1938: Merchant Marine, American

Rehabilitation of the Merchant Marine.

Substantial progress was made during 1938 toward rehabilitation of the American merchant marine. The condition of American-flag operators in general was more hopeful than for some years past. The principal factor contributing to the increased optimism was, of course, the actual beginning of the United States Maritime Commission's long-range construction program.

It is still obvious, however, that if the maritime industry is to return to a satisfactory financial basis under private operation, considerably greater patronage must be afforded American-flag ships by Americans, both as to cargo and passengers.

Vessels of United States registry carried less than 30 per cent of the country's foreign trade during 1938. Under the Merchant Marine Act of 1936, amended, Congress laid down as a basic policy carriage of a 'substantial' portion of our foreign trade in our own ships. The word 'substantial' has been variously interpreted, but it appears to be the consensus that at least 50 per cent should be the proportion. In this connection we find Japanese ships carrying 70 per cent of Japan's foreign commerce, British ships, 60 per cent of their own, Norwegian ships, 62 per cent, German ships, 58 per cent, Italian ships, 46 per cent, and French ships, 39 per cent.

It has been estimated that were the American merchant marine to handle even 35 per cent of American foreign trade, annual revenues would increase by more than $75,000,000 of which more than $40,000,000 would accrue to the subsidized portion of our merchant fleet. Were this condition to be realized, and it is by no means impossible, there is reason to believe that the amount of operating subsidies could be very materially reduced, if not eliminated altogether, thus effecting a saving on the present basis of some thirteen million dollars a year for the taxpayer.

Rehabilitation of the merchant marine is a responsibility placed by the Congress upon the United States Maritime Commission. The fate and fortunes of that fleet must of necessity follow the success or failure of the Commission's program designed to carry out the policies laid down by the Congress.

On Jan. 3, 1938, the Commission could report only one contract signed for construction of new merchant tonnage. By Dec. 31, 1938, however, 52 new ships of approximately 425,000 gross tons had either been laid down or ordered by the Commission in conjunction with private operators or for its own account.

The Commission under the Merchant Marine Act, 1936, by which it was created, was directed to establish an adequate and well-balanced merchant fleet, providing service on more than twenty foreign trade routes considered essential to the international commerce of the United States and to the national defense. Because of the dangerously inferior condition of the American merchant marine at the time that legislation was passed, a large and immediate construction program was necessary to replace tonnage which presently would be obsolete. The United States had declined to fourth place among the principal maritime nations of the world in the size of its foreign-trade fleet; sixth in speed, and seventh in the age of its ships.

New Construction Program.

Following a thorough study of replacement requirements, as well as those involving additions to the fleet, the Commission began in 1938 to follow an informal policy of constructing 50 new ships a year for ten years to provide an orderly and systematic replacement of obsolete tonnage with an eye both to foreign commerce and national defense. At the end of the year the quota had been exceeded by one ship. In addition, construction had begun on the largest liner ever laid down in an American shipyard. This vessel, ordered during the latter part of 1937, brought the total of new vessels ordered or under construction on Dec. 31st, 1938, to 52.

The Commission's technical staff was ready with the beginning of 1938 to invite bids on two types of cargo ships which it had designed, known as the C-2 and the C-3. These are believed to be among the best ships of their kind that modern engineering can produce. Their design was adopted after long and detailed discussions during 1937 with representatives of the Navy and qualified experts in both technical and commercial fields of marine transportation.

Twenty of the C-2 type ships were ordered during 1938. They are 459 feet overall, beam 63 feet, depth 43 feet six inches, 6,000 normal-shaft horse power and capable of a sustained sea speed of 15 knots per hour. They have a displacement at load draft of 13,900 tons and 9,291 tons deadweight. These ships were allocated to four different trade routes. Three will go into service, upon completion, on runs from North Atlantic ports to the West Coast of South America. Six will enter service from North Atlantic ports to Scandinavian and Baltic Sea ports. Six more will run from North Atlantic ports to the English Channel, East Coast of the United Kingdom and German North Sea ports. The last five of the twenty have been allocated to routes running from North Atlantic ports to the Red Sea, Persian Gulf and Indian ports via the Suez Canal; and/or to Australia and New Zealand ports via the Panama Canal; and/or to Far Eastern ports via the Panama Canal. These ships, which are being constructed for the Commission's account, will be available to private operators by sale or on a charter basis.

