possible expansion of economic- and military-aid cargoes to areas such as Indochina, American shipping companies who have transferred ships to foreign registry under Maritime Administration authorization will obviously be able to buy or charter in the open market any available privately owned American ship. Present law does not permit the sale of Government-owned merchant vessels, but as to charter of such vessels, any private American shipping company, otherwise eligible under existing regulations, would be eligible to apply to this Administration for the charter of Government-owned war-built ships under the terms stipulated in the Merchant Ship Sales Act of 1946. 11, 12, 13, 14. No current information is available sufficient to permit a response to the questions propounded in paragraphs Nos. 11, 12, 13, and 14. In view of the great mass of detailed data requested in these questions, applicable not only to those companies which have made requests for transfers, but also to those companies which have made no such request, the Maritime Administration suggests that the American Tramp Shipowners Association be approached directly to contact its members and to furnish the information required. 15. For complete and accurate information on this particular subject, it is suggested that the question be directed to the United States Department of Justice. 16. It is presumed that this question refers to applications now pending for the Maritime Administration's approval of the transfer of Liberty dry-cargo ships to foreign ownership and/or registry. The attached statement gives such data as of the close of business on April 14, 1954. If germane to the subject, and if requested to do so, the Maritime Administration can obtain from the applications on file the names of the other American and foreign-flag ships owned by the companies who have applied for transfer foreign. This information, it is believed, would be in more complete form if obtained from the American Tramp Shipowners Association. 17. According to the applications presently on file, the majority of the transfers foreign are to Panamanian or Liberian corporations which are 100 percent owned by the present United States owner, the officers and directors for the most part being the same as those of the transferor corporation. No information is available in the applications concerning the operating or husbanding agents of the proposed foreign corporations, nor is data with respect to the corporate setup of the present United States owner of such vessels reflected in the application on file. This information can be secured if required. 18. The Maritime Administration does not have sufficient data available to respond to this question. UNITED STATES DEPARTMENT OF COMMERCE CHARLES SAWYER, SECRETARY WASHINGTON 25, D. C. FEDERAL MARITIME BOARD, MARITIME ADMINISTRATION [For release Friday a. m., July 11, 1952] Vice Admiral E. L. Cochrane, Maritime Administrator today made public terms under which privately United States owned vessels of 1,000 gross tons and over will be transferred to foreign ownership and/or registry during the period of national emergency declared by the President December 16, 1950, in accordance with Sections 9 and 37, Shipping Act of 1916, as amended. The terms are as follows: 1. Transfer of American-flag ships to foreign ownership and/or registry, or the transfer of ownership and/or registry of any ship owned by a citizen of the United States or corporation organized under the laws of the United States or of any State, Territory, District, or possession thereof, shall not be granted where there is a finding by the Administrator that the ship is needed for national defense purposes. 2. In evaluating the necessity of a particular ship for national defense purposes, the Administrator will obtain the views of the Secretary of the Navy. 3. If there is a finding by the Administrator that a particular ship is not needed for national defense purposes, consideration must be given to the need of the ship to meet the requirements of the foreign and domestic commerce of the United States. 4. All applications for approval of the transfer of privately owned United States flag ships to foreign ownership and/or registry, or transfer of ownership Gross tons and over approved, pursuant to sec. 9, Shipping Act, 1916, as amended for transfer to foreign ownership and/or registry for fiscal years 1946 to and including Feb. 28, 1954 Period 130 (c) Cargo, passenger 147,335 20.0 July 1, 1945-June 30, 1947. 45, 925 21.5 July 1, 1947-June 30, 1950. (d) Miscellaneous (schooners, Total. 461 2, 349, 148 23.5 July 1, 1950-Feb. 28, 1954. NOTE 1.-Above represents approvals granted and is not necessarily indicative of actual transfers. NOTE 2.-The above statement excludes approvals granted solely under the provisions of sec. 37 of the Shipping Act, 1916, as amended, which is effective only during periods of national emergency. Two such periods are involved during the years covered by this Type of conditions (1) Trading restrictions: (2) no change in ownership statement, namely, May 25, 1941 to July 27, 1947 and Dec. 16, 1950 to date. Accordingly STATEMENT BY ANTHONY N. ZOCK My name is Anthony N. Zock. I am a member of the firm of Zock & Petrie with offices in New York City. I am appearing on behalf of owners of Americanflag Liberty-type dry-cargo vessels who have either filed applications for transfer of flag pursuant to the provisions of sections 9 and 37 of the Shipping Act of 1916 or are contemplating such action. The problem before this committee posed by sections 9 and 37 of the Shipping Act of 1916 has long been the subject of study and hearing inasmuch as the regulation of the transfer and sale of American-flag vessels brings into conflict our traditional American concept of freedom to lawfully dispose of private property as enunciated in the fifth amendment of the Constitution with our merchant marine policy as set forth in the Merchant Marine Acts of 1916, 1920, 1928, and 1936. The problem is further aggravated and tossed into the political arena by the alleged direct loss of American maritime employment as a result of such transfers. The decision as to whether a particular American owner should be given authority to transfer its American-flag vessel to foreign flag and ownership is, by all statutes pertaining thereto, placed with the Maritime Administration, the administrative agency charged with the duty of developing and maintaining an adequate and well balanced American merchant marine for the promotion of the commerce of the United States and in aid of its national defense. It has been the opinion of counsel for the Maritime Commission (predecessor to the Maritime Administration), many times expressed in public hearings before committees of the Congress, that the power to disapprove transfers under sections 9 and 37 is limited by the policy of the acts and that a transfer, therefore, may not be denied unless it is found that the vessel is necessary for the