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three ships, small ships, purchased by Denmark in Canada, financed by the ECA.

Mr. LATHAM. And they would be put in world trade in competition with our own ships?

Mr. HOFFMAN. Oh, no; they were just small ships. I can find out

for you.

Mr. LATHAM. I would like to find out. Would you let us have a report on that, because this committee is very vitally interested in that subject.

Mr. HOFFMAN. We will give you a report on any financing we have done.

The CHAIRMAN. If you can hand that report to the counsel of the committee it will be incorporated in the record. (The information referred to follows:)

ECONOMIC COOPERATION ADMINISTRATION,
Washington 25, D. C., February 8, 1949.

HUGH A. MEADE, Esq.,

Counsel, Merchant Marine and Fisheries Committee,

House Office Building, Washington, D. C.

DEAR MR. MEADE: In accordance with the committee's request to Mr. Hoffman during the course of his appearance last Thursday, there are enclosed the following:

1. Information concerning cargoes carried at rates of $4.50 or more per ton below the United States flag rate.

2. Information concerning ECA financing of a purchase of ships in Canada by Denmark.

Also enclosed is a copy of the seventh report to the ECA Public Advisory Board. Copies of statement 25, which appears on pages 78-80 of this report, were sent to the chairman of the committee by Mr. Syran last week.

Sincerely yours,

A. I. HENDERSON, General Counsel.

Cargoes carried at rates of $4.50 or more per ton below United States flag rates

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FEBRUARY 7, 1949.

ECA FINANCING OF DANISH PURCHASE OF THREE CANADIAN VESSELS

Under date of August 9, 1948, ECA issued a procurement authorization by which it undertook to reimburse the Danish Government to the extent of a maximum of $1,759,000, which was the last of a series of payments made by the Danes in connection with the purchase of three small Canadian vessels of approximately 4,600 dead-weight tons each. The purchase had been negotiated before the existence of ECA but the ships had not been delivered before that date, and ECA undertook to finance only such payments as still were due and payable as of April 3, 1948, the date ECA was established. The Danish Government represented that the vessels would be used in the coastal waters of Denmark. It has since been alleged that these vessels are being offered for trans-Atlantic charter. ECA has made inquiries through its mission in Denmark and has been advised that all three ships are now in the Baltic trade. The Danish Foreign Office has agreed to request the present owner of the vessels to keep all three in Baltic and North Sea service and not to offer them for transAtlantic charter.

The vessels are owned by private interests in Denmark and it may not be possible for the Danish Government to restrict the trades into which the vessels may be offered. In this connection, Danish Government representatives have indicated that Denmark may request ECA to cancel the procurement authorization so that ECA dollars will not be used to finance the purchase of the vessels. It should be mentioned that ECA is not financing the purchase of United States flag vessels by participating countries nor the construction of vessels in the United States for participating countries, and further that ECA considers financing construction of ships outside of the United States or purchase of vessels which are not United States flag vessels only where in its opinion such financing is required in the interest of the European recovery program.

Mr. LATHAM. Thank you very much.

Mr. NELSON. I would like to understand, if I can, the circulation of American dollars in the European recovery program. You have testified in this particular instance that you do not want coal carried at an increased cost because you are competing on the European price market with England. How much of the coal furnished on the Continent now does come from England?

Mr. HOFFMAN. A very small amount from Great Britain and the Continent, a very large amount from Poland. Poland is a large supplier of coal to Sweden and to certain of the other European countries; and, of course, if it had not been for some American coal, I think the price would have been higher. American coal was put in the picture, but the price of American coal landed at the present time fairly well controls the price of Polish coal. It is not English coal that worries us; it is Polish coal.

Mr. NELSON. English coal is being sold on the Continent at an export price of $7 over the cost of domestic coal in England.

Mr. HOFFMAN. Mr. Nelson, if you can tell me what the exact difference is in the export price, I would like to have it. As a matter of fact, I have spent hours trying to figure out what the differential is, and have had experts on it. It is one of those problems where we have so many different grades that you come up very dizzy.

