that all construction subsidy should be exhausted before building abroad would be permitted. At that time, it was 15 ships in the United States, and then sufficient ships built abroad to rebuild the fleet. Then they retreated once more, to having a hearing process so that nobody who built ships at American prices would be hurt in the process. Then they increased the 15 to 30, and the recent movement was that they would limit the number of ships built abroad in the first 5 years to some percentage of the ships built in the United States. I think they have made a lot of movements. The trouble is that the people who are opposing it made no movements. Mr. DOWNING. The people who oppose it made no movements? Mr. CASEY. I am talking about the shipyard workers, the shipbuilding industry who have insisted that there be no scintilla of building abroad under any circumstances, no matter how many ships there might be, but wanted to insist that all the ships be built here in the United States. This to me is a completely intractable position. Mr. DOWNING. I think that is all, Mr. Chairman. The CHAIRMAN. Mr. Dow. Mr. Dow. Yes. Mr. Casey, you have made a very capable statement. Why do you say it is a completely impracticable position? Mr. Dow. I see. You would not object, in other words, if all the ships are here, and we had many foreign. You are interested in a substantial fleet that you people can operate. Mr. CASEY. Exactly, sir, and in fact, I might go one step further, that I don't believe that we ought to get mixed up in arithmetic and figures about how many ships are going to be built here, and abroad. We are interested in a strong American-flag merchant fleet, and we are down to the point where 665 ships are over 20 years of age. In determining how many ships are built here, and how many abroad, I think we ought to get off the dime at this moment, and provide for something that meets the administration's approval, and get a program started. The first ships to be delivered under this program will take 2 or 3 years, and I would like to find out whether in the course of the next 5 years the prices that we pay in this country as compared to the prices abroad, and the delivery schedule compared to the deliveries abroad is not a standard that we should have before us. They have now provided that in 5 years the Congress would have to reenact this building abroad, after 5 years, another point that they retreated on. Mr. DOWNING. If you stick around, you may get others. Just because you got your goal, you jumped off. You are interested in a strong merchant marine fleet. You don't care where it comes from. I can understand that interest. You are representing your interest, when you accomplish that. Mr. CASEY. And I will go one step further, to say that my people would prefer to build their ships in the United States. Mr. DOWNING. I think so. Mr. CASEY. And there has been some question raised as to this: Under a 150 ship program built in the United States in the next 5 years, everyone seems to assume that all the ships that the administration, Secretary Boyd, has talked about will be built. After all, it is going to take some operators with an interest in building them, if they are ever going to be built. Unless someone does something to straighten out that labor situation in New York, I doubt they ever will be built. Mr. DOWNING. Thank you, Mr. Chairman. Mr. Dow. Thank you, Mr. Casey, and Mr. Chairman. The CHAIRMAN. Thank you very much, Mr. Casey. We will recess until tomorrow. Our witness tomorrow will be Mr. Paul Hall, representing the Seafarers International Union. The meeting will recess until tomorrow. (The following letter was received for inclusion in the record:) Hon. EDWARD A. GARMATZ, AMERICAN MERCHANT MARINE INSTITUTE, INC., Chairman, Committee on Merchant Marine and Fisheries, MY DEAR MR. CHAIRMAN: During the hearings before your Committee last week, it was alleged that the Institute's position with respect to the independent agency bills was changed "under the pressure and arm-twisting of Mr. Boyd". This I categorically deny. In order to keep the record straight, I should like to analyze briefly the sequence of events which led to the position AMMI now takes in support of transferring the Maritime Administration to the Department of Transportation. On October 4, 1966, there was issued the Interagency Maritime Task Force Report. The Institute strongly opposed a number of the recommendations in this report. To mention a few: (a) Conference membership would be discouraged; (b) it contained a "hair-brained" scheme with respect to operating-differential subsidies; (c) Cargo Preference would be phased out; and (d) the operation of passenger liners would be terminated. In December, 1965, there was published a report of the President's Maritime Advisory Committee. Although never called upon to comment upon this report, the Institute had strong objection to several of its recommendations, viz., (a) that no reliance could be placed upon vessels under "effective control", (b) that all vessels for United States operation be built in U.S. shipyards, and (c) mandatory requirements for the carriage of commercial cargoes in U.S. flag ships. On March 10, 1966, the Institute issued its recommendations for "A New National Maritime Policy". An examination of the salient recommendations contained in this report indicate how closely they dovetail with the program now proposed by Secretary Boyd: 1. AMMI Position: The United States should maintain an active and healthy shipyard capability, but construction-subsidy aid should be granted directly to the shipyard and American owners should have the right to construct vessels abroad and operate them under the American flag in all trades. This is precisely what Secretary Boyd now recommends. 