Q 
D 
naval vessels, may-serve as visible expressions of 
national power and prestige abroad and such vessels 
and citizen crews play a representational role that can 
help implement U.S. foreign policy. At an even mor 
general level, it has been suggested that national 
prestige, national pride, and our commitment to eco- 
nomic competition demand participation by the 
United States in these internationally competitive 
industries. In his message-proposing tegislation. h 
was to become t ae eI) 
President Roosev i eon following statement 
of this political imperative: ‘4 
“In such free competition, the American 
people want us to be properly represented 
.. Their Govetnment owes it to them to 
make certain that [American] ships are in 
keeping with our national pride and our 
national needs.” 
Over the years, a variety of economic benefits have 
also been cited in support of Federal assistance for 
the U.S. merchant marine. First, U.S. shipping and 
SiS Se Stra re epee 
) ploy ortunities which, in some circumstances, 
AiEhe otherwise be unavailable. Such justifications 
have been particularly important during periods of 
high national unemployment and in regions of the 
Nation which face chronic employment problems and 
in which the maritime industries provide many of the 
available job opportunities. 
The regional employment argument has been par- 
ticularly persuasive in recent years with respect to 
Federal support for shipbuilding. As of December 
1977, for example, nine U.S. shipyards were engaged 
in the construction of merchant vessels with construc- 
tion-differential subsidy assistance. All nine of these 
shipyards are in areas classified by the Department of 
Labor as having substantial unemployment. The ship- 
building employment opportunity argument is further 
advanced by the relatively high proportion of minority 
workers in this industry. Such workers consistently 
face greater employment difficulties than their non- 
minority counterparts in the labor force and, in many 
areas, shipbuilding has become a major source of jobs 
and training for minority employees. 
The other economic justifications most frequently 
advanced in support of Government aid to the mari- 
time industries stem primarily from.international trade 
onsiderations.-H has been argued, for example, that 
a U.S. presence in the carriage of our foreign com- 
merce helps assure the maintenance of a competitive 
environment which, in turn, assures the continuation 
of fair and reasonable ocean freight rates and reliable 
ocean transportation services. In this way, it is sug- . 
gested, U.S. shipping makes a direct contribution to 
14 Message from the President of the United States, 
Doc. 118, 74th Congress, Ist Session (1935), p. 31. 
House 
the maintenance and expansion of U.S. foreign com- 
merce. National flag ocean transportation has also 
been encouraged as a means of opening new markets 
for our export products. This justification was of par- 
ticular importance in the early period of our history 
when merchant ships carrying goods around the world 
provided the principal means of exposing potential 
customers to new products and to new sources 
supply. Finally, balance of payment savings have bee 
cited as an important benefit of maintaining strong 
U.S. shipping and shipbuilding industries, especially 
during periods of high or chronic deficits_in_the 
balance of payments. To the extent that U.S.-built 
vessels and U.S. -owned ; 1 and operated shipping services 
obviate © part of the requirement for foreign vessels 
and services, balance of payments. savings accrue to 
the Nation. 
It is important to note that today, like many of the 
other benefits associated with Federal support for the 
merchant marine, the balance of payments benefit is 
not generally cited as a major justification for Fed- 
eral support, but rather as one of the many ancillary 
benefits which derive from this policy. As suggested 
previously, it is probably national security that today 
provides the primary justification for Federal support 
for the U.S. maritime industries. Nonetheless, while 
the international political and economic benefits 
associated with U.S. shipping and shipbuilding might 
not individually warrant Federal support of these 
industries, the collective value of these benefits is 
substantial and represents a major offset against the 
cost to the Nation of maintaining the essential mari- 
time resources needed for security purposes. Hence, 
it is not surprising that the political and economic 
benefits of a viable merchant marine continue to re- 
ceive prominent attention in the promulgation and 
implementation of Federal maritime promotional 
policies as programs are sought which minimize the 
net cost to the Nation of maintaining this essential 
national resource. 
Over the years, Federal maritime assistance has 
been provided in many forms through programs of 
both direct and indirect aid. Using the Federal sub- 
sidy classification scheme developed by the Joint 
Economic Committee of the Congress,’’ it is possible 
to identify past or present maritime assistance pro- 
grams that fall into each of the six Government aid 
categories described by that Committee. Direct cash 
payments in the form of ship construction and 
ship operating subsidies have been a mainstay of 
Federal support since 1936. Tax assistance is pro- 
vided through special provisions allowing tax defer- 
ral on income set aside for new ship construction. 
Credit aid has been provided in the form of direct 
45 U.S. Congress, Joint Economic Committee. Federal Subsidy 
Programs. A staff study prepared for the use of The Subcom- 
mittee on Priorities and Economy in Government. Washington, 
D.C., Government Printing Office, 1974, p. 1. 
V-28 
