which the bill which passed this committee and the House last year provided.

Now, however, we have had 7 months of additional delay. We are told that there are a number of additional months before the Spitfire can be brought back here, pass its Coast Guard inspection, have the Coast Guard work done, and be redocumented. We know of no reason, by strike or otherwise, why this additional delay should be grounds for further extension of the right to participate in 50-50 cargoes.

I have already mentioned, Mr. Chairman, so I won't belabor the point, how the redocumentation of the Spitfire will take away jobs from American seamen and work from American shipowners and shipyards, but I would like to point out that last September Mr. Wang chartered the Spitfire to carry grain, I believe, to the United Arab Republic.

Mr. Earl Smith had three Liberty ships which he tendered for that business. Because the Spitfire took that work, being a bigger ship, a faster ship at that time, Mr. Smith had no work for his three Libertys. Is was only when Mr. Wang was unable to deliver the Spitfire that these same three Libertys were employed.

I think we have, in other words, a perfect example of what this ship will do to the other people. It is robbing Peter to pay Paul. Mr. Wang would be Paul. My clients would be Peter.

We don't think that is a proper thing to have done.

Mr. Chairman, I think this Congress has clearly expressed its views that 50-50 cargoes should be carried by American ships, Americanbuilt ships, and American-rebuilt ships. I don't believe that an exception to that rule should be made in this case.

May I add, parenthetically, that if it were it would be the forerunner of many. It would be the end of any nonsubsidized building in American shipyards because why build when you can get a foreign vessel brought in under special-privilege legislation?

We do not have full facts, Mr. Chairman. Much of what we have is second hand because of the very nature of this but we are told that the only reason for the delay in this case is failure of the owners of the Spitfire to make their payments to the yard.

We do know in the testimony last year before the Senate committee that Mr. Wang testified that the total cost of rebuilding this vessel in the Spanish yard-and I presume this would include changes and extras would be $1.1 to $1.2 million.

At the same time, he testified that he owed that yard at that time before completion of the work $903,000.

Now, under those circumstances, it seems to me that it is a case of "no tickee-no shirtee." No money and the shipyard does not do the work.

Mr. Wang has conceded and has so told the Maritime Administration that there is presently owing between $600,000 and $700,000.

You may have disputes but, gentlemen, I have never heard of a case with a shipyard in which a dispute will run over 50 percent of the total contract cost and which last year ran over 80 percent of the total contract cost.

Now, Mr. Wang had stated he has now put $750,000 in a letter of credit. If there was a dispute, why wasn't this done a great deal earlier? In other words, these have all been matters within the dis

cretion and power of the owners to solve. They have not solved them. I would also be interested in hearing the shipyard's side of this particular transaction.

May I point out that this legislation, if enacted, would result in a great windfall for the owners of this vessel. I have been told by a prominent ship broker that the value of the Spitfire today under American registry with 50-50 privileges would be $2,500,000. I am told that the vessel under foreign registry would be worth perhaps $1,500,000. Mr. Wang testified last year that the total cost of this vessel, including the purchase of the ship, the Italian yard work and the work in the Spanish yard, would be $1,800,000. Obviously, there is a very large windfall here and that is the "equity" which people are talking about.

We have also some question as to who owns this ship because, while I have been given to understand that Mr. Wang owns it, I have also been told within the past few days that it is owned by an Empire Commercial Co., which is a moneylending company in New York. I think that is important because of the fact that I would like to know and I feel that the Congress would like to know who will get this windfall.

Before closing, I will say that there is one factor which has not been mentioned. That is that the delay here comes from the choice of a Spanish shipyard. The Spanish shipyards are the lowest cost and I daresay the slowest yards in Europe. I am told that as of last year the wages of a skilled shipyard worker were under $25 a week. I was told only yesterday that my figures were grossly exaggerated and that the skilled worker in a Spanish shipyard at the time the Spitfire contract was entered into was 30 cents an hour.

Now, Mr. Wang has testified that the work in joining this ship was done in Italy. On the Senate side last year, he testified that he brought the vessel to a Spanish yard because it was cheaper. Mr. Wang made a gamble. I don't say that he was wrong in going to the cheapest yard, but he made a gamble to get the cheapest. He got the slowest. He hasn't had his ship delivered.

We suggest, Mr. Chairman, that the committee should not bail him out from his gamble.

