Mr. Pimper, will you explain that to the chairman, if you will? Mr. PIMPER. After the Commission approves it, we send them a contract of sale, which embodies the conditions and terms of sale of the vessel. He is given 15 days within which to return that general order signed, accompanied by a deposit of 10 percent of the unadjusted statutory sales price.

The CHAIRMAN. Accompanied by a deposit of 10 percent of the unadjusted statutory sales price?

Mr. PIMPER. Yes, sir. In the case of a T-2 tanker, that 10 percent would amount to $202,000, and in the case of a Liberty ship it would amount to about $55,000.

The CHAIRMAN. You sold them all in the last part of November, and the 15 days you speak of would be up a long time ago, is that not correct? Did you get them all back in 15 days?

Mr. PIMPER. You cannot send them all out in one day.

The CHAIRMAN. I mean the applications.

Mr. PIMPER. The contracts cannot all got out in one day.
The CHAIRMAN. They cannot all go out?

Mr. PIMPER. No, sir.

The CHAIRMAN. Well, with respect to the contracts, how many were there? There were only about a hundred of them, were there not? You could dictate enough letters to take care of all of them in a couple of days, so that a contract could be sent to each person? Mr. PIMPER. They went out quite promptly, Mr. Chairman, I

assure you.

The CHAIRMAN. What do you mean by that? Would that be a week or two or three after this so-called report of sale-just roundlybecause I do not understand somebody coming in now and saying, "I do not want them."

Mr. PIMPER. Well, you see

The CHAIRMAN. When did you send a letter to each one of these people that you approved back in November, saying to them. “Herewith is the contract. Return it in 15 days" with so much money.

Mr. PIMPER. I think they all went out within a month after the time.

The CHAIRMAN. Within a month?

Mr. PIMPER. The last of them were approved sometime about the middle of December. That was when we approved the T-2 tankers. The CHAIRMAN. But it took a month to send out a letter saying, "Herewith is the contract. Return it within 15 days."

Mr. PIMPER. The Commisison allocated those tankers, and the Commisison had to make specific terms with respect to each of the applicants. Some of them wanted credit; some of them paid cash. The CHAIRMAN. Some were credit, some were cash?

Mr. PIMPER. Yes.

The CHAIRMAN. But with a contract it took you nearly a month to send out the contracts, and then each one got 15 days?

Mr. PIMPER. I do not think the specific determination as to the financial ability, and so forth, of all of the applicants was made until about the first of January or thereabouts.

The CHAIRMAN. I thought that the procedure you followed was to send out a contract, and after you had the contract then you determined whether he was financially able, is that not correct?

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Mr. PIMPER. No, sir.

The CHAIRMAN. It looks like the tankers have not been sold yet. Mr. PIMPER. We determine his financial standing and ability to go through with the deal before we send the contract, and then he signs the contract first and later we sign it.

The CHAIRMAN. He signs it first, and then later you sign it?
Mr. PIMPER. Yes. And when we sign it, it is a bill of sale.

The CHAIRMAN. If that is the way you do it, how was that man just the other day able to turn back six, if you determined all that in advance? How many people altogether did not take the tankers that were allocated to them? If you determined it all in advance, as you just said, how did that come about? Now, here are six. You evidently did not determine those six in advance. What is the reason for the six if the determination was made in advance?

Admiral SMITH. There have not been more than half a dozen of them altogether that have been turned back. One of them, for example, is a very reliable operator, and he wired in and asked for an extension of time. We gave it to him.

The CHAIRMAN. You did not determine his financial ability in advance then, did you?

Admiral SMITH. We knew.

The CHAIRMAN. You knew about his financial ability?

Admiral SMITH. We know that he has the financial ability, but he had to get just a little bit more money in order to go through with

the sale.

The CHAIRMAN. In other words, what you are saying is that he finally found out that he did not have the financial ability, that he had made a mistake?

Admiral SMITH. He had the financial ability for everything he was doing at the time. He is an operator, but he could not expand. He thought he could.

The CHAIRMAN. He thought he could?

Admiral SMITH. Yes.

