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Mr. BAILEY. I rather think so, unless there is some other program that takes its place, of the same character, sir.

Mr. HAND. And probably not before.

Mr. BAILEY. No; well, I think the European recovery program is going to taper off. And before the program is complete, there probably will not be the necessity for this chartering operation. But as long as they have the volume of tonnage which we anticipate for 1949, I think

So.

Mr. WEICHEL. In line with Mr. Hand's question: You said "only for the European recovery program." What about the recovery program as to the intercoastal trade, where nobody has purchased practically any ships, and where they had 400, and where there is a certificate of convenience, and the rates have been such, according to the testimony of last summer, that you could not exist and go on? Now, is there anyting like the European Recovery Act in your mind for this intercoastal business, and for these people from the two coasts, about extending this charter business, or long-time charters, 2, 3, or 4, or 5 years? Is that in your conception of this extension of charter, too?

Mr. BAILEY. I would be hopeful, Mr. Weichel, that before the heavy volume of European recovery tonnage has declined, the intercoastal and coastwise operators will find a solution to their problem; which they are diligently seeking, although up to date they have not found it. Mr. WEICHEL. Well, is this chartering extension for 2 or 3 years, or maybe a long-time charter in your contemplation with reference to a recovery for the intercoastal business?

Mr. BAILEY. No; we have it covered here for 1 year for all purposes. At the end of 1 year, if the intercoastal or any other service is in a particular condition that justifies it, this committee and the Congress, I assume, would give consideration to it. But our suggestion is a 1year extension of charter only, for all services.

Mr. WEICHEL. Well, now, as I said, this has been going on year after year; and this now would be up to 1950-4 years. In view of what has happened on the intercoastal, so that it might stabilize, would it be advisable to have chartering to intercoastal people who have certificates of convenience under the Interstate Commerce Act, so that the Maritime Commission might charter up to 5 years? Would that be advisable to consider along in this, now? Because that is our own home business here, the intercoastal; whereas this European aid is for people far away. I am a little bit interested in the people at home for a while,

too.

Mr. BAILEY. Mr. Weichel, we favor private ownership and private operation, and we would be hopeful that the people in those trades would find their way clear to revert to private ownership and private operation in those trades, perhaps within this year; and if not at that time, then that the Congress would give further consideration to their problems as they found them at that time.

Mr. WEICHEL. Do you mean by that a long-term chartering?

Mr. BAILEY. No, sir; I mean a 1-year charter. One year is all that we suggest.

Mr. WEICHEL. Should we not give any consideration to a longer period of time on our own home front, here on the intercoastal part of it?

Mr. BAILEY. Our own home front is better off, sir, if we have privately owned ships in the trade.

Mr. WEICHEL. But we do not have them.

Mr. BAILEY. We have some in there now.

Mr. WEICHEL. There were 400. How many are in now, privately owned? I mean, on the intercoastal. You had 400 intercoastal and coastwise, privately owned, before the war. How many are privately owned now?

Mr. BAILEY. I do not have the division as to privately owned, but the intercoastal is operating 60 ships, and the coastwise is operating about 20 ships.

Mr. WEICHEL. That is 80.

Mr. BAILEY. Yes.

Mr. WEICHEL. How many of those are owned and not chartered? Mr. BAILEY. I think about half of them are privately owned. And the trade is gradually tending to private ownership.

Mr. WEICHEL. But what I am getting at: Of the 80, half of them are actually owned by people. That is about 40. So that one-tenth of the former number of ships, the number owned before the war, are now privately owned.

Mr. BAILEY. And the privately owned ships are increasing in the trade?

Mr. WEICHEL. I say one-tenth. That is a long way off.

Mr. BAILEY. My figures are that immediately prior to the war there were 305 ships in the trade, both the coastwise and the intercoastal combined. Now there are in that trade 80, of which approximately half are chartered ships. I haven't the exact figure, but from memory I would say approximately half are chartered ships. And I think it is fair to say-and you will have other witnesses before you who are exclusively in those trades-that there is a trend toward privately owned ships, gradually going into the trade, and a lesser number of chartered ships.

Mr. WEICHEL. I see. But it is not going very fast, is it?

Mr. BAILEY. None of this is going fast; no.

