non-self-sustaining makes it harder for us to use those ships for an initial invasion of any country without a developed port.

On the other hand, there are some of the newer ships that work perfectly for us, the ro/ro type ship and the seabarge and the lash ships.

The containership was one of the prime reasons why we find ourselves short of the type of ships that we may need, and it is economically a better ship.

Mr. PATTERSON. What is the containership?

Mr. CARL. It is a ship that carries anywhere from 800 to 1,200 containers per voyage, and they run in size from the 24-footer to the 35and 40-foot containers.

Mr. BENNETT. These containers will not handle all of our particular equipment, and additionally the ships themselves will not go to some of the places we think they may need to go.

Mr. PATTERSON. Now, some questions have touched on this, but I am curious as to the relationship between the Defense Department and perhaps Commerce with regard to subsidy.

For example, lets look at military subsidy and commercial subsidy. One could take the position that there is no need to subsidize private enterprise such as the Merchant Marine, except to the extent that it serves the national security interest. I am not advocating that position, bu some members, of course, are.

Let us look at a hypothetical case with a boycott, and our Merchant Marine was small in capacity, and we were using many foreign flags. Would this fact not become a national security issue which therefore becomes a defense issue; or is it still a commercial operation?

Mr. BENNETT. I think it becomes three isues. It becomes a national issue; it becomes a national security issue and becomes a national defense issue.

They are all interrelated, Mr. Patterson.

Mr. PATTERSON. It would seem to me that the problem is a great deal interrelated to the extent that if we cannot feed the people of this country for any reason, that it is a national security issue.

How do you relate that to your budgetary process which comes before this committee in terms of what things you include in your budget and other departments include in theirs that might affect the Merchant Marine?

Mr. BENNETT. We would budget for an organic capability in the Military Sealift Command, through the normal Defense budget process.

We would make our requirements known as we do to MARAD to include those requirements in their budget, and they are the two essential routes we have.

We have other routes. In the Office of Preparedness we make known our strategic materials requirements and things of that nature.

Mr. PATTERSON. Is there a need for subsidization of vessels then that are not militarily adaptable in your opinion?

Mr. BENNETT. I think in a very broad plane, if you are talking about the interrelationship between national interests, national security and national defense, having a totally viable U.S.-flag fleet, if that requires subsidy and we think it does, I personally think it does-then there is a need for subsidy and it is related to national security and national defense.

Is that a responsive answer, Mr. Patterson?

Mr. PATTERSON. Yes; I think so, even though it may not come within the purview of your budgetary processes.

I have no further questions, Mr. Chairman.

Mr. DOWNING. Mr. Bonker?

Mr. BONKER. I have no questions.

Mr. DOWNING. Thank you very much, gentlemen.

Gentlemen, I would like you to end your testimony with the answer to this question. I believe the answer to this question could be helpful to those Members who voted against the merchant marine authorization bill last week, because I think they do not understand subsidy, and the necessity for subsidy if this country is going to have a viable merchant marine.

Because you testified as to the need for a subsidy for a merchant marine, I wonder if you could tell me and the other members of the committee and the world, is subsidy necessary, and why?

Mr. BENNETT. Well, that is a big order.

Mr. DOWNING. Would you like to do that for the record later on? Mr. BENNETT. I would like to do it for the record, but I would also like to give you a personal opinion.

Mr. DOWNING. Please do.

Mr. BENNETT. I think that subsidy is necessary, because we must compete in the world market in order to maintain and meet our national goals, objectives and to support our national interests.

In order to compete in the world market we need a viable merchant

marine.

In order to have a viable merchant marine, we must keep up with the things that are going on around us.

Other countries, Russia for example, have subsidized fleets, and if we are going to compete adequately with those countries and in world markets we have got to have this viable fleet; and the cost of doing business in this kind of environment, in my opinion, requires subsidy. It is a question of competition, Mr. Chairman.

Now, that is a personal opinion. I do not think it represents the opinion of the Department of Defense.

I would suspect that our position probably would be that that would be something that the administration should essentially respond to. [The following was submitted:]

SUBSIDY REQUIREMENT

As to a Defense Department position on a subsidy requirement, this is a matter of National interest upon which we would not take a position driven solely by considerations of National defense. From the defense standpoint, the position has to be that a number of ships is required from the U.S. flag merchant marine to meet defense requirements. If the subsidy is the best, most cost-effective, or the only practical way, to satisfy the defense requirement and the other requirements that constitute the whole of National interest in maintaining a viable U.S. flag merchant marine, then the DoD position on your question would have to be that subsidy is necessary to retain the availability of merchant ships required by National defense.