This also holds true of the twelve C-3 type ships which were ordered by the Commission during 1938. These vessels are 492 feet over all, with a beam of 69 feet 6 inches, 8,500 normal-shaft horse power, and a displacement at load draft of 16,725 tons and 11,036 tons deadweight. They have a sustained sea speed of 16 knots per hour.

In addition to these vessels, the Commission undertook the construction, during the year, of four vessels with the American Export Lines, and three with the Mississippi Shipping Company. The S. S. America is being built for the United States Lines.

The year's construction program included twelve tankers for the Standard Oil Company of New Jersey. These vessels, practically unique, are of great potential value to the national defense. Their high speed which has exceeded nineteen knots on trials, and their capacity of approximately 150,000 barrels of oil, place them in a position superior to that of the tankers of any other nation. The additional propulsion machinery and other purely national-defense features, such as equipment for fueling at sea, accounted for approximately 28 per cent of their cost which was paid by the Maritime Commission. These tankers will become available to the Navy, which has purchased two, in time of war or national emergency.

The Commission during 1938 began the design of additional cargo and passenger vessels to supplement those on which construction had already begun. It has considered that rehabilitation of the merchant marine in the Pacific Coast service is of primary importance, and in that connection adopted a comprehensive building program of twenty-four vessels for the important trade routes originating in that region.

The awards for construction of C-3 cargo ships involved the allocation of two vessels to a California yard. This is the first construction to be undertaken by a West Coast yard since passage of the Merchant Marine Act, 1936, and the first in that area for overseas trade since the World War. In making this award, the Commission based its action upon a finding that existing shipyards, including Navy yards on the West Coast, did not provide adequate facilities for purposes of national defense and national emergency, and consequently, a revival of the industry there was desirable.

Taking the 1938 construction awards as a whole, they involved an expenditure of approximately $130,000,000 for the construction of fifty-one ships. Supplementing the 1938 program with that contemplated for 1939, it is estimated that together they will involve an expenditure of approximately $140,000,000 for shipyard labor; $175,000,000 for purchase of material; and approximately $78,000,000 assignable to overhead and profit, including such things as administration, maintenance, real estate, social security taxes, fire, casualty and compensation insurance. The record indicates that from July 1st, 1938, to June 30th, 1939, the nation's shipyards will have employed on this program a total of 16,030 men at an average of about $30 per week. In the fiscal year of 1940 it is expected that the number of shipyard workers will increase to approximately 34,000.

This program will provide considerable stimulation for various industries as those participating in ship construction include heavy machinery, steel, brass, copper, air compressor, refrigeration, laundry equipment, plumbing, radio, storage battery, floor coverings, paint, furniture, clocks, electrical machinery, table china, etc. In addition, almost every state in the Union contributes some product of its mines, factories or fields to the construction of a vessel.

Subsidy Agreements.

At the end of 1938 the Maritime Commission was paying operating-differential subsidies to thirteen companies operating 148 vessels of 1,028,398 gross tons. The subsidy agreements run for various periods of time depending upon the age of the vessels covered and the requirements for their replacement in the long-range program.

The companies under subsidy contracts in 1938 included: American Export Lines; American President Lines, Ltd.; Grace Line, Inc.; Lykes Bros. Steamship Company, Inc.; Mississippi Shipping Company; Moore-McCormack Lines, Inc. (operator of the American Scantic Line); Moore-McCormack Lines, Inc. (operator of the American Republics Line); New York and Cuba Mail Steamship Company; Oceanic Steamship Company; Pacific Argentine Brazil Line; Seas Shipping Company; South Atlantic Steamship Company; United States Lines Company.

