As the United States faced the possibility of entering World War I, one of its most pressing needs was to transport personnel, war materiel, and supplies to the battlegrounds of Europe. Cross-Atlantic transport was in short supply, as the United States had an underdeveloped shipping fleet. To bolster the creation of a strong merchant marine, the Congress created the United States Shipping Board with the Shipping Act of 1916. The board was empowered to operate shipping vessels as the Emergency Fleet Corporation. During the war, the U. S. Shipping Board contracted with private firms to build approximately 18 million tons of shipping vessels. Only about three million tons were built during the war. The government canceled 4.5 million tons of the contracts, and the remaining ships, weighing 10.5 million tons, were completed after the war. With their completion, the government was faced with a major dilemma.
The existence of a new, but outmoded, federal merchant marine fleet presented two problems. First, in the war’s aftermath, few supported the idea of a government-owned shipping fleet. Second, the ships built during the war were of an obsolete design, and many of them deteriorated at their docks. In June 1920, noting the state of the merchant marine, Congress passed the Jones Merchant Marine Act, which increased the Shipping Board to seven members and assigned them the task of decommissioning the wartime fleet. During his presidential campaign, Republican Warren G. Harding had made the merchant marine a central issue. Once elected president, he appointed Albert Lasker, an advertising executive, head of the Shipping Board. Lasker’s charge was to sell or dismantle the wartime fleet, find a way to subsidize private shippers to build new vessels, and strengthen the merchant marine. A highly competent businessman with many successes to his credit, Lasker promised to relieve the country of its unwanted ships and modernize the merchant fleet.
Over the next two years, the task proved to be far more difficult than originally thought. The Shipping Board found few takers for the rapidly deteriorating fleet, even at rock-bottom prices. In 1921, the Shipping Board had 1,109 steel vessels in operation, with 520 in dry dock. It was operating at a deficit. There also were charges of graft, corruption, and incompetence. Lasker made little headway against these overwhelming problems. While he off-loaded some vessels, he was less successful in eliminating the board’s chronic deficits. With a budget of $3.5 billion appropriated, it still fell behind about $150 million a year.
To deal with these problems, the Shipping Board proposed a twofold program. First, the Shipping Board would sell the government’s entire merchant fleet, if only for scrap; second, it sought to substitute for government ownership a direct subsidy program for the merchant marine. The cost of the subsidies would be an estimated $30 million a year, a tremendous savings for the government. In addition, the board proposed creating a merchant marine naval reserve of 500 officers and 30,000 men and an army transport service. The bill failed to pass Congress in 1923. In the face of mounting problems, Lasker resigned as head of the Shipping Board.
By the end of 1927, the United States Shipping Board still owned 823 ships. Deficits continued to rise in maintaining the deteriorating fleet. Lasker’s successor was able to dismantle the fleet only by selling the majority of the ships as scrap material. The problem of how to sustain a strong merchant marine was solved only when government subsidies became a permanent fixture through the Merchant Marine Act of 1936.
Further reading: Robert K. Murray, The Harding Era: Warren G. Harding and His Administration (Minneapolis: University of Minnesota Press, 1969).
World History
