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no such interdiction upon the personnel of the War Shipping Administration.
Admiral Land. That is right, but Congress passed a law subsequently which completely covered the case.
Mr. SCHELL. The Merchant Marine Act, 1936, specifies also that it only applies to members of the Commission, that is, the 3 years' limitation.
Mr. DIRKSEN. But that does not apply to any employees?
Mr. SCHELL. It did provide that other employees of the Commission could not have a financial relationship.
Mr. DIRKSEN. That means every employee? Mr. SCHELL. Yes. Mr. Dirksen. Does that apply to the personnel of the War Shipping Administration ?
Mr. SCHELL. No; it does not.
Mr. DIRKSEN. They have been lifted from the interdiction of the 1936 act by the Executive order?
Admiral LAND. I think it was by legislative act.
The appropriation act for the fiscal year 1943 providing for the War Shipping Administration authorizes the War Shipping Administration to employ people from private industry.
Mr. DIRKSEN. But the employees of the Maritime Commission are still under the restrictions of section 1242!
Mr. SCHELL. That is right, section 201, Merchant Marine act.
WATERMAN STEAMSHIP CORPORATION CASE
(See p. 751) Mr. DIRKSEN. Admiral, I want to go into this matter of the procurement of ships by purchase, and I want to be very frank about it. I want to talk about the Waterman case, and I will tell you why I think it is related to this matter.
Its authorizations are somewhat continuous in nature.' It is hard to tell when the funds for a particular vessel begin and where they kick out.
I have never been able to make that distinction, and in my mind I think of it as a continuous organization, and I assume that the use of the 1940 funds and the 1941 funds will be in process some time in the future, just as the amount in the construction fund covered by che pending bill will be in process for a long time to come, and you cannot tell where they will break off.
I think I understand the Waterman case that is before us so that I could in a general way, but I wish you would say something about the general nature of it. I prefer to leave that to you. I think I know what happened, of course, from the Comptroller's report, from the letter written by Senator Aiken, from the testimony before the Merchant Marine Committee and from other sources, but I would prefer to have you give us a statement as a basis for asking you á few questions.
Admiral LAND. The only point I care to comment on, that seems to me to be the crux of the whole matter, is whether or not there was
and an option; whether it was an option as ordinarily understood in the
law, or had a string to it; and if the action of the Commission was in dako error in determining that it was not an option, but had a definite string
to it, it is solvable by a perfectly simple process of exercising the opPri tion; and that clears up the whole matter. That is all there is to it.
We did not feel it was an option. We feel that the exercise of an option would have been an injustice to Waterman.
The argument centers around that particular point, and if the soft Commission is in error in its judgment, or in the exercising of its
authority, it may be cured in 24 hours by exercising the option as to the price at which the ships were sold.
Mr. DIRKSEN. Is there any quarrel about the fact that five ships of the were sold to Waterman, five old ships!
Admiral LAND. No.
Mr. Dirksen. The price received, according to the General Ace counting Office, in a report submitted to Congress on August 21,
1942, was $596,000 ?
Admiral LAND. Yes.
Admiral Land. There is no controversy about any of this, not the
Mr. Dirksen. You did not remember the price received ?
the price paid, but it is all correctly stated by the Comptroller. 1 There is no question about that.
Mr. DIRKSEN. Is there any controversy over the sale of the five other ships to Waterman?
Admiral Land. No. As far as the sales price is concerned, that is correctly stated there; there is no controversy about that.
Mr. DIRKSEN. And the amounts indicated by the vouchers as examined by the General Accounting Office indicate that the consideration was $3,374,700.
Admiral LAND. That is right. I say there is no controversey in any of those figures.
Mr. Dirksen. Let me ask you a question in connection with section 902 of the act, and the reason is this. If the Commission is going to determine the policy under which this
program is going forward, instead of Congress, we had as well know it now.
I want to be clear whether you are going to make this policy, not
withstanding the declared intent of Congress, or whether we are be going to make it, and if we are going to make it, we want the Mari
time Commission to abide by it.
Admiral LAND. Surely.
Mr. DIRKSEN. We wrote into the law of 1936 what is commonly referred to as section 902.
Admiral LAND. Yes.
Mr. DIRKSEN. Which authorizes the taking of vessels in an emergency. I have examined that language, and I find no evidence of the fact that we had embraced in that language a limited emergency. The word "limited” is not carried in the provision of the statute, I think you will agree to that.
Admiral LAND. I agree with that.
Mr. DIRKSEN. It says any emergency. The word "any” is carried in the statute.
There would be a difference to the taxpayers of the Nation, and there would be a very substantial difference to the Treasury of the United States, I take it, involving the amount of the appropriation and the interpretation of the words “any emergency,” whether, under the authority of that act, you could have taken those five ships back from Waterman at a value—that is the statute; it does not say any. thing about prices; it says, "at a value which shall not be enhanced by any factor or any condition attending emergency."
You stated awhile ago, as I recall, that you are having a controversy with the General Accounting Office as to when the emergency actually accrued, whether in September 1939 or whether it accrued from 1927 to 1940. Of course, the importance of this lies in the fact that, in
my judgment, it is the difference between $596,000 and $3,374,000 which you could have taken by taking back those ships as specified and as decreed by the statute, under the emergency clause.
