Today, in an era of unprecedented expansion of American interests and responsibilities, the U.S. merchant marine is woefully inadequate to meet national requirements.

An examination of the participation of the U.S. merchant fleet in our oceanborne freight trade proves this point. Total oceanborne trade in 1966 was approximately 2.8 times the 1947 level, but the tonnage carried in U.S.-flag ships in 1966 was approximately onethird of that carried in 1947. U.S.-flag ships, as a whole, carried over 57 percent of the Nation's commercial waterborne export-import trade in 1947, but only 7 percent of the total in 1966.

Although tonnage carried has held up in recent years, the percentage has continued to decline. This is the result of somewhat stable capacity versus the growing total oceanborne foreign trade. The most dramatic shift has been in the nonliner and tanker trades, which are now four times the 1950 level. Yet, U.S.-flag carryings have declined to the point where they account for only about 5 percent of this traffic.

These figures are not mine. They were contained in a statement by Secretary of Commerce Trowbridge before the Senate Merchant Marine and Fisheries Committee on April 12 of this year.

The record is clear that the executive departments and agencies have failed to implement the congressional mandate of 1936. Budgetary expediencies have been permitted to determine our maritime policies rather than national needs. Our American-flag fleet has steadily deteri orated; it no longer has the commercial and defense capabilities contemplated by the 1936 act.

The administration's proposal made in March of 1966 that the Maritime Administration be transferred to the Department of Trans portation would be like "jumping from the frying pan into the fire." The proposal would simply mean the transfer of the Maritime Administration from one Federal department to a bigger Federal department, neither department being basically concerned with maritime problems.

In my opinion, H.R. 159, the legislation we are discussing today, if passed by Congress, would constitute a return to the original poly contemplated by Congress in the Merchant Marine Act of 1966, the creation of an independent agency to establish an American-bu American-owned, American-manned merchant fleet capable of carry ing a substantial proportion of foreign trade and developing as a nava auxiliary in emergencies.

It is our firm conviction that the U.S. merchant marine wo!! have a far better chance of survival and growth if its affairs wer administered by a Federal agency whose sole concern was mariti, The reestablishment of an autonomous Federal maritime agency we. be the best way to deal with the varied problems which have plans the American-flag fleet, the Government and the Nation for so years.

The selection of Alan S. Boyd as the Secretary of the Departmen of Transportation and the proposals for a new maritime progra which have been advanced by him have not made the proposed any more inviting. I certainly do not intend to discus here in dea the proposal Secretary Boyd submitted to this committee. Howeve

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nust point out briefly what the Boyd proposal would mean to the ipyard workers of our Nation. The Secretary has indicated that the rnerstone of his program is foreign building. He has told Congress at, without foreign building, there will be no program.

I should like to give this committee a concrete example of the devastgeffect foreign shipbiulding has already had on my union, alone. Our ion has an agreement with the American Shipbuilding Co. of Lorain, hio. In 1966, American Ship and a number of other yards bid on some avy work. They bid on two AGS's-AGS-29 and AGS-32. These re both naval oceanographic vessels.

The Department of Defense also allowed Great Britain to bid on hese vessels. Because of the low wage rate in Britain, because the British did not have to use American-made material, the British were ow bidders on these ships. The result was that our union members lost ,460,000 man-hours of work and the Nation's economy lost $11,430,000, which would have gone to purchase materials for the two ships.

Later on the same year, the ATS-1, an ocean-salvage tug, was also warded to the British. Lost to American Ship employees were 685,000 nan-hours. Lost to the Nation's economy were $5,035,000.

This year, the British were low bidders on two ocean-salvage tugs, the ATS-2 and ATS-3. Although the awards have not been made yet, the indications are that they will go to British yards. Incidentally, the difference between the American Ship bid and the British shipyard bid was only 42 percent, a long cry from the "50 percent" we hear so much about. If they are awarded to the British, the loss in work to the shipyard workers of American Ship will be 1,260,000 man-hours with over $10 million for equipment lost to the economy.

