Senator BUTLER. In other words, that wouldn't be the controlling factor?

Mr. ROTHSCHILD. No, sir.

Senator BUTLER. But you do consider it?

Mr. ROTHSCHILD. Yes, sir.

Senator BUTLER. Would you think it is better for the Government to get its money out of those ships or to keep them under American registry or put them up in the lay-up fleet, or whatever you have to do with them?

Mr. ROTHSCHILD. It seems to me the overriding consideration is how badly do we need the ships for defense purposes and in what condition do we need them.

Senator BUTLER. I take it from the general tenor of your testimony never, under any condition, would you consider the transfer of a mariner, for instance, that is too highly classified as a military ship or auxiliary ship?

Mr. ROTHSCHILD. Not only a mariner, Senator, but many other types of ships we wouldn't think of transferring.

Senator BUTLER. You would absolutely prohibit it?

Mr. ROTHSCHILD. Yes, sir.

Senator BUTLER. Are there many such ships you would absolutely not consider the transfer in the interest of national defense?

Mr. ROTHSCHILD. There are several types of ships; yes, sir.
Senator MAGNUSON. Sure.

Supposing you could project yourself that the ships were not going to be needed for defense; wouldn't then your overriding factor be on its effect on our commercial merchant marine?

Mr. ROTHSCHILD. Well, that

Senator MAGNUSON. In other words, every time you would transfer one, regardless of what you say it is going to be used for, it depletes our merchant marine; it just adds so many more headaches to keep our merchant marine alive.

I don't care whether they use it coastwise or where they use it. There is just so much tonnage in the world, and the more tonnage you put under foreign flags the less there is going to be.

Mr. ROTHSCHILD. Except this fact has to be considered also, Senator Magnuson: There are certain trades restricted to American carriers.

Besides that, there are certain advantages accruing to American carriers by legislative action.

Now, there will always be a need for enough ships to handle services under those conditions.

Beyond that, there is a fluctuating need for ships in the so-called tramp fleet, or at least there has been since the war.

Senator MAGNUSON. But isn't it true, beyond that, beyond the restricted trades, that every time we let a ship go to a foreign register that ship is just another ship to divide the available cargo

Mr. ROTHSCHILD. No.

Senator MAGNUSON. That might go to us, too?

Mr. ROTHSCHILD. Not precisely: no, sir.

Senator BUTLER. Isn't it true

Senator MAGNUSON. It just adds more tonnage. You just divide the world tonnage by the number of ships, and every time we transfer foreign it dilutes it to a certain extent. It has got to dilute it.

Mr. ROTHSCHILD. Not necessarily to the extent that ship or ships represent, because fewer ships, better ships, more modern, faster and more economice ships replace the ones that are going out in the natural course of events.

Senator MAGNUSON. As long as it is in use, as long as it is in use in the world trade, it has got to dilute the availability of cargoes. We have no trouble with our own restricted cargoes, but if we are going to get out of the world trade completely and only limit ourselves to restricted cargoes, every time we transfer ship foreign we dilute that by dividing the tonnage available and the cargo available.

Mr. ROTHSCHILD. I think the records will show that we have never been a factor

Senator MAGNUSON. Oh, I am not saying that.

Mr. ROTHSCHILD. In the tramp trades until after World War II. Senator MAGNUSON. Yes.

Mr. ROTHSCHILD. And then

Senator BUTLER. But, Mr. Rothschild, is it also true

Senator MAGNUSON. Oh, we are in the tramp trade to some extent. We weren't in the tramp trade as we are today, or as we had been prior to World War II.

Senator BUTLER. It is not universally true that such ships would become competitors, if the age of the ship-and the average age of the transfers you have testified to is 231% years. Those ships are very old ships, with a very slow speed and very costly operation. Would they really be competitive with the faster, newer ship?

Mr. ROTHSCHILD. Only as a broader sort of concept, where you infer that every ship that floats is a competitor to every other one. actual practice, however, they would not be. For example, I think it would be impossible today to charter Liberty tankers in any quantity to American oil companies, at any rate.

Senator BUTLER. They have just passed that state and got it into more faster and more modern ships?

Mr. ROTHSCHILD. They are just like model T Fords today.
Senator BUTLER. Yes.