Admiral LAND. We can still do it.
Admiral LAND. Because, as I have explained, it was not considered that it was equitable, or just, or right.
Mr. DIRKSEN. Is that what Congress mandated you to do under the law?
Admiral LAND. That is my understanding, that when Congress enacts a law they put things in it that are correct and just.
Mr. DIRKSEN. Did you so testify in response to Mr. Culkin's question at the hearing before the Merchant Marine Committee! Did you not testify that the shipowners and the Maritime Commission and the public and Congress were all correct as to the intent of section 902 and the emergency there for the taking of those ships?
Admiral LAND. Yes, sir; and I still testify to that so far as section 902 is concerned.
Mr. DIRKSEN. How can you justify, with any element of fairness, justice, and right, the imposition of such a policy, not by Congress, but (despite the intent of Congress, by the Maritime Commission, at the expense of the taxpayers of this country?
Admiral LAND. I think you are bringing in some extraneous matters there, because nothing was brought out about the value enhancement provision of section 902. The Maritime Commission had the right, and it still has the legal right, to take options on those ships at the prices they were secured for. That has nothing to do with the interpretation of the enhancement provision.
Mr. Dirksen. Why were those five old ships bought from the Waterman Co., from the standpoint of good business judgment, at a cost to the taxpayers of nearly two and a half million dollars?
Admiral LAND. I think that the best thing to do, since you have brought up these other things, would be to submit to you the arguments, such as were prepared on this subject when the matter was gone into. I will be glad to send them to you. That gives the basis of the whole business, and I will be glad to submit them for your consideration. I am not saying that we were right or wrong, but I believe we were right.
Mr. DIRKSEN. In the letter that you sent to Mr. Bland you did not give that information, and the argument there was that you were proceeding under the policy which was quite aside from the policy of Congress or the policy which Congress had prescribed for the Maritime Commission in the operation of the merchant marine. That was the sum and substance of the argument made to the committee,
you did not indicate whether there was any basic reason for that action, based on cost ascertainment, values, and so forth, as to why you should sell to the Waterman Co, at $596,000.00, and buy back from that company five older ships at a cost of $3,374,700. I would like to have an explanation of that.
Admiral LAND. It has all been explained.
Admiral Land. I beg your pardon, I did not say any such thing. I said, on the contrary, that this policy of the Maritime Commission was the policy of Congress, to the best of our judgment. I do not say that our judgment is 100 percent accurate. You are going on ex
parte testimony there, of giving what somebody else said. You did and not mention the letter of the Comptroller.
Mr. DIRKSEN. We will come to that.
Admiral LAND. Yes, sir. I had it before me. He has also submitted a letter since then.
Mr. Dirksen. Let me refresh you. The last ruling of the Genera! Accounting Office was dated November 22, 1942, in which they reaffirmed their earlier decision that section 902 did have that effect on
Admiral Lind. There has been a letter since that date from the Comptroller General.
Mr. Dirksen. Has any effort been made to secure an amendment to section 902?
Admiral LAND. Yes, sir.
Admiral Land. An effort was made to secure the amendment in the 50-called omnibus bill that passed the House and went to the Senate.
Mr. DIRKSEN. What happened to it in the Senate?
Mr. DIRKSEN. And for that reason an effort was made to secure an amendment to section 902 at a time when we were in a state of hostilities, and when you, as Chairman of the Maritime Commission, under the act of 1936, as amended by the act of August 1939 were taking existing vessels in the country at prices that should not be enhanced by the emergency.
Admiral Land. You are going back to the same thing I said awhile ago. Whether it is right or wrong, we do not know, but we do not feel that section 902 had anything to do with our transaction. If we operated in error, however, we did not know it, and you will not get anything out of me on that. We had to deal with the emergency, and whether it was done rightly or wrongly, that is the way we did it. I offer no excuse whatever for it. We did not do it with any possible idea of defrauding the Government.
Mr. DIRKSEN. Let me ask you this, whether any effort was made to have the Comptroller General of the United States reconsider his ruling on the matter?
Admiral LAND. Yes, sir.
Admiral Land. I must say this, that I do not know. I am not a lawyer, and I confess that I get confused about some of these rulings on laws. The letters are available, and we are willing to submit them to you. There is nothing secret about them.
Mr. DIRKSEN. You have a staff of lawyers, and we give you whatever administrative money you need. There is involved in this ruling millions of dollars to the people of the country.
Admiral LAND. That is true.
Mr. DIRKSEN. That is the reason you should be familiar with the rulings.
Admiral Land. I am familiar with the rulings, but I do not understand all of them. This is not the first time that they have not been understood. I know of other people in the United States who do not understand them. We have some very good lawyers in our organization.
Mr. DIRKSEN. What was the highest mark used in taking vessels over the period of the last 3 or 4 years?
Admiral Land. The highest sale price of an American vessel was $140. Foreign vessels sold for considerably more than American vessels. For comparable old freighters, the Commission has not paid more than $75 per ton, in purchasing ships. Requisition values are somewhat under this figure.