York Port Authority. Philadelphia's piers, outside of the railroads, are entirely city property. Jacksonville, Fla., is another city-operated pier facility area.

In the authority field, which again really is Government in taxation money, you have New Orleans with the Board of Harbor Commissioners, you have San Francisco with the same situation, and Newark has been referred to here in connection with the New York Port Authority.

Abroad you have the same situation. In London you have the London Port Authority, you have it in Glasgow, in the continental ports like Antwerp and Rotterdam.

Unfortunately, in one sense the development of ports is not a private enterprise venture because of the unprofitable nature of the business as such. It has been taken over by Government. That does not mean the subsidy that Government gives to the shipping and trade activities of its port is a losing proposition because the indirect benefits that flow back from shipping into the industries that locate on these great waterways such as the Delaware River really give the subsidization of these shipping facilities a very handsome return to the city and the State and even the Federal Government. So that I, as a businessman, am not concerned that we cannot get private capital into this field. It would be very unusual if we could succeed in doing so. I do think it is the responsibility of the city of Philadelphia to carry on the grand job they have done since Mayor Dilworth came into office to promote the commerce of the port. He has done a magnificent job and has taken more interest in the welfare. of the shipping in the port than any mayor in my experience.

I think the offer of the city, as I have demonstrated with the figures, will probably mean that if they make any money it will be so small that it is meaningless compared to the investment they are willing to put into the property of $3 million.

If I may, Mr. Chairman, as to some of the questions that were asked of the preceding witness, the Philadelphia Piers, as operators of the property for the Federal Government, is a limited-capital organization that was formed by local warehousing interests to operate the piers as such under lease. They have no substantial capital. They are simply looking to the operation of the piers to give them a small return on the operating organization that they have set up and secondly to in that way prevent the use of the facility as purely warehouses, as otherwise it would compete with the warehousing facilities they own and operate.

We e are very anxious that the facilities not be made available for warehousing and so in the agreements that the Army and, before that, the Maritime Administration had made for the leasing of the piers we have insisted that commercial warehousing should not be permitted. in connection with the use of the piers.

They definitely are not interested in making an offer for the property or at best I would assume they would make a minimal offer on the basis of doing no rehabilitation, which we think is vital to the future operation of this tremendous terminal facility. I think that is the reason they have not come down to the hearing today, Mr. Bray, is that they realize you could only take a property of this kind on if you could get it for nothing and do nothing with it as far as rehabilitation.

I think, Mr. Chairman, that covers the practicalities of the situa tion as we see it. We would like to suggest to the committee that you do favorably consider the bills that are before you with, in view of the Department of the Army's report to you, the elimination of paragraph (c) of section 2 on page 2. Otherwise, we businessmen of Philadelphia would like to see the city tied down in taking over this property, if the Congress approves, that they do have to spend this $2.5 million. We want the property rehabilitated and we would like to have the assurance that some successor to Mayor Dilworth would carry through on the rehabilitation of that pier by having it as a part of the transfer legislation that the city must do exactly that. So we have a selfish interest in asking you to keep the bill in its present terms with, in deference to the Department of the Army, the elimination of paragraph (c) of section 2 and leaving it to condemnation and just compensation as to the Government taking over the facility in time of emergency.

Mr. DURHAM. Thank you very much, Mr. Schad. Are there questions?

Mr. GREEN. In your opinion, Mr. Schad, is there any private individual or company who would come in and purchase these piers and operate them as a marine terminal?

Mr. SCHAD. Congressman, in my opinion there is not, for the obvious reason that on a $3 million investment based on current conditions, $162,000 loss would be sustained. I do not know of any capital you could get interested to go into a venture business such as this is.

Mr. GREEN. I took it from your testimony that there is no commercial value in the operation of the piers as a terminal pier to keep in standby condition for interest of national defense and saving the lifeline of the port in Philadelphia.

Mr. SCHAD. I would think that this committee would be vitally concerned, in spite of the Army's attitude, that this facility be maintained as a very vital defense facility for the future, that meantime it serves the Government and the interest of the taxpayer that we put it to use in the city of Philadelphia for the advancement of trade and all that it means to the welfare of the country as a whole.

That is a consideration that would not enter into private investment in a facility of this kind. They would only be looking for a return on the investment and they do not think of all the indirect benefits that flow to both the Federal, State, and city governments and the population as a whole from this aid to the development of foreign trade. Have I answered your question, sir?

