American Export Lines, Inc., 25 Broadway, New York, N. Y.-Continued 2. Operating differential subsidy: Accruals, July 1, 1937, to June 30, 1945. Less recoveries as of Jan. 1, 1948. Net accruals as of Jan. 1, 1948.. $5,875,844, 63 $5,875, 844. 63 $455, 152.93 21, 324, 134. 88 3. Charter hire payments to owners of vessels (not under Merchant Ship Sales Act of 1946): Estimated accruals, May 1, 1941, to Sept. 1, 1947.. 4. General agency fees: Jan. 1 to Dec. 31, 1942.. Jan. 1 to Dec. 01, 1943. Jan. 1 to Dec. 31, 1944. Jan. 1 to Dec. 31, 1946. Jan. 1 to Dec. 31, 1947. Total general agency fees, Jan. 1, 1942, to Dec. 31, 1947. $444, 498. 79 3, 165, 027. 87 5. Payments for purchase (or loss) of ships from Apr. 1, 1941, to Dec. 31, 1947: Total, Apr. 1, 1941, to Dec. 31, 1947. Total, item Nos. 1 to 5. $7,780, 279. 07 3, 193, 345. 98 10, 973, 625. 05 $10, 258, 608. 01 13, 899, 004.83 6. Claims for adjustment of purchase price (sec. 9, Merchant Ship Sales Act of 1946). 8. Tax exempt (see note) statutory capital reserve fund (sec. 607, 1936 act), Gross deposits: July 1, 1937, to June 30, 1945. Total, July 1, 1937, to Jan. 1, 1948 1 9. Tax exempt (see note) statutory special reserve fund (sec. 607, 1936 act) exemption for deposits used to defray operating losses, to meet recapture liability and with approval of Commission transferred to capital reserve fund and utilized for purposes of such fund. Gross deposits: July 1, 1937, to June 30, 1945. July 1, 1945, to Jan. 1, 1948. Total, July 1, 1937, to Jan. 1, 1948. 10. Charters of Government-owned vessels (interim and ship sales charters): Payments to Government: March to Dec. 31, 1946. Jan. 1 to Nov. 30, 1947. Profits including overhead in excess of charter hire pay ments to Government: March to Dec. 31, 1946. Jan. 1 to Nov. 30, 1947. Total, March 1946 to Nov. 30, 1947. NOTE.-Reports from company beyond Nov. 30, 1947, not available. 11. Application to purchase and actual sales under Merchant Ship Sales Act of 1946; charters under that act; and vessels owned by chartering companies: NOTE. While the statute (sec. 607 (h)) denotes deposits in the capital reserve fund and special reserve fund of the operators as exempt, agreements entered into between the Bureau of Internal Revenue and the 12 presently subsidized lines terminate total exemption as of the end of 1942, provide for full tax liability for earnings of 1943 to 1946, inclusive, and tax deferment with respect to capital gains during such years and tax deferment with respect to 1947 and all subsequent years. Includes $4,181,770 transfer from statutory special reserve fund. American Mail Line, Ltd., 740 Stuart Bldg., Seattle 1, Wash. 1. Construction differential subsidy: July 1, 1939, to June 30, 1945. Less recoveries as of Jan. 1, 1948. 2. Operating differential subsidy: Accruals, July 1, 1937, to June 30, 1945. Less recoveries as of Jan. 1, 1948. Net accruals as of Jan. 1, 1948.. $2,422, 329. 13 $2,422, 319. 13 $2,422, 329. 13 $1,211,062. 42 $1,808, 826. 42 1,700, 286. 04 2, 209, 245. 04 3. Charter hire payments to owners of vessels (not under Merchant Ship Sales Act of 1946): Estimated accruals, May 1, 1941, to Sept. 1, 1947.. 4. General agency fees: 6, 400, 389. 18 $2,000,000.00 0 2, 000, 000. 00 14,732, 249. 39 0 0 Total general agency fees, Jan. 1, 1942, to Dec. 31, 1947. Total, Nov. 1, 1939, to Dec. 31, 1947. Total, Items Nos. 1 to 5... 6. Claims for adjustment of purchase price (sec. 9, Merchant Ship Sales Act of 1946). 8. Tax exempt (see note) statutory capital reserve fund (sec. 607, 1936 act), Gross deposits: July 1, 1937, to June 30, 1945. July 1, 1945, to Jan. 1, 1948. Total, July 1, 1937, to Jan. 1, 1948 2. 9. Tax exempt (see note) statutory special reserve fund (sec. 607 1936 act) exemption for deposits used to defray operating losses, to meet recapture liability and with approval of Commission transferred to capital reserve fund and utilized for purposes of such fund. $912, 782. 27 1,840, 853. 45 2,753, 635. 72 $2, 405, 253. 39 $3,024, 232. 05 $1,067, 169. 24 $2,769, 293.03 643, 420.90 983, 598. 13 3,752, 891. 16 NOTE.-Reports from company beyond Dec. 31, 1947, not available. 11. Application to purchase and actual sales under Merchant Ship Sales Act of 1946; charters under that act; and vessels owned by chartering companies: NOTE. While the statute (sec. 607 (h)) denotes deposits in the capital reserve fund and special reserve fund of the operators as exempt, agreements entered into between the Bureau of Internal Revenue and the 12 presently subsidized lines terminate total exemption as of the end of 1942, provide for full tax liability for earnings of 1943 to 1946, inclusive, and tax deferment with respect to capital gains during such years and tax deferment with respect to 1947 and all subsequent years. 1 Estimated, Jan. 1, 1947, to Jan. 1, 1948. Includes $1,541,154.25 transfer from statutory special reserve fund. American President Lines, Ltd., and/or Dollar Steamship Lines, Inc., Ltd., 311 California St., San Francisco, Calif. 1. Construction differential subsidy: Less recoveries as of Jan. 1, 1948. 2. Operating differential subsidy: Accruals, July 1, 1937, to June 30, 1945. Less recoveries as of Jan. 1, 1948.. Net accruals as of Jan. 1, 1948. 8, 140, 127.52 8,812, 008. 