Mr. ELY. They have not been as yet.

Mr. WEICHEL. But what I mean is that you had charters longer than the previous law covered. It was only extended from year to year. And you just said that the Maritime Commission made charters up until the end of February of this year.

Mr. ELY. No; I do not understand that, sir. They chartered ships in February of last year, for 1 year. That is my understanding. The Maritime Commission perhaps will correct that. But those charters are to expire and cannot be renewed unless some action is taken to correct this situation. That is the way I understand that, sir. The CHAIRMAN. Any further questions?

Thank you, Mr. Ely.

Mr. ELY. Thank you, sir.

The CHAIRMAN. There are still a number of witnesses whose names have been given to me.

Mr. Haddock, you are the next witness I have here.

We will take one witness and try to continue until 4 o'clock, and then we will adjourn.

STATEMENT OF HOYT S. HADDOCK, EXECUTIVE SECRETARY, CIO MARITIME COMMITTEE, WASHINGTON, D. C.

Mr. HADDOCK. My name is Hoyt S. Haddock, executive secretary of the CIO Maritime Committee.

The CIO Maritime Committee supports the extension of general agency, charter, and sales authority, and of waiver power, as proposed in House Joint Resolution 92, with such modifications as are discussed below.

It is argued that the charter and sales authority has been extended far beyond the original intent of the Ship Sales Act of 1946, and that such extension does not keep faith with the pledges made to American purchasers of war-built vessels. There is merit in this argument, but the broader issues of the welfare of the American merchant marine and the success of the European recovery program must take precedence. Moreover, upon examination, we discover that the competition afforded privately owned American vessels by chartered vessels is small indeed.

We favor a 15 months' extension for the following reasons:

(1) General agency is essential to provide services which owners cannot provide. Typical of these services is the transportation of displaced persons. In the absence of general-agency operations, this movement will be handled by the armed forces, which is not the proper agency to do the job. Every effort should be made to take the armed forces out of normal private-transportation fields.

(2) Continued chartering is essential to provide the flexibility needed to carry out the European recovery program. Moreover, to freeze out charterers now, before a permanent tramp and a permanent domestic shipping program is evolved, may destroy all hopes for the fostering of these important segments of the American merchant marine.

(3) Continued sales are necessary because ships will be bought and the American merchant marine benefited thereby, if the afore-mentioned programs are evolved. To cut off ship sales now is to freeze out

the small operators at the very moment there is hope for enactment of a program under which they could survive.

(4) A 15 months' period is more desirable than the 12-month extension proposed, because it puts the extension on the fiscal-year basis, easing the administrative problems.

For over 4 months the Maritime Commission has been considering two types of limitations on the chartering program. The first would limit chartering to owners of American-flag vessels and would establish a ratio of chartered vessels to tonnage owned. The second would forbid the chartering of vessels to American operators with foreignflag connections. One group of shipowners (the subsidized lines, industrial carriers, and established unsubsidized lines) favor the first type of limitation. Another group (largely the smaller operators) oppose it. Virtually all shipowners oppose the second type of limitation. We oppose the first type and favor the second type?

For many small operators, the imposition of an ownership ratio is a life-and-death issue. They will not and cannot purchase vessels until a tramp program is worked out. We understand that the Maritime Commission has completed a study on American tramp shipping and that there is excellent opportunity for the establishment of a program in the near future.

Many domestic operators are faced with the same situation. They cannot reestablish their fleets in the face of unfair railroad competition and without a program for coastal and intercoastal shipping. It will be a most unfortunate blow to the American merchane marine if these independents are frozen out.

The companies we believe deserve a chance to make a go of things under the American flag are not fly-by-nights. On the contrary, they are the most skillful tramp operators. They are the operators who stand at the top of the list in recapture returned to the United States Treasury from charter operations. They are the operators who are surviving with high charter costs while other operators with more financial resources have fallen by the wayside.

We agree that the charter program must eventually end and that the purchasers of vessels for American-flag vessels must be given assurances of this fact, but it must not end by freezing out the small, independent, skillful tramp operator. Let's extend the chartering and sales authority without excessive limitations until tramp and domestic programs can be worked out. Then force the operators to

buy or get out.

The argument that the charter program without ownership limitations is providing unfair competition to American owners fails when the fact that only forty-odd vessels are involved is made known.

We do favor, however, limitations on charters to American operators with foreign-flag connections. Just as our opposition to the ownership limitation is based on a sincere desire to foster the American merchant marine, so is our support for limitation of foreignflag connections.

Charterers-and even subsidized lines-are owners of foreign-flag tonnage, charterers of such tonnage, coventurers with foreign-line tonnage in cargo and revenue pools, freight solicitors and agents for foreign-flag tonnage, and husbanders for foreign-flag ships.

We believe that there is no justification for assistance in the form of charters or subsidies to double personality operators, who profess to be interested in the American merchant marine and serve foreign shipping interests. We hope the committee will soon consider amendment of section 804 of the 1936 act.

We ask the committee to cut off chartering (and, within the near future, subsidies) to all who actively foster foreign-flag shipments at the expense of the American merchant marine. At what point the limitation should be imposed, we are not in a position to say now. Certainly all who own, charter, or coventure with foreign-flag tonnage should be cut off; certainly those who actively solicit cargo in competition with American-flag operations. Possibly husbanders. Possibly not. We think the committee should hear all sides and decide on the proper point at which the limitation should be imposed, and that point is: Where will the best interests of the American merchant marine be served?

