independence is provincial and is only on land and within our own borders."

77493-56-11

After World War I, the 66th Congress made a full study of the role of the American merchant marine in peace and war. After studying the near disaster our Nation experienced because of the philosophy of depending upon foreign-flag ships instead of maintaining our own merchant marine, they passed the Merchant Marine Act of 1920. The conclusion they reached is evident in the strong language contained in the preamble of this law which is as follows:

"That it is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States and it is hereby declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine, and insofar as may not be inconsistent with the express provisions of this act, the United States Shipping Board, shall, in the disposition of vessels and shipping property as hereinafter provided, in the making of rules and regulations, and in the administration of the shipping laws keep always in view this purpose and object as the primary end to be obtained."

In 1936 Congress reaffirmed its mandate that our Nation should develop and maintain a United States merchant marine adequate to service our foreign and domestic commerce and be available in national emergency. The preamble

of the act is as follows:

"It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine (a) sufficient to carry its domestic waterborne and a substantial portion of the waterborne export and import foreign commerce of the United States and to provide shipping services on all routes essential for maintaining the flow of such domestic and foreign waterborne commerce at all times, (b) capable of serving as a naval and military auxiliary in time of war or national emergency, (c) owned and operated under the United States flag by citizens of the United States insofar as may be practicable, and (d) composed of the best equipped, safest, and most suitable types of vessels, constructed in the United States and manned with a trained and efficient citizen personnel. It is hereby declared to be the policy of the United States to foster the development and encourage the maintenance of such a merchant marine." [Italic ours.]

World War II

With the outbreak of World War II we still heard the argument that our allies had merchant fleets that were large enough to service the free world. Yet, after the outbreak of World War II, experience shows us that the fleets of our allies were not available for our use and we had to construct over 5,000 ships to meet the shipping needs of our Nation and our allies. This shipbuilding program cost us $12.5 billion.

On September 1, 1939, the United States merchant fleet had 1,379 seagoing ships of 1,000 gross tons and over. The United States Maritime Commission in November of 1937, had said that 1,200 ships would be adequate for our country in time of war. Again the so-called experts claimed our country could depend on foreign merchant marines. Again they were proved to be wrong, by more than 6,000 ships.

All theaters of World War II operations were overseas. Accordingly, our Nation and the free world were dependent upon ocean transportation in making our defense and counteroffensive against the enemy.

The Axis Powers were well aware of that fact. They did all they could to destroy our merchant marine.

Considering the low ebb of American shipbuilding during the early 1930's and the vital part which the American shipbuilding industry was called upon to play in the successful carrying out of the war, it was fortunate that this industry was kept alive before we entered the conflict. After the German forces had overrun Norway, the Low Countries, and France in the early summer of 1940, this fact was even more apparent and its implications became serious. Accordingly, in the fall of 1940 the British placed orders with American shipyards for 60 freighters. Early in 1941 the Maritime Commission ordered 200 more cargo carriers. By the end of 1941 the American shipbuilding program, including foreign and American orders, had been expanded to include about 1,200 ships, aggregating about 14 million deadweight tons. It was with the view of expediting the deliveries of British orders that a ship of simplified design was agreed upon.

This gave birth to the Liberty ship which was actually obsolete on the drawing board.

During the 5-year period 1941-45, a total of 5,280 oceangoing vessels, aggregating over 54 million deadweight tons, were delivered from American shipyards. During this same war period, British Empire shipyards delivered less than 11 million deadweight tons. In fact, all of our allies upon whom the prewar experts had claimed we could depend for merchant ships supplied us with only 715,000 gross tons of ships. On the other hand, we delivered 5,500,000 gross tons to them. The United States merchant marine delivered the goods to our fighting forces and allies overseas. The total cargo lift from the United States between December 7, 1941, and the surrender of Japan was 268,252,000 long tons, of which 203,522,000 were dry cargo and 64,730,000 were petroleum and other liquid cargoes. During the last year of the war, this meant an average rate of delivery of 8,500 tons of cargo every hour of every day and night. Our ships also carried the great majority of the 7,129,907 Army personnel and 141,537 civilians moving overseas between December 7, 1941, and November 30, 1945. During this same period, they carried 4,060,833 Army personnel and 169,626 civilians back to the United States.

Our agricultural industry had no economic problems as far as exporting their produce was concerned. Farm commodities moved freely to all parts of the world in our American merchant ships. This is a sharp contrast to the early days of World War I when the lack of a United States merchant marine almost destroyed our farm economy.

