Our national policy today requires that the United States maintain a Navy and Merchant Marine capable of carrying on warfare anywhere in the world. The strategy of naval warfare securing the sealanes against enemy attack in order that shipping can transport forces, materiel, and supplies needed to conquer, occupy, and police enemy territories has not changed appreciably with the passage of time, even though weapons have grown more complex. Secretary of the Navy Gates stated before Congress on July 11, 1957, “ . . . A large, modern, and well-balanced American merchant marine is positively vital to our defense planning, as without it, in time of war, neither the military effort nor the war economy of our Nation could be supported. . . . ” The U. S. Merchant Marine by 1907 had shrunk so low that when President Theodore Roosevelt sent the U. S. fleet around the world, the Navy was forced to charter foreign flag vessels to serve as auxiliaries.
Only ninety years ago, at the close of the Civil War, the United States turned her back on the seas from which she had drawn her strength for so many years and devoted herself to westward expansion. Men and capital found larger rewards in new fields of endeavor, and the American-flag merchant marine was allowed to dwindle to a fraction of its pre-Civil War size. In 1855 we had carried about three-fourths of our foreign commerce in our own ships. By 1890 we were carrying only one-eighth, and by the outbreak of World War I, carryings in American-flag ships had dropped to about one-tenth of our foreign commerce.
Although the United States in 1913 was one of the world’s great exporting and importing nations, it had no more than eight per cent of the world’s total of ocean-going vessels of 3,000 deadweight tons or more. In the early days of World War I, a large proportion of the foreign flag merchant fleets upon which we relied to meet our import and export trade was diverted to other trades, laid up in port, or sunk. Our own shipping, plus foreign ships available, soon became inadequate to carry our trade. We were unable to serve ourselves or the nations with whom we were soon to be allied. Three years later, the Shipping Act of 1916 was passed. Recognizing the threat to its economic and military security, the United States then undertook a huge and costly crash shipbuilding program. This program, costing more than three billion dollars, produced 2,300 ships, but only a few of them were delivered before the Armistice, and the quality of most of them was inadequate to meet the competition of newly constructed foreign flag vessels.
In 1920, American merchant ships of 3,000 deadweight tons or more represented 30 per cent of the world’s total of such ships, and the United States was in second place in tonnage among maritime nations.
The Merchant Marine Act of 1920 was designed to promote the development of U. S. flag services throughout the world and to assure the maintenance of a strong merchant marine for commerce and defense. The many ships available were to be sold to U. S. citizens, not as surplus, but for the express purpose of organizing new trade routes and continuing to operate essential foreign and coastal services. The Shipping Board, through its Emergency Fleet Corporation, was authorized in the meanwhile to operate the ships on the trade routes until business was sufficiently developed to make feasible the sale of such ships on terms satisfactory for independent private operation. American operators, however, were reluctant to purchase such ships because of the lack of adequate government assistance, world conditions in general, and the world shipping situation in particular. As a result, the operation and maintenance of the U. S. flag services in foreign trade depended almost entirely on the government operated fleet.
The Merchant Marine Act of 1920 proved seriously deficient in that no provision was included to promote the replacement of obsolete government ships. The 1920 Act did provide for the establishment of a construction loan fund by setting aside, out of Shipping Board revenues, an amount not to exceed $25,000 annually during the five years from the signing of the Act. The Thirteenth Annual Report of the U. S. Shipping Board and the U. S. Merchant Fleet Corporation covering the fiscal year ending June 30, 1929, indicates that 69 new ships were constructed under this Act.
For several years following the passage of the 1920 Act, considerable attention was devoted to American merchant marine problems by the Executive and Legislative branches of the government, but there was marked divergence of opinion as to the type and as to the desirability of assistance that should be authorized.
The Jones-White Act was passed in 1928, which confirmed the policy of the 1920 Act, again recognizing that a merchant marine was necessary to the national defense and the promotion of the foreign and domestic commerce of the United States. This Act increased the revolving construction loan fund to $250,000,000 and increased from fifteen to twenty years the period of amortizing construction cost of the ships. Interest was charged at 5j per cent for periods during which ships operated predominantly in the coastwise trade and at 3j per cent when operated predominantly in the foreign trade. This latter was the lowest rate of any government obligation issued after April 6, 1917 (except postal savings). Fifty-eight vessels were constructed under the provisions of the 1928 Act.