Senator MAGNUSON. Yes, but my point is: As long as that ship carries cargo, there is just so much cargo. I don't care whether it is 23 years old or 3 years old. As long as it carries cargo, it dilutes the available cargo. There is only so much available cargo in the world, and when you add 1, 2, or 50 ships, or 461, you are diluting to that extent. As long as it is running, as long as it is operating, you are diluting to that extent.

Mr. ROTHSCHILD. Except the world figures tend to increase right along, Senator.

Senator MAGNUSON. They increase, and then they build ships foreign, which they are doing all over the world. Then they keep up with that. As long as that ship is operating, they add to that, too.

Mr. WEBSTER. Mr. Rothschild, the thing that bothers me is this: I think we all recognize the organized labor groups are probably the ones that have resented more actively than any other groups the approvals of these transfers foreign, and in your explanation of the factors which you take into consideration in approving the transfers foreign I am not sure that I understand just how much weight or how thorough the consideration is of what we might term the legitimate interests of organized labor.

Would you care to comment on that?

Mr. ROTHSCHILD. Well, we look at it somewhat along this line: If a ship is laid up, as most of these ships are, it is furnishing no employment to the people who would man the ship, no employment to the people who would repair it and no business to the people who would supply it. It, therefore, is of no value as an employment factor to any segment of the economy.

If a ship, on the other hand, is able to be operated, even for a reasonably short length of time, and it is possible that some part of her repair work will be done in American yards, and that some part of her crew will be American, and that some part of her

Senator MAGNUSON. Would you say some part of her crew would be American?

Mr. ROTHSCHILD. Yes, sir, because many of these ships under foreign flag employ a minimum of an American master—

Senator MAGNUSON. Yes.

Mr. ROTHSCHILD. And some all of their licensed personnel; and if we have an opportunity, through our various commercial enterprises, to supply fuel or food, or whatever else it takes to operate a ship, then that, it seems to us, is in the interest of the American people.

Besides that, from a defense point of view, and this is most important, a ship in operation is much more available and much more important to the M-day requirements of our Armed Forces than a ship in lay-up.

Senator POTTER. In other words. Mr. Rothschild, you are saving that this is cargo which a ship under a foreign flag would be picking up and which we couldn't pick up with a tramp ship under American flag; is that correct?

Mr. ROTHSCHILD. I say that she has a chance to pick up many cargoes that would not be available.

Senator POTTER. That they can't pick up today?

Mr. ROTHSCHILD. Yes, sir.

Senator POTTER. Isn't it a fact that a majority or a great portion of the cargo that the trampers had after the war was cargo of the aid character, under the 50-50 provision and the various acts of the Congress on foreign-aid bills?

Mr. ROTHSCHILD. The bulk of the cargo which they carried was military and economic aid cargo; yes, sir.

Senator POTTER. Am I correct in interpreting your remarks that the transfer of the ships to foreign flag will in no way take away from American maritime labor?

Mr. ROTHSCHILD. Well, surely, Senator Potter, if they are not running at all no one is working and no one is having a job and no one is getting anything out of it.

Senator POTTER. And it is your belief that certain repair work that would be done in our yards and a certain minimum of labor, American Labor, that would be on the ships, and, of course, from the supply end of furnishing the cargo, that in the end American labor is being better served by the transfer of ships that are not in use in order to pick up cargo which they can't get or can't compete for today under American flag?

Mr. ROTHSCHILD, Yes, sir. We look at it this way, and we think this is pretty factual: We cannot force an owner of any one of these vessels to operate the vessel. If he wants to do with it as he would

with any other piece of private property which is his, he has the rt to do so.

Now, therefore, if we cannot keep it employed, either on a breaken or profitable basis, there are only three alternatives that we w of: One is to transfer it foreign; one is to lay it up, and one is ripit. Now, surely the best needs of the Nation cannot be served by having reless vessel than we presently have, if we need what we have today, that would be the result of scrapping, and surely if we need it for defense purposes we are far better off to have the ship in commisand operating than we are to be required to put it into a shipyard for an indeterminate period of time before we can use it.

the least of the evils seems to us to be in many cases the transfer

Serator POTTER. What does it cost to lay up a ship?

