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Mr. Smith. Yes, sir. It gives the authority for the information and gives a good many charts which indicate graphically, as well as tables which indicate specifically, the principal problems involved.

On page 39 of this statement is table III, which shows the number and tonnage of vessels each of 2,000 gross tons or over of each of the principal maritime nations engaged in foreign trade throughout the world. I invite your attention particularly, gentlemen, to the fact as shown by this table that the foreign-trade fleet of the United States is about the same as that of Japan, is less than 25 percent of that of Great Britain, and is not much greater than that of Germany, France, or Italy.

Mr. MANSFIELD. You are speaking now in reference to tonnage only?

Nr. Smith. Of tonnage only, at this point. American shipping engaged in foreign trade, as pointed out by Mr. Haag, must not be confused with the total tonnage of American ships, as it is only in connection with the foreign-trade fieet that we are now dealing. We are dealing, therefore, with a fleet much smaller than Great Britain's and approximately on a parity with that of four other maritime nations.

On page 39 of the booklet is also shown the percentage of the waterborne foreign trade of each of the principal nations carried in their own vessels. It should be noted particularly that Great Britain carries 61 percent, Germany 61 percent, France 64 percent, Italy 51 percent, Japan 76 percent and the United States 35 percent, of their own trade in their own ships.

I have compared the tonnage of the United States fleet with that of other nations and it is important to see how it compares as to age. On page 67 of the same booklet you will find the percentage of our ships of various ages. That table shows that out of a total fleet of 486 ships, 429 of them now average 15 years or more of age and only 57 of them will average as little as 5 years old; that is, there are only 57 that are comparatively modern ships. It is quite evident from these figures, therefore, that within 5 years, or by 1940, all but 57 of our foreign-trade fleet will have expended their useful average life of 20 years or more. Of course some of them may operate well beyond that time, but they will not be good competitive ships.

Let us at this point see what the United States has done in comparison with other nations in rebuilding its fleet with a view to maintaining its position in foreign trade in the future. Chart no. 5, on page 41, shows this pictorially. This chart shows the percentage of tonnage which was built in the 10-year period from January 1, 1924, to January 1, 1934. With the single exception of combination vessels, the figures are deplorable. The reasonable showing in combination vessels is due wholly to the Merchant Marine Act of 1928, which has placed upon the seas 31 combination passenger and cargo vessels that are the equal in every respect, of their class of vessels, built by any foreign nation and which must be looked upon for some time to come as the backbone of our future merchant fleet.

This chart shows that in the United States there has been practically no cargo-vessel construction during the 10-year period, while all other important maritime nations have extensively built vessels of this type. Forty-one percent of Great Britain's present cargo fleet was built during the above mentioned 16-year period. This fact is further emphasized graphically by chart no. 6 on page 45. As shown

on this chart, Great Britain has built 50 times as much cargo tonnage in the past 10 years as has the United States.

A further point to be noted is that most of the cargo ships built during the war period were of prewar design, so that from a standpoint of design such ships are at the present time approximately 20 years of age, and, in comparing the age of ships, it must be recognized that the older the ship, like any other article, the more out of date it becomes. There has been a great advance in the science of naval architecture since the war, both in the form of ships and in the design of machinery. As you gentlemen know, the amount of fuel required, which is one of the very important parts, called "items", in the cost of ship operation, is dependent upon the horsepower necessary to drive the ship at a given speed. If you better the form of a ship, make it easier to go through the water, you will reduce the amount of power required; if you increase the efficiency of your machinery design, you will decrease the amount of fuel necessary to produce a horsepower.

Studies of recent ships which have been published in some of the technical journals of the British Shipping Record, show improvement in form of ships alone, since the war, has produced increased efficiencies of 25 percent. The same studies show greatly increaesd efficiencies in machinery design. So that due to the form of ships and design of machinery combined, it has been actually possible to operate modern ships of the latest design with approximately one-half of the fuel required to operate a ship of the same size of pre-war design. Or, conversely, you can get a considerably higher speed out of a ship of the same size now for the same fuel consumption than you can out of a ship designed before the war.

