be carried in ships flying the American flag-if they were available at the specified rates.

But the consensus of shipping industry sources yesterday was that, even if all available oil tankers were pressed into service, no more than 1.8 million tons, or 40 percent of the total, could be handled by the U.S. merchant fleet.

There is considerable doubt that the Soviet Union will buy all it originally negotiated for. Even so, the trade sources said, there will not be enough American shipping to handle half of a large grain deal on a short-term basis.

At present the rates for American-flag ships are about $7 higher than foreignflag rates for 10,000-ton vessels and about $4 higher for vessels in the 15,600-to30,000-ton range.

The larger ships are permitted to carry wheat at a 20-percent discount from the rates applicable to the 10,000-ton vessels. For all practical purposes, the smaller ships are said to be disqualified because of the higher rates.

Dry-cargo tramp-ship operators noted that the American tramp fleet consisted of about 115 active vessels. About 20 units were said to be larger vessels in the 20,000-ton class and the remainder Liberty and C-2-type ships in the 10,000-ton range.

Unless additional American-flag tonnage is made available-presumably tankers that would be diverted from carrying oil-the dry-cargo tramp fleet could carry only 15 to 20 percent of a large-scale wheat export program to the Soviet Union.

Whether tankers will be diverted in large numbers to grain carriage appears doubtful, many U.S.-flag vessels are profitably employed carrying refined products over coastal routes at favorable freight rates.

However, some tanker tonnage, particularly in the supertanker class, was said to be available. This could be supplemented, to some extent, by carrying grain shipments in vessels owned by subsidized steamship lines. These ships are normally employed on fixed routes.

Earlier this month one grain cargo to Hungary was moved by a subsidized vessel.

However, even if large tankers and some subsidized tonnage were brought into play, only 30 to 40 percent of the wheat exports could travel in American ships.

The shipping industry views were expressed in response to inquiries concerning the granting of two export licenses by the Department of Commerce to Continental Grain Co.

The two licenses authorized the sale of about 700,000 tons or $40.6 million worth of wheat, to the Soviet Union. It would be a cash transaction.

A spokesman for Continental said here yesterday that no negotiations were being conducted now. He said that the company was not looking for tonnage to cover that shipment, but added that a few unsolicited offers of American-flag ships had been received.

He said the sale of the 700,000 tons was "just a big question mark" now. Shipping industry sources referred to the Continental licenses as "hunting licenses" and explained that the issuance of a license was no guarantee that any "game would be bagged."

It was recalled that when shipment of 100,000 tons of wheat to Hungary was made earlier this month, only 9,000 tons of it could be booked on American-flag vessels. A waiver was granted by the Maritime Administration to permit 41,000 tons of that shipment to travel in foreign-flag ships.

Other potential obstacles to large-scale sales of wheat to the Soviet Union were said to be:

Soviet unwillingness to pay the higher freight rates for American ships. The ability of American tramp ships to keep busy with cargoes through Government-sponsored exports of agricultural surplus commodity exports under Public Law 480.

Doubt as to the ability of Russian ports to handle large tanker-borne grain shipments, which may require special pneumatic unloading equipment.

The possibility that American maritime labor might boycott foreign-flag ships carrying wheat to the Soviet Union. The Seafarers International Union earlier this month made an unsuccessful attempt to delay through picketing a West German vessel carrying Hungarian wheat.

Industry sources said they did not anticipate any relief in the situation from the authority granted the Administration on Monday to allow Export-Import Bank credit guarantees for commercial wheat export transactions.

Mr. GILES. I refer to that, Mr. Kahn, to make this point: All of us, I am sure, recall the government-to-government negotiations on the principle, and we recall the position that Soviet high officials took, that American officials took. Rightly or wrongly, the decision was made by the U.S. Government last September and October, by the late President Kennedy, that if there were any sales of wheat to the Soviet Union, they would be made through what we call private channels. grain exporters.

And then, proceeding from that point, it was going to be up to the individual exporter to strike his bargain with the Soviets. That is what it has been.

Now, what you are suggesting is that the United States should have taken the position, or should take the position, that whatever it takes to cover the differential in American shipping costs or prices, then that is it, and if the Soviets want it, then they buy it. If they don't take it, then they don't. I think the grain exporters have found out, and I think that U.S. officials have, after exploring that quite thoroughly over a long period of time, that perhaps the Soviets didn't want or need the wheat that badly.

