Admiral LAND. Yes.

Mr. WIGGLESWORTH. And you have filed with the committee, I believe, your rules under that interpretation?

Admiral LAND. Yes. I do not want to be misunderstood. We have offered that to the operating companies. I cannot tell you whether they will accept it or not.

Mr. WIGGLESWORTH. Have there been any payments made under this interpretation?

Admiral LAND. No. This was only promulgated recently, and if you will listen to the ship operators you will find some of them are quite dissatisfied with it, but there it is. As far as we are concerned, it is on a "take it" or "leave it" basis.

Mr. WIGGLESWORTH. Do the agency rules show the mathematical application of the judges' interpretation?

Admiral LAND. Insofar as it is humanly practicable to convert a legal statement into a mathematical formula; yes.

Mr. WIGGLESWORTH. For instance, you gave in your statement a figure for the basic bare-boat charter rate and also for the basic insurance valuation.

Admiral LAND. That is correct.

Mr. WIGGLESWORTH. But you did not tell us, I think, what the basis of determining the fair value for the purchase, or the requisition of a vessel is under the present set-up.

Admiral LAND. That was the dead-weight-ton basis that we did use. We also have the time-charter rates, and all the increments that go on there, depending on speed, refrigeration, condition, and so forth, all of which are available.

Mr. WIGGLESWORTH. Have you given us that?

Admiral LAND. It is in our General Order No. 37, which is made a part of this record. I have also placed in the record some memoranda which furnish the background for these rates and values. When you get into the passenger ships, you have to handle them individually. Mr. WIGGLESWORTH. Have you any idea how much extra we have paid in connection with purchases and requisitions than we would have paid if the yardstick used had been section 902 of the act? Admiral LAND. Well, I do not know just what the yardstick is there, except the law itself. I think that we are complying with the law and complying with correct legal interpretations of the law. Therefore, I assert that we have not paid anything beyond section 902 rates or values. If you mean what we would have paid if we had requisitioned sooner if we had requisitioned when some people wanted us to and when we would have hit a high market, then I say that we probably never would have gotten the ships away from the courts, because they would have refused our rates and values and would have had good evidence upon which they could have gotten more than we allowed, perhaps two or three times what we allowed. Mr. WIGGLESWORTH. I am thinking about the question of enhancement that has been discussed so much back and forth, if the enhancement had been eliminated.

Admiral LAND. The enhancement referred to in the law, has been completely eliminated.

Mr. WIGGLESWORTH (interposing). How much more have we paid than we would have paid if we had paid as of the date of the declaration of the limited emergency?

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Admiral LAND. I do not know how to answer that question. I do not think we are paying any more. If you will refer to the memorandum mentioned earlier you will find that our rates and values can be reconciled even with the 1939 theory of the Comptroller General.

Mr. WIGGLESWORTH. You have heretofore, have you not?

Admiral LAND. No; except possibly where we had insurance contracts which are not covered by the enhancement clause. We have paid what we were contractually obligated to pay.

Mr. WIGGLESWORTH. Senator Aiken made a talk on the floor of the Senate recently with which you are no doubt familiar, in which he stated, I think, that there have been instances of payments from 13 to 16 times what he construed as the legal valuation of the ships. Admiral LAND. He is taking General Order No. 24, which has nothing whatever to do with the case, and is nothing more than something on which to determine subsidy recapture. It is a misinterpretation and has never been acted upon by the Commission at any time in accordance with the interpretation that he has placed upon it. I shall prepare and submit a reply for the record tomorrow on that item.

Mr. WIGGLESWORTH. You gave me some time ago certain tables which dealt with purchase and requisition, in the first place; in the second place, with charter hire; and in the third place, with insurance. The tables provided detailed figures up to the end of the calendar year 1942. How much of a task would be involved in bringing those tables down to date, say, to the end of the calendar year 1943?

Admiral LAND. I think that we could bring them up to date. We spent a tremendous amount of time with the first reports. I think they can be brought up to date in less time and with a smaller expenditure of effort.

Mr. WIGGLESWORTH. Then, I would like to have those three tables brought up to date.

Admiral LAND. All right, sir; it will take a lot of time and man

hours.

Mr. WIGGLESWORTH. You would make the same observation, I take it, as far as General Order No. 24 is concerned, with respect to charter hire?

Admiral LAND. Yes. General Order No. 24 is a subsidy valuation entirely. It does not have anything to do with this.

Mr. WIGGLESWORTH. And also in respect to the matter of insurance?

Admiral LAND. That is right.

PERCENTAGE OF INSURANCE BY GOVERNMENT AND BY COMMERCIAL

COMPANIES

Mr. WIGGLESWORTH. Under what conditions--it is not clear from your justifications-is commercial insurance utilized as distinguished from Government insurance?