The Merchant Marine Act of 1928 set up a system of ocean-mail contracts to aid American flag lines engaged in foreign trade. The compensation provided for carrying the mail was fixed on a mileage basis, with maximum rates varying according to size and speed of the ship. Actually, this legislation was designed to compensate American ship operators for construction and operating costs which were higher than those of their foreign competitors. It was expected that the rates would be high enough to permit the maintenance of American flag services in the face of foreign competition.
The results of our attempt to foster an adequate merchant marine under these Acts are summarized briefly in the statement from a survey made about the time of the passage of the Merchant Marine Act of 1936:
“It must be admitted that, despite the millions of dollars lavished on the American merchant marine during the past IS years (including the payment of a quarter of a billion dollars in mail contracts and other subsidies), the effort, so far as the establishment of a sound merchant marine policy is concerned, has been a failure.”[1]
Congressional recognition of the dangerous inadequacy of the American merchant marine, and Congressional concern over the revealed abuses of the ocean mail contract payment form of indirect aid culminated in 1936, after a period of extensive study of the problems, with the passage of the Merchant Marine Act, 1936, and the creation of the U. S. Maritime Commission.
In the Merchant Marine Act of 1936, Congress established the administrative organization and the administrative authority, which, when supplemented by the necessary appropriations, were designed to assure the construction and the continued maintenance of an adequate and well balanced American merchant marine to promote the commerce and the national defense of the United States.
The express aim and purpose of Congress in the enactment of the 1936 Act is found in the “Declaration of Policy” set out in Section 101 of the 1936 Act, reading as follows:
“It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine (a) sufficient to carry its domestic water-borne commerce and a substantial portion of the water-borne export and import foreign commerce of the United States and to provide shipping service on all routes essential for maintaining the flow of such domestic and foreign water-borne commerce at all times, (b) capable of serving as a naval and military auxiliary in time of war or national emergency, (c) owned and operated under the United States flag by citizens of the United States insofar as may be practicable, and (d) composed of the best-equipped, safest, and most suitable types of vessels, constructed in the United States and manned with a trained and efficient citizen personnel. It is hereby declared to be the policy of the United States to foster the development and encourage the maintenance of such a merchant marine.”
The Merchant Marine Act of 1936, with numerous amendments, and the Ship Sales Act of 1946 today form the basis for maintaining a merchant marine adequate for national defense.
The manner in which this is accomplished is by fostering private shipping through a system of government aid. Two of these aids are especially important. Construction- differential payments as high as 50% of U. S. Government cost may be made to offset lower foreign construction costs. Operating-differential subsidies are granted to approximately 40% of the number of U. S. flag dry cargo ships which comprise about 56 per cent of the U. S. flag vessels operating on established foreign trade routes. This form of subsidy covers wages, subsistence of crew, insurance, maintenance, and repairs not compensated by insurance, to offset lower foreign costs and standards of living. In addition, the Maritime Administration may grant mortgage aid, mortage-insurance aid, and trade-in allowance aid to foster new construction.
This is not all. In addition, U. S. flag operators may avail themselves of tax benefits by depositing earnings in construction and special reserve funds. In certain instances, it is possible to obtain rapid tax write-offs under the Defense Production Act of 1950.
During the latter part of 1954, the Administration sponsored Public Law 574, better known as the Tanker Trade-in-and-Build program, in order to improve the quality of the U. S. tanker operating fleet and to provide a reserve of tankers in the National Defense Reserve Fleet.
This resulted in the building of six new larger and higher speed tankers and the acquisition in the reserve fleet of fourteen older type tankers. These reserve fleet ships were being used to relieve the tanker shortage created by the Suez crisis.
The transfer of a U. S. merchant ship to foreign registry must be with the permission of the Maritime Administration. This authority has been used as a means of obtaining new construction in the interest of national defense and a modernized merchant marine. As of August 1, 1957, approximately 53 additional new vessels for U. S. flag registry, mostly tankers, totalling over 2,000,000 deadweight tons, have been contracted for or built in U. S. yards under this program. The new ships built or being transferred will be available to the United States in case of emergency; none may operate on trades forbidden to U. S. ships, nor under any flags or owners except as approved by the Maritime Administration.
More liberal Federal ship mortgage insurance provisions in the law have encouraged the entry of additional private funds into shipbuilding ventures.
