Statement by the President Upon Signing Bill Amending the Merchant Marine Act.

I HAVE signed S. 241, a bill which amends the Merchant Marine Act of 1936 and which has come to be known popularly as the "long-range shipping bill." In taking this action, I want to correct two mistaken impressions which have grown up concerning the bill in the course of its consideration by the Congress over the past several years.

In the first place, this bill is not a long-range shipping bill. It fails to develop a long-range basis for the future relationships between the Government and the maritime industry in the United States. Second, while the bill contains a number of constructive and workable provisions which will be immediately useful, it does not represent the balanced and thorough going adjustment of the 1936 act which is needed to meet present conditions in the maritime industry.

There are also two specific matters upon which I wish to comment with respect to this measure. In a very real sense the bill establishes a new national policy governing the assistance afforded by the Government to ship operators in the construction of vessels. Under the 1936 act, construction subsidy was available only for vessels operating on essential trade routes. The new policy apparently will be to permit the Government to extend assistance on construction to any vessels engaged in foreign trade and regardless of whether used on an essential trade route. The bill purports to establish standards which will prevent either abuse of this provision or its use in a manner which is not wholly consistent with national responsibilities to the shipping industry.

I do not believe that the standards incorporated in S. 241 with respect to the new construction subsidy policy are as clear and as meaningful as their proponents have contended. If the Maritime Board and the Secretary of Commerce find that the legislation does not provide them with ample authority for the exercise of executive discretion to grant only such construction assistance as is clearly in the national interest, I am sure that they will report the fact promptly. It will then be up to the Congress to deal with this problem.

The other matter which I should like to mention specifically is my regret that final action on this bill, which was taken in the closing days of the Congress, resulted in a failure to deal in any constructive way with the tax issues now existing in the maritime field. On many occasions I have expressed my opposition to the principle of using tax advantages as a permanent means of extending Government assistance to individual industries. In the maritime field, because of the provisions of the 1936 act and the changes which have taken place in our tax laws since 1936, the tax benefits now accruing to the maritime industry are far greater than those originally contemplated. In my judgment, they are also completely out of focus with the principles which underlay the original incorporation of certain tax benefits in the 1936 act.

I regret very much the failure of the Congress to deal with this tax issue, particularly in view of the fact that the Departments of the Treasury and Commerce, at my request and with my concurrence, made available to the Congress extensive information dealing with the tax problem.

The conference committee indicated its desire to give this issue further study and its desire to have the affected departments prepare further tax studies for its use. I have been assured by the Chairman of the House Committee on the Merchant Marine and the Chairman of the subcommittee of the Senate Interstate and foreign Commerce Committee which handled this bill that neither Committee will allow the tax issue to go long unconsidered and that legislation dealing with the tax issues will be taken up when the Congress reconvenes.

In order to assure that there will be no failure on the part of the executive branch, I shall direct both the Secretary of the Treasury and the Secretary of Commerce to revise and to bring up to date their studies of maritime tax benefits and to present recommendations to the Congress to provide a basis at least for reducing, and preferably for eliminating altogether, the use of tax benefits as a substitute for whatever amount of direct assistance the Federal Government should undertake to provide to keep our merchant marine strong, economically healthy, and adaptable to the needs of our defense and commerce.