Mr. WIGGLESWORTH. Why are they delayed? Admiral LAND. Merely on account of manpower and man-hours to do it. The accounting is not finished until after the ships are commissioned, and these ships are not on an individual contract in most cases. They are in a group, and the accounting cannot be made until the group is finished. Mr. WIGGLESWORTH. What happens when you take over one of these ships for war purposes, as far as those accounts are concerned? Admiral LAND. What do you mean when you say "what happens?” Mr. WIGGLESWORTH. Are the operating subsidy agreements terminated? Admiral LAND. We have not any operating subsidies on ships we requisition. There is nothing here for that. Mr. WIGGLESWORTH. Has not Congressman Bland introduced a bill looking to the suspension rather than the termination of those agreements? Admiral LAND. That is right. Mr. WIGGLESWORTH. What is the story on that? Does that affect this excess-profits picture in any way? Admiral LAND. If they have an operating subsidy it would be a part of the profit. Whether it is excess or not, I could not say. We feel that there is justification for carrying an operating subsidy where there is an old route, line, or service, practically for wages only. We presented that to the House committee some time ago, and they have it under consideration. It is my understanding that they may take legislative action terminating the operating subsidy. From a quantitative point of view, it is practically terminated now. There would be no serious objection by us if they were terminated by legislative action. Mr. WIGGLESWORTH. It is a fact, then, that the Commission has not collected the excess profits due the Government as required by law, and that the reason for the failure to do so is that you are handicapped as to manpower? Admiral LAND. It is not only a question of manpower. It is a matter incidental to accounting. I do not know of any organization where the accounting work is not behind. Manpower is one of the reasons. Another reason is that the contracts are not finished, because many of the contracts have 6 months to run. When you say profits, some have and some have not any. Some are group contracts and not individual ship contracts. There are a great many mechanical reasons why the accounting is not up to date. All of it is in process, and all of it will be finished in due course, but I would not like to guess how many weeks or months we are behind in that form of procedure. But it is no more than would be the standard practice in peacetime, with the exception that we are handicapped both by space and personnel, and thus unable to do this in absolutely up-to-date fashion. But it is being done; it is merely a question of the time lag. TOTAL OF CONTRACT AUTHORIZATIONS TO DATE FOR SHIP PROGRAM Mr. DIRKSEN. Admiral, by way of preface, I just want to get this matter presented chronologically. First, under your general program—that is, under the general ship program, you are operating under the act of 1936, and the first supplemental act, dated August 25, 1941, and the fifth supplemental act, dated March 5, 1942, as I recall. Then you have your emergency program under Public, 5, dated February 6, 1941. Then you have still another program of defense aid. The others are the so-called lend-lease ships, under the act of March 27, 1941, the act of October 28, 1941, and the act of March 5, 1942. Then you have construction for the Army and Navy, and I assume that is carried on under a variety of acts of one kind and another, where you have the authority and where the funds are made available. I have not checked it particularly, but I assume that is the authority you have for that program. Admiral LAND. Yes, sir; that is right. Mr. DIRKSEN. Over all, in this ship program you procure ships by building them or buying them, or if that were the case, by confiscating foreign vessels that might be in our ports. I assume that basically those are the three sources from which the program of ships is now being carried on for all shipping, by building, by buying, or taking over any foreign ships in our ports. What have been the total authorizations to date in support of these various programs, in dollar volume? I am trying to get in my mind the over-all figure. Mr. KIRSCH. I can tell you that. Under the Third Deficiency Appropriation Act of 1937, Congress authorized contract authority for $115,000,000, plus available cash on hand carried over from the old Fleet Corporation and Shipping Board, which was estimated then at $100,000,000. Thus we started with authority for $215,000,000. In the Independent Offices Appropriation Act, 