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Mr. WELCH. One-quarter of 1 percent would make it possible, in your estimation, to construct merchant vessels at a profit on the Pacific coast?
Mr. SMITH. I do not see any reason why it would not put them in an absolutely competitive basis with any yard on the east coast in the matter of efficiency; of course, the matter of what you can do when you get a contract-but I do not see why they should not be on an equal competing basis.
Mr. WELCH. You realize, of course, that the vast amount referred to, of $150,000,000, loaned by the Government of the United States for ship construction has been spent within a radius of two or three hundred miles of this room?
Mr. Smith. Well, it has been spent--of course, it has all been spent in the east-coast yards; but it has been spent in those yards that exist on the west coast.
Mr. WELCH. Is there not something that your organization can do to bring about the development of ship construction on the Pacific coast?
Mr. Smith. Well, I have repeatedly discussed it with my group and told them what I have stated to you, that I believe, from the standpoint of national defense, it is important that there should be some shipbuilding facilities maintained on the Pacific coast in private yards.
Mr. WELCH. Will you or your organization make a recommendation to this committee that a differential of some degree in the interest rates charged by the Government be established for vessels constructed on the Pacific coast for Pacific-coast trade?
Mr. SMITH. I think we would, sir. I think it would be based, however, upon such differential as was necessary to cover differences in cost, and that would have to be analyzed. We would have to analyze the wage rates and the transportation charges.
Mr. WELCH. Do they pay a higher wage rate on the Pacific coast than they do on the east coast ?
Mr. Smith. At the present time there is practically no difference, since the codes went into effect. I think, as a matter of fact, you would find that the differentia! now is so small that your west coast yards are practically on a competitive basis.
Mr. WELCH. À differential was worked out by the people of the Pacific coast, interested in both ship construction and national defense, to be about one-half of 1 percent. If you and your organization will be good enough to submit your estimate what this differential should be for ships constructed on the Pacific coast, at a reasonable profit to the ship yards and the shipping interests, I feel that it would be very valuable information for this committee.
Mr. Smith. We would be very happy to analyze the situation and to present a statement to you, sir, as to what it looks like. I simply happened to take one type of ship when the matter came up here last week, and analyzed it.
Mr. WELCH. Would you be good enough to confer with the shipbuilding and shipping interests on the Pacific coast with reference to the possible differential?
Mr. SMITH, I did before when we developed this 21/2 percent on the transportation charges; and I have talked it over at length. I have met with several groups on the west coast. I have met with the Chamber of Commerce of San Francisco and with groups all up and down the west coast, and have discussed this at length. I made to them the same statement I made to you this morning.
Mr. WELCH. Then, it is clear that you do favor some differential making it possible to construct vessels on the Pacific coast?
Mr. Smith. If there is a differential indicated, and I think there is some.
Mr. WELCH. That is agreed.
Mr. Smith. I think there is. It would not be if your labor rates happened to be higher on the east coast than there. That might overcome the transportation differential. But, assuming your labor rate is equal or higher, then, of course, that would have to be allowed to place them on an equality. I would be very glad to go into it, sir, and I will come to see you and go carefully over the figures and see what it looks like.
Mr. WELCH. That is all.
Mr. CULKIN. Mr. Smith, you said that you thought that the building of these wooden ships was due to some selfish interests. If we had built iron ships at that time or built steel ships-did we have the facilities at that time to build steel ships, or could they have been created as readily as the facilities for building the wooden ships?
Mr. SMITH. Yes; they could have been created more quickly. As a matter of fact, the facilities, of course, were multiplied many times over for the construction of the steel ships.
Mr. CULKIN. Well, now, just one more question. What would have been our position in the world trade subsequently to the World War if we had built steel ships?
Mr. SMITH. If we had built steel ships?
Mr. Culkin. If we had built steel ships instead of wood ships, we would have had a large carrying fleet, would we not, that would have been
Mr. SMITH (interposing). We would have had more steel ships.