In summary, we favor House Joint Resolution 92 with two amendments. The first amendment should provide a cut-off date of June 30, 1950. The second amendment should prohibit charter of vessels to operators who serve foreign-flag shipping at the expense of the American merchant marine.

The CHAIRMAN. Any questions?

Mr. Dow. Mr. Chairman, might I correct one statement I made to Mr. Boykin?

I suggested that the number of vessels that would be adversely affected by a lack of 50-50 split would be around 700; I think I said. Well, the figure is about 450; so that the personnel involved ashore and afloat would be 22,500, excluding shipyards and other services, such as ship chandlers and repairmen.

Mr. BOYKIN. That was the figure I had. That was the reason I asked. Thank you.

The CHAIRMAN. We will meet tomorrow morning at 10 o'clock, then, gentlemen.

(Whereupon, at 4:05 p. m., the committee adjourned, to reconvene at 10 a. m. Wednesday, January 26, 1949.)

SALE, CHARTER, AND OPERATION OF VESSELS

WEDNESDAY, JANUARY 26, 1949

HOUSE OF REPRESENTATIVES,

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D. C. The committee met at 10 a. m., the Honorable Schuyler Otis Bland (chairman) presiding.

The CHAIRMAN. We are continuing this morning with the resolution we had before us yesterday afternoon, Joint Resolution 92, I believe it is.

Mr. Marvin J. Coles of Dichmann, Wright & Pugh, Inc., will be the first witness.

STATEMENT OF MARVIN J. COLES, ATTORNEY, AND ALAN SMITH, PRESIDENT, DICHMANN, WRIGHT & PUGH, INC.

Mr. COLES. May I state that my name is Marvin J. Coles. I am an attorney, and I appear on behalf of Dichmann, Wright & Pugh, Inc., a steamship company with activities in the Chesapeake Bay and Delaware River areas.

With me is Mr. Alan Smith, who is chairman of Dichmann, Wright & Pugh, Inc. Unfortunately, it has been deemed inadvisable for Mr. Smith to testify because of his physical condition, so he asked me to put forth the views of his company.

Before proceeding, I would like first to present a bit of background on this company. Dichmann, Wright & Pugh, Inc., was formed in 1924 in Hampton Roads. At that time, they were agents for domestic and foreign shipping companies. All of the stockholders of this company are American, and there never has been any foreign participation in the ownership or management of the company.

In the war, they acted as agents for the Maritime Commission and handled as agents and subagents in the Chesapeake area approximately 150 ships a month.

Since the war, they have assisted the Maritime Commission and have handled over 1,000 vessels in some service or other for the Commission. I mean by that that they performed some service on these vessels in behalf of the Maritime Commission.

During the past few years, this company has extended its activities into steamship ownership and steamship management; and at the present time it owns one Liberty vessel which it purchased from the Commission and charters eight.

It differs from most operators, however, in that first and foremost it is engaged solely in carrying cargoes from the Hampton Roads area.

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Secondly, almost all its cargoes are coal cargoes. It does not engage in general tramp trade.

On behalf of this company, I have been asked to say that they are in full accord with the provisions of H. R. 1340, requiring at least 50 percent of all Government-supplied cargoes to be shipped in American bottoms. In their opinion, it is necessary, if the American merchant marine is to survive, to operate on that basis. This company is fully in accord with House Joint Resolution 92 as it pertains to the selling of ships, to chartering ships, and their operation as general agents. This company, however, is exceedingly concerned with one phase of House Joint Resolution 92, and that is the chartering phase.

They should like to present certain thoughts concerning the chartering powers of the Maritime Commission. They are particularly interested in making sure that the charter authority of the Commission be carried on as it has been during the past few years without restrictions or impositions of two types which we will discuss later.

Again, by way of background, let me say that, prior to the war, there was no American tramp fleet. This was so despite the fact that a large proportion of all cargoes carried across the ocean highways were carried in tramp vessels. The reason there was no tramp fleet was that the American operator was unable to compete with the comparatively low costs of the foreign operator.

By way of further explanation, I would like to say something about tramping in general. Most of us tend to look upon all freight ships as tramps. Actually, that is not so. While all tramp ships are freighters, conversely it does not work, because your freighters are not all tramps. The ships we see operated by American lines, such as Waterman, United States Lines, and so forth, are usually freighters operating on specified routes, as between New York and Antwerp, or San Francisco and Shanghai. They operate carrying general cargo, in other words, they may carry a thousand and one different things from automobiles to needles and thread. They operate at conference rates.

In other words, it costs X dollars to ship an automobile from New York to Antwerp. It costs Y dollars to ship an automobile from San Francisco to Manila.

Tramps, however, are entirely different. Basically, they carry bulk cargoes. Generally speaking, they carry cargoes for one or two and rarely, if ever, for more than three shippers. The cargoes are almost all of the same type. And they may go to anywhere in the world. For example, they may pick up a cargo in New York and go to Antwerp and then go to South America to pick up a cargo for Cairo and then go to South Africa and gradually work back to its home port. The important thing is that not only do they not operate in specified routes, but also they operate at no set rates. For example if there is a cargo of coal to be moved from New York to Cherbourg, there may be three ships that offer themselves.

Owner A says he will offer to carry for $10 a ton. Owner B will offer to carry for $9. 50 a ton, and Owner C offers to carry for $9 a ton. It is given to the lowest man.

I gave you this background to show the special tramp problems as opposed to those of the generel berth operator.

As I said, before the war we had no American-flag tramp fleet. Today we have a very large one. The reason for this is that during