The CHAIRMAN. So now there are six like that which have come back. Is there an opportunity for any more of them to do the same thing, and have the Government operate them? Does such a possibility exist?

Admiral SMITH. No, sir.

The CHAIRMAN. There is no opportunity for these other people to change their mind on the tankers then, and you only have six among those allocated and approved that have been turned back?

Admiral SMITH. Yes.

The CHAIRMAN. All right.

Mr. JENKINS. Mr. Chairman, might I suggest that the Admiral has not yet answered your question.

Admiral SMITH. Which one?

Mr. JENKINS. What happened to the six.

The CHAIRMAN. Yes, what happened to the six? Did you sell those to somebody who had cash in hand? I mean you have had more applicants for tankers than you had tankers, and there have been people around with cash in hand who were willing to take them, where, as, and if.

Admiral SMITH. These were turned in the day before yesterday. The CHAIRMAN. I see.

Admiral SMITH. The Commission is meeting on them this morning. The CHAIRMAN. Do you have somebody who wants to pay cash now?

Admiral SMITH. We have plenty of them. We try to be fair and allocate them in a fair manner, and not give them all to one man. The CHAIRMAN. All right.

Admiral SMITH. Probably half a dozen operators will get one each in this case.

The CHAIRMAN. With reference to the sale of them, we have them all actually sold except the six now, is that correct?

Admiral SMITH. Yes, sir, they will all be sold.

The CHAIRMAN. And of course those that you say are sold, how many of them are you still operating under this general agency? Admiral SMITH. Seventy-one.

The CHAIRMAN. You mean you just approved the sale but you are still operating 71?

Admiral SMITH. We have signed contracts for them, and the operators are begging to get them, and we will give them to them as soon as we can do it without interfering with the delivery of this oil to the eastern seaboard during this cold weather. We do not want to lay them up too long. We may run them on one more trip, until there is a break in this cold weather and we have a lot of new ships coming in. Even some of these foreigners who have taken their ships out of lay-up have agreed to run one ship to the east coast of the United States. I believe the situation has eased now, and as soon as we can we will gladly turn these over to the operators. We do not want to run them.

The CHAIRMAN. Can you not do that administratively with reference to how much credit they are going to get? That can be done with out Government operation, can it not? By continuing Government operation, that just goes on and on. If they are sold, they are sold.

Amiral SMITH. We will continue the Government operation to make sure the oil is delivered. We do not want to interrupt the delivery of that oil.

The CHAIRMAN. To make sure it is delivered?

Admiral SMITH. Make sure that the pipe line is kept open and the oil comes in to the eastern seaboard of the United States, because as soon as we say, "All right, you can have that ship," he just does not go aboard it. He puts it in the shipyard and has to survey it and drydock it. That takes a little time, as you can well appreciate, and it may lose a voyage.

The CHAIRMAN. In order to see that this oil was coming into the New England States last June, we had some hearings before this committee about that, and at that time the Government-owned tankers had been hauling petroleum and petroleum products from continental United States to foreign countries. Has that practice continued right down to the present time?

Admiral SMITH. NO.

The CHAIRMAN. The Government-owned tankers were doing that. Admiral SMITH. No. We have not had one like that since last November.

The CHAIRMAN. With reference to the oil from the New England States and that was one of the stories that came to our attention and was written up in all the newspapers last June, and a lot of people came up here and listened to the statement that you must have general agency, and the extension of general agency for tankers, so that people in the New England States would not freeze.

Admiral SMITH. It is more than New England.
The CHAIRMAN. What was that?

Admiral SMITH. It is more than New England.

The CHAIRMAN. Well, in New England and the east coast.
Admiral SMITH. The eastern seaboard.

The CHAIRMAN. Yes. Somebody said it was colder up there in New England than it was anywhere else and because of that they needed it more, but anyhow that was the story, and the petroleum people came in and said, "We have all the tankers that are needed for domestic use, to haul domestically, and we have enough for all increases, but the need with reference to tankers is world-wide to haul from one foreign country to another," and they said that they would not purchase any more. Do you remember that?

Admiral SMITH. Yes, sir.

The CHAIRMAN. You remember that, do you not?
Admiral SMITH. Very well, sir.

