CHARTER HIRE Mr. CANNON. You have an item for charter hire for which you estimate an increase of $9,906,000 over 1945. We discussed charter rates at some length when we had this matter up before, and the committee was in hopes that rates would be reduced. I judge from this item that you have not been able to reduce them. What has been your experience in that respect? Admiral LAND. There will be an increase in the number of ships under charter and also the increase reflects the higher time charter costs on the bareboat out time charter back deals. Mr. CANNON. It is due to two things: first, an increase in the rates, and, secondly, an increase in the number of vessels? Admiral LAND. It is primarily the increase in the number of vessels. Our rates were reduced to some extent by general order 37. They have not been increased. Mr. JOHNSON. That is shown on page 70, where there is given a complete analysis and reconciliation. Mr. CANNON. What is that analysis? Give us a résumé of it. Mr. JOHNSON. The increase during 1946 represents the net sum of estimated adjustments as follows: Base statement War Shipping Administration, 1946 budget, charter hire [Amounts shown in thousands of dollars] 1945 program. Deduct items included in 1945, not required in 1946: Adjust- Estimated ments obligations $346, 765 1. Vessels on hire part of year and purchased during year, 59 ships, non- 2. Casualties during year 1945, 10 ships, nonrecurring. 3. Net decrease for return during 1945 of special chartered vessels, 4 Total deductions. Add excess of full-year cost during 1946 over 1945 cost of items required dur- 4. Net increase for new vessels delivered during 1945, 27 vessels. Base for 1946 Total additions. Increase (+) or decrease (-) from base for 1946: 1. Casualties estimated for 1946, 5 vessels. 2. Net decrease in off-hire credit 3. Decrease for estimated purchases in 1946, 54 vessels. 4. New deliveries during 1946, 14 vessels (in terms of vessel-years). +7,854 +14, 295 1946 estimate. +9.906 367, 138 POWERS OF ADVISORY BOARD ON JUST COMPENSATION Mr. CANNON. Now, going back to page 16, what are the powers of this advisory board on just compensation? What are its functions? Admiral LAND. It is a body composed of three eminent jurists set up to determine equity and justice to the Government and to the operators. Their powers of course are not statutory, but, just as the term indicates, advisory. BASIS OF DETERMINATION Mr. CANNON. On what basis does it make its determinations to which you refer here? Does it fix rates for a particular ship or does it govern rates by type of ship? Admiral LAND. It lays down 10 general rules for determining just compensation. The 10 rules are administratively implemented by the War Shipping Administration. They laid down some very correct and proper fundamentals on which to base just compensation. Mr. CANNON. It does not take individual vessels then; it establishes a formula that you are to follow? Admiral LAND. Yes. RECONVERSION OF SMALL CRAFT Mr. CANNON. I see that you have here an estimate for the reconversion of 135 small craft and that you provide for that reconversion exclusive of the amount of the charter hire. That is at the bottom of page 16 and the top of page 17. What is the amount of the charter hire there in the case of those 135 small ships? Admiral LAND. They are of sizes ranging from 35 feet and a few tons up to a thousand tons' displacement. Mr. CANNON. Could you give us the cost of reconversion as related to the value of the craft? Admiral LAND. As to those we have had to reconvert; yes. We are doing our best to get those back to the owners under a special law passed by the Congress giving the original owner the first crack at it; and if we cannot negotiate settlement with him we have to sell them. Of course reconversion is a very dubious matter with a small boat. It frequently costs more than the boat originally cost. We have had a number of cases of that kind. Most of them are already settled, and we have had a few very cantankerous owners, but the percentage is extremely small. The table at page 101 gives the details of it. Mr. CANNON. Just in one sentence, then, summarize those last two paragraphs, please, so we can get it into the record. Admiral LAND. I think the most important thing is the last paragraph. I cannot improve on that [reading]: On redelivery the Government, represented by the War Shipping Administration, is obligated to restore the chartered vessels to a condition at least as good as when delivered, reasonable wear and tear excepted. On the basis of known cases involving redelivery of chartered vessels these reconversion costs have varied from $60,000 to $5,000 depending on the condition of the vessel on redelivery. It is reasonable to estimate that a fair average cost for each vessel would be $25,000. Mr. CANNON. Then the value of the vessel itself does not enter into it? Admiral LAND. It enters into it when we determine whether or not we should reconvert it; yes. In some cases, if the reconversion cost is too high, we requisition the vessel for title to pay the owner just compensation and clean it up that way rather than to go to a lot of