I would like to emphasize a point brought out by Mr. Alfred Haag in his statement before this committee, that the efficiency of the fleet cannot be measured by its tonnage alone, but that there must be taken into account in addition its age and the speed of its ships. In this connection, I invite your attention to table V, on page 52 of the booklet that I have previously referred to, which confirms the figures given you by Mr. Haag-in fact they were furnished us by the Shipping Board Bureau-to the effect that Great Britain stands at the top of the list in tonnage, in speed, and in age; that the United States stands second in tonnage and fifth in speed, and at the bottom of the list in age. Therefore you cannot in any sense measure the efficiency of our fleet by its tonnage.

It is now pertinent to see what the United States is doing at the present time as to new construction. This is clearly illustrated graphically by chart 7 on page 49 of the booklet. The black line on this chart shows that from the beginning of 1933 up to date the United States has had under construction less merchant tonnage than any other important maritime nation. Actual figures appear on page 50. These figures show that on September 30, 1934, the total volume of merchant tonnage under construction in the United States were 22,225 tons out of a total world construction of about 1,311,000 tons, or less than 2 percent of the world total. As a matter of fact, the only commercial work the United States had under construction at that time was two oil tankers and a few small craft, but no seagoing cargo or combination passenger and cargo ships of any type.

While the United States has lagged behind and has built almost no cargo tonnage during the past 10 years, Japan, as well as Great Britain, has made rapid strides in the construction of high-speed cargo vessels, as shown on pages 55 and 56 of the booklet. As a matter of fact, since 1929, Japan has built, according to the records we have, 39 cargo vessels ranging from 14 to 18 knots in speed and aggregating about 277,000 gross tons.

Replacement of our ships has seriously lagged behind, so that while it will require an average annual construction of 150,000 gross tons of ships in the United States to maintain our present position in foreign trade, it will require an even greater volume of construction over the next 10 years to replace ships that will be wholly out of date, if we are to catch up for loss of time, that is, to modernize our ships after 1940.

What I have stated here are some of the essential facts; the booklet referred to contains a great many others, but I have attempted to bring out the important statistical facts upon which I feel the problem that confronts you gentlemen depends.

Without for the moment discussing the importance of American shipyards and shipbuilding from the point of view of national security, it is of importance to point out to your committee what the shipbuilding industry really is and what it means to American industry and to American labor. In this connection, the attention of the committee is invited first to table no. XIII on page 77 of the booklet, which shows private shipbuilding establishments in the United States which, with their present facilities or with very moderate additions thereto, can build or repair sea-going commercial vessels. In addition to this list, there are listed as operating under the Code of Fair Competition and Trade Practice for the Shipbuilding and Shiprepairing Industry, fully 100 other smaller yards scattered throughout the United States, on the seaboard, on the Great Lakes, and along the great rivers, and that does not take into account any of the yards that are classed as boat-building establishments, of which there are many hundreds.

I have heard discussed several times before this committee the percentage of the cost of a ship which goes to American labor, and it appeared to me it was somewhat confused and I would like to clarify it. In my opinion, confirmed by a careful study of the National Council of American Shipbuilders on the subject, from 80 to 85 percent of the entire cost goes to American labor. It must be understood, however, that this includes not only the labor within the shipyard itself, but also the labor performed on all of the materials and equipment that are purchased by the shipyard and used in the construction of the vessel. All of the work within the shipyard is labor. When a shipyard buys material, as for instance a piece of machinery, the industry making this machinery performs labor upon it and it in turn buys raw matrials such as steel, copper, lumber, and other products, which, in turn, use labor in their production. So that if you trace the production of any one of these products you will find that in producing ingot copper or steel, or lumber, that labor has again been performed, so that finally everything is labor except the intrinsic value of the material in the mines, field, or the forests of the country.

It was my privilege to appear before the Merchant Marine, Radio and Fisheries Committee in 1928, in connection with the Merchant Marine Act then under consideration, and I presented to the committee at that time a statement prepared by the National Council of American Shipbuilders, a copy of which I have with me today and which I would like to file with your committee as a part of the record of this hearing.

The CHAIRMAN. Without objection, it is so ordered. (The paper above referred to will be filed with the committee.)

Mr. Smith. This statement is dated February 29, 1928, and is entitled “Statement of Conditions of the Shipbuilding Industry in the United States” at that time. This statement shows, on page 21, the sources of material entering into the construction of a $15,000,000 vessel, with the approximate amounts from each State. I am sorry I have not sufficient copies so that they could be placed before each of you gentlemen, because what is brought out in that statement is the very, very broad distribution of materials which go into shipbuilding and, taking a ship that was actually built and just doubling it to get one of larger size, the distribution of materials made in the booklet is taken directly from the purchase orders for material for a large ship, and it shows in that particular case, with one or two exceptions, that every State participated in the materials which went into the construction of that ship.

