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REQUISITIONING OF VESSELS

THURSDAY, APRIL 27, 1939

HOUSE OF REPRESENTATIVES,
COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C. The committee met at 10 a. m., Hon. Schuyler O. Bland (chairman) presiding.

The CHAIRMAN. I am going to take up first H. R. 4983, relative to the requisitioning of vessels. Admiral Land has another engagement which he has to fill immediately and, in order to expedite the time and convenience him, I am going to hear him now.

My understanding is that all of the parties probably have gotten together, except I do not know how the shipowners or operators feel about it.

(The bill under consideration and Department reports are as follows:)

[H. R. 4983, 76th Cong., 1st sess.)

A BILL To amend sections 712 and 902 of the Merchant Marine Act, 1936, as amended,

relative to the requisitioning of vessels

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 712 of the Merchant Marine Act, 1936 as amended (49 Stat. 2010; U. S. C., 1934 edition, Supp. IV, title 46, sec. 1202), is amended to read as follows:

“Sec. 712. Every charter shall provide

“(a) That the charterer shall carry on the chartered vessels, at his own expense, policies of insurance covering all marine and port risks, protection and indemnity risks, and all other hazards and liabilities, in such amounts, in such form, and in such insurance companies as the Commission shall require and approve, adequate to cover all damages claimed against and losses sustained by the chartered vessels arising during the life of the charter: Provided, That in accordance with existing law, some or all of such insurance risks may be underwritten by the Commission itself as in its discretion it may determine.

“(b) That the charterer shall at its own expense keep the chartered vessel in good state of repair and in efficient operating condition and shall at its own expense make any and all repairs as may be required by the Commission.

"(c) That the Commission shall have the right to inspect the vessel at any and all times to ascertain its condition.

“(d) That whenever the President shall proclaim that the security of the national defense makes it advisable, or during any national emergency declared by proclamation of the President, the Commission may terminate the charter without cost to the United States, upon such notice to the charterers as the President shall determine.”

SEC. 2. That section 902 of the Merchant Marine Act, 1936, as amended (49 Stat. 2015; U. S. C., 1934 edition, Supp. IV, title 46, sec. 1242), is amended to read as follows:

"SEC. 902 (a) Whenever the President shall proclaim that the security of the national defense makes it advisable or during any national emergency de

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clared by proclamation of the President, it shall be lawful for the Commission to requisition or purchase any vessel or other watercraft owned by citizens of the United States, or under construction within the United States, or for any period during such emergency, to requisition or charter the use of any such property. The termination of any emergency so declared shall be announced by a further proclamation by the President. When any such property or the use thereof is so requisitioned, the owner thereof shall be paid just compensation for the property taken or for the use of such property, but in no case shall the value of the property taken or used be deemed enhanced by the causes necessitating the taking or use. It any property is taken and used under authority of this section, but the ownership thereof is not required by the United States, such property shall be restored to the owner in a condition at lease as good as when taken, less ordinary wear and tear, or the owner shall be paid an amount for reconditioning sufficient to place the property in such condition. The owner shall not be paid for any consequential damages arising | from a taking or use of property under authority of this section.

“(b) When any vessel is taken or used under authority of this section, upon which vessel a construction differential subsidy has been allowed and paid, the value of the vessel at the time of its taking shall be determined as provided in section 802 of this Act, and in determining the value of any vessel taken or used, on which a construction-differential subsidy has not been paid, the value of any national defense features previously paid for by the United States shall be excluded.

"(c) If any property is taken and used under authority of this section, but the ownership thereof is not required by the United States, the Commission, as the time of the taking or as soon thereafter as the exigencies of the situation i may permit, shall transmit to the person entitled to the possession of such property a charter setting forth the terms which, in the Commission's judgment, should govern the relations between the United States and such person and a statement of the rate of hire which, in the Commission's judgment, will be just compensation for the use of such property and for the services required under the terms of such charter. If such person does not execute and deliver such charter and accept such rate of hire, the Commission shall pay to such person on account of just compensation a sum equal to 75 per centum of such rate of hire as the same may from time to time be due under the terms of the charter so tendered, and such person shall be entitled to sue the United States to recover such further sum as added to such 75 percentum will make up such amount as will be just compensation for the use of the property and for the services required in connection with such use. In the event of loss or damage to such property, due to operation of a risk assumed by the United States under the terms of a charter prescribed in this subsection, but no valuation of such vessel or other property or mode of compensation has been agreed to, the United States shall pay just compensation for such loss or damage, to the extent the person entitled thereto is not reimbursed therefor through policies of insurance against such loss or damage.

"(d) In all cases, the just compensation authorized by this section shall be determined and paid by the Commission as soon as practicable, but if the amount of just compensation determined by the Commission is unsatisfactory to the person entitled thereto, such person shall be paid 75 per centum of the amount so determined and shall be entitled to sue the United States to recover such further sum as, added to said 75 per centum will make up such amount as will be just compensation therefor, in the manner provided for by section 24, paragraph 20, and section 145 of the Judicial Code (U. S. C., 1934 edition, title 28, secs. 41, 250).