Mr. Smith. There are no wood ships. They are all gone, years ago.
Mr. CULKIN. The ships that were built at that time were mostly of wood ?
Mr. Smith. Oh, no; only a small percentage; and all of those ships in our fleet today are the steel ships.
Mr. CULKIN. I am talking about the ships at the time of the construction during the World War—after we went into the World War.
Mr. Smith. There were 1,308 steel ships built and 589 wood ships; but those wood ships included everything down to tugs, little fellows.
Mr. CULKIN. And the steel included the Henry Ford "arks"?
Mr. Smith. No; they did not include any of those. Those were naval vessels.
Mr. Culkin. Just one more question. Have you facilities in America, yard facilities, for building a 50,000-ton ship now, such a ship as the Berengaria, a ship of that size?
Mr. SMITH. Yes, there are.
Mr. CULKIN. You have yards that can build such ships?
Mr. SMITH. Yes, sir. There are three yards in the United States that could build that ship with very little additional building way facilities.
Mr. Culkin. I saw a rather bitter criticism in one of these magazine articles that came to my desk the other day, in regard to the inability of our present naval architects to design a ship of that type. Is there anything in that?
Mr. SMITH. No, sir. They are the equal of any in the world.
Mr. CULKIN. She was not built?
Mr. SMITH. That was a part of the program for new construction by Chapman at the time that he took over the United States Lines. The ship was designed, and not built.
The CHAIRMAN. Mr. Mansfield has asked me several times to recognize him.
Mr. MANSFIELD. Speaking of the cost of assembling material for ship construction on the Pacific coast, steel, I presume, is by far the major item of material used in ship construction, is it not?
Ńr. SMITH. As far as tonnage is concerned, it is.
Mr. MANSFIELD. And that is produced principally in the Pittsburgh district, perhaps some of it at Erie or Birmingham!
Mr. Smith. Well, it might be produced at any one of the Bethlehem plants, at Lackawanna or Bethlehem, or at the United Ştates Steel Corporation's plants in and around' Pittsburgh, or at Gary, Ind., or Birmingham, Ala.
Mr. MANSFIELD. And steel at all of the Atlantic coast points has the advantage in rail rates over the Pacific coast? Mr. SMITH. That is right.
Mr. MANSFIELD. Now, then, as to the Gulf coast. We have practically no shipbuilding on the Gulf. I live down on the Gulf, and the freight rates from all of these points to New Orleans by water are less than the rail rates to Baltimore, the nearest Atlantic port?
Mr. SMITH. That is right. Mr. MANSFIELD. That ought to be an argument for shipbuilding along the Gulf, at New Orleans especially, where they could assemble the materials there, perhaps, cheaper than they could even on the Atlantic seaboard.
Mr. Smith. Well, they have, as you know, very fine ship repairing facilities on the Gulf, at New Orleans, Galveston, and Mobile,
Mr. MANSFIELD. I am quite familiar with the facilities at Galveston, which is in my district.
Mr. SMITH. And at Mobile.
Mr. SMITH. Yes; the Todd Co., at Galveston, and the Johnston Iron Works, and there are yards at Mobile, and there is quite & plant at Tampa. There are numerous smaller plants, such as the Engle Iron Works, that engage in the building of barges. There is quite a good deal of building of barges and smaller craft down on the Gulf; but they have made no attempt since the war to build ships of large size, although they did build a great many, during the war, on the Gulf.
The CHAIRMAN. If you have finished your answer, Mr. Sirovich wants to make an inquiry.
Mr. SIROVICH. My distinguished colleague and friend from New York, Mr. Culkin, asked you a question before regarding the In. ternational Mercantile Marine, and its effect upon construction; and you showed how the International Mercantile Marine had built the California, the Virginia, and the Pennsylvania.
Mr. SMITH. Yes.
Mr. SMITH. Yes, sir; they built the Manhattan and the Washington.
