We, for instance, the National Maritime Council, sponsor the McCaffrey show heard here locally in Washington.

We put out brochures. We put out thousands of newsletters to shippers. But the real impact of what we do is meeting regularly on a regional as well as a national basis, bringing unions, labor, both dock and shipside, and the management companies and the Government together to talk about common problems.

In addition to that we go out as groups. I have done it on my own level with presidents of unions, and presidents of companies, making calls on large American companies who, for one reason or another, have been reluctant to use U.S. shipping, and we make the pitch, not down on the traffic level, but on up to the corporate headquarters level.

This has been extremely successful, and this is being done every day.

Mr. Chairman, we also have a staff of 30 or 40 people in Maritime Administration who are in the market development program. These people analyze statistics. They look for lucrative areas where American lines can make a traffic penetration. This information is then disseminated to all the lines. We do not play favorites. We do not favor subsidized lines or nonsubsidized lines. This information is given to the freight departments of U.S. steamship companies, and all we request of them is a follow up on what they have done.

We also obtain literally tens of thousands of traffic leads on specific items of traffic to be moved, and we also communicate this to the lines. Here again, all we ask is that they followup and advise us what happens. We can demonstrate, Mr. Chairman, not overall, but in a large number of instances, how that effort has actually paid off in getting cargo for U.S. ships.

Mr. DOWNING. Well, if that is so, is it possible for you to intensify your efforts in the promotion field?

Mr. BLACKWELL. Oh, yes.

Mr. DOWNING. Do you use television and radio?

Mr. BLACKWELL. Yes; we do.

Mr. DOWNING. It is very rare, because I have not seen it on television.

Mr. BLACKWELL. Well, I have appeared on television, pushing this program in Jacksonville, Chicago, and New York.

Mr. DOWNING. I know in speeches, and I do too, but I am talking about a real promotional effort to get the American people to insist that exporters use our U.S.-flag lines.

Mr. BLACKWELL. Again, I am not going to defend our program as perfect. Mr. Chairman, we think we have a very good program. We work very hard at it. In my opinion, it has been effective, but that is no reason to rest on that. I think we should try to continue to improve it, and here is an area that we do welcome constructive criticism and suggestions.

Mr. DOWNING. Tell me this. If your forecast of an upsurge is true, why have we not more contracts on hand for the construction of ships? How many contracts do you have now?

Mr. BLACKWELL. You mean applications for vessels?
Mr. DOWNING. Yes.

Mr. BLACKWELL. Well, we have applications for 30 or 40 vessels. Again, I cannot say that every one of these, or any of them, would be effectuated in a way that they will lead to shipbuilding.

We think that there are a number of viable applications before the Agency that will cause us to build in this year additional LASH vessels, some container ships, and some roll-on/roll-off ships and possibly some heavy-lift ships.

Mr. DOWNING. How about bulkers?

Mr. BLACKWELL. Except for one application that could be classified as a quasi-bulker, that was an operation that was intended to serve the Great Lakes, we do not have an application for bulk ships. We have tried in every way that we know. We have tried to collar shipowners. We have also gone to people who move cargo. We have had a difficult time trying to interest the American shipping community in the development of bulk vessels.

I have reached the point where I think we ought to at least consider the possibility of making some changes to section 804 of the Merchant Marine Acts of 1936 and 1970, which currently precludes applicants, or American companies, or companies that operate foreign-flag ships from participating in the operating-differential subsidy program.

We need bulkers in the fleet very badly, Mr. Chairman. We have 19 bulkers, all of World War II vintage. Almost every one is going to be scrapped or put out of business in the next year or so.

We only carry about 1.6 percent of our bulk commodities, our own bulk commodities, and none of it probably is bulk that we carry commercially. It is probably Public Law 480 cargo.

We practically have a nonexistent bulk fleet. One would think that this would be a good place for Americans to invest in shipping.

For some reason, Mr. Chairman, we are not able to induce companies to come into this market.

Mr. DOWNING. Have you changed your previous position about cargo preference?

