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REMOVAL OF RESTRICTION ON
USE OF LAID-UP FLEET
HOUSE OF REPRESENTATIVES
H. J. Res. 519
JOINT RESOLUTION AMENDING SECTION 510 (g)
OF MERCHANT MARINE ACT, 1936
APRIL 24, 1940
Printed for the use of the Committee on Merchant Marine and Fisheries
REMOVAL OF RESTRICTIONS ON USE OF LAID-UP FLEET
WEDNESDAY, APRIL 24, 1940
HOUSE OF REPRESENTATIVES,
Washington, D. C. The committee met at 10 a. m., Hon. Schuyler Otis Bland (chairman) presiding, for consideration of House Joint Resolution 519, which, together with the report thereon, is as follows. There will
Iso be inserted for the information of the Committee the original
IN THE HOUSE OF REPRESENTATIVES
APRIL 22, 1940
to the Committee on Merchant Marine and Fisheries
To suspend section 510 (g) of the Merchant Marine Act, 1936,
during the present European war, and for other purposes.
76TH CONGRESS H. J. RES. 509
IN THE HOUSE OF REPRESENTATIVES
APRIL 9, 1940
to the Committee on Merchant Marine and Fisheries
during the present European war.
UNITED STATES MARITIME COMMISSION,
Washington, April 19, 1940. Hon. S. O. BLAND, Chairman, Committee on Merchant Marine and Fisheries,
House of Representatives DEAR JUDGE BLAND: You have requested the views and recommendations of the Commission with respect to House Joint Resolution 509, a joint resolution to suspend section 510 (g) of the Merchant Marine Act, 1936, during the present European war.
The resolution would suspend, during the present European war, section 510 (8) of the Merchant Marine Act, 1936, as amended (Public, No. 259, 76th Cong., approved August 4, 1939), which provides as follows:
"(g) An obsolete vessel acquired by the Commission under this section which is or becomes twenty years old or more, and vessels presently in the Commission's laid-up fleet, which are or become twenty years old or more, shall in no case be used for commercial operation, except that any such obsolete vessel, or any such vessel in the laid-up fleet may be used during any period in which vessels may be requisitioned under section 902 of this Act, as amended, and except as otherwise provided in this Act for the employment of the Commission's vessels in steamship lines on trade routes exclusively serving the foreign trade of the United States."
Subsection (g) is a part of section 510, which was enacted on August 4, 1939, as an amendment to the 1936 act. The section provides for a “turn-inand-build” program designed to facilitate the removal from service of old or obsolete tonnage (whether in domestic or foreign trade) and the replacement thereof with modern vessels. The program was recommended to Congress on the basis of the Commission's survey of coastwise and intercoastal shipping. The survey showed an excess of tonnage in the coastwise and intercoastal trades, arising from the disposition at bargain prices of Government-owned vessels built during and just after the World War. It also showed an unsatis. factory financial condition of carriers in such trades, the obsolescence of their fleets, and a failure to provide adequate vessel replacements.
Subsection (g) prohibits the use for commercial operation (except in certain limited cases) of vessels over 20 years old, which were in the Commission's laid-up fleet on August 4, 1939, or are turned in under section 510. It was designed to prevent any increasing of an already excessive obsolete tonnage and to remove a hindrance to new construction arising from the possibility or probability of acquiring from the Government old or obsolete vessels at bargain prices for use in the domestic trades. The joint resolution by suspending section 510 (g) would restore to the Commission, for the period of the European war, its discretionary authority to sell, charter, or otherwise dispose of its old vessels for commercial operation, pursuant to the provisions of the merchant marine acts in force prior to the enactment of section 510.
There are at present 116 vessels in the laid-up fleet, some 96 of which, being over 20 years old, are "sterilized” by subsection (g). No vessels have as yet been turned in under section 510. The vessels in the laid-up fleet consist of cargo vessels (except four ex-German passenger vessels) constructed during or immediately after the World War. These vessels have been classified as being of sufficient military or commercial value to warrant their preservation for possible use in case of a commercial or national emergency.
Changed conditions arising largely in connection with the war in Europe, which broke out a few weeks after the enactment of section 510, impel a reconsideration of the problems involved in section 510 (g). The possibility of a large increase in the Commission's holdings of obsolete vessels under section 510 has not materialized (probably because of war conditions) and, on the other 'hand, conditions attendant upon the war have brought about a reduction in the amount of tonnage employed in the domestic trades, especially the intercoastal trade. The Commission has had under way for some time a survey of the problems involved, including the need for using Government vessels for private operation in the affected trades. The unsettled and rapidly changing conditions prevent any final conclusions on these matters, but certain tentative conclusions as to current conditions can be made on the basis of this survey, which will be continued in order to meet conditions as they arise. Much helpful information is being acquired through the Commission's investigation of the intercoastal rate structure.
Considerable concern has been manifested as to the effect of the changing conditions in intercoastal shipping. Since the outbreak of the war, there has been transferred to foreign ownership and registry an appreciable percentage (about 12 percent) of the gross tonnage then employed in the intercoastal trade. Since that time an appreciable percentage (about 22 percent) of the tonnage has been removed from the intercoastal trade by charter or other diversion to offshore trade. This diversion results from steps taken by the intercoastal operators to take advantage of greater return in the off-shore trade. During this period, however, a few vessels have been brought into the intercoastal trade from other trades.
While the net diversion to tonnage from the intercoastal trade is considerable on the basis of tonnage figures alone, it must be remembered that up to the beginning of the war the tonnage was definitely in excess of needs. From the available data, it does not appear that any emergency exists in the intercoastal trade so far as available space is concerned at this time. Insofar as there exist increased demands for cargo space in the intercoastal trade, this increase in considerable part is based on an anticipation of increased rates, possibly of shortage of space, and the desire to protect against possibilities of the future rather than present conditions. There has been a considerable amount of advanced booking, some for the protection against increased rates on future sales, and some of which is wholly speculative in character. The complaints as to lack of cargo space must also, to some extent, be attributed to lack of space at the rates existing, rather than to an absolute lack of space. To offset possible adverse effects of the reduction in tonnage, the cargo-carrying capacity of the vessels remaining in the trade and the earning capacity of these vessels may well be increased by rearrangement and speeding-up of schedules and by carrying fuller cargoes at remunerative rates. Steps to this end have been taken by some of the operators.
Notwithstanding the preceding considerations, it is possible that an emergency may develop in intercoastal or coastwise trades, or also in some foreign trades. It is, therefore, desirable that the Commission have discretion to meet problems as they arise, insofar as they can be met by some use or disposition of the Commission's vessels. The Commission consequently favors the enactment of the joint resolution to suspend during the European war the restrictions of section 510 (g) on the use or disposition of vessels in the Commission's laid-up fleet, together with an amendment which would vest in the Commission complete authority to make effective disposition of its vessels as needs therefor may arise during the continuance of the war.
Such amendment should rest in the Commission general authority, during the European war, to sell or charter its vessels, including those in the laid-up fleet, under such terms and conditions and subject to such limitations as the