I have said before that a Maritime Administration without mar funds is nothing-no matter how independent it may be-and tha Maritime Administration with funds is something-no matter it is.

Early this year the Secretary of Transportation discussed with groups an entirely new program to revitalize the merchant marine. This program met the approval, generally, of the American chant Marine Institute. An integral part of this package involved transfer of the Maritime Administration to the Department of Tr portation. We accepted this condition in approving the program.

As I have stated, the original position was founded primarily the need for a sound, progressive, and adequate program for reviia. ing our decadent merchant fleet.

sup

It was our thought that the necessary time and attention to out such a program could only be found in an agency devoted s to the problems of the American merchant marine. However, re nizing that if the program now proposed by the Secretary of Tr portation were to be submitted to the Congress with the full and endorsement of the President of the United States, and if it enacted into law, it could well form a solid foundation upon whi build a new and well balanced merchant fleet under the American Hence, it is our considered judgment at this time that we sh support the transfer of the Maritime Administration to the Deper ment of Transportation.

In this connection, however, it should be explained that we feel that a degree of independence within the Departmen Transportation should be maintained.

Therefore, we support such transfer on the condition that its st within DOT will be along the lines of the bill approved by the Se during the last session of the Congress, but amended to give the ator the right of appeal on adverse Maritime Board determination the Secretary of Transportation or to the courts.

There are some who believe that establishing an independent ag would remove maritime activities from the entire budgetary pro applicable to all agencies in the executive branch of the Govern This is not so.

Fund requests would still have to be funneled through the B Bureau in the Executive Office of the President.

And, if any version of these bills is passed, over the strenuous jections of the Administration, and if the President should feel pelled not to veto the bill when it reaches his desk, gentlemen, I be you will have won a battle and lost the war.

As one of the sponsors of these bills testified:

"No one can force the Administration to ask for or spend more does not want. I know that Congress cannot restore our Americar service or maritime industry if the executive branch is unwilling."

Mr. Chairman, we must be realistic. Back in Boston, we used to"You can't fight City Hall." This is what we are attempting to we pass these bills over the objection of the administration.

We would have an independent agency that was persona non with the President. This, in my judgment, would not be in the inter of the long-range welfare of the maritime industry.

I must point out that whether you agree or disagree with the program which the Secretary of Transportation has outlined, it involves the expenditure of more Federal funds than has ever before in the history of the United States been proposed by any responsible Federal official, except in time of outright war.

The 5-year program calls conservatively for the expenditure of over $3 billion.

We in the institute feel this type of proposal is deserving of the most serious and deliberate consideration.

Certainly we express the hope that a new maritime program will not be scuttled by another hassle over the issue of dependence or independence of the agency administering maritime activities.

Thank you.

Mr. Chairman, I have necessarily kept the statement short, because I believe this issue has been thoroughly explored by the witnesses pro and con, and I merely subscribe to the proposition that unless the Congress and the administration work together, then the maritime industry cannot obtain the kind of support and revitalization we need. The CHAIRMAN. Mr. Ashley.

Mr. ASHLEY. I don't have any particular questions, Mr. Chairman. I must say that I think you make a short but persuasive statement, Mr. Casey, persuasive to me, particularly, in its concluding remarks, which were concerned with the long-range picture, and we are in a position here to be very destructive, as well as constructive.

I think that you underscore that point quite effectively.

You do say that previous to the proposal submitted by Mr. Boyd that the administration has been silent, and has not exerted much effort to develop a program.

In all fairness to Mr. Nicholas Johnson, and I think we have to make one exception, don't we?

Mr. CASEY. Well, Nicholas Johnson's ideas were basically contained in the task force report, which met with very little acceptance by anybody in industry, as tending to give us the kind of a program which he thought in the long run would be one which would revitalize the American merchant marine.

You will remember that we have come a long way from the task force recommendations, when Secretary Boyd outlines the kind of program he is outlining now.