Two more ships have been put out for bid, the AGS-33 and the AGS-34. American Ship's bid is over $10 million; the man-hour total is another 1,250,000 man-hours. These bids have not been awarded, but again the British are in the picture. The U.S. Navy has issued a bid for multiyear procurement of 16 MSO's, and thanks to Congressman J. W. Byrnes, of Wisconsin, an amendment was attached to the Defense appropriations bill, H.R. 10738 which provides: "That none of the funds herein provided shall be used for the construction of any naval vessels in foreign shipyards." Many of you gentlemen voted for this amendment. We are hoping that the Senate will keep the amendment in. If they do, there will be no more problems with the British yards at least with Navy work.

Gentlemen, I think from these examples that it should be quite obvious why we oppose foreign building. I should like to point out that the man-hours I am talking about are only the man-hours that would be used in the shipyard, and that it is a positive fact that more man-hours are involved in producing the material and equipment needed to build the ship than are used in the actual assembly of the ship in the yard. The Secretary of Transportation, in his written presentation to this committee, recommended as an example of the limited foreign building he has been talking about: "Foreign building versus U.S. building on a ratio of 2.5 to 1. During the first 4 months of each year, contract for a 'unit' of 10 ships to be constructed in U.S. yards and then authorize up to four ships to be constructed in foreign yards, repeat same during the second and third '4' months' period during each of 5

years.'

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To me, this means 30 ships a year for 5 years in U.S. yards and at least 12 ships per year in foreign yards. Let's give the Secretary the benefit of two ships a year and assume that there will only be 10 ships built foreign each year under his proposal. In terms of dollars, all this means that U.S. yards would lose around $200 million in contracts each year. The direct allied suppliers would lose an estimated $100 million each year.

The effect on shipyard employment would be equally as severe. It would represent a loss of 16 million man-hours of shipyard employ ment annually, with an additional 11,200,000 man-hours lost to the direct allied suppliers.

Over the 5-year period, it is estimated that the loss would be $1.5 billion and 136 million man-hours of work would be lost to the US. economy by reason of foreign building. By applying the multipler effect of money flow throughout the economy, the total would be far greater than these figures indicate.

What the authors of foreign building conveniently forget is that the worker, the consumer, and the taxpayer are all one in the same persot. and that every time you export a job to a foreign country, you lose a consumer and a taxpayer with the job.

What kind of economy is this?

Mr. Boyd also said:

I firmly believe that this is the best possible maritime program. The reason I believe this is that it achieves all of the major objectives which any maritime program must achieve. First, the opportunity for American shipowners to par chase their ships at world market prices without restraint imposed by the need for Government appropriations.

Apparently his advisers have not told him the facts of life. American shipowners have this option now. In fact, using this option, they have built more than 1,000 ships in foreign yards in the last 20 years, all for American companies and their affiliated interests. The Secretary proposes to give them a bonus for building foreign.

Foreign building is as repugnant to us as it is to the members of Congress, not only because of the shipyard jobs involved but because we are firmly convinced it is not in the public interest and would weaken our Nation's defense posture.

The most alarming aspect of the current maritime dilemma is the "all or nothing at all" position taken by the Secretary. To me, this smacks of plain, unadulterated political blackmail, which I don't fee. has any place in our society.

His argument for foreign building started with the thesis of needing as many ships as possible, as fast as possible. In view of this argument, doesn't it seem odd that the Maritime Administration has received appropriations to build 13 ships in the fiscal 1967 budget and as of this moment they have only contracted for one ship? With the need for these ships being agreed on by everyone, what possible reason cou there be for not having started the other 12, unless it was to blackja the industry in line with the Boyd program?

Mr. Chairman, all of this loud talk about a program, the need for a new program, to me is so much hogwash. In my humble opinion, the policy and objectives set forth in the Merchant Marine Act of 194 as amended, are as reasonable, realistic, and applicable today as when

acted. The present inadequacies in the U.S.-flag merchant marine dre in direct ratio to the extent that this policy and these objectives ave not-and I repeat have not-been carried out.

In the face of the critical and obvious national need, we consider nsatisfactory Mr. Boyd's comment that Federal revenues were not an open sack" and that the maritime industry is not the only probm facing the Nation.

If the Budget Bureau is unwilling to increase appropriations to oster the development and encourage maintenance of a strong, viable J.S.-flag merchant marine, then there has been a failure in the quality f salesmanship which has been exerted within the administration, nd that the policies and the responsibilities as prescribed by law have Deen willfully disregarded.

