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The CHAIRMAN. Is Mr. Hansen here? I said this morning that we would hear only Mr. Hansen, but we have since that time had a request from Mr. John O'Connor, a former Member of the House, who has asked that he be permitted to testify immediately after Mr. Hansen.

STATEMENT OF SVEND HANSEN, PRESIDENT, FALL RIVER NAVIGAGATION CO. AND ATWACOAL TRANSPORTATION CO.

Mr. HANSEN. My name is Svend Hansen. I am president of Fall River Navigation Co. and Atwacoal Transportation Co. Both companies are corporations organized and existing under the laws of the State of Massachusetts, with the home office at Fall River, Mass., and their operating office at 21 West Street, New York City. Both corporations are owned by the same stockholders, all of whom are citizens of the United States.

Prior to the Second World War, each company owned a dry-cargo Ivessel and was engaged in the transportation of general commodities between cities on the Atlantic and Gulf coasts of the United States, and between United States ports and ports in the Caribbean area. The vessel owned by the Atwacoal Transportation Co. was sunk by submarine. The vessel owned by the Fall River Navigation Co. was requisitioned for title by the United States Government, and that company has not yet received a single penny of compensation for the vessel.

I wish to call the committee's attention to the severe plight of these companies occasioned by the failure to collect just compensation for the one vessel which was requisitioned by the United States Government, and the refusal of the Maritime Commission to permit the sale of an ex-German vessel, which was purchased for coastwise operation but which has proved to be completely unsuited to United States coastwise operation.

The vessel to which I refer was constructed in Germany in 1935 for use in the Baltic trade. The original name was steamship Wilhelm Traber. She was taken over from the Germans by the British at the end of the Second World War, was renamed the steamship Empire Wandle, and was operated by the British for a time. Subsequently, she was transferred to the United States Maritime Commission, which Commission then offered her for sale to United States citizens. The Atwacoal Transportation Co. purchased the vessel from the United States Maritime Commission on March 17, 1947, for the sum of $201,000 and, after making extensive alterations, put her in service under the name of steamship Yankee Dawn,

The Atwacoal Transportation Co. purchased the vessel from the Maritime Commission for the purpose of operating her in the coastwise and nearby foreign trade, the same trade in which the company had been engaged prior to the loss of its vessel during the war. Immediately after purchasing the vessel, the Atwacoal Transportation Co. placed her in a shipyard for extensive alterations, including the conversion from coal to oil. During the course of the alterations, the company found that it would be necessary to replace numerous operating parts of the vessel, which had not appeared to be necessary at the time of the submission of its bid, in order to meet the requirements of

the American Bureau of Shipping and the United States Coast Guard inspectors.

The alterations were finally completed in October 1947 at a total cost of $269,858.01. Consequently, the total cost of this vessel to the Atwacoal Transportation Co., including the original price paid to the United States Maritime Commission and the cost of alterations made prior to the operation of the vessel, was $470,858.01.

When the vessel began operation, it soon became apparent that additional alterations would have to be made. Subsequent to the date when the vessel first began operation, the company has spent approximately $80,339.65 in additional alterations and repairs and is. now confronted with the necessity of making still further expenditures within the near future.

The vessel was finally placed in operation late in the year 1947 and has been operating since that time, except for the many occasions when she is laid up in the shipyard for repairs. It soon became apparent that the vessel was not suitable for United States coastwise operation. Her consumption of oil exceeds by approximately 50 percent the amount of oil which should be consumed by an economical vessel of this type. She requires a crew of 32, consisting of 9 officers and 23 unlicensed men. Her crew accommodations are entirely too cramped for American crews, and the company continuously receives complaints from her crew. In fact, it has been almost impossible to hold a desirable crew on the vessel. Personnel turn-over is approximately 90 percent per voyage because of the cramped European-type quarters and the difficulty of working with her engine. The engine gives off an immense amount of heat and steam vapor and, because of its fast turning and close clearing, frightens new men. The engine is not a standard make, and parts cannot be purchased in this country. Every time it becomes necessary to replace a part, an entirely new pattern must be prepared for the particular part, after which the part must be manufactured from the pattern. All of these factors have increased her operating loss tremendously.

