The only part of the above estimate which can be considered controversial is that pertaining to the tramp fleet. The Maritime Administration accepted the recommendation contained in Report of the Tramp Shipping Committee to the Maritime Commission. This report was dated August 5, 1949. The report stated that 200 American tramp ships were required if 50 percent of our postwar foreign trade were to be carried by American ships. The report has been a controversial one since it was released.

On June 16, 1953, Rear Adm. R. E. Wilson, deputy commander of the Military Sea Transportation Service, advised your subcommittee that a United States tramp fleet should be maintained. This is further support to the position taken by the Maritime Administration.

We accept the estimate of 200 tramp ships as the number required if our ships are to carry at least 50 percent of our exports and imports. However, we believe that the experts in the Maritime Administration should conduct an up-to-date study in order to arrive at the necessary number of tramp ships for our merchant marine.

Senator POTTER. Do you know when the study was taken by the Tramp Committee that reported to the Maritime Board?

Mr. HADDOCK. I believe it was 1946 or 1947. I thought I pointed that out.

Senator POTTER. Yes; August 1949 the record was submitted. Mr. HADDOCK. That is right. That study covered a 3- or 4-year period.

Mr. DREWRY. That report was not adopted officially by the Maritime Commission, was it?

Mr. HADDOCK. No; it was not.

In our estimate, we have included 96 freighters, aggregating 1,056,000 dead-weight tons, which are now being operated by the Military Sea Transportation Service in their nucleus fleet. These ships should be operated by commercial operators. MSTS should operate only those ships which are combat auxiliary ships that service the naval combat ships under combat conditions. There is as little need for the military to operate commercial-type ships as there is for their operating railroads, automobile and airplane factories, etc.

In our freighter estimate, we include 75 dry-cargo ships, aggregating 599,682 dead-weight tons, which are operated under foreign flags and owned by subsidiaries of American companies. Sixty-two of these ships, aggregating 363,082 dead-weight tons, are in actual operation. Thirteen ships, aggregating 236,600 dead-weight tons, are being constructed and will be registered under foreign flags.

Ships of 1,000 gross tons and over under foreign flag and owned by affiliates of parent companies incorporated in the United States, as of Jan. 1, 1953

All of the bulk and ore carriers in our table are owned by affiliates of large American corporations. The following table gives the ownership of these ships:

Bulk and ore carriers of 1,000 gross tons and over under foreign flag and owned by affiliates of major United States companies

There is no excuse in the world for such companies as the Aluminum Corporation of America, Republic Steel Corp., Bethlehem Steel Corp., or any other large American company to own and operate their ships under foreign flags.

It is paradoxical that the large companies that dodge paying American taxes are the same ones having large foreign holdings which require the protection of our Government. To realize a few more dollars in profits, these companies man their ships with alien seamen from low standard-of-living countries. Unlike our seamen, the seamen sailing these ships are not screened for loyalty. Should an all-out war break out, we can only hope that these ships will be available to the United States.

Mr. DREWRY. Are these ships in this table under the runaway flags that you mentioned, Mr. Haddock?

Mr. HADDOCK. Yes, they are.

Mr. DREWRY. Those runaway flags, I believe, are also the flags of nations which I believe Admiral Wilson referred to as being under effective control.

Mr. HADDOCK. You know, I think that is about the silliest idea that a person can get. We came out of World War II where we see vessels under these very flags, manned by foreign seamen, not available to the United States. Any responsible person who can look back at the hindsight we have-and I am certainly one to admit that hindsight is better than foresight with me-but you can look at this clear experience of American-owned ships under those runaway flags, if you will, under Panamanian flag, yet not available to the American Government because they were manned by crews of the countries that we were fighting.

The Maritime Administration transferred a ship just last week. That ship is going to be manned principally by Italians. Well, now, the greatest incidence of Communists on ships are Italians and French. If anyone in his right mind can think that a crew which is predominantly Communist is going to turn those ships over to the allies, should we get into a war with the Soviet Union-I do not know, maybe it is my brain processes that are bad. But I cannot, for the

life of me, conceive of those ships being available to the allies unless they are covered with warships all the time, and then I am not sure that they would not be sunk.

Senator POTTER. This American-owned ship was allowed to be registered under the Italian registry?

Mr. HADDOCK. She was actually sold to the Home Line. I think it is a foreign corporation. I am not sure. It may be an American corporation. Anyway, she went to the Panamanian flag, I believe. Ben, do you recall what flag she went to?

Mr. MAN. It is Panamanian registry, but I do not know if the Home Line is a subsidiary of an American corporation or not. We could find out for you.

Mr. HADDOCK. I just do not know how people can arrive at those conclusions at all.

Senator POTTER. In other words, it is your feeling, which is a contradiction to Admiral Wilson's testimony, that ships registered under Panamanian flag, or Liberian flag, or whatever it might be, those ships are not ships we can depend on in an emergency?

Mr. HADDOCK. Absolutely not. The only way we can depend on one of them is if they are manned by American seamen. Mr. DREWRY. What do you mean by "runaway flag"?

