tion for ship construction on an annual basis since 1955, say, 11 years ago, and then put alongside of it the actual expenditure for ship subsidy on construction in each of those years since 1955. I think you will ascertain that even though there is legislation authorization from Congress, for ship construction or ship subsidy, because it is a continuing thing, very frequently the Department of Commerce, through the Maritime Administration, has not authorized ship construction at the level that has been authorized and appropriated by the Bureau of the Budget and the Appropriations Committee.

Secretary CONNOR. I will be very glad to put that in the record. (Information to be furnished follows:)

U.S. DEPARTMENT OF COMMERCE, MARITIME ADMINISTRATION

1 Where obligations exceed amounts appropriated, unobligated balances of prior year appropriations were available to finance the obligations.

* Includes $18,000,000 for construction of the NS Savannah.

* Includes $675,000 for construction of the NS Savannah.

4 Increase of $1,250,000 for payment of design expenses on 2 superliners authorized by Public Law 85-251. Includes $14,200,000 amendment to provide for an 18-ship replacement program and reconversion of 4 combination vessels added by the conferees.

• Assumes Appropriations Committee will concur in change of method of funding trade-in ships as proposed in 1967 budget submission. Also assumes that funds previously reserved for retrofit program will be used for new ship construction.

NOTE.-Appropriation for fiscal years 1956 through 1961 also included funds for research and development.

Mr. LENNON. Do you want to explain why, in the last two fiscal years, the Department of Commerce did not approve ship construction subsidies that were approved by the Maritime Subsidy Board?

Secretary CONNOR. Mr. Gulick, the Acting Administrator of Maritime, is here, and I would prefer to have him give the detailed answer to that.

Mr. GULICK. Thank you, Mr. Secretary.

67-225-66- -11

I may be wrong in this, but to my knowledge there has been no action by the Department of Commerce to cut into the ship construction program which has been authorized and appropriated by the Congress.

The difficulty, upon occasion, has been the appropriations have been in a specific dollar amount, but the type of ship, the cost of construction, have made it impossible to get as many ships with the money as we would like.

There is a close cooperation between the Maritime Administration and the Department of Commerce in the creation of the annual budget request. We try to be realistic about this, and we try to plan for the most and the best ships which we think we can get.

Mr. LENNON. Please put in the record, if you will, for the last 6 fiscal years, the amount of money that the Maritime Administration has requested from the budget for ship construction subsidies, and the amount in each of those years that was approved, and allocated by the Bureau of the Budget, and subsequently appropriated by the Appropriations Committee.

Mr. GULICK. We will be glad to do this, Mr. Lennon.

(See table on p. 155.)

Mr. LENNON. What has been your experience with requests going to the Bureau of the Budget on an annual basis for ship construction? Have you always gotten within 80 percent of what you requested? Mr. GULICK. That is probably a pretty good figure.

Mr. LENNON. In other words, that is an optimistic figure?

Mr. GULICK. It would run between, probably, as an offhand guess, 65 and 80 percent.

Mr. LENNON. On an annual basis?

Mr. GULICK. Yes, sir.

Mr. LENNON. Now, you have had instances, have you not, where your Subsidy Board made a decision to make necessary subsidy grants, and then that was overruled at the Secretary's level?

Mr. GULICK. One such case comes to mind.

Mr. LENNON. Just one?

Mr. GULICK. As I recall, this is the only one that I am aware of at the moment. Other applications are pending.

This was the case of the construction with construction subsidy funds of a proprietary ore carrier.

Mr. LENNON. I recall that, too. But you are saying now for the record that this is the only instance that you can recall, or that is the only instance that happened?

Mr. GULICK. This is the only instance that I can recall, and we will be glad to check this and furnish you a statement for the record. (The information follows:)

BETHLEHEM STEEL APPLICATION FOR CONSTRUCTION DIFFERENTIAL SUBSIDY

There has been no case in which the Secretary of Commerce has overruled the Maritime Subsidy Board of the Maritime Administration in matters of applications of United States flag ocean carriers for construction-differential subsidy. The matter alluded to by Representative Lennon and Mr. Gulick involved an application by Bethlehem Steel Corporation for construction-differential subsidy under title V of the Merchant Marine Act, 1936.

On March 6, 1961, Bethlehem Steel Corporation applied to the Federal Maritime Board for construction-differential subsidy to aid in the construction of two ore-carriers to be operated by Bethlehem in the foreign commerce of the United States.

The Federal Maritime Board, on June 29, 1961, approved the application subject, however, to certain conditions including, among other things, "The favorable reaction thereto by the Secretary of Commerce as a matter of policy, and the allocation of sufficient appropriated monies for the project."

The Federal Maritime Board advised the Under Secretary of Commerce for Transportation of the action by memorandum dated June 29, 1961, and requested concurrence of the Secretary and Under Secretary of Commerce.

The Federal Maritime Board was abolished and its promotional functions transferred to the Secretary of Commerce by Reorganization Plan No. 7 of 1961, effective August 12, 1961. The Maritime Subsidy Board was created effective August 12, 1961, by Department of Commerce Order 117.

The Secretary of Commerce, September 6, 1961, advised the Chairman, Marítime Subsidy Board, that he had concluded that it would not be feasible to concur in the Federal Maritime Board action as a matter of policy until the Department of Defense and the Chairmen of the House and Senate Appropriations Committees determined that funds should be made available for the construction of bulk carriers rather than liner vessels.

On September 20, 1961, the Committee on Appropriations of the House of Representatives advised that the construction of bulk carriers "is of such importance as to require further budgetary clearance and resolution by Congress."

