directly provides the incomes of millions, must be permitted to expand and compete for business with the maritime nations of the world. Hopefully, the establishment of an independent agency to deal with present maritime problems will be a constructive act leading to the development of a stronger U.S.-flag merchant fleet.

Mr. Chairman, the Vietnam conflict has highlighted many serious deficiencies in the U.S. merchant marine. This neglected segment of our defense capability can no longer afford the luxury of being administered as a stepchild of the Department of Commerce, lost within already complex and overburdened administrative measures. Το properly focus attention on the problems of the merchant marine, we must provide an administration having flexibility and independence, able to report and recommend programs to the highest echelon of our Government. For this reason, I support and have proposed the establishment of an independent Federal Maritime Administration and an independent Maritime Subsidy Board.

The CHAIRMAN. Thank you for a fine statement.

Next I would like to call Mr. Cahill, the very able Congressman from New Jersey.

STATEMENT OF HON. WILLIAM T. CAHILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. CAHILL. Mr. Chairman, I am pleased to be able to testify here today on the necessity of a strong merchant marine. It is to insure that the merchant marine of the United States is adequate to meet the needs of today that I have introduced H.R. 16079, the Federal Maritime Act.

I think we should review the sequence of events over the past 30 years. Three decades ago the 74th Congress passed the Merchant Marine Act of 1936. In establishing the Federal Maritime Administration, the Congress stated as national policy the following:

It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine (a) sufficient to carry its domestic water-borne commerce and a substantial portion of the water-borne export and import foreign commerce of the United States and to provide shipping service on all routes essential for maintaining the flow of such water-borne commerce at all times, (b) capable of serving as a naval and military auxiliary in time of war or national emergency . . . and (d) composed of the best-equipped, safest, and most suitable types of vessels, constructed in the United States and manned with a trained and efficient citizen personnel. . . . (Section 101).

Three decades ago the U.S. Congress declared the above as our national policy. Yet, Mr. Chairman, we have failed to achieve the goals of the stated policy. We are presently involved in a grave conflict in southeast Asia, but our merchant marine has proved incapable of supplying our troops with sufficient materiel. On several occasions American soldiers have had an inadequate supply of ammunition and the Air Force has not had enough bombs to conduct this conflict as we militarily should.

In addition the Merchant Marine Act of 1936 stated that a substantial portion of the waterborne exports and imports should be carried in American ships. This was true in the years after World War II. During that great war the merchant fleet of the United States

was tremendously expanded and the fleets of the traditional maritime countries of the world such as Norway, Greece, the United Kingdom, and Japan were virtually eliminated by the war. As a result, for a period that really extends until after the Korean war into the early fifties, our war-inflated, U.S.-flag fleet carried a large part of our imports and exports.

But this is no longer the case, Mr. Chairman. By 1954 the traditional world merchant fleets regained their positions in international trade. More and more new foreign-flag vessels appeared in our harbors and the participation by U.S.-flag vessels in the carriage of our cargoes began to drop rapidly. Today, we are carrying only about 5 percent of our dry bulk cargo on a tonnage basis; of our liner cargo, that is to say, package-type cargos carried by common carriers operating on regular schedules, we are carrying but 35 percent by weight and 37 percent by revenue. This I hold, Mr. Chairman, is not the substantial portion of the American import and export trade required. by the Merchant Marine Act of 1936.

The gradual decline of the U.S. Merchant Marine has not only been dangerous from a standpoint of national security, but many of the foreign-owned vessels carrying American passengers and cargo simply are not safe. The tragic sinking of the foreign-flag cruise ship, the Yarmouth Castle, a year ago is an example of what we risk when 'Americans are forced to use foreign vessels because safe American ones simply do not exist.

The President of the United States has said of the merchant marine, "We cannot afford the luxury of drift-or to proceed with business as usual." I agree with the President and for this reason it is necessary that we save our merchant fleet. H.R. 16079 will help accomplish this important goal.

Part of the cause of the decline of the American maritime industry, Mr. Chairman, has been the submersion of the Maritime Administration in the Department of Commerce. The Merchant Marine Act of 1936 made the Maritime Administration an independent agency in the executive branch of the Federal Government. However, the Executive Reorganization Acts of 1949, 1951, and 1961 placed the Maritime Administration under the Department of Commerce. The present Maritime Administrator is only the third highest person in the Department of Commerce. The members of the Maritime Subsidy Board are but regular employees of the Department of Commerce. In view of the grave problems confronting the American maritime industry today, we must change these poor administrative practices.