“(e) The Commission is authorized to repair, recondition, reconstruct, and operate, or charter for operation, any property acquired under authority of this section. The Commission is further authorized to transfer the possession or control of any such property to any department or agency of the Government of the United States upon such terms and conditions as may be approved by the President. In case of any such transfer the department or agency to which the transfer is made shall promptly reimburse the Commission for its expenditures on account of just compensation, purchase price, repairs, reconditioning, reconstruction, or charter hire for the property transferred. Such reimbursements shall be deposited in the construction fund established by section 206 of this Act.”

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NAVY DEPARTMENT,

Washington, December 30, 1938. The SPEAKER OF THE HOUSE OF REPRESENTATIVES,

Washington, D. C. MY DEAR MR. SPEAKER: There is transmitted herewith a draft of a proposed bill to amend sections 712 (d) and 902 (a) of the Merchant Marine Act, as amended, relative to the requisitioning of vessels.

The purpose of the proposed legislation is to authorize the Maritime Commission, whenever the President shall deem that the interest of the national defense makes it advisable, or during any national emergency declared by his proclamation, to requisition such vessels documented under the laws of the United States as the President may deem necessary to maintain the national defense.

The proposed measure would prescribe that charters made by the Maritime Commission shall provide, among other things, for termination of the charters upon such notice to the charterers as the President shall determine whenever the President shall deem that the security of the national defense makes it advisable, or during any national emergency declared by proclamation of the President.

The prompt procurement for use as naval auxiliaries of a large number of privately owned or operated ships at the outset of war or when war is imminent is essential to the defense of the Nation. While the Merchant Marine Act, 1936, authorizes the Mantime Commission to requisition such ships during any national emergency declared by proclamation of the President, the Navy Department feels that the assembling and preparing of merchant vessels for war use must start earlier than authorized by that act, otherwise a decided advantage would be open to an aggressive enemy.

The Navy Department believes that this legislation is essential for the successful operation of its plans for the national defense, and recommends it to the Congress for enactment into law. Sincerely yours,

WILLIAM D. LEAHY, Acting.

A BILL To amend Sections 712 (d) and 902 (a) of the Merchant Marine Act, 1936, as

amended, relative to the requisitioning of vessels

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That Section 712 (d) of the Merchant Marine Act, 1936 (49 Stat. 2010; 46 U. S. C. 1202), approved June 29, 1936, is amended to read as follows:

“(d) That whenever the President shall deem that the interest of the national defense makes it advisable, or during any national emergency declared by proclamation of the President, the Commission may terminate the charter without cost to the United States, upon such notice to the charterers as the President shall determine."

SEC. 2. Section 902 (a) of such Act (49 Stat. 2015; 46 U. S. C. 1242) is amended to read as follows:

"SEC. 902. (a) Whenever the President shall deem that the interest of the national defense makes it advisable, or during any national emergency declared by proclamation of the President, the Commission shall requisition such vessels documented under the laws of the United States as the President may deem necessary for maintaining the national defense, and when so taken or used, the owner shall be paid the fair actual value of the vessel at the time of taking, or paid the just compensation for the vessel's use based upon such fair actual value (excluding any national defense features previously paid for by the United States), less a deduction from such fair actual value of any construction differential subsidy allowed under this Act, and in no case shall such fair actual value be enhanced by the causes necessitating the taking. In the case of a vessel taken and used, but not purchased, the vessel shall be restored to the owner in a condition at least as good as when taken, less reasonable wear and tear, or the owner shall be paid an amount for reconditioning sufficient to place the vessel in such condition. The owner shall not be paid for any consequential damages arising from such taking or use."

NAVY DEPARTMENT,

Washington, February 11, 1939. The CHAIRMAN, COMMITTEE ON MERCHANT MARINE AND FISHERIES,

House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to your letter of January 13, 1939, in which you requested the views of the Navy Department relative to the bill (H. R. 131) to amend sections 712 (d) and 902 (a) of the Merchant Marine Act, 1936, as amended, relative to the requisitioning of vessels; and to your letter of January 25, 1939, in which you requested comment on certain differences between the bill H. R. 131 and a bill of similar title submitted to the Speaker of the House of Representatives by the Navy Department under date of December 30, 1938, and referred to your committee.

In its report to the Speaker dated December 30, 1938, mentioned above, the Navy Department recommended the enactment of legislation similar to that contained in the bill H. R. 131. The reasons for such recommendation are contained in that report.

As pointed out in your letter of January 25, 1939, however, there is a difference between the terms of the bill H, R. 131 and those of the bill submitted by the Navy Department.

In brief, the bill, H. R. 131, would authorize the requisition of merchant vessels of the Maritime Commission “whenever the President shall proclaim that the security of the national defense makes it advisable, or during any national emergency declared by proclamation of the President,” where the bill proposed by the Navy Department would permit such vessels to be requisitioned “whenever the President shall deem that the interest of the national defense makes it advisable, or during any national emergency declared by proclamation of the President."

It appears, therefore, that the provisions of the measure proposed by the Navy Department could be made effective by an Executive order, whereas those of the bill H. R. 131 would require an Executive proclamation.