Mr. GREEN. Yes, sir.

Mr. BRAY. I would like to address this question to the mayor. There is no question of your interest and the present city administration's interest in using this pier for its proposed purpose, that is, operating a pier, but if this bill is passed the actual cash you put into it, unless you did rehabilitate it, it is an unconscionable and enormous bargain.

It is your intention and the intention of the present city administration that if in the future in consideration for this that if the city does not carry out its part and use it as a pier and does fail to rehabilitate to the extent of $2.5 million, that it will revert to the Federal Government again?

Mr. DILWORTH. That is right.

Mr. BRAY. It should revert to the Federal Government?
Mr. DILWORTH. That is right.

Mr. BRAY. I believe there is a legal phrase for that.

Mr. CUNNINGHAM. Reversionary clause.

Mr. BRAY. That there shall be a reversionary clause in there that if you do not carry out your part of the bargain and use it as intended it should revert to the Federal Government, including whatever improvements you have placed on it meanwhile.

Mr. DILWORTH. That is right.

Mr. CUNNINGHAM. I notice from the report here that when this land was acquired during World War I the total cost was about $506,000. I am no authority on real-estate values in Philadelphia but it would seem to me within the city of Philadelphia that far back that was a very reasonable price. The Government did not pay an exorbitant price, according to the land values at that time.

Was there any assistance given to the Federal Government, either financial or otherwise, in acquiring this land when it was needed for military purposes? If there was such assistance given, I think it should be in this record in all fairness.

Mr. SCHAD. You mean whether the city of Philadelphia donated any of this land?

Mr. CUNNINGHAM. Or any group of interested citizens raised money to acquire the land for the Government, which often happens? Mr. SCHAD. I do not know.

Mr. CUNNINGHAM. I suppose such records are available if it did happen.

Mr. SCHAD. If I may suggest, I would think the Department of the Army could give you practically everything. I do not know whether they are here today. They do have the complete record on this whole situation. These piers are 40 years old.

Mr. CUNNINGHAM. I have run into cases in the past where the local people in organized citizens' groups did a lot in the way of acquiring land for the benefit of the Government and where the Government got it at a very low price or free and yet today there would be no records to prove that except some old newspaper files.

Mr. DURHAM. Thank you very much.

We have one more witness

we would like to get through, Mr. Francis A. Silver.

STATEMENT OF FRANCIS A. SILVER, COUNSEL, INTERAGENCY COMMITTEE ON PORT UTILIZATION, INTERSTATE COMMERCE COMMISSION

Mr. SILVER. I am also counsel for the Interagency Committee on Port Utilization and it is more in that capacity that I appear here today.

Mr. DURHAM. Who are you employed by?

Mr. SILVER. By the Interstate Commerce Commission.

Mr. DURHAM. Federal Government?

Mr. SILVER. That is right.

Mr. DURHAM. You may proceed.

Mr. BYRNE. I invited Mr. Silver here because he knows the situation.

Mr. DURHAM. We are glad to have you.

Mr. SILVER. I have no prepared statement because my invitation just came this morning. However, I have been associated through my connection as counsel for the Interagency Committee on Port Utilization with the Philadelphia pier situation. It was in 1955 in the summer or fall that it was brought to the attention of this committee that the Army supply base had been declared surplus to the Army need and would be sold. This committee to which I refer, which has representation on it from the Department of Defense, Department of Commerce, Department of the Interior, and is chaired by a member of the Interstate Commerce Commission, is very much interested in the national defense aspects of the situation. This committee, as you may know, developed a plan for the utilization of port facilities in time of war. Of course, facilities such as these under discussion here today are of great importance. As a result of the study made by the committee at that time, it addressed a letter to the chairman of the Armed Services Committee of the Senate embodying its views. I have a copy of that letter today and would like to make it part of the record.

Mr. DURHAM. Without objection, it will be made part of the record. (The letter referred to follows:)

Hon. RICHARD B. RUSSELL,

INTERSTATE COMMERCE COMMISSION,
Washington, December 14, 1955.

Chairman, Armed Services Committee,

United States Senate, Washington, D. C.

