case shall sickness or disease be regarded as an injury within the meaning of this section.

SEC. 211. The Commission and the Commandant may prescribe an insignia for the Maritime Service. It shall be unlawful for any person not enrolled in the Maritime Service to wear the duly prescribed insignia of such service or any distinctive part of the same. Any person who violates the provisions of this section shall, upon conviction, be punished by a fine not exceeding Two Hundred Dollars ($200.00) or by imprisonment not exceeding three (3) months, or by both such fine and imprisonment.

SEC. 212. Enrolled persons when employed on active duty or on training duty with the Coast Guard, or when employed in authorized travel to and from such duty, shall receive the pay and allowances received by officers and enlisted men of the Coast Guard of the same rank, grade, or rating, and shall, when traveling under orders, receive transportation in kind, mileage, or actual expenses, as provided by law for travel performed by officers and enlisted men of the Coast Guard of the same rank, grade, or rating.

TITLE III-INSPECTION OF EMPLOYMENT CONDITIONS

SECTION 301. In order to determine the results of the training of enrolled persons, as provided for herein, and to coordinate and adapt such training to the requirements of the United States Merchant Marine, and to observe the working and living conditions of the personnel in ocean-going shipping, the Commandant is hereby authorized to assign a commissioned officer or officers of the Coast Guard to any merchant vessel of the United States, excepting those navigating the rivers, harbors, bays, or sounds, exclusively. The pay and allowances for any officer so assigned shall be made from funds appropriated for the maintenance of the Coast Guard.

SEC. 302. Every officer assigned to any merchant vessel of the United States shall have access to all parts of such vessel and is authorized to inspect the living accommodations of the licensed and unlicensed personnel of such vessel, and all apparatus and equipment necessary for the safety of life and property at sea; and he is further authorized to observe the working conditions of such personnel, and the conduct of fire, lifeboat, and other drills. Every officer so assigned shall, on arrival in any port of the United States at the termination of each voyage, make a complete report to the Commandant. Such report shall contain a statement of all violations of any laws of the United States or of any regulations issued pursuant to such laws, relating to seamen, customs, immigration, quarantine, navigation, marine inspection, and shipping. The Commandant shall transmit a copy of such report to the Commission, the Department of Commerce, and such other agency of the Government as may have jurisdiction over any part of the subject matter of the report: Provided, That nothing in this Act or in any regulations prescribed hereunder shall be construed as relieving the master of any vessel from his full authority and responsibility as the person having command of the vessel.

SEC. 303. The master of any vessel to which a Coast Guard officer has been assigned under the provisions of this Title shall not clear the vessel from any port of the United States without such Coast Guard officer on board, nor shall the master or any officer of such vessel interfere with the performance of the duties imposed on such Coast Guard officer. Any person violating the provisions of this Section shall, upon conviction thereof, be fined not more than Five Hundred Dollars ($500.00) for each offense.

TITLE IV-MISCELLANEOUS PROVISIONS

SECTION 401. The Commission and the Commandant are hereby authorized to adopt all necessary rules and regulations to carry out the provisions of this Act.

SEC. 402. The Secretary of the Treasury, or the Commission, from funds available or hereafter appropriated for the use of the Coast Guard or the Commission, respectively, may make such expenditures as are necessary to cover the cost of the establishment and administration of the Maritime Service and of the training system established under this Act. Such expenditures may include the cost of the procurement, use, repair, reconditioning, construction, establishment, equipment, maintenance, and operation of shore training stations, barracks, training vessels, and all other property reasonably necessary to effectuate

the purposes of this Act, and the compensation, retainers, subsistence, and other allowances for the administration of such training system as is established by this Act, and for the personnel operating training bases ashore and training vessels and for all persons receiving the course of training prescribed under Section 201 of Title I and for enrolled persons as specified by this Act: Provided, however, That the Commission, out of funds now or hereafter available to it, shall, upon requisition of the Commandant, reimburse the Coast Guard for any and all expenditures which have been made by the Coast Guard to cover the reasonable cost of establishing and administering the training system prescribed under this Act in the training of the number and class of persons previously designated by the Commission for the fiscal year in which such expenses are incurred; which expenditures, however, shall be within such limitation as to amount and scope as shall have been agreed upon by the Commission and the Coast Guard at the beginning of the fiscal year. Such reimbursement shall be made upon certification by the Commandant as to the necessity for, and correctness of, such expenditures.

SEC. 403. The War Department, the Navy Department, the Commission, and all other agencies of the Government are hereby authorized to transfer or lend to the Coast Guard such real and personal property, including but not limited to buildings, materials, vessels, and equipment, as may be necessary to effectuate the purposes of this Act.

