The demand is going to be there. The supply of ships is going to be ry limited, even with the acquisition of these 12, but those prices are ing to be controlled by governmental restriction. Senator BIBLE. I am glad to have that information. You concur th what Colonel Chambers says on that point? Mr. SHETH. Yes. Before I go into the conclusions in my statement, while we are on s pricing formula, I would like to testify that one of the other things ich brings us to this country for the purpose of taking reserve fleet ps is also the fact that we are acutely short of foreign exchange. Senator Cooper said, on a broad basis we have 800,000 rupes, which approximately $200 million foreign exchange shortage for the iod between 1956 and 1961. Under those circumstances the Government directed to all industries t are now considering expansion that they must endeavor to get erred payment and we feel if these ships are released on a deferredment basis, it will go a long way in building our economy and ultaneously conserving our exchange in the short-range period. n the concluding remarks I would like to say that on the broad v, the case for a dozen Liberty ships rests on solid grounds. Here omething that a key Indian industry urgently needs but cannot get where except on terms that are prohibitive; something that the ted States has in plenty, that she can easily sell, and deliver mediately. Turthermore, the United States can do so in full conformity with present maritime policy and also her established policy of extendassistance to India to strengthen her economy at vital points. nder the ICA program, a hundred locomotives were given to ian railroads at a cost to the United States of some $28 million. assistance to Indian shipping would be in the form of vessels to old to India, at a realistic value in the light of their restricted and the good to come to both countries. hese considerations, in our opinion, far outweigh any technical ctions that could be raised against the proposal. We fervently e that they will do so for the good that it will do our country as as your own. shall now request our representative, Col. J. M. Chambers, to k further on this subject. once again wish to thank you, sir, and all present for having ded me this opportunity of giving my views on the above. I will appy to supply any details or back-up material that might be ired. -nator BIBLE. Thank you very much, Mr. Sheth. You have given very able and well considered statement. We are happy to have views. olonel Chambers, would you care to supplement this? olonel CHAMBERS. Thank you, Mr. Chairman. I had felt earlier it would be unnecessary for me to say anything about this bill but o some of the things that were suggested yesterday and that have said today, I would like to comment further. rst of all-and I don't know whether I could qualify as an expert I certainly don't intend to try to do so, sir, but I have been intily connected with the problems of the Maritime Administration and many of our security problems for many years, not the least of which was working up here, sir, for about 5 years. I have always had the belief that we shouldn't sell any of these ships from the laid-up fleet unless there was a positive advantage to be achieved for our country, that it was helping our foreign policy or some of the broad problems we had designed to cover the total security of ourselves and the free world. And certainly in the case of India I became convinced that this criteria-my own self-imposed criteria, if you will-was being met. The part that India plays in this fabric of the free-world countries that we are trying to build up has been more clearly than I could ever say it, put out by Senator Cooper, today, and later by Senator Humphrey. I am a little disturbed that we find ourselves after about a year and a half of rather careful consideration on the part of the appropriate departments of our Government, with the question of including a bill for India for the coast wise trade of India with a group of other bills, many of which are for worldwide trade, because I am afraid, Mr. Chairman, due to the very size and complexity of that problem that any or all of these measures could bog down and not be enacted. Senator BIBLE. Admitting that is true, certainly we don't have the favorable report insofar as Maritime is concerned nor do we have a favorable report insofar as State Department is concerned on Senate Joint Resolution 66. Colonel CHAMBERS. As a matter of fact, Mr. Chairman, you have in your files a favorable report from the State Department on Senate Joint Resolution 66 which ends up with the statement that this is a coordinated-that the Bureau of the Budget offers no objection which means it is a coordinated report. However, that is some few weeks old. Senator BIBLE. That wasn't the position I understood State to take yesterday. Colonel CHAMBERS. That was in support of what is rather a new idea within the executive branch and that is that they wanted a consolidated