additional expense which would come out of the Treasury. Mr. CANNON. The cost average of all the vessels is about $25,000? Admiral LAND. Yes, sir. Mr. CANNON. Are there any questions, gentleman, on charter hire? REASON FOR DIFFERENT CHARGES FOR CHARTER HIRE Mr. TABER. I have some questions on charter hire. How does it come that your charges on charter hire for dry-cargo boats are $31,000, approximately, while your charges for tankers are about $40,000 and your charges for passenger boats are a little more than that, $45,000? How does that happen? Admiral LAND. I don't follow your figures there at all. Mr. TABER. All right. We will do a little multiplying and dividing. Admiral LAND. You said $45,000. Mr. TABER. Is not that right? No; I see it is wrong. It is $450. It is $317 a ton for dry-cargo boats and it is $400 for tankers, approximately. Those figures are rough, but approximate. How does it happen that there is such an increase over the tanker charge as compared with the dry-cargo charge? Mr. JOHNSON. Do you mean, why does the charter rate increase? Mr. TABER. Why does it run more for the tankers than it does for the dry-cargo boats? Mr. JOHNSON. That is on the basis of the time charter. Is that the line headed "Time charter"? Mr. TABER. I am going over on page 67. Mr. JOHNSON. Which line do you refer to? Mr. TABER. You have 5,387,000 tons at $217,174,000, which is practically $400 a ton. Mr. JOHNSON. Yes, sir. Mr. TABER. Not exactly, but practically. You have got 667,000 tons of passenger tonnage and you are putting in here $30,083,000, and that produces approximately $450 a ton. You have got 3,018,000 tons of dry cargo at $95,844,000, which produces $317 a ton. Do you have to pay more for the dry cargo than you do for the other? Admiral LAND. It depends altogether on the characteristics of the ship, the type of the charter, the speed of the ship; and of course when you get into passenger ships you naturally have to carry more crew. Mr. TABER. I can see a difference there. These are bareboat charters. Tankers cost less to build than dry-cargo ships, do they not? Admiral LAND. No, sir; they do not. Mr. TABER. More? Admiral LAND. Generally speaking, they run a little bit higher. Mr. WIGGLESWORTH. I thought you said it was $1.15 a dead-weight ton per tanker and $1.25 a dead-weight ton for the dry-cargo vessels. Admiral LAND. Yes. Mr. WIGGLESWORTH. The differential ought to be the other way. Mr. JOHNSON. Mr. Taber and Mr. Wigglesworth, may I point out that in connection with the dry-cargo ships more than one-third of the ships are bareboat chartered. In the case of tankers only 23 tankers out of 397 are bareboat chartered, whereas 145 dry-cargo vessels out of 373 are bareboat chartered. I presume you understand the difference. Admiral LAND. One is a time charter which costs a lot more. Admiral LAND. Because the owner of a time-chartered ship has to furnish the crew, subsistence, maintenance, and so forth., and under the bareboat charter the owner merely furnishes the ship. Mr. TABER. The operator furnishes the crew? Admiral LAND. Yes, sir. I did not see what you were driving at, before. Mr. RABAUT. When you furnish the crew you furnish clothing, too? Admiral LAND. Subsistence, not clothing. REASON FOR INCREASE FOR 1946 Mr. TABER. I am wondering if you have not got $10,000,000 too much in this figure of $367,000,000 that you have given us in this estimate on page 11. You show an increase of $9,906,000, and your 1945 figure was $346,000,000. Am I wrong there? Mr. JOHNSON. The point there, Mr. Taber, is that, as you will see on page 70, the 1945 figure does not include full operation throughout the year of all the ships under charter during the year. An adjustment has been made, therefore, to the 1945 costs to bring those costs to the proper base for 1946. It has not been the practice in the past to use the base statement as we are doing this year; but you will note that there are net adjustments to the 1945 costs of $10,467,000 which are explained in detail on base statement A-3, page 70. Mr. TABER. You have casualties in there. Is that an increase? Admiral LAND. That is a decrease. Mr. TABER. And you are expecting to charter more vessels in 1946 than you did in 1945? Admiral LAND. Yes. Mr. TABER. Why? Where are you going to get them? Admiral LAND. We are gradually allocating ships to some of the United Nations. Mr. TABER. I should think that would cause a reduction rather than an increase. Do you mean that you are allocating them to the United Nations and then chartering them back? Admiral LAND. Yes. We bareboat out and time-charter back. That is correct. Mr. TABER. So that they are operating the ships and are paid on a time-charter basis? Admiral LAND. That is right. Mr. TABER. After you turn them over to them? USE OF TIME-CHARTER VESSELS Mr. TABER. What are they used for-hauling stuff to those same people? Admiral LAND. No. They are used as part of the pool, the combined pools of all the United Nations. Mr. TABER. They go wherever you send them? Admiral LAND. They go wherever they are sent. Mr. TABER. What is the object of turning them over to these other nations? Do they furnish the crews? |