Mr. HADDOCK. I can say this without any fear of contradiction whatsoever, that the other maritime nations of the world, when operating a program such as this, never permit 1 pound of such procurement to go in anything other than their own flag vessels.

Mr. DREWRY. Then, of course, a great deal of the strategic materials do not come from maritime nations.

Mr. HADDOCK. That is true. I think it would be highly desirable to obtain from General Services just what the division of these strategic materials is between American-flag and foreign-flag vessels.

Senator POTTER. That is information we will request.

Mr. HADDOCK. In January of 1953, American-flag ships carried only 25.8 percent of our foreign trade. This is only one-half of the goal we are striving for.

On November 1, 1952, the Secretary of Commerce submitted a report entitled "American Merchant Marine and the Federal Tax Policy" to the President of the United States. This report very thoroughly covered the importance of an American merchant marine for our national welfare and defense. Based on a study of the commercial needs of our Nation, the report stated that our merchant marine should consist of 2,256 ships of 25,833,000 dead-weight tons. Of this number, 1,856 ships of 21,982,000 dead-weight tons are for oceangoing requirements and 400 ships of 3,851,000 dead-weight tons for the Great Lakes.

The table showing the breakdown of this projection is as follows:

Composition of projected American merchant marine adequate for United States oceanborne and Great Lakes trades

We submit as exhibit I that section of the American Merchant Marine and Federal Tax Policy which explains the above-projected size of the American merchant marine.

The Maritime Administration is responsible for advising the Secretary of Commerce on maritime matters. Since the report was written by the Maritime Administration staff, we accept the report as one which was written by technical experts. We are quite certain that they have spent considerable time and effort before arriving at their conclusions.

We agree with the Secretary of Commerce when he states that our foreign trade in the future will expand and not contract. We do not doubt that our prosperity as well as world peace will largely depend on the ability of nations to increase their trade with other nations. This will become more important as our Nation is compelled to import greater quantities of raw materials and export more finished products. The Mesabi Range is being rapidly depleted of iron ore. In the near future, the United States will be compelled to depend upon the importation of iron ore from the rich mines of such countries as Labrador and Venezuela. In turn, we will have to export more machinery and tools to the countries that are just beginning to become industrialized. This type of foreign trade will enable the entire world to increase the standards of living. At the same time, it will teach the people that peace and prosperity are most available to those who cooperate with other nations in the efficient production and distribution of wealth.

We were quite disappointed in the fact that the Secretary of Commerce did not go far enough in his projection of the desired size of an American merchant marine. He sidestepped two issues which are most vital to achieving and maintaining an adequate United States merchant marine. The first issue is the encroachment of the military into the commercial maritime industry. The second is the dangerous practice that some of our wealthiest corporations have of maintaining large numbers of ships under foreign flags. This is especially appalling when the ships are registered under such runaway flags as Panama, Honduras, and Liberia. We shall later discuss our views on these

two points in some detail.

In our analysis we have limited ourselves to studying the needs of our oceangoing merchant marine. We have excluded the Great Lakes fleet because we feel that it is a problem which is great enough to warrant a separate study. In fact, we believe that the Maritime Administration and the Department of Defense should submit a detailed report pertaining to the adequacy of the Great Lakes fleet to your subcommittee.

We believe that our present active commercial oceangoing merchant marine should consist of 1,995 ships aggregating 25,815,000 deadweight tons. The breakdown by types of ships is as follows:

Projected American oceangoing merchant fleet consisting of ships of 1,000 gross tons and over (excludes Great Lakes)

We estimate that our passenger and combination fleet should consist of 135 ships aggregating 1,627,000 gross tons. One hundred and twenty-five of these ships are for our liner services in foreign trade and 10 for our domestic trade.

We have accepted the Maritime Administration's basic figures of 62 passenger and combination ships for our foreign trade and 10 ships for our domestic trade, excluding the Great Lakes. The aggregate tonnage of these 72 ships is 790,000 gross tons.

Officials in the Maritime Administration have advised us that they have made a careful study of the needs of the various trade routes. Their figures closely jibe with the number of United States-flag passenger and combination ships in foreign-trade operation in 1939. In the period 1931 to 1940, our passenger fleet was larger than it is today. În that period, there was an annual average of 481,720 passengers arriving in the United States by sea, and 498,230 departing from the United States by sea. This was an average annual total of 979,950 passengers carried to and from the United States by sea. In 1950 there were 601,543 passengers arriving in the United States by sea, and 467,105 departing from the United States by sea. This was a total of 1,068,648 passengers carried to and from the United States by sea. In 1951, a total of 946,495 passengers were carried to and from the United States by sea. Thus, the number of passengers traveling to and from the United States is the same today as it was in the 1930's. However, our present passenger fleet is smaller than it was in the 1930's. Our passenger vessels cannot meet the demand for space at present. In 1939, for example, our passenger and combination fleet consisted of 62 ships of 590,000 gross tons. This number of ships and gross tonnage is in line with the 62 ships recommended by the Maritime Administration.

Mr. DREWRY. I was looking at this chart on page 24. Could you turn back to that? I do not quite understand it. Under "Passenger and combination" vessels is the only place you have any figures at all. Do you have similar breakdowns for the tankers and freighters? I see you have 200 passenger and combination tramp ships, for instance, as I read the chart.

I would assume that would be under the freighters.

Mr. HADDOCK. Well, they are not shown there. The freighters are shown in your totals up at the top.

