Senator BUTLER. Are you referring to sections 9 and 37 of title 46? Senator BUTLER. Yes. Mr. HALPERN. Of the 1916 Shipping Act. Senator MAGNUSON. That is right. Senator BUTLER. That is the one. Senator MAGNUSON. And there have been, Mr. Rothschild, many cases where there were restrictions placed upon the foreign transfer and you found the ship transferred again, even into another trade. Mr. HALPERN. There have been many instances of that? Senator MAGNUSON. Yes. Mr. HALPERN. I would not say that, Mr. Magnuson, but there have been Senator MAGNUSON. Yes, and particularly following World War II. Mr. HALPERN. But interest in the vessel; there may have been situations where through stock ownership that occurred. I can think of no others. Senator MAGNUSON. Well, some of these operators under the Panamanian flag; it would take 17 Philadelphia lawyers to figure out where the stock ownership was. Mr. HALPERN. We have had our difficulties, if that is what you suggest. Senator MAGNUSON. I would probably like to be hired as a lawyer to untangle that, say, in an Italian court. I would be working the rest of my life. Mr. HALPERN. I am thinking of cases where that occurred or forfeiture occurred in the United States and those suits are in court now. Senator SMATHERS. May I ask 1 or 2 other elementary questions? Senator MAGNUSON. Anyway, the point I want to make, in all seriousness: Although we do have the provision, there have been many cases where we just couldn't enforce it and in many cases where the provisions have been freely violated, even after the conditions were Mr. HALPERN. There have been cases where foreign-flag vessels upon arrival in a United States port have been forfeited. Senator BUTLER. And also it extends to this, does it not-where the owner happens to come here, he is personally apprehended and made to answer for the violation? Mr. HALPERN. Well, he is subject to criminal penalties under the law, and there have been indictments against aliens for such violation. Senator BUTLER. So, you have a two-way thing. If you get the vessel here or if you get the owner here, it is just like any other legal right. You have the res before you can operate on the right, before you can put the statute into effect. Mr. ROTHSCHILD. There is another factor in that area, and that is that if a violation has occurred, when the Government has not been satisfied, that affects the title of the vessel and it would interfere with its future sale. Senator BUTLER. So, there is at least some real deterrent. Senator SMATHERS. Let me ask just a couple of questions, Mr. Chairman, so I can get my thinking a little clear. As I say, I am inexperienced in these matters completely. How many Government-owned vessels do you have under your jurisdiction that are eligible to be transferred?" Mr. ROTHSCHILD. Not a one. Senator SMATHERS. Not a one. As I understand, you have to pass judgment on whether or not any Government-owned vessel can be transferred to a foreign registry. Is that what you do? Mr. ROTHSHILD. Our authority to sell any vessel, any Governmentowned vessel, expired sometime ago, Senator. We do not have authority to sell any of the war-built vessels. The only vessels which we would sell now, which are in our fleet, are those which were either built before or since the war. Senator MAGNUSON. We closed that act up. Senator SMATHERS. Yes. Mr. HALPERN. But not foreign. Mr. ROTHSCHILD. But not foreign. Mr. HALPERN. Whatever authority we had under the Ship Sales Act of 1946 to sell foreign was permanently and completely terminated by Congress in 1948. Senator BUTLER. As a matter of fact we have now before this subcommittee an act to permit sales of certain vessels. Mr. HALPERN. Yes. Senator BUTLER. It can only be done by an act of the Congress now. Senator SMATHERS. That is what I wanted to find out, and that answers that. Senator BUTLER. Mr. Rothschild, I have got a question here. Senator BUTLER. Oh, yes. Senator MAGNUSON. I think we ought to realize, too, here when we are talking about the availability of cargo ships that are transferred, so-called tramps foreign, those rates are not set and, therefore, with lower-cost operation they claim they can be in a better chance to bid lower and, therefore, get more cargoes. They are really auctioned off, that is, the rates. I mean they negotiate. Senator BUTLER. That seems to be