(Thereupon the committee adjourned until 2 o'clock p. m.)

AFTERNOON SESSION

The committee reconvened, pursuant to the taking of the recess, at 2 o'clock p. m., Senator Frederick Hale presiding. The CHAIRMAN. The committee will come to order. Mr. Jahncke, will you continue?

STATEMENT OF ERNEST LEE JAHNCKE-Resumed

Mr. JAHNCKE. Gentlemen, I would like to correct a statement I made before lunch, in which I said that the interest on our investment of $3,650,000 was $219,000 a year. It is not that, because I forgot to deduct the depreciation, and as we have been in existence for 10 years our interest on investment is $132,000 a year.

Senator COPELAND. How much was the investment?

Mr. JAHNCKE. $3,650,000. Mr. Chairman, in compliance with your request for a statement of the amount I consider as fair to the owner of the New Orleans dock and water front property, I beg to state that an annual rental price covering interest on investment, depreciation, taxes, and insurance would amount to $163,000. This rental is based on a replacement value of $1,500,000.

The lease should require the lessee to keep the property in its present condition of good repair, and the lessee should protect the Government against any damage for injury to employees or the public who might have a claim against the dry dock and the water front.

Gentlemen, it was with reluctance that I made this approximation, but as you know, it was done at the request of the Senator, and it has been embarrassing to me to make it, but this is my judgment. The CHAIRMAN. You figure it would cost $1,500,000 to build another dry dock?

Mr. JAHNCKE. To build another dry dock to-day would cost.approximately that amount.

Senator COPELAND. You said $1,500,000, less depreciation?
Mr. JAHNCKE. No; replacement value.

Senator COPELAND. How much would that depreciation be?
Mr. JAHNCKE. That depreciation would amount to-

The CHAIRMAN. Read your figures. How do you reach the $163,000?

Mr. JAHNCKE. I figured the interest at 5 per cent, amounting to $75,000. Depreciation, 5 per cent on the wharf and 2 per cent on the dry dock, amounting to $45,000. Taxes, $23,000, or approximately 40 per cent of 32 per cent for seven years.

The reason I said seven years, Senator, is that the dry-dock and ship-repair business in Louisiana has been in such a depressed condition that at the last session of the State Legislature of Louisiana the State proposed a bill giving special consideration to those citizens who had invested in dry-dock and ship-repair facilities, and that tax was fixed at approximately 40 per cent of 32 per cent.

After seven years, of course the dry-dock companies in Louisiana will be assessed the full amount of 32 per cent and that would change my figures.

To continue further, the insurance I estimate at 1 per cent on the dry dock and 2 per cent on the wharves, $20,000, making $163,000.

As I said before, with a 10-year lease the taxes of at least three years would be increased to the full amount of 32 per cent, or $50,000 per year, as against $23,000, and that would make the total cost $190,000.

Senator COPELAND. When you fix that figure of $1,500,000, how does that compare with the price of other existing dry docks, privately owned?

Mr. JAHNCKE. I fixed it at $1,500,000 because it is a 16,000-ton dry dock, and I estimated that that is approximately what it could be reproduced at to-day.

Senator COPELAND. That is $1,000,000 for the dry dock?

Mr. JAHNCKE. Yes.

Senator COPELAND. And what was the $500,000?

Mr. JAHNCKE. That was for the wharf and moorings.

Mr. BARNES. You could not get the wharf, if you wanted it. It belongs to the State.

The CHAIRMAN. Why do you figure on a wharf?

Mr. JAHNCKE. Because the dry dock is tied up alongside of the wharf, and the wharf directly adjoining, that is directly behind the dry dock, could not be available for any other purpose; and in our plant we use that wharf as being necessary to handle our business. In other words, we could not operate a dry dock merely anchored in the Mississippi River. We would have to have moorings and a wharf to which to tie.

Senator COPELAND. Then with the dry dock, the wharf would not come into consideration.

The CHAIRMAN. Yes; and I understand that is why he separated them.

Senator COPELAND. What sized boat can you take in your dry dock!

Mr. JAHNCKE. I can take 12,000 and 14,000 ton vessels. Of course you gentlemen appreciate that tonnage of ships is estimated and figured entirely differently from the dead weight lifting capacity of a dry dock. When we say we have a 10,000-ton dry dock, that means we can lift 10,000 tons dead weight or actual weight; but the tonnage of a ship, after all deductions are made, in cargo vessels means that we can dock a much larger ship than that in comparison to the way we estimate the dry-dock weight.

Senator COPELAND. Are there any dry docks in New Orleans that were built by the Government?

Mr. JAHNCKE. During the war?

Senator COPELAND. Yes.

Mr. JAHNCKE. Yes.

