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The CHAIRMAN. Some of those ships had been assigned to the War Department, but before they ever came under your control they were turned over to the Navy?
Capt. DALY. Yes, sir. The CHAIRMAN. It was stated that they had been assigned to the War Department transport service.
Gen. SĦARPE. We requested their assignment for transport service, but they were never actually assigned to us. They were turned over to the Navy.
The CHAIRMAN. They were turned over to the Navy!
The CHAIRMAN. Then, Admiral Griffin said, “ Yesterday, or the day before, we had 14 other Army transports turned over to us."
Gen. SHARPE. We have never turned over any to them,
The CHAIRMAN. They were either German interned ships or ships acquired from alien owners, but they were not ships that had been under the War Department?
Gen. SHARPE. There is only one ship that was turned over to the Navy Department by us, and that was to be fitted up as a hospital ship for the Navy. That was one that we had chartered.
The CHAIRMAN. That makes 44 transports that have been turned over to the Navy for operation for the Army. Now, in estimating the number of vessels that you require, did you take into account the 44 vessels that have already been provided for? You are estimating on a certain number of vessels for the needs of the transport service overseas transports. Capt. Daly. Yes, sir.
The CHAIRMAN. 'In estimating the number required have you taken into account the fact that 44 are already provided for?
Gen. SHARPE. It takes several months to get those vessels.
The CHAIRMAN. We will not bother about that yet. That is another question. You estimated on the number of ships.
Capt. Daly. We did not take into consideration the fact that the Navy was getting those ships.
The CHAIRMAN. You did not take into consideration the fact that there were 44 ships that were to be fitted up by the Navy for this transport work?
Capt. Daly. No, sir. The CHAIRMAN. How many ships have you estimated on there? The number is 106. That is what you estimated would be required, but you did not take into consideration the 44 that the Navy had already turned over to them.
Capt. Daly. No, sir,
The CHAIRMAN. I understood you to say that the six German ships, for the refitting of which you ask $600,000, are actually being refitted by the Quartermaster Department now?
Capt. Daly. Yes, sir. The CHAIRMĄN. And this is to provide for that work? Capt. Daly. Yes, sir; for that work. The CHAIRMAN. And after they are refitted the intention is that they will be operated by the Navy Department?
Capt. Daly. Yes, sir; that is the presumption.
The CHAIRMAN. And you estimate that it will take $900,000
The CHAIRMAN (continuing). For each ship. Do you know the capacity of those ships?
Capt. Daly. We have it, Mr. Chairman, but I do not know it now; no, sir. They are large ships.
The CHAIRMAN. Then, you are asking for money to charter 100 ships at charter prices which you place at $82,000 each per month. How is the charter price arrived at?
Capt. Daly. It is based on the prices we have to pay for the ships that we now have chartered.
The CHAIRMAN. When were those ships chartered?
The CHAIRMAN. Were those charters upon which the price was based recent charters or charters made prior to the outbreak of this war!
Capt. Daly. After the outbreak of the war. The CHAIRMAN. Are these prices you are paying the market prices! Capt. Daly. Yes, sir. The CHAIRMAN. The market price of a charter is practically prohibitive, is it not?
Capt. Daly. Yes, sir.
The CHAIRMAN. The earnings of a ship in the trans-Atlantic trade on two or three trips pay for the ship under existing conditions!
Capt. Daly. Not these ships. These are big ships.
The CHAIRMAN. I know they are, and I know something about the shipping business just now. The earnings of a cargo freighter on two or three trips to Europe and back will more than pay the cost of the ship.
Capt. DALY. Yes, sir.
The CHAIRMAN. Has this question of obtaining the tonnage required been taken up with the Shipping Board ?
Capt. Daly. I do not know.
The CHAIRMAN. We have given them authority to commandeer all ships or any charters of ships, either building or being already operated. To prevent the payment of prohibitive prices for shipping just now we have passed legislation empowering the Shipping Board to commandeer the necessary tonnage. Has this question been taken up with the Shipping Board ?
Gen. SHARPE. Before we charter a ship we take it up with the Shipping Board. We take the matter up with them or refer the matter to them that is, the matter of the charter.
The CHAIRMAN. Those charters of which you speak, you say, contain certain provisions relative to the reimbursement of the owners in case of the loss of the vessel ?
Capt. Daly. Yes, sir.
Capt. Daly. Minus the amount of money that has been paid out, or minus its earnings under the charter.
The CHAIRMAN. You mean that they simply get the amount of the value of the ship, less whatever they have been paid !
Capt. Daly. Yes, sir; I think that is the provision of the charter party. I am not certain about that, but I think that is the provision.
The CHAIRMAN. That obviates the necessity of the owner taking out marine insurance, because we are guaranteeing him?
Capt. DALY. Practically; yes, sir.
The CHAIRMAN. Does that provide only for loss due to acts of war, or does it provide for loss due to the ordinary perils of the sea?
Capt. Daly. Just acts of the war or of the enemy. War risk is what it is. As to that $82,000, we do not mean by that that we actually pay them $82,000 per month. It is not based on a monthly rate.
NOTE.--The charter party covering vessels chartered for transport of troops and supplies to Europe provides in part as follows:
"That the United States assumes all war, marine, and all other risks of whatsoever nature or kind, including all risk of liability for damage occasioned to other vessels, persons, or property.
“That any port charges and pilotage during the continuance of this charter shall be paid for by the United States.
“That said steamship shall be manned, operated, victualed, and supplied by and at the expense of the United States.
" That in consideration of the faithful covenants of this charter, the company shall be paid hire by the United States for each and every day said steamship may be retained at the rate of
per gross registered ton (in some cases rate is per dead weight capacity).