For the period ended December 31, 1947, the vessel lost in operation $78,068.95, exclusive of depreciation. During the period January 1, 1948, to November 30, 1948, during which time the vessel was being operated continuously in United States coast wise and nearby foreign service, she lost a further amount of $132,583.32, exclusive of depreciation.

The heavy loss sustained in the operation of this vessel, together with the fact that all of the capital of Atwacoal Transportation Co. was tied up in the vessel and a large part of the capital of Fall River Navigation Co. was tied up in the requisitioned vessel for which the company could get no compensation, made it necessary to combine the operations of the two companies. Consequently, the vessel to which I refer, the steamship Yankee Dawn, was transferred from Atwacoal Transportation Co. to Fall River Navigation Co. in December 1948, and is now being operated by Fall River Navigation Co. When it became apparent that the vessel was not suited to the United States coastwise trade for which she had been purchased, the Atwacoal Transportation Co. entered into an agreement to sell her to a Danish corporation at a price which, after paying the commission, would barely cover the company's cost. The Danish corporation

planned to use her in the Baltic Sea trade, for which she is well adapted. She could also be used in the South American coastwise trade, but cannot be operated profitably in the United States coastwise trade. However, the United States Maritime Commission refused to approve the transfer of the flag of this vessel to the Danish owner, or to any other foreign owner, stating that it had no authority to do so.

This has left the Fall River Navigation Co. and Atwacoal Transportation Co. with all of their available capital tied up in this vessel, which is losing money every day that she operates. They have no alternative except to continue to operate her at a loss or to tie her up indefinitely and lose their entire investment in the vessel. She could serve a useful purpose if the owner were permitted to sell her to a foreign company for use in the Baltic Sea trade, or the South American coast wise trade.

The CHAIRMAN. Is that related at all to the subject matter of these two bills, Mr. Hansen?

Mr. HANSEN. I think so, Mr. Chairman-and I am almost through— and, as a result of what I am just reading now, I would like to just suggest for the consideration of the committee an addendum to the Joint Resolution No. 92.

The CHAIRMAN. All right.

Mr. HANSEN. Therefore, I urge that this committee add to the pending resolution a provision which would authorize the Maritime Commission to approve the sale of this vessel to foreign purchasers, or the transfer of her flag, if the Commission finds that the vessel is not necessary or economically desirable for permanent use in the American merchant marine. I desire to file with the committee a suggested amendment to House Joint Resolution 92, which I believe will give the United States Maritime Commission the necessary authority to approve the transfer of this vessel to a foreign purchaser. This will enable Fall River Navigation Co. and Atwacoal Transportation Co. to retrieve all or part of their investment in this vessel and to invest the proceeds in another vessel better suited for the United States coastwise trade.

With your permission, Mr. Chairman, I would like to read the suggested amentiment, if I might.

The CHAIRMAN. If it is not too long. If it is, we will just put it in the record.

Mr. HANSEN. It is not very long: "To change the period at the end of the resolution to a colon, and added the following provision:

"Provided further, that the Maritime Commission is hereby authorized to approve without condition the transfer of flag or sale foreign. under section 9 of the Shipping Act of 1916 of any vessel owned by a citizen or citizens of the United States, which was acquired by the United States pursuant to a determination by the Inter-Allied Reparations Agency Shipping Committee and thereafter sold to such citizen by the Maritime Commission, if in the opinion of the Maritime Commission such vessel is not necessary or economically desirable for permanent use in the American merchant marine.""

The CHAIRMAN. Does that conclude your statement?
Mr. HANSEN. Yes, sir.

Mr. ALLEN. Mr. Hansen, would that amendment apply to any vessel other than your own; do you know?

Mr. HANSEN. I know that there were several vessels secured by the Maritime Commission or by this Government under this InterAllied agreement, and I know that some of them were sold to other American citizens besides ourselves.

Mr. ALLEN. Do you know of any other similar condition now existing with any other owner?

Mr. HANSEN. While I have no figures of what other owners and operators are doing, I do not think that anybody has had any large amount of success with those ex-German vessels.

The CHAIRMAN. Any other questions? [None.]

Mr. O'Connor? This is the last witness on House Joint Resolution 92. Then we will resume on H. R. 1340.

STATEMENT OF JOHN J. O'CONNOR, WASHINGTON, D. C.

Mr. O'CONNOR. My name is John J. O'Connor. I am a lawyer at Washington and New York. My Washington address is 423 Washington Building.