89 3. Charter-hire payments to owners of vessels (not under Merchant Ship Sales Act of 1946): Estimated accruals, May 1, 1941, to Sept. 1, 1947. $6,406, 890.87 32,058, 560. 08 76,759, 284. 25 2,870, 783. 40 0 5. Payments for purchase (or loss) of ships from May 1, 1941, to Dec. 31, 1947: Total, May 1, 1941, to Dec. 31, 1947. 6. Claims for adjustment of purchase price (sec. 9, Merchant Ship Sales Act of 1946).... 8. Tax exempt (see note) statutory capital-reserve fund (sec. 607, 1936 act), exemption for July 1, 1937, to June 30, 1945. July 1, 1945, to Jan. 1, 1948.. Total, July 1, 1937 to Jan. 1, 1948. 9. Tax exempt (see note) statutory special reserve fund (sec. 607, 1936 act) exemption for deposits used to defray operating losses, to meet recapture liability and with approval of Commission transferred to capital reserve fund and utilized for purposes of such fund. Gross deposits: July 1, 1937, to June 30, 1945.. July 1, 1945, to Jan. 1, 1948.. Total, July 1, 1937, to Jan. 1, 1948. 10. Charters of Government-owned vessels (interim and ship $28, 593, 335. 89 31, 481,265. 20 $8,571, 736. 03 10.02 8, 571, 746. 05 Jan. 1 to Nov. 30, 1947. $4,284, 643. 83 $13,550, 986.59 NOTE.-Reports from company beyond Nov. 30, 1947, not available. 11. Application to purchase and actual sales under Merchant Ship Sales Act of 1946; charters under that act; and vessels owned by chartering companies: NOTE. While the statute (sec. 607 (h)) denotes deposits in the capital reserve fund and special reserve fund of the operators as exempt, agreements entered into between the Bureau of Internal Revenue and the 12 presently subsidized lines terminate total exemption as of the end of 1942, provide for full tax liability for earnings of 1943 to 1946, inclusive, and tax deferment with respect to capital gains during such years and tax deferment with respect to 1947 and all subsequent years. 1 Estimated, Jan. 1, 1947, to Jan. 1, 1948. marine have already been sacrificed far out of proportion to those of any other major American industry. Consequently, State Department proposals that large numbers of additional vessels not only be sold but chartered to foreign nations appear to us completely one-sided and inequitable, with disastrous results to our merchant marine. We have already seriously been hurt by sales of surplus vessels to foreign nations, often on liberal credit terms which we could not obtain. Furthermore, American tax requirements are far heavier and more onerous than those of almost any foreign nation. We feel that our company is amply justified in recommending that no additional ships be sold, let alone chartered, to other nations. The American tramp operator is already in a very marginal position in trying to keep the ships he has purchased profitably employed. Oddly enough, ships chartered from the Maritime Commission always command better terms than those a few companies, including ourselves, were, possibly, unwise enough to purchase. The large berth operators, the liner services, in the main the so-called subsidized lines have chartered the majority of the bulk-cargo-type vessels, Liberty ships. These companies, with one exception, have not purchased a single Liberty ship. Yet they are consistently taking the cream of the tramp business away from the few brave and probably misled American companies who have bought Liberty ships in the hope of prospering in this bulk-cargo trade. We do not wish to quarrel with the large berth operators, nor with the smaller bulk operators who have not purchased any ships from the Government, but we do feel that it is directly contrary to the Nation's interests to continue our present chartering system. American tramp shipping is equally important in time of national emergency. The Liberty ship was actually the backbone of the successful conclusion of the last war. Present Maritime Commission chartering policy not only discourages but directly conflicts with the business interests of those few companies who have been willing to purchase and operate tramp vessels under the American flag. I do not wish to take more of your time, gentlemen, but I do not see how you can help agreeing with me that America's contribution to foreign shipping has already been fare more than generous and that true American tramp operators, who have already purchased Liberty ships from the Maritime Commission, should at least have some favorable consideration in relation to those companies who are operating Liberty ships only for temporary profits. The Ponchelet Marine Corp. recommends, therefore: (1) That no additional sales of ships and no charters be made to foreign nations. (2) That sale and charter of surplus vessels to citizens of the United States be extended for a reasonable length of time. (3) That American owners of bulk-cargo tonnage be given every consideration and encouragement considered equitable in the charter of bulk-cargo-type vessels from the Maritime Commission. Respectfully submitted. Hon. ALVIN F. WEICHEL, H. A. NOLAN, Operating Manager, Ponchelet Marine Corp. UNITED STATES MARITIME COMMISSION, Washington, February 13, 1948. Chairman, Committee on Merchant Marine and Fisheries, House of Representatives. MY DEAR MR. WEICHEL: At the hearing yesterday before your