On September 23, 1961, the Committee on Appropriations, United States Senate, advised that the matter in question had run into legal difficulties and that until resolution of the matter by the Attorney General, the matter would be held in abeyance.

On November 7, 1961, the Department of Defense stated that it would not support subsidy for construction of bulk carriers at the expense of liner-type construction.

On February 15, 1962, the Maritime Subsidy Board met and considered the Bethlehem application in the light of circumstances existing in February 1962, as requested by the Secretary of Commerce. The Board considered the foregoing facts as well as factors favoring and factors against the Bethlehem application.

The Board noted that there had been no clearance by the appropriation committees to use available funds for this purpose and that the most important consideration was the unavailability of appropriations without jeopardizing the then-current vessel replacement program. The Board was of the further opinion that it would look favorably on a renewed application if Congress would appropriate funds specifically designated for aid in the construction of ore carriers.

The Maritime Subsidy Board denied and disapproved the Bethlehem application on February 15, 1962 and accordingly advised the Secretary of Commerce. Mr. LENNON. Now, Mr. Secretary, what causes you to believe that the transfer of the Maritime Administration in toto to the new Department of Transportation will cure the situation that you gave some consideration to in your colloquy with Mr. Mailliard, with respect to the independence of the Maritime Subsidy Board? You said you had some concern about that.

Secretary CONNOR. Well, the Secretary of Transportation would be giving transportation matters his entire time and attention. The Secretary of Commerce has ultimate responsibility in this field to the extent that there are transportation functions within the Department, but in addition has other responsibilities.

Mr. LENNON. But you have an Under Secretary who is charged specifically and categorically with the responsibility of transportation, and you have had him since 1950, you say.

Secretary CONNOR. I don't think it is adequate to have an Under Secretary responsible, because he does not sit at the Cabinet table, and nevertheless, this is a time-consuming job. So that the Secretary of Commerce just cannot handle these things personally.

I think the Secretary of Transportation, who would have only transportation responsibilities, can give transportation matters better management.

Mr. LENNON. But the Department of Transportation legislation calls for an Under Secretary of Transportation, and you had an Under Secretary of Transportation since 1950.

The transportation bill calls for five different Assistant Secretaries in addition to the Under Secretary, does it not?

Secretary CONNOR. Yes, sir. It does.

Mr. LENNON. And in fact, each one of these Under Secretaries will ride herd on each of these departments that are put under this bill.

Secretary CONNOR. No; that is not correct, Mr. Lennon. These will be staff assistant secretaries who will have various areas carved out, but they will not have any line jurisdiction over the Federal Maritime Administrator, or the Public Roals Administrator, et cetera.

Mr. LENNON. There is one specific category of Assistant Secretary in this proposed legislation. I don't recall offhand how he is so defined and designated, but he is the only one that I see is described.

Secretary CONNOR. Yes, he would be an Assistant Secretary for Administration.

Mr. LENNON. What specifically are the categories of these Assistant Secretaries, Assistant Secretary for what?

Secretary CONNOR. Four of them would not have duties designated in the statute. The fifth one, as you indicate, would. He would be the Under Secretary for Administration.

So the other four would in effect be staff assistants to the Secretary, and the Under Secretary, and they would be responsible for activities within areas that would cut across modes of transportation, research and development being one.

I would suspect that there would be an Assistant Secretary for Research and Development. Another might well be an Assistant Secretary for Planning, that sort of thing.

Mr. LENNON. Now, Mr. Secretary, Mr. Pelly discussed with you the decline in our merchant marine. In what period of our history, since the Department of Commerce took it over, or during its independent status, has it declined to the greatest degree?

Secretary CONNOR. Mr. Lennon, I don't think I am in a position to give a value judgment on that. I just have been in this job of too recent vintage. In most of this period I was happily in private business, and I just don't have the personal familiarity.

Mr. LENNON. Could you give us the decline, say, in the last 5 years, or even 2 years, during your administration, that we have had in ocean shipping, American bottoms?

Secretary CONNOR. I will be very glad to try to pull together some objective measurement in this field, showing percentage of world trade that is carried by American-flag ships.

(The information follows:)

1960. 1961.

1962

1963.

1964.

U.S.-flag participation in foreign trade of the United States,1 1960–64
[In thousands of long tons]

(a) In vessels of 1,000 gross registered tons and over; (b) military cargoes are excluded; (c) Canadian translake cargoes are excluded.

Mr. LENNON. You are concerned about the fact that we now handle just a little over 8 percent of our total oceanborne commerce with American-flag bottoms?

Secretary CONNOR. Yes, I am. I think that we should be carrying more.

Mr. LENNON. But you take the position that we have to consider more than anything else the competitive aspect of ship construction, as well as operation, and that has to be a factor.

Are you suggesting to the committee that the time will come when we will have to build in foreign yards American vessels, under American registry?

Secretary CONNOR. By no means. I think that American shipyards can be more competitive with respect to their foreign competitors than they are now, and I think this will come about by the use of modern technology.

Mr. LENNON. That leads me to ask this question. It is my recollection from the records of the past several years with respect to the amount of money that was asked by the Maritime Administration from the Bureau of the Budget for research, that it has been negligible.

Will you put in the record, sir, what the Department of Commerce, more particularly the Maritime Administration, has expended in the last 6 years on an annual basis for research to meet what the Secretary so aptly describes as a need for research into progress and technology?

I think you will be a little surprised when you check that. I checked it the other day.

Secretary CONNOR. We will be glad to put that in.