Therefore, may I respectfully suggest that this committee give careful consideration to the following proposals: First, I propose chat Congress take up the gauntlet thrown down by the Secretary of Transportation. It is apparent from the remarks made by Mr. Boyd, during his appearance before this committee, that none of you gentlemen convinced him you mean it when you say foreign building is repugnant to you and will not be accepted. It is just as apparent that he was not convinced by Senator Bartlett's committee.

I, therefore, propose that this committee join with the Senate Subcommittee on Merchant Marine and Fisheries of the Senate Committee on Commerce and sponsor a joint congressional resolution expressing the opposition of Congress to the building of U.S.-flag vessels in foreign shipyards while, at the same time, expressing the very real concern of Congress for an immediate start on an effective, expanded building program in American shipyards.

The adoption of such a joint congressional resolution, in my opinion, would clear the air once and for all. It would remove the uncertainty which hangs over the industry. It will give several independent unsubsidized operators the go-ahead with planned replacements they need to make. It will give the shipyards the incentive to move ahead on facility modernization and manpower programs.

Second, I would ask this committee to take careful note that the Secretary is ready to commit the administration to a 5-year program financed to the tune of $600 million per year, of which construction subsidies would account for about $222 million in each of the first 3 years and $255 million in each of the next 2 years, this to build 30 ships a year for the 5-year period.

It must be assumed this amount is what the administration can afford, because in answer to Congressman Edwards' question about Bureau of the Budget opposition, Mr. Boyd indicated that the Bureau of the Budget would be no obstacle.

While we are firmly convinced that the construction of 30 ships a year is not enough, it seems to us that the failure of the administration to act effectively to meet this dire national emergency permits this committee no alternative but to initiate immediately development of a constructive merchant marine program within the framework of the $600 million per year that the administration has indicated it is willing to spend. Ths program should insure construction of a maximum number of U.S.-flag ships in U.S. shipyards, and provide for operat

ing and construction subsidies to those segments of our mercha fleet which do not presenty enjoy such privileges.

Mr. Chairman, at this point I should like to make it crystal ca that my international union is in complete agreement with the point program submitted by Paul Hall, president of the SIT, the Maritime Trades Department, AFL-CIO. In our judgment implementation of this program as presented by Mr. Hall is ab lutely essential. I therefore would hope that any program undera by this committee would include the serious consideration of t MTD's 20-point program.

Gentlemen, as our former great President Harry S. Truman + to say, "*** the buck stops here." This buck has been passed aro and around until we are all dizzy. I feel that by the very gravezess our plight, that the buck has got to stop with this committee and Congress.

The future of our industry is in your capable hands.

The CHAIRMAN. That was a very fine statement, Mr. Groton. Downing.

Mr. DOWNING. Thank you, Mr. Chairman. Mr. Groton, you ha given us an exellent statement and in so doing have made a val contribution to the deliberations of this committee. I was interese in your statement on page 8, where you say that "the difference i tween the American ship bid and the British shipyard bid was 412 percent." Would not this contract fall within the Buy-Ameri 6-percent rule?

Mr. GROTON. Possibly so, Mr. Downing, but the facts of the mate are that Defense has waived all these provisions and are allow these ships to be put out for bids under conditions which allow British to waive all the provisions of the Buy-American Act. Mr. DOWNING. Were those provisions waived in this particu case?

Mr. GROTON. I believe so.

Mr. DOWNING. Do they have that right by law to waive the B American?

Mr. GROTON. I am not a lawyer but I assume they do if they ha been doing it.

Mr. DOWNING. Can you tell us why Great Britain was allowe participate in these bids; why weren't other nations allowed to bid

Mr. GROTON. Great Britain was allowed to participate because of arrangement made between the Defense Department and the Brit Government in relationship to the purchase of some aircraft fr United States by British in exchange for allowing Britain to bi some of the ships for the Navy.

Mr. DOWNING. Do you know this as a fact?

Mr. GROTON. This is a statement that has been elaborated on by, believe, one of the Assistant Secretaries of Defense, Mr. Henry J. Ki Jr. He has made a statement to this effect. There has been quite a of noise made about this and this is their defense. Yes, I know this a fact.

Mr. DOWNING. Thank you very much, Mr. Groton. Thank you, M Chairman.

The CHAIRMAN. Mr. Pelly.