First of all the Federal Maritime Administration should be established as an independent agency in the executive branch. This way the Administrator will have full authority in his field instead of being subordinate to the Secretary of Commerce. There is little question that the Secretary of Commerce wants to do something about. the problems facing the industry. Yet the Secretary knows little of the problems facing the American shipping industry and does not have adequate time to do anything about them. It is necessary that we establish an independent board as a source of new independent thought and power in this area.

Secondly, Mr. Chairman, the Maritime Subsidy Board should likewise be taken out of the jurisdiction of the Department of Commerce.

It is not in our national interest to keep this Board in the Department of Commerce with its members unable to attack vigorously the problems we face today.

I would like to thank you, Mr. Chairman, for the opportunity to testify today. Passage of the Federal Maritime Act, H.R. 16079, will greatly strengthen the merchant marine of the United States in this time of continued importance of surface shipping and travel. The United States will be safer from aggression if we insure that our merchant marine is strong.

The CHAIRMAN. Thank you for giving us your statement this morning. Our next witness is Hon. William C. Cramer.

STATEMENT OF HON. WILLIAM C. CRAMER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. CRAMER. Mr. Chairman, a crisis of major proportions is facing America with respect to its merchant marine. At the close of World War II, this country had a merchant marine fleet of over 3,500 vessels. By 1951, there were 1,955 active U.S.-flag ships. Today, there are only 1,000, including those reactivated for the Vietnam war, and most of these are over 20 years old.

The U.S. has dropped to 12th place among the world's major shipbuilding nations. Russia, on the other hand, has risen from 12th to 7th place as a maritime nation and is presently building an even larger fleet which she intends, by her own admission, to utilize as an instrument of foreign policy. Russia ordered the construction of 673 ships in 1964 to add to her fleet of 1,500 mostly new vessels.

On January 1, 1966, the United States had only 45 ships under construction. And the President's budget for fiscal 1967 provides only $85 million for our merchant marine ship construction. This represents a cut of $47 million from appropriations for the current year. It would permit the construction of a maximum of 13 new ships.

At the same time our shipbuilding effort is lagging and our World War II reserve fleet is growing older and more dilapidated, the expanding war in Vietnam is putting the U.S. merchant marine under tremendous pressure. Tonnage volume to Vietnam has leaped from 300,000 tons a month. Almost 470 ships are now under direct operational control of the Military Sea Transportation Service and most are engaged in the sealift to Vietnam. Dramatizing the problem is the fact that because U.S. ships were not available, the Military Sea Transportation Service had to look to foreign-flag vessels for help. Should these foreign-flag vessels refuse to come to our assistance, a crisis of major proportions would arise immediately as far as supporting our men in Vietnam is concerned.

Much of the present problem may be attributed to the fact that several years ago the Department of Defense decided that the role of ships in the defense picture could be reduced. Secretary McNamara reasoned that air transport could be substituted as a primary military supply vehicle. Now, just 4 years after this disastrous decision, two out of every three soldiers in Vietnam had to be transported by ships and, as of January of this year, 98 percent of the supplies and cargo

for the war went by ship. The fact that it would take 260 of the C-5A planes to carry the load of a single ship, and air transportation, if utilized, would cost six times as much per ton-mile is further compelling evidence of our need for and our dependency upon ships.

Mr. Chairman, the bill I have introduced and upon which I am testifying today is not a cure-all to this very real problem. It is, however, a giant step in the right direction.

The bill establishes an independent Federal Maritime Board, appointed by the President, by and with the advice and consent of the Senate. The Board would set policy for the promotion of the merchant marine. It is hoped that such an independent board would serve as an effective instrument in moving this Nation forward with an effective and aggressive merchant marine program.

Significantly, this bill would remove the U.S. Maritime Agency from the Secretary of Commerce where it has been treated as a stepchild rather than a full-fledged member of the American family. It would do away with the ineptness and neglect that has been the hallmark of the U.S. Maritime Agency and hopefully lead to a needed revitalization. It is my contention that, unless this bill is acted upon, this country that once boasted the greatest merchant fleet in the world will be left on history's shore waiting for ships that never come in.