Now, we can have different points of view as to what the basic policy of the United States should have been. I just want you to know or to remind you that there, in December and the first part of January, before Continental ever made its sale, there were a lot of shipping owners you weren't one of them because I don't recall you-a lot of shipowners who were very apprehensive that this was, in fact, going to bog down completely on shipping costs, and instead of coming in to me and talking about, "Let us be darn sure that the Soviets are going to do so-and-so," I heard much talk about "Let us work this out some way; the Soviets are not going to do it."

Now, where do we come out? All I am saying is that you have basic points of view here that are rather irreconcilable. The basic point came up early as to whether there should be some sort of direct, out-and-out subsidy for American shipping. Perhaps many could make the argument that there should be. But that basic policy decision was not made by those in our Government who have the authority to make it, and I do not.

So we got the framework set up, we moved along. It so happened that Continental or somebody came up with this Durum wheat item and you can put your own interpretation on that. All I will say is that to the best of my knowledge, the grain exporters on the basis of what I know about it, they struck the best deal they could. If they had continued or stuck with the position you have described, there would not, so far as we can tell, be any sales of wheat. Many of you will say, "That is all right; there shouldn't have been." But then we get to the question of difference of opinion as to what we really ought to do.

There are a lot of people in Congress who say, as is evident in what has happened in legislation, that it does not make any difference; there should not be any sale even if 100 percent went on American vessels, even if they paid twice the going world price, or all of the rest of it. There are a lot of people who feel just exactly the opposite.

So here in the Maritime Administration, what we have done is to take the basic policy decisions that have been made and then try to implement them or help the parties carry them out so far as the shipping.

Your point of view is a rational and logical one, but that just is not the way it turned out because of these other more basic decisions made. Mr. KAHN. One more comment in answer.

Mr. GILES. Yes, sir.

Mr. KAHN. I agree with you on several points. First of all, I agree with you on the subject that there is just so much you can make the Russians pay. I agree with you that the business is good for the country. We are not discussing that phase of it, but you have implemented a policy under ground rules which presumably were to permit a good deal of American-flag participation.

I would like now to ask a question: Under the same rules, would this new million tons of wheat sold by Cargill, how can you anticipate that this policy will work wherein there will be any reasonable amount of American-flag participation?

Mr. GILES. What is the basic question you are raising? Are you talking about the time period?

Mr. KAHN. Because the type of ship that was really to have performed or moved the largest amount of this wheat is today excluded from this movement.

Mr. GILES. Mr. Kahn, on that point of your competitive interest, between the smaller vessels and the larger

Mr. KAHN. It is not competitive interest.

Mr. GILES. You know our point on the Public Law 480. As I have indicated previously, where it turns out that the larger ships are excluded from the Soviet commercial shipments, then they are not by advice of Maritime Administration excluded from Public Law 480. But I could not take the position and still cannot, as I was requested some weeks ago, to let the larger vessels have their choice as between the commercial shipments and the Public Law 480.

So I assume on that point we will have to be following along with any further shipments, along the same line we have here with Continental. I would like to ask, if I may, sir, this one specific question:

As you know and have seen in the papers, Captain Goodman and his staff have been working with this and-I am going to ignore myself at the moment-have been charged with collusion. Do you have any opinion as to whether you think that charge is correct?

Mr. KAHN. I think that Captain Goodman would verify that the first time that I spoke to him on the telephone in about 4 weeks is last night. Is that about right? So I would say the charge is irresponsible. I don't believe there is any collusion. I will answer it that way.

But I have not been telephoning Captain Goodman back and forth. I just sent him one Telex as per request as to what I offered, and that is it.

Mr. GILES. The charge was also made, and very widely publicized, that Captain Goodman and his staff-it did not name names, but it said "the staff working on this"-were incompetent.

Mr. KAHN. This is a very difficult question to answer. I think that this program is incompetently administered, if I have to answer it honestly.

Mr. GILES. What do you mean by "incompetently administered"? Mr. KAHN. Because it is not accomplishing its purpose.

Mr. GILES. You mean incompetently administered by the people who are making the decisions from day to day because they have flexibility to make other decisions and don't do it?

Mr. KAHN. Mr. Giles, you know, I have gotten myself in a bad way with the Maritime before and I don't want to get into that. I just feel, you know, that the basic policy is wrong the basic policy. I think there is little understanding of what is required in a change of policy to really get this cargo moving. I just don't think that this has been properly administered.

I think that there has been good will on the part of everyone who has had anything to do with it and I am very sympathetic with the complexity of the problem.

Mr. GILES. Assuming that Captain Goodman and I do not make this basic policy you are talking about, which I would like to state for the record is the fact, but we do have the day-to-day job of carrying it out, do you have any opinion as to whether that has been carried out by Captain Goodman and his staff incompetently?