Mr. Chairman, it is a little difficult for me to say whom I represent in this particular instance. As many of you know, I do represent at times the Isbrandtson Co., the largest independent American operator, and I advise with other people. Whether or not the views I express today would be the views of my clients, I am not sure; but I have given a great deal of attention to this subject for several years, and I did not intend appearing until this morning I happened by here and listened to some of the testimony, and I felt that it should not be permitted to stand unchallenged before this committee. So if you want to label me as appearing pro bono publico, that would probably be more exact.

I thought that this extension resolution merely continued the authority in the Maritime Commission to sell and charter. That in itself, of course, is a fundamental question. Ordinarily I would be opposed to the chartering feature of that. I would say that, if the Commission has any ships left that are usable in the American trade, they might be permitted to sell them. But to continue in the shipping business, of course, is an anomolous situation that just does not fit in with our American economy.

It was definitely decided in 1936, in the debates on the Merchant Marine Act of that year, that the United States Government was not going into the ownership or operation of shipping. The Great War, of course, created a situation which gave rise to these surplus ships, to the selling of them. As I understand it, practically all the desirable ships have been sold. But some 300 ships are now being chartered and, of course, there are between 1,000 and probably 2,000 in the laid-up fleet which might be from time to time desirable.

The only reason that the Commission should be granted extension of the permission to charter-and I will say, at the outset, I do not oppose that permission at this time-is to meet the foreign-trade situation, if we ever can induce the ECA and the State Department to prefer American ships to foreign ships; and, as to the State Department, that is quite a difficult task. Second, to provide ships to American operators who may need them, and so provide that American operators do not have to charter foreign.

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Then there is a serious question whether or not it might be better to keep ships active rather than in the laid-up fleets, so that undoubtedly there is a sentiment to continue the chartering of these ships. And I was content to assume that would be done by this committee and by the Congress, but this morning I heard a proposal here—and I have heard it before, advanced I think principally by Mr. Garner of the Waterman Co.-that I think is so contrary to the American philosophy and the American way that it should not go unchallenged. În other words, for the Congress to say that the only people in this country who deserve to have any attention paid to them are the big shots, the people who have money, the people who own ships, rather than to favor any fellow who hasn't got the money to buy ships but who wants to come in and charter them.

NRA fell partly because of that position it took-that nobody could go into a business who had not been in the business. They used the grandfather clause; the War Production Board used the grandfather clause, and the Maritime Commission has been using grandfather clauses in certain instances. But to say that you will only charter a ship to people who own ships, and then in proportion to the number of ships which they own, gives no opportunity to the interested person who wants to help the American merchant marine and charter an American ship and fly the American flag and sail the seven seas.

I am not talking for anybody who would be affected by that. I heard behind my back something said about the Isbrandtson Co. That one client of mine happens to be the fourteenth biggest owner of ships, and ahead of that individual, of those 14, 12 are subsidized lines. Of course the Isbrandtson Co. is not subsidized, and the Isbrandtson Co. happens to be fifth or sixth in the charter of ships, and at this moment is sailing over 50 ships in every sea around the world. That is much more than many of the big shots are doing at the moment.

To say that only a person who has had the money to go down and buy ships shall engage in the shipping business just does not set well, in my opinion, as to what this country stands for. Here are two veterans, we will say, each greatly decorated and wearing all the medals available in World War II. One of them has a rich father. He hands his son a million dollars, or the down payment of $250,000, to buy a ship. The other one has just enough backing to charter a ship. And you say he cannot charter a ship. Only this fellow that happens to have the money can buy a ship, and then he can charter one ship for every ship he buys.

I hope that the committee will not give serious consideration to any such proposal.

Something was said here about the financing of ships. Well, probably the committee knows more about it than I do, but ships are not financed generally by banks, like other businesses in this country. Possibly if you make enough connections with Kuhn, Loeb or Lehman Bros. you can get the backing, as some of them have, but generally banks do not finance ships or take mortgages on ships.

Now, because it appeared that this resolution might be open to amendment, as suggested by Mr. Garner, I want to take this opportunity to lay before this committee at least two amendments about which I have talked before this committee for some time.

This resolution should be amended in at least two respects, to take away or prevent the arbitrary use by the Maritime Commission of

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