Mr. WEICHEL. Because in this trade, on the intercoastal, there has not been an operating profit. And in this offshore chartering business there has been a substantial profit.

Mr. BAILEY. Yes, sir. The offshore trades have been very much better.

Mr. WEICHEL. You can charter them and make a lot of money. But you cannot make much out here on this intercoastal. That is why they do not buy them. Is that not right?

Mr. BAILEY. We have 80 ships in there, sir.

Mr. WEICHEL. I just wanted your view, inasmuch as your association represents everyone.

The CHAIRMAN. Is there anyone else who wished to be recognized? Thank you, Mr. Bailey.

Mr. BAILEY. Thank you, Mr. Chairman.

The CHAIRMAN. We will now hear from Mr. Dow.

STATEMENT OF WILBUR E. DOW, JR., AMERICAN TRAMP
SHIPOWNERS INSTITUTE, NEW YORK, N. Y.

Mr. Dow. My name is Wilbur E. Dow, Jr., and I represent the American Tramp Shipowners Institute.

I do not know whether all of you gentlemen are familiar with the connotation of the word "tramp." It does not ordinarily mean what you might at first blush think it does. There are, amongst a number of other types of ships in the world, fast passenger vessels, or fast line cargo vessels, that are designed for the carriage of general cargo. They have a number of decks and are built something like a pie-wagon. The tramp has one gut, and it goes all the way through it. She has big holds. Some of them even have no 'tweendecks. And they take bulk cargoes, cheap cargoes per ton, in which time and speed of shipment is not a factor in the cost. Whether cargo aboard takes 30 days or 35 days or 40 days to get somewhere does not mean very much. But if you are shipping furniture, automobiles, and machinery, time is of the essence, and you take the fast line vessels for that purpose.

Before the war, approximately 80 percent of the world's tonnage moved in tramps. And I have no reason to believe that that equation is very much disturbed today.

The merchant marine of the world, before the war, the tramp merchant marine, was composed 100 percent of foreign flag ships. There wasn't a single American tramp engaged in foreign trade before 1942, when we got into the business.

One hundred years ago, we were the leaders in that, with our clipper ships. Then we lost it, and we never went back. At the end of this war, we found ourselves there again. We had the ships and we had the business. And we are striving to stay there. But we are going to need a little help.

At the present time our institute is composed of shipowners. There are, I think, only two or three members who have not bought, but they are planning to buy. The rest have all bought. And this 50-50 split in ECA cargoes is absolutely necessary if you are going to keep this baby alive.

Mr. Bailey and both Admiral Smith and Commissioner Mellen of the Maritime Commission have said enough on that subject, and I hardly think I need elaborate on it, except to say that we are heartily in accord with their views as to the necessity of the 50-50 split.

But we do not wish to charter vessels. We have them under charter. We want to buy them, and we want to buy more. And the rationalization of your argument, Mr. Weichel, is that, as I think I told you last year when I advocated, or the Institute advocated a tramp shipping subsidy that if you are going to have American buyers put down their money and buy tramp vessels so that they can be used in the trades of the world, you have got to give them some chance to live beyond the foreseeable end, in less than 4 years, of the ECA business. And if you give them that, they will live just as long as ships will float. We have got to have it.

When we appeared, last week and the week before, before Mr. Hoffman, who wanted some help in his dilemma, he asked us what solution there was to his problem. I told him that I thought a tramp subsidy would be it. And he seemed very pleased with the idea. Because he felt that he was subsidizing American tramps, without having the name actually used, even though he was using ECA funds to do it.

Mr. Boykin, you asked some time ago what the proportion of ECA cargoes was in American and foreign ships.

Mr. BOYKIN. That is right.

Mr. Dow. The 1948 proportion, according to Mr. Hoffman's figures, was 50.9 percent to American flag, and 49.1 percent to foreign flag. They split almost squarely down the middle.

The tramp subsidy bill was pretty well whipped into shape last year. We have no reason to believe that you would have to go much further to get it here.

Mr. Bailey said, in his very able presentation, toward the end, that the 50-50 split was not to be looked upon as a subsidy to American tramp shipping. But the way shipowners look upon it, the way the men who have actually put their own money in there look at it, is that "a rose by any other name would smell just as sweet."

