TONNAGE RESULTS OF MARITIME CREDIT LAW'

January 19834 report of the Ministry of Merchant Marine states the fola mysis of tennage acquired with the aid of the maritime credit law. fgures show that of the total tonnage aided by provision of the law, 61 as la Luage acquired in France:

SAUGSTAD. There is in France a protective margin in favor 4i rreh shipbuilders and this was illustrated in connection with

In the law, there is a provision that if an owner calls for at a French shipyard and if the French shipyard charges or to el arge more than 15 percent more for the vessel than it it hased for in a competitive market, the French Governtuvy advance and underwrite his mortgage on the vessel built or i in the foreign country.

was one point I forgot in discussing interest rates. The rest rates are established either by the sales price of the bonds ; at are as-ned by the bank for the purpose of raising funds which to be advanced under this policy, or they may be fixed by the rent prices of real estate mortgage loans, plus 1 percent. I think west quotation I had on those loans was 7.4 percent.

Mr. CULKIN. Have the French financed the construction and purof any ships abroad, to your knowledge!

Mr. SAUGSTAD. Yes, sir.

Mr CUKIN. In what countries?

M. SAUGSTAD. Mostly in Germany.

Mr. CULKIN, New construction?

Mr. SAUGSTAD. Yes, sir.

Syndicale des Constructeurs de Navires et de Machines Marines, no. 31 B.

Mr. CULKIN. That is where this provision you referred to a moment ago is effective?

Mr. SAUGSTAD. Yes, sir.

Mr. CULKIN. Where the cost is 15 percent over the foreign market, then the Government itself will finance the purchase?

Mr. SAUGSTAD. Will underwrite the paper.

Mr. CULKIN. Will underwrite the paper for the purchase and construction of a ship abroad-outside of France?

Mr. SAUGSTAD. Yes, sir.

Mr. CULKIN. And to what extent, just generally, has that been done?

Mr. SAUGSTAD. In January 1934 the ministry of merchant marine reported that under the act 61 percent of the tonnage acquired under these loans was acquired in France; that purchases abroad were 64,631 gross tons; that construction abroad was 29,856 gross tons, and that construction in France was 149,167 gross tons.

Mr. CULKIN. The French were wise in that.

Mr. SAUGSTAD. They have long experience with this policy. Mr. WALLGREN. Did I understand you aright to say that the interest rate was 7.4 percent?

Mr. SAUGSTAD. The last quotation I had was about 7.4 percent. Mr. WALLGREN. I would like to have you repeat that statement again. I asked if I was right in understanding you to say that the interest rate was 7.4 percent?

Mr. SAUGSTAD. That is the last notice I have seen.

Mr. SIROVICH. You stated, on the item of reconstruction, that the French House of Deputies had voted for 5 years a sum amounting to 200,000,000 francs?

Mr. SAUGSTAD. Authorized the Credit Foncier to advance that amount.

Mr. SIROVICH. And then after these 5 years they voted an additional 125,000,000 for 4 years?

Mr. SAUGSTAD. Yes, sir.

Mr. SIROVICH. That means that the French House of Deputies voted for construction purposes the sum of 1,500,000,000 francs.

Mr. SAUGSTAD. It means the chamber voted to extend credit to that amount.

Mr. SIROVICH. Which in conformity with the international exchange amounts to about $100,000,000.

Mr. SAUGSTAD. Yes, sir.

Mr. SIROVICH. Which they have put away for the construction of new ships, or the reconditioning of ships, or anything that appertains to construction?

Mr. SAUGSTAD. Yes, sir.

Mr. SIROVICH. Now of this $100,000,000, you stated, further, that the Government, through the House of Deputies, had arranged on the interest basis up to a certain tonnage for cargo and for passenger ships, that the individual, or the corporation, or company that borrowed or had the ship built would have to stand a limit of 2 percent and a maximum of 3-percent interest; is that right?

Mr. SAUGSTAD. Yes, sir; a minimum limit.

Mr. SIROVICH. Now, it struck me, while these figures seem so very large-and I want the chairman to correct me if I am wrong—that

ve put away for construction purposes the sum of about $246,Is that right, Mr. Chairman.

CHAIRMAN. I do not think that is correct. There was orig. Izogongono authorized for the loan fund and then subsethe authorization was increased to ₹250,000,000, but I cannot w much has since been actually appropriated. There was **) and then they increased the authorization, but it never

Mr SAICH. So, according to my theory, we have today about against which we have begun to build and reconstruct

- CHAIRMAN. I do not think we have that much in our construci an fund now.

Mr SIROVICH. We have not that much now, but we had that

~ CHAIRMAN. I do not think so; we never had that amount. V SIROVICH. We had 146 and 90, I think-something like thatas brought out in the testimony a few years ago,

M

- CHAIRMAN. We will get that from the Shipping Board.

SIROVICH. On that basis, I want to come to my point, that w our munificence for the construction of ships by advanc1gh as 75 percent of the first mortgage against those slaps, at companies can build new ships, and rebuild and get rid of the -te ships that are derelicts upon the ocean of commerce. Now a not think upon the basis that we charge, as the hearings rought out, anywhere from an eighth to a quarter of 1 percent, percent-——

I CHAIRMAN. It is 312 percent now.

SIPOVICH. It is 31% percent now, but we have as low interest aath and a quarter, up to 311⁄2 percent maximum, in which

iters can build new ships

I ́e CHAIRMAN. Now, wait a minute. They have not that one⚫th of 1 percent now at all. That was a misinterpretation that

rought to have been put into effect by the Shipping Boardat or eighth of 1 percent. And that was changed so that the -12 was 31 percent for foreign shipping.