committee, Congressman Potts requested that there be inserted in the record a statement as to the number of Maritime Commission vessels chartered to subsidized and nonsubsidized operators of berth services. We did not have current figures available at the time but indicated that the number was probably 175 to 180. An analysis was made of the current position, which is as follows: STATEMENT OF G. C. CHARLTON FOR BLIDBERG ROTHCHILD CO., INC., AND EASTPORT STEAMSHIP CORP. My name is G. C. Charlton. I am assistant to the president of Blidberg Rothchild Co., Inc., and its affiliate, Eastport Steamship Corp., of New York City. I have been engaged in the steamship business for over 25 years and during the late war served with the War Shipping Administration and Maritime Commission here in Washington. Blidberg Rothchild Co., Inc., was established in 1920 as a firm of steamship agents, chartering brokers, etc. They did not own any vessels prewar, neither did they, at any time, charter foreign-flag vessels. The company is entirely American but served as agent for foreign-flag vessels visiting our shores. Unless American companies were available for the purpose of servicing foreign vessels in American ports, the only alternative would be for foreign owners to install their own organizations in the United States. Surely it is preferable for American concerns to perform this work, employing Americans and paying taxes to our Government. It should be understood that prewar, American vessels were only engaged in liner and domestic services, all of the tramp vessels being under foreign flags. I now pass to 1942-43. America was embarked on its great shipbuilding program made necessary by the world conflict. Ships were being delivered at the rate of four or five a day and the War Shipping Administration, under Admiral Land, was faced with the problem of managing and operating this tremendous fleet of war-built vessels. The prewar owners of American vessels were immediately appointed as general agents to operate Government-owned vessels and were soon assigned all the vessels they could efficiently handle-20, 40, 50, 75 and even over 100 vessels, each according to their prewar capacity and ability to expand their operating organizations. And still the ships kept coming out of the yards and there was grave doubt in the minds of many War Shipping Administration officials as to whether the handful of prewar owners of American vessels could possibly operate so many ships with the efficiency and dispatch that the war situation demanded. At this stage the War Shipping Administration decided to appoint as general agents approximately 30 American companies experienced in shipping, even though they were not prewar owners of American vessels. The records of the War Shipping Administration will show that these companies did an excellent job. I think it may be truly stated that in the main they operated more economically and equally as efficiently as the former owners of American-flag vessels. Blidberg Rothchild Co. was one of these non-owning operators appointed as general agent by the War Shipping Administration, and in this capacity they managed 25 vessels at the time the war was ended. Let us go back, however, to about a year or so before the end of the war. The War Shipping Administration publicly announced its desire that some, if not all, of the former agents for foreignflag vessels, presently serving as general agents, would become interested in the ownership and operation of American vessels postwar. It was stated that our merchant marine required "new blood," that our future shipping industry must be greatly expanded in order to secure our share of the trade formerly conducted by the ships of Germany, Italy, and Japan. The amount of net worth requisite to be a general agent was increased from $100,000 to $250,000 "in order to encourage the investment of outside capital in the future American merchant marine." Blidberg Rothchild Co., Inc., went along with this program, increased its capital and gave serious consideration to the suggestion of our Government that newcomers would be welcome in the postwar shipping picture. This brings us to 1945-46. General agency was over, the Ship Sales Act was passed by Congress and its chartering provisions were in effect. Blidberg Rothchild Co., Inc., and its affiliate, Eastport Steamship Corp., purchased 3 vessels from the Maritime Commission and chartered a total of 12 vessels, meantime maintaining its executive, clerical and operating staff of approximately 75 persons. Of the three vessels purchased, it might easily be said that this is a small matter. One of the larger operators testifying before this committee has bought 55 vessels. It should be remembered, however, that in our case there were no tax-free moneys involved, that we have expended, in actual cash outlay, in the neighborhood of three quarters of a million dollars, and our total commitment to the Maritime Commission, cash and in mortgage notes, is in excess of one and a half million dollars. We have done what our Government asked-we have invested our money in the American merchant marine. Not for a moment do I suggest that this has been entirely altruistic-we thought it was a good investment and would bring a |