Deduct

Revolving fund, 1946 budget, base statement-Continued

Revolving fund base statement for 1946 (by functions and activities)

CHARTER HIRE

Mr. CANNON. You have an item for charter hire for which you estimate an increase of $9,906,000 over 1945. We discussed charter rates at some length when we had this matter up before, and the committee was in hopes that rates would be reduced. I judge from this item that you have not been able to reduce them. What has been your experience in that respect?

Admiral LAND. There will be an increase in the number of ships under charter and also the increase reflects the higher time charter costs on the bareboat out time charter back deals.

Mr. CANNON. It is due to two things: first, an increase in the rates, and, secondly, an increase in the number of vessels?

Admiral LAND. It is primarily the increase in the number of vessels. Our rates were reduced to some extent by general order 37. They have not been increased.

Mr. JOHNSON. That is shown on page 70, where there is given a complete analysis and reconciliation.

Mr. CANNON. What is that analysis? Give us a résumé of it. Mr. JOHNSON. The increase during 1946 represents the net sum of estimated adjustments as follows:

Base statement War Shipping Administration, 1946 budget, charter hire

[Amounts shown in thousands of dollars]

1945 program.

Deduct items included in 1945, not required in 1946:

1. Vessels on hire part of year and purchased during year, 59 ships, non-
recurring.

2. Casualties during year 1945, 10 ships, nonrecurring.

3. Net decrease for return during 1945 of special chartered vessels, 4
ships

Total deductions..

Add excess of full-year cost during 1946 over 1945 cost of items required dur-
ing only part of 1945:

4. Net increase for new vessels delivered during 1945, 27 vessels.
5. Net increase for 5 additional special chartered ships during 1945.
6. Net increase for 34 owned vessels which were bareboated out and
time chartered back during 1945..

Base for 1946

Total additions....

Increase (+) or decrease (-) from base for 1946:

1. Casualties estimated for 1946, 5 vessels..

2. Net decrease in off-hire credit.

3. Decrease for estimated purchases in 1946, 54 vessels.

4. New deliveries during 1946, 14 vessels (in terms of vessel-years)
5. Increase for 48 owned vessels which will be bareboated out and time
chartered back during 1946.

1946 estimate.

POWERS OF ADVISORY BOARD ON JUST COMPENSATION

Mr. CANNON. Now, going back to page 16, what are the powers of this advisory board on just compensation? What are its functions Admiral LAND. It is a body composed of three eminent jurists st up to determine equity and justice to the Government and to th

operators. Their powers of course are not statutory, but, just as the term indicates, advisory.

BASIS OF DETERMINATION

Mr. CANNON. On what basis does it make its determinations to which you refer here? Does it fix rates for a particular ship or does. it govern rates by type of ship?

Admiral LAND. It lays down 10 general rules for determining just compensation. The 10 rules are administratively implemented by the War Shipping Administration. They laid down some very correct and proper fundamentals on which to base just compensation.

Mr. CANNON. It does not take individual vessels then; it establishes a formula that you are to follow?

Admiral LAND. Yes.

RECONVERSION OF SMALL CRAFT

Mr. CANNON. I see that you have here an estimate for the reconversion of 135 small craft and that you provide for that reconversion exclusive of the amount of the charter hire. That is at the bottom of page 16 and the top of page 17. What is the amount of the charter hire there in the case of those 135 small ships?

Admiral LAND. They are of sizes ranging from 35 feet and a few tons up to a thousand tons' displacement.

Mr. CANNON. Could you give us the cost of reconversion as related to the value of the craft?

Admiral LAND. As to those we have had to reconvert; yes. We are doing our best to get those back to the owners under a special law passed by the Congress giving the original owner the first crack at it; and if we cannot negotiate settlement with him we have to sell them. Of course reconversion is a very dubious matter with a small boat. It frequently costs more than the boat originally cost. We have had a number of cases of that kind. Most of them are already settled, and we have had a few very cantankerous owners, but the percentage is extremely small. The table at page 101 gives the details of it.

Mr. CANNON. Just in one sentence, then, summarize those last two paragraphs, please, so we can get it into the record.

Admiral LAND. I think the most important thing is the last paragraph. I cannot improve on that [reading]:

On redelivery the Government, represented by the War Shipping Administration, is obligated to restore the chartered vessels to a condition at least as good as when delivered, reasonable wear and tear excepted. On the basis of known cases involving redelivery of chartered vessels these reconversion costs have varied from $60,000 to $5,000 depending on the condition of the vessel on redelivery. It is reasonable to estimate that a fair average cost for each vessel would be $25,000.

Mr. CANNON. Then the value of the vessel itself does not enter into it?

Admiral LAND. It enters into it when we determine whether or not we should reconvert it; yes. In some cases, if the reconversion cost is too high, we requisition the vessel for title to pay the owner just compensation and clean it up that way rather than to go to a lot of additional expense which would come out of the Treasury.