APPENDIX A MEMBERS OF ASSOCIATION OF AMERICAN SHIP OWNERS American-Hawaiian Steamship Co., New York, N. Y. American-Hawaiian Steamship Co. (Delaware), New York, N. Y. Baltimore Insular Line, Inc., New York, N. Y. Luckenbach Gulf Steamship Co., Inc., New York, N. Y. Oliver J. Olson & Co., San Francisco, Calif. Pacific-Atlantic Steamship Co., Vancouver, Wash. States Marine Corp. of Delaware, New York, N. Y. Weyerhaeuser Steamship Co., San Francisco, Calif. APPENDIX B The privately owned coastwise and intercoastal dry-cargo fleet NOTE. The report of former Secretary of Commerce Saywer in November 1952 estimated that 154 drycargo vessels could be employed in the coastwise and intercoastal trades (no estimate of tonnage), which would comprise 8.2 percent of the 1,856 vessels aggregating 14,727,000 dead-weight tons which the report estimated should be the total United States flag deep-sea fleet. APPENDIX C CERTIFICATED WATER CARRIERS WHO HAVE SUSPENDED OR ABANDONED THEIR PREWAR INTERcoastal and CoASTWISE OPERATIONS Source: ICC Ex Parte No. 165, "Problems in the Regulation of Domestic Transportation by Water," Appendix B, p. 357 showing "Carriers Subject to Part III of Interstate Commerce Act Which Suspended Operations During the War Emergency"-checked against table 3, Department of Army, Corps of Engineers "Transportation Lines on the Atlantic, Gulf and Pacific Coasts, 1952." Mr. DREWRY. Mr. Ball, back to the prototypes which Admiral Wilson mentioned, what would be your thought as to how such a program should be developed, whether it should be developed from the standpoint of commercial needs, first, with the defense needs then being designed on to it, or build a prototype which will meet all defense needs, and then compromise down from there to get a suitable commercial vessel? I am thinking in that connection that there seems to be developing in various places in the country at present a sort of air-taxi service, and a local airmail service with the use of helicopters. The helicopter development has, of course, been almost exclusively military. I think I saw a statement the other day that to have commercially available, commercially practicable helicopters of large enough size to run a substantial profitmaking taxi service, or bus service, say, from LaGuardia Field to downtown New York, they are waiting on the further development in that field by the military in connection with the building and use of large craft of that kind. I think that is true in other types of aircraft, that the DC-3, for instance, was essentially a military development, which has turned into pretty much the workhorse of the commercial lines. Mr. BALL. It seems to me that this shipping thing is a pretty special area which involves an awful lot of factors. If either a container ship or a vehicle roll-on, roll-off ship is to be of any use in com mercial operation, the commercial operators would have to be in on it from the very beginning. It would have to be a cooperative project. I think, also, you would have to have the unions in on it, the teamsters, the railroad brotherhoods, certainly, and probably the longshoremen, because they can tie them up, too. The Interstate Commerce Commission ought to be in on it, because if you cannot get profitable, joint rail-water or truck-water rates when you get this vehicle or container in operation and going, it still will not work. You have to get a fair division of the rates to make it work. It seems to me that the situation calls for a cooperative job with all those agencies-Maritime, Defense, the unions, and the Interstate Commerce Commission-and Congress ought to be in it, because eventually Congress is going to have to do something about it, anyhow. It would probably have to be financed some way, either to loan the money, or some way to modernize the terminals. Mr. DREWRY. You feel that right now there is enough opportunity for the commercial employment of vehicle-type vessels if these various conflicting elements can be reconciled; that the movement of truck bodies, for instance, in large numbers, from Jacksonville to New York, would be a feasible thing, could be done economically, if the opposition from the unions and railroads, for instance, could be ironed out? Mr. BALL. And the capital needs met, plus the design of ships and terminals. To me, what seems to be wrong with the handling costs in the coastal and intercoastal trade, where they run into trouble competing with the trucks and railroads, is that the trucks and railroads do door-to-door pickup and delivery. They handle the cargo once at the point of origin and once at the destination. But if it goes on a ship, the way it is done now in most cases, is that it is first loaded onto a truck or railroad car at the point of origin, and at the dock it is unloaded, then it is loaded onto the ship, and the same thing is true at the other end. It is handled three times at each end rather than once. You have 6 operations in place of 2. That is a pretty tough thing to lick. It takes a terrific differential in the water rate to overcome that. Mr. DREWRY. It is not solely the rates by a long shot? Mr. BALL. No. Mr. DREWRY. Mr. Ball, in the course of earlier testimony, there has been some comment about difficulties which have been experienced by