true. Senator MAGNUSON. Yes; they negotiate them. Mr. HALPERN. I think what you have in mind, Senator, is that the tramp rates are not rates pursuant to tariffs. Senator MAGNUSON. NO. Mr. HALPERN. Or conferences. Senator MAGNUSON. That is right. Mr. HALPERN. And they trade in available cargoes, and the rates that have traffic will bear Senator MAGNUSON. The cheaper the operating cost, the better chance they have to offer and negotiate for a lower rate, and the better chance they would have to get cargoes. Mr. HALPERN. Right. Mr. ROTHSCHILD. Right, sir. Senator BUTLER. That, in substance, was the testimony of Mr. Rothschild. Senator MAGNUSON. Yes. Senator BUTLER. Are you referring to sections 9 and 37 of title 46? Mr. HALPERN. I believe that is section 41. Senator BUTLER. Yes. Mr. HALPERN. Of the 1916 Shipping Act. Senator MAGNUSON. That is right. Senator BUTLER. That is the one. Senator MAGNUSON. And there have been, Mr. Rothschild, many cases where there were restrictions placed upon the foreign transfer and you found the ship transferred again, even into another trade. Mr. HALPERN. There have been many instances of that? Senator MAGNUSON. Yes. Mr. HALPERN. I would not say that, Mr. Magnuson, but there have been Senator MAGNUSON. Yes, and particularly following World War II. Mr. HALPERN. The transfers, however, were not actual transfers. Senator MAGNUSON. Some were under ship sales. Mr. HALPERN. But interest in the vessel; there may have been situations where through stock ownership that occurred. I can think of no others. Senator MAGNUSON. Well, some of these operators under the Panamanian flag; it would take 17 Philadelphia lawyers to figure out where the stock ownership was. Mr. HALPERN. We have had our difficulties, if that is what you suggest. Senator MAGNUSON. I would probably like to be hired as a lawyer to untangle that, say, in an Italian court. I would be working the rest of my life. Mr. HALPERN. I am thinking of cases where that occurred or forfeiture occurred in the United States and those suits are in court now. Senator SMATHERS. May I ask 1 or 2 other elementary questions? Senator MAGNUSON. Anyway, the point I want to make, in all seriousness: Although we do have the provision, there have been many cases where we just couldn't enforce it and in many cases where the provisions have been freely violated, even after the conditions were Mr. HALPERN. There have been cases where foreign-flag vessels upon arrival in a United States port have been forfeited. Senator BUTLER. And also it extends to this, does it not-where the owner happens to come here, he is personally apprehended and made to answer for the violation? Mr. HALPERN. Well, he is subject to criminal penalties under the law, and there have been indictments against aliens for such violation. Senator BUTLER. So, you have a two-way thing. If you get the vessel here or if you get the owner here, it is just like any other legal right. You have the res before you can operate on the right, before you can put the statute into effect. Mr. ROTHSCHILD. There is another factor in that area, and that is that if a violation has occurred, when the Government has not been satisfied, that affects the title of the vessel and it would interfere with its future sale. Senator BUTLER. So, there is at least some real deterrent. Senator SMATHERS. Let me ask just a couple of questions, Mr. Chairman, so I can get my thinking a little clear. As I say, I am inexperienced in these matters completely. How many Government-owned vessels do you have under your jurisdiction that are eligible to be transferred? Mr. ROTHSCHILD. Not a one. Senator SMATHERS. Not a one. As I understand, you have to pass judgment on whether or not any Government-owned vessel can be transferred to a foreign registry. Is that what you do? Mr. ROTHSHILD. Our authority to sell any vessel, any Governmentowned vessel, expired sometime ago, Senator. We do not have authority to sell any of the war-built vessels. The only vessels which we would sell now, which are in our fleet, are those which were either built before or since the war. Senator MAGNUSON. We closed that act up. Senator SMATHERS. Yes. Mr. HALPERN. But not foreign. Mr. ROTHSCHILD. But not foreign. Mr. HALPERN. Whatever authority we had under the Ship Sales Act of 1946 to sell foreign was permanently and completely terminated by Congress in 