The American Merchant Marine has had a past, a glorious history, but so did the Dodo. What of the future? Probably all of the Dodoes saw a brilliant future for Dodoes, with Dodoes multiplying and spreading throughout all of the lands and across the seas, just as we would like to see American ships, flying the Stars and Stripes, on all of the Seven Seas. Let us not be like the Dodoes; let us be realistic.
What constitutes seaborne shipping? Cargo to carry; operators, owners and smart agents in all of the ports of the world to husband those ships and their trade; well found ships and the loyal personnel to operate the ships. You may change the order of preference which is thus set forth if your political leanings and economic views so dictate, but the order given is logical.
Without a purpose, you do not walk down to the corner drugstore. You either wish to have another look at the beautiful blonde, to buy a tube of tooth paste, or to get the exercise. There must be a purpose behind the effort. In the case of shipping, the purpose is the carriage of cargo, be it freight or passenger service. There must be an incentive with a reasonable return. Cargo, at a reasonable freight rate, is the incentive in the steamship business. A passenger service increases the prestige of the steamship line and may cause that line to be nationally important. Passenger service, of itself, does not pay dividends, but it may attract trade and add to the seeming importance of the routes served. Missionary work with respect to American products may require that American ships carry our products to foreign shores even at a loss in that carriage but, remember, that is only missionary work. What is required for a successful merchant marine is a cargo to carry with a reasonable return for each and every voyage made. That is the steamship business.
All of the legitimate commerce of the world is open to all of the ships of all of the maritime nations. It is a sad fact, but only too true, that merchants, American or otherwise, will not ship their cargoes in American bottoms unless there is some tangible return for their so doing. That is good business sense, and we are all agreed that we must exercise good sense in this topsy-turvy world. We must be smart and up-to-date in our business dealings or else we will not long be in business. The prosperity of America has been based on our modern, up-to-the-minute methods; our ability to outdo other peoples in meeting the needs of the changing economic conditions. Our steamship lines must have cargo to carry at a reasonable freight rate so that the ships may show a reasonable return.
American ships may not even hope to carry more than half of the tonnage which enters or leaves our shores. Each of the other nations of the world has a right to half of the tonnage which clears their ports. We shall be entitled to that half only if our business sagacity and enterprise makes us eligible for it. We are apt to think that, as Americans, we are entitled to all of the good things of this world. Actually we are entitled to only that business which we can earn in our own right in active competition with others engaged in the same type of business. If we can carry cargo so much more safely, so much more quickly, or under much better conditions or at a lesser cost than our competitor, then we have a bid for the commerce of the world. We have got to have something to offer if we wish successfully to compete in the trade routes of the world.
To return to our concept of shipping, first we must consider cargo. Heretofore we have had cargo to ship from our shores, either raw materials in excess of our own demands or manufactured products in whose production we excelled. We have had customers who could pay for those products or, more lately, peoples to whom we were willing to supply them on a credit or gift basis. This last is a one-way proposition and has its limitations, for Uncle Sam’s pocket is only so deep. We can continue to supply cargo for export, but at our figure of cost. The United States of America can furnish most of the manufactured articles demanded by the peoples of the world, but the cost of those articles is regulated by the present day cost of production. And costs are inflated. The dollar buys only half what it formerly did. Foreign currency, even the British pound, buys little. We have few products which are not common to the world as a whole, little that is peculiar to this nation, and the demand for our goods will be based upon the scarcity of the article elsewhere and upon our ability to produce it at a lesser cost, or upon the fact that other nations cannot produce it at all. That era when America was a reservoir of natural resources is about at an end. We have been lavish with our natural wealth, perhaps too much so. We have shipped great quantities of coal, oil, and grain out of this country—and we daily read of their shortage to us. Right now, today, freight rates on outward bound cargoes are slumping. With the combination of competing shipping and a declining market, the export trade future cannot be said to be too bright.
All of our shipping consists of our exports plus our imports. We will always be in the market for certain of the world’s goods, particularly raw materials not common to us. Actually our ships are now returning to this country in a light condition; few come in with anything approaching a full lift of cargo. Some bring back ore, at less than the true cost of carriage. If our ships were dependent upon their inward bound cargoes, the returns would be slim indeed.
