of interest could end up with us being the loser. I think the recent Middle East crisis gave us some compelling evidence to sustain the unreliability of foreign-flag ships. American-owned vessels sailing under a Liberian flag were ordered to recognize the Arab blockade of the Gulf of Aqaba in absolute opposition to U.S. policy. If this could happen to an American-owned ship, what could happen to ships built abroad during times of crisis when our Government and the government of the shipbuilding nation had opposed political views.

How can we even think of building ships abroad when our own shipbuilding industry is capable of handling our present needs and when it is in a sad economic state precisely because we are not giving it the opportunity to build ships? Less than a hundred vessels have been built in American yards during the past 6 years. This is less than an average of 17 vessels per year, less than one ship per shipyard per year. We have the capacity; why aren't we using it? What possible reason can there be for starving our own shipyards and their employees and feeding those of other countries?

Shipbuilding has the potential for being a significant part of the American economy. Even operating at less than capacity, it provides jobs for thousands upon thousands of American workers. În addition to those who are directly employed in American yards, there are three, four-even five-persons employed in related fields. The incomes of all of these people would be imperiled by any move to build in foreign yards. The tax revenues from these earners, and from the industries which employ them, would likewise be imperiled.

I would like to touch on another fact here involving our Nation's economy. There can be no denying our living standards are higher than those of any other nation in the world. With all our troubles, we are still considerably better off than we could be if our circumstances more closely approximated those of other nations, including other shipbuilding nations.

Is it not reasonable to assume, then, that even if cheaper prices might be possible for ships built in foreign yards, these savings might represent false economies in our case? Rather than help support one end of one part of our economy-the substantial maritime industrysuch a move may contribute to the erosion of the very standard of living we seek to improve.

We need to upgrade our maritime endeavors, not downgrade them by hiding them in a bureaucratic maze. The only way that we can upgrade our maritime status-the only way that we can become a maritime power again-is to get on with the job of maritime independence.

An independent Maritime Administrator, freed from the restraints of vetoes within the department structure, should be able, I believe, to come up with the new, forward-looking programs that will end our decline on the seas. Thank you.

Mr. Chairman, I have attached to my statement excerpts from the Journal of Commerce of Wednesday, July 12, 1967, which I request be placed in the record of these hearings.

The CHAIRMAN. Without objection, so ordered. (The excerpts follow:)

[From the Journal of Commerce, July 12, 1967]

SHIPYARDS WILLING TO BE PUT TO TEST

WASHINGTON, July 11.-The U.S. shipbuilding industry said today that allegations that yards have insufficient capacity to construct the number of merchant ships needed “just aren't true."

"... There is sufficient, competent and ready capacity to build as many as 50 large, oceangoing merchant ships annually” and “given the opportunity to carry out an orderly, carefully planned program, the U.S. shipyard industry can meet and probably exceed the most ambitious ship replacement requirements of U.S. flag operators of this we are truly confident," a letter to key Senate and House members from Edwin M. Hood, president of the Shipbuilders Council of America, said.

AIMED AT CURRAN, BOYD

Mr. Hood's letter to Sen. Warren G. Magnuson (D-Wash.) and Sen. E. L. Bartlett (D-Alaska) and Rep. Edward A. Garmatz (D-Md.) was not directed at anyone specifically, but it was unmistakenly aimed at Joseph M. Curran, president of the National Maritime Union, who favors allowing some foreign building if U.S. private yards can't handle the business, Alan S. Boyd, transportation secretary, who has advocated letting operators build foreign once subsidy funds have been depleted, and the subsidized lines. Mr. Boyd also said a 50-ship-a-year program built in U.S. yards would lead to inflation in the price of ships. Mr. Hood did not go into the price aspect.

Motivation for these allegations, he said, "is all too apparent-to attempt to justify the export of shipbuilding contracts and jobs to other countries with consequent adverse effects on the balance of international payments."

"PUT US TO THE TEST"

Mr. Hood said "we therefore challenge those federal government spokesmen and shipping operators who say that U.S. shipyards cannot do the job to put us to the test. To paraphrase President Johnson's words in Baltimore last week, let's begin to talk about some of the things that are right about U.S. shipbuilding.

... Put us to the test before there is any more talk of foreign building, give us a better procurement environment than heretofore, plus an expanding, not a limited, workload, and we will deliver the ships as required," he said.

The CHAIRMAN. We will recess until tomorrow at 10 o'clock. Tomorrow's witnesses will be Hon. Alexander Trowbridge, the Secretary of Commerce; Hon. Charles L. Schultze, the Director of the Bureau of the Budget; and Hon. Alan S. Boyd, the Secretary of Transportation. (Whereupon the subcommittee recessed, to reconvene at 10 a.m., Thursday, July 13, 1967.)

INDEPENDENT FEDERAL MARITIME ADMINISTRATION

THURSDAY, JULY 13, 1967

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON MERCHANT MARINE OF THE

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C.

The subcommittee met at 10:10 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 come to order.

The first witness this morning is Congressman Pollock, one of the committee members, from the State of Alaska. He surrendered his time yesterday to Chairman Celler to appear before the committee because Chairman Celler had other business to attend to. The Congressman gladly yielded to him. You may proceed.

STATEMENT OF HON. HOWARD W. POLLOCK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALASKA

Mr. POLLOCK. Mr. Chairman, first I would like to express my appreciation to the chairman and to the members of the committee for an opportunity to testify on this very vital subject. As a member of this distinguished committee, and as a sponsor of a measure to create an independent Federal Maritime Administration, I am delighted that we are at long last considering legislation to accomplish this goal.