The CHAIRMAN. That will be included in the statement you are filing, will it?

Mr. Smith. Yes, sir; that will be included in the statement. On pages 23 to 40, inclusive, of the 1928 statement are shown details relative to the broad distribution of materials used in the construction of a ship. Particular attention is invited to exhibit no. 2, showing that the material purchased on this particular design of ship would be slightly in excess of half of the total cost; that is to say, half of the total cost goes all over the country. Every State in the Union and almost every community manufactures something that goes into a ship. And this is further exemplified in the booklet of which

you have a copy and I ask you for a moment to refer to page 75, which shows a very broad distribution of the material.

The CHAIRMAN. One of the best ways to relieve unemployment would be to build ships, would it not, Mr. Smith?

Mr. Smith. It is a very definite way; yes, sir.
The CHAIRMAN. Carrying the relief to every State of the Union?

Mr. SMITH. I know of no broader spread of employment than you get in the construction of ships.

The table on page 75 shows for every State some of the most important products, not by any means all of them. A further analysis made by our national council is in this small booklet, of which each one of you has a copy, taking an entire program of construction about 4 years back, in 1930. With approximately $75,000,000 worth of work under way on commercial work throughout the United States at that time and taking the ships of all types, there has been prepared and shown in that statement the approximate distribution of the materials by classes. Chart no. II of this pamphlet gives some particular information with reference to structural steel products. It shows that for that large program of $75,000,000, the cost of the structural iron and steel to the shipbuilder was about $10,742,000. It will vary, of course, for ships depending upon their type. It will average from 10 to 15 percent of the total cost of a ship, depending on the particular type of the ship involved.

When a ship is once built, there are necessarily large expenditures during its entire lifetime for upkeep—such as docking and paintingfor surveys, for miscellaneous repairs due to casualties or other causes, and for changes made by the owner in order to keep his ship as near up to date as he can during its 20-year life. So that during the 20-year life of a ship, you again have expenditures that go to American labor broadly distributed throughout the country in maintaining that ship. And when it is in operation, it of course gives continuous employment to American labor through its lifetime, because of the fuel, supplies, and provisions of all kinds used by it which are largely purchased in American markets and give further continuous employment to American labor.

I have endeavored to present to the committee in this statement the most important statistical facts concerning our merchant fleet and concerning the American shipbuilding industry and I would like, at this point, to make a few remarks as to the importance of an American merchant marine to our national prosperity and security.

This phase of shipping has been well presented by the Interdepartmental Committee in its report. The need of American shipping in foreign trade is a factor in the promotion and development of foreign markets for our goods. It has been shown that it is important in the control of our freight rates at all times and that it is of vital interest to the country in time of war in which we may or may not be engaged.

There have been many references to the need of merchant ships in a time of war and I would like to read into the record a brief statement made by Gen. John J. Pershing, Commander in Chief of the United States Expeditionary Forces during the World War, which appears on page 50 of a publication entitled “The American Merchant Marine”, published under the auspices of the American Bureau of Shipping in cooperation with the National Council of American Shipbuilders and other groups in April 1933. This statement was made by General Pershing at the Sixth National Conference on the Merchant Marine held in Washington in January 1933. He said:

I feel that I can speak with some authority on this subject. At the head of our armies, 3,000 miles away, the responsibility rested upon me of upholding our country's honor and directing our part in the gigantic struggle which we had chosen to share with the Allies. Everything depended upon sea transportation. Our troops and most of our munitions, materials, and supplies had to come to us from home. Throughout that whole period there was scarcely a day when the danger of lack of sea transportation facilities was not present. It was a desperate race against time, in which we had to depend in large measure upon our Allies for the necessary shipping, in spite of the fact that they were constantly suffering the severest losses by enemy submarines.

Two lessons stand out clearly from that experience. The first is the wisdom of the historic national policy of Great Britain in maintaining a strong merchant marine. But for her merchant fleet and her ability to replace losses rapidly, the U-boat campaign might well have been successful. The other lesson is the unwisdom of America and our risk of defeat because we had practically no ships on the high seas when we entered the war.

In this connection I invite the special attention of the committee to the publication referred to and, if it is not already incorporated in your records, I recommend that it be incorporated as part of your

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