SEC. 404. There are hereby authorized to be appropriated such sums as are necessary to carry out the provisions of this Act.

SEC. 405. This Act may be cited as the Maritime Service Act of 1937.

The CHAIRMAN. Thank you very much, Admiral.

Our next witness is the Reverend Father Edmund A. Walsh, of Georgetown University.

We are very glad to have you here, Father Walsh. I feel that you are my preceptor in this subject. Whatever enthusiasm I have in the merchant marine, I received from the inspiration of your speeches on the subject.

I think we may say, Father Walsh, that there is no better-informed man anywhere on the subject of the American merchant marine. Will you go ahead in your own way, Father?

SATEMENT OF REV. EDMUND A. WALSH, S. J., VICE PRESIDENT, GEORGETOWN UNIVERSITY, REGENT OF THE SCHOOL OF FOREIGN SERVICE, WASHINGTON, D. C.

Father WALSH. Mr. Chairman, may I at the outset qualify myself in my own way? That is to say, it may appear unusual to have a person of my calling and profession as an educator so vitally interested in this question for a quarter of a century, but it derives from the fact that I was brought up in a maritime region, in Boston, and had a great deal to do with and an opportunity to observe shipping. I received early a preliminary appointment to go to Annapolis, to become a person devoted exclusively to the Navy. But, as my mother said, I was converted, and became a sky pilot instead of an admiral. However, the interest has lasted, very, very deeply.

During the war it so happened that I was caught abroad by the dearth of transportation, and witnessed what to me was a humiliation: That instead of a merchant marine such as I had read about in history and learned about in my studies, of the preeminence of the American-flag ships on the ocean, when that war broke out, as you know, we had practically nothing. Those of us who were abroad had to scramble for either passenger space or other forms of transporta

As a result of that, I began at that period a specific study of the merchant marine, which was implemented by perhaps 26 to 30 trips across the ocean in the last 10 or 15 years. I have also lived in Russia for 2 years and had a great deal to do with the shipping coming into the Black Sea for the discharge of relief supplies during the Russian famine. I have traveled over the world a great deal and have always observed this particular aspect of the decline of the American shipping branch of our national economy. As a result of that, I made a slight report on that a year or two ago, which is here in published form, a copy of which I will submit.

The CHAIRMAN. Thank you, Father; we shall place this in the files of the committee.

(The booklet entitled "Ships and National Safety" is to be found in the files of the Committee on Commerce.)

Father WALSH. During this testimony, if I may be permitted to do so, I shall merely refer here and there to certain points. This statement was prepared during the controversial period of the hearings with regard to the Merchant Marine Act in general; consequently, many arguments here, I feel, have been answered by the passage of the act. However, there is a great deal of the data which I may, with your permission, refer to.

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When the war broke out, as I said, the absolute necessity of a functioning and an efficient merchant marine in a national economy became evident, when, to my own knowledge, being in Europe, I saw how those nations immediately pulled home from the overseas commerce their own tonnage and left us either without any or forced us to pay increasingly heavy space charges, giving whatever they saw fit to give. The result was that freight rates leaped enormously for the hauling of a bale of cotton or of a bushel of wheat. It is recorded in this statement how high they went.

Also, we had miles upon miles of freight cars in American yards, back from the ships, loaded with perishable commodities, because space could not be had to ship them overseas. That naturally is now a matter of history, and the tremendous effort to overcome that cost us $3,000,000,000. That is what the fleet cost as a war emergency.

However, as a student of this from the point of view of national economy, may I say that it is a delusion to refer to that fleet as a three-billion-dollar investment in a merchant marine. It was not a three-billion-dollar investment in a merchant marine; it was a threebillion-dollar investment in a war instrument-an instrument to do a certain thing in the heat of war at any cost whatsoever. Provided that those ships could make one round trip to Europe, laden with munitions and supplies, they justified their existence. I feel that there has been a great element of disproportion in the quotation of that figure as a charge against an efficient American merchant marine; it should be charged up as a war expenditure, just as munitions, powder, uniforms, and all of those things are.

The CHAIRMAN. Those ships were merely fodder for the submarines?

Father WALSH. Exactly, Senator; and if after one voyage a ship went down, it was considered that it had fulfilled and paid the cost of its construction.

As a result of that, we now have on our hands an enormous amount of obsolescent and obsolete tonnage, which is unfit, in large measure,

to enter into modern competition. The number that are tied up in the James River and in the northern and the Gulf ports are simply rotting away, as we know. The others that have been remodeled at tremendous expense have proved that it is, I think, a waste of money to attempt to use that old, worn-out instrument in competition with the modern, efficient, highly geared machinery of our competitor nations. That, of course, is all remedied in the act, as I understand it, and the arguments I spent so much time in convincing people about are accepted.