1940, we received additional contract authority amounting to $230,000,000; under the Second Deficiency Appropriation Act of 1940 we received $50,000,000 additional. Under Public Law 5, Seventy-seventh Congress, approved February 6, 1941, there was an additional $65,000,000 authorized. In the Independent Offices Appropriation Act, 1941, there was $180,000,000; in the First National Defense Act for 1942 there was contract authority of $1,296,650,000. In the Independent Offices Appropriation Act, 1943, there was $90,000,000; in the Fifth Supplemental National Defense Act of 1942 there was $3,850,000,000, or a total of $5,976,650,000. That is the entire contract authority for the construction fund, for this program of ships. In addition to that we received under Public 5, authority to build 200 emergency-type ships, which are our so-called Liberty ships, and necessary facilities, amounting to $475,000,000 at the present time. Aside from that, the building of ships under the so-called defenseaid program is by authority of lend-lease acts, and the building for the War Department and the Navy Department is covered by authority contained in the acts appropriating funds to those departments. ALLOCATION OF LEND-LEASE FUNDS FOR SHIP CONSTRUCTION Mr. DIRKSEN. Does this total include allocations out of lend-lease funds? Mr. KIRSCH. No. Mr. DIRKSEN. What funds have been allocated at prior dates from lend-lease funds? Mr. KIRSCH. Allocations for ship construction up to December 31, 1942, amounted to a total of $569,655,000, or approximately $570,000,000 for ship construction, and in addition, lend-lease has made available to us $71,000,000 for facilities construction. Mr. DIRKSEN. When you speak of ship construction I assume you' include also ship purchase. Mr. KIRSCH. No, sir. Mr. DIRKSEN. What funds are available for ship purchase? Mr. DIRKSEN. I mean heretofore, any funds you may have used before the existence of the Executive order of February 7. Mr. KIRSCH. Part of the Maritime Commission construction fund. Mr. DIRKSEN. These are not funds available for ship purchase, as such? Mr. KIRSCH. That is right. Mr. DIRKSEN. You have in contract authorization, and I assume this would exclude lend-lease, a total of $5,976,650,000. New authorizations are requested now in the supplemental request which is coming up, which is not carried in this bill, amounting to $5,250,000,000, making a total of $11,226,650,000, which, I assume, would be exclusive of lend-lease funds. EMPLOYMENT OF ARMY AND NAVY OFFICERS Mr. DIRKSEN. I notice in the language of the appropriation bill you are authorized to use funds for the employment of Army and Navy officers. Is that a correct interpretation of the administration? Mr. KIRSCH. Yes, sir. I think you will find that is in the Merchant Marine Act of 1936, and it is carried forward in each appropriation, because I think there is some specific statutory requirement that the appropriations carry that language in order to appropriate the necessary funds. Basically we are authorized in the Merchant Marine Act to employ a certain number of Army, Navy, and Coast Guard officers. Mr. DIRKSEN. Are they transferred to the Maritime Commission? Mr. KIRSCH. They are detailed; yes, sir. Mr. DIRKSEN. With additional compensation? Admiral LAND. In some specific cases they are, where they conform to law. Mr. DIRKSEN. Roughly, how many Army and Navy officers are in the employ of the Commission now? Admiral LAND. I do not know just how many there are now; about 10 I believe. Mr. SCHELL. We have 5 to whom we are paying this additional pay. Altogether we have probably 8 or 10 to whom nothing is paid other than the Navy pay and allowances. Mr. DIRKSEN. There is $3,250,000 earmarked for the War Shipping Administration and the Maritime Commission? Admiral LAND. Yes. Mr. DIRKSEN. So you have a very close, integrated relationship? Admiral LAND. I hope. so. That is what we are trying to do, to avoid duplication. FUNCTIONS OF WAR SHIPPING ADMINISTRATION Mr. DIRKSEN. That relationship does involve an administrative fund carried in this bill. I mention that because I was interested in your observations relative to the impertinency of an inquiry by Mr. Wigglesworth as to this particular bill. I want to be sure I have related it to what I think is the efficacy of the expenditure of the appropriations made heretofore and the appropriations contemplated in the pending measure. That seems to bring before us, of course, the functions of the War Shipping Administration, to some extent, at least. I want to ask you something about the creation of the general functions of the War Shipping