adequateness of our merchant marine or for national defense. In this connection, reference is made to testimony elicited by committee counsel (Mr. Coles) before the House Merchant Marine and Fisheries Committee June 4, 1946, on H. R. 3603, 79th Congress, 2d session (postwar disposition of merchant vessels), of Maritime Commission Counsel (Mr. Skinner), and Commissioner McKeough: "Mr. COLES. My thought was that the committee might ask the Commission for an explanation of its policy in permitting these transfers. If, as Mr. Skinner has indicated, they must permit the transfer, I cannot see how a criticism can be leveled at the Commission. "Mr. SKINNER. They have a discretion to the extent that in determining whether the particular ship is needed for the development of an adequate American merchant marine. If they answer, 'No,' and determine that the ship is not needed for National Defense purposes, I cannot find anything in the legislative history which gives any discretion to the Commission to say to a private individual ‘You cannot sell your private property.'" and again: "Mr. COLES. The question of the requirement that these people could not sell their products in a free market, whether that could not be a deprivation of due process. "Mr. MCKEOUGH. Our counsel has insisted, and I think correctly so, that should we deny such transfer, the owner of the property would immediately go to the Federal court and seek a restraining order prohibiting us from holding up his sale of goods. It is purely a constitutional picture." Again, in hearings under S. Res. 50, pt. 3, p. 625, Commissioner Mellen in describing criteria used by the Maritime Commission in permitting transfers said: "The Maritime Commission, in its administration of section 9, considers as to the particular vessel involved, its value to the merchant fleet for national defense needs, the possibility of retaining the vessel in operation under American ownership and flag, the advantage to the merchant marine of retaining such vessel and the overall effect of the proposed transaction on the merhant marine, including the possibility of obtaining a replacement through the construction of new tonnage. All these factors are considered in their relation to the declared national merchant marine policy as expressed in the 1916 act and in subsequent merchant marine legislation." Commissioner Mellen further stated: "The Commission in the past has held to the position that a withholding of its consent to the transfer or sale for reasons not involved in these considerations would exceed the authority intended to be delegated to it by Congress." The American Tramp Shipowners Association has reported to this committee that "almost 100 of a total of 150 American-flag tramp ships are now laid up for lack of profitable employment." These vessels are of the Liberty dry-cargo type-emergency war-built tonnage designated as surplus and not constructed as part of the program contemplated by the Merchant Shipping Act of 1936 to give us an adequate and efficient Merchant Marine to serve our commercial needs and effectively meet foreign competition. The Maritime Administration, in its report to Congress under the Merchant Ship Sales Act of 1946, reporting activities through December 31, 1953, in appendix B thereto, giving a summary of reserve fleet ships indicating general availability for reactivation, stated that there were 1,361 Liberty ships available for service at normal reactivation and repair expense in the reserve fleets. It is this type of vessel above-described which American citizen-owners of the "unsubsidized specie" are presently requesting the Maritime Administration approve for transfer foreign and which the Congress has been requested to prevent. Let us review the above-mentioned tests invoked, and it is submitted properly, by the administrative agency and evaluate the overall effect of nontransfer versus transfer. 1. Value to national defense.-Nontransfer would increase our laidup reserve of Liberty vessels from 1,361 to approximately 1,500 whereas in transferred status there would be available to the United States immediately, without costs and time incident to breaking out vessels from lay-up, up to 150 vessels in operating condition. 2. Possibility of retaining vessel in operation under Amerigan flag and ownership. There is no sale or charter market for about 100 Liberty vessels which are in layup now at owners' cost with no foreseeable employment and ever-increasing new foreign dry-cargo tonnage coming off foreign ways. 3. Advantage to merchant marine retaining vessel.-Inasmuch as the vessels are noncompetitive with foreign tonnage, and now laid up, the vessels will not even if retained under American flag, provide employment to American seaman or shipyard employees. In many cases where owners are in financial distress, nontransfer will cause loss of the vessels to mortgagees, either Government or banks, neither of whom are desirous of becoming owners of nonoperative or nonmarketable obsolete American-flag tonnage as well as disruption of owners' shoreside personnel. Transfer would permit some employment to shipyard workers in effecting repairs and would aid in the maintenance of shoreside personnel. 4. Possibility of obtaining replacement through the construction of new tonnage. The retention of these vessels, which are now commercially noncompetitive, will not induce new construction under American flag but will lead a number of owners to financial ruin and act as a deterrant to any private American investment in new tonnage. It is submitted that nothing in the proposed transfers is inimicable to the intention of the Congress as expressed in the various shipping acts from 1916 to date and that the transfers made subject to the general conditions now imposed by the Maritime Administration: (1) Sale to owners and flag approved by Maritime Administration and State Department. (2) No further transfer without Maritime Administration consent. (4) Availability for United States use in emergency. will be in furtherance of our Maritime and Foreign policies and will not violate any American interests. The Canadian Government, when confronted with a similar situation in its merchant marine, acted promptly and realistically in granting permission to Canadian owners to transfer to an approved flag so as to become competitive inasmuch as refusal to grant subsidized owners the right to transfer would in effect make such owners subsidizers of domestic labor until economic forces put such owners into bankruptcy and their vessels into wasting "rust buckets" or the scrap heap. It is recommended that the subcommittee impose no restriction upon the Maritime Administration as requested but permit said agency to administer sections 9 and 37 of the Shipping Act of 1916 in accordance with the established policies of said act and related laws in furtherance of our national defense and foreign policy with due regard for the constitutional guaranties of American citizens. |