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resulted in the creation of a Governinent agency known as the “l'nited States Shipping Board”. Upon our entry into the World War, we had about sixty-odd shipyards employing about 50,000 men and they were increased during the World War about sevenfold.

The number of ships ordered in the war-time program numbered about 3,200, of about 12% million gross tons. That tonnage equalled the combined tonnage of seven countries, before the World War the United States, France, Italy, Germany, Japan, Norway, and Sweden. The Government, in intiating that program, within 20 months had committed itself for an expenditure of 3,000 million dollars. That sum represented twice the value of the entire world's merchant marine of ocean-going vessels, of 1,600 gross tons and upwards, numbering 8,400, of about 35 million tons in 1914.

With the signing of the armistice, steps were taken immediately to cancel some of the war-time contracts. Nine hundred and fifty-eight contracts of about 3 million gross tons were canceled. The vessels acquired by the Government through seizure, purchase, requisition, and by other means resulted in the accumulation of about 2,500 vessels of 12 million tons. That tonnage equalled the entire tonnage destroyed during the World War by submarine, mine, and raider warfare.

Following the signing of the armistice, there was a great demand for ships due to the first post-war impetus of world trade, homeward troop movements, relief work, and rehabilitation. This demand for tonnage continued until about March 1920.

The United States curtailed its ship-building program very rapidly. In 1918, 1,110 keels were laid; in 1919, 651; in 1920, 54; and, in 1921, 5. In 1920, the demand in the world for tonnage had been met. In 1922, there were about 10 million tons of shipping idle. Despite this, countries other than the United States, continued to build ships in large numbers.

During the period from 1922 to 1928, there was not a single keel for a ship laid in the United States for service in the overseas foreign trade.

During the post-war period extending from 1922 to 1933, about 16 million tons of ocean-going ships of 3,000 gross tons and up: ward were constructed throughout the world, of which the United States contributed less than 7 percent.

Contrasted with the situation in 1914 when there were $1 vessels of less than 500,000 tons, there are today about 477 vessels of slightly under 3 million tons operating in regular services in the foreign trade of the United States. In 1914 there were about 31,000 vessels of 49 million tons in the world, of 100 gross tons and upwards; today there are about the same number of vessels, of 65 million gross tons.

It is customary to compare the relative standing of the world's inerchant marine by such figures. Those figures include vessels of small sizes, miscellaneous types, and the kinds that have no part in competition in the international carrving trade. For example, there are slightly over 11 million tons of ships, of the 65 million tons, that consist of ferries, tugs, cable ships, fishing vessels, municipal craft, and about 8 million tons of tankers. So that there are leit, out of the 65million tons, about 54 million tons of vessels of 100 gross tons and over available for the carriage of goods and passengers.

An analysis of the world's tonnage of 65% million shows the United States has over 13 million, and is second to Great Britain with

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21,820,000 tons. Such figures are very misleading. If we are confining the discussion to the competition that exists in the international carrying trade, certain deductions must be made.

Mr. Širovich. What is the tonnage of Germany, France, and Italy, in comparison?

Mr. Haag. I am going to mention that.

The CHAIRMAN. I think, if you will let Mr. Haag proceed, we will get a more connected story.

Mr. Haag. First of all, I think we should confine the tonnage to ocean-going sizes. The sizes considered as ocean going are vessels of 2,000 gross tons each, and upward. When we limit the tonnage to those sizes, the sixty-five and a half million tons, is brought down to about 49 million tons. That is inclusive of tanker tonnage of about eight and a half million tons.

However, insofar as the United States is concerned, in its coastwise trade, which is very extensive, there are employed many ships of 2,000 tons and over but practically all of the ocean-going tonnage of other nations of 2,000 gross tons and over engage, according to the British Chamber of Shipping, is engaged in the international carrying trade.

Now, if we eliminate from the United States tonnage that which operates in the domestic trade, vessels of 2,000 gross tons and over, we eliminate about 2,100,000 tons. If we eliminate the tankers, we eliminate about 2,400,000 tons; if we eliminate the Lake ships, we eliminate about 2,300,000 tons. We also must eliminate about 1,300,000 tons of ships owned by the Government (that are more or less in permanent lay-up) which will probably not go to sea and offer no menace in the international carrying trade.

So when we reduce the world's tonnage to ocean going types competing in the international carrying trade, we have a world total of about 36 million tons, of which Great Britain has about 13 million; Japan slightly over 3 million; the United States slightly less than 3 million; Germany, 2,700,000; France about 2% million; and Italy about 2,100,000.