Mr. BLACKWELL. I have not, sir.

Mr. DOWNING. How are you going to build ships if there is no cargo to carry?

Mr. BLACKWELL. Well, as you recall, the President's statement on his veto message on the oil cargo preference bill, he alluded to three problems that he saw in cargo preference.

One was the inflationary effect, No. 2 was possible interference with Navy shipbuilding programs, and a third problem was stimulating additional tonnage in times of overcapacity.

I do not know what the administration's position would be on cargo preference today.

I would think that no cargo preference bill regarding oil would be acceptable to the administration if it called for a building program for tankers, because we have a market that has been depressed to its lowest point in history, and everyone, including the United States, has an overcapacity.

It simply does not make any sense to go into a program whether it is under the 1936 act, or some cargo preference measure, that would induce people to build additional tonnage in a trade which is already overtonnaged.

If a bill were written in which that was eliminated, certainly it would remove, I think, one of the objections that the President had to cargo preference in its original form.

Also, there was a concern in the administration that cargo preference would induce such a level of shipbuilding in this country as to interfere not only with other maritime shipbuilding programs, but particularly with the Navy shipbuilding program, thereby running prices up to unconscionable levels.

Mr. DOWNING. Now stop right there. It seems to me that every yard that has major contracts with the Navy is in trouble because of those

contracts.

Would you comment on that?

This is a matter of concern to you, I know.

Mr. BLACKWELL. Yes, it is.

Mr. DOWNING. And I am wondering how we are going to resolve the problem with the Navy and their contracting procedures.

Mr. BLACKWELL. Well, it really is not a problem that I am basically competent to discuss, Mr. Chairman. I know the Navy has made tremendous efforts to clear up its claims.

The Navy, compared to the merchant marine program, builds extremely complicated ships. Our ships are basically simple, with the possible exception of the LNG's. The basic shipbuilding requirement is the fabrication of steel. We have boilers, some other complicated pumping systems and navigational systems, but basically, compared to Navy vessels, merchant ships are really relatively simple.

The Navy ship is extremely complex, Mr. Chairman. It has, in many cases, such sophisticated weaponry that they have not really decided on which way they are going to go.

The same thing is true to some extent for propulsion equipment, and there are constant changes and more changes being made by the Navy also. This came out in the recent seapower hearings. The Navy uses what seems to some people to be an inordinate number of people at the yards supervising shipbuilding.

The merchant marine uses one person, or perhaps two people. I am not saying that the Navy is not justified in using much larger numbers of supervisory people, as the ships and their problems are considerably different than ours.

There have been complaints by the management of yards about the redtape, oversupervision, interference, that type of thing.

I would say that the big problem with the Navy shipbuilding program is the change order problem.

The Navy obviously wants to have the latest designs and the latest weaponry and the most sophisticated electronics aboard its vessels, and many times the state of the art in those areas just constantly changes, and they are attempting to put the ship out with the latest equipment which requires the ripout of what they have put in and the installation of new equipment.

Mr. DOWNING. That is a problem.

Mr. BLACKWELL. It also involves the Navy in these yards and these divisive claims over who is responsible. I think basically it is a human problem, and I think it can be resolved.

There are indications that both the management of the yards and

the Navy are now working together in a much better spirit through a cooperative effort, and are beginning to iron out the problems.

Mr. DOWNING. I have other questions, but I will defer now to Mr. Zeferetti.

Mr. ZEFERETTI. Thank you, Mr. Chairman.

I would like to thank Mr. Blackwell for a very, very extensive summation of what the needs are, and what are some of the recommendations that we possibly could use.

I would just like to comment here. You say in your testimony that our own U.S.-flag fleet is marginally adequate in times of an emergency or in wartime, and even with the inclusion of some of the foreign vessels.

Mr. BLACKWELL. Yes.

Mr. ZEFERETTI. I would like to ask you, do you feel that our dependency on these foreign-flag vessels has curtailed in any way our own merchant marine buildup?

