The report analyzes in detail significant changes that have occurred in the maritime transportation

account.

Record Posted in 1957

"Excluding the early postwar period," the authors state, "both international payments and receipts rose to a record amount in 1957, and then declined in 1958. The excess of receipts over payments in 1957 was about 100 per cent greater than the difference of the previous year, and exceeded that of any year since the early 1950's.

"The present level of the (receipts) balance represents a return from the emergency years of the war during which the U. S. carried about two-thirds or more of its trade. In many postwar years, U. S.

operators have carried considerably less than this amount. . . . In 1958 the per cent of cargo tonnage carried on U.S. flag vessels in U. S. export and import trade was 14 per cent."

The study by The American University economists is most timely in view of the Government's recent sweeping foreign spending order designed to reduce the deficit in our balance of payments, reduce the outflow of gold and preserve the stability of the dollar.

Coupled with this is the increasing interest by economists and business leaders in other possible measures that might contribute to a permanent solution of the problem. Some of these are analyzed by the Committee of American Steamship Lines in the following section of this report.

T

HE GOVERNMENT'S NEW DIRECTIVE indicates that our nation is still clearly committed to a program that stresses - among other things foreign economic and military aid; promoting investment and travel abroad; promoting trade, and preserving the soundness of the dollar at home and abroad.

At the same time the policy is essentially a "Buy American" policy insofar as the military services and the International Cooperation Administration are concerned. The latter agency handles foreign aid.

The Committee of American Steamship Lines believes that the program to avoid expenditures of critical dollar balances abroad can be extended effectively even beyond the steps announced in the Government's recent directive. As an extension of the present program the Committee recommends that prompt and immediate action be taken to insure these two fundamental policies:

1) U. S. flag liner vessels (the common carriers) which move cargo at conference freight rates equal to foreign liners should be given first preference and utilized to their maximum capacity in transporting all shipments of direct or indirect economic or military aid by the United States; and

2) In all programs of direct or multilateral assistance to foreign countries, whether through the United Nations or otherwise, the U.S. should make its contributions, wherever possible, in terms of credits to be expended for American products and for transportation in U. S. flag vessels.

This measure has had the wholehearted support of the American shipping industry ever since its inception. Formally launched by President Eisenhower on March 17, 1960 as the National Export Expansion Program, the campaign has now become one of the top priority policies of our Government.

Since the President made his announcement eight months ago, the Department of Commerce has established thirty-three regional committees composed of leading businessmen - in the areas where the Department maintains field offices. Their goal is to alert business executives throughout the country to the opportunities that exist in export trade today; and to persuade them, if practicable, to make exports a part of their business operation. Department of Commerce Activities

Among the Department's many specific activities are improved displays of United States products which are being more widely shown at world trade fairs, new pilot trade and exhibit centers, increased market information by country and commodity and better training of foreign and domestic commercial officers and specialists.

In addition, the Export-Import Bank is now offering through private banks, as a part of the Export Expansion Program, insurance against unusual international risks in the short-term credit field and wider protection in the area of medium-term export loans.

There is reason for some encouragement despite some large non-recurring exports in the fact that during the first seven months of 1960 exports have increased 21 cent. per

Exports carried aboard American flag ships can be a significant positive factor in our balance of payments position, as explained recently by John J. Allen, Jr., Under Secretary of Commerce for Transportation." He said:

"The American exporter tends to hinder his role as a contributor in improving our balance of payments position if in expanding his exports abroad he utilizes foreign flag transportation.

4) In an address November 9, 1960, before the Propeller Club, New Orleans, La.

"The reduction of our payments deficit is predicated in part on our reducing the outflow of dollars from this country and in part on increasing the relationship of our exports to our imports. In effect, when an exporter utilizes foreign shipping to move his goods overseas he is importing a service and adding the dollar value of this shipping service to our deficit. However, if, in shipping his goods abroad, he utilizes American ships, he is exporting a service and contributing the dollar value of this service to a more favorable balance of payments for the United States.

Role of Importer

"The importer also has an important role insofar as the utilization of American flag ships and conservation of dollar balances are concerned. Ultimately, his own self-interest is involved. This is true because his livelihood as an importer is predicated upon a sufficient amount of American exports and resultant American foreign exchange credits being available in foreign countries to permit the importation of products at reasonable prices. A continued outflow of dollars could conceivably drive the foreign exchange rate so high that it would become difficult, if not impossible, for importers to purchase foreign goods. Second, just as the exporter lessens the outflow of dollars, the importer, by using U.S. flag shipping whenever possible, achieves the same objective."

CASL Has Aggressive Program

The Committee of American Steamship Lines is giving the Government's export promotion campaign all possible assistance through an aggressive program of its own. One of its major purposes is to encourage American firms to sell exports and buy imports in a way that gives them the opportunity to designate American flag ships as carriers of their cargoes.

Other countries use their Merchant Marine, as a matter of national policy, to a much greater degree than we do. In Great Britain, for example, 70 per cent of all United Kingdom cargo is carried in British bottoms. Some 57 per cent of Japan's imports and exports are transported in ships of its flag. In contrast, only an average of 14 per cent of U. S.

foreign trade was carried by American flag ships in 1958, and 1959 the figure declined to an average 10 per cent. There was only a slight improvement in 1960, with the average for the first six months (latest figures available) amounting to 11.7 per cent.

Why Use American Ships?

It is good business to use American ships, the Committee emphasizes, both from the standpoint of national interest and the shipper's self interest. It is good business for practical reasons like these:

a) Rates are competitive – International steamship conference freight rates are the same for American flag berth service lines as for foreign flag lines; so that, generally speaking, the transportation charges would be the same on American ships as those of established foreign lines.

b) Schedules are dependable - American flag lines operating over essential trade routes provide regular, frequent schedules to 400 major world ports - more than our competitors. Customers are assured of dependable service.

c) Sales opportunities are improved – Shipping via American vessels gives shippers the opportunity to use the skills, services and experience of the American flag line traffic development staffs with their superior knowledge of overseas conditions. This is often a vital factor in getting new customers and retaining those already served.

d) The national defense is strengthened - By regularly using American flag lines, shippers are supporting an indispensable American industry. This means added assurance that a modern, efficient

Merchant Marine will always be available for the nation's commerce and defense in time of emergency. A strong merchant shipping fleet is essential to compete with Russia's growing maritime capabilities if we are to maintain our world trade position.

e) The national economy will profit - Regular use of U. S. flag ships will also insure continuance of a $5,000,000,000 ship replacement program with resultant widespread benefits to the national economy. It will reduce taxes through increased mari

time revenue.

CONCLUSION

The export expansion program, which offers such rich prospects for future growth and profits to American business, has far-reaching implications for Government, too.

Additional use of American flag ships for the carriage of Government generated cargoes is an immediate step that can be taken to improve the balance of payments. Heretofore, the participation by U. S. flag ships in the carriage of these Government cargoes has generally been substantially less than 50 per cent - even though the U. S. pays in dollars practically all the ocean freight.

As a matter of national self-interest the Government should now give first preference to U. S. flag ships in carriage of such traffic. Industry should also utilize, as broadly as possible, all services of the U.S. Merchant Marine - thereby helping our balance of payments immediately.

Such a program is a challenge to our resourcefulness, our productive talent, our sales ability and our patriotism.