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revealed that American officers are greatly encouraged by this law, for thes feel that at last Congress understands their problem and has provided a real solution for them.

There is attached herewith copy of an article that was published in the October 1937 issue of the Marine News, of 26 Water Street, New York City. This deals with the personnel features of the Merchant Marine Act, together with a complete explanation and analysis of the military features of this law. Respectfully submitted.



By Capt. Paul Joiner Williams

The United States Navy is outstanding as one of the strongest and most efficient fighting units ever developed and maintained by any nation. Its duty, in time of war, is to engage in offensive and defensive warfare and to protect the thousands of miles of our territory along the Atlantic, Gulf, and Pacific coasts and our insular possessions, as well as guarding the right of our nationals abroad. To adequately fulfill its purposes, the Navy must be backed by a strong reserve of naval auxiliaries manned by a highly skilled and efficient personnel. Upon the American shipping industry falls the obligation of building and maintaining a merchant marine which can instantly be converted in time of need into an efficient auxiliary of the Navy and its fleets of fighting ships.

The decline of our merchant marine in recent years crippled its effectiveness as a naval auxiliary and endangered our entire national defense program. By February 1936, conditions had reached a point where definite action had to be taken. Congress recognized this fact and set about to provide a merchant marine law which would give America an adequate fleet of naval auxiliary ships which would be manned by a Reserve personnel capable of immediate transformation to active naval duty. As a result of congressional efforts, we have the Merchant Marine Act of 1936, providing ample authority for the building up of our Naval Reserve by the United States Maritime Commission which was created by this act to administer our merchant marine law and see to it that the fundamentals of law were carried out according to the mandates included therein by Congress.

An analysis of the law reveals that Congress recognized the necessity for building new ships for naval auxiliaries and, in addition, provided that ample and just consideration be given the men who serve on our ships. The law contains many provisions never before written in any maritime laws. Many have been subjected to severe and unjust criticism from those who failed to recognize the importance of our Merchant Marine Naval Reserve. Unjust criticism of the national defense features of this law shows a lack of understanding of the problems confronting our ships' officers of today, who are our naval officers of tomorrow. The law itself is ample proof that the authors, in the United States Senate, possessed a keen understanding of the problems confronting our merchant marine and the vital importance of the “human element" to our Naval Reserve Force. The ultimate results will prove the wisdom of those who recognized a national necessity and provided the legislative authority to build a Merchant Marine Naval Reserve second to none.

The importance of the Merchant Marine Naval Reserve is clearly defined in title 14-Declaration of policy:

“It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine (a) sufficient to carry its domestic water-borne commerce and a substantial portion of the water-borne export and import foreign commerce of the United States and to provide shipping service on all routes essential for maintaining the flow of such domestic and foreign water-borne commerce at all times, (b) capable of serving as a naval and military auxiliary in time of war or national emer. gency

The declaration of policy is a clear mandate that the merchant marine shall he of sufficient size to fulfill our commerce needs and so designed that it shall be capable for service in time of national emergency. The Merchant Marine Arts of 1916–20 and 1928 all recognized this necessity, but the history of our merchant marine since the war is such as to leave a grave doubt concerning its effectiveness as a naval auxiliary. Few ships have been built in proportion to our needs, and internal strife and dissension has split the unity and close harmony so necessary between the men on the ships and their employers. The Merchant Marine Act of 1936 goes beyond other acts, since it recognizes the personnel who man our ships, and in so doing, seeks to provide a sound solution to the problem by laying down certain provisions which deal specifically with officers and men.


"The Commission is authorized and directed to investigate the employment and wage conditions in ocean-going shipping and, after making such investigation and after appropriate hearings, to incorporate in the contracts authorized under titles 6 and 7 of this Act minimum-manning scales and minimum-wage scales and reasonable working conditions for all officers and crews employed on all types of vessels receiving an operating-differential subsidy. After such minimum-manning and wage scales and working conditions shall have been adopted by the Commission, no change shall be made therein by the Commission except upon formal complaint, public notice of the hearing to be had on such complaint, and a hearing by the Commission of all interested parties, under such rules as the Commission shall prescribe. Every contractor receiving an operating-differential subsidy shall post and keep posted in a conspicuous place on each such vessel operated by such contractor a printed copy of the minimummanning and wage scales and working conditions prescribed by his contract and applicable to such véssel: Provided, however, That any increase in the operating expenses of the subsidized vessel occasioned by any change in the wage, manning scales, and working conditions as provided in this section shall be added to the operating-differential subsidy previously authorized for the vessel.”