The best answer I can give you is that so far as we can find out, the difference between the export price and the domestic price in Great Britain averaged out is about $2.40 a ton. I won't guarantee that figure, sir.

Mr. NELSON. We had a coal exporter in here the other day who, as I remember, said the difference between the domestic price in England and the export price of English coal was $7 a ton.

Mr. HOFFMAN. There are many different grades. I find the coal business a very complicated business. I thought it was quite simple. I thought you could ask the question, "What is the difference between the price Great Britain charges domestically and the price they charge for export?" and I got 18 pages of figures as an answer. My guess is that it is somewhere around $2.40.

Mr. NELSON. And whatever the difference is between that and the American price

Mr. HOFFMAN. Is a profit Great Britain is getting at the expense of some of the non-coal-producing countries of Europe.

Mr. NELSON. In other words, they are taking European recovery money that we advance to the non-coal-producing countries, in addition to the European recovery money we advance to them.

Mr. HOFFMAN. Very little; but whenever they sell a ton of coal and the price is higher than the price domestically, of course they are getting a profit.

Mr. NELSON. And one of the difficulties of estimating the price is no doubt the fact that the mines are government operated and we have no way of ascertaining their true costs.

Mr. HOFFMAN. It is just as difficult to get the cost in the Ruhr, which we are running. I have the Ruhr price, the Polish price, and the English price. If you can tell me the exact difference, I would be glad to know it.

Mr. NELSON. I am trying to get at the circulation of American dollars, and find out why you want a direct subsidy paid instead of increasing the price of coal.

Mr. HOFFMAN. We would like to pull down the price of British coal and Polish coal, and we would like to see the price of coal out of western Germany stay where it is.

Mr. NELSON. And that can only be done by direct subsidy and reducing the American price rather than by increasing the American price?

Mr. HOFFMAN. I don't quite get the question.

Mr. NELSON. If we require that 50 percent of American cargoes be carried in American bottoms, and that price is higher, that price is added to the price of American coal in Europe. If, on the other hand, we pay the shippers a direct subsidy, they reduce the delivered price so that you reduce the market for coal in Europe and make Great Britain come down on their price, and also Poland on theirs.

Mr. HOFFMAN. That is the idea.

Mr. NELSON. Is any ERA money going into Poland?

Mr. HOFFMAN. There was some financing at one time, at a time of great stress. We financed a purchase of Polish coal for France. It was at a time when it was more or less the only place they could get the coal and get it quickly, but we do not finance any Polish coal as a regular procedure.

Mr. NELSON. So that Poland, being a Russian satellite, is selling at the American market price in Europe, and ERA funds, by the same token, are going for coal in Poland?

Mr. HOFFMAN. I would have to understand that question before I answer it.

Mr. NELSON. The Europeans are buying coal in Poland with money advanced by you with American dollars.

Mr. HOFFMAN. Indirectly. Of course, the whole European economy is underpinned by American dollars, so everything the European economy buys in a sense might be with American dollars, but if you asked me which particular part of it, I don't know.

Mr. NELSON. Is it true that this whole artificial situation with regard to the coal mines in Europe cannot be cured unless we do import Polish coal?

Mr. HOFFMAN. I think that Poland always has been a coal producer for certain countries. I think if you took Polish coal out of the European market today it would probably slow down the whole recovery program.

Mr. NELSON. Well now, the European recovery program is going to last for a certain specified time, we hope. Is it possible that Great Britain and the Ruhr, which are the great coal-producing places in western Europe, can furnish enough coal to assure the recovery of western Europe?

Mr. HOFFMAN. Without Polish coal?

Mr. NELSON. Without Polish coal.

Mr. HOFFMAN. I don't think so.

Mr. NELSON. So that we will have to compete with Polish coal from now on?

Mr. HOFFMAN. Yes, sir.

The CHAIRMAN. I promised to recognize Mr. Boykin.