At this point I would like further to mention that tonnage figures alone do not accurately reflect the competitive standing of the world merchant marines. Gross tonnage figures alone are only indicative of volumetric proportions; they reflect size only. If the world's merchant marines were based on gross tonnage alone, if such ships were used as floating warehouses, they would accurately reflect the relative standing, because they would show what each could store in the holds. However, ships are used for the purpose of transporting goods and passengers, therefore the speed factor is a consideration-how fast can tho tonnage of each country move. So, when we consider the speed factor and the gross tonnage factor, the carrying power of such tonnage is indicated.

There is another factor that must be considered-because, while it is possible to move a large tonnage rapidly, it may involve a considerable expense--how economically can that tonnage be moved. So you not only have the question of mobility, but you also have the question of modernity. Only when the factors of volumetric proportions, mobility, and modernity are considered do we have an accurate yardstick by which to measure competitive power.

From the standpoint of tonnage, as I pointed out, of the ships engaging in the international carrying trade, it showed the United

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States was third. However, from the standpoint of speed, the United States ranks fourth. From the standpoint of modern ships, the United States ranks last among the principal maritime countries. So while the figures disclose that we have the second largest merchant marine in the world when considering vessels of one hundred gross tons and over, which include all of these miscellaneous types of vessels, they tend to confuse and do not reflect accurately the relative standing of the merchant marine in the international carrying trade.

Insofar as the standing of the American Merchant Marine in the foreign trade today is concerned, the situation as contrasted with 1914 has vastly improved. However, insofar as our standing among the principal nations of the world is concerned, we are near the foot of the list from the standpoint of competitive power.

As a result of the act of 1928, 42 vessels of about 450,000 gross tons were launched and all of these vessels were launched between 1929 and 1932—a period of 4 years. There were invested in those vessels about $160,000,000 within that period. Those 42 vessels included 9 tankers and 2 ships of special type. When we eliminate those 11 vessels we then have high types of combination freight and passenger vessels valued at about $142,000,000, averaging about $4,600,000 each.

Our merchant marine today operating in the foreign trade of slightly less than 3,000,000 tons includes 224 vessels of 1,400,000 tons, which were purchased from the United States Government. There is a high percentage of old vessels and obsolete vessels in the number. Of the 3,000,000 tons, there are about 1,900,000 tons having contracts for carrying mail-in other words, vessels that are subsidized.

At the end of 7 years, 86 percent in number and 77 percent in tonnage of the vessels now operating on ocean-mail routes will have become 20 years old. From the standpoint of number, the new tonnage built with the aid of the construction loan fund represents very few ships; from the standpoint of the investment in money it has been considerable. They are high-class ships and those ships that have been constructed—those 31 combination freight and passenger ships-are as fine a ships as any afloat in the world today and as competitive as any and they are getting a fair share of the business available even in these depressed times.

If during the next 7 years we launch an average of 35 vessels per annum it will result in an investment of $35,000,000 a year. Thirtyfive million dollars a year will give us, roughly, 35 vessels of the cargoliner types with a speed averaging about 14 knots, and, at the end of 7 years, if the program of replacement on that scale is maintained which in my estimation is a conservative replacement program--we will have one of the most modern and competitive merchant marines not the largest, but of a size to meet the present requirements for commerce and defense-when 86 percent in numbers and 77 percent in tonnage will have become 20 years old of the present fleet operating under ocean-mail contracts.

The Chairman. What is the economical speed for vessels of the cargo-liner type?

Mr. Haag. That I think can be answered by saying that the ships that the Government built during the war, which were nearly all of

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pre-war types, have a fuel consumption running from 1 to 1.2 pounds
per shaft horsepower per hour. Modern ships consume about from
0.62 perhaps to 0.7 pounds per shaft horsepower per hour. Con-
verting that into fuel consumption, the saving in fuel in a modern
ship runs upward of 50 percent over the old type.

Mr. Culkin. You said that with a disbursement of $35,000,000 a
year, 35 vessels of the combination freight and passenger type could
be built?
Mr. Haag. No; 35 cargo-liners.
Mr. Culkin. That is cargo liners?
Mr. HAAG. Cargo liners.
Mr. Culkin. Does that involve any Government contribution?
Mr. Haag. Yes; it would.

Mr. Culkin. Well, what proportion? Will these boats cost about a million apiece?