M- SIROVICH. But they have charged less than 31% percent. 1. CHAIRMAN. Yes; before the act of 1928.

Mr SIROVICH. That is what I am trying to bring out.

CHAIRMAN. You said they had that available now.

Mr SIROVICH. I said we had available now for the construction of new ships perhaps anywhere from seventy-five to one hundred dollars, I think.

CHAIRMAN. I am not prepared to answer that.

Mr. SIROVICH. Now, on that basis, I think our Government has very liberal, very gracious, more so even than the French Govent with all of its munificence, if the merchant marine operr would only avail themselves of the opportunities we give; that bank you spoke of, the Credit Foncier, only gives up event, and under certain conditions up to 70 percent; and, if give collateral up to 85 percent, and they can take that colteral and go to any bank and get a loan against it. So that there thing to that. So that when you compare the Government of

the United States from the standpoint of subsidy, when you take it from the standpoint of construction, I think we have far outstripped France in the generous way in which we have treated our merchant marine, and we ought to have had better results.

Mr. PENNYPACKER (National Council of American Ship Builders). Mr. Chairman, in regard to the construction loan fund, I have here a statement which was prepared by the Shipping Board showing the status of their construction loan fund as of March 1, 1933. It is not quite up to date. At that time, the total authorized loans from the construction loan fund for both new construction and reconditioning was $147,734,794.66.

The CHAIRMAN. Does that show what payments have been made? Mr. PENNYPACKER. No; that is just simply the authorization and that includes both new construction and reconditioning.

Mr. SIROVICH. Does it show how much money there was for construction and reconditioning purposes altogether?

Mr. PENNYPACKER. There is a table here; I have given the total of the table. The table shows an authorization for new vessels completed, not completed, and the total.

Mr. SIROVICH. That is only $147,000,000 that you just read?
Mr. PENNYPACKER. Yes, sir.

Mr. SIROVICH. That $147,000,000 is what has already been authorized for construction and reconditioning up to the 1st of January

1933.

Mr. PENNYPACKER. Up to March 1, 1933.

Mr. SIROVICH. Which is $47,000,000 more than the total amount that the French Government showed in 9 years with their 1,500.000,000 francs?

Mr. PENNYPACKER. Yes, sir.

Mr. SIROVICH. So it again proves how generous we have been. Mr. PENNYPACKER. Out of that total, loans of $116,000,000 plus have been authorized for new construction alone; the balance was for reconditioning.

Mr. SIROVICH. At what interest is that being paid; does it show? Mr. PENNYPACKER. No, sir; the interest rates are not given in that table.

The CHAIRMAN. That would hardly conform with the report of the Post Office Department which gave a table on page 43 showing that the United States Shipping Board has loaned the following sums in connection with the above construction program to mail contractors at rates of interest varying from one-eighth of 1 percent to 311⁄2 percent, and for reconditioning, which total $107,593,957.32, the additional sum, or the difference between these figures and those you gave probably being loans made to ships that did not have ocean-mail contracts, as this undertakes to show only loans that were made to ships that had ocean-mail contracts.

Mr. PENNYPACKER. I think possibly there is some other difference there. The figures I quoted were authorized loans; perhaps the figures you have read were loans actually made.

The CHAIRMAN. I was reading from part 1 of the first day's hearings before this committee. The same information is contained in the Message of the President, which you probably have, on page 9. I have called the Shipping Board and am trying to get the figures.

M. SAUGSTAD. To complete the record on the French section. I a: to say that these loans are made under two classes, short-term : long term. There is a short-term loan which is for 5 years and er which the repayment periods are fixed in the mortgage. ize long term loans are for not to exceed 20-year periods and they are amortized through annuities; in other words, annual payments at include both the interest and the principal.

i sen just one more thing: At the time the French Government rized a 100-percent interest base to which the Government 4 contribute one half, they also authorized a 40-percent inof the Government share provided it did not exceed the ap;tration of 6,000,000 francs annually.

M.

CUIKIN. You did make the statement a moment ago, Mr. a1, that repayments were in a certain amount. I did not

the amount.

SAUGSTAD. The repayments are over a period of 20 years or depending upon the loan period.

MY CURKIN. I know; but I mean the amount of the payments. kit is in the record, but I did not catch the amount-the repayon those loans, Mr SAUGSTAD. 80,000,000 francs; about 18 percent of the loans

fstatement male on May 6)

M: SAUGSTAD. Mr. Chairman, I have just four brief items which up to date some points that we discussed here in March when I fore the committee.

first of these relates to a bill which was introduced in the r of Deputies of France on the 14th day of March and which -zawk to accomplish three things. The bill is in the nature of val of a supplemental agreement dated March 7, 1935, between - French Government and the Compagnie Generale Transatlane, and provides as follows:

st, that the state shall pay amortization, as to the principal and rest, on the Normandie;"

d, that the Government shall guarantee interest and principal eans to cover operating deficits for 1933 of 45,000,000 francs, and »4 of 10,000,000 francs, in excess of the total subsidy of 150,000,fannually;

rd, that operation accounts of the Normadie shall be distributed accordance with the agreement of July 20, 1933, and, that in view

state undertaking the payment for the Normandie, the insuragreement on that vessel for account of the state is canceled. iס itv Candace introduced a resolution in the Chamber of Deputo cancel the contract system as it now exists and to reconstruct a limited basis under one national company. We have no her information as to the position of that proposal before the her. If anything comes in before we close these hearings I will

it it.

I sy say that when Deputy Candace introduces a measure it

receives very serious consideration because he is one of the pal promotors of the French merchant marine and is an author of the standard works on the French merchant marine.