Remarks in Seattle, Washington: "Restoring the U.S. to the Role of a First-Rate Maritime Power"

Toward a Revitalized Merchant Marine

The maritime industry of the United States has been permitted to decline to a point at which the nation's defense and economic welfare are imperiled.

The policies of the present Administration have put us on a course toward becoming a second-rate seapower.

Seapower is the ability of a nation to project into the oceans, in times of peace, its economic strength; in times of emergency, its defense mobility.

Seapower is composed of all those elements enabling a nation to use the world ocean advantageously for either trade or defense—its navy, its merchant shipping, its shipbuilding, its fishing, its oceanographic research, and its port facilities.

Even a cursory examination of the United States seapower today makes it clear that our present course has been wrong.

Two-thirds of the Navy's tonnage now afloat was designed during World War II to meet the conditions of that time. The replacement needs of the United States Navy are so great that last year the Secretary of the Navy stated that the Navy needs to build a ship each week for the next 10 years just to keep up.

Our fishing fleet is composed of some 13,000 vessels, most of which are too small and too old for efficient operation. Some 60 percent are more than 20 years old.

Our shipyards have suffered under misguided federal policies which have given them no incentive to increase productivity, to adequately update plant facilities or to introduce new technology.

In oceanographic sciences we have only begun to pierce the surface.

Almost every day a ship leaves the Soviet Port of Odessa with cargoes for North Vietnam. An estimated 80 percent of the materials used by the enemy in Vietnam arrives in Soviet merchant ships. More than 97 percent of all supplies used by the Allied troops in South Vietnam also moves by water, most of it aboard old ships flying the U.S. flag but which are no match for the modern Soviet merchantmen.

Two-thirds of our merchant ships are beyond their economically useful age. By contrast, half the Soviet fleet is less than 5 years old.

The Soviets are adding at the rate of 100 ships or about 1 million tons per year to their existing 1,500 ship fleet.

By contrast, the United States now has an active privately-owned merchant marine of fewer than 1,000 American flagships. We are producing less than 15 ships a year, and we have built only some 300 American flag merchantmen since the end of World War II. In less than a decade, erosion will reduce our fleet to one-third of its present inadequate size unless change is forthcoming.

In the early 1970's the Soviet Union not only will surpass us in number of ships but also in the quantity of goods they can transport on these ships.

They would not hesitate to use this growing economic power as part of their global strategy. At this very moment, the Soviets have created a rate war to undercut the British on the route from Australia to the United Kingdom and Europe.

Apart from its absolute size, our merchant fleet is dramatically unbalanced. The most glaring deficiency is in the dry bulk carrying segment, which is woefully inadequate in lift capability in spite of the vast export and import trade of this country in commodities of this type—imports of raw materials on which this nation's productive capacity depends—exports of farm products that feed the hungry of friendly nations.

In the face of these conditions, there is today in the executive branch of our government a shocking de-emphasis of our national maritime efforts. Continuation of such a lack of interest could only result in making the United States a second-class seapower during the 1970's and beyond.

If we permit this decay to continue we will find that we have abdicated our maritime position to none other than the Soviet Union. Even now their modern merchant fleet ranks sixth in the world—just one place behind our own much older fleet.

In 1965, the present Administration promised to recommend a new policy for our merchant marine.

But the Administration has failed to present a cohesive program to restore the United States as a maritime power.

The void between promise and action of the past four years has halted maritime progress. Our fleet carryings have declined to record lows, our balance of payments has suffered, vessel obsolescence has multiplied, and our ability to meet our maritime commitments overseas has decreasd alarmingly.

Nuclear merchant vessel propulsion, which offers an encouraging possibility, is ready to be junked by the present Administration—this in spite of the long lead we developed in this field during the Eisenhower years with the Nuclear Ship Savannah.

Only through new and advanced technology can the American merchant marine minimize its competitive disadvantage with other merchant fleets. The same holds true in other components of seapower: naval, oceanography, fishing and port facilities.

Commerce

Only 5.6 percent of the U.S. trade is carried on U.S. flagships. This is the lowest since 1921.

Soviet flagships already carry more than 50 percent of Soviet cargoes; Sweden, 30 percent of her own commerce; Norway, 43 percent; Great Britain, 37 percent; France, 48 percent; and Greece, 53 percent. Japan is carrying 46 percent right now, but Japanese shipping policy has prescribed that by 1975, the Japanese flag merchant marine should carry 60 percent of Japanese exports, and 70 percent of Japanese imports.

These nations have determined that a high degree of reliance on their own shipping resources is important to their own self-interest. We have not.

To state it bluntly, our trade is predominantly in the hands of foreign carriers, some of whom may be our trading competitors. We must have more control over the movement of our own cargoes not only for competitive reasons, but also because of the contributions our ships make to our balance of payments.

The stability of the dollar is vital to the whole free world. Increasing our exports is probably the healthiest method of removing our balance of payments deficit.

Exports of those services as well as goods, therefore, is essential to increase U.S. flag participation in our overseas shipping as part of our export promotion policy.

This cannot be done with our present fleet or under our present maritime policy.

Shipbuilding

Continuing neglect of vessel replacement has led to an antiquated current fleet.

The new Administration's maritime policy will seek a higher level of coordination between naval and merchant shipbuilding.

