The CHAIRMAN. How many of the 37 are operated for the use of the Army and the Navy? I mean just in round figures now.

Admiral SMITH. None of them are used by the Army and the Navy at the present time.

The CHAIRMAN. Are they operated for the private carrying of passengers, or operated for Government uses?

Admiral SMITH. They are operated for the carrying of passengers. The CHAIRMAN. The carrying of private passengers?

Admiral SMITH. Yes, sir; but particularly for the carrying of passengers recommended by the Government-the State Department. The CHAIRMAN. The 37 ships are used for that purpose? Admiral SMITH. No; only eight.

The CHAIRMAN. Only eight?

Admiral SMITH. Only eight; yes, sir. The rest of them are in lay-up.

The CHAIRMAN. Only eight of them are used to carry private passengers, principally from Europe to the United States, at the recommendation of the State Department; is that correct?

Admiral SMITH. That is correct.

The CHAIRMAN. With reference to that, does the Maritime Commission set the rate of passage, the fare, and collect all the money? Admiral SMITH. Yes; that is correct. We operate through agencies. The CHAIRMAN. But I mean when you operate through an agency you pay them for their services?

Admiral SMITH. That is right.

The CHAIRMAN. Husbanding services, so to speak?
Admiral SMITH. Yes, sir.

The CHAIRMAN. And with reference to the fares, does the Maritime Commission say how much those fares should be?

Admiral SMITH. Yes.

The CHAIRMAN. Are they in line with other fares for transportation covering trans-Atlantic passage, is it free, or what?

Admiral SMITH. Can you answer that?

Mr. HELMBOLD. The fares are somewhat less than the standard passenger fare, but they are generally based on the accommodations and the type of ship.

Admiral SMITH. They are based on the type of ship and the type of

accommodations.

The CHAIRMAN. I mean with reference to privately operated ships for carrying passengers. Is it 50 percent, or 25 percent less, or just what is it, approximately, for the record?

Mr. HELMBOLD. I should say it is at least 25 percent. I would like to have Mr. McGuire give you more information on that.

The CHAIRMAN. Just in round numbers, it is about 25 percent, roughly?

Mr. HELMBOLD. Yes.

Admiral SMITH. But there is no privately operated ship that is comparable to this type of vessel.

The CHAIRMAN. I understand, but with reference to the same thing operated by private people, it is around 25 percent; is that correct? Admiral SMITH. That is right.

The CHAIRMAN. And there are eight of those being operated?
Admiral SMITH. That is correct.

The CHAIRMAN. And they are being used principally in the transAtlantic trade for people designated by the State Department to come to this country?

Admiral SMITH. Well, there are more than that.

The CHAIRMAN. Who else rides on them?

Admiral SMITH. Some American business travelers, some American travelers going abroad for various reasons, displaced persons, socalled, repatriated Americans.

The CHAIRMAN. In other words, it is a passenger boat service; is that correct?

Admiral SMITH. Well, yes.

The CHAIRMAN. Conducted by the Maritime Commission with reference to the State Department principally, is that about it? Admiral SMITH. Principally, yes.

The CHAIRMAN. With reference to American citizens traveling over on them, there aren't very many of them, are there?

Admiral SMITH. I couldn't give you the figure offhand.

The CHAIRMAN. I don't mean the exact number. Just round figures. Admiral SMITH. I do not know what the percentage is. Perhaps Mr. McGuire might know.

The CHAIRMAN. I don't mean the exact percentage. Just some idea, in round figures.

Mr. MCGUIRE. Eastward to Europe we carry any passengers who offer themselves for transportation. Of course, the large majority being carried outward are American citizens. Homeward, we call those people according to priority status accorded by the State Depart

ment.

The CHAIRMAN. That is people coming to this country to become citizens under a quota, and those people who come under a nonquota. Are those the people who come?

Mr. MCGUIRE. There are two major types, Mr. Chairman. One consists of the American citizen repatriate being brought home to this country, many of whom have been abroad for a number of years. The second major type consists of displaced persons and immigrants coming here, presumably, with the intent of becoming citizens in due time.

The CHAIRMAN. Are not the American citizens all home yet?
Mr. MCGUIRE. No.

