Vanishing Flag

Britannia may have ruled the waves, but America had the best ships: first the famous clippers, then the fastest steamships afloat and eventually some of the most luxurious liners ever to ply the Atlantic. Today only two American passenger ships operate from the Atlantic Coast, and next month they will show the Stars and Stripes there for the last time.

Prudential-Grace Lines announced that the 300-passenger Santa Rosa and Santa Paula will sail out of New York harbor on their final Caribbean cruises in January, bringing to an even dozen the number of American luxury ships retired over the past three years. Like most former passenger lines, Prudential-Grace will concentrate on freight. Said President Spyros S. Skouras Jr., who merged his Prudential Lines with the Grace Line fleet last December: "It's the foreign-flag cruise ships--they beat us every time."

Skouras figures that foreign liners can operate at half the cost of American ships, and that his average passenger fare for a 13-day Caribbean cruise would have to be raised from $675 to $900 to break even. Also the traveling public's resistance to price increases has stiffened. Fuel costs have nearly tripled in the past year, mainly because of turmoil in the Middle East and increased tanker charges, but the most crushing expense for American shipowners is still labor. U.S. merchant sailors generally earn twice as much or more than their foreign counterparts. To help offset the wage differential--and keep American passengers' fares out of foreign coffers --the Government since 1936 has paid a generous annual subsidy on each U.S. passenger ship for the first 20 years of its life. The regal United States, for example, received $12 million a year from the Maritime Administration. The ship still ran in the red, and was retired last June.

Though the U.S. flag is disappearing from Atlantic liners, it lingers on in the Pacific. Four American ships still cruise from San Francisco and Los Angeles to southwest Pacific islands. Alaska and Mexico, but Matson Navigation Co. is unloading its two passenger ships on another line and going full steam into freight. The Government senses that the era of luxury liners is over: the Merchant Marine Act of 1970 finances the construction of 300 new merchant ships in the next decade, but does not even mention the passenger business.

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