some of the subsidized operators in connection with particular reference being made to construction subsidy, where the company has thought it had an agreement and found out later that it did not seem to have an agreement, or that the rate of construction subsidy was so much higher than they had originally thought that they considered the change to be not only unjustifiable but unconscionable. Have there been, as far as the members of your group are con cerned, any instances where the sanctity of contracts has not been observed, or whether something approaching that might be subject to complaint? Mr. BALL. Yes. I recall one in the domestic trades. You are speaking about this tendency of Government contracts to be a oneway street, binding on the contractor but not on the Government? Mr. DREWRY. That is the area that is being considered. Mr. BALL. I was thinking of the domestic addendum to the general ship charter form that was entered into with the Maritime Commission under the Ship Sales Act right after the war, before many lines had made their arrangements to buy their own ships. Mr. DREWRY. Could you explain the addendum part of it? Mr. BALL. What happened was that right after the war a great many war-built ships were chartered to private operators because they needed them to carry cargoes and wanted to abandon Government operation. They were chartered on this 15 percent of the floor price, or the Ship Sales Act, whichever was lower, with, I believe, a recapture provision in it. That was the general charter. Right after the war, the coastwise and intercoastal trades looked so very unprofitable that none of the private operators were ready to attempt to private operation again. So I think beginning in 1945 or early 1946, the Maritime Commission itself operated vessels in the coastwise and intercoastal trades, using the old private operators as general agents. They lost a terrific amount of money. I forget how much. Then in 1947, the operators were willing to try private operation. They worked out a plan with the Maritime Commission to charter the vessels, but the Commission itself recognized that this 15 percent charter hire, which applied to vessels chartered for use in the foreign trades, would be prohibitive in the coastwise and intercoastal trade. So they agreed that there would be some reduction. They haggled over it for years. Actually, they had telegrams or letters of intent, and the domestic operators went ahead and chartered the vessels and started private operation of the coastwise and intercoastal trade. In 1947 they fussed around, actually, and negotiated until January of 1950, which in itself, I think, is kind of a sad state of affairs, because for 3 years they operated without knowing where they were. Mr. DREWRY. No written contract at all? Mr. BALL. No, just various telegrams back and forth and a lot of meetings and negotiations. When they did finally get the contract, the domestic addendum, which was simply an addition to the general ship charter contract which each operator had for the ships that he was chartering, and some in the foreign trade, provided for a domestic charter hire of 8% percent payable immediately, and then an additional 61⁄2 percent payable only out of earnings, out of profits, if there were any. The addendum, as it was written and approved by the Maritime Commission, and signed by the operators, provided that that 61⁄2 percent was to be paid out of profits figured cumulatively over the entire period of the charter. The Comptroller General, as has happened rather frequently in the past, criticized the cumulative feature of that very vigorously. There were some hearings before the Hardy subcommittee in the House, at which, incidentally, the operators themselves were not permitted to testify-did not get a chance to testify, at least. As a result, the Maritime Administration, in 1951, reversed itself and said that the 61⁄2 percent payable out of profits would be figured annually instead of cumulatively over the whole charter period. It so happened, after losing money heavily in 1947 and 1948, that in 1949 and part of 1950 the operators did show a slight profit, although the period, as a whole, showed a loss. Cumulatively, it was a loss. They billed the various companies for extra charter hire, and the whole matter now is in litigation. But that is another case where the operators signed a contract, the Maritime Commission approved it, and then it was a little over a year later that it was repudiated. Mr. DREWRY. And they had nothing in writing, nothing in the way of a formal contract for 3 years? Mr. BALL. That is right. It makes it a tough way to do business. Mr. DREWRY. It certainly does. I believe I have no further questions, Mr. Ball. Thank you very much. Mr. BALL. Thank you very much. Mr. DREWRY. We appreciate your indulgence in my substituting for the chairman. Mr. BALL. You do it very well. Mr. DREWRY. There being no further witnesses today, the meeting is adjourned until Monday at 10 o'clock. I will check with the chairman to see if that is satisfactory. At that time, we expect to hear from Mr. Hoyt Haddock, representing the CIÓ-NMU. The meeting is adjourned. (Whereupon, at 12:10 p. m., the subcommittee recessed to reconvene at 10 a. m. Monday, July 13, 1953.) |