However, in that act, I understand, there are certain things which it has been deemed ought to be, if possible, amended or strengthened, or in which greater liberality should be shown.

One of the first is with respect to helping the industry build ships. The act presupposes a building program which will supply that deficiency caused by the obsolete fleet, and provisions are made, as the act sets forth, for the advancement of 75 percent of the total cost, new, which is a concession in the proposed amendment, leaving 25 percent to be found by the industry. Without in any way being a spokesman for the industry, for labor, or for the Government, but purely as a student of the matter, and after having shopped around a good bit and talked with the industry, I do not believe, sir, that they can find today 25 percent. In other words, to carry through this program which is of national importance, I do not advocate or suggest deletion even of that, but I do want to go on record as saying that it is still very difficult, as I understand from the industry, for the industry to raise even 25 percent of that needed total foreign cost which, I repeat, is a concession from the Government, modifying the original provisions of the act.

The result of that is that I doubt very much if the necessary replacement program will get under way with the speed that_the emergency requires. That particular point, whether or not the Government still will have to help more with the 25 percent, is more a question of fiscal solution than of economic. However, as a merely collateral fact, I do believe that they will not find even that 25 percent. Why? I think the blame there has to be evenly adjusted. A good bit of that blame is the industry's own; but a good bit, too, is que, I think, to unwise criticism of the merchant marine by the Government. I apportion that blame on both sides; namely, that the whole industry, particularly as an investment field, has been made so suspect, has been made so almost guilty of corrupt practices, that nobody is going to invest in it any more. I understand from authorized sources that they find it difficult even to get 25 cents of a dollar25 percent. They find it difficult to get that necessary amount.

That is unfortunate, because it has destroyed confidence in what used to be our greatest pride. I agree thoroughly with the admiral who preceded me as to the damage that has been done to one of the most important links in our national economy, the merchant marine. That damage is attributable, as I see it, to several factors, and it is a mistake, I think, and an injustice, to blame it all on one side. I followed with tremendous interest the various hearings during the last few years. The hearings sometimes allow certain elements to be largely publicized to the derogation of others. The result was, as we know, a falling off, even a suspicion, with regard to the merchant marine. I think that ought to be remedied immediately,

Mr. Chairman and gentlemen; otherwise we are going to grow worse and worse.

Senator MALONEY. How would you remedy that, Father?

Father WALSH. Any remedy, naturally, must attack the causes. No. 1: As an investment field, it is useless today. I think that is a fair description. To get that 25 percent, even, which the act and the amendment will require, there are only about three companies which would be able to take that 25 percent out of reserve. I think that is a fair statement-about three.

What will the others have to do? The others will have to go to the bankers.

Let us take a unit of measurement. Suppose it is a million-dollar ship which in American yards would cost a million and in foreign yards would cost about $600,000. We have estimated about 40 percent difference in the construction of these ships, with the disadvantage against us. Of course, if it is a large ship, it may be $10,000,000; but I am speaking merely in the unit of a million.

There will have to be put up 25 percent of $1,000,000 for a small ship, or of $10,000,000 if it is a large ship, and it will be necessary to go to the bankers for the balance, which becomes practically a second mortgage, the Government holding the first mortgage through the provisions of the act.

The CHAIRMAN. He has to go to the bankers for the first payment? Father WALSH. The first payment, yes; with the hope that the other payments shall derive from income.

As far as I have been able to ascertain, the bankers themselves regard it as a very poor risk. The shipowner will have to pay secondtrust rates, which may go up to 7 or 10 percent on whatever he gets, and he would be coldly received. Several have been, as I understand it, up to date. That is to be remedied. Whether the remedy shall lie in the act or in the Government providing a different approach, I am not prepared to say at this particular moment.

What I feel I could do is to say that I doubt if they will get even their 25 percent, because of the present public opinion of the merchant marine. That has come from, I think, unwise generalization and too broad accusations as to the condition of the merchant

marine in past years. Of course, there were a few operators-some operators who used mail subsidies in too generous a manner and profited in a way that was not intended by the act; but there has been launched on the basis of that an indictment of the whole industry, which I consider a catastrophe.

Senator MALONEY. Father, do you think that if they cannot meet that 25 percent, the Government ought to be more liberal with them? Father WALSH. It is not a question of liberality. I think there are means, Senator, by which the entire domestic cost of any unit of the merchant marine can be assumed by the Government and paid back cent by cent by the operator, so that there is really no assumption of a cost but merely the advance of a loan; and over a period of years that can be returned absolutely, even without the first initial payment.

I am not speaking for the industry, as you understand, because I have no interest in it; but I am afraid this would slow up our program. What I am afraid of is that the program which is so necessary is going to be slowed up further through that plan.