AN ANSWER TO THE SOS
U.S. SHIPPING POLICY
DURING World War II the U.S. spent $15 billion to build the mightiest merchant marine the world has ever known. But the peacetime U.S. merchant fleet has floundered along on a course of argument, scandal, and poverty until now both shippers and shipbuilders face the stormiest sailing since the Depression. Of 1,329 vessels (with another 1,996 in mothballs) currently flying the U.S. flag, fully 80% will be obsolete by 1965, and new ships to replace them are not coming off the ways. Since 1952 U.S. shipyards, once the world's busiest, have dropped from fourth to eighth place in volume of new construction, with only 24 vessels being built in 1954. For the peacetime shipping industry, the result is an increasingly high-cost, low-efficiency fleet whose share of world trade has slipped badly. In terms of future military needs, the problem is even more serious.
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To answer the SOS, the Maritime Board has just started a program which it hopes will replace at least 60 worn-out vessels each year and boost shipyard employment from a low of 20,000 to a steady 36,000 men. The board first-year goal, as approved by Congress for fiscal 1955; a total outlay of $401 million in both Government subsidies and private funds to build, modernize, and repair 99 ships in U.S. shipyards. In its overall purpose, the new program is little different from the many ship-subsidy programs that the Government has launched since the basic Merchant Marine Act was passed in 1936. But in its operation under Maritime Board Chairman Louis S. Rothschild, a Kansas City retail mag nate who has been in charge since 1953, it will be a stronger program, notable for its cost-conscious, businessman's approach.
Under the new program, the U.S. will spend a total of $174 million in ship subsidies for 1955; another private investors will put up another $227 million to build up the fleet. Grace Line and Moore-McCormack have each contracted to replace two of their big passenger vessels (easily converted to troop ships) at a cost of $95 million, of which the lines will pay 53% American President Lines will pay 85% of $65.8 million to be spent for eight new passenger ships and freighters, the biggest such pro gram under the present Merchant Marine Act. For its part, the Navy, which needs 19 high-speed tankers, will build four itself at a cost of $30 million; the rest will be built privately for lease to the Navy.
The Maritime Board has also worked out a whole series of satellite programs to improve the existing fleet and attract capital for brand-new ships. Congress has appropriated $12 million for an emergency repair program to modernize 54 mothballed ships from the reserve fleet, has appropriated another $11 million for a "Liberty Conversion Plan" to experiment with ways of modernizing the entire fleet of 1,500 wartime Liberty ships laid up in port.
In addition, Maritime Chairman Rothschild has pulled a leaf from the auto dealers' book; he has started a tanker trade-in program that he hopes will add 20 old tankers to the reserve fleet and start ten new ones abuilding in U.S. shipyards. Under the new plan, any tanker more than ten years old can be traded in for mothballing; the Government will pay a trade-in allowance that can then be used to build a new ship to replace the old one in active service. Another new idea is patterned after FHA: the board will insure ship mortgages up to 90% in hopes of luring capital into the shipyards.
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The board has no way to cure completely th biggest troubles of the U.S. merchant marine --the high of cost the of shipbuilding in the U.S. and the high cost of operating ships with U.S. crews. As a result, despite subsidies, many shippers feel they can save money by placing orders for new vessels in German and Japanese shipyards (TIME, May 17). The present Maritime Board is trying to win the confidence of shippers not only through its new program but also by the prompt payment of back subsidies. In 1953, for example, the Government had subsidy claims dating back to 1947, was paying them off at the rate of only $20 million a year. In fiscal 1954 the board paid off $85 million in subsidies, much of the amount past due, and next year the rate will jump to $115 million.
If the new maritime program works, it may go a long way toward preserving the essentially private character of the U.S. merchant marine, while at the same time broadening the scope of Government aid to a badly distressed industry. Some critics may complain that an annual outlay of $174 million is too costly a subidy. But the U.S. needs a strong merchant marine both in peace and war. The current program seems a relatively cheap price to pay for it.
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