Maritime Authority

The U. S. Merchant Marine is a classic U. S. industrial example of the smalltown boy who did not make good in the big city. A century ago the famed clippers sailed out of Salem, Newburyport, Baltimore to capture the oceans of the world for two decades, carry 90%, of U. S. trade. By 1914 the U. S. Merchant Marine was carrying less than 10% of U. S. trade. Since the War it has been kept afloat only by constant Government help. Last week, when President Roosevelt signed the Merchant Marine Act of 1936, experts thought that Congress had finally offered enough help to do some good.

Under the Jones-White Act of 1928, the Government agreed to lend shipping companies up to 75% of construction costs, pay them fat mail contracts to subsidize operations. This indirect subsidy was still not enough to put U. S. ships on an equal competitive footing with directly subsidized foreign liners.

The new law frankly goes the whole hog in meeting foreign ship subsidies by committing the Government to creating a Merchant Marine owned and operated by U. S. citizens, composed of U. S.-built vessels, sufficient to carry U. S. trade and capable of serving as a naval auxiliary in war time.

To effect these aims, the Act creates a Maritime Authority of five men to be appointed by the President for six years at $12,000 a year. Any shipping company seeking Government aid must agree to build its ships only in the U. S., employ only U. S. seamen, register only under the U. S. flag for 20 years, pay its executives no more than $25,000 a year. These conditions satisfied, the Authority will submit for bids the company's plans for new ships to U. S. shipyards, which in turn must agree to return to the Government profit in excess of 10%, for the job. The Authority will accept the lowest bid, but will contract to sell the finished product to the operator at a figure equal to the cost of building the ship in a foreign yard. This figure is almost certain to be lower than the cost in the U. S. The difference constitutes the subsidy paid by the Government. In some cases this subsidy may be as high as 50% of the costs, the Government's maximum. On receiving the ship, the operator must pay the Authority 25% of the U. S. cost of building. The remainder of the bill may be paid in installments over 20 years at 3 1/2% interest.

In operating the ship, the company will also receive a subsidy, planned in each case to equalize its operating costs with those of its chief foreign competitor. To be eligible for this subsidy, the company must agree to share all net profits in excess of 10% with the Government and must pay its men wages approved by the Authority. Concerning the act as a whole, most shipping men were enthusiastic. Almost all agreed, however, that its effectiveness will depend upon the calibre of the five men President Roosevelt must appoint to the Maritime Authority within the next 90 days.

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