Because we were able to build up our own merchant marine during this war, we were able to deliver the goods, including our farm commodities, needed to win the war. Also, we avoided the type of gouging we received during World War I. During World War II general cargo rates increased only 70 percent as compared to 1,117 percent during World War I. This difference is most impressive when we note that the ship construction and operating costs during World War II were substantially higher than during World War I.

Korean war

When the Korean war broke out in June 1950, our allies again were not in any position to provide us ships even for that limited operation. Our Government was compelled to activate from 30 to 75 ships a month from our national defense reserve fleet. By February of 1952 our Government had activated approximately 700 ships. Thus, we were able to service ourselves and the free world in a time of national emergency when we were facing the Communist aggressors.

It is with some bitterness that we observe that during the Korean war not only were we able to rely most heavily upon ourselves for vital merchant shipping, but also we found that the fighting manpower of our allies suddenly dried up. We were found in a strange position of defending the principles of the free world with our Navy, our Army, our Marines, our Air Force, and our merchant marine. This, coupled with our experiences in World War I and World War II, should once and for all teach us that we as a nation must prepare to fully defend ourselves. We can only hope and pray that other nations will be at our side defending the freedom of the world against the terrible threat of Communist aggression which is facing us.

RETURN TO THE UNITED STATES ECONOMY

One of the arguments submitted by the anti-50-50 forces is that it is more costly to ship the title I, Public Law 480 agricultural surplus commodities on American ships than on foreign ships. When appearing before the House Merchant Marine and Fisheries Committee, the Department of Agriculture spokesman, Mr. Butz, stated that in 1955 the title I shipment's cost differential between American and foreign ships was $3 million. However, Mr. Butz nor any other Government spokesman submitted data pertaining to the direct return to our economy resulting from the American ship carriage of these farm commodities. In 1954 on the floor of the House of Representatives there was a charge made that American taxpayers' money was being wasted because of an existing differential between the cost of shipping ECA aid cargoes on American ships as compared to foreign ships. Congressman John Allen of California made a complete analysis of the charge. In turn, he made an objective study showing that the differential paid by the Government for utilizing American-flag ships to carry 50 percent of our aid cargoes was more than balanced out when considering the direct return to the United States Treasury and to our national economy. We shall project the same type of analysis to the shipment of title I cargoes aboard

American-flag ships. Table I is an analysis of the estimated shipping costs involved in the full title I, Public Law 480, disposal program. This table is as

follows:

TABLE I.—Estimated revenues of United States and foreign ships under title I, Public Law 480

It should be noted that we begin our analysis with the $1.5 billion authorized under title I. We have not attempted to estimate the increase in this authorization which will result from the dollar reimbursement to the fund by the various overseas United States Government agencies that will be expending the title I foreign currencies in the foreign countries. From past experience, as well as experience under title I, we have estimated that the total ocean shipping cost, both United States and foreign, will be 12.5 percent of the authorized $1.5 billion program, or $187,500,000.

We have estimated that of the ocean shipping costs under the title I program, 70 percent will be for liner companies, both United States and foreign. United States liners have carried 20 percent of the title I cargoes during the early months of the program. However, most of these first cargoes have been the urgently needed commodities such as wheat and other grains which are basically tramp ship bulk cargoes. Since the great bulk of the cargoes to be carried in the future will be liner-type cargoes, we have estimated that liners will carry 70 percent of the total dollar value of the cargoes under this program. Industry experts advise us that our estimates are sound.

Because the liner companies are covered by international conference rates, the cost of shipping aboard United States liners and foreign liners is the same. With the assumption that United States and foreign liners each carry 50 percent of the berth liner cargoes, the revenue of the United States liners will be $65,625,000 or the same as that paid to the foreign liners.

We estimate that of the $187,500,000 shipping costs involved in the transportation of title I programs, 30 percent will be carried in United States and foreignflag tramp ships. This will provide a total revenue to United States and foreignflag tramps of $56,250,000.

Based on our past experiences and the close observation of the tramp shipping rates, we estimate that it will cost 25 percent more to ship aboard United Statesflag tramp ships than aboard foreign-flag tramp ships. Thus, of the total $56,250,000 tramp ship revenues the foreign tramps will receive $25,000,000, and the American tramps will receive $31,250,000. The estimated differential between