sation of further aid to U.S. operators. Essentially the 
position taken by the Black Committee was to urge 
maximum Government involvement in both the acqui- 
sition and operation of a merchant fleet of precisely 
the size and composition needed to achieve specifi- 
cally identified national objectives. Although this 
approach was not adopted in subsequent legislation, 
many of the specific proposals recommended by Black 
and his associates for protecting the Government 
interest were included in the new subsidy program 
which eventually emerged in 1936. 
The Post Office and Commerce reports, while 
critical of the mail contract subsidy system, urged 
far less sweeping reforms. The Post Office study 
basically recommended retention of the existing sys- 
tem with improvement of administrative procedures. 
The Commerce report emphasized the importance of 
maintaining a U.S. merchant marine through Govern- 
ment aid, but recommended that future Federal_assist- 
ance be strictly tied to actual differences between U.S. 
and foreign construction and operating costs. Upon 
receiving these reports, President Roosevelt forwarded 
them to the Congress together with a brief statement 
expressing his views on the importance-of_maintain- 
ing_a_viable merchant marine. While the President 
expressed his support for the abolition of indirect sub- 
sidies and for the substitution of some form of more 
direct construction and operating assistance based on 
U.S./foreign cost differentials, he left it to Congress 
to decide how large and what kind of shipping and 
shipbuilding capacity should be maintained and how 
it should be owned and operated. 
The Merchant Marine Act of 1936 
During 1935 and 1936 Congress debated the issue 
of Davernmen’ versiis private ownership of merchan’ 
ship d focused considerable attention on tech- 
nichiee co aiaint auntie vette GRSSSUEeTeraade 
(SUS ae a ee 
technical issue of whether or not it would be possible 
to determine accurately the parity requirements if a 
subsidy system based on U.S./foreign cost differen- 
tials were adopted. During Nese deliberations, how- 
ever, little attenti to_establishin 
cise ma nd, as a consequence, Reh 
the Mer. i 36 emerge id not 
specifi i size_and kind of merchant 
marine ich_was sou hrough fhe programs it 
At the broadest level, the 1936 Act, which remains _ 
the primary statutory authority for contemporary 
Federal subsidy programs, simply reaffirmed and re- 
fined the basic national policy of Federal support for 
a private merchant marine which ha ied 
in the Merchant Marine e Acts of 1920 and 1928, Para- 
phrasing Sectior Section 101 of the 1936 Act, it declared a 
national policy of fostering the development and en- 
couraging the maintenance of a merchant marine suffi- 
cient to carry the domestic waterborne commerce and 
a substantial portion of the foreign commerce of the 
Nation in essential trades: capable of serving as a 
naval and military auxiliary in time of war; owned 
and operated insofar as practicable by citizens of the 
United States; and composed of the best-equipped, 
safest, and most suitable types of vessels, constructed 
in the United States and manned by a trained and 
efficient citizen personnel. Beyond this broad state- 
ment of national policy, however, little additional 
guidance was provided in the law. as to the size and 
type of merchant marine that would be needed to 
achieve these broad maritime objectives. 
Under the provisions of the 1936 Act, new direct 
onstruction and operating subsidy programs, based 
lon U.S./foreign cost differentials, were established 
o replace the mail contract subsidies that were to be 
hased out in compliance with Title IV of the Act. 
Through the operating-differential subsidy (ODS) 
program and the construction-differential subsidy 
(CDS) program, direct cash payments from the Fed- 
eral Government were to be provided to qualified 
applicants to defray the higher cost of building ships 
in U.S. shipyards and the higher cost of vessel opera- 
tion under U.S. registry. Although many “‘free trade” 
Democrats remained opposed to the provision of 
direct subsidies to the shipping and shipbuilding in- 
dustries, the Roosevelt Administration lent its sup- 
port to the concept, having become convinced that 
the best way to control maritime aid was to provide 
it directly, exposing the aid to regular and continuing 
budget scrutiny. 
The new law also established a new agency to 
administer its provisions and carry out various regu- 
latory responsibilities under the Shipping Act of 
1916 and the Intercoastal Shipping Act of 1933. 
Although Federal regulatory and promotional func- 
tions were retained within a single agency, the estab- 
lishment of a new five-member, bipartisan, inde- 
pendent U.S. Maritime Commission_ reflected a 
thorough displeasure by almost everyone with the 
operation of the Shipping Board Bureau and its 
predecessor. Hence, the new law sought not only.a 
change of program, but a change in administration~ 
as Wi well. 
Ks a compromise to those who favored Govern- 
ment ownership and control of merchant shipping, a 
separate title (Title VII) was included in the 1936 
Act authorizing the Government to build and sell or 
. charter vessels if necessary to achieve the broad 
objectives of the Act. Furthermore, as indicated pre- 
viously, many of the protective provisions recom- 
mended by Senator Black and his supporters were 
also incorporated in the legislation. 
V-32 