The CHAIRMAN. Then how large a ship would a 15,000-ton dry dock take?

Mr. JAHNCKE. I think that I would prefer that Mr._Warren Johnson, the president of the Johnson Iron Works & Dry Dock Co. of New Orleans would answer that, because he is a practical shipbuilder and has been in the business for a long time.

The CHAIRMAN. Can Mr. Johnson answer that now?

Mr. JOHNSON. Gentlemen, the tonnage of a ship is in three tonnages one that they call dead weight, the carrying capacity of ship; the gross tonnage, which is the cubic contents of the ship in feet divided by 100; and the net tonnage of a vessel, which comes after deducting from the gross tonnage various features of the ship.

The actual weight of, say, a 6,000-ton gross ship-when you talk of ships in dry-docking we talk of their gross tonnage, and that weight, as I recollect it, is something like 4 and 7 and 9; in other words, 4 would be the net, 7 would be the gross, and 9 would be the cargo-carrying capacity; but the weight of a ship is possibly about one-third or a little bit greater than the total cargo carrying. Is that correct, Admiral Gregory?

Admiral GREGORY. I think that is correct.

Mr. JOHNSON. It is something like that; so that a 10,000-ton dock could take a 10,000-gross ship.

The CHAIRMAN. Take a 16,000-ton dry dock?

Mr. JOHNSON. That would take an 18,000 or 20,000-ton ship. Some are short in capacity and others are not.

Senator RANSDELL. Can you not differentiate between a ship of commerce and a naval vessel? That dock was evidently built to dock naval vessels. They do not carry any commerce. They carry no cargo; they have their full weight?

Mr. JOHNSON. A naval vessel is measured by its actual weight. Senator RANSDELL. When you speak about docking a vessel of commerce, you usually take it unloaded, do you not?

Mr. JOHNSON. Yes; most of the time.

Senator RANSDELL. So that a vessel that is susceptible of carrying 16,000 tons loaded might not weigh over 8,000 tons or 10,000 tons unloaded?

Mr. JOHNSON. No; it would not.

Senator RANSDELL. So that a dock which could handle a 10,000ton vessel if it was unloaded would be able to carry a vessel carrying 15,000 tons when loaded?

Mr. JOHNSON. Yes.

Senator RANSDELL. In a commercial vessel, but not a ship of war? Mr. JOHNSON. A ship of war is different, because it is loaded all the time.

Senator RANSDELL. I just wanted you to differentiate, because we are talking about a naval dry dock, and that dock was intended to dock naval vessels.

The CHAIRMAN. You mean to use it for commercial purposes?
Senator RANSDELL. Yes.

Senator COPELAND. I want to ask you again about the dry docks that the Government built there. What became of those.

Mr. JAHNCKE. We have two of them at our plant.

Senator COPELAND. Were they sold to you? Did you buy them from the Government?

Mr. JAHNCKE. One of our dry docks that we have was bought from the United States Shipping Board at 100 cents on the dollar. I believe it is one of the few contracts that was made during the war on which the contractor paid 100 cents on the dollar.

The other dry dock and equipment that we bought from the Government, I do not recall the exact figures but I think it was somewhere about $800,000.

it?

Senator COPELAND. The total figure?

Mr. JAHNCKE. Yes.

Senator COPELAND. And what did it cost the Government to built

Mr. JAHNCKE. It cost the Government to build it a little over $1,100,000.

Senator COPELAND. You paid, then, something like 85 per cent of the cost?

Mr. JAHNCKE. I paid a great deal more than the others, New York dry-dock companies who later on acquired three 10,000-ton dry docks, exact duplicates of mine, for a total amount of $300,000 or $400,000. Senator COPELAND. Do you mean in New Orleans?

Mr. JAHNCKE. No; I mean in New York.

Senator ODDIE. What percentage was that of the original cost of those dry docks?

Mr. JAHNCKE. Mr. Johnson, we were discussing the matter of those three dry docks which were acquired from the Shipping Board, sold to the New York Dry Dock Co. They were 10,000-ton docks, exact duplicates of our dry dock, and, as I recall it, the total price was about $150,000 apiece, was it not?

Mr. JOHNSON. My recollection is that the price was $320,000 for the three docks; but that is very unusual. That does not fix the value of the docks.

Senator ODDIE. Do you remember what they cost the Government?
Mr. JOHNSON. About a million dollars; wooden docks.
Senator ODDIE. They were sold for how much?

Mr. JOHNSON. Three of them were sold for $320,000. Mr. Barnes might tell us about that, because Mr. Todd bought them.

Mr. BARNES. I only bought one of them. Those docks, if the committee would like to know, one of them was lying in the mud up in the bay in New York and had not been used for a long time. One section was very badly warped. Two other docks were being leased.