New Course

Foreign shipyards are booming. From Hamburg to Yokohama, shipbuilders are trying to keep up with orders totaling more than 6,000,000 gross tons (TIME, Aug. 3). But shipbuilding in the U.S. has been dropping steadily. In 1953, only 23,000 workers were busy building 40 new bottoms. If new orders do not come in. only three merchant ships will be delivered by U.S. yards in 1955 and employment will drop to 1,200. The U.S. merchant marine has been wallowing so badly that the Administration suspended all federal aid to shipbuilding last year and set the Commerce Department to charting a new course through the doldrums.

Last week Robert B. Murray Jr., Under Secretary of Commerce for Transportation, made his report to the Senate Water Transportation Subcommittee. Used to the windy rhetoric and special pleading of most such documents, Senators and shipowners were loud in their praise of Murray's objective review. They seemed doubly pleased that he disagreed with Randall Committee recommendations and strongly supported the present cargo-preference law, which requires that at least 50% of U.S.-financed foreign-aid shipments be carried in U.S. ships.

Present Government subsidies, said Murray, make up the "construction differential," i.e., the difference between the cost of shipbuilding at home and abroad. But even with this aid, few shippers can afford the required down payment of 25% on new vessels. Foreign competition has grown so large that the U.S. fleet in operation represents only 10% of the world's merchant ships. Operating costs are also high. An American freighter with a 51-man crew has a monthly payroll of $20,800 v. $4,700 for a British crew.

Merchant ships become obsolete after 20 years, Murray reminded the Senators. Since most of the U.S. fleet was built during World War II, keels must be laid at the rate of 60 a year to prevent the merchant fleet from losing 81% of its ships between 1961 and 1965.

If the U.S. merchant marine is to support a building program of 60 ships a year, said Murray, it needs every penny of present subsidies, and more besides. Among his long-range recommendations:

P: Investment of private capital should be fostered. Under the present system, the Government pays the cost of shipbuilding, sells the finished vessel to the operator at a 40% to 45% discount (the construction differential). Murray wants shipowners to use private cash to build new ships, have the Government contribute only the construction differential. The Government would guarantee up to 100% of the shipbuilding loans.

P: Shipowners who do not receive subsidies should get the same break as subsidized operators and have their taxes deferred on any profits that are laid away to provide for future construction.

P: Depreciation allowances on aging ships should be boosted, permitting owners to write off the cost faster and encouraging them to order new ships.

P: Government trade-in allowances on old ships should be standardized to promote a trade-in-and-build program.

P: Shipbuilders, who well remember the long court battles over subsidies for ships such as the United States (TIME, June 30, 1952), are impressed with the fact that there are already ten bills in Congress to implement Murray's plan. Since the plan also has Defense Department backing, some of the bills, at least, should get congressional approval this year.

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