Since the business of ships is that of carrying cargo at profitable rates, our maritime future is based upon our ability to coax our share of the world’s cargo into American bottoms.
We cannot have an American Merchant Marine without American Owners, American Operators, and American Agents scattered throughout the trade routes of the world. If you wish to go into the steamship business, there are several courses open to you. Having made such a decision, and with considerable forethought, we hope (for the headaches and heartaches will then commence), you may either buy ships, charter ships “bare-boat” or “time,” operate them for their owner, or act as an Agent for one of the foregoing. The ideal merchant marine would be that in which the Masters and members of the crew had a “share and a venture” in their ships; were part owners, keenly interested in the success of the ship that they manned. Our merchant marine was truly great under such conditions during the days of wooden ships and iron men. Next best is the situation wherein American ships are owned by American citizens, the ships fly the American flag and are manned by American citizens. That is American ownership under American registry.
Were you to decide to become an Owner today, you would undoubtedly apply to the U. S. Maritime Commission for the purchase of a war-built vessel with priorities as a citizen of the United States. You would be handed a copy of General Order 60, the Maritime Commission write-up of the Merchant Ship Sales Act of 1946. It was the evident intent of the Congress to provide for the establishment of a strong American Merchant Marine as a reserve for the Navy. The execution of the act was placed in the lap of the U. S. Maritime Commission; it was declared to be their baby. It would thus appear that how well the purpose of the Congress is realized rests upon the somewhat bowed shoulders of the Maritime Commission.
For the purpose of our argument, let it be decided that we would wish to purchase one or more vessels of the popular C-2 Class, freight vessels with limited passenger accommodations. The C-2 will lift about 9,400 long tons, is steam driven and will make a speed of about 16 knots. Such a vessel, under wartime conditions, cost about $2,750,000 to build and we find that we can buy one for about $958,000, of which we must put down 25 per cent, the remainder to be secured by mortgage generally payable over a period of 20 years. As we further read the Act, we find that we will be given a certain preference in the purchase, since we are citizens, and that we shall receive a vessel “in class.” A sneak-preview of the Contract of Sale assures us that prior to the delivery of each vessel, the Commission shall remove, at its own expense, national defense or war service features. On the other hand, we learn that we shall be investigated as to our ability, financial resources, and other qualifications necessary to enable us to operate and maintain the vessels under normal competitive conditions.
So far, so good. We make application for purchase. After several months of correspondence interspersed with conferences we find ourselves the proud possessors of some fine American ships. We find that we have really bought the ships “where is, as is,” for the “in class” qualification is now found to mean that the Commission will accept responsibility for only the “black marks” of the American Bureau of Shipping against the vessel. The American Bureau of Shipping, familiarly known as “A.B.,” will have a rather complete record of the defects known to exist in the vessel, and the date of inspections due. The defects will be divided into two classes: those which may be repaired at the Owner’s convenience, and those which require immediate rectification. The latter are known as “black marks.” The Commission accepts responsibility for the black marks but does not accept the burden of returning the ship to her designed condition with respect to fittings, Owner’s convenience, repairs, or other matters. We find that much the same is true with respect to defense items. To make a long story short, our ships will cost us about a million dollars each, and we have to put a considerable amount of capital, good solid American dollars, on the shelf to satisfy the desires of the Commission. We are getting into deeper water all of the while; we find that we are really in business in a big way—in a business requiring a great deal of capital, much knowledge of shipping, and many contacts.
We are now ready to go into the steamship business provided we have met the requirements of the American Bureau of Shipping, the U. S. Coast Guard, and the Federal Communications Commission, have made a radio service agreement so that press may be received, have satisfied the U. S. Public Health Service, have made contracts (with assurances of delivery) for bunkers, have covered our ships with the many types of insurance required, have provided the some seventy-five types of operating forms and reports required, have concluded our business with the four or more Labor Unions involved, have stored the ships at a considerable cost—and have some business in sight.