1948. Senator BUTLER. As a matter of fact we have now before this subcommittee an act to permit sales of certain vessels. Mr. HALPERN. Yes. Senator BUTLER. It can only be done by an act of the Congress now. Senator SMATHERS. That is what I wanted to find out, and that answers that. Senator BUTLER. Mr. Rothschild, I have got a question here. Senator BUTLER. Oh, yes. Senator MAGNUSON. I think we ought to realize, too, here when we are talking about the availability of cargo ships that are transferred, so-called tramps foreign, those rates are not set and, therefore, with lower-cost operation they claim they can be in a better chance to bid lower and, therefore, get more cargoes. They are really auctioned off, that is, the rates. I mean they negotiate. Senator BUTLER. That seems to be true. Senator MAGNUSON. Yes; they negotiate them. Mr. HALPERN. I think what you have in mind, Senator, is that the tramp rates are not rates pursuant to tariffs. Senator MAGNUSON. No. Mr. HALPERN. Or conferences. Senator MAGNUSON. That is right. Mr. HALPERN. And they trade in available cargoes, and the rates that have traffic will bear Senator MAGNUSON. The cheaper the operating cost, the better chance they have to offer and negotiate for a lower rate, and the better chance they would have to get cargoes. Mr. HALPERN. Right. Mr. ROTHSCHILD. Right, sir. Senator BUTLER. That, in substance, was the testimony of Mr. Rothschild. Senator MAGNUSON. Yes. Senator BUTLER. Mr. Rothschild, on pages 4 and 5 of your statement you say and I quote: A subsidized operator may transfer a vessel foreign under section 611 of the Merchant Marine Act of 1936 only where the United States defaults upon the subsidy contract or cancels it without just cause. Now, in your opinion, would the Government be in default of any of its subsidy contracts if you don't get the appropriations from Congress you are now seeking? Mr. ROTHSCHILD. That is a very nice question, Senator. I think it would depend on how well it was possible for us to negoti ate with the various shipping lines. Some of them have resources which would permit them to wait a longer time than others. Senator BUTLER. If you defaulted, it looks to me like they can just wholesale transfer their vessels. So, it looks to me like it would be quite important for you to get your appropriation, wouldn't it? Mr. HALPERN. As one lawyer to another, Mr. Chairman, I should say the Government would be in default. Senator MAGNUSON. That is right. That is what we contended in the Appropriations Committee. Senator BUTLER. Then that certainly highlights the necessity for getting these appropriations for the operating subsidy. Senator MAGNUSON. At least the operator at that point would have a right to go into court. Mr. ROTHSCHILD. No doubt of it. Senator MAGNUSON. He wouldn't be thrown out of court. So, he would have a right to go in. Senator BUTLER. It seems to me it is a clear violation and, under the statement you have made, they could transfer at will. Mr. ROTHSCHILD. It would seem also that we have the bipartisan support of this committee. Senator BUTLER. Can you give us any idea, Mr. Rothschild, of the price paid by the United States Government for tramp ships, that is, the downpayment and the total price paid to the Government and the outstanding mortgages? Mr. ROTHSCHILD. I presume, Mr. Chariman, you are speaking in terms of Liberty dry cargo vessels and to those sales which were made by the Government under the Merchant Ship Sales Act. Under that act the Government sold 202 standard Liberty vessels for American-flag operation. The sales price of these ships, after repair allowances amounted to $104,799,720.59. Of the 202, 151 were sold under mortgage and 51 for cash. The amount of the original mortgage on the 151 was $61,812,755. There remained unpaid $33,679,771.53. Since the sale, however, the mortgage has been paid off with respect to 39 of these vessels, so that the Government holds mortgages on 112 standard Liberty ships at the present time out of the total of 202 originally sold. Through the sale of standard Liberty ships, the Government had already received cash payments totaling $71,119,949.06. Senator BUTLER. Mr. Rothschild, can you determine the profits the tramp-ship owners realize through the carriage of economic and military-aid cargoes, as well as cargoes financed by American loans? |