DEAR SENATOR RUSSELL: At a recent meeting of the Interagency Committee on Port Utilization, of which I am chairman, information was brought to its attention to the effect that piers Nos. 96, 98, and 100 South, Delaware and Oregon Avenues, Philadelphia, Pa., known as the Philadelphia Army Supply Base, have been declared as excess to the Army requirements and approval for the disposal of this property, without a recapture clause, has been requested of the Armed Services Committees of Congress.

As your committee may know, the Interagency Committee on Port Utilization was created in May 1951 pursuant to section 904 of Executive Order 10161, and sections 101 (g), 201 (g), and 202 of Executive Order No. 10219, in order to provide a convenient and effective procedure for cooperation between the agencies of the United States directly concerned with the utilization of ports and port facilities. One of the functions of the committee is to analyze the requirements for port facilities for national defense. In addition to functioning as an advisory body with respect to problems arising under the Defense Production Act of 1950, as amended, the Interagency Committee has developed a specific plan for the control of port utilization in time of war or national emergency-a plan which is a part of an overall war transport control plan recently accepted in concept and functional scope by the Defense Mobilization Board. The port plan is concerned, among other things, with the protection of port capacity; with the restoration of damaged port facilities and the development of alternate port facilities, in order to maintain the essential traffic flow through the port systems.

Having in mind the important role played by the Philadelphia Army Supply Base in World War I, World War II, and the Korean emergency, and the probability that, should there be another world war, the capacity of United States ports would be affected by enemy action, it is the recommendation of the Interagency Committee that your committee be advised that, in the opinion of the Interagency Committee, the facilities of the Philadelphia Army Supply Base would be necessary for national defense in any future war emergency that might occur, and for that reason, the Interagency Committee urges that, if disposal of this property is authorized, it be done under conditions which would insure that in any future national emergency the property would be available for marine terminal purposes. Very truly yours,

(Signed) OWEN CLARKE, Chairman, Interagency Committee on Port Utilization.

Mr. SILVER. The committee never has had before it the bill which is before this group today. Its position is simply that no matter what disposition may be made of the Philadelphia piers, that provision should be made in the event of national emergency that they would be available for marine terminal uses and purposes.

Mr. DURHAM. That has been the general policy of this committee over the years.

Mr. PRICE. In that connection, it is amazing that there has been a statement made here that the Army does not consider this important in any of its future mobilization plans. Can you reconcile that position?

Mr. SILVER. I perhaps could reconcile it this way. At the time the committee considered this matter the Department of Defense representative did not participate in the final decision. He was the Chief of Transportation and I knew his personal views were contrary to the position of the Department of Defense, but being a good officer he kept his mouth shut. The Department of Defense position then with the advice of the Bureau of the Budget was to get rid of this property and sell it or at least declare it surplus and available for sale. However, I am quite sure from the plans that have been made in the port area that the Chief of Transportation, at that time at least, considered these pier facilities in Philadelphia as very important to the mobilization plans of the Nation. We still believe they are. The committee has never changed its view in this respect.

Mr. DURHAM. Is that a unanimous opinion of the committee?

Mr. SILVER. The Department of Defense representative at the meeting did not participate in the voting out of deference to the fact that his Department had taken a position.

Mr. GREEN. In connection with that, if these piers were sold to a private party or corporation under the present Army report, without restriction, there would not be anything to prevent these people from selling the 25 or 26 acres in the back for speculation, which would make almost valueless the piers themselves in the operation in a national emergency.

Mr. SILVER. That is the view the committee adopted when it considered the matter.

Mr. PRICE. I think it is ridiculous for the Federal Government to permit these piers to go without restriction in the face of future emergencies which we know will occur some time. When it will be, no one knows. The port has been useful in other world conflicts and even in the so-called limited war in Korea; Korea is pretty far from the east coast yet this was an important port facility to support that military action. I cannot understand how the Defense Establishment could permit these piers to go without some sort of restriction.

Mr. SILVER. The only argument I heard presented at the meeting against it was that by putting in a national defense clause it reduces the value of the property or the amount you can get purchasewise. Mr. PRICE. You heard that argument advanced by a representative of the Defense Department?

Mr. SILVER. No; I would not say that.

Mr. LANKFORD. I have a copy of a letter here signed by Secretary of the Army to Mr. Vinson in which it says:

Assistant Secretary of Defense advised the Director of the Bureau of the Budget and action was initiated to declare the Philadelphia Army Supply Base to General

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