Mr. SIROVICH. Now, as I refresh my mind on testimony of witnesses who appeared before our committee about 4 or 5 years ago, when you mentioned Chapman, the International Mercantile Marine was organized about 25 years ago, and in that International Mercantile Marine we had the following organizations: There was the United States Shipping Lines. There was the Leland Line, the White Star Line, the Red Star Line-and I have forgotten the fifth line. Now, the United States Lines in those days, along about 1910), had ships like the St. Paul and ships of that caliber. Now, these have all been replaced and in their place we find the Manhattan and the Washington. Is that right?
Mr. SMITH. We find the Manhattan and the Washington as the two large steamships.
Mr. SIROVICH. I mean built in American shipyards.
Mr. SIROVICH. Now, the White Star Line has been fused with the Cunard Lines in 1933.
Mr. SMITH. Well, of course, I know that is so; but I would not like to state as regards ownership of the International Mercantile Marine, because I cannot speak from first-hand information, of course, being a shipbuilder and not a shipowner.
Mr. SIROVICH. I was trying to find out what other ships. I think the Leland Line came from Baltimore.
Mr. Smith. I was under the impression that they came into New York.
Mr. SIROVICH. I was just trying to find out what other ships had been constructed by the International Mercantile Marine since the 1928 act, because, as you have stated
Mr. Smith (interposing). They are the only ones.
Mr. SIROVICH. If I understand your statement correctly, when Mr. Chapman testified before us they had taken over the Leviathan and
ediger lunes, and part of his contracts or agreements was to build a ... riter.
dir. Siru. It was intended to build a superliner at that time; Jr. Simona H. And that had to be deferred on account of the great
the depresion. In that right? Mr. SMITH. I understand that is the reason.
Mr. SIRUNICH. Are you in favor of having our Government equal. Ir the work done by Italy with their liners, like the Rex and the
mode da avvia; by Germany with their liners like the Bremen, 1.word, and Berengaria; by France with the Normandie, and by Exial with the Queen Vary! Don't you think we ought to have ..perher, run by somebody, some good operating company, that
si carry the glory and prestige that goes with the operation of a Sit of that site!
Sir. SMITH. Well, sir, I think there is no justification whatever for te buliing of a superliner in the United States, except from the Lan 11. It of national defense. Ise no possibility of it being pros;- from a commercial standpoint; and, if such a ship were oper21:1, the Government would have to see to it that the owner is ruanar:terd, over its lifetime, protection to take care of the difTitial.
11. CHAIRMAX. And, really, as a matter of national defense, has turperliner ever demonstrated that it was capable of anything as 2a 11. rument of national defense! Did the British u the Youri C:n, which was the largest ship they had then, in the national de fermet
Jir. SMITH. Well, they used it as a troop transport, and I believe 1:.- did use the Lusitania, which was a sister ship.
Ile CHAIRMAX. Don't you favor small ships, upon the principle 18. at tsere are too many eggs in one ba-ket in a superliner!
Mr. SMITH. My own judgment is only a personal judgment; but I will be very much surprised if we see any ship of anything like the superliner size built abroad in the next few years, unless it is a d. Dit sale of the Queen Mary.
14 ( HAIRMAN. Has not a member of the British Parliament sug. meet that there might have to be an international conference on Birrifar junt as there was on battleships, so as to stop the comfwrit on along this line and to have the money spent for more useful
Mr. SMITH. It has been so stated in a disrusion of the subject in Parian.rnt that the Queen Mary was built because of the neersity ! cumpling with the Rex, Conte di Savoia, Bremen, Europe, and
Mr. SITNICH. Now, on that subject, may I continue, Mr. (haircar!
The ('HAIRMAX. Go ahead.
Mr. SIBIH. Since we are competing with foreign nations, with (rat Britain and Japan, for naval construction and for aviation gurmare, don't you think, from the standpoint of transporting troups a:..i from the standpoint of the psychological etfect that comes to our eral try, that we, at least, ought to have one or two large superliners, to match the foreign countries, to carry our own passengers, even to