In a practical sense, I believe we have demonstrated this affirmation. For example, there is an effective agreement between the Departments of Commerce and Defense, dating back to 1954, whereby one of the criteria for determining the number of Defense-owned merchant type ships is to accommodate those current logistic needs which cannot be met by commercial interests. In an internal policy directive, it is stated that: "There shall be maintained and operated in peacetime sufficent DoD-owned transportation resources to meet approved DoD emer

gency and wartime requirements, having due regard for available commercial transportation." In the merchant marine context, these policies are grounded on the realization that many of those commercial assets are operating under the U.S. flag solely because of subsidy.

Certainly we, along with most everyone else, probably, would like to see a U.S.-flag merchant marine able to sufficiently penetrate the U.S. foreign and domestic offshore trading market solely on the merit of economic competitive considerations, without any governmental protection whatsoever. We do not see this as realistic. If ships are needed, it appears that subsidy of some type is necessary. We do not see cargo preference for foreign trade cargoes as a better solution. From a pure defense interest, we have considered the alternative of "stock piling" cargo ships. This may be practical for DoD to do in very small numbers, and, in effect, the NDRF already represents a stock-pile which can, at best, meet only part of the need. Stock-piling of new ships by DoD in numbers significant to the total need would be tremendously expensive and, to the extent that Congress interprets the National interest, has already been rejected.

Mr. DOWNING. I yield to Mr. Sarbanes for a question.

Mr. SARBANES. I appreciate that argument, but it is essentially an economic argument, which gets you into all sorts of economic comparative cost analysis.

What we need from the Defense Department is a very straightforward, careful analysis of the defense reasons. If you look down the road, will the United States find itself in a situation some day where it needs a maritime capacity but does not have it, does not have the men to sail the ships, the men to build the ships, does not have the ships it needs in a world in which economic competition in the marketplace is not at work because the world is at war.

Mr. BENNETT. I understand what you are saying.

My position would be that the economic and the defense aspects cannot be separated; that if you do not have the economic wherewithal in this country, we are not going to be No. 1 in defense.

Now, I would have to partially reject that aspect of it.

Mr. DOWNING. I yield to Mr. McCloskey.

Mr. MCCLOSKEY. I am struck by the fact that in your prepared testimony and the answers to the questions, there is very little consideration. of that trade competitive aspect.

Let me take one of your statements here. You indicate that the first major contingency you plan for is a NATO war.

I assume the second would be a Mideast war.

Mr. BENNETT. That is included in our planning.

Mr. MCCLOSKEY. We are presently undergoing a reanalysis of our posture in Asia. But at the moment we have a treaty with South Korea, with Taiwan, do we not, a mutual defense treaty?

Mr. BENNETT. Yes.

Mr. MCCLOSKEY. And also with Japan.

Mr. BENNETT. Yes.

Mr. MCCLOSKEY. Is there a re-analysis going on of the shipping needs that might be required in Asia and the Pacific, the various contingencies that might arise there?

Mr. BENNETT. Let me try to answer that in three ways.

I share your own personal concerns in this area, of the need for great economic defense analysis.

Second, there is an assessment going on in this particular area, which includes a look at the U.S.-flag fleet in questions of this nature as they relate to defense.

The third I would have to say from a personal opinion, I think

our planning could be improved to consider more of the economic aspects of the question.

Mr. MCCLOSKEY. Well, you have referred to the military chain of command here, under which you operate, and yet, if it is to be improved with respect to the economic and trade benefits, at least Treasury, State and Commerce are of equal importance with the Defense Department.

This is my essential question to you. Is there a study underway now reassessing the relationship between Defense and the trade posture over, let us say, the next 20 years?

Mr. BENNETT. Not to my knowledge, Mr. McCloskey.

Mr. MCCLOSKEY. In your opinion, should there be?

Mr. BENNETT. I agree with you that I think that is a necessity, and I will carry your message back to the Secretary of Defense and let me provide specific items for the record as to what we might propose doing or not doing about this particular aspect.

[The following was submitted:]

PLANNING CYCLE

Our own planning cycle continuously looks ahead some seven years, and we will explore the possibilities of projecting shipping requirements beyond that period. We understand that the Maritime Administration has made twentyyear economic forecasts of U.S. foreign trade and expects to have an update toward the end of this year. We will take steps to coordinate with the Maritime Administration in this respect and see if these two planning efforts can be coupled together to provide us with a continuing methodology for evaluating the relationship between foreign trade and Defense requirements in the moredistant future.