Lastly, Mr. Chairman, and it does not appear in my statement, I am told that there was no contract for the Spitfire. There was a contract for the Esso Buffalo with the Spanish yard, and there was a contract for the Esso Syracuse with the Spanish yard. I presume that those contracts were similar to the one for the Montauk which appeared in the record of this committee last year. However, I am told that the work done on this vessel was substantially different than the work done on the other and, parenthetically I might add that, while Mr. Wang stated that there was no thought in his mind or anybody else's mind that there could be a strike in the Spanish yard, may I refer this committee to page 48 of its transcript last year in which the contract on the Montauk was in issue and in the first full paragraph of that page it says:

"The contractor" that is the shipyard-"shall not be charged with liquidating damages when delay in completion of the work is due to acts of God **** and so on *** "strikes"-and the word "strikes" is specifically put into the force majeure clause of the contract. Never

having seen the contract on this vessel because we know of none, I would presume however that, if a contract existed, the same word "strikes" appears.

Mr. Chairman, if I may reiterate what I said in the beginning, this is a question of who takes the loss. This vessel is an American-flag vessel. If it comes back it can do non-50-50 work. I am told that Mr. Wang has offered this vessel to MSTS for the carrying of American coal to be shipped on American-flag vessels. It is possible, indeed it is probable, that during the 3 years before this vessel would gain 50-50 privileges that Mr. Wang might take a loss on the vessel or whoever owns the vessel might take a loss on it. But, if he doesn't take the loss, someone else does, and it is people like my clients. So it gets down to a relative question of equities and we say that privileged legislation of this kind for a specific owner for a specific ship should not be permitted when it is contrary to the interests of others in the American merchant marine.

May I say lastly, Mr. Chairman, that the Congress has determined and I think very wisely that foreign-flag and foreign-rebuilt ships should not be permitted to come back to American registry and get 50-50 cargoes. That seems to me to be an excellent policy. I do not believe that that should be abrogated by special legislation such as this.

Thank you, sir.

The CHAIRMAN. Do you have any questions, Mrs. Sullivan?
Mrs. SULLIVAN. Only very briefly, Mr. Chairman.

I would like to ask, Mr. Coles, first, if this ship would not go under American flag it would probably go under foreign flag, would it not? Mr. COLES. Mrs. Sullivan, this vessel is under American flag. It can go under foreign flag only with the permission of the Maritime Administration.

Now, the Maritime Administration has recently had an application to transfer the vessel Glenbrook to foreign registry and has rejected that application.

The only way in which this could conceivably go under foreign registry is if there were a foreclosure in a foreign court they might sell that under foreign registry. Now the Maritime Administration, I believe, I am quite certain, has taken the position that a sale by a foreign court does not give that court the right to sell it free of the American flag. I would say as a lawyer there is doubt in my mind that it could possibly be that the foreign court could sell it. Now, however, that is a matter completely in the control of Mr. Wang, because, as Mr. Wang has stated, he has the money, $750,000, to satisfy the yard. If that is done, there can be no foreclosure on the vessel and hence the vessel must stay American flag.

Mrs. SULLIVAN. When you say that it would put American seamen out of work because of the fact that it would bring in a ship that is not needed in the trade, did the Maritime Administration say that we need no more bulk carriers?

Mr. COLES. Quite the contrary, Mrs. Sullivan. I think we do need bulk carriers. I certainly would be the last one to argue that we should not encourage the building of new carriers, the last one to argue that carriers which come in in the proper way are not needed.

The fact that they may replace other ships is one of the economic facts of life.

What we object to, Mrs. Sullivan, is the fact that, by special private legislation, this will be done. There is quite a difference.

Mrs. SULLIVAN. Then along that line, the only reason I would say that this bill should be considered as private legislation is the fact that they did comply with the regulations set up in Public Law 87-266, when they made application prior to any bill being introduced or any stoppage of this kind of privilege?

Mr. COLES. Mrs. Sullivan, I do not believe from what I have seen that they did comply with the regulations. The Maritime Administration refers to a contract which is a contract made between General Cargo and the Maritime Administration.

It is my understanding that the original contract made with the Spanish shipyard was made by Progressive Steamship Co., and subsequently assigned to General Cargo Steamship Co.