In addition to the government aids which have been described, we have one very important type of assistance provided through the so-called 50-50 cargo preference features of the various over-all government aid and relief programs. Briefly stated, the 50-50 provisions require that at least one-half of the ocean cargoes resulting from U. S. Government aid and assistance programs, or programs which are underwritten by the U. S. Government, must move in American flag ships. Without this type of assistance, which incidentally the Maritime Administration is mandated to encourage by the Merchant Marine Act of 1936, our all too small tramp fleet would be eliminated entirely.
The Administration is further assisting U. S. flag shipping by engaging in prototype development and research aimed at improving ships and, in particular, engines, hulls, and cargo handling systems.
The Department of Defense and the Department of the Navy are continuously consulting and coordinating their studies with the Maritime Administration as to the size and characteristics of the desired active operating U. S. merchant fleet and the desired composition and readiness of the National Defense Reserve Fleet. This is accomplished through a joint committee called the Marad-Navy Planning Group.
In the past, upon the sudden outbreak of war, we found it necessary to hastily improvise a shipbuilding program. This was not only costly but resulted in the production of improvised ships, limited in their capability to meet modern military needs. It must be recognized that the special characteristics of merchant ships which are desired for ultimate military use must, of necessity, be modified and limited to conform to acceptable requirements for successful commercial enterprise.
The Marad-Navy Planning Group was able to set up a program to go to the Congress of the United States on a joint basis. For the first time a channel was supplied to the Congress through which information of combined Marad-Navy mobilization planning could reach them in understandable language. After receiving the reports of this group, the Congress readily supported bills for a phased construction program of the ships required to assure an active operating U. S. merchant fleet, possessing acceptable defense characteristics up to the numerical limits required to meet the initial needs of the Department of Defense and to provide the means for the orderly replacement of operating tonnage approaching obsolescence.
This is of particular importance in view of the problem of block obsolescence. Since most of our operating ships are war-built, constructed over a short period of time, they will all reach the accepted age limit of twenty years at approximately the same time. It would not be feasible or desirable to replace them all at the same time, which would continue a feast and famine situation in our shipyards.
Many members of Congress, complimentary of the work accomplished, stated that for the first time they had received actual data on the dry cargo ships needed to support our Armed Forces, on the troop transport needs that we might be called upon to face, and on the tanker requirements we may need to supply. Ship speed data, gathered by the Marad-Navy Group, has been of great significance and continues to be of prime importance to planning. The Congress has also supported a proposal that a method be provided for the construction and operation of certain prototype and experimental vessels to serve as a basis for an emergency ship construction program. The work of the Marad-Navy Planning Group is of a continuing nature, resulting in pertinent and current recommendations enlisting the support of the Congress for the rapid modernization of the U. S. Merchant Marine.
Today, our U. S. Merchant Marine, a deterrent to any potential aggressor, is able to say: “We stand ready to deliver the men and the goods. We can deliver them swiftly and in sufficient quantity to make aggression a costly venture, highly unlikely to meet with success.”
Maritime-Navy teamwork has proved to be the key to the solution of many of our problems. The principle of working together that Americans are taught, and which they have grown to respect, is one of the great spiritual assets of our nation. Nowhere is constructive teamwork better illustrated than in the maritime field, nor is there any field where teamwork is more essential to concrete attainment.
Another essential element to the maintenance of a merchant fleet for national defense has been the creation of the same spirit of teamwork between the government and the U. S. maritime industry. The Congress of the United States has materially shared in this atmosphere of dedication toward the proposition of keeping America strong on the high seas.
Recently the Maritime Administrator, in his address before the Annual Merchant Marine Conference, made the following strong policy statement:
“Face up to the facts of life; the primary and basic reason for the existence of a subsidy program—construction subsidy or operating subsidy —is national defense. In the over-all picture, the commercial aspects of the merchant fleet are of secondary importance. Do not misunderstand me. I do not wish to indicate that the commercial aspects are to be disregarded, but I do emphasize the fact that the commercial characteristics must be made to accommodate themselves to the defense requirements.”
The three principal elements that comprise our maritime mobilization base are, namely, the ships in being, both active and reserve, the shipbuilding industry, both active and dormant, and the manpower skills required to man and build the ships. Let us consider each of these three elements in their relationship to the normal, peacetime merchant marine and its mobilization role.
With respect to the active merchant fleet element of our mobilization base, it is our national policy to maintain a strong, well equipped, well balanced, privately owned commercial fleet, manned and operated by U. S. citizens and subsidized to the extent necessary. The numbers and composition of this active merchant fleet as it engages in both foreign and domestic commerce is maintained at a level sufficient to meet the early requirements of mobilization.