Mr. Haag. I think, roughly, they will average about a million apiece. That means for the 8,000-ton vessel, about $125 a deadweight ton. And if they are built in numbers of 35 vessels, you can get the advantage of volume production; instead of building 1 or 2 ships, you will build probably 8 or 10 of one type.

Mr. Culkin. Under the existing law, is there any subsidy for that type of ship? Mr. Haag. Yes.

Mr. Culkin. What is that now; what proportion of that million dollars is the Government now contributing?

Mr. Haag. I think, of the vessels of 10-knot speeds, those 224
received about $20,000,000 during the fiscal year 1934.
Mr. CULKIN. Twenty million out of the thirty-five?
Mr. Haag. That is an estimate. I would rather put in an accurate
statement concerning that.

Mr. Culkin. You have not gotten to the point in your discussion
where it involves the construction of the combination ship?
Mr. Haag. What?
Mr. Culkin. That is the passenger and freight ship; are you going
into that? I do not want to anticipate your discussion, but I was
wondering if you were going to get into that phase of it.

Mr. Haag. My reaction there is since we have built nearly all
combination ships since the enactment of the 1928 legislation there
is a considerable shortage, in fact a great shortage, in the cargo liner
types
Mr. CULKIN. In the American marine?

Mr. Haag. In the American marine—that the next move should be to replace our obsolete 10-knot ships with modern ships of an average speed of 14 knots.

Mr. Culkin. What would a sufficient type of that ship cost today?
Mr. Haag. What would a ship like that cost today?

Mr. Culkin. Yes; a sufficient type, a type that could compete in
the world markets?
Mr. Haag. Well, an American ship would cost about $1,000,000.
Mr. Culkin. I am not talking about freight; I am talking about
combination freight and passenger.
Mr. Haag. Well, it just depends on how many passengers a ship
will carry, in order to class it as a combination ship.

Mr. Culkin. Well, the average ship that is necessary to compete in the passenger trade and the freight trade?

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Mr. HAAG. Well, the average ship necessary to compete, of the combination type, are those that we have built since the Act of 1928.

Mr. CULKIN. What do they cost per ship?

Mr. Haag. They average $4,600,000 apiece. They run from perhaps $2,000,000 up to $10,500,000.

Mr. CULKIN. What is the Government's contribution to that type of ship now?

Mr. Haag. In the construction differential?

Mr. Culkin. Yes. I am talking about the present law, not the proposed law. What do we contribute now?

Mr. HAAG. As to what we are paying in subsidies, or what the ships cost?

Mr. CULKIN. Yes.
Mr. Haag. What we are paying in subsidies?
Mr. CULKIN. Yes; the whole Government disbursement for that?

Mr. HAAG. The whole Government disbursement in the fiscal year 1934 for all of the mail-contract ships was $29,600,000.

Mr. Sirovich. That was brought out in the President's message, in which he contended we had given $30,000,000 in subsidies to all of the ships and, if we had to pay for the mail it would be $3,000,000; so that the difference between the two represents a subsidy we have given, which is $27,000,000.

Mr. Haag. That is a subsidy for all of the ships operating under mail contracts.

Mr. SIROVICH. Yes.

Mr. Culkin. I thought the question was confined to cargo ships alone. It was $29,600,000 paid out in the fiscal year 1934.

Mr. Sirovich. How many ships did that involve—this $27,000,000 subsidy?

Mr. Haag. 282 vessels of 1,900,000 gross tons.
Mr. SIROVICH. Two hundred and eighty-two vessels?

Mr. Haag. Two hundred and eighty-two vessels that made one or more voyages which drew mail pay, and their total gross tonnage was just about 1,900,000 tons.

Mr. Sirovich. My colleague, Mr. Culkin, was trying to bring out a point which I am going to follow through. We have today merchant marine passenger ships of foreign countries, ships of the caliber of the Rer, Conte di Savoia, Normandie, Bremen, Europa, and the Queen Mary

Mr. Haag. Did you ask me do we have such ships?
Mr. Sirovich. No; I say foreign countries have at the present time.
Mr. Haag. Yes, they do.

Mr. SIROVICH. Now, these ships are mainly passenger ships; they carry very little cargo; is not that true?

Mr. HAAG. Very little.

Mr. SIROVICH. And they were designed, constructed, and built just for speed purposes and passenger service; is that right? Mr. Haag. Primarily for the passenger trade.

Mr. Sirovich. Now what ships have we in America that can compete with these ships?

Mr. Haag. None.
Mr. SIROVICH. None at all?

Mr. Haag. None of that type. The finest ships we have today are the Manhattan and Washington in the North Atlantic trade, and those

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