We may either decide to operate the ships ourselves, finding our own cargo and deciding upon our own trade routes, or we may charter them to other operators. Should we decide to operate them, we must have Agents to look after our interests in each and every port that the ships will visit. Agents to husband the ships while they are in their ports, to watch over the discharge of the cargo, and to find cargo to be moved from those ports. Should we decide to charter, we have our choice of time charters or bare boat charters. In the time charter, we will provide the ship, her crew, and the subsistence of the crew at an agreed upon figure for the tonnage lift of the ship. In the bare boat charter, we merely supply the ship, and the operator makes his own arrangements for the crew and their subsistence. In any case we are now an Owner, subject to all of the intricacies of Admiralty Law (the maritime laws of the various nations of the world), and greatly dependent upon the personnel who man our ships. As the Farrels, of the American South African Line, are wont to remark, “the steamship business is not a business; it is a disease.”
The average American ship afloat today is far better than the average ship under a foreign flag. Our ships cost more, are more costly to outfit and maintain under our standards. We have supplied many of our ships to the steamship lines of the various foreign nations. Their cost of outfitting and maintenance will be far less than ours. The vessels will be manned with fewer people, and their crews’ wages will be far less than those of the American seamen. The operational cost attributable to personnel will be considerably less than half of that of a ship under the American flag. Uncle Sam cannot justly be accused of having been too shrewd in supplying our new ships, at less than cost, to our foreign competitors.
Now we come to the matter of the personnel who man our ships. Naval history has proved that better men, even in poorer ships, are certain of success at sea. The same is no less true of the merchant service. As in no other venture, the success of the business is dependent upon the operating personnel—the men who take the ships to sea and to the various ports of the world. If we are to compete with the peoples of foreign nations—and compete with them we must if we are to operate upon the high seas and visit their shores—then our success will depend upon our ability to move cargo at some advantage over that of any other people. We have got to have something to offer: lower cost per ton-mile, or improved service. The merchants of the world, upon whose business the shipping business is dependent, will demand no less.
Unfortunately we, as Americans, have no magical formula for the successful operation of a ship. While we excel in certain of the trades, professions, and production methods within our own country, that is not so in the steamship business. Economic conditions do not force Americans to go to sea for a livelihood, and when they do go to sea, even in our own ships, they have to live with and compete with men who were foreign-born. Up to twenty-five per cent of the crew may be alien. The fact that probably eighty per cent of our ships are commanded by Masters of Scandinavian birth or extraction is an indication of our trend away from the sea. Only recently a young man with a Chief Engineer’s license, paid at the rate of $553.00 per month and found, quit his ship and his profession because it kept him away from home over-night. His case is not unusual. Even though shipboard work has been lightened, personnel increased far above the legal requirements and those of other nations, and accommodations and subsistence furnished comparable with those of a hotel; even though coffee time and rest periods have been allowed and free medical service furnished; even though union delegates in each department of the vessel have been recognized with the right to present facts or opinions concerning any matter which they think proper to their department heads or to the Master at any time that they choose; even though the type and extent of the work which each rating may perform has been curtailed and specified, wages increased again and again with further demands coming up, and overtime pay liberalized to the point where a ship cannot operate without the payment of overtime amounting to about thirty-five per cent: even with all of this, citizens of the United States are not keen to go to sea.
The overtime question in American ships is the most serious problem confronting the owners of American ships today. One of the seagoing unions has had the good sense and courage to admit that overtime may become a racket. When it comes time to pay off the crew at the termination of a voyage, it will be found that the overtime generally amounts to thirty-five per cent of the agreed-upon wage. Under the current union agreements, no ship can operate without the payment of overtime. Overtime, and in large amounts, has come to be looked upon as a right and not as a safeguard against unscrupulous Owners, Operators, Masters, or Chief Engineers.
Overtime may become the straw which will break the camel’s back.