Mr. BLACKWELL. I would say not, Mr. Zeferetti, and the reason is that the maritime program reacts to private sector economic stimulusprofits, in other words.

There is very little concern as a businessman, on the part of a person wanting to build ships in this country, in terms of whether there is a NATO fleet, or an effective U.S.-controlled fleet out there in time of

war.

He is basically looking at the market. He has looked at prices he can get here and prices he can get abroad, and he makes a decision, hopefully, that the ship can be built in the United States and provide him with a unit of production, and allow him to make a profit.

I do not think that the use, or the possible use of the NATO vessels or the effective controlled fleet has, in any way, deterred the shipbuilding effort in this country.

On the other hand, I do not think it is wise for the Government to totally rely on non-U.S. support in terms of its maritime activities. We have seen in the recent conflict with Israel and Egypt where American supply aircraft taking military equipment to Israel were unable to land in continental Europe or in Africa.

We had, as you know, substantial amounts of military equipment stored in Germany. We literally could not get that to Israel when we considered it in our national interest to do so during the early stages of the operation.

Now, that is something that no one could have conceived of. I am not saying that that is wrong. I am not saying we should be out of NATO. I am saying, in periods of economic crisis and political crisis and military developments, every government looks at its own selfinterest.

The fact of the matter is that, as with airfields, there is no assurance that our allies will make their vessels available to us under all foreseeable circumstances.

That is why I say it is pure folly for the United States, in terms of its national security, to rely on alien resources to protect the United States, and I do not think there can be anything more important to any of us than our country's national security.

Mr. ZEFERETTI. Well, I happen to agree with you, and it brings to mind some of the other testimony that we heard, and some of the

things that we have been reading about. You hear about the Russian fleet, and the Russian merchant marine being built bigger and bigger, and they have all types of ships and cargo vessels.

I think the Chairman touched on this before; what can we do to stimulate this type of growth, this type of awareness; to make the people understand?

You stated you have a campaign now, a public relations campaign, but what, in fact, can we as Members of Congress do to stimulate that same type of concern?

Mr. BLACKWELL. I think that conducting hearings of this sort is a very important educational process, not only for the people that are interested in this subject, but for Congress itself and the members of this committee.

We all recognize how diverse the responsibilities of various Congressmen are, and you just do not have the time to enmesh yourselves in any particular problem.

Sometimes I feel that way in my own job, but the fact is, it is important to know the nuts and bolts of this program.

It is important to know the international maritime situation and what makes it tick.

I think the record that has been developed here, despite the fact that it does contain some criticism of the program, and the way it has been implemented, it is a very healthy thing because it gives us all an opportunity to reassess our position, and to make new judgments.

What Congress can do, in my opinion, is to continue to do what it has done here, to try to become better informed, and hopefully, support the maritime program in its present context.

Here again, in the other elements of the program that will be discussed I am sure Congress will be provided with hundreds of suggestions as to how the program can be made better.

It is very difficult in the area of national security to make an effective legislative change.

I personally believe that the program, and the national security considerations embodied in it, are pretty good, and basically, ought to stand. But there are other elements of the program-operating subsidy, capital construction funds, title XI, ship construction, and some other areas in terms of the National Defense Reserve Fleet and our relations with the Navy where I think Congress can make some meaningful recommendations at the end of these hearings.

I think it is important, not necessary that Congress and this committee know every infinite detail of the maritime program, but I think this particular hearing, this particular stage of the hearing, is extremely useful.

We are concerned with national defense, national security, and the economic benefits of the program. If we can convince this committee and the full committee that those are worthy objectives, and this act makes sense, should not be discarded, and should be improved, then I think this committee individually and collectively can probably do the greatest good for the merchant marine that can be done.

Mr. ZEFERETTI. I would like to touch upon one other point. With regard to our young men in the Merchant Marine Academies, it is my understanding, and correct me if I am wrong, that they are not obligated upon graduation to serve any specified amount of time within the merchant fleet itself.