Mr. DREWRY. Just for example, you have 200 tramps listed under passenger and combination, but they are not to be passenger and combination ships.

Mr. HADDOCK. They are not passenger and combination.

Mr. DREWRY. I wonder if there is an error in that chart which you might correct.

Mr. HADDOCK. There is certainly an error in putting it in there. Mr. DREWRY. You say there is an error?

Mr. HADDOCK. Yes.

Mr. DREWRY. Would you want to correct that?

STATEMENT OF BEN J. MAN, RESEARCH CONSULTANT, CIO MARITIME COMMITTEE

Mr. MAN. Yes, that "601" and the "200."

Mr. DREWRY. Do you have your other ships broken down into these different categories? On this particular table, the only breakdown you have is under the "Passenger and combination." You do not, for instance, show the total number of freighters that would be in the domestic trade and the total number in foreign?

Mr. MAN. That is explained a little later on, Mr. Drewry. It does show 205 in the "Gross tonnage" under the "Passenger and combination" column, which also moves under "Freighters." That shows that domestic freighters would be 205. That is the Maritime Administration's projection, which we have accepted.

Mr. DREWRY. You say that is shown elsewhere in here?
Mr. HADDOCK. It is explained in the text.

Mr. MAN. That whole column on the gross tonnage should be shifted over under "Freighters" as the first column. There is a typographical error.

Mr. HADDOCK. At the present time, the Military Sea Transportation Service is operating 63 passenger-type ships aggregating 837,000 gross tons in their so-called nucleus fleet. These ships are operated by the military to transport troops, troop dependents, civilian employees of Government agencies, contractors employees, et cetera. Most of these ships are operated between points which are serviced by privately owned merchant ships.

A short time ago, we submitted detailed testimony to your committee pertaining to the encroachment of MSTS into our maritime industry. Therefore, we will not burden you with a repetition of what we have already said. However, we wish to repeat that we believe that our merchant marine should transport our troops, their dependents, and all passengers now carried by MSTS. This will strengthen our merchant marine and, at the same time, make some naval officers available for our combat ships where they belong and are really needed.

Mr. DREWRY. Your testimony that you submitted earlier was on what bill? Do you remember the number of it, just as a matter of reference for the record?

Mr. HADDOCK. I am not sure there was a bill in evidence. It was the hearings conducted by the similar subcommittee in the previous Congress, which Senator Magnuson presided over. A bill was introduced, I believe, after the hearings instead of before. It is in those hearings.

Mr. DREWRY. In the 82d Congress?

Mr. HADDOCK. Yes.

Senator POTTER. It is your contention that the cargo and passengers that are now being transported by MSTS could be transported by commercial liners?

Mr. HADDOCK. Absolutely. We can see literally no justification for the military transporting passengers and cargoes.

Mr. DREWRY. Not any?

Mr. HADDOCK. Not one. The only time I would-well, I cannot justify any of it. If there should be the necessity of transporting troops or cargoes to some place where they cannot obtain commercial

ships to carry it, then it should transport it. But if we reach the point where they cannot obtain commercial ships to transport their stuff, we ought to examine the heads of our commercial operators to find out what is wrong with them. That is my contention, very simply.

Senator POTTER. In other words, you do not believe in a half a loaf; you believe in a whole loaf?

Mr. HADDOCK. I believe in a whole loaf. We cannot have a half merchant marine. Experience has shown that. We have to have a whole one. I feel quite strongly that our Navy, our Army, and our Air Force have a big specific job to do, a bigger job than they are capable of doing, and they need all of their resources to do that job. They need all of the help of the American people and of the American industry to accomplish that job. There is only one way to get it, and that is for them to stick to the things that they are best suited to do, and let American industry do the things that it is best suited to do.

Senator POTTER. You think when certain emergencies come along, such as the Korean emergency, the ships could be pulled out of the reserve fleet and operated by American operators, private operators, just as well as for the Government to do it?

Mr. HADDOCK. No, I would not say "just as well"; I would say far better. Experience has shown that they operate them far better. It would be very interesting to see an efficiency chart on the utilization of ships by MSTS. I think you would probably have your eyes opened, if you could get it. I know from the experience of World War II, and from the experience that is going on now, some of the things we know of that have happened with their ships, that no commercial operator would permit such wastefulness. War, in itself, is synonymous with waste. I think the military, by their training and by their experience

Senator POTTER. Are not the most frugal people?

Mr. HADDOCK. They just do not have the makeup to be efficient operators. I am not saying that critically. That is part of their makeup. They want to get the "mostest" there in the "soonest" in the "greatest."

Mr. DREWRY. You want that to be done, too?

Mr. HADDOCK. We want it to be done, too. But they go about it in a different way. For example, take the operation of a ship. Well, to them, it is most efficient to have three men doing every job. In case there is a casualty, they still have a man to do the job. Well, a steamship company simply looks at it differently.

Experience has shown, certainly in the 2 wars that we have been in, or the 3 wars, counting the Korean war, which is probably as great a war as World War I from the viewpoint of logistics, the commercial companies have done the job better and cheaper than the military can do it.

Our freighter fleet should consist of 1,006 ships aggregating 10,606,000 dead-weight tons.

We have accepted the basic Maritime Administration estimate of 205 freighters for our domestic trade, excluding the Great Lakes; 430 ships for our foreign-liner services; and 200 tramp ships. The aggregate tonnage of these ships is 8,950,030 dead-weight tors.