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Admiral SMITH. Yes; they have.

Mr. BONNER. What are they? Reefers?

Admiral SMITH. They charter dry-cargo ships for their route. So if you add the reefers in there it might exceed the number that they are allowed to charter.

Mr. ALLEN. Mr. Chairman, may I pursue that question a little further?

The CHAIRMAN. Yes.

Mr. ALLEN. Admiral, as I understand it, the Pacific Far East is one example. It owns 5 C2's, and charters 9 C2R2's, and has 17 other ships chartered. I understand further that they have in a sense four lines of carriage. One is their regular berth operation running a line; another is the carriage of some 180,000 tons of sugar from the Philippines which heretofore has moved in foreign bottoms; and another line is the carriage of steel to the Arabian Gulf, when and if the steel is available, and that is a third use.

Now, will the operation of this proposed amendment affect any of those four operations, and, if so, how?

Admiral SMITH. As I say, I have not analyzed that proposed amendment. I just heard it read. I do not know whether there is anything in there which would exclude the reefers or not.

The CHAIRMAN. I think we will take that up when we get to the consideration of amendments.

Mr. ALLEN. I appreciate that, Judge. But I do not know how it would operate. I do not know the facts personally, and I would dislike seeing, I think, the best of the Pacific operators go out of business. I think it is worth a little time, if I might presume.

Mr. BONNER. I tried to get that information. I tried to get the number of ships that operated directly under the supervision of the Army, operated by subcharter, operated specifically for the Army by some operator in some special way.

The CHAIRMAN. Cannot we take that up when we get to an executive consideration of House Joint Resolution 92?

Mr. ALLEN. I do not know the facts well enough to interpret the amendments to apply to the companies. I would appreciate information on three other lines if I can get it.

The CHAIRMAN. Will the Maritime Commission supply the information desired by Mr. Allen?

Admiral SMITH. Yes, sir.

The CHAIRMAN. At the earliest possible moment.

Mr. HARE. Mr. Chairman, I would like to have a copy of that information, too.

Mr. ALLEN. I would like to know how the amendment would affect the Pacific Far East, the Coast Line, the Pacific Transport, and the American President Line, Admiral Smith.

Admiral SMITH. Very well.

Mr. ALLEN. And also the Luckenbach and American Line.
Admiral SMITH. Very well.

(Number of ships operated under Army supervision, operated by subcharter, operated specifically for the Army, appears at p. 352.) Mr. NELSON. Would it be possible for the committee to have a list of all the steamship lines, all the ships they charter?

The CHAIRMAN. Anything possible that can be supplied by the Commission.

Admiral SMITH. I am informed it will be be supplied, and will be here in a few minutes.

Mr. MEADE. Mr. Chairman, we have that information for the committee in our files. We can present it.

(The information referred to appears in the report of the United States Maritime Commission on the activities and transactions of the Commission under the Merchant Ship Sales Act of 1946, from October 1, 1948, through December 1, 1948, at p. 330.)

Mr. BONNER. The question Mr. Allen has asked is just what I wanted developed. I am merely striving to try to curtail this charter, to get it into some form where credit will be given to those who have shown good faith and gone in and bought under the Ship Sales Act, and this charter business not go on harum-scarum for the next 5 years. That is all I am doing.

Mr. ALLEN. I am trying also, but I want to be sure we do not start in one way and stop in another.

Mr. BONNER. I agree with you.

The CHAIRMAN. The general purpose is fine, and I am in sympathy with it. At the same time, I do not want to delay this.

Mr. BONNER. I do not want to cripple operations.

The CHAIRMAN. I know that.

I have a letter from Stevenson & Co. Inc., that I would like to have made a part of the record. Mr. Meade, have you seen this?

Mr. MEADE. Yes, sir.

The CHAIRMAN. It will be available for the members in the record. (The letter of T. J. Stevenson & Co., Inc., is as follows:)

Hon. SCHUYLER O. BLAND.

T. J. STEVENSON & CO., INC.,
New York 4, N. Y., February 3, 1949.

Chairman, Merchant Marine and Fisheries Committee,
United States House of Representatives,

Washington, D. C.

DEAR SIR: May we urge upon you the advisability of granting to American shipowners who purchased and reconditioned war-built Liberty tankers some relief from the intolerable position in which they now find themselves owing to Government action and to conditions absolutely beyond their control.

In February 1948, our company purchased from the Maritime Commission two Liberty tankers: George W. Kendall; Helen Stevenson, ex-Nicholas Longworth. At the time of purchasing these tankers there was a good demand for tankers, and we had in view long-term business extending over a period of 2 years. This business would have shown us a fair return on our investment in my judgment, based on my 39 years' experience in the shipping business.

Immediately after purchasing the tankers, the Coast Guard advised us that we had to fireproof the tankers, and we had to spend another approximately $50,000. At the time of sale to us, the Maritime Commission undertook to give us the vessels fully classed. The question of recovering these $50,000 from the Commission is now being litigated between the owners who purchased this type of tanker and the Maritime Commission.