Admiral LAND. Of course, there was a time when there was not any commercial war-risk insurance and we did it all. Some of that has gone back, and I would rather have Mr. Chubb go into the details of that because what I know about insurance would fill a very small book. We have done two things. We have tried to build up the merchant

marine insurance market so we would not be dependent upon the foreign market, or Lloyds, if you like. We have supported the American Merchant Marine Syndicate. When you talk about insurance, you have four or five different kinds of insurance, and at one time there was not any private market. By an act of Congress we were authorized to insure in certain cases. We made a report to Senator Bailey and Judge Bland on the activities, which from a paper point of view looked as though we made money. Actually, we do not attempt to indicate that we made great profits, but we did earn a profit of about $1,800,000. Now as the risks are becoming less and less serious and there is more activity in the private market, they are taking on more and more the various types of insurance; but for a complete and intelligent discussion of the thing, I would rather that you call upon Mr. Chubb who is here.

Mr. WIGGLESWORTH. I do not want to go into too much detail, but I would be interested in knowing what percentage of the insuring the Government is doing and what percent is done commercially, and what insurance there is if any, that is done commercially but reimbursed by the Government.

Admiral LAND. We can put that in the record on a percentage basis. Mr. CHUBB. Subject to correction, approximately 60 percent of the amount of insurance that we have in the Budget will be paid into the Government insurance fund, and approximately 40 percent will go to private underwriters.

Of that 40 percent a great part is under agreements where we can recapture any excessive profit, or we can participate. We are really utilizing the services and claims investigating services of the insurance underwriters.

Mr. WIGGLESWORTH. Are the premiums paid by the companies or are they paid by the Government?

Mr. CHUBB. On privately owned ships, up to the present the premiums have been paid by the owners when they have been under time charter. Under the new form of time charter, we are taking over the responsibility for the insurance.

Mr. WIGGLESWORTH. So that in effect the Government is paying the premiums to private insurance companies?

Mr. CHUBB. In the case of those ships, we are paying the premiums on the basis where we can recapture any excess profit, and we do not share in any loss.

Mr. WIGGLESWORTH. Is that the 40 percent that you have already referred to?

Mr. CHUBв. That is a portion of the 40 percent that we have already referred to.

Mr. WIGGLESWORTH. What would that run, about half of the 40? Mr. CHUBB. It is less than half. Of the remaining half, the great bulk relates to liabilities to third parties-collision claims and injuries. In that case, even where we do insure the risk, we run 75 percent of the losses and we recapture 75 percent of the profits, and the organizations of the insurance companies actually settle the claims for us, subject to our supervision. It saves a lot of work and helps out the manpower problem for us.

TRADE-IN OF SHIPS

Mr. WIGGLESWORTH. What is the picture with reference to the trade-in of ships?

Admiral LAND. It is progressively going on. Quantitatively, the tanker people are more interested and have traded in certain of their older ships for new tankers. The biggest deal we made on a trade-in basis was the ore boats on the Lakes, and progressively this will keep on happening, I assume, from time to time, especially if they think they see the end of the war so that they can utilize section 510 and get rid of the old ships and get in operation the new and more economical and more efficient ships. At the end of the war, by law, we are required to scrap these ships so traded in, but quantitatively, that is not going to be a very great number of ships.

Mr. WIGGLESWORTH. Is the basis of determining the trade-in value the same as determining the purchase value?

Admiral LAND. Not necessarily although it may have a good deal of bearing on the subject. Each case is analyzed and broken down into its component parts, and each trade-in is considered on its merits, depending upon the type of ship, its condition, its speed, building cost, and things of that kind. But it does not fit in exactly with the formula we have used here since the law is much more flexible on trade-ins although they will be utilized on the same basis and with the same judgment, so that fundamentally the data we have on this side of the hall, because you are talking about M. C. now, and W. S. A. information will be used by the Maritime Commission in connection with trade-ins. All the data that W. S. A. has prepared will be utilized so as to arrive at a proper value.

Mr. WIGGLESWORTH. Does the basis of reaching that value also appear in the rules that the agency is furnishing us?

Admiral LAND. No. That is a matter that is quite separate. Mr. WIGGLESWORTH. There are not many of these trade-ins, are there?

Admiral LAND. Not a great number of them. I can put that in the record.

Mr. WIGGLESWORTH. I wonder if you could give us a table, a similar table, which would show the name of the ship, the owner, and the age of the ship.

Admiral LAND. Yes.

Mr. WIGGLESWORTH. The construction cost and the credit allowed, so that we could get an over-all picture of that activity.

Admiral LAND. We will be very glad to do that. As I stated, it is a Maritime Commission project, but I will put it in the record. (The statement requested is as follows:)