Mr. WELCH. One-quarter of 1 percent would make it possible, in ur estimation, to construct merchant vessels at a profit on the Patton coast!

Mr. SMITH. I do not see any reason why it would not put them in a. atsolutely competitive basis with any yard on the east coast in - matter of efficiency; of course, the matter of what you can do then you get a contract-but I do not see why they should not be anal competing basis.

Mr Wrich. You realize, of course, that the vast amount referred t of $150,000,000, loaned by the Government of the United States fors, p construction has been spent within a radius of two or three dresi m les of this room!

Mr. SMITH, Well, it has been spent-of course, it has all been stent in the east-coast yards; but it has been spent in those yards

ste xst on the west coast.

Mr Wich. Is there not something that your organization can toring about the development of ship construction on the Pacific

Mr SMITH. Well, I have repeatedly discussed it with my group ai told them what I have stated to you, that I believe, from the sta pont of national defense, it is important that there should be shipbuilding facilities maintained on the Pacific coast in private

Mr. WizCH. Will you or your organization make a recommenda-* to this committee that a differential of some degree in the interent rates charged by the Government be established for vessels con- ted on the Pacific coast for Pacific-coast trade?

Mr. SMITH. I think we would, sir. I think it would be based, wever, upon such different.al as was necessary to cover differences * - t, and that would have to be analyzed. We would have to a: a vze the wage rates and the transportation charges.

Mr. Watch. Do they pay a higher wage rate on the Pacific coast t. in they do on the east coast!

Mr. SMITH. At the present time there is practically no difference, » te codes went into effect. I think, as a matter of fact, you ind that the differential now is so small that your west east yards are practically on a competitive basis.

Mr. WCH. A differential was worked out by the people of the 1. coast, interested in both ship construction and national deto be about one-half of 1 percent. If you and your organizawill be good enough to submit your estimate what this differshould be for ships constructed on the Pacific coast, at a rearabe 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 a: i to present a statement to you, sir, as to what it looks like. I #rly happened to take one type of ship when the matter came tre here last week, and analyzed it.

Mr. WEICH. Would you be good enough to confer with the shiping at shipping interests on the Pacific coast with reference to the possible differential?

Mr. SMITH. I did before when we developed this 21 percent on 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.

The CHAIRMAN. Mr. Culkin.

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. The CHAIRMAN. We had plenty of them, of course.

Mr. SMITH. Yes, sir; we had an immense number.

Mr. CULKIN. Wood and 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. CUIKIN. You have yards that can build such ships? Mr. SMITH. Yes, sir. There are three yards in the United States tat could build that ship with very little additional building way

Mr. CATKIN, I saw a rather bitter criticism in one of these magaze articles that came to my desk the other day, in regard to the atulity of our present naval architects to design a ship of that Is there anything in that?

Mr. SMITH. No, sir. They are the equal of any in the world.
Mr. GULKIN. They could design a ship like the Rer?

Mr SMITH. Yes, sir.

Mr. SMITH. Or the Europa?

Mr. SMITH. They have designed such a ship.

Mr. CUL.KIN. I mean of that size, that tonnage.

Mr SMITH. Yes, sir; we had a 60,000-ton ship designed, a $30,000,*** stup designed, a superliner, in connection with United States L, degned by Theodore Ferris,

Mr. CULKIN. She was not built?

Mr. SMITH. She was not built.

Mr SIROVICH. What was her tonnage?

M-. SMITH. Around 60,000 tons.

Mr. SIROVICH. For what line!

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.

Te 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 or item of material used in ship construction, is it not? Mr. SMITH. As far as tonnage is concerned, it is.

Mr. MANSFIELD. As far as tonnage is concerned!

Mr. SMITH. Yes,

Mr. MANSFIELD. And that is produced principally in the Pitts bgh district, perhaps some of it at Erie or Birmingham!

Mr. SMITH. Well, it might be produced at any one of the Bethlebem plants, at Lackawanna or Bethlehem, or at the United States Steel Corporation's plants in and around Pittsburgh, or at Gary, I1, 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 pract. ay 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 Baltiinore, the nearest Atlantic port? Mr. SMITH. That is right.

Mr. MANSFIELD. That ought to be an argument for shipbuilding ng 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 repairfacilities 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. MANSFIELD. The Todd Co. there.

Mr. SMITH. Yes; the Todd Co., at Galveston, and the Johnston Iron Works, and there are yards at Mobile, and there is quite a 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 International 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. SIROVICH. And built the Manhattan and the Washington? Mr. SMITH. Yes, sir; they built the Manhattan and the Washing

ton.

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. SMITH. That is right.

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

other lines, and part of his contracts or agreements was to build a sirianer.

Mr. SMITH. It was intended to build a superliner at that time;

Mr. SIROVICH. And that had to be deferred on account of the great enomic depression. Is that right?

Mr. SMITH. I understand that is the reason.

Mr. SIROVICH. Are you in favor of having our Government equale the work done by Italy with their liners, like the Rez and the nie di Savoia; by Germany with their liners like the Bremen, Europa, and Berengaria; by France with the Normandie; and by England with the Queen Mary! Don't you think we ought to have a superliner, run by somebody, some good operating company, that w.. carry the glory and prestige that goes with the operation of a ..p of that size!

Mr. SMITH. Well, sir, I think there is no justification whatever for the buni ling of a superliner in the United States, except from the stan ipoint of national defense. I see no possibility of it being prosjeros from a commercial standpoint; and, if such a ship were operat.ng, the Government would have to see to it that the owner is garanteed, over its lifetime, protection to take care of the differential.

1. CHAIRMAN. And, really, as a matter of national defense, has the perliner ever demonstrated that it was capable of anything as an instrument of national defense? Did the British use the Maure, which was the largest ship they had then, in the national

Mr. SMITH. Well, they used it as a troop transport, and I believe they did use the Lusitania, which was a sister ship.

The CHAIRMAN. Don't you favor small ships, upon the principle that there are too many eggs in one basket 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.pate of the Queen Mary.

The CHAIRMAN. Has not a member of the British Parliament sugte that there might have to be an international conference on superioners, just as there was on battleships, so as to stop the competit on along this line and to have the money spent for more useful 1!

Mr SMITH. It has been so stated in a discussion of the subject in Parliament that the Queen Mary was built because of the necessity of competing with the Rez, Conte di Savoia, Bremen, Europa, and Mrmandie.

Mr. SIROVICH. Now, on that subject, may I continue, Mr. Chairmar!

The CHAIRMAN. Go ahead.

Mr. SIROVICH. Since we are competing with foreign nations, with Great Britain and Japan, for naval construction and for aviation purposes, don't you think, from the standpoint of transporting troops and from the standpoint of the psychological effect that comes to our our 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