Let us examine a few cases of what constitutes overtime on board ship today. They may surprise you, but they are all carefully specified in the various union agreements:
The modern high pressure, high temperature boiler requires that the tube nests should be blown out with steam jets once every four hours. Mechanical, easily operated tube blowers are provided for this service. Well, it costs an hour’s overtime to blow tubes. It costs an hour’s overtime when the oiler starts or blows down an evaporator. It costs overtime when the Steward’s department cleans the meat or chill boxes. When free launch service to the shore from a ship anchored in the stream is not provided after a period of eight hours, even though launches have been requested by the Company, continuous overtime for all hands is claimed. Overtime is paid for sea watches at sea on Sundays. The Boatswain must be paid for as many hours overtime as any man in the deck department shall be paid, regardless of whether the Boatswain actually worked any overtime hours or not. Overtime is required to move a passenger’s baggage from the ship to the dock. Overtime must be paid to the unlicensed personnel if work is performed by licensed personnel which is the normal work of the unlicensed personnel. The claims for overtime are innumerable; they create friction within the ship, lessen the smartness and efficiency of the ship, and put the American operator at a great disadvantage in the world shipping of today. The maritime unions might be smart to look into this, for their working agreements will be worthless if American ships, in which those agreements apply, cannot continue in the business of going to sea.
Perhaps the unions are not wholly to blame for the conditions which are upon us today. The agreements were signed by the steamship Owners and Operators as well as by the various unions. If “feather-bedding” and unreasonably high wage scales have been agreed upon, why did the Owners sign on the dotted line? Maybe there was a little greed involved. It might be that each Owner or Operator wanted to keep his ships at sea while the rates were high, as they have been in the past. It might be that there was hope or assurance of subsidy to care for the higher operational costs. It may have been a case of divide and conquer, wherein the unions first worked upon one steamship line and then others in turn, each Owner hoping that he was settling his personnel troubles and being assured of continued operation at sea. Maybe it is the present day political thinking of our country that the costs of operation may be increased without increasing the costs of the product. The steamship business is different from that of manufacturing automobiles, however. The automobile industry is internal, an industry in which we, as a nation, have little competition. That is not true of shipping, in which our competition is worldwide. At any rate, the heads of our steamship lines signed to accept the demands of the various maritime unions with the hopes that they would be able to operate in some manner against the competition of the steamship lines of the other nations. They had costly investments to protect and went along with the popular trend of granting increased wages and privileges.
The future of the American Merchant Marine is now at the crossroads. The American flag is again in danger of disappearing from the seas. Our cost of operation is far greater than that of any other people, and the trend is ever upwards. A merchant marine is essential to our economic and defensive well-being. Under existing conditions of declining freight rates, declining freight, increasing foreign competition, and increased costs of operation (with bonus rates of pay and high overtime demands), a ship under our flag is not a good investment. If our ships are to stay at sea there must be a lowering of the over-all cost of operation. Loyal, interested American seamen must man those ships. A Federal subsidy in one form or another is required. Subsidies are not popular; as Americans we look to each business venture to pay its own way and to return a reasonable profit. Subsidies paid to the Owners and Operators could be subject to abuse and might be open to suspicion. It might be smart to consider other means of caring for our Merchant Marine, such as “Federalizing” our Merchant Marine seagoing personnel—putting them on a Civil Service footing, which would surely cure many of the present ills. Such a move would surely be bitterly opposed by those who had selfish interests to serve, but it would prove to be a blessing to the men who wish to continue to go to sea. It would assure them of ships in which to sail and of a future in the merchant marine.
The American Merchant Marine is of vital importance to the Navy. It is yours and it is mine. We paid for the ships, we pay the freight, and we shall surely have to pay for its continued operation. It is well that we should know and recognize the facts.
* The opinions or assertions contained herein are the Private ones of the writer and are not to be construed as official or reflecting the views of the Navy Department or naval service at large.
Commissioned in the Regular Navy shortly after the First World War, Captain Perry served through various grades and duties until his retirement in 1946. Much of his service was in connection with shipbuilding, inspection, and operation. As Marine Superintendent of a steamship company in civil life he met experiences in buying, re-conditioning, and operating American built merchant vessels under the American flag which impelled him to write this article on a problem of vital import to the U. S. Navy and the American people at large.