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Government Support Vital To Merchant Marine WARNING that any substan- tial decrease in the amount of government aid to shipping will mean the end of the American lines in foreign trade was issued re- cently by R. J. Baker, president of the American Steamship Owners’ as- sociation, New York. President Roosevelt’s action in in- stituting a sweeping study of ocean mail contracts, announced July 18, has again focussed the attention of the country on the perennial problem of an adequate American merchant marine. In an executive order signed at Panama, the President instructed Postmaster-General Farley to make a study of all ocean and foreign air mail contracts now in ferce, with a view toward modification in any di- rection made necessary by a change in the government’s maritime policy. Farley’s report is expected to be completed before the end of the year and will undoubtedly figure in what- ever action is taken when congress reconvenes. Mr. Baker’s statement in full is given below. The problems of ocean shipping are now being subjected to the scru- tiny of no less than three govern- mental agencies. It would be well, at this time, to review the purposes of the present program and the bene- fits to shipping. Jones-White Act Effective The backbone of our present estab- lishment is the Jones-White act of 1928, the first comprehensive piece of shipping legislation to be enacted in 50 years. Various substitute plans have been offered during the current administration. Every one, without exception, takes cognizance of the keystone of the 1928 legislation— the utter inability of American ves- sels to withstanding low-cost foreign competition without some form of government support. It costs from 50 to 100 per cent more to build ships in American yards than it does abroad. It also costs considerably more to operate ships according to the American standard of living. For this reason American vessels—except in isolated cases— have never been able to survive in the highly-competitive, low-wage in- ternational market. This is especial- ly true now, when tariffs, the new deal and various other factors have conspired to make our costs of ship operation incomparably the highest in the world. The merchant marine act attacked this problem in two ways. It pro- vided, first, for a system of mail con- tracts to maintain trade routes deemed essential to the proper de- velopment of foreign commerce, The act also set up a revolving fund of $250,000,000, to be made available to the industry in the form of con- struction loans. Both provisions have been remarkably successful in promoting the building of ships and the extension of services at a time when the remnant of our war-built fleet might easily have been swept from the seas. The act was primarily concerned with the development of foreign trade. To that end, a total of 44 mail contracts has been let to Amer- ican ship lines serving every major market. The American manufac- turer and the American farmer today have an outlet to markets in which, only 20 years ago, our products were unknown. In other markets we have gained greatly through the improve- ment of service. This improvement accrued not only from the entry of American tonnage; it was forced also upon competing foreign lines which all toc frequently extended service grossly inferior to that offered from European ports. Today, some 500 American vessels carry our from 60 American ports to terminals in 125 foreign lands. Cost Is Not Excessive The mail contracts last year cost the government $23,054,223 more than would have been required to carry the mail on a strict poundage basis. They have averaged less than $20,000,000 a year during the five fiscal years they have been in force. No new contracts have been let since the early. part of 19338,... The sum now being expended is a trifling one compared to other expenditures in- cidental to the new deal, such as the more than $1,000,000,000 that is be- ing paid as subsidy to agriculture. The cost of the mail contracts is also small when compared to the expenses of government operation, which caused the shipping board to show annual deficits ranging up to $50,- 000,000 a year. If we are to have a merchant marine—and no one seems to question the necessity therefor— we must start by realizing that the present system has proved to be the most economical yet devised for keep- ing American vessels at sea. There has been some talk recently about the apparent disproportion be- tween the amount of the govern- ment’s aid and the amount of mail carried by contract vessels. It must MARINE REviIEw—August, 1934 goods - be reiterated once again, in this con- nection, that the rate of payment has nothing whatsoever to do with the car- riage of mail. Ships are paid ac- cording to size and speed, not ac- cording to the amount of mail car- ried. The rate is the same for one letter as it would be for a shipload. Some ships receive as low as $2.59 a mile; others might get up to $12 a mile, Ships are paid for the out- ward voyage only. The government was interested in getting a fleet of large, high-speed vessels, and the mail contracts were accordingly graduated with that end in view. Any attempt to relate the payments to the volume of mail simply befogs the issue. Forty-two New Vessels Construction loan provisions of the merchant marine act have resulted in the launching of 42 new vessels and the reconditioning of 40 others. The new vessels increased the American fleet by 458,000 tons. The total pro- gram involved in the neighborhood of $200,000,000, of which the gov- ernment loaned $116,183,237 on the new vessels and $12,922,057 on those that were reconditioned. Of the amount loaned, approximately $40,000,000 has now been returned to the government in the form of in- terest and repayments on principal. The building of these ships gave employment to 25,000 men in the shipyards for a period of four years, and involved an equal number in related industries scattered through- out the country. Ships in foreign trade give employment to nearly 40,- 000 officers and men. All of these men will be thrown out of work if there is any substantial change in the government’s shipping policy. Practically every ship line in the United States—and foreign lines, too, for that matter—is today op- erating at a loss. Any drastic reduc- tion in the amount of the govern- ment’s support would force the ma- jority of American lines in foreign trade right into bankruptcy. Their employes, ashore and afloat, would be out of work, bondholders would find their securities valueless and the government would have on its hands another fleet of ships. The American people have a prodi- gious investment in their merchant marine. To turn back now would be to forfeit all that we have done thus far. Other nations are building to the limit of their ability. They know that without ships they cannot compete on an equitable basis with their competitors in world trade. They also know that navies are help- less without auxiliary tonnage. It cost us $3,000,000,000 to get ships during the World war, when they were a condition of national survival. That sum would have been sufficient to support the present modest pro- gram for 150 years. 37