bill on which I might say that the salient features of the Indian bill fit four-square. In other words, the bill as suggested was a general bill which dealt with vessels that would be limited to the coastwise trade and our proposed legislation meets that completely. Furthermore, it has the other restrictions in there that Mr. Morse discussed very briefly yesterday. Senator BIBLE. Certainly your bill doesn't square with the Maritime Administration's proposed bill insofar as the pricing portion is concerned. Colonel CHAMBERS. The pricing pattern we have already discussed a little bit, and I have a suggestion to offer on that. In fact, I might sum up the suggestions I would like to offer, Mr. Chairman. I respectfully submit that the legislation in India's behalf should be considered on its merits and enacted as separate legislation, having in mind the fact that your files will show that certainly up until 120 days ago or up until yesterday's testimony, really, the executive branch of our Government was, on the record, in support of Senate Joint Resolution 66. Senator BIBLE. You are talking about the State Department. Colonel CHAMBERS. Yes; and it was a coordinated report coming out of the executive branch. I don't think there was a separate report here from the Department of Commerce or the Maritime ministration. However, in the event that you decide to go ahead with general islation, sir, I submit that in view of all the evidence that has been luced here today through Senator Cooper, Senator Humphrey, and ope ourselves, and others, that perhaps there is sufficient merit to king certain that we will try specifically in that general legislation make sure that the problems of India are met in a realistic fashion. Ve are trying to help a country, here, which is just trying to get ted as a country and which in the past has not been able to take antage of the Ship Sales Act. Senator BIBLE. How do you propose that be done, specifically? Colonel CHAMBERS. I think you are quite correct; you get right n to the pricing pattern and certainly there are several alternative s that could be suggested but it would appear to me by proviso, tever you set up in the bill, you could meet the problem of India l on. ow, Mr. Chairman, the proposed legislation says that a reasonable uction will be made, in view of these limitations that will be osed. ow, your staff can very easily verify the fact that this percentage veen an unrestricted Liberty and a restricted Liberty presently lies and recognize there is the additional restriction of coastwise Le in connection with India. would seem to me that they could come out with a formula which ld be acceptable not only to the Congress, but to the executive ach of our Government, and also which would be realistic from the dpoint of the Indians being able to participate. owever, I would rather see you put that in law, and while I make rief or even discuss these bills for other countries, it seems to me, hat all you are doing is giving the Department of Commerce or Administrator of the Maritime Board sort of a license to sit down battle these cases out from here on out. I think the Congress es this problem or says what they think the pricing formula ld be, as they did in the Ship Sales Act when they put in upset es and things of that type. If it does, you will find the purpose our legislation will be implemented a great deal better than if you - it to what a man I presume to be reasonable will determine to asonable on any given day. seems to me this morning I heard some things which I do not I whether I like or not, Mr. Chairman. People were sort of ing that Americans should not have the right to come to the ress with proposed legislation-at least it seemed this morning some of the people who testified felt that they should not be ng up here with bills for you to consider. elieve this is where matters of that kind should come. In drafting egislation, I could see how they would like to have administrative ority to decide which country would get what vessels at what s, and I believe, sir, that it can be solved by the Congress and he Congress should write the formula into the act and not leave a matter of administrative discretion. e only other point I would like to make is this, that in connection this business of payment in cash, unless the Secretary would e to the contrary Senator BIBLE. You are talking now to the general bill? Colonel CHAMBERS. The general bill, or I would presume in the event a bill were specifically enacted for India that perhaps some language would go in the on that. If I understood Mr. Morse's testimony, he testified that he had-the history of the mortgages had not shown that they had defaults. Just 1 or 2 cases out of a great many sales. If that is true, why do they want to change the pattern and put it all on a cash basis? Now, again speaking solely to India-some countries may be financially able at the present time to pay cash and save the interest, and it is a better deal for them. In the