The CHAIRMAN. These people coming over here to this country in and out of quota, have they been brought over here all this time ahead of American citizens?

Mr. MCGUIRE. The type of citizen being brought home and the American repatriates being brought back consist mainly of persons who have lived abroad for a great many years. In some cases their claims to citizenship are quite dubious and require a good deal of investigation.

The CHAIRMAN. How about the bona fide citizens who want to come back. Are they back?

Mr. MCGUIRE. Yes.

The CHAIRMAN. You are not holding them up in preference to those coming in in or out of quota, or displaced persons, are you?

Mr. MCGUIRE. Under the regulations set up by the State Department, there are certain major categories of priority, and the assignment of passengers to the vessels is made in line with those priority categories.

The CHAIRMAN. All right, Mr. McGuire. That is all I have along that line.

Now, Admiral, with reference to tankers, on the second page of your statement. You talked about tankers-all the tankers.

Admiral SMITH. Yes, sir.

The CHAIRMAN. As I understand it, in a statement made by the Maritime Commission in the early part of December; is that correct? Admiral SMITH. That is correct; but they were not delivered. We have had a few rejects. In fact, Mr. Chairman, the Commission is meeting this morning with respect to the limited number turned back. There is a total of seven people who could not get the money from the banks and had to turn them back. We had plenty of applicants, and they have promptly been reallocated.

The CHAIRMAN. With reference to the sale of tankers, are there not plenty of people available with cash in their hands to take the tankers and you can take the money? At least from all the publicity that has been given the matter, you read in the newspapers about the big demand for tankers-that the demand is way beyond anything that can be met, and that people are standing around with money in their hands. Why can't you complete those transactions?

Admiral SMITH. Well, you see, we have to screen those very carefully.

The CHAIRMAN. You mean those with cash in their hands? Are they the ones you are talking about?

Admiral SMITH. Yes. Well, you see, Mr. Chairman, they say they have cash in hand until they get it, and then they go and find that they cannot get the long-range charter with a major oil company, and consequently what happens is that they turn the ship back.

The CHAIRMAN. In other words, then, these people are making applications to buy them, saying that they have cash, and then at a later date, if they have not been able to secure a charter from some oil company, they do not complete the transaction?

Admiral SMITH. Yes.

The CHAIRMAN. I understand that that is part of the difficulty; but would it not seem with reference to the sale of these tankers that as an administrative thing, they should be asked to put up the money, and if they do not put up the money, stop it right there? Otherwise, as this thing goes along, you will have all the applications, and you will have them approved, without having the cash in hand, or maybe having half of it, and then, if at some future time they just decide that they do not want it, in the meantime you would be operating a Government agency or general agency indefinitely. They would have you operating on such a basis, making trips back and forth, until they get ready to buy it, and then if they do not get ready, you have to go around and look for another purchaser. Why is it not desirable, if you are going to approve a sale to them, and you have approved the sale--and this is an administrative thingwhy is it not desirable to put down a quarter of a million dollars, and then go through the rest of it?

Admiral SMITH. They have to qualify for net worth. We have given each one of them a deadline. As a matter of fact, there was one in my office with his check when I left. His deadline expires at noon today.

Of course it is very difficult to take some of these ships. There is one down there in the Gulf with its entire bottom out, for instance. There is no steel in the Gulf. There is another one up in Boston that the Navy turned over to us, and it broke in half.

The CHAIRMAN. I am talking about those that are floating around. Admiral SMITH. That is right, but even the broken ones are under sale.

The CHAIRMAN. I understand, but you cannot do much with them. I am talking about the ones that you can use now. They talk about this emergency with reference to those. They have been sold since November of 1947. It would seem desirable from an administrative standpoint to get a quarter of a million dollars, and then if they do not proceed with it you have not lost anything and have not been delayed as to some future time. You cannot work that out? Admiral SMITH. Oh, yes, we are.

The CHAIRMAN. You are?

Admiral SMITH. Yes, sir.

The CHAIRMAN. Well, if you had done that it would not be necessary to run this general agency operation with respect to tankers.