In addition to the active fleet, the government, since 1945, has maintained a National Defense Reserve Fleet which is strategically located in lay-up anchorages along the coastal perimeter of the United States.
The National Defense Reserve Fleets of the nation have a stockpile of shipping in excess of 2,000 ships. Of these 2,000 ships, conservatively estimated at an eight billion dollar value, about 1,500 are Liberty ships. The Liberty ship was the workhorse of World War II. It did a fine job in sustaining the “Bridge of Ships” that so materially aided the Allied victory. However, when Marad-Navy security planning began to assess the potential of these vessels, they came to the inescapable conclusion that in the face of modern warfare techniques, especially those represented by enemy submarines, the Liberty ship was a doubtful asset to our national defense.
Actually the data on hand as to their capabilities, speed, sea-keeping qualities and cargo capabilities, if followed out to certain logical conclusions, might have dictated the scrapping of all of our Liberty ships.
National defense requirements were of paramount importance. It was concluded, on the basis of careful study, that experimentation should be initiated to determine the optimum procedure to be followed in the improvement of the Liberty ship. All the available information and the records were reviewed, as well as the requirements listed by the Navy and the Joint Chiefs of Staff, and the practical considerations involving structural characteristics, speed of conversion under emergency conditions, optimum use of manpower, and availability of ships’ power plants.
It became apparent rather early that extensive alterations of the cargo-handling gear of the Liberty should be experimented with in order to increase the efficiency of this ship commercially and to enhance its ability to service the new demands of larger tanks, massive new armament vehicles, and other large and complex defense components.
The supply of diesel engines that were being mass-produced for the Rural Electrification program and a gas turbine that was driving locomotives across the Great Divide and pumping gas through pipelines were also examined. Data was assembled on the free piston engine for experimental use. It was also decided to see what could be done with the supply of Victory ship engines that we had in our warehouses.
In this program there were two basic things to be accomplished. First, there was the factor of national defense, and secondly, the Merchant Marine industry of the United States, in the immediate years ahead, faced a vital task of replacing itself as the ships of the U. S. Merchant Marine became obsolescent.
It is necessary to undertake research in behalf of the future of the U. S. Merchant Marine. This is a proper role for government, since such an undertaking would be economically unsound for any of the individual shipping lines. The first of these experimental measures has been completed and shows good promise toward improving the quality of the Liberty ship segment of the Reserve Fleet if it becomes necessary. Under war conditions we believe that these ships can be made serviceable at a minimum expenditure of material and manpower to tide the nation over during the early period before new construction becomes available. Our emergency re-engining, hull conversion, and cargo handling rehabilitation programs seek to improve the defense potential of our reserve fleet.
It has been proved possible to increase the speed of these ships from 10 to 16 knots or more, to inaugurate such a program in an emergency. This could fill the gap while a mobilization shipbuilding program was getting underway and would be a saving in time, manpower, and material, before newly constructed ships come off the ways.
The shipbuilding and ship repair industry forms the second element of our mobilization base. As in the case of the active fleet element, it is the policy of the Maritime Administration to see that there is a privately owned, active shipbuilding industry maintained at a sufficient level of activity so that it will be capable of expanding at the desired rate to permit the activation, conversion, and defensive equipping of the active and reserve fleets. In addition, it is our policy to maintain it in such condition that it will be capable of expanding sufficiently to man government-owned standby shipyards and such new shipyards as may be required to build new ships to support any war effort.
The Maritime Administration engages in combined planning with the Navy to fully utilize both the ship repair and the shipbuilding capabilities of the United States. In order to keep a sufficiently large shipbuilding establishment actively engaged in shipbuilding, steps have been taken to devise measures for building new ships. The trade- in-and-build tanker program, the transfer- foreign-and-build program, and our negotiations with the private shipping industry to accelerate the replacement of their operating fleets are all based on our efforts to maintain an adequate industrial nucleus and employment level in the shipbuilding and supporting industry to meet mobilization requirements.
The shipbuilding nucleus involves active shipyards engaged in the construction of large oceangoing ships, having, at present, 45 ways either occupied or capable of being occupied with construction.
Our mobilization plans call for a round-out of the active commercial yards and the activation of the reserve yards by employment of management cadres created from the assigned active yards. It might be said that new yards have also been planned with sites selected. Prototype shipyard construction plans and drawings have been prepared.