Mr. BOYKIN. Go ahead; I am about to get all of my questions answered anyway.

Mr. ALLEN. Earlier in the morning you said something about the situation which would result in countries like Norway if there was a requirement that 50 percent of the cargoes move in our ships. With reference to countries like that-and I will preface the question by saying that I am interested in seeing the merchant marine kept on the high seas, but I am also interested-and it is good, I think-to have it going into the ports of every country in the world where that is possible. So would you, under the circumstances, if there are exceptions that should be made, in your opinion, indicate a percentage, a lesser percentage than 50 percent, that should be carried in connection with some countries?

Mr. HOFFMAN. I don't know exactly what percentage. Do you have those figures as to how much is United States and how much is Norwegian?

Mr. SYRAN. I think about 10 or 15 percent is American, and the rest is Norwegian.

Mr. ALLEN. I think there was testimony a day or so ago that as little as 5 percent going to Denmark was carried in American ships. Mr. SYRAN. Norway, over-all, was 26.7 percent that was moved on American-flag vessels, and 73.3 on foreign-flag vessels, presumably mostly Norwegian vessels.

Mr. ALLEN. How many countries are there, and what are they if you can name them, that are in a similar position with Norway? Mr. SYRAN. That look to their merchant marine as a major source of revenue?

Mr. ALLEN. And which should be justifiably exempted.

Mr. SYRAN. The Netherlands and the United Kingdom. They would be the principal ones. Of course, the other countries, Denmark and

Italy, are all hooked to the merchant marine to a certain degree, but I means principally those three.

Mr. ALLEN. What percentage, if you know, of the entire ECA program, so far as shipping is concerned, goes to those countries?

Mr. SYRAN. I will tell you, Mr. Allen; there is a seventh report to the public advisory board that has a complete tabulation indicating by tonnage as well as percenatge the individual nations and the amount that they moved on their own and on foreign-flag vessels. We will be glad to submit a copy to you.

Mr. ALLEN. Could you make a rough estimate for us for present purposes?

Mr. SYRAN. It is hard to make it unless I could read it down, because there is a difference in each one.

Mr. ALLEN. Do you know if any of the cargoes are moving on any of the Panamanian or Honduran ships?

Mr. SYRAN. There are some cargoes moving on Panamanian and Honduran vessels. It is a relatively small amount, but there are some cargoes moving on those flag vessels; yes, sir.

Mr. ALLEN. How can we justify the movement of cargoes on those vessels rather than on our own ships?

Mr. SYRAN. It is difficult to answer a question in quite that way. The fact was a rate negotiation generally on the bulk cargoes where that was taken. A cheaper rate may have been offered in the negotiating of a charter under the foreign-flag group, and they took the lower price.

Mr. ALLEN. That was because, was it not, the shipment was not directed otherwise?

Mr. SYRAN. That's right. Presumably X nation was moving a certain amount of cargo, and they may have gotten, say, two Italian vessels, a Norwegian vessel, and they negotiated and got a Panamanian possibly at a lower rate.

Mr. ALLEN. Would it not be justifiable policy on the part of our Administration to say that our ships should not have to compete with countries of that type, which are not being supported by the ECA program?

Mr. SYRAN. Well, we have done this, Mr. Allen. We have discussed on many occasions this matter of the use of Panamanian vessels, and we have requested that participating nations very definitely to make an effort to prefer the vessels of other nations who are members of the ECA circle, so that any dollars expended for freights would remain within the ECA circle, and there would be some benefit derived from it.

Whereas we recognize that the payment to a Panamanian flag pays a certain currency outside of that circle, we have not restricted the use of Panamanian vessels, although we have requested that they be used only as a last resort if other vessels are not available.

Mr. ALLEN. Do you feel there is no abuse of that situation by any other party that might be arranging ships?

Mr. SYRAN. I do not think there is any abuse in that. I think it has been kept to fairly well downward bounds, and I think it depends upon conditions. There are some months when no Panamanian vessels are used, while in other months there may be a number.

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