About the time that the business was available, the Maritime Commission issued a directive that no charter running longer than September of last year would be approved, because during the preceding several months there had been a shortage of tankers to carry oil coastwise and the Commission wanted to keep as many American tankers in the coastwise trade as possible. Consequently, we lost our long-term business and could only make a few coastwise trips and one foreign trip. Then the tanker-chartering market completely collapsed. The expected demand for coastwise tankers that caused this chartering restriction did not materialize.

During this winter, many of these Liberty tankers have been tied up because of lack of business.

We are now faced with continual lay-up of these tankers, with the resulting heavy carrying charges plus the yearly installment we have to pay on the mortgage to the Maritime Commission. As a matter of fact, our Helen Stevenson has been tied up since the last of June 1948, and the George W. Kendall since August; and the rates that can now be obtained in the trade for these tankers are so low that we lose less money by keeping them tied up than operating them.

Due to the fact that we find ourselves in this position, we asked the Maritime Commission informally as to whether it would exchange dry-cargo Liberties for these Liberty tankers, and we were told that they do not have authority to do so under section 8, Merchant Ship Sales Act of 1946.

We cannot sell the vessels (there are some possibilities) or transfer them to foreign flag without the approval of the Maritime Commission, and we understand that the Commission will not give such approval. We cannot find any American buyers. We cannot operate the tankers except at a loss.

We understand that the Commission sold about 35 Liberty tankers and that most of the purchasers are in the same position as ourselves.

We owned and operated American vessels before the war. affiliated companies purchased two Liberty dry-cargo vessels.

Two of our

Section 11 of the Merchant Ship Sales Act of 1946 provides for the creation by the Commission of a reserve fleet for national defense. We understand that the Commission has in the reserve fleet a large number of Liberty dry-cargo vessels, but few if any tankers. It is just as important to have a reserve of tankers as of dry-cargo vessels.

We ask you to make an amendment to the joint resolution which you introduced in the House of Representatives on January 17, so as to provide that section 8 of the Merchant Ship Sales Act be amended permitting the maritime Commission to accept in exchange for a Liberty dry-cargo vessel a Liberty tanker, and allow as a credit on the Liberty dry-cargo vessel the moneys paid the Commission on account of the Liberty tanker and for fireproofing the tanker as ordered by the Coast Guard.

We feel that the members of the Commission must appreciate the position purchasers of Liberty tankers now find themselves, and we trust they will concur in the amendment.

We are sending copies of this letter to the Commissioners of the Maritime Commission.

Yours very truly,

Carbon copies sent to:

T. J. STEVENSON & CO., INC.
T. J. STEVENSON,

President.

Hon. Joseph K. Carson, Jr., Commissioner, United States Maritime Commission, Washington, D. C.

Hon. J. Grenville Mellen, Commissioner, United States Maritime Commission, Washington, D. C.

Hon. David J. S. Coddaire, Commissioner, United States Maritime Com-
mission, Washington, D. C.

Hon. Raymond S. McKeough, Vice Chairman, United States Maritime
Commission, Washington, D. C.

Hon. W. W. Smith, Chairman, United States Maritime Commission,
Washington, D. C.

Mr. MEADE. There are three or four other communications. May I make them a part of the record?

The CHAIRMAN. Very well.

Mr. MEADE. I offer a telegram from the Ship Operators and Owners Association, Inc., with respect to House Joint Resolution 92.

Also a telegram from the American Tramp Shipowners Institute, with respect to both bills, H. R. 1340 and House Joint Resolution 92. Also a communication from the National Organization of Masters, Mates, and Pilots of America, with respect to H. R. 1340.

Also a letter from Himala International, 82 Wall Street, New York City, with respect to H. R. 1340.

Also a memorandum from Representative Bennett of Florida.

The CHAIRMAN. Is that all, Mr. Meade?

Mr. MEADE. Yes, sir.

The CHAIRMAN. I also want to present for the record a letter of Dichmann, Wright & Pugh, Inc., Mr. Allen Smith, giving a statement on some information which is very valuable, I believe. Mr. Smith is here.

Mr. HART. Mr. Chairman, may I ask whether the letter addressed by the American Federation of Labor to the chairman of the committee is incorporated in the record?

Mr. MEADE. That has not been offered yet.

Mr. HART. I would like to offer it then, Mr. Chairman. I have a copy of it here.

The CHAIRMAN. Very well. It may be made a part of the record. (The above-referred-to telegrams and letters as described are as follows:)

Judge SCHUYLER OTIS BLAND,

NEW YORK, N. Y.