We do not care what you might label it, as long as we have some assurance of continuing to live. We do not feel that we can toss over the 50-50 split and rely wholly on the subsidy bill. Because we have already bought ships.

Now, it is not easy to buy ships from the Maritime Commission. You have got to put up not only 25 percent, but virtually another 25 percent in net worth, to get the vessel.

We must remember that the foreigners whom we helped to rebuild their merchant marine, got those vessels for a flat 25 percent, plus their government guaranty of the balance, which may or may not be worth a nickel. But our people had no such Government guaranty, and had to put up, in essence, another 25 percent besides that, and keep it in the company subject to regular audit of the Maritime Commission auditors.

Now, that is a very sound way of doing it, a very sound way of doing business, but it certainly doesn't facilitate the sale of ships. when the foreigner who had $139,000 and a piece of paper from his embassy, got a vessel just like that.

We helped them, in that respect, far more than we helped our own, even though the prices were the same, because we had to put up double the cash for every single ship we got, and keep it there.

Mr. WEICHEL. If you purchased it, you owned it. You did not have to put it up if you bought ships. The foreigners bought ships. And when you buy one, you do not have to keep any more money up there.

Mr. Dow. Yes, sir. We do. We have to put up twice as much and keep it there.

Mr. WEICHEL. When you buy it and pay for it?

Mr. Dow. You do not buy it all cash, Mr. Weichel.

Mr. WEICHEL. If you buy something and pay for it, you own it. You do not have to keep any more money up there.

Mr. Dow. Oh, yes you do.

Mr. WEICHEL. You are talking about a case where you buy it and have it paid for?

Mr. Dow. You have got to have net worth of $275,000 paid in, to stay there, less the amount you pay for your ship, the down payment, which is around $139,000.

Mr. WEICHEL. Oh, you are talking about buying it on the cuff, with the taxpayers holding the bag. That is a different thing.

Mr. Dow. Nonsense. Perfect nonsense.

Mr. WEICHEL. I though you were talking about buying it and paying for it.

Mr. Dow. Nonsense. We went all through this last year.

Mr. WEICHEL. It is the same old hokum story.

Mr. Dow. I told you the foreigners got theirs for $139,000. We get ours for $139,000 plus $139,000. And we have to leave it there. Mr. WEICHEL. You do not pay for it.

Mr. Dow. Did they?

Mr. WEICHEL. It is supposedly paid for by the Maritime Commission. As to foreigners, they are authorized only to sell; which they did, I hope.

Mr. Dow. Well, they did.

Now, another question. And I do not know whether it was Mr. Latham or Mr. Allen who asked approximately how many men would be thrown out of work if this 50-50 split failed to go through. I think the question was asked of Mr. Mellen, who did not have the figures. But a fair estimate is that there are about seven to eight hundred American-flag Libertys that would thereupon be laid up. And you have to figure about 50 men to the ship-that is, thirty-odd in the crew, and the balance shore personnel that would be thrown out. That is not counting shipyard personnel and all their know-how. So that the figure would be somewhere in the neighborhood of 40,000 men.

I do not think that you gentlemen appreciate-but perhaps you dothe extent to which rates would go up if you took away the American tramp merchant marine.

Mr. BOYKIN. Did you say 4,000 or 40,000?

Mr. Dow. 40,000, sir. And that is not counting shipyard personnel. Everyone of those shipyard personnel, it took years to train. They are not bohunks, but very able seamen, engineers, shipfitters, chartering men, and all the able personnel you need ashore to run an efficient steamship operation.

The national feature of this, as to the American merchant marine, and times of national emergency, can hardly be overlooked, if you read the reports of Admiral Nimitz. And we are getting a lot of softening-up talk from Russia now, and when this Marshall-plan period is over we might look out. Because when the time comes that the American merchant marine is again laid up, they do not put it in moth balls. A good part of it rusts and it deteriorates, in spite of the best lay-up care. When you go to get the vessels out, you find you do not have the men to run them, and it takes a long, long time to get them out of the industry and the business they have gone into and assemble their skills, and put those ships back to work. It is terribly important beyond this 4 years.

This 50-50 split to us is a 4-year subsidy, nothing else. But it is so short-sighted. We must have it, because we own the ships-or

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