2. AMMI Position: Steps should be taken to protect vested property rights of existing operators. Mr. Boyd agrees. 3. AMMI Position: Construction aid to U.S. shipyards should be available for building for foreign as well as American account. Mr. Boyd agrees. 4. AMMI Position: The cost equalization parity concept of the operatingsubsidy provisions of the Merchant Marine Act of 1936 should be maintained, but the possibility of providing additional features in the operating-subsidy system should be explored. This is in essence what Mr. Boyd now recommends. 5. AMMI Position: Subsidy aid should be extended to dry bulk carriers for the international trade. Mr. Boyd agrees. 6. AMMI Position: The principle of essential trade routes for liner services should be continued, although some increased flexibility should be considered. Mr. Boyd so recommends. 7. AMMI Position: Mandatory reservations to American-flag ships of at least one-half U.S. Government-sponsored cargoes should be continued. Mr. Boyd agrees. 8. AMMI Position: Rate differentials on Preference cargoes should be phased out insofar as practicable. Mr. Boyd so recommends. 9. AMMI Position: Flags-of-Necessity ships are no threat to American-flag ships and would be an asset to the United States in the event of an emergency. This is understood to be Mr. Boyd's view also. 10. AMMI Position: Any Government allocation of commercial cargoes to American-flag ships should be opposed. It is understood that this is also Mr. Boyd's view. Now, it is true that in this same report it was recommended by AMMI that "the Maritime Administration should be reestablished and operated as an independent agency of the Government." However, as is well known to all principal representatives of labor and management, as well as to each member of your Committee, we were, in a sense, in a trading position at the time this report was drafted. We were desperate for a new maritime program. And since no such program was forthcoming from the Maritime Administration as part of the Department of Commerce, it was hoped that pushing for independence for the maritime agency might stir "the powers that be" out of their lethargy. Then, early this year, Secretary Boyd outlined a program which, as indicated above, coincided in all its principal features with the views of AMMI. At this point, recognizing as we long have that the location of the maritime agency was of insignificant importance in relation to the existence of a sound progressive program, we readily accepted the condition that we support the transfer of maritime activities to the Department of Transportation. Far from being pressured, we did as anyone would do in a trading position-since the terms were completely acceptable, we settled. In view of the rather extensive discussions which took place with respect to "pressure tactics" in connection with the present position of the Institute on the bills to create an independent maritime agency, I respectfully request that this letter be made a part of the record of your hearings. Sincerely, RALPH E. CASEY, President. (Whereupon, at 12:20 p.m., the committee adjourned, to reconvene at 10 a.m., Wednesday, July 26, 1967.) INDEPENDENT FEDERAL MARITIME ADMINISTRATION WEDNESDAY, JULY 26, 1967 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MERCHANT MARINE OF THE Washington, D.C. The subcommittee met at 10:15 a.m., pursuant to recess, in room 1334, Longworth House Office Building, Hon. Edward A. Garmatz (chairman of the committee) presiding. The CHAIRMAN. The meeting will please come to order. Today we are continuing our hearings on H.R. 159 and other bills to authorize the establishment of an independent Maritime Administration. From the outset of these hearings, it has been clear that discussion of the merits of the legislation inevitably involved discussion of a general merchant marine program. The testimony we have received so far has been very thorough and enlightening. The various points of view which have been, and will be, presented to us, will be most helpful in guiding us to informed conclusions upon which we can proceed to develop a program to revitalize the American merchant marine. I am delighted to call on our colleague from Connecticut, who is a valuable contribution to the Merchant Marine Committee, the Honorable William St. Onge.,, STATEMENT OF HON. WILLIAM L. ST. ONGE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CONNECTICUT Mr. ST. ONGE. Mr. Chairman and distinguished members of the committee, I wish to thank you for this opportunity to present my views on my bill, H.R. 2142, and similar bills now under consideration before your committee. These measures call for the amendment of title II of the Merchant Marine Act of 1936 in order to create an independent Federal Maritime Administration. As the sponsor of one of these bills, I am especially grateful to you for scheduling these hearings. The legislative intent of Congress in passing the Merchant Marine Act of 1936 was to create an American-built, American-owned, and American-manned merchant fleet adequate to transport a major percentage of our foreign trade and to be readily available for military needs in time of war. To administer this program, Congress established an independent and autonomous U.S. Maritime Commission. |