House of Representatives Office Building, Washington, D. C.: The Ship Operators and Owners Association, Inc., the oldest organization exclusively devoted to the interests of United States-flag tramp shipping, desires to record its approval of subdivision (1) (3) (4) of subsection (B) of the bill proposed by the USMC for submission to the Senate and House of Representatives relative to the extension of the authority of the Maritime Commission to sell, charter, and operate vessels (H. J. 92). This association requests that your committee seriously consider the possible effect of United States-flag tramp shipping of subdivision (2) relative to preference to United States citizens for allocation of chartered vessels, particularly that part of the section which provides that "the amount of United States tonnage owned or contracted for by the applicant at the time of application in relation to the amount of tonnage chartered by the applicant." Such a provision should not apply to United States-flag tramps, for it favors the few large owners of American tonnage primarily engaged in berth operations and whose growth, in most cases, has been obtained through Government assistance and the ability to obtain public funds. Neither of these conditions are or have been available to United States tramp operators. Prior to World War II, United States-flag tramp ships did not exist, although approximately one-third of United States cargoes were tramp cargoes. During the war, due to 90 percent recapture of profits, there was little opportunity for a tramp operator to acquire sufficient capital to purchase more than one or two vessels; and at the present time, there is no public source from which an experienced tramp operator can obtain capital. The result has been that some of the most experienced tramp operators have been able to purchase only one or two Liberty ships. If the bill in its present form is approved, the small United States tramp operator will be practically shut out from chartering sufficient vessels to maintain the minimum fleet required for efficient operations. If our merchant marine is to be adequate, tramps must constitute a proper part of it, probably at least one-third of the total tonnage, and experienced tramp operators must be encouraged. Therefore, this association recommends that (1) in applications for chartered tonnage the berth owners and the tramp owners be separated and that the berth operator should be permitted to charter only for berth operators and the tramp only for tramp operations; (2) that, in chartering for bulk cargo or tramp operations, only vessels owned or purchased for tramp operations should be considered. In other words, if a company owns or has purchased a number of vessels for berth operations and none for tramp operations, it should not be entitled, because of its berth ownership, to charter tramp vessels for tramp operations; (3) that, in order to really build up United States-flag tramp shipping as a part of our merchant marine, experienced tramp owners who can only finance purchase of additional vessels through private means should be encouraged by permitting them to charter five vessels for the first United States-flag tramp vessel owned or purchased, and thereafter two for each tramp vessel owned. This would permit an experienced and successful tramp operator to acquire a minimum efficient fleet privately owned and chartered. Without such safeguard, this association believes that our merchant marine will return to its prewar condition as a ninth-rate maritime nation controlled by a few large companies, and United

States-flag tramp ships will gradually be eliminated. Until some permanent assistance is given the United States-flag tramp operator, he must be able to supplement his owned tonnage with Government-chartered tonnage in order to acquire the minimum tramp fleet necessary for economic and efficient operations. SHIP OPERATORS AND OWNERS ASSOCIATION, INC.

NEW YORK, N. Y.

Hon. O. S. BLAND,

Chairman, House Merchant Marine and Fisheries Committee,

Washington, D. C.

This telegram is addressed to H. R. 1340 and House Joint Resolution 92, as introduced by yourself and on which hearings were held and the substitute measures introduced by the Maritime Commission last Thursday afternoon. Can only say that we find Maritime Commission version of H. R. 1340 completely different from one on which we gave our views, changing as it does both method of calculating 50-50 split and completely different administration thereof which not clearly defined. Limitation of 50-50 rule to cargoes to and from United States will probably result in the elimination of all but a very few tramp vessels. Returning normal conditions of European coal production will reduce potential exports this commodity from here to relatively small quantity. Further possibility of exportation United States Government-financed grain and other commodities from Canada and elsewhere would preclude use American ships under bill as submitted.

It is therefore vital to future of American tramp branch of the merchant marine that bill as submitted originally by you remain intact, thereby providing 50 percent of all United States Government-financed cargo for United States ships. Further recommend that immediate steps be taken to make available return cargoes such as ore at compensatory rates, for United States-flag ships now unable compete against foreign vessels operating at approximately half American costs. Such cargoes should be made available to help build and maintain an adequate American tramp service engaged in comprehensive forms of operation. Benefits derived through carriage these return cargoes in lieu of present practice ballasting homeward will eventually permit reduction rates on cargoes originating here. Ultimate expense involved maintaining a rounded-out merchant marine including tramp vessels will be insignificant in relation to benefits derived, which includes vital necessity to maintain and preserve what we now have in the way of an active merchant fleet for the sake of national defense.

AMERICAN TRAMP SHIPOWNERS INSTITUTE.

NATIONAL ORGANIZATION MASTERS, MATES, AND PILOTS OF AMERICA, Mobile, Ala., February 1, 1949.

Members of the Committee of the House on Merchant Marine and Fisheries: GENTLEMEN: In support of H. R. 1340 enclosed find comments which were prepared in protest of Mr. Paul Hoffman, Director of the ECA of allocating more than 50 percent of bulk cargoes of the ERP to foreign vessels.

In reviewing H. R. 1340, I find that the same arguments as used in protest of Mr. Hoffman's plans would apply in the same manner, if at least 50 percent of cargoes bought with United States dollars or United States credits were not carried in United States vessels.

Furthering the use and giving of the United States dollar to foreign countries, are we not to derive more benefits from this than only maintaining part of our production. I am sure that any other country that would go so far as to give their moneys and extend their credits to this country or any other country would ask for 100 percent movement of goods in their carriers.

I therefore would like to be recorded as being in favor of H. R. 1340 and that this letter with the enclosed comments be included in the records of this committee.

Thanking you for your cooperation, I am,

Very truly yours,

E. W. HIGGINBOTHAM,

First Vice President.

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