Mr. ASHLEY. I could not agree with you more, but there is a difference between acceptance and those efforts in those days. The efforts were there, and that perhaps in a sense was a starting point. The rejection of those ideas led us into other areas and other directions. Would you not agree with that?

Mr. CASEY. Yes, I would.

In other words, I would have to modify my statement to the effect that they made an effort by one of the people charged with the merchant marine, but the effort, in our judgment, fell far short of what we thought should come forth.

Mr. ASHLEY. Of course.

Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Downing.

Mr. DOWNING. Mr. Casey, you always deliver a cogent statement, and one to the point.

We have come a long way since Congress first started reacting to inaction of the administration.

You will agree with that?

Mr. CASEY. Yes.

Mr. DOWNING. We now have some sort of a program, not w most of us want, in its entirety, but at least a program. We are

our way.

My only concern is that you may be jumping off the ship before: docks. I wish you would stay on it a little while longer.

Certainly you don't agree with the proposal which would seek to vitalize these idle ships in our reserve fleet?

Mr. CASEY. Mr. Downing, you picked out the one aspect of t program about which we have some serious doubt. That is, the modeling of the 100 Victory-type troopships.

However, in an area of this kind, if the military says that expenditure of the funds that has been called for in this progr is going to be well spent in putting those ships in a reserve fleet dition, while we would hope that the administration would take t money and put it to new ship construction, again, I have been told the Secretary of Transportation that this is not an if/or situat that if that money is not spent to remodel those ships, that the mo goes out of the program, and is not going to be spent for new construction.

I have to take some of these things in the way in which they are p to me, and I am not going to quarrel with the administration wit they say this.

I think it is a shame now that we are at loggerheads with the ministration and the Congress over a program that is designed help the shipbuilding industry far more so than any program wh has ever been put forth by the administration before, and help t ship operators, and they are, of course, above all others, that a needing help at the present time, and by reason of one or two aspects this program, the thing is on dead center.

I think it is a very disillusioning situation.

Mr. DOWNING. I think you may be in error as to the Secretary the reserve fleet program.

In his speech in Baltimore, he said, on page 12:

Let me point out here that even if we don't use these funds to revitalize Reserve Fleet, they would not be available for other maritime programs. Mr. CASEY. That is what I meant to say.

Mr. DOWNING. I did not understand.

Mr. CASEY. We would not get the money if we don't use it for t purpose.

Mr. DOWNING. Does building foreign bother you at all? Mr. CASEY. When you say "bother me," the fact that this is hold up the program bothers me. I will say that.

I believe that what has been put forth is a reasonable, feasible, sible proposition.

While some of the members tried to indicate that Secretary Be has been inflexible on this, he has not been inflexible. Originally proposal was to build foreign, even before the appropriations for struction subsidy were exhausted here. He retreated then to the po

at all construction subsidy should be exhausted before building broad would be permitted.

At that time, it was 15 ships in the United States, and then sufficient hips built abroad to rebuild the fleet. Then they retreated once more, o having a hearing process so that nobody who built ships at American rices would be hurt in the process.

Then they increased the 15 to 30, and the recent movement was that hey would limit the number of ships built abroad in the first 5 years to ome percentage of the ships built in the United States.

I think they have made a lot of movements. The trouble is that the eople 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 shipbuildng industry who have insisted that there be no scintilla of building broad under any circumstances, no matter how many ships there might be, but wanted to insist that all the ships be built here in the Jnited 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. CASEY. Intractable, inflexible.

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.

3

The first ships to be delivered under this program will take 2 or 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..
New York, N.Y., July 31, 1967.

Chairman, Committee on Merchant Marine and Fisheries,
U.S. House of Representatives,
Washington, D.C.

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 se quence 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 directi to the shipyard and American owners should have the right to construct vessess 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 operating subsidy provisions of the Merchant Marine Act of 1936 should be maintained. but the possibility of providing additional features in the operating-subs.dj system should be explored.