awards and unclaimed items....all money...received from operation or leasing of lands, docks, wharves, piers, or real property...etc." They were accumulated funds derived strictly from governmental maritime operations. An Administration program now being proposed calls for an expenditure of $5.1 billion over a 10-year period or $500 million per year as the government's share. Had Section 206 funds been retained for their rightful purposes; had they been applied to the causes from which they were derived-- we would have long since underwritten the government financing obligation for the proposed administration program. In summary: (1) Some $500 million of these funds should be restored to their rightful purpose by the establishment of the "Maritime Revolving Fund" under Section 206 of the Merchant Marine Act amended to cover both operating and construction obligations. (2) Future replenishing of this maritime revolving fund should be accomplished by the transfer from customs receipts annually, such pre-determined amounts as are necessary to achieve the objectives of our national maritime policy. (3) If necessary, customs duties should be raised accordingly to accomplish this purpose. The concept of diverting funds from import duties is not new. It has long been championed by the Honorable Russell Long, U.S. Senator from Louisiana. Other authorities in the field of shipping policy have also advocated it. For example: "O.R. Strackbein, chairman of the nationwide committee on import-export policy, suggested that there be a diversion of import duties to be collected on all imports to go to the merchant marine instead of the present operating differential system. If a share of the duties collected on all imports... were made available to the merchant marine it could keep in step with the growth in our trade. Our merchant marine would be linked to trade expansion while today there is no such relationship, Mr. Strackbein said. By way of example he said if 25-30 per cent of the $2.6 billion in duties collected last year were channeled to support the merchant fleet it would help greatly in reversing the fortunes of this important constituent of the domestic economy." 1) Such a practice is already in use in some countries and has the virtue of financing government support for the merchant marine out of revenues facilitated by the merchant marine itself. For example, Argentina finances loans for shipbuilding conversion, and other work by a 4 percent tax on freight imports and a 2 percent tax on freight exports. Brazil finances the purchase, construction and modernization of ships under a 5 percent tax imposed on freights in international trade and 15 percent on coastwise freights. 1) New York Journal of Commerce, February 24, 1967. 58 Peru provides a subsidy to Corporacion Peruna de Vapores (CVP) through a 4 percent tax on export and import freights. The practice is thus not without precedent and variations of it exist in other countries. Expansion of it is presently under review in Japan. If adopted in the United States, program authorizations should be lodged with the Senate Committee on Commerce, and the House Merchant Marine and Fisheries Committee with financial control exercised through the respective appropriations committees of the Congress. Such a process would have the added virtue of avoiding the financial penury and budgetary privation resulting from negative administrative practices within the Executive Branch of Government which have contributed to the notoriously low status of our merchant marine. 83-195 67-18 THE NATIONAL DEFENSE RESERVE FLEET ACCEPT THE FACT THAT THE NATIONAL DEFENSE PURSUE AN ACTIVE SCRAPPING PROGRAM FOR ALL $ OPPOSE THE UPGRADING OF APPROXIMATELY 150 AP-2 T FAVOR THE CONSTRUCTION OF 40 TO 50 PRIVATELY- CONCENTRATE ON NEW SHIP CONSTRUCTION TO PRODUCE The Government has proposed upgrading approximately 150 victory ships (AP-2 and AP-3) at the cost of $300,000 each and placing them in ready status in the Reserve Fleet at the end of the current hostilities. This is not a conversion program but chiefly The AP-2 & 3 victory upgrading proposal involves much more and would total approximately $45 million in costs. With matching funds under a 50 to 55% construction subsidy, this amount would expand to at least $90 million if applied to new private merchant ship construction. The testimony of Assistant Secretary of Defense Ignatius, portrayed some doubt as to the efficacy of such expenditures on victory ships by indicating he would like to explore it further. The only possible justification for such a commitment of funds would be a military assessment that world conditions, and the untimely prospect of future conflicts, places a high premium on immediate availability, as against a delayed program of new construction, to match corresponding deadweight tonnage and operating capability. In addition, the Government proposes the conversion and upgrading of some 100 AP-5 ships at a cost of $3,000,000 each for a total of $300 million. These are troop ships or auxiliary passenger transports. The conversion process would involve cutting out the center sections and inserting mid-bodies for |