The CHAIRMAN. Thank you Congressman, for a fine statement. Our next witness this morning is Rear Adm. Ralph K. James, executive director of the Committee on American Steamship Lines.

STATEMENT OF REAR ADM. RALPH K. JAMES, U.S. NAVY (RETIRED), EXECUTIVE DIRECTOR; ACCOMPANIED BY ROBERT S. HOPE, COUNSEL, COMMITTEE OF AMERICAN STEAMSHIP LINES Admiral JAMES. Mr. Chairman, I would like to have Mr. Robert Hope, of Kominers & Fort, the counsel for our association, accompany me, please.

Gentlemen of the committee, Mr. Chairman, my name is Ralph K. James. I am executive director of the Committee of American Steamship Lines (CASL), which is an association of U.S.-flag steamship companies operating cargo and passenger services over essential trade routes under wage differential contracts with the Maritime Administration.

I am accompanied by Mr. Robert S. Hope of Kominers & Fort, counsel for CASL. We are pleased to have the opportunity of appearing before your committee to present the position of CASL with respect to a series of bills recently introduced to create an independent Federal Maritime Administration.

These bills come at a time when the House Committee on Government Operations has concluded hearings on legislation proposed by the President, H.R. 13200, which would create a Department of Transportation. This bill, as approved by the Government Operations Committee, would transfer the Maritime Administration in its present form from the Department of Commerce to the Department of Transportation.

Prior to testifying before the House Operations Committee on H.R. 13200, the CASL membership made a thorough study of all possible types of executive organization for handling maritime matters in order

to determine which offered the best prospect for achievement of our national maritime goals.

After this deliberate analysis, CASL came to the conclusion that the administration of the shipping laws of the United States should be vested in an independent agency that would be responsive to the merchant marine policies enunciated by the Congress. This conclusion was based on broad experience that goes back to the days before the Merchant Marine Act of 1936.

We believe that the national maritime policy stated in the Merchant Marine Act of 1936, as amended, is basically sound and progressive. However, we are equally convinced that there has been a substantial failure on the part of those who administer these laws to completely implement the policy enunciated by the Congress in these statutes.

This failure has been particularly apparent since Reorganization Plan No. 7 vested full authority for the administration of the various statutes affecting the American-flag merchant marine in the Department of Commerce.

The results of this lack of vigorous and positive administration of established maritime policies is nowhere so evident as in the statutes of our tramp and dry and liquid bulk cargo fleets. These segments of the American merchant marine have declined to the point where they now carry less than 5 percent of the liquid and dry bulk cargoes moving in our foreign trade.

We believe that the 1936 act is broad enough to have permitted our Government to extend assistance for the replacement and expansion of these fleets. Such assistance has been withheld. As a consequence, the great majority of the ships in these World War II built fleets are now obsolescent and approaching the end of their useful lives. We must expect most of the present tramp and bulk fleet to virtually disappear within the next 5 years.

By contrast, our liner fleet operating under essential trade route. contracts, is basically vigorous and healthy and today carries approximately 35 percent, on a revenue basis, of all liner cargo in the U.S. foreign trade.

This success is directly attributable to the fact that the Merchant Marine Act of 1936 has largely been implemented as a liner act. However, the status of this segment of the fleet could also be greatly improved if the intent of Congress, as expressed in our maritime statutes, had been fully implemented.

The CASL lines, since 1957, have built and placed in operation approximately 110 new, efficient, high-speed merchant cargo ships with an additional 40 under construction and soon to enter service. Of itself this is an encouraging situation, but this program has also lagged behind that contemplated by the various shipping laws.

The most recent former Maritime Administrator, appearing before this committee testified that the ship replacement program is now some 90 ships behind planned schedules. This situation stems from the fact. that shipyard subsidy funds necessary to initiate ship replacement programs have consistently been requested by the Administration in amounts inadequate to carry out prescribed and needed programs. One must give pause at this point to consider the anomaly of the U.S. attitude toward the support of its merchant marine in contrast. with the attention given to this vital national asset in other major and even minor maritime nati he world.