case of India at the present time, due to the foreign exchange situation that does prevail-and I do not know whether Senator Cooper was right; I assume that he was, but he pointed out they were about $1 billion on the wrong side of the ledger in foreign exchange. That being true, if they have had good experience in the past, it seems to me that certainly they should not be imposing this restriction in the future. To put it another way, again, if there is general legislation, then I would like to see that part by proviso also specifically exclude India and not leave it to the discretion of the Secretary of Commerce. Outside of these points, sir, which have been a little on the rambling side due to the fact that the context has been fouled up, I would like to say that the consideration of this legislation that has been given over the months by the executive branch, and their files, I suspect, would show clearly that this is one case where they believe it will make a substantial contribution in our overall development of foreign policy, through improving the economy of India, and I would earnestly urge that the staff make themselves aware of that material, because it is quite exhaustive and apparently the State Department agrees with it completely. Senator BIBLE. I am very happy to have your views, Colonel Chambers. Possibly the staff has some questions. Mr. LUCKEY. Yes, Senator. Colonel, in the event legislation is passed out of the committee permitting the sale of vessels to India or to citizens of India, in the event it is to citizens of India, would the Government of India guarantee payment of those vessels? Mr. SHETH. Yes; they would. Mr. LUCKEY. The Government itself would? Mr. SHETH. The Government of India would. Mr. LUCKEY. Is it your plan, in the event you get any of these vessels, you are going to have them reconditioned and remodeled in American shipyards? Mr. SHETH. Yes, sir. Mr. BOURBON. Is that in the bill, sir? Colonel CHAMBERS. It is not in the bill, but it would be acceptable to include it in the bill, I am sure. Mr. LUCKEY. On page 3 of your statement you state that you attempted to buy some American-flag Libertys in the open market and to secure approval from the Maritime Administration to transfer the flag. Did you make formal application to Maritime and you were formally turned down? lonel CHAMBERS. Yes, sir. We do not understand there is a al procedure. This was handled as an intergovernmental propon. The Indian Embassy prepared an aide memoire to the State artment asking if this could be done. We, here, were handling specific details of it. The State Department approved it and mended it very strongly to the Department of Commerce and Maritime Administrator. I, personally, along with Dr. Zen, who then the general manager of Great Eastern, met with the Admintor and some of his assistants, and at that time we were advised, to the objections raised to flag transfers, they could not approve r. LUCKEY. What was the date of this? lonel CHAMBERS. As I recall, it was about a year ago this time. . SHETH. March 1956. lonel CHAMBERS. I might add that that was followed by sugons that we seek legislation, which we were told would not be sed-that was in that same conference-and, similarly, followhat, a second aide memoire went to the State Department, now ng about legislation for the procurement of vessels for India, mething distinct from the approval of the transfer of 4 to 6 Is for the Great Eastern Steamship Line and our State Departstarted an exhaustive study which really culminated when they ented on Senate Joint Resolution 66. . LUCKEY. When you had your informal talk down at Maritime, you proceeding on the basis of transferring the vessels to India e purchase by the Indian Government or for purchase by private n corporations? . SHETH. Private Indian corporations. I think the normal proe with which the Maritime Administration deals with these s, if the particular American shipowner would reinvest that in American shipping, such permission would be granted. The that were offered to us were by American shipowners who wanted spose of their ships without the restriction of reinvesting that n American shipping. It was due to that that the efforts were -cessful. . LUCKEY. So it was through no fault of your own that you were d down? . SHETH. That is right. It was due to local laws and local cir cances. ator BIBLE. Thank you very much. We appreciate your testir next witness will be John A. O'Donnell, representing Mariana inte Mexicana, Mexico City, D. F. EMENT OF JOHN A. O'DONNELL, REPRESENTING MARIANA MERCANTE MEXICANA, MEXICO CITY, D. F. O'DONNELL. Mr. Chairman, I am John A. O'Donnell, a lawyer offices at 1025 Connecticut Avenue. I appear here with respect to 14, which has to do with the sale of some MAC-1 vessels to some ns of Mexico. that connection I represent the Mariana Mercante Mexicana, of o City, whose president is Mr. Angel Rosas, who are also interin securing Liberty vessels in the event on the basis of S. 1644- |