"That in consideration of the faithful performance of the covenants of this charter, said steamship shall be returned by the United States to the company at * * at the termination of this charter in the same and as good order and condition as when received, ordinary wear and tear excepted, and free from all claims and liens arising during the continuance of this charter; or, in default thereof, the United States shall pay the company for said steamship as of the time of loss (if uncertain, the time when said steamship is last heard from), together with interest at 6 per cent per annum, at the following rates : $275 per ton if said steamship be 12 years old or under ; $250 per ton if said steamship be over 12 years and not over 17 years of age; $225 per ton if said steamship be over 17 years and not over 22 years of age; $200 per ton is said steamship be over 22 years and not over 27 years of age; $175 per ton if said steamship be over 27 years of age."
The CHAIRMAN. How is it based ?
Capt. DALY. On a ton rate. On some of the ships the charter price is $12 per gross ton, and for others $10 per dead weight ton per month. We have ships running from 6,800 tons to 12,000 tons.
The CHAIRMAN. Is this number of vessels the number which it is estimated will be required to transport and keep supplied 2,000,000 men abroad?
Capt. Daly. Yes, sir.
The CHAIRMAN. There is no expectation that it will be done inside of
Capt. Daly (interposing). One of the things that we have to do is to get the supplies over there, and the shipping question is a serious question.
OPERATION OF TRANSPORTS.
The CHAIRMAX. You ask also $50,868,000 for wages, crew, and operating expenses of the ships?
Capt. Daly. Yes, sir. Mr. Chairman, I will have to look into that. I am not familiar with that item.
NOTE.-The 1917 deficiency estimate provided for charter hire of 16 vessels to June 30, 1917.
Owing to increase in Army it was considered that these would be required for three months longer and the estimate under this item was made accordingly.
It was further considered that the service would require 14 additional vessels for six months and 10 for nine months, with 60 ships for a full year; the requirements met in the early part of the year by these several groups of ships to be provided for as the vessels were let out by the interned ships entering the service as fast as refitted.
The estimate is therefore made for : 16 ships for 3 months, at $54,000 per month each.
$2,592, 000 14 ships for 6 months, at $54,000 per month each
4, 536, 000 10 ships for 9 months, at $54,000 per month each..
4, 860. 000 60 ships for 12 months, at $54,000 per month each
50, 868, 000 The CHAIRMAN. I wish you would do this--of course, in making up these estimates you are taking an average unit price. You hare not in mind any definite or particular ship, and can not have. You have average ships figured on some unit basis.
Capt. DALY. We have averaged these ships at a unit price, or at the average tonnage of the ships.
The CHAIRMAN. Can you furnish us with a statement showing what is the average capacity, either in freight or men, of these ships?
Capt. Daly. Yes, sir.
The CHAIRMAN. Of course, in figuring on chartering ships, you do not know what charter you will get, but we would like for you to furnish that information that is, what would be the average capacity of the ships, either in freight or men.
Capt. Daly. Yes, sir; I will do so.
The CHAIRMAN. Has the question been considered of having property losses covered by cooperation with the War Risk Bureau?
Capt. Daly. No, sir.
The CHAIRMAN. Do these figures for operating expenses cover also the cost of painting and repairs ?
Capt. Daly. Yes, sir.
The CHAIRMAN. Now, for shore establishments you are asking for certain sums. What expenses are covered by this estimate!
Capt. DALY. That is for the employees at the docks, harbor dues, etc.
The CHAIRMAN. You mean the longshoremen forces?
Capt. Daly. The longshoremen forces, stevedores, etc., and the shore expenses incident to the loading and unloading of ships, including the offices.
The CHAIRMAN. Will you also try to get from the Navy Department and put in your statement a statement showing the capacity, either in men or freight, or both, of the 44 ships that they have obtained for the transport service? Capt. Daly. Yes, sir; I will do so.
Washington From: Secretary of the Navy. To: Secretary of War. Subject: Navy transports.
The information requested in War Department letter 111-1000-A-E of Au. gust 4, 1917, is given below. The statement that there are 44 transports that have been turned over to the Navy for operation for the Army is incorrect. There are but 16 vessels of this class, ali ex-German vessels, which, by Executive order dated June 30, 1917, were taken over to the United States through the United States Shipping Board and transferred to the Navy Department to
be fitted out and operated by the Navy as troop transports for the Army. Of the other 28 vessels mentioned, 14 are Army transports not under the control of the Navy and 14 are being fitted for service as naval auxiliaries to be operated by and for the Navy as colliers, supply vessels, repair vessels, and tenders. The number of troops each vessel can carry is estimated and can not be given definitely at this time:
The CHAIRMAN. As to those 44 ships, you did not take them into consideration at all!
Capt. Daly. No, sir.
New York, August 8, 1917.
1. Pursuant to your request of the 6th instant, there are inclosed herewith six copies of the form of printed " Charter Party” used in the case of steamships not under any previous charter engagement and voluntarily chartered to the United States.
2. The following forms are under consideration as additions to the form of charter for use in case of requisitioned steamships. They have been drafted especially with a view to protect the United States against claims in respect of any charter existing at the time the steamships were requisitioned and to make it clear that the agreed rate is in full payment to the owners. It is believed that where a steamship already under charter to a third party is requisitioned by the United States, that not only does the owner have a claim to compensation but the charterer may also have a claim, especially if he can show that the charter rate he was paying was less than the fair value of the use of the steamship. In the case of each of the steamships that were requisitioned through the General Superintendent, there was at the date of requisition by the United States, a preexisting charter to a third party which, because of the fact that steamship rates were rising, was at a rate of hire lower than the commercial rate prevailing at the time steamship was requisitioned and lower than the rate agreed upon between the Government and the owner as a fair rate for steamships free from all charter engagements voluntarily chartered at that time. Up to the present time, the General Superintendent has