In that way we can create a climate in which shipbuilding can attract the capital, as well as the stable labor force, needed to make it competitive with foreign yards and to provide an expansion base for national emergencies.

In turn I would expect initiative and cooperation from both industry and labor. Throughout the maritime industry, a new outlook must be encouraged to replace the current divisiveness and short sightedness.

Until such time as American yards can be independently competitive, I recognize that shipbuilding subsidies are necessary to enable shipyards to build ships and deliver them to operators at competitive world prices.

We must set as our goal a sharp increase of the transport of U.S. trade abroad American flagships. The present rate is 5.6 percent; by the midseventies, we must see that rate over 30 percent and the growth accelerating.

I support a building program to accomplish that objective.

In keeping with the traditions of private enterprise, our efforts will be directed toward the creating of a favorable shipbuilding environment through a better use of credit facilities and amortization procedures. The use of long-range government cargo commitments should be explored as a means to stimulate unsubsidized financing of ship construction.

Shipbuilding is not all financing and steel. This is an industry where many of our hard-core unemployed, and those whose jobs are displaced by automation, might be channeled and trained. During World War II, the United States established records for turning out nearly 6,000 merchant ships. Many of the people who participated in achieving these records had been classified as "untrained." This should serve as an example to us today.

Operating Subsidy

Since the Merchant Marine Act of 1936 was passed, we have been living with an operating subsidy system. The system has been aimed primarily at removing the wage-cost disadvantage of the American operators who must pay seamen under U.S. working standards and levels of living.

The subsidy system has had its shortcomings. It has been extended exclusively to liner operators in the foreign trade; it has grown more costly; it has not created a modem merchant fleet even among its recipients nor has it had as a basic ingredient enough reward for increasing efficiency.

I propose, therefore, an immediate re-evaluation of this program, in consultation with industry members and labor representatives, with the goal of providing more incentives for productivity.

The unsubsidized sector of our merchant fleet must be given attention, so that it, too, can replace its deteriorating fleet in the immediate future. Included in this category are those who carry farm products to the underdeveloped nations, and the Great Lakes operators who daily face competition from their government-assisted Canadian counterparts.

Although the Eisenhower Administration provided the United States with a fourth seacoast through the St. Lawrence Seaway, the present Administration has chosen to turn its back on this inland network of water transportation.

Certainly these segments of our merchant marine can be stimulated by tax incentives and cargo assistance. The United States, in turn, can expect them to make a capital commitment in new ships and facilities.

Oceanography

This Administration has paid too little attention to the new opportunities that science and technology can open beneath the surface of the sea.

New leadership will stimulate exploration and scientific study of the ocean depths, bringing to light hidden resources. And, we must never lose sight of the importance of oceanography to our nation's security.

My Administration will make full use of the Marine Resources Engineering and Development Act passed in 1966. That Act established a cabinet-level council and a study commission, which I will ask next year to submit to the new President and to the new Congress recommendations for bringing about a unified effort in the field of marine sciences and engineering.

Food from the Sea

The present Administration also has permitted a deterioration in our seafood industry. Under new leadership we may discover beneath the sea a food supply that will satisfy the growing needs of humanity.

In 1957 the U.S. imported only one-third of all the seafood we consumed. Today that figure has jumped to a startling 71 percent. In 1938 the U.S. ranked second to Japan in the amount of fish it caught. By 1965 the U.S. had slipped to 5th place, passed by Peru, Japan, Communist China and Russia, in that order. During this period, Russia more than tripled her catch, and Japan almost doubled hers, while the U.S. catch remained about the same.

This reflects a failure of our existing federal programs to encourage the fishing industry to modernize fast enough so that it can counter foreign competitors. Meanwhile, Soviet trawler fleets virtually dominate the Grand Banks off our shores. These trawlers have a multiple capacity—fishing and oceanography and electronic snooping.

At the present time, there is not one modern long-range trawler in service in the U.S. fleet. While the fleets of other countries roam the oceans, our fleets too often can only hug the coastlines.

The maritime policy of the new Administration will be to accelerate the technological improvements which we know can be achieved today in our fishing industry to make it competitive world-wide.

Ports

Federal maritime policy must recognize not only how essential the fleet is, but also how essential are the facilities and capabilities to handle the fleet's cargo.

Cooperating with local port authorities, the new Administration will encourage further modernization and development of our existing port facilities to meet the needs of the future.

Summary

All our goals will not be accomplished overnight. Restoring the U.S. to the role of a first-rate maritime power requires the cooperation of management, labor, local port authorities, and government; but the leadership for a national policy can and will come from a new Administration.

To overcome the present maritime crisis, I recognize that we have an opportunity and an obligation to reverse the gross deficiencies that have marked the present Administration's performance in this field.

We shall adopt vigorous research and development programs designed to harness the latest and best technology to the needs of our maritime fleet.

We shall adopt a policy that recognized the role of government in the well-being of an industry so vital to our national defense, and stimulate private enterprise to revitalize the industry.

We shall adopt a policy that will enable American flagships to carry much more American trade at competitive world prices.

The old ways have failed, to the detriment of the seamen, the businessmen, the balance of payments and the national defense.

The time has come for new departures, new solutions and new vitality for American ships and American crews on the high seas of the world.