I question, although the assignment itself was valid, whether or not that was intended within the proviso clause of Public Law 87-266. Moreover, I have never yet seen a contract and I don't know anyone who has for this particular ship because the only contracts that were made prior to the cutoff date of that Public Law 87-266 is on the Esso Buffalo, the Esso Syracuse, and others, but not for that work.

May I point out that the copy of the Montauk contract in the record shows an approximate cost of $450,000. Mr. Wang, testified before the Senate that this vessel, will cost $1,100,000 to $1,200,000. Obviously it must be a great deal different type of work on this vessel than contemplated on an original contract. It is as though I had a contract to build a three-bedroom rambler and suddenly decided to build a four-story office building. There is quite a difference.

Mrs. SULLIVAN. The only evidence I have as to the eligibility of his original request was the statement of the Maritime Administration. As a member of this committee and having to rely on the evidence and investigation of the Maritime Administration, I feel that I can accept their recommendation. I would have felt differently if they had come back with an adverse recommendation or disputing the facts that the witness had stated. In fact, because of the first news story that I heard and read, I withdrew by interest in having this bill considered because if it was not going to be helpful to our American merchant marine, I was not interested in it. But, when the story came out a month later by a reporter refuting those first statements and completely changing the story, I felt that there was substance to the request for approval. Then, with the Maritime Administration giving approval in their report of the bill, I felt that there was every reason for this bill to be favorably considered.

There is just one other thing that I wanted to bring up.

You say on page 4 that this committee and the House passed a bill last year. It is true that the House did pass it but no action is ever completed without both the House and the Senate acting and the President's signature before it became law. So, that this period between last year and this year was not the fault of those who had made application. It was the fact that Congress did not complete action, so, hence there had to be a delay.

Mr. COLES. Mrs. Sullivan, I am afraid I can't agree with you on that. What I am saying here is that this vessel is still not ready for delivery according to Mr. Wang. As of last year, the argument was made that the strikes were no fault of the owners of this vessel and the Maritime Administration bought that argument and said, "Yes; that is true. Therefore, extend until December 31"-in other words, 3 months and 10 days-"the date in which to redocument," and the Maritime Administrator said that was all the time that was necessary to make up for the strikes.

Now, there have been no strikes since that time. But, nevertheless, we are 712 months past the December 31 date. That delay has nothing to do with the act of Congress. That delay has to do with the actions of the owners and the shipyard in this case. I do not feel that can be compensated for by special-privilege legislation when that legislation will do damage and serious damage to others.

May I comment very briefly. I read with interest the Maritime Administration's statement to this committee. I did not have the transcript. I read the quoted portion from the Congressional Information Bulletin, which I know is usually accurate, and in there the contract that Maritime referred to as I read it is the contract made between the Maritime Administration and General Cargo. I know of nothing in here in which they say that there was a contract on the Spitfire made with the Spanish yard.

I recall Mr. Mailliard asked a question as to whether the assignment of the contract between Progressive and General was valid. I have no question as to the validity of the assignment but I do question whether Public Law 87-266 had in mind assignments of contract from one company to the other.

Mrs. SULLIVAN. I have no further comments, Mr. Chairman.

The CHAIRMAN. Mr. Tollefson?

Mr. TOLLEFSON. If there had been no delay, as Mr. Wang has indicated, in the Spanish shipyard, his ship could have been brought back to the United States before the cutoff date, September 21, 1962?

Mr. COLES. Mr. Tollefson, I don't know and I don't know whether it would have qualified. I will assume it would.

Mr. TOLLEFSON. Assuming that it would, then you would have the same situation that you fear now?

Mr. COLES. Sir, I would have the situation but that is something we would have to live with because that is general legislation. We can't bother with that because we can do nothing about it. It is right and proper and Congress so decided it.

What we object to is the special legislation for any particular ship. Mr. TOLLEFSON. You, of course, put your finger on the problem that bothers the committee.

Mr. COLES. It is the special nature of this private bill.

Mr. TOLLEFSON. I have no further questions.

The CHAIRMAN. Mr. Stubblefield?

Mr. STUBBLEFIELD. What would have been your recourse had this contract been fulfilled and the delay not come about and if the ship had been able to have been documented under Public Law 87-266?

Mr. COLES. Mr. Stubblefield, we would have had no recourse and we would have welcomed this ship in because there was nothing else

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