were carrying less than 10 percent of our foreign 
commerce and only one U‘S. trans-Atlantic line re- 
mained in operation. During this period, three events 
focused sharp public attention on the need to revive 
the U.S. merchant marine.*® 
First, in 1898 during the Spanish-American War, 
the U.S. Navy found itself heavily dependent, at 
several critical points, on foreign merchant support 
vessels. This U.S. fleet deficiency imposed particular 
hardships on Naval operations in the Philippines and 
in maintenance of the Cuban blockade. 
Following the Spanish-American War the peace- 
time commercial adequacy of the U.S. fleet was also 
found seriously wanting when, during the Boer War 
from 1899 to 1902, many British vessels were with- 
drawn from U.S. service in order to support the 
British war effort. Shipping rates escalated rapidly 
in the U.S. trades and the quality of service plum- 
meted. As a consequence, U.S. exports suffered 
major setbacks in world markets. 
Finally, the voyage of the Great White Fleet in 
1907 and 1908 provided a highly visible expression 
of both our naval strength and our maritime weak- 
ness. Intended as a demonstration of U.S. sea- 
power, the 14-month voyage of 16 first-line U-S. 
battleships and other naval vessels was significantly 
blemished when. sufficient auxiliary shipping to sup- 
port the voyage could not be secured from the U.S. 
merchant fleet. As a result the Great White Fleet 
became dependent for its support on “. . . a motley 
array of colliers, tankers and tenders bearing the 
flags of the world.” *° 
These three events provided fresh impetus for a 
thorough reconsideration of the appropriate Federal 
role in the promotion and protection of the U.S. 
merchant marine, and a lively public debate ensued 
regarding what the Government could or should do 
to improve the maritime situation. The focus of this 
debate quickly centered on one major issue—free 
trade versus protectionism. \\ 
Essenti “free trade” Democrats: urged removal 
of the 1st against US etyo owe 
See eee et etea Eee ons 
publicans wanted to retain the protection afforded to 
the shipbuilding industry under the 1789 law_and 
provide the U.S. operating industry with direct Fed- 
eral subsidy assistance. Ultimately it was the free 
trade position which prevailed, and in 1912, through 
a provision included in the first Panana Canal Act, 
duty-free importation of foreign-built vessels for use 
in U.S. foreign commerce was authorized and duties 
were removed from materials imported for ship- 
building, outfitting, and repair. Unfortunately, this 
liberalization of U.S. import policies was soon 
found insufficient to improve appreciably the condi- 
' Samuel A. Lawrence, op. cit. note 46, pp. 33-34. 
49 Ibid., p. 34. 
tion of the U.S. merchant marine. Higher U.S. crew 
costs,°° the cost of registry transfer, and the absence 
of any real advantage to U.S.-flag operation con- 
tinued as major impediments to U.S. fleet expansion. 
In 1913, the Congress attempted to rectify this 
situation by including a provision in the Underwood 
Tariff Act allowing a 5 percent tariff reduction on 
dutied goods imported aboard U.S.-flag vessels. Al- 
though this program proved to be a major aid to 
U.S. shipping, it was subsequently struck down by 
the Supreme Court. In its 1915 decision, the Court 
ruled that the program conflicted with U.S. treaty 
obligations, citing language in the Underwood Act 
itself requiring U.S. treaty compliance. 
By the time World War I began in Europe, the 
U.S. fleet had declined to the point where its pres- 
ence in the carriage of U.S. foreign commerce was 
virtually nil. As a consequence, after the war began, 
the withdrawal of European-registered vessels from 
the U.S. trades left the United States in a critical 
position. Two immediate steps were taken to ease 
this situation. First, legislation was passed author- 
izing the Government to issue war risk insurance 
covering U.S.-owned merchant vessels in order to 
allow such vessels to continue operating under war- 
time conditions. And second, legislation was enacted 
liberalizing the terms under which U.S.-owned, 
foreign-flag vessels could be transferred to U.S. regis- 
try. 
Although these two actions yielded immediate re- 
sults, it was soon evident that these initiatives would 
not produce all of the tonnage needed to meet U‘S. 
commercial requirements. As a result, the Wilson 
Administration initiated a drive for additional legis- 
lation to authorize Government acquisition and op- 
eration of the merchant fleet. This initiative was 
delayed in the Congress, however, and it was not 
until 1916, with enactment of the Shipping Act, that 
this program was finally authorized. Although the 
program embodied in the Shipping Act of 1916 was 
designed to provide merchant shipping to meet com- 
mercial requirements, implementation of the new 
Government program had not really begun by the 
time the United States entered the war in April 1917. 
Consequently, the program was quickly converted to 
an emergency shipping and shipbuilding program in 
support of the war effort. 
As indicated in the previous section of this report, 
the Shipping Act of 1916 is today most notable for 
its regulatory provisions. In 1916, however, the 
focus of attention was clearly on its emergency au- 
50 Jt is interesting to note that the higher U.S. crew costs in 
this period were not generally traceable to U.S. citizen manning 
- requirements on U.S. registered vessels. In this period, only 
watch officers on ships in the U.S. domestic trades were required 
to be US. citizens. It was not until 1915 that the Seamen’s Act 
was passed, becoming the forerunner of subsequent citizenship 
requirements by requiring that 75 percent of the crew on U.S. 
ships speak the same language as the ship’s officers. 
V-30 