Mr. HADDOCK. Well, these are flags of convenience, if you will. Mr. DREWRY. It is the operator who runs away, and not the flag? Mr. HADDOCK. That is right. The American operator, finding that he can make more money operating his ship under a foreign flag, takes his ship out from under the American flag, and puts it under the flag of some foreign nation where the most money can be made. It is a flag of convenience, and it is very similar to-well, I guess we probably stole the term from runaway companies. We have runaway companies that are moving out of highly industrial areas, such as around the Great Lakes and around New York and down the east coast and the New England States, and going down to Southern States where they have cheaper taxes, cheaper labor, cheaper utility rates, in some instance, avoiding unionization. Those are normally referred to as runaway companies.

I suppose we borrowed this phrase "runaway flag" from the runaway company concept.

It is a method of reducing expenses, running away from responsibilities. That is what it boils down to.

Our estimate of an American tanker fleet is 854 ships aggregating 13,581,780 deadweight tons. Four hundred and eighty-four tankers, aggregating 7,592,000 deadweight tons are from the estimate arrived. at that the Maritime Administration.

In our estimate, we include 69 tankers aggregating 1,152,300 deadweight tons which are operated by the Military Sea Transportation Service in their nucleus fleet. These tankers are commercial ships performing a function which is strictly civilian.

In our estimate, we include 339 seagoing tankers aggregating 5,502,732 deadweight tons, operated under foreign flag by affiliates of American companies. Of these 339 tankers, 281 aggregating 4,111,320 deadweight tons, are now under foreign-flag operation, and 58 tankers aggregating 1,391,000 deadweight tons are being constructed for foreign-flag operation.

Two hundred and forty-seven, or 88 percent of the 281 tankers actually in operation, are owned by 5 large oil companies. Fifty-four, or 93 percent of the 58 tankers under construction for foreign-flag operation are owned by the same 5 large American oil companies. The numbers and tonnage of the tankers owned by the five large oil companies are as follows:

Seagoing tankers of 1,000 gross tons and over under foreign flag and owned by affiliates of major oil companies incorporated in the United States as of Jan. 1, 1953

120 tankers are jointly owned by Socony-Vacuum Oil Co., and Standard Oil of New Jersey.
250 tankers are jointly owned by Standard Oil of California and Texas Co.
Source: U. S. Maritime Administration.

We are amazed that our Government does not compel these oil companies to return to the American flag. They operate most of their ships under such runaway flags as Liberia, Honduras, and Panama. They man their ships with crews from low-standard-ofliving countries. These crews are not screened for loyalty as are our American seamen.

We have often heard the argument that the American companies transfer their old tankers to foreign flags and operate their new tankers under the American flag. This is not true. In their annual report, Lloyd's Register of Shipping reported that only 5 percent of the tankers registered under the American flag were under 5 years old. On the other hand, the percentages of tankers under 5 years old in the runaway flag fleets was as follows:

Honduras..
Liberia...

Panama..

Percent

60

78

31

We are hopeful that this subcommittee will act to bring all runaway ships under the American flag. Only by so doing will you compel these large corporations to operate for the benefit of our Nation.

The size, speed, and design of our ships will vary according to the trades served. Also, national-defense requirements will be a modifying factor on the decisions of the shipowners. For example, the passenger service in the North Atlantic could well use more ships of the size of the steamship America or even the steamship United States. In this particular service, American ships are carrying approximately 25 percent of the passengers traveling to and from the United States.

Admiral Wilson stated that the Defense Department considers freighters having the general characteristics and capacities of the C-2's and C-3's as good ships from the commercial and military

points of view. We agree with the Department of Defense. However, each company will best know the type and size ships needed in each particular trade. This reasoning also applies in the case of the tanker fleet.

Because Mr. Earl Clark, Deputy Maritime Administrator, thoroughly covered the problem of block obsolescence, we shall be brief in our opinions on this subject.

It is indeed appalling to realize that we are at the brink of a world war with 56 percent of our merchant ships classified as poor by the Maritime Administration. Thus, out of the total number of 3,348 active and inactive ships in our merchant marine, 1,875 are ready for the scrap pile. This is not surprising when we realize that 1,713 ships in our merchant marine are obsolete Liberty-type ships.

Our Nation has never had as clear a warning of impending war as the one given to us by the Communists. Despite this warning, our policymakers, both administrative and legislative, believe that we need not start building modern merchant ships to keep the fighting away from our shores.

At the outbreak of the Korean war, there were only 20 merchant ships of 1,000 gross tons and over under construction in the depressed American shipyards. On that date, employment in ship construction and repair was only 42,500. By September 1952, there were 111 ships under construction in American yards. The total ship construction and repair employment was 98,000.

On January 1, 1953, there were 92 merchant ships of 1,000 gross tons and over under construction in American yards. Of these ships, 29 were the high-speed Mariner-type cargo ships, 55 were tankers, 7 bulk carriers, and 1 ferryboat. On January 1, 1953, employment in our shipyards decreased to 95,353. Of these 92 ships, only 30 will not be completed this year. By 1955, there will be only 2 ships of the 92 remaining under construction. This means that incoming orders in our ship-construction industry are at the lowest ebb since 1946. In fact, there have been no new orders for oceangoing ships placed with our shipyards in the last 6 months.

According to figures recently released by the Shipbuilders Council of America, the number of merchant ships of 1,000 gross tons or over being built or on order as of January 1, 1953, in the principal shipbuilding countries of the world are as follows:

The 92 ships under construction in American yards aggregate 1,985,980 dead-weight tons. Of this tonnage, 803,500 are for foreign flags. These ships are being built in American yards (1) because of