Admiral SMITH. The thing is, sir, that you cannot sell a ship the way you would sell a sack of potatoes, or something like that. It takes time.

The CHAIRMAN. Yes.

Admiral SMITH. We have transferred title to 44 since the 1st of January. They are going very rapidly, and we have most of thempractically all of them-out of lay-up now. That is our main concern: to get them out of lay-up-those that are being sold, those that are operating. The sale means to put them in drydock and inventory them and survey them, and that interrupts the flow of oil to the eastern seaboard, which is so desperately needed at this critical time. The CHAIRMAN. As I say, that is just an administrative thing. Admiral SMITH. It is all being worked out.

The CHAIRMAN. If these people have asked for the ships, and you have allocated them to them, after you allocate them you can certainly ask them to put down $250,000 for the purchase of the ship. With reference to the time you are going to do the repairs, that could be done at some future time, could it not, because that is with reference to the Maritime Commission giving them something?

Admiral SMITH. No, sir, it cannot, because Congress took all of our money away. We do not have a nickel to spend on that kind of work. When we make a sale, the vessel has to be tied to a drydock, and a survey made. The bids are put out. Then we can make the deal, when the buyer knows how much the repairs are going to cost him, because he pays for the repairs, and we give him an allowance. We do not repair the ships.

The CHAIRMAN. Could you not have them put down $250,000 on the purchase of the tanker so that you know you have it sold? This thing of having them allocated and nobody putting down money, and having the Government operate them since November, after they are all soldI was wondering if it did not occur to you that there was another way to handle that? Why can't you do something? Why can't you get some money from them? That is what I want to know.

Admiral SMITH. We are doing something on it. Of the 71 tankers, we have signed contracts on all but 12.

The CHAIRMAN. Why have they not signed on the 12? Why have they not signed on all of them?

Admiral SMITH. Well, for example, one of them turned back six only a week ago.

The CHAIRMAN. In other words, these sales have not meant any more than if a man can turn back six he has not put down any money, what you might call binding money, has he? He has delayed you for weeks, and then says there are six he is not going to take?

Admiral SMITH. Well, those tankers are operating. Nobody is hurt. The CHAIRMAN. But there are still other people, according to the papers, who are demanding tankers. Everybody gets calls that they want to buy tankers. Do you not think that they should be made to pay what you might call good faith money, and if they do not want to put that down, sell it to somebody who does have good faith money. What is wrong with that?

Admiral SMITH. I will have Mr. Pimper explain the procedure followed in the sale of ships.

The CHAIRMAN. But with reference to that, is it not a desirable business practice that when somebody makes an application to buy, and you approve the application, is it not desirable to get some good faith money down so that 6 weks later, as we have in the case of these six tankers—and nobody knows how many more there may be—if they say they do not want them or if they cannot get a charter, you do not find yourself in such a stiuation? In other words, the Government and the Mairtime Commission are left holding the bag. I thought when you speak of a sale in anybody's language, that means it is sold and you have some money on it. I mean, what is the matter with following a policy such as that?

Admiral SMITH. I would like to have Mr. Pimper explain the procedure that is followed.

The CHAIRMAN. What I mean, Admiral, is it not desirable to have good faith money?

Admiral SMITH. It is desirable that we get that money as soon as

we can.

The CHAIRMAN. I am saying that after the application is there and you approve it-this man you are speaking of has held up six now since way back in November, when you allocated these, he has held you up all that time. Now he turns back six. If he had had $250,000 planked down on each one of those when you made your approval, you would still probably have them sold.

Admiral SMITH. I believe in this case

The CHAIRMAN. Is it not desirable to get good-faith money immediately, as soon as it is approved?

Admiral SMITH. I am not sure, Mr. Chairman, but I believe that in this case he did put down his money, but he could not get the net worth; he could not get the capital behind his company to back up completion of the contract. As you know, Mr. Chairman, there are certain rules that he has to meet.

The CHAIRMAN. Yes; but in other words, in a deal with the Government, you make an application and the sale is approved. You say they do put down money, but if they do not go through with it, they get their money back. Is that about it?

Admiral SMITH. I would like to have Mr. Pimper explain that to

you.