The importance of this provision lies in the fact that although minimummanning scales have always been in force under our navigation laws, yet the minimum wage and reasonable working condition features of the law represent a progressive step in building up a strong morale amongst the men, which constitutes an important element of a strong Naval Reserve.

"Every contract executed under authority of titles 6–7 of this Act shall require

"Insofar as is practicable, officers' living quarters shall be kept separate and apart from those furnished for members of the crew.”

In naval service there is a severe line of distinction between the officers and enlisted men, and it is important to our Naval Reserve that this be carried into our merchant marine.

"Licensed officers and unlicensed members of the crew shall be entitled to make complaints or recommendations to the Commission, Coast Guard, or Department of Labor, providing they file such complaint or recommendation with their inmediate superior, who shall be required to forward such complaint or recommendation with his remarks to the Commission, Coast Guard, or Department of Labor."

This provision is a continuation of a military policy which has proven its value. No man should be denied the right of making a justifiable complaint or recommendation, because many constructive policies for benefit of the Naval Reserve may be the result of this provision.

“Licensed officers who are members of the Naval Reserve Corps shall wear on their uniforms such special distinguishing insignia as may be approved by the Secretary of the Navy; officers being those men serving under licenses issued by the Bureau of Navigation and Steamboat Inspection."

In naval service there exists no confusion of uniform identification between officers and enlisted men. In merchant service, experience has proven this confusion did exist and the law now specifically designates that the deck and engineer officers are the sole officers on a merchant vessel. The special-uniform identification is a departure from the policy of the past wherein any vessel carrying a certain percentage of Reserve officers was permitted to fly the Reserve flag, but no means existed whereby the layman or passenger could instantly pick out the Reserve officers. The restoration of confidence of the American people in the merchant marine is dependent upon the ability of the United States Navy to build up and support its Reserve in merchant service.

"The uniform stripes, decoration, or other insignia shall be of gold braid or woven gold or silver material to be worn by officers, and no member of the ship's crew other than licensed officers shall be allowed to wear any uniform with such officer's identifying insignia."

This provision effectively eliminates confusion of uniforms worn by officers and nonofficers in merchant service and is a continuation of a strict and well-founded naval policy.

"No discrimination shall be practiced against licensed officers, who are otherwise qualified, because of their failure to qualify as members of the Naval Reserve Corps."

This provision, though seemingly apart from our Naval Reserve, is actually a strong factor, since it does not deprive the junior officers in the Naval Reserve the knowledge and experience of their seniors, who, by reason of age or some physical defect, are in eligible for membership in the Naval Reserve Corps.

"Licensed officers shall take their meals in the main dining salon of the vessel, and no other place, during regular meal hours, except in cases of emergency."

Of all the provisions of this law this has been most bitterly attacked. From a naval point of view, officers do not eat with enlisted men; and Merchant Marine Reserve officers must be placed on a high standard of living so that they may conduct themselves at all times as officers and gentlemen, and thus command the respect of those under whom they serve, of the men that serve under them, and if engaged in passenger service, of the passengers whose responsibility they carry during the voyage.

In the final analysis, careful consideration of the above provisions reveals a very human understanding of the problems existant on merchant vessels with respect to living and working conditions. They clearly define the status of the officers as distinguished from the crew and recognize the necessity of placing those officers on a plane where they will be recognized in their official capacity. When combined, these provisions will develop a type of ships' officer who not only will command the respect of the passengers, crew, and his brother officers but who will be that type of ships' officer who is efficient in the performance of his duties and greatly desired by the United States Navy.