Mr. MCCLOSKEY. I think it would be important as we get the testimony from witnesses from Treasury, Commerce, and State, on this: trade expension program, because it is clearcut and within this committee's oversight responsibility.

Do you agree with that?

Mr. BENNETT. Yes.

Mr. MCCLOSKEY. I would like to see the hearings continue this afternoon, if that would be possible, because the testimony goes to the very heart of the rest of our hearings, as we progress.

Mr. DOWNING. I think the presentation here has been outstanding, and you have certainly been candid with this committee, and we appreciate that.

I think you made a very valuable contribution to these oversight hearings.

Now, Mr. McCloskey, do you wish to call them back this afternoon for further questions?

Off the record.

[Discussion off the record.]

Mr. DOWNING. Back on the record.

Mr. Len Sutter, counsel to the subcommittee, will submit to you some questions, and you may answer for the record later. [Questions referred to follow:]

ADDITIONAL QUESTIONS SUBMITTED BY CHAIRMAN SULLIVAN

Question: As I understand it, the military is not interested in tankers over 25,000 deadweight tons. Is there any cogent military reason for this and could you explain to us why the military has traditionally wanted tankers in the 16,000 to 25,000 deadweight range?

Answer: Where_port facilities exist, particularly as to sufficient deep draft sand turning area, Defense has utilized tankers up to 100,000 D.W.T.'s. However, the majority of military fueling ports throughout the world have draft limitations which preclude the use of tankers over 50,000 D.W.T.'s, therefore the military has preferred tankers with this range. Additionally, the 25,000 to 50,000 D.W.T. tanker is more adaptable to use for fueling at sea purposes due to the restricted length thereby permitting these smaller tankers to work more safely with the fleet. Smaller tankers are also required in underdeveloped ports.

Question: Assuming that several offshore terminals are constructed off the shores of the Continental United States, would not then the military require, or at least be able to feasibly operate, much larger tankers, say in the 100,000 to 200,000 deadweight ton range?

Answer: If several offshore terminals were constructed off the shores of the Continental U.S. with sufficient deep draft, the military could employ the larger tankers, but worldwide would still require tankers in the 25,000 to 50,000 D.W.T. range.

Question: Please explain and give the reasons why the military could, or could not, use these large tankers under the circumstances of offshore terminal facilities existing off our coasts.

Answer: The limiting factors in the use of offshore terminal facilities are the depth of the terminal waters, turning areas and storage facilities. There does exist certain means such as mooring buoys which permit the use of the larger tankers and where feasible these can be used. Any improvement and increase in offshore facilities would of course permit the military to utilize larger tankers.

ADDITIONAL QUESTIONS FOR THE RECORD BY CHAIRMAN DOWNING

Question: Does the Department of Defense consider that a shipping capability under the U.S.-flag is essential?

Answer: Yes.

Question: Does the Defense Department consider that a shipbuilding capability under the U.S. flag is essential?

Answer: Yes.

Question: Does the Pentagon consider that these capabilities must be maintained in the national interest?

Answer: Yes.

Question: With some kind of precision, would you define "national interest," "national security" and "national defense." I would particularly like to have your definitions as they apply to shipping capabilities and to shipbuilding capabilities.

Answer: Let me first define these terms in general language, then define them in the context of shipping and shipbuilding.

National interests are the broadest issues which relate to the total ability of the nation to exist and develop culturally, economically and politically as a balanced and viable entity.

National security is the protection of the nation from international encroachment by any means.

Natioal defense is that element of national security that protects the nation with the application of military force.

Now, to apply these terms to U.S.-flag shipping, in inverse order for sake of clarity. First, a U.S.-flag merchant marine serves national defense in terms of secure logistic support when it is necessary to deploy military force abroad.

Second, a U.S.-flag shipping capability supports national security through the defense support mentioned above. It also supports the broader element of national security through provision of a secure transport capability for those materials that are essential to national security.

Third, these defense and security considerations serve the national interest in promoting continuing national viability. Also in the broad national interest, the U.S.-flag merchant marine is a conserver of national currency and demonstrates U.S. economic vigor by showing the flag.

The U.S. shipbuilding industry, to the extent that it provides secure support to the U.S.-flag merchant marine can be attributed with the same advantages indicated above for the U.S.-flag merchant marine. Additionally, on its own, the shipbuilding industry supports the defense interest in providing a secure capability for