CONTENTS Anderson, Hon. Robert B., Secretary of the Navy; accompanied by Vice Adm. Francis C. Denebrink, commander, Military Sea Trans- portation Service; and Rear Adm. Ira H. Nunn, Judge Advocate Denebrink, Vice Adm. Francis C., commander, Military Sea Trans- Duke, Gordon, Southeastern Oil & Affiliates, Jacksonville, Fla. Haddock, Hoyt S., executive secretary, CIO Maritime Committee, Pappas, Thomas A., C. Pappas & Co., Boston, Mass. (statement 46 CHARTER OF TANKERS BY NAVY THURSDAY, MARCH 4, 1954 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON ARMED SERVICES, Washington, D. C. The subcommittee (consisting of Senators Saltonstall, Hendrickson, and Stennis) met, pursuant to notice, at 10:30 a. m., in room 212, Senate Office Building, Senator Leverett Saltonstall (chairman) presiding. Present: Senators Saltonstall, Hendrickson, and Stennis. Also present: Senator Flanders; Philip K. Allen, chief clerk; and Verne D. Mudge, of the committee staff. Chairman SALTONSTALL. For the record, the chair will appoint himself and Senators Hendrickson and Stennis as a subcommittee in connection with holding this hearing and reporting to the full committee on S. 2788. Mr. Secretary, this is an open hearing on S. 2788, a bill to authorize the long-term charter of tankers by the Secretary of the Navy. (The bill referred to is as follows:) [S. 2788, 83d Cong., 2d sess.] A BILL To authorize the long-term time charter of tankers by the Secretary of the Navy, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, notwithstanding the provisions of section 3679 of the Revised Statutes, as amended (31 U. S. C. 665), of section 3732 of the Revised Statutes, as amended (41 U. S. C. 11), or of any other law, the Secretary of the Navy or such officer as he shall designate is authorized to enter into contracts upon such terms as the Secretary of the Navy shall determine to be in the best interests of the Government for the time charter of not to exceed twenty tankers not now in being for periods of not more than ten years to commence upon tender of the tankers for service after completion of construction. The tankers shall be of approximately twenty-five thousand deadweight tons each with speeds of not less than eighteen knots and shall be constructed in United States shipyards for operation under United States registry. Chairman SALTONSTALL. As the Chair understands the situation, the American-flag tanker tonnage is in the process of a sort of block obsolescence which entails serious risk to our security. During the war, our buildup of the standard T-2 type tanker gave us the world's largest tanker fleet. The tremendous postwar buildup of foreign tanker fleets, and the fact that our own wartime fleet will become obsolete all in a block, plus the need for larger and much faster types, all place us in a very poor competitive position in the tanker field. Private builders are not willing to build the larger and faster types needed to meet the logistic requirements of modern fleets unless there is some assurance of a long-term charter. 1 To meet this need, the bill proposes to authorize 10-year Navy leases on not to exceed 20 new vessels of the type needed. Mr. Secretary, we have asked you to come, and we have also asked Admiral Denebrink, commander of the Military Sea Transportation Service. Will you tell us about this bill, and whether you need it at once, and why you need it, and why you think that this is an efficient way to run the Navy; why should not the Navy own these tankers, and why should they build them by private builders and lease them, and any other questions that occur to you? STATEMENT OF HON. ROBERT B. ANDERSON, SECRETARY OF THE NAVY; ACCOMPANIED BY VICE ADM. FRANCIS C. DENEBRINK, COMMANDER, MILITARY SEA TRANSPORTATION SERVICE; AND REAR ADM. IRA H. NUNN, JAG, UNITED STATES NAVY Secretary ANDERSON. All right. Mr. Chairman, shall I read a statement I have here? Chairman SALTONSTALL. Well, perhaps, if it is a brief statement, you may put it in the record. Secretary ANDERSON. If you prefer. Chairman SALTONSTALL. If you prefer we will put it in the record, and we will let you talk. You talk well. Secretary ANDERSON. All right, sir. Chairman SALTONSTALL. We will put the statement in the record, and the Secretary can tell us what he pleases. Secretary ANDERSON. Mr. Chairman, let me say, in the first place, that the Secretary of Commerce has raised one question with reference to the bill, and that is, beginning on line 3, with the words "notwithstanding the provisions of section 3679 of the Revised Statutes, as amended," and so forth, down to where it says, on line 6, "the Secretary of the Navy." The objection of the Secretary of Commerce is that the law currently provides that no tanker that flies