Section 302 (a), is that provision which places 100 percent American citizens on cargo vessels and 90 percent American citizens on passenger vessels. We cannot build up a Naval Reserve for the enlisted men if foreign seamen continued to serve in great numbers on American vessels. Americanization of the merchant marine is the backbone of a strong enlisted men's Naval Reserve Force which will serve with the Reserve officers on these vessels in time of national emergency.

“All of the deck and engineer officers employed on vessels on which an operating-differential subsidy is paid under authority of title 6, or employed on the Commission's vessels, after one year after the passage of this Act, shall, if eligible, be members of the United States Naval Reserve."

This provision puts it up to the officers on the ships. If an officer who serves on any vessel under subsidy and receives the benefits thereto does not think enough of his country to become a member of the Naval Reserve, then he should get off and make way for a man who accepts his moral obligation that we all carry to our country and our flag. It is hoped that the act will be amended so that this provision will apply to ships' crews as well.


Under authority of this act, the Maritime Commission can loan money to private industry for ship construction or, in the event that private industry cannot finance necessary ship construction, then the Commission is authorized to build and charter ships to private operators, or operate the ships for its own account. We need at least 350 new ships to replace our present obsolete fleets. Every one of these ships should and must be suitable for naval auxiliaries.

Since the passage of the act, in June 1936, there has existed a continuous argument throughout the entire industry that the law actually will bring about Government ownership and Government operation of our merchant marine, that private industry will be driven out of American-flag shipping entirely, and services now maintained by American-flag vessels will eventually give way to foreign competition. There is much to be said on either side, but the fact remains that the law carries a clear mandate to the Maritime Commission to build new ships that will be

“Capable of serving as a naval and military auxiliary in time of war or national emergency.”

From a naval and national defense standpoint, we can expect a whole new fleet of naval auxiliaries in our merchant marine and in the not too far distant future, every vessel in our foreign, intercoastal, and extensive coastwist trade will be a Naval Reserve vessel designed and marked for special service in time of war.

Examination of the law reveals that the Maritime Commission is authorized to build ships and no restrictions exist as to what kind of ship they can build as long as they can operate in commercial services. Furthermore, the Commission is authorized to charter ships for operation with no restrictions as to who (other than American citizens) they may charter to. Under this law, the Maritime Commission can build high-speed tankers, refrigerator ships, supply ships, commerce raiders, and other vessels which actively participate in naval operations in time of war or national emergency. The strength of our naval auxiliaries depends entirely upon the Maritime Commission to build ships.


Under title 5–Construction differential subsidy, in addition to the foreign construction differential features of the law which relieves the shipowner of excess American costs we find, under section 501 (b):

“The Commission shall submit the plans and specifications for the proposed vessel to the Navy Department for examination thereof and suggestions for such changes therein as may be deemed necessary or proper in order that such vessel shall be suitable for economical and speedy conversion into a naval or military auxiliary, or otherwise suitable for the use of the United States Government in time of war or national emergency. If the Secretary of the Navy approves such plans and specifications as submitted, or as modified, in accordance with the provisions of this subsection, he shall certify such approval to the Commission."

This provision existed in previous merchant-marine laws; but unlike its predecessors, the Merchant Marine Act of 1936 takes exception to the nationaldefense-features costs included in merchant-marine construction. It eliminates that cost as a fixed charge on the capital investment of the ship owner, for under section 502 (b), is found :

"The amount of the reduction in selling price which is herein termed the 'construction differential subsidy' may equal, but not exceed, the excess of the bid of the shipbuilder constructing the proposed vessel (excluding the cost of any features incorporated in the vessel for national-defense uses, which shall be paid by the Commission in addition to the subsidy) over the fair and reasonable estimate of cost, as determined by the Commission

It is a fair assumption that, prior to this act, many vessels constructed could have had many military features of distinct advantage for naval purposes, except however, the excess costs over and above the commercial investment would have absorbed a part of or all of the profits of operation. By comparison, we have the following example:

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Under the provisions of this act, it is now possible to incorporate in merchantvessel construction many very desirable and necessary features for naval auxil. iaries without burdening the American shipping industry with excess military costs which are a nonpaying investment for private capital. If the Maritime Commission, in its recently announced $500,000,000 shipbuilding program, would allow 10 percent for excess military features costs, it would amount to $50,000,000 spread over a period of a minimum of 5 years, or an annual expenditure by the Government of $10,000,000 per year for our raval auxiliaries. This represents 2 percent of the naval appropriation bill passed by Congress in 1936 and 2 percent of the same bill passed by Congress in 1937. Considering the importance of the merchant marine to the Navy, it is a very small investment in a highly important part of our national-defense program.