Mr. KAHN. No, sir; I think it has been carried out competently. If you have a set of rules and have been following them, I think that you have tried to stick by them, there is no question about it. But I just feel someplace along the line, and I don't know how high I have to go, but someplace along the line someone is sure not doing what he is supposed to be doing or thinking through the problem and I would like to meet that person and I would tell him so straight to his face.

Mr. GILES. I understand your position pretty well I believe. Mr. KAHN. Again today I promised I wouldn't say it but I did. Mr. GILES. Mr. Kahn, I think it has been good that you have said it. You say it well.

Mr. KAHN. But I said it twice.

Mr. GILES. Well, these people didn't hear it. I heard it twice but they didn't hear it but once. Thank you very much, Mr. Kahn. Mr. KAHN. Thank you sir.

Mr. NORDEMANN. Mr. Kahn, not for the part you said you were sorry you said again, but the rest of it, thank you very much.

Mr. GILES. We have one final shipowner and this is Victory Carriers' Mr. Peter Spalding. Is Mr. Spalding here, please?

Mr. SPALDING. I believe it is not around any more. That ship is not around any more. I did not know that we would continue negotiations.

Mr. GILES. Is this Mr. Spalding?

Mr. SPALDING. Yes.

Mr. GILES. This is Mr. Peter Spaulding; S-p-a-u-l-d-i-n-g?

Mr. SPALDING. S-p-a-l-d-i-n-g.

Mr. GILES. And Victory Carriers, Inc.

STATEMENT OF PETER SPALDING, EXECUTIVE VICE PRESIDENT, VICTORY CARRIERS, INC.

Mr. SPALDING. Mr. Chairman, I had no idea I was to come down here for the purpose, or with the possibility, to continue negotiations on the Montpelier Victory which we had offered to Continental. I therefore tried to obtain employment for the ship. This must be my lucky day because my office just advised me about a half hour ago that the ship has been fixed. Otherwise I would have been able to help out our friends in Continental and would have been willing to give them the ship ready on February 13 for 36,000 tons of grain

which I had offered over the last 3 or 4 weeks to do. If you think that I can be of any help here

Mr. GILES. Then you have no ship in issue or in controversy.
Mr. SPALDING. Indeed not.

Mr. GILES. While you are here, Mr. Spalding, if you have any general comments I would certainly be happy to have them for the record. If you don't mind, I would like to ask you these same specific questions I asked Mr. Kahn, if you would like to consider them. If you prefer not to get that specific in personalities that is all right.

But as you know, we have had a rather serious charge again I am ignoring myself personally-it is very specific, a very serious charge against Captain Goodman and his staff.

Very specifically it is that, "We are convinced from its failure to protect the public interest and the rights of the U.S. merchant marine that the Maritime Administration, either in collusion with Continental or,”—and I am skipping the Administrator-"that portion of the staff charged with supervising this program are completely incompetent."

Now you have an important shipping operation and you have a good deal of dealing with this agency and this staff. Do you have any opinion which you would care to express as to whether you think or you know there has been any collusion on the part of Captain Goodman and his staff?

Mr. SPALDING. Mr. Administrator, I almost missed the plane this morning. I wish I had. But I would be less than fair if I would not state in this connection that I have always had the highest regard for Captain Goodman. There is no question about his integrity, his ability, and his very sincere determination to help the American merchant marine.

You referred to, I don't know which dictionary, probably Webster's, for definition of the word "collusion" and you seconded the motion of Mr. Kahn's. Surely there was no collusion of any kind. But having said so, you will pardon me if I say that I think this program does need tightening up.

Perhaps we are faced here with a situation which called for fairly quick decisions which could not be handled very much differently from what it was.

Furthermore, I understand you always know exactly on Monday morning how the football coach should have instructed his team the day before but I wish to state that I would not only have been able but I would have been most anxious to carry these 36,000 tons of cargo which Continental Grain now still wants to cover.

In this respect if I may make two points not to be considered directed against anyone but I hope that perhaps in the future it may help to tighten up this program in the interest of everybody concerned, including our grain merchants, because it seems to me that this program might continue for a quite a while, might also be expanded quantitywise and in that case we had better face the issues squarely.

Now in regard to the negotiations which we conducted on our ship since the beginning of January: I believe we made the first offer about January 7, when we offered at the Administration rate of $18.02. Sure, I am supposed to do a job for my company. Therefore I did not go along with all the terms of the tender in the beginning. As a matter