Page 20-21: ** to accept the lowest responsible bid with respect to construction of ships may result in concentrating construction within limited geographical areas. The maintenance of adequate and well-equipped (p. 20) shipbuilding yards in other areas essential for purposes of national defense and to effect the purposes of the Merchant Marine Act, 1936 (p. 21) is to be paid by the Commission as part of the cost of national defense (p. 21): The proposed change would also permit the Commission to approve the bid of any shipyard in which the applicant desired to have the vessel built if the Commission considered the bid fair and reasonable, regardless of whether it was the lowest bid. Such payment is in no sense a subsidy. Page 23: Experience has shown that 5-year periods do not cover the average business cycle in the steamship business. It is proposed to change the 5-year period to one of 10 years. If the capital gains are to be ignored the capital losses should also be ignored, and the amendment so provides. Page 25: The section provides for the determination by the Commission that the vessel or vessels are to be used in an essential service, route, or line in the intercoastal commerce, and that they are suitable for economical and speedy conversion into naval or military auxiliaries. Page 26: Any subsidiary, affiliate, holding, or associate company, for which a waiver has been secured, must agree that its profits in such transaction will be paid to the contractor and accounted for by it. This will amply protect the interest of the Government. There is no satisfactory reason why the right of the waiver should be limited to subsidiary companies wholly owned by the contractor. To do so unnecessarily prevents the Commission from allowing the contractor to take advantage of situations favorable to the contractor and Government. Page 30: To the extent of $20,000,000, mortgages securing existing loans or advances may be insured if coupled with new loans or advances in a substantial amount of the total indebtedness. Page 31: Inability to obtain financial assistance is undoubtedly contributing to the obsolescence of our domestic fleet, which is in urgent need of modernization from a standpoint of national defense as well as safety. It is hoped that a shipbuilding program will be initiated that will be stimulating to many industries in all sections of the country, which supply materials for ship construction, reduce unemployment in those industries, and contribute to the relief of economic conditions generally, train mechanics in trades where a shortage now exists due to the curtailment of production during the years of depression, and build up a new personnel available to man our vessels in foreign trade in time of peace, and that may become eligible for the Naval Reserve. A BILL TO AMEND THE MERCHANT MARINE ACT OF 1936 Printed for the use of the Committee on TO AMEND THE MERCHANT MARINE ACT OF 1936 THURSDAY, MARCH 24, 1938 UNITED STATES SENATE, Washington, D. C. The committee met, pursuant to call, at 10 a. m., in the Commerce Committee room, Capitol Building, Senator Royal S. Copeland, chairman of the committee, presiding. Present: Senators Copeland (chairman), Caraway. Overton, Maoney, Berry, and Gibson. The CHAIRMAN. The committee will please come to order. May I say to you gentlemen that we are so crowded in the Senate with various committee hearings that it is unlikely that there will be many Senators here this morning? But you need not be disturbed about that, because we shall be making the record and it will be read at the proper time. So, if they are not here in any numbers, do not be disturbed about that; it is not due to any lack of interest; it is just physically impossible for a Senator to divide himself into three parts. We have in the bill before us a section 215. I am going to read this so that it will be fresh in my mind as well as in yours. This is the bill recommended to us by the Maritime Commission, desiring amendments to the Merchant Marine Act, 1936. The proposal in regard to section 215 is as follows [reading]: SEC. 215. The provisions of this act, insofar as they are practically or appropriately applicable, are extended to the construction and operation of aircraft used in transportation for hire of passengers and property in overseas trade between the United States, its Territories, possessions, or the Canal Zone, and foreign countries; and between the United States and its Territories, possessions, or the Canal Zone; and between such Territories or possessions and between the Canal Zone and such Territories or possessions. The significance of this amendment is that the same advantages of law which are now given to steamships shall be extended to aircraft. You may recall that in the maritime law the Maritime Commission may give a construction subsidy. That subsidy under certain circumstances may go as high as 33% percent; or even as high as 50 percent, under certain circumstances. Likewise the law prescribes that an operating-differential subsidy may be given to put the American operator on a parity with the foreign operator. It is a fact, of course, in steamship operation that foreign countries-operators under foreign flags have lower standards of living and less rigid requirements as regards living quarters on the ships. And the purpose of the maritime law is to recompense the American operator for the actual difference between the cost of operation under American standards and those of a com |