For the fiscal year ending June 30, 1938, accrued operating-differential subsidies amounted to $8,753,769,02 covering 792 voyages for all operators involved.

Amendments to Maritime Statutes.

Numerous important amendments to the statutes governing the Commission's activities and maritime affairs in general, were passed by the Seventy-fifth Congress. In the main these were based upon recommendations of the Commission arising out of its experience in the administration of subsidy agreements. They included amendments making possible more construction, minimizing the danger of interruption to service in the event that a shipping company goes bankrupt, and a new title providing for ship-mortgage insurance. Under this title, the Commission is authorized to insure preferred-ship mortgages which secure new loans or advances made to aid construction, reconstruction or reconditioning of virtually all types of vessels in the domestic or nearby trades.

A second title was added to the Act by the Seventy-fifth Congress, creating a Maritime Labor Board with limited powers of mediation. This Board was directed to submit by March 1st, 1940, a comprehensive plan for establishing a permanent labor policy stabilizing maritime labor relations.

Training of Personnel.

During 1938 the Commission completed a detailed study of training merchant marine personnel in the leading maritime countries of the world. It also inaugurated a training system for American merchant seamen and assigned the administration of this project to the United States Coast Guard.

In a special report to Congress, the Commission stated that its training program 'will provide an excellent opportunity for experienced seamen to improve their skill and enhance their opportunities for advancement.

'We expect to have the shore stations at Hoffman Island in New York Harbor, Government Island at Oakland, California, and Fort Trumbull at New London, Connecticut, operating to capacity by Feb. 1, 1939. By the first of April, 1939, the steam training ship, American Seaman (ex-Edgemoor), will be in commission. With these facilities it will be possible to train annually approximately 300 licensed and 3,000 unlicensed personnel.'

Coastwise and Intercoastal Vessels.

One of the most important branches of the American merchant marine involves the coastwise and intercoastal fleet.

The ships in these trades constitute a majority of the vessels under the American flag. The problem common to all operators of replacing any of their American vessels bought during post-war bargain sales, is complicated in the domestic trade by the higher degree of obsolescence and the exclusion of this fleet from the subsidy provisions available to ships engaged in the overseas or foreign services.

Consequently, the Commission during 1938 instituted a thorough study of all problems facing intercoastal and coastwise operators, which upon completion will be submitted to the Congress with such recommendations as appear necessary.

In seeking to stimulate trade and traffic between the East Coasts of the United States and South America, the Commission on Oct. 8, 1938, inaugurated the 'Good Neighbor Fleet' of the American Republics Line. On that day the S. S. Brazil sailed from New York for Rio de Janeiro, Santos, Montevideo and Buenos Aires. She had aboard an official mission representing the United States Government, as well as representatives of the nations in South America which she and her sister ships, the S. S. Uruguay and the S. S. Argentina, serve on fortnightly schedules. These ships were formerly the S. S. Virginia, S. S. California and S. S. Pennsylvania. They were acquired by the Commission and outfitted for the South American trade at a cost exceeding $1,000,000. The Brazil is typical of all three. She is 613 feet long with a beam of 80 feet and displacement of 32,832 tons. She has accommodations for over 400 first-class and tourist passengers, with cargo space for 8,500 tons of perishable and semi-perishable cargo. The average speed of each vessel is 18 knots. These ships compare favorably with any of their class afloat.

During 1938 one of the leading American steamship lines was reorganized through the efforts of the Commission and services around the world were resumed. This line, formerly the Dollar Steamship Company, was renamed the American President Lines, and with the installation of new management, the company's regular round-the-world service was resumed.

The continuing improvement in the business picture is bound to be reflected favorably in the maritime industry. The extremely delicate foreign situation, however, creates a persistently-difficult question so far as the foreign trade fleet is concerned. Regardless of this, however, replacements by new construction are expected to continue. It is also possible that stimulus will be given to placements in the intercoastal and coastwise fleet through legislative action by the Congress.