iahiiies \WE® 
thority. The 1916 Act established a five-member 
independent Shipping Board with broad promotional, 
investigatory, regulatory, and administrative powers 
and authorized the Shipping Board to set up a Gov- 
ernment corporation (the Emergency Fleet Corpora- 
tion) to build and operate merchant vessels. Under 
this legislation more than 3,000 ships were ulti- 
mately authorized for construction although only 
about one-sixth of these vessels were completed be- 
fore the end of the war.*? 
The United States emerged from World War I 
with a merchant fleet representing 22 percent of total 
world capacity in terms of gross tonnage.®? This 
fleet, which had five times the lift capacity of the pre- 
war fleet, was, however, more than half Government- 
owned, and many of the vessels, hurriedly built 
under wartime conditions, were ill-suited to peace- 
time commercial requirements. Because the Shipping 
Act of 1916 authorized Government ownership and 
operation of merchant ‘vessels for only 5 years be- 
yond the duration of the war, and because it con- 
tained no guidance for disposing of Government- 
owned shipping capacity, new legislative authority 
was clearly needed. 
Congress responded with enactment of the Mer- 
chant Marine Act of 1920. Under the provisions of 
this legislation, the Shipping Board was directed to 
determine what shipping lines and services were 
needed _to support U.S. foreign and domestic com- 
merce and to sell or charter Government ships to 
establish and maintain such services. If necessary, 
the Shipping Board was also authorized to operate 
commercial services itself until other suitable private 
services could be arranged. Furthermore, inexpensive 
Government loans were authorized in support of new 
private merchant ship construction. In this period 
many felt that, given the size of the postwar fleet, 
ufficient Government promotion, some loan assist- 
nce, and, if required, temporary Government opera- 
tion of commercial vessels, private U.S. operators 
ould have little difficulty in capturing and maintain- 
ing a large _share_of U.S.foreign trade with little 
itional direct Federal aid. However, almost imme- 
ws diately after enactment of the 1920 Act, the shipping 
y 1922, 17 percent of the tonnage in the world 
eet lay idle.** The inability to sell ships to private 
operators on satisfactory terms led the Government 
to undertake commercial operations itself, but large 
deficits in the program created growing pressure for 
the Government to dispose of its merchant ships on 
whatever-terms it could get. 
in 1928) additional legislation was enacted pro- 
pee a new form. of Federal assistance to U.S.-flag 
dustry entered a major worldwide Idwide depression and 
E 
51 Samuel A. Lawrence, op. cit. note 46, p. 40. 
52 Tbid., p. 40. 
53 Ibid., 42. 
VAM co 
private commercial operators. Under the terms of the 
Merchant Marine Act of 1928, the Government was 
authorized to provide private U.S.-operators—with 
lucrative mail Carriage contracts which were in- 
tended to offset the growing differential between U-S. 
and foreign operating | costs. The broad intent of the 
ei: difficult t to administer and the aipuae yahis 
f the mail contracts frequently bore little relation- 
ship to actual U.S./foreign shipping cost differ- 
entials. Because of numerous controversies among 
competing applicants for mail contracts, the program 
failed | to facilitate the sale of TRUE ships and 
program began. 
In addition to the promotional programs em- 
bodied in the Merchant Marine Acts of 1920 and 
1928, there was also a minor retreat in the early 
1920s from the free import policy which had been 
adopted as part of the 1912 Panama Canal Act. 
Under the provisions of the Tariff Act of 1922, the 
U.S. shipbuilding industry regained a small Part of 
the protection it had lost in 1912 through the 1 imposi- 
tion of a 50 percent ad valorem duty on all repairs, 
parts, and equipment purchased abroad for a U.S.- 
registered vessel. Today this ad valorem duty re- 
mains in effect (19 U.S.C. 1466) .°* 
The failures of the programs undertaken under the 
provisions of the Merchant Marine Act of 1928 
together with the onset of the depression, precipitated 
a great deal of criticism, in the early 1930s, of both 
the substance and _administration of US. SUPP 
which. had been provided by the 1933 Tadepertcnt 
Officers Appropriations, the President reduced the 
Shipping Board in size to three members, relieved it 
of its independent status, and reestablished the Board 
as a Bureau within the Department of Commerce. 
At the same time three separate investigations of the 
mail contract subsidy program were undertaken— 
one by a select Congressional committee chaired by 
Senator Hugo Black, a second by the Post Office 
Department, and a third by the Department of Com- 
merce assisted by an interdepartmental committee of 
staff experts. 
The Black Committee produced the strongest criti- 
cisms of the mail subsidy system and called for repeal 
of the 1928 Merchant Marine Act and complete ces- 
54 Jt is important to note that the Tariff Act of 1922 did not 
change the duty-free status of foreign-buiit ships, although, over 
the years the value of this free import status has been diminished 
by the provisions of various new government programs. Today 
foreign-built U.S.-flag vessels are ineligible to receive operating 
subsidies from the government and, for a period of 3 years, are 
precluded from participation in the carriage of government 
preference cargoes. 
V-31 