Mr. ROTHSCHILD. It depends on the size and kind and character of -S. p. A tanker will cost more than a dry cargo ship, for example. Serator SMATHERS. To take this list, your grand total of Govern

-owned ships transferred from 1945 to 1954 is 1,374. How much ey did they realize from the sale of those ships?

Mr. RoHSCHILD. We don't have those figures with us, Senator, but can supply them to you.

ator MAGNUSON. They were all under the formula of the Ship

Act.

Mr. MCGUIRE, I think in the aggregate the total must run around *à sot million dollars, sir.

Serator SMATHERS. If you had not transferred those, would it be able to believe you would have nothing? In other words, the fgovernment would have lost that amount in time, would it not? M- MCGUIRE. That is one element of war surplus property on 1. a very appreciable measure of return was realized, Senator. rator MAGNUSON. These were surplus.

Senator BUILFR. They would have been probably in the lay up

cator MAGNUSON, Yes. They were surplus. We just wrote the and allowed them on certain formulae to let them go because they we going to be laid up, and then we finally closed it after we Zat we

Didnt we sell about one-half of our laid-up fleet?

Mr. M. Gt IRF. Not quite, Senator.

Serator MAGNUSON, Close to it.

Mr. MCGUIRE. Eleven hundred and fifty ships, approximately, forl about 675 domestic, Senator.

rator MAGNUSON. It was close to 50 percent, and we realized better on surplus on that property than any other property we lft after the war, way above.

Mr. McGUIRE. That is correct, sir.

Serator SMATHERS. Do we have any ships now which the Governsent has laid up and which you don't see any practical use for in the ear fiture!

Mr. ROTHSCHILD. Senator, we have hundreds of ships laid up in kets throughout the country. 3 on the Atlantic coast, 3 on the Pat, 2 in the Gulf, that are only there for defense purposes.

Senator MAGNUSON. Yes. A subsidized line sometimes is better. Mr. ROTHSCHILD. We have some.

Senator MAGNUSON. Yes; you have some cases of that.

Mr. ROTHSCHILD. That is right.

Senator BUTLER. Mr. Rothschild, you give that serious consideration in whether or not you will approve a transfer, do you not?

Mr. ROTHSCHILD. We try to consider every pertinent fact and we try to arrive at a decision based on the consideration of those facts, Senator.

Senator SMATHERS. You have no future control over any of these vessels once they have been transferred?

Once the Government has gotten rid of them, then you have no further recapture provisions, do you?

There are no recapture provisions, are there, except in time of war, we will say?

If they don't operate them like you think they should, you can do nothing about it, can you?

Mr. ROTHSCHILD. If I understand your question, we impose restrictions on them after they leave American flag, to the extent they may not again be transferred to another flag, to the extent they may not transfer part of the ownership to aliens and to the extent that they must comply with the Department of Commerce T-1 and T-2 transportation orders, and anyone transferring a vessel agrees to abide by those rules; and, furthermore, in many cases post a bond to guarantee the performance.

Senator BUTLER. If the Senator will excuse me for a minute, I think we should make a part of the record the T-1 and T-2 orders referred to by Mr. Rothschild. They are quite extensive and quite complicated in some instances, but I think they should be made a part of the record. (The orders referred to are as follows:)

T-1

DECEMBER 8, 1950

UNITED STATES DEPARTMENT OF COMMERCE

OFFICE OF THE UNDER SECRETARY

Washington 25, D. C.

TITLE 32A-NATIONAL DEFENSE, APPENDIX

CHAPTER IX-UNDER SECRETARY FOR TRANSPORTATION, DEPARTMENT OF COMMERCE [Transportation Order T-1]

PART 1101-SHIPPING RESTRICTIONS

This order is found necessary and appropriate to promote the national defense and is issued pursuant to the authority granted by section 101 of the Defense Production Act of 1950. Consultation with industry in advance of the issuance of this order has been rendered impracticable by the need for immediate issuance. Sec.

In

AUTHORITY: §§ 1101.1 to 1101.6, issued under sec. 704, Pub. Law 774, 81st Cong. terpret or apply sees. 101, 705, Pub. Law 774, 81st Cong., sec. 101, E. Ó. 10161, Sept. 9, 1950, 15 F. R. 6105.