154 REPORT OF THE COMMITTEE ON MERCHANT MARINE, 



under the American flag, is to be required to invest the full amount of that huge sum, it will 

 not make the attempt. Manifestly the correct procedure is that indicated by the Chairman 

 of the Shipping Board in his suggestion that the valuation of the vessels be written down, 

 and that a portion of their cost be charged off to war service. This procedure would be 

 eminently just, as well as absolutely necessary to the pennanent retention and operation of 

 these vessels under our flag. The war service rendered by these vessels is of the highest 

 character, not second even to that of the guns and shells which they transport to the theater 

 of war. But the guns and shells are wholly written off. Their entire cost is charged to war 

 service. Whatever valuation may be determined upon ultimately as fair and just, these 

 ships will represent a recovery of expenditure for the Government impossible in the case of 

 vast disbursements for munitions. 



Broadly speaking, there are three essential factors in the fumishment and operation of 

 ships: the cost of capital, the cost of construction and the cost of operation. As far as the 

 first is concerned, the United States will certainly be in no worse position than foreign coun- 

 tries after the war. The probability is that we shall be in better position than some, at least, 

 of the nations which will be interested in expanding their maritime enterprises. Private en- 

 terprise will be able to obtain at reasonable cost the capital necessary to extend its invest- 

 ment in merchant vessels. But private enterprise will not care to expand its investment in 

 that direction unless there is reasonable assurance that it will be permitted to operate at a 

 profit any vessels which it may purchase, lease, or charter, and unless it has reasonable assur- 

 ance that costs of construction will be such that renewals or additions to its fleet may be ob-' 

 tained upon terms which will permit competition with foreign fleets upon an equitable basis. 



For reasons already referred to, it seems likely that American shipyards after the war 

 will be able to produce tonnage at the rates and under conditions that will compare favora- 

 bly with those obtaining in foreign maritime countries. It is therefore in the third factor — 

 costs of operation — that there are most likely to be found the disadvantages to American en- 

 terprise which will constitute the greatest obstacle to the continued successful operation of 

 our new vessels under our own flag. These obstacles are found in certain provisions of our 

 existing navigation system, the inevitable result of which is to increase the costs of opera- 

 tion to the disadvantage of American maritime enterprise. 



No one contends or believes that it is not desirable to have American vessels fully 

 manned by competent crews and to have American seamen enjoy the best possible conditions 

 of life and service, and receive in wages due and ample return for their labor. But it is 

 perfectly obvious that provisions of law which require American vessels to maintain larger 

 crews, and to pay them higher wages than is the case with foreign vessels, necessarily sub- 

 ject such American vessels to a disadvantage which renders it difficult if not impossible for 

 them to continue in operation against the competition of foreign vessels which can operate 

 at lesser costs. 



Your Committee again draws attention to the vital necessity of an early and thorough- 

 going revision of the American navigation system which shall strip it of its present inequali- 

 ties and injustices if the merchant fleet now in process of creation as a war emergency is to 

 be retained in operation under the American flag. Attention is again called to the fact that 

 the law creating the United States Shipping Board directed the Board to conduct an examin- 

 ation into comparative costs of construction at home and abroad; an examination into sys- 

 tems of classification at home and abroad ; an examination into the question of marine insur- 

 ance ; and an examination of the American navigation system, with a view to submitting 

 recommendations to Congress covering its amendment, revision and improvement. 