Administration. As we know that organization, it was created by an Executive order of February 7, 1942. Admiral LAND. Yes, sir. Mr. DIRKSEN. Who are the personnel of the War Shipping Administration? Are you a part of it? Admiral LAND. As to the personnel of the War Shipping Administration, on the basis of the Executive order creating the War Shipping Administration, there was created a War Shipping Administrator, and I am the unfortunate guy who is the chairman of the Maritime Commission and also the War Shipping Administrator. The organization is divided into three vital parts, (a) Operation, under Lewis W. Douglas; (b) Construction matters under Admiral Vickery; and (c) Personnel, under Captain Macauley. In addition to that, we have a Combined Shipping Adjustment Board. The functions of the War Shipping Administration and the "Combined Shipping Adjustment Board" are to operate the merchant tonnage of the United Nations over here, insofar as possible, as a ship pool, which involves, of course, under the War Shipping Administration, requisition, purchase, charter, and the general operation of this pool that is under the American flag; in other words, to control the pool. That is the primary function of the War Shipping Administration. Mr. DIRKSEN. Has the insurance authority under the act of 1936 also been allocated to the War Shipping Administration? Admiral LAND. Generally; yes. Mr. DIRKSEN. Do you have any insurance today? Admiral LAND. Practically all of that is handled by the War Shipping Administration. Mr. DIRKSEN. Do you feel that the authority of the Maritime Commission in that field has been entirely divested from the Maritime Commission, or do you still have a participating interest in it? Admiral LAND. We have a participating interest in it so far as shipyards are concerned, and we have the same personnel augmented by additional personnel, operating and functioning on the same basis, in the same general direction. War risk insurance problems which come about over the war tonnage, controlled by the W. S. A., are handled by the War Shipping Administration. Mr. DIRKSEN. From what other sources does the War Shipping Administration secure administrative funds? Admiral LAND. There are no administrative funds for the War Shipping Administration in this bill. Mr. DIRKSEN. Except for the joint service. Admiral LAND. Except for the joint service. Mr. KIRSCH. May I clear up the joint service organization? The joint service organization represents part of three Maritime Commission divisions. That is, the Secretary's office of the Maritime Commission, some part of the Finance Division of the Maritime Commission, and the Public Relations Division of the Maritime Commission. They are all carried on the rolls of the Maritime Commission, but because of the nature of the service they perform jointly for the War Shipping Administration and the Maritime Commission, we have been allowed by the Bureau of the Budget, to include funds in the appropriation for the Maritime Commission to pay those joint service divisions with Maritime Commission funds, notwithstanding the fact that they serve jointly. Aside from that you have War Shipping Administration pay rolls. For instance, you have the Wartime Insurance Division entirely in the War Shipping Administration. You have the Division of Large Vessels Procurement and the Division of Small Vessels Procurement, and a number of divisions in the War Shipping Administration that do not come within this joint service organization. There are at present about 1,900 employees on the War Shipping Administration side paid specifically out of those funds. Mr. DIRKSEN. When you speak of service, do you mean personal service? Mr. KIRSCH. Yes, sir. Mr. DIRKSEN. Some part of these funds will be available for the payment of personal services of the War Shipping Administration, notwithstanding the fact that it is joint service. Mr. KIRSCH. It will be available for employees of the Maritime Commission who serve jointly the War Shipping Administration and the Maritime Commission. I am the Budget officer for both organizations, but I am paid by the Maritime Commission. Mr. DIRKSEN. Which raises an interesting question, in my judgment. We wrote specifically into the Merchant Marine Act of 1936 a provision that anybody who had been identified with the shipping interests for a period of 3 years prior to the possibility of appointment to a Federal position was definitely disqualified, and that provision was invoked in the appointment of Mr. Kennedy, for whom Congress made a specific provision, and if I read the Executive order correctly there is |