STATEMENT OF HON. JOSEPH H. BALL, VICE PRESIDENT, ASSO CIATION OF AMERICAN SHIPOWNERS

Mr. BALL. Mr. Drewry, my name is Joseph H. Ball. I am vic president of the Association of American Shipowners, which is com prised of a number of old, established shipping companies, none o which has received any subsidy under the Merchant Marine Act of 1936. A list of our member companies is attached at the end of my statement as appendix A.

Mr. DREWRY. Could I ask you for the same information that I just asked for from Mr. Clark, the number of ships and types of ships operated by your members and if they are in more or less regular service, and an indication of the services?

Mr. BALL. Yes.

(The material referred to is as follows:)

We believe that Congress is the proper body to determine the size and composition of the American-flag merchant marine required in the national interest, with the help and cooperation of all whose views may be helpful, including, of course, those executive departments most closely concerned, such as Commerce and Defense.

The enactments of Congress probably affect the merchant marine to a far greater degree than most industries. The strength and perhaps the very existence of American-flag shipping depend upon policies formulated by Congress. For example, war-built ships purchased under the terms of the Ship Sales Act of 1946, enacted by Congress, are all but a few of the vessels in the fleet today. Congress excluded foreign competition from the domestic trades, and the 55 vessels serving noncontiguous territories of the United States constitute one of the strongest segments of our fleet, small as it is. The 275 vessels in foreign trades receiving operating subsidies under the 1936 act passed by Congress are another segment of strength in our fleet, while the requirement by Congress in many postwar acts that at least 50 percent of foreign-aid cargoes must be transported in American-flag vessels has aided substantially in keeping a sizable privately owned fleet on the seas.

The 240 dry-cargo American-flag vessels which were operating without subsidy in the foreign trades on March 31 constitute a very weak segment of our privately owned fleet. The 50-percent requirement on foreign-aid cargoes has been especially important to these vessels. The probabilities are that many of them will find it impossible to continue profitable operations once there are no more foreign-aid cargoes.

What Congress does in the future, first, in setting goals as to the size and composition of the fleet required in the national interest, and then in adopting policies designed to achieve those goals, undoubtedly will be the dominant factor in determining what kind and how large a fleet we have under our flag in the future.

The Department of Commerce seems to be the appropriate agency to estimate the size of fleet necessary to protect our commerce in time of peace, just as the Defense Department is the logical one to estimate with reasonable accuracy the active fleet needed initially as a defense auxiliary in case of war. We have followed their presentations to your subcommittee with great interest.

It does appear to us that one aspect of the problem has been overlooked so far in their testimony. That is the extent to which our national interests are served by foreign-flag vessels owned by American citizens. If our public policy as to commerce and defense can be satisfied by investment of American capital in lower-cost foreign shipping services, the shipping industry should know it.

It was reported recently that United States citizens have built 239 vessels of nearly 5 million dead-weight tons abroad since the war. It is generally said that vessels under our own flag are preferable, primarily because of the shipbuilding and operating skills they keep alive among citizens. We believe this is true, and that Congress will reaffirm it. But the large tonnages of foreign-flag vessels operated and being built by American citizens raises a question that seems sufficiently important for this subcommittee to ask that the executive departments make some evaluation of it in their estimates.

Our association has studied with much interest the reports and estimates as to the American merchant-marine needs and possibilities which have appeared almost annually since the end of World War II, beginning with the Harvard report, and including Maritime Commission studies, the President's Advisory Committee, the report of the Magnuson subcommittee and the most recent report of former Secretary of Commerce Sawyer.

I have been reviewing those reports and studies recently, and particularly those portions dealing with the coastwise and intercoastal trades. A number of our member companies are engaged in those trades, and I believe that there is general agreement that the coastwise and intercoastal fleet, as of today, constitutes one of the very weak segments of our merchant marine. The disposition of the active American-flag fleet of oceangoing vessels at the time a major war occurs can be tremendously important in the initial phases of the war. In both World Wars I and II, the coastwise and intercoastal fleet, because of its ready availability, was the first to be requisitioned and proved to be of great value in the opening phases of both conflicts.

We believe this subcommittee, as part of its overall task, will want to consider whether some Government effort should not be devoted to strengthening of these domestic trades which, in the past, have supplied a variety of vessel types readily available to the Nation in time of emergency. Once this subcommittee, after this current set of hearings, makes its recommendations as to the goals in size, composition, and disposition of the active merchant marine required in the national interest, our association will be prepared to offer suggestions as to policies we believe would be helpful in attaining such goals, not only in the domestic trades, but also in the foreign trades.

Since most of the testimony heretofore has concerned the foreign trades, it might be helpful now to review briefly the situation in the coastwise and intercoastal trades. I have concentrated on them because the fleet engaged in trades with the noncontiguous territories, with the exception of the Alaskan trade, appears to be in a relatively strong position.

Just for my own information, I abstracted from the various reports and studies I reviewed, the estimates of each as to the size of coastwise and intercoastal dry-cargo fleet which might either find employment or was needed in the national interest after the war, together with the size of such fleets as of 1939 and March 31, 1953. For purposes of comparison, I also included the total size of the United States fleet in each column and the size of the intercoastal fleets as a percentage of that total. The table is attached to my statement as appendix B.

The table shows graphically how prospects in the coastwise and intercoastal trades have deteriorated. In 1939, the fleet comprised 378 vessels totaling 2,570,000 deadweight tons. The first postwar study, made by the Harvard Graduate School of Business Administration in June 1945, estimated that a minimum of 250 and maximum of 478 vessels could be employed in these trades after the war. These vessels would have comprised from 29 to 36.6 percent of the total United States-flag fleet which the Harvard report estimated could find active employment after the war. In 1939, the coastwise and intercoastal fleets comprised 34.6 percent of the vessels and 27.6 percent of the deadweight tonnage under the American flag.