the American flag can be transferred to foreign registry without the permission of the Secretary of Commerce. Now, the Secretary of Commerce felt that if we included this particular section that it might have some effect of abrogating the requirement of private owners owning these 20 tankers, of transferring them to foreign registry without his permission. Accordingly, we are in agreement with that. We do not want them transferred to foreign registry without the agreement of the Secretary. Chairman SALTONSTALL. So what you are asking for is to strike out that "notwithstanding" provision? Secretary ANDERSON. Yes, sir; the "notwithstanding" provision. Chairman SALTONSTALL. And that provision would permit or allegedly permit the ships to be transferred to foreign registry without getting the approval Secretary ANDERSON. That is the fear of the Secretary of Commerce; and we are perfectly willing for it to be stricken out if it raises any doubt in his mind. Chairman SALTONSTALL. The American Merchant Marine Institute, in a letter signed by Francis T. Greene, executive vice president— and I believe you have seen this letter-suggests that the last sentence of the bill on page 2, lines 2 to 5, be amended to read as follows: The tankers shall be of approximately twenty-five thousand deadweight tons each with speeds of not less than eighteen knots and shall be constructed in United States shipyards of materials and equipment produced or manufactured in the United States for operation under United States registry. That amendment would add the words "materials and equipment produced or manufactured in the United States," as I read it. Would you comment on that also in your remarks, Mr. Secretary? Secretary ANDERSON. Yes, sir; I will. Chairman SALTONSTALL. For the purposes of the record, the Chair, without objection, will put the entire letter in the record at this point. (The letter referred to is as follows:) AMERICAN MERCHANT MARINE INSTITUTE, INC., S. 2788-A bill to authorize the long-term time charter of tankers by the Secretary of the Navy, and for other purposes. Hon. LEVERETT SALTONSTALL, Chairman, Committee on Armed Services, United States Senate, Washington, D. C. DEAR SENATOR SALTONSTALL: The American Merchant Marine Institute, Inc., composed of the owners of a substantial majority of American-flag shipping of all categories, supports S. 2788, which would authorize the Secretary of the Navy to enter into long-term charters of not to exceed 20 tankers which are to be built, such charters to run for periods of not more than 10 years commencing with the tender of the completed tanker for service by the Navy. We believe that to the extent the Navy may have need for ships which are predominantly commercial in character, they should come from private industry. The proposed legislation would make it clear that the Secretary of the Navy may thus utilize the capital investment and the facilities available in private industry. We further support the requirement of the bill that the tankers, in order to be eligible for such long-term charters, must be "constructed in United States shipyards for operation under United States registry." We point out, however, that this limitation leaves open the possibility-and it is a real possibility-that such tankers may be fabricated in United States yards using major components, propulsion machinery, or other materials purchased from abroad. In order to prevent such an eventuality, which is clearly not contemplated by the legislation, the American Merchant Marine Institute urges that the last sentence of the bill (lines 2 to 5 of p. 2) be amended to read as follows, the new wording which we suggest being shown by italics: "The tankers shall be of approximately twenty-five thousand deadweight tons each with speeds of not less than eighteen knots and shall be constructed in United States shipyards of materials and equipment produced or manufactured in the United States for operation under United States registry." We sincerely hope that you will think well of our suggestion, and respectfully ask that this letter be incorporared in the record of your consideration of S. 2788. Sincerely yours, FRANCIS T. GREENE, Chairman SALTONSTALL. You will speak to the bill as amended by your suggestion of striking out that "notwithstanding" clause. Secretary ANDERSON. Yes, sir. Chairman SALTONSTALL. So that we will consider the bill as rewritten by leaving that provision out. Secretary ANDERSON. Yes, sir. Chairman SALTONSTALL. Thank you. Secretary ANDERSON. As the committee knows, the United States has a large number of worldwide commitments, and one of the requirements that we have, of course, is for the worldwide movement of petroleum products in the event of any emergency. |