I would like to associate myself with the very excellent testimony of Mr. Pelly, the distinguished gentleman from the State of Washington, and with the remarks that were made by the distinguished gentleman from Maryland, Mr. Morton, and also with the remarks of Chairman Celler of New York. I think they were very pertinent, very excellent remarks. I am delighted that they are in the record.

It seems safe to say that H.R. 159, introduced by our distinguished chairman, enjoys wide support in the 90th Congress from Members on both sides of the aisle, 104 Members having introduced bills, even though we are only now holding our hearings and no bill has yet been reported to the floor. This broad backing is evidenced by the fact that more than 100 Members of the House of Representatives have introduced identical legislation.

I think it is a very vital thing. It is time that we awaken the need in the administration for enactment of this type of legislation.

I think this serves to underscore the deep concern of this Congress over the crisis in our merchant fleet, about which we have heard so much in recent months.

83-195-67- -6

It is imperative that the United States begin immediately to assert itself once again in commercial activity in the world's oceans and seas on a scale that will restore the country to first-rank maritime importance. I think we tend to say that we are a great power in the maritime industry, but if we are realistic we are not. We are going downhill. It is time that we change this trend. It is time that we recognize in this very significant manner the decline of this significant industry, and incidentally the U.S. fishing industry in relation to that of other nations.

It is time that we called attention to our embarrassing lack of an aggressive, comprehensive national maritime policy, and that we emphasized our neglect of the potential of the world's oceans-we really have done this in general-and certainly the resources of the fisheries and living resources of the oceans and of our merchant marine, in particular.

I have no special axe to grind as a Representative of the State of Alaska. I am speaking today, Mr. Chairman, as an American vitally concerned with the deplorable condition that we find our maritime industry in at this time.

I take great pride, as a member of this committee, in the fact that, without regard to partisanship, we have tried to alert the American people and the administration to the plight of our merchant marine. Under these circumstances, it would be superfluous at this time for me to recite again those dreary statistics which we have heard and which we have published which record our present state of urgency. We have been pummeled. We have heard them over and over and have had them published. I particularly thank the gentleman from North Carolina for the remarks he made yesterday and the statistics he brought forward to be placed in the record.

I think it is sufficient to say that, by any means of comparison, our merchant marine and fisheries situations are bad, and are growing steadily worse. Nothing short of a fullfledged overhaul of all our maritime and fisheries programs is in order. I am talking about the two because I think in some measure they are inseparably connected, Mr. Chairman.

I say "programs" because today there is no overall national ocean policy, no definitive national program, no entity capable of implementing such a policy or program, and no national budget for ocean development, particularly pertaining to the merchant marine and utilization of the living resources of the sea. There is no comprehensive plan to revitalize the U.S. maritime industry, or the U.S. fishing industry, no significant drive to increase fishing exports, no real Government-industry understanding or partnership, which, I think, exists in Japan, exists in Russia, and exists in many other countries, and it is vital that we come to realize that it does not today exist in the United States.

There is an immediate and vital need for one unified national policy for ocean and fishery development, and one for the merchant marine and it is my belief that such a unified approach is possible only if we reconstitute the Maritime Administration as a wholly independent

agency.

Until we do, there will be no unified effort, and we will be forced to continue with our present fragmented approach to maritime prob

lems. And make no mistake about it, Mr. Chairman, today we are fragmented. Within the executive branch, there are no less than 22 separate agencies engaged in various ocean activities-each of them is separately funded. These 22 agencies compete with each other, and with other agencies much larger, for the Federal budget dollar. This situation breeds duplication of effort, and cannot but hinder our ocean development programs.

If we were concerned here only with sound Government organization, which I think is essential, we would have to move forward with an independent Federal Maritime Administration just to end the present piecemeal, uncoordinated approach toward the budgeting of various maritime and fishing problems. But of course the question of a maritime budget, important as it is, is overshadowed by the need for coordination in our approach to our merchant marine and fisheries industries, themselves, for both our national defense and our national commerce are involved.

Because the Maritime Administration does not have independence, because we have more than two score Federal agencies with their fingers in the maritime "pie," we are treated to the spectacle of various Cabinet officers making policy decisions, often contradictory, for this vital industry.

We had, for example, one Cabinet officer-the Secretary of Transportation-proposing a maritime program to the Congress, despite the fact that in our legislation establishing the Department of Transportation in the last Congress, we made it abundantly clear that the maritime program was to be outside his province.

In his program, the Secretary of Transportation proposed the construction of nuclear-powered ships at a time when the Budget Bureau and some others in this administration advocated laying up the nuclear-powered commercial vessel we now have, the hundredmillion-dollar NS Savannah.

This same Secretary of Transportation proposed a low-level program of domestic ship construction, coupled with opening of the floodgates to foreign ship construction. To my mind, this is loaded with danger. It poses the threat of an ever-increasing flight of American capital abroad, adversely affecting our balance of payments. And it would certainly depress our own shipbuilding industry, which is very sick at this point, in my humble estimation, thus killing any hope of reducing unit cost in the future through multiple ship construction. Well, this is the proposal of one member of the administration.

We have had another member of the administration, the Secretary of Defense, inject himself into the maritime program, too. He wants us to upgrade and reconstruct hundreds of national defense reserve vessels at astronomical costs. As this committee is well aware, we have broken out 172 of these ships for the present Vietnam conflict. Each one of these vessels has cost the Government about a half million dollars to be fitted back into service. After these old rust buckets had been placed into service, many of them were plagued with mechanical failures which resulted in the loss of valuable sailing days.

This recommendation to pour millions of dollars into the "upgrading" of a reserve fleet, which is long since past its prime, came from the same Secretary of Defense who wanted to build fast deployment