Under the impulse of the merchant marine act of 1928 the transfer to
private enterprise of the Government-owned steamship lines is going forward
with increasing success. The Shipping Board now operates about 18 lines,
which is less than half the number originally established, and the estimate
of expenditures for the coming fiscal year is based upon reduction in
losses on Government lines by approximately one-half. Construction loans
have been made to the amount of approximately $75,000,000 out of the
revolving fund authorized by Congress and have furnished an additional aid
to American shipping and further stimulated the building of vessels in
American yards.
Desirous of securing the full values to the Nation of the great effort to
develop our merchant marine by the merchant marine act soon after the
inauguration of the present administration, I appointed an
interdepartmental committee, consisting of the Secretary of Commerce, as
chairman, the Secretary of the Navy, the Postmaster General, and the
chairman of the Shipping Board, to make a survey of the policies being
pursued under the act of 1928 in respect of mail contracts; to inquire into
its workings and to advise the Postmaster General in the administration of
the act.
In particular it seemed to me necessary to determine if the result of the
contracts already let would assure the purpose expressed in the act, "to
further develop an American merchant marine, to assure its permanence in
the transportation of the foreign trade of the United States, and for other
purposes," and to develop a coordinated policy by which these purposes may
be translated into actualities.
In review of the mail contracts already awarded it was found that they
aggregated 25 separate awards imposing a governmental obligation of a
little over $12,000,000 per annum. Provision had been imposed in five of
the contracts for construction of new vessels with which to replace and
expand services. These requirements come to a total of 12 vessels in the
10-year period, aggregating 122,000 tons. Some other conditions in the
contracts had not worked out satisfactorily.
That study has now been substantially completed and the committee has
advised the desirability and the necessity of securing much larger
undertakings as to service and new construction in future contracts. The
committee at this time is recommending the advertising of 14 additional
routes, making substantial requirements for the construction of new vessels
during the life of each contract recommended. A total of 40 new vessels
will be required under the contracts proposed, about half of which will be
required to be built during the next three years. The capital cost of this
new construction will be approximately $250,000,000, involving
approximately 460,000 gross tons. Should bidders be found who will make
these undertakings, it will be necessary to recommend to Congress an
increase in the authorized expenditure by the Post Office of about
$5,500,000 annually. It will be most advantageous to grant such an
authority.
A conflict as to the administration of the act has arisen in the contention
of persons who have purchased Shipping Board vessels that they are entitled
to mail contracts irrespective of whether they are the lowest bidder, the
Post Office, on the other hand, being required by law to let contracts in
that manner. It is urgent that Congress should clarify this situation.