32437–38—pt. 9- -5


NAVAL SUPERVISION OVER MERCHANT VESSELS Under title 6 of the act there is a very significant provision which, in effect, gives the Navy Department unlimited authority and supervision over the vessels operating under benefit of subsidy contracts. It is :

“An operating differential subsidy shall not be paid under authority of this title on account of the operation of any vessel which does not meet the following requirements: (1) the vessel shall be of steel or other acceptable metal, shall be propelled by steam or motor, shall be as nearly fireproof as practicable (2) if the vessel shall be constructed after the passage of this Act it shall be either a vessel constructed according to the plans and specifications approved by the Commission and the Secretary of the Navy, with particular reference to economical conversion into an auxiliary naval vessel, or a vessel approved by the Commission and the Navy Department as otherwise useful to the United States in time of national emergency."

This provision actually gives the Navy Department complete jurisdiction over vessels constructed for operation under subsidy contracts. Vessels constructed according to the Bureau of Navigation specifications may not be suitable as naval auxiliaries and yet conform to commercial standards. Section 610 clearly states that such vessels will not receive any Government aid until such time as they are approved by the Navy Department, whose authority is unlimited and extends beyond commercial standards maintained by the Bureau of Navigation. American vessels are as safe as any vessels in the world, but experience has proven the necessity of this naval supervision which heretofore has never been granted in our merchant marine laws.

A comprehensive review of world affairs is convincing evidence of the necessity of a strong Naval Reserve in the American merchant marine. The act of 1936 provides ample authority to the Maritime Commission and the Navy Department to build up this Merchant Marine Naval Reserve. Congress created the Maritime Commission and gave them authority to "go ahead with the program.”

The appointment of Admirals Land and Wiley to the Maritime Commission is ample proof of the necessity for building a strong Merchant Marine Naval Reserve of both ships and men. The Maritime Commission, consisting of Chairman Kennedy and Commissioners Land, Wiley, Moran, and Woodward is a well-balanced Commission both from a naval and commercial point of view, and the result of their efforts in giving a sound and just administration of the law, in conjunction with the Navy Department, will be one of a Merchant Marine Naval Reserve second to none.-The Marine News.


(By Captain Paul Joiner Williams) The Merchant Marine Act of 1936 is designed to place American shipowners on a parity with their foreign competitors, and in establishing such parity the United States Maritime Commission is authorized and directed, under section 502 (b), to grant a construction-differential subsidy to the shipowner. Section 502 (b), is as follows:

"The amount of reduction in selling price which is herein termed the 'construction-differential subsidy' may equal, but not exceed, the excess of the bial of the shipbuilder constructing the proposed vessel (excluding the cost of any features incorporated in the vessel for national-defense uses, which shall be paid hy the Commission in addition to the subsidy), over the fair and reasonable estimate of cost, as determined by the Commission, of the construction of the proposed vessel if it were constructed under like plans and specifications (excluding national-defense features as above provided) in a principal foreign shipbuilding which is availed of by the principal foreign competitors in the service in which the vessel is to be operated, and which is deemed by the Commission to furnish a fair and representative example for the determination of the estimated cost of construction in foreign countries of vessels of the type proposed to be constructed: Provided, That the construction differential approved by the Commission shall not exceed 3313 percent of the construction cost of the vessel paid by the Commission (excluding the cost of the national-defense features as above provided), except in cases where the Commission possesses conclusive evidence that the actual differential is greater than the percentage, in which cases the Commission may approve an allowance not to exceed 50 percent of such cost, upon the affirmative vote of four members, except as otherwise provided in subsection 201 (a)."

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