The CHAIRMAN. And from sometime after the first of July, nobody purchased any. You had around 250, and this committee was desirous of your selling them. Then sometime after that, did not the people who owned the American flag tankers, did they not use those to haul petroleum away from this country, and did they not charter the Amercan flag tankers that they said were for domestic use? Did they not charter them for foreign use?

Admiral SMITH. Yes.

The CHAIRMAN. Is that not a fact?

Admiral SMITH. That is correct.

The CHAIRMAN. And only recently you had some record-or are they required to give you a report if they charter a tanker for a long period of time to a foreign country? Are you supposed to have a report from the American flag operator if they charter a vessel?

Admiral SMITH. The purchaser from us, if he makes a contract to charter his ship in foreign trade for a period of more than 1 year to an alien, must get the approval of the Maritime Commission. The CHAIRMAN. That is the one that you are going to sell to? Admiral SMITH. Yes.

The CHAIRMAN. That is any American flag operator?

Admiral SMITH. Yes, sir.

The CHAIRMAN. Any American flag operator or owner of a tanker? Admiral SMITH. Yes, sir.

The CHAIRMAN. If he is going to charter to a foreigner for how long?

Admiral SMITH. For a period of more than 1 year.

The CHAIRMAN. He must give you a report in that event; is that correct?

Admiral SMITH. We have reduced that recently.

The CHAIRMAN. With reference to those who make voyage charters to a foreign country for less than a year, they are not obliged by law to give you any report, are they? Is that correct?

Admiral SMITH. They are now; yes, sir.
The CHAIRMAN. They are now?

Admiral SMITH. Yes, sir.

The CHAIRMAN. When did you start that?
Admiral SMITH. A few weeks ago.

The CHAIRMAN. A few weeks ago?

Admiral SMITH. Yes.

The CHAIRMAN. Up to now and during the last 18 months when the oil shortage was accruing, the owners of American flag tankers have been able to charter them for less than a year to foreigners and haul oil for foreigners and make voyage charters and haul for foreigners, hauling away from this country; is that not correct?

Admiral SMITH. Yes.

The CHAIRMAN. That is correct; is it not?

Admiral SMITH. Yes, sir; that is correct.

The CHAIRMAN. And they have been doing that, is that not true?
Admiral SMITH. That is true.

The CHAIRMAN. You say that is true?

Admiral SMITH. Yes. It has been changed recently.

The CHAIRMAN. But it has been changed just 2 weeks ago. It has been a cold winter up to now. Now, you have had a report just recently, have you not, of the owner of a large American-flag tanker being chartered to some foreign government for 3 or 4 years?

Admiral SMITH. We have one case.

The CHAIRMAN. Is that the one that took place in just the last few weeks?

Admiral SMITH. I would like for Mr. McGuire to discuss that. The CHAIRMAN. What government was it chartered to, the French Government?

Admiral SMITH. Mr. McGuire?

Mr. MCGUIRE. My name is Charles H. McGuire. Do you want me to answer that?

The CHAIRMAN. Yes, what government was it chartered to? Was it the French Government?

Mr. MCGUIRE. The ship you refer to, Mr. Chairman, is the Ulysses. The CHAIRMAN. That what?

Mr. MCGUIRE. The Ulysses.

under Panamanian registry.

Owned by American interests but

The CHAIRMAN. Under Panamanian registry?

Mr. MCGUIRE. Yes, sir. It was chartered to the French Government for eight consecutive voyages, which will take approximately 1 year, to perform at a very lucrative rate, I might add.

The CHAIRMAN. A high rate?

Mr. MCGUIRE. Yes.

The CHAIRMAN. What is the rate?

Mr. MCGUIRE. The Maritime Commission basis, plus 75 percent. The CHAIRMAN. What is the Maritime Commission basis for tankers that are chartered?

Mr. MCGUIRE. The Maritime Commission basic scale is $2.85 per ton from the United States.

The CHAIRMAN. That is the basic Maritime Commission rate?

Mr. MCGUIRE. Yes. It is scheduled on the level of $2.85 per long ton of cargo from the United States Gulf to north of Cape Hatteras.