It is considered that the language of the Navy Department's proposal is preferable in that, during a period of strained relations, the President might effectuate his purposes by Executive order with less chance of diplomatic embarrassment than by the more formal method of proclamation.

In view of the foregoing the Navy Department recommends enactment of the legislation submitted with its letter dated December 30, 1938.

Referring to your letter of January 30, 1939, you are advised that the Navy Department has no objection to retaining the word "marine” in the law rather than employing the word “maritime” as is proposed in the bill H. R. 131. You will note that no such change of language is recommended in the proposed bill transmitted with the Navy Department's letter of December 30, 1938. Sincerely yours,

WILLIAM D. LEAHY, Acting.

UNITED STATES MARITIME COMMISSION,

Washington, February 27, 1939. Hon. S. O. BLAND, Chairman, Committee on Merchant Marine and Fisheries,

House of Representatives. MY DEAR MR. CHAIRMAN : In your letter of January 13, 1939, you requested the views and recommendations of the Maritime Commission on H. R. 131, a bill to amend sections 712 and 902 (a) of the Merchant Marine Act, 1936, as amended, relative to the requisitioning of vessels.

This bill expands the power of the President to proclaim an emergency in which charters may be terminated under section 712 of the Merchant Marine Act, 1936, or vessels may be requisitioned under section 902 (a) of such act. Under the present section 712 the Commission may terminate charters of vessels owned by the Government, and under the present section 902 (a) the Commission may requisition vessels in any national emergency proclaimed by the President of the United States. The bill would also allow such action whenever the President may proclaim that "the security of the national defense makes it advisable.” The bill further amends section 902 (a) to provide that in case of a proclamation declaring a national emergency or declaring that the security of the national defense makes it advisable, the Commission “shall requisition such vessels

as the President may deem necessary for maintaining the national defense

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The bill also amends the first sentence of section 712 (a) by striking out marine" and inserting in lieu thereof “maritime.” This sentence now requires that the charterer carry on chartered vessels policies of insurance covering (among other risks) all "marine” risks.

It is understood that the proposed amendments relating to the termination of charters and the requisitioning of vessels are designed to enable the departments charged with national defense to secure possession, whenever war may be imminen of such vessels documented und the laws of the United States as the President may deem necessary to maintain the national defense, and to prepare such vessels for the needs of the national defense before the actual proclamation of a national emergency. This may be done under the proposed amendments whenever the President shall proclaim that the security of the national defense makes it advisable. The Commission believes that the objectives of these amendments would be obtained still more effectively by a further amendment to section 902 (a) extending the present power of requisitioning vessels documented under the laws of the United States to include the power to requisition undocumented vessels or watercraft. Such watercraft are very important for national defense purposes. The Commission also deems that it is desirable to retain the existing language in section 902 (a) which provides that “It shall be lawful for the Commission to requisition any vessel instead of amending it as the bill does to read “the Commission shall requisition such vessels

The Commission feels that the objective of these amendments is desirable in the interest of national defense and preparedness, and that they constitute a proper amplification of the policy of the Merchant Marine Act, 1936, which provides that the merchant marine shall be one “capable of serving as a naval or military auxiliary in time or war or national emergency.” The Commission feels that the enactment of the bill would not have any adverse affect upon the development of the merchant marine. In connection with the subject of requisitioning vessels, you are advised that the Commission is making a study of other procedural and substantive problems which have arisen under section 902, and shortly will be prepared to inform you concerning such legislation as it may deem necessary or desirable to aid in meeting such problems.

The amendment changing “marine" to "maritime” in section 712 (a) superficially appears to broaden the insurance protection which may be required in cases of vessels chartered by the Commission to private operators, but the language proposed to be amended is so all-inclusive in this respect that the suggested change does not appear to be of any material significance. The Commission therefore feels that this amendment is unnecessary and confusing.

In view of your request that the Commission's report on this bill be submitted, if possible, not later than February 28, 1939, it has been impossible to submit the report to the Bureau of the Budget for the purpose of ascertaining whether or not it is in accord with the program of the President. Consequently, nothing contained herein shall be construed as an indication that the proposed legislation wouid or would not be considered to be in accord with such program. Sincerely yours,

(Signed) E. S. LAND, Chairman.

UNITED STATES MARITIME COMMISSION,

Washington, March 10, 1939. Hon. S. 0. BLAND, Chairman, Committee on Merchant Marine and

Fisheries, House of Representatives, Washingion, D. C. MY DEAR MR. CHAIRMAN: As stated in my letter to you dated February 27, 1939, setting forth the Commission's views and recommendations on H. R. 131, a bill to amend sections 712 and 902 (a) of the Merchant Marine Act, 1936, as amended, relative to the requisitioning of vessels, the Commission has been making a study of the procedure and substantive problems which may arise if it is found necessary to exercise the emergency powers vested in the Commission by the provisions of section 902 of the Merchant Marine Act, 1936, as amended.

As a result of discussions between representatives of the Commission and of the Navy Department concerning the formulation of plans for the speedy and effective use of privately owned merchant vessels and other watercraft during a period of emergency proclaimed by the President, the Commission is persuaded

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