There is a carefully planned coordinated use of United States ship repair facilities. An agreement signed by the Secretary of Defense and the Secretary of Commerce has established a Coordinator for Ship Repair and Conversion so that the conversion, activation, repair, battle damage, and defensive equipping programs of the Navy and the Maritime Administration can be accommodated in the most expeditious manner with the most effective use of the facilities. Our current continuous ship repair program, whereby certain desirable ships earmarked for early activation are periodically placed in private ship repair yards, does two things. It assures us that the ships are maintained, and it provides at least a minimum nucleus work force in the private ship repair industry.
The third element in our mobilization base deals with two aspects of manpower. The ability of any country to defend itself and the things it stands for depends on the amount, quality, and productivity of its manpower. Our first manpower concern has to do with the maintenance of a nucleus of skilled shipbuilding workers in those shipyards which will be required to expand to furnish skeleton organizations for reserve and proposed new shipyards.
Our second manpower concern is the maintenance of a hard core of high quality seafaring personnel, both licensed and unlicensed, to man our shipping. As the persons comprising the pool of trained, but inactive, merchant marine personnel left over from World War II reach the age where they no longer constitute a satisfactory reserve, it will be necessary to have a reserve not too dissimilar from that employed by the armed services. Our training stations, like our reserve fleets and shipyards, are in being and are held in readiness against the day when they may be activated. In the meantime, the Maritime Administration, by providing merchant marine officer training at Kings Point and by assisting the four state maritime academies, provides for additional officers and ratings.
Of course, it goes without saying that we have problems for which there are no readily apparent solutions. Primary among these is the increasing dependence of the United States on foreign sources of petroleum and ores without a corresponding increase in American flag ships to transport those commodities. Efforts are being made to meet this deficiency.
The Korean campaign afforded a good opportunity to evaluate our capabilities. From it we learned that we could activate ships rapidly and that we could operate as we had previously planned as a logistical support auxiliary for the Department of Defense.
The Maritime Administration requirements for shipbuilding and repair, ship operations, and personnel training are given periodic over-all feasibility and mobilization readiness checks under the direction of the Office of Defense Mobilization. Shortages of critical items of manufacture, long-leadtime items and those requiring scarce stockpile raw materials are dealt with by ODM in coordination with the Business and Defense Services Administration of the U. S. Department of Commerce. Where deficiencies in components and production persist, expansion goals are authorized under the Production Act of 1950, and such a device as rapid tax acceleration is used as an incentive for increasing expansion. When so-called incentive measures fail, the government steps in. This was done in the case of the existing shortage in capability to produce ships’ turbines and gears.
Under the Defense Production Act of 1950, The Department of Defense, Atomic Energy Commission, and the Maritime Administration are instructed to take all required measures with respect to facilities and production capacity prior to D-Day which are necessary to assure feasibility of their approved mobilization programs.
The Maritime Administration gives technical advice to the National Security Council and the Defense Mobilization Board as they deal with matters relating to the adequacy of sea transport.
The United States and the members of the North Atlantic Treaty Organization, through the Planning Board for Ocean Shipping, have agreed to pool shipping in excess of actual military support requirements. The Maritime Administration has assumed the leading role in the planning and consultation which resulted in the present organization and operational procedure of PBOS.
The maintenance of a U. S. Merchant Marine adequate for both trade and national defense is costly and complicated. The high cost of United States shipbuilding and high cost of ship operation in peacetime makes it essential that we devise aids to private industry in order that this essential arm of our national defense can be preserved and that we are not forced to maintain a government owned and operated merchant fleet.
Thus our efforts in recent years have vastly improved the government’s role in the joint task of maintaining an adequate merchant fleet under our flag. In our research and development programs, we are not only devising plans for utilizing existing shipping and shipping facilities, and in planning for mobilization expansion, but in addition we are providing a broad base for future commercial development along new technological lines.
The successful use of gas turbines and new type cargo gear in our Liberty Ship experimental program opens new vistas for commercial ship design and subsequent improvement for war use, but it is in the area of nuclear power that the government’s role will be most telling in its effect on future merchant ship and propulsion power design.
The Maritime Administration and the Atomic Energy Commission are now carrying out the President’s desires and the will of the Congress in constructing the world’s first nuclear-powered merchant ship. At the same time the Maritime Administration is engaged in study programs to keep abreast of the swiftly developing events in this field so as to be ready to adapt them for the improvement of merchant ship propulsion design and to the service of our national defense.
1. Kennedy Report—November 10, 1937.