the carrier has failed within a reasonable time to comply with an order of the Commission commending rectification of the violation. The latter provisions have not been incorporated in the proposed legislation. Members of the industry are somewhat divided in their opinions as to the merits and needs of the proposed legislation. Nevertheless, consideration of all the factors involved leads to the conclusion that the power to revoke operating certificates and permits should be given to the I.C.C. in accordance with legislation now before Congress. The interests of holders of dormant certificates would appear to be fully protected by the provisions of the proposed legislation, and the power to revoke for good cause should not only facilitate I.C.C. determinations, but should also remove a potential barrier to healthy development of coastwise and intercoastal shipping. CONCLUSIONS 1. A strong domestic merchant fleet is of vital importance to national defense. It is important also to the national economy, but defense considerations are paramount. (Chapter I) 2. Taken as a whole, the coastwise and intercoastal shipping trades are in a reasonably healthy condition. The exception is in the break-bulk dry cargo trades, and the principal weakness in this area is in excessive operating costs, particularly the costs of cargo handling. (Chapter II) 3. The basic, long-range solution of the break-bulk dry cargo problem appears to lie in the adoption of technological improvements which will reduce cargo handling and other related costs and result in less in-port time and better vessel utilization. (Chapter III) 4. This can best be accomplished through the initiative, enterprise and knowledge of private industry proceeding with a vigorous replacement program. (Chapter III) 5. Considerable progress towards solution of the problem is evident in the proposed construction and operation of some 29 roll-on, roll-off ships to be employed in the coastwise and intercoastal trades. (Chapter III) 6. The immediate need for government assistance in the construction of new roll-on, roll-off ships involves only mortgage insurance, and in certain cases, vessel trade-in and rapid tax amortization. In addition, defense features incorporated in the new ships will be underwritten by the government to the extent that the cost of such features exceeds their commercial value. (Chapter IV) 7. There is no present need or justification for constructiondifferential subsidies. (Chapter IV) 8. There appears to be no real justification for special treatment of intercoastal shipping through the reduction or elimination of Panama Canal tolls. If, however, as reported by the General Accounting Office, tolls have been charged at levels higher than those prescribed by law, correction of this situation would be especially helpful to intercoastal shipping. (Chapter IV) 9. Various proposals for changing the rate-making mechanism do not appear to answer questions of the interpretation and applicability of the regulatory provisions of the Transportation Act of 1940. (Chapter IV) 10. The primary responsibility for technological development rests with private investors and operators. It is believed, however, that the government may properly contribute in certain areas of research and development. (Chapter IV) 11. The establishment of through rates on joint land-sea routes is desirable in the interests of the public shippers, consignees, and the domestic shipping industry. (Chapter IV) 12. The lack of authority in the Interstate Commerce Commission to revoke dormant water carrier certificates is a potential deterrent to the establishment of new coastwise and intercoastal services, and to investment in ships for these trades. (Chapter IV) RECOMMENDATIONS Revised October 31, 1955 1. Provide direct Government assistance in the field of research and development by undertaking or participating in engineering studies, prototype ship and facility construction, especially pertaining to break-bulk dry cargo operations, and if necessary, the operation of same during trial periods. 2. Continue the granting of certificates of necessity for accelerated depreciation involving ships and/or related shoreside facilities required for national defense to be used primarily in the coastwise-intercoastal trade. 3. Accelerate trade-in-and-build programs by requesting funds as required to utilize the trade-in allowance provisions of Section 510, Merchant Marine Act, 1936, as amended. 4. Amend Section 51, Merchant Marine Act, 1936, as amended so as to permit non-subsidized oper tors to make voluntary deposits in the construction reserve fund with the sare benefits as are now available to the subsidized operators under Title VI. 5. Intensify consultations between the Maritime Administration and other Federal agencies with port authorities a state and local level with a view to accelerating programs of port improvement and facility modernization consistent with vessel replacement programs. 6. Amend Title VII to authorize the construction, for Government account, of ships to be used in the coastwise-intercoastal service and their sale/charter to operators in these trades and under conditions which will allow the operators to (a) charter the ship for a 5-year period, and (b) purchase the ship from the United States at its then depreciated cost at any time during that period, such purchase price to be reduced by the amount of charter hire in excess of depreciation plus interest to date of sale paid to the Government. Projects under this authorization would be undertaken only upon Presidential determination that national policy cannot be realized within a reasonable period of time under other provisions of law. 7. Support legislation authorizing the ICC to revoke, amend, or suspend water-carrier operating certificates and permits of coastwiseintercoastal carriers for wilful failure to comply with the provisions of Part III of the Interstate Commerce Act within a reasonable period of time after that Agency has issued a decision stating its findings and an order requiring compliance with those findings. 8. To the extent that funds required for carrying forward the programs needed for the national economy and national defense as contemplated by the findings of this study and the pertinent general provisions of the Merchant Marine Act, 1936, as amended, are not covered by specific appropriations or otherwise, the adequate appropriation requests should be submitted. APPENDIX A MARITIME ADMINISTRATION QUESTIONNAIRE DRY CARGO GROUP COASTWISE AND INTERCOASTAL SHIPPING The following questions deal with the major problems of coastwise and intercoastal dry-cargo shipping: Regulation, Development and Promotion 1. In your opinion, do shipping interests and the various affected Government agencies fully utilize all the means now provided by law for: a. The regulation of coastwise and intercoastal trades b. The development of coastwise and intercoastal trades 2. If you feel that the law as it now reads, or as it is now administered, handicaps the economic development and the promotion of the coastwise or intercoastal trade, what are your recommendations for change and amendment? Cite specific examples upon which you base your recommendations and include, if you wish, specific wording to accomplish such changes. Areas in which statutes or regulations exist, and which you may wish to consider, e. Limitations on land carriers engaging, financially or |