Merchant Marine Act of 1920

Michael McClintock

The President of the United States has just been briefed by the national security advisor on a critical situation developing overseas. A close ally of the United States has come under attack from a hostile nation, and the president has decided to immediately deploy U.S. military forces to assist the defense of our ally. To whom will the president turn to in order to get the majority of U.S. military personnel, equipment, and weapons overseas? The answer is not the Army, Navy, Air Force, or Marines. Rather, the job of transporting our military forces and equipment in such a scenario is the job of the U.S. Merchant Marine.

The U.S. Merchant Marine is the fleet of civilian owned and crewed ships carrying imports and exports during peacetime, which becomes a naval auxiliary during wartime to deliver troops and war material. The Merchant Marine, as a cohesive and distinct arm of U.S. commerce and defense, began during the Revolutionary War and was then known as the Colonial Merchant Marine. The best known captain in the Colonial Merchant Marine was John Paul Jones, who committed his private merchant fleet to the development of the United States Navy. The Merchant Marine Act of 1920 is commonly referred to as the "Jones Act," named after the legislation's sponsor, Senator Wesly L. Jones of Washington, though it is a common misconception the act is named after Captain John Paul Jones.

At the turn of the nineteenth century the United States had completed a period of continental development and overcome the turmoil of the Civil War. By the dawn of the next century, the need for a strong and viable modern merchant fleet had become a political priority, driven by several factors. One consideration was the ascension of Britain as a world power, based in great part on its merchant fleet, control of the world's shipping lanes, and its steadfast adherence to a national maritime philosophy embodied in the quote by Sir Walter Raleigh, as "Whosoever commands the sea commands trade; whosoever commands the trade of the world commands the riches of the world, and consequently the world itself." Another important factor was America's need for a large sea lift capability in time of defense, realized during World War I. Lastly, the most important maritime development in this period was the converson of ships from coal to oilburning, made possible through the development of a process to refine petroleum. Before World War I approximately only one percent of the world's merchant and naval vessels burned oil for fuel. By the end of 1918 the number of oil burning ships had risen to nearly 15 percent and continued to climb until coal-burning ships had become totally obsolete by the commencement of World War II.

At this same time, however, the volume of cargo and international trade for the U.S. merchant fleet had drastically decreased due to the economic decline and global turmoil caused by World War I. Further complicating the ability of the U.S. merchant fleet to compete in international commerce were higher construction and operation costs. For example, in 1926 the comparative monthly crew costs for ships of equal size were: $3,270 for the United States; $1,308 for Great Britain; and $777 for Japan. Historically, the United States curbed the impact of such issues through "cabotage laws," which are government measures used to protect or foster a domestic shipping industry by reserving all or a portion of international sea commerce to ships which fly the national flag.

Cabotage laws were first introduced with the Shipping Act of 1916. The Shipping Act provided, among other things, that only citizens of the United States, or companies in which a controlling interest was held by a citizen of the United States, could own a U.S. vessel. Additionally, the secretary of transportation had strict control over the transfer and chartering of U.S. vessels to foreign companies, and the Shipping Act provided for the regulation of rate agreements to avoid rate wars.

Subsequently, Congress passed the Merchant Marine Act of 1920, which was arguably the nation's most important cabotage law. At the time the Merchant Marine Act was passed into law, the act represented both the commitment of the United States to maintaining a strong and viable merchant fleet for commerce and defense, and its awareness that its merchant fleet could not profitably operate in unregulated competition. The opening paragraph of the act, entitled "Purpose and Policy of the United States," summarized this commitment:

It is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States; and it is the declared policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine.

The Merchant Marine Act provided many measures to protect and foster the U.S. Merchant Marine. Most important, the act restricted the transport of goods from points within the United States to vessels constructed and registered in the United States and owned by U.S. citizens or companies. In this regard, the act further provided that any vessel lawfully engaging in the coastwise "Jones Act" trade must never have been foreign-owned at any time and never registered under a foreign flag or rebuilt abroad. Any cargo shipped in violation of the Jones Act is subject to seizure and forfeiture to the U.S. government.

The U.S. merchant fleet, however, continued to be plagued by its inability to compete in unregulated international commerce despite the passage of the Merchant Marine Act of 1920. The U.S. merchant fleet has declined steadily since the end of World War II and, from 1947 to 1999, the U.S. merchant fleet fell from approximately 4,400 vessels to less than 500 vessels. Numerous reasons are thought to have contributed to the decline, including lower standards of health, welfare, and safety for foreign merchant mariners leading to lower operating costs; discrimination by foreign countries against U.S. merchant vessels engaged in international trade; tax advantages of operating foreign-registered vessels; aggressive labor unions in the United States; and the decline of the nation's steel production industry. It is also important to note that many of the merchant fleets of other countries are highly subsidized by their governments, making it more difficult for the U.S. merchant fleet to compete in international commerce.

In response to the continual decline of the U.S. merchant fleet, Congress passed new legislation to assist the maritime industry, including the Maritime Security Act of 1996. Pursuant to this act, the government acquired and has been maintaining a fleet of merchant ships, known as the "Ready Reserve Fleet" (RRF) to ensure that there are sufficient U.S. merchant vessels to support military operations worldwide. Further, the United States continues to fund and operate the U.S. Merchant Marine Academy in Kings Point, New York, a four-year military academy vital to providing properly trained officers and executives for the transportation industry.

See also: SHIPPING ACTS.