shipping to carry relief supplies and the inadequacy 
of private shipping to meet this demand made it 
necessary to place large numbers of Government- 
owned ships under charter, but, as conditions im- 
proved, this chartering operation declined. By the 
middle of 1950 fewer than 100 Government-owned 
vessels remained in the chartering program. 
To dispose of the hundreds of Government-owned 
war-built ships, the Merchant Ship Sales Act was 
enacted in 1946. This legislation authorized ship sales 
not only to U.S. citizens, but to our allies as well, as 
part of the postwar reconstruction effort. When the 
Merchant Ship Sales Act expired in 1951, 1,956 ships 
had been sold (843 to U.S. operators and 1,113 to 
foreign flag operators) at a return of nearly $2 billion 
to the Government. 
Under the terms of Section 11 of the Merchant Ship 
Sales Act, the Maritime Commission was required to 
establish and maintain a National Defense Reserve 
Fleet (NDRF) of Government-owned merchant it ships 
to be used in the event of future national emergencies. 
Ships for this fleet were selected after consultation 
with the Secretary of the Navy and were placed in 
eight anchorages—three each on the East and West 
Coasts and two on the Gulf Coast. On June 20, 1950, 
the reserve fleet reached its maximum size of 2,277 
ships. 
Since establishment of the NDRF, vessels held in 
the fleet have been activated on several occasions to 
meet emergency shipping requirements. In the early 
1950s, some 300 reserve fleet vessels were reactivated 
in support of U.N. forces in Korea. At about the same 
time, a critical commercial shortage of world shipping 
capacity also developed because of increases in Euro- 
pean demand for American coal and the need to 
transport large quantities of grain to India where a 
series of natural disasters had severely limited agri- 
cultural output. 
To reduce the detrimental impact of these commer- 
cial shortages, additional ships from the NDRF were 
activated and devoted to the carriage of grain to 
India. In January 1952, a peak of 725 NDRF vessels 
in active service was attained in response to the com- 
bination of these commercial requirements and the 
military support requirements associated with the 
hostilities in Korea. 
Ships from the NDRF were again activated in 1956 
when the Egyptian nationalization and closing of the 
Suez Canal precipitated another worldwide shipping 
crisis. The need to ship many goods over greater 
distances resulted in a substantial commercial ship- 
ping shortage and forced freight rates rapidly upward. 
The shortage and higher freight rates placed a major 
burden on the United States, and, as a consequence, 
an extensive NDRF reactivation was undertaken. A 
total of 223 dry cargo ships and 29 tankers were 
eventually activated in response to this crisis. 
The most recent reactivation of vessels from the 
NDRF was undertaken in support of the war in Viet- 
nam, during which 172 reserve fleet vessels were with- 
drawn from the fleet and placed in active service 
under contracts with private operating companies. 
This operation, which ended in November 1970, was 
motivated more by commercial considerations, how- 
ever, than by emergency necessity. By using NDRF 
vessels instead of commercial ships for this service, 
U.S.-flag commercial operations were not unduly in- 
terrupted. Generally, it was felt that the diversion of 
U.S.-flag capacity from its usual trading patterns 
would have significantly damaged commercial opera- 
tions, because many regular U_S.-flag customers would 
have been forced to seek alternate services. Once lost, 
it was felt that such customers would be difficult to 
recapture and that the long-term cost of this commer- 
cial damage would greatly exceed the cost of NDRF 
reactivation. Increasingly, this NDRF role in protect- 
ing U.S. commercial shipping by providing a capacity 
which may be used during limited emergencies has 
been cited as a major justification for the continued 
maintenance of at least some reserve fleet capacity. 
During both World Wars American shipowners 
were provided with Government-sponsored_war-risk 
insurance, but at the end of each war this coverage 
was discontinued. In 1952, to meet Korean War re- 
quirements, a new title XII was added to the Mer- 
chant Marine Act of 1936 establishing what has 
become a more or less permanent war risk insurance 
authority. 
Under this program the Government is authorized 
to insure or reinsure vessels or other components of 
the U.S. foreign trade marine transportation system 
against loss or damage due to war when it is deter- 
mined that such coverage is not commercially avail- 
able on reasonable terms, and when it is determined 
that without such coverage, U.S. waterborne com- 
merce would suffer. Coverage authority extends to 
both U.S. and foreign flag vessels owned by U.S. 
citizens and, if necessary, may be extended to foreign- 
owned foreign-flag vessels engaged in U.S. commerce. 
This war risk insurance authority includes an expira- 
tion date which has been periodically extended by the 
Congress. The statutory basis of the program lapsed 
briefly from September 9, 1975, through October 17, 
1976, but the current authority runs to September 30, 
1979. 
The lapse of authority in 1975-76 was due prin- 
cipally to controversy surrounding the availability of 
this coverage to foreign flag vessels. Many U.S. opera- 
tors sought an end to this program for foreign vessels. 
Ultimately, foreign coverage authority was retained 
but stricter eligibility requirements were imposed to 
assure that such vessels are needed to meet national 
security requirements. In addition, vessel location 
reporting requirements were imposed on all foreign 
vessels included in the program. 
Following the Korean hostilities, 
there was a 
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