The importance of a strong merchant fleet as an adjunct to the Navy is so well understood that naval officers and others interested in national defense will be gratified to learn of the success which is beginning to crown the Shipping Board’s efforts to create a new American merchant marine.
It is a matter of common knowledge that lack of merchant ships seriously handicapped our naval and military efforts in the Spanish War, and again in the World War. Our war-time shipbuilding program, undertaken with a view to developing an emergency fleet for war purposes, gave us a vast amount of tonnage, some of which has proved very serviceable, while other units have been found to be not at all adapted to present requirements. After the war we used part of this tonnage to establish regular steamship services on some of the more important trade-routes, and as soon as these services were developed to the point where they proved attractive to American investors they have been sold to private interests. The lines so disposed of, together with those still remaining in the Board’s possession, constitute the foundation on which we are building up the new American merchant marine.
In transferring the government’s war- built tonnage to private ownership, the Shipping Board has not been unmindful of the difficulties that confront American shipowners when competing with foreigners, and has been less concerned with the actual prices in dollars secured for its ships than with the larger consideration of obtaining reasonable assurance that the private owners will be able to carry on successfully for a number of years. Because of the greater construction and operating costs of American ships, as compared with similar costs under foreign flags, Congress has acted in the interest of the private owner by taking steps to remove, or at least to mitigate, these burdensome differentials, and thus lessen the financial handicaps under which American shipowners have labored in the past. As a result of the interest displayed by Congress in these important matters, we now have on the statute books two all-important provisions—one relating to ocean mail contracts, the other to construction loans— which together are rapidly bringing about great changes in the evolution of the merchant marine. It is my purpose to point out very briefly the results thus far achieved.
The mail contract provisions of the Merchant Marine Act of 1928 have furnished the chief stimulus for the gratifying activity which is today being manifested in all branches of the shipping industry. Ocean mail contracts have already been awarded, or are in process of award, on forty-one routes. According to the terms of the contracts, the various operating lines are required to build a total of sixty-eight new and modern ships, aggregating approximately 700,000 gross tons, and costing in the neighborhood of $277,000,000. Furthermore, the majority of these vessels will be launched within the next five years. Contracts have already been let for the construction of twenty-nine of these ships, totaling approximately 265,000 tons, at a cost of $88,274,470. Indeed, thirteen of the twenty- nine are under construction at this writing and three have actually been delivered. As a result of these developments American shipyards are again enjoying a period of great activity.
Under a wise provision of the law, the Secretary of the Navy approves the plans and specifications of these new ships, with particular reference to their economical conversion into auxiliary naval vessels in time of national emergency. It is interesting to note that of the sixty-eight ships required under mail contracts thus far awarded, eight will have a speed of thirteen knots, twelve a speed of fourteen knots, two a speed of fifteen knots, twenty-three a speed of sixteen knots, thirteen a speed of eighteen knots, eight a speed of twenty knots, and two a speed of twenty-eight knots. All will be serviceable in time of emergency, either as transports, supply ships, or unarmored cruisers.
Supplementing the operating aids afforded by ocean mail contracts are the loans granted to American citizens from the construction loan fund, originally authorized by the Merchant Marine Act of 1920, and since made a revolving fund of $250,000,000. Loans from this fund are made on liberal terms for new ship construction and for the reconditioning of ships already built. Since the fund was first established loans have been authorized amounting to a total of $162,380,372, involving work on sixty-nine vessels. While the low rates of interest and easy terms of repayment combine to make this service one of great value to American shipping, it can by no means be said that the construction differential is wiped out thereby. Because of higher costs of labor and material in this country, compared with the cost of these items in other maritime nations, a considerable differential will probably always exist. It is clear that it will have to be met by improved construction methods— perhaps involving standardization of types and parts—or else be absorbed in the revenues derived from operation.
At the same time that the Shipping Board has been working along the constructive lines above indicated, it has been exerting its best efforts to liquidate the government’s emergency fleet, in accordance with the policy laid down by Congress whereby it was provided that these war-built vessels were to be transferred, as soon as practicable, consistent with good business methods, to private American ownership. So far has this liquidation program progressed that out of a grand total of 2,546 vessels of all sorts which have been owned by the board at one time or another, only 420 vessels remain in its possession today. Many of the ships sold have gone to build up our wonderful coastwise service, while others are being operated in the foreign trade of the United States by private American interests.
Of the thirty-eight foreign trade services operated by the Shipping Board several years ago, only sixteen lines now remain unsold. It is expected that within the next year this number will be further reduced to six lines. Meanwhile there is being put into effect a new form of operating agreement which will materially assist in reducing the budget for the next fiscal year, the prepared estimates showing that only $4,000,000 will be required for 1931-32, as compared with $10,000,000 in 1929-30 and $6,000,000 in 1930-31. It is patent that the new American merchant marine will be privately owned and operated, the government’s establishment and operation of lines having been in the nature of pioneering work, quite necessary in its place, but destined from the first to be superseded by the sounder principle of private ownership.
Coincident with the sale of ships and ship lines, the Shipping Board has effected marked retrenchment in its operating and administrative personnel, amounting to $1,376,859, or 31.8 per cent for the fiscal year ended June 30, 1930. With additional sales of lines, and with the lump-sum operating agreement placed in effect, it will be possible to make still further reductions in personnel. Our main objective, constantly borne in mind in the midst of minor distractions, is to take the Shipping Board out of the operating field altogether and have it confine its activities to its purely regulatory and promotional functions.
The new American merchant marine will be owned and operated by American citizens. It is important, too, that it should also be manned by Americans, and this is a problem that has long engaged our attention. For some years the law has required that officers of our merchant ships shall be citizens of the United States, but there has been no such requirement in the case of the crew. However, the Merchant Marine Act of 1928 provides that for a period of four years after the enactment of the act one-half of the crews of American vessels engaged in ocean mail service, and thereafter two-thirds of the crew of such ships shall be citizens of the United States.
Not only should the new American merchant marine be owned, operated, and officered by American citizens, but the greater portion of its crews, too, should be bona fide citizens of the United States if we are to count on the merchant service to play its full part in time of national emergency.