7

---

The Merchant Marine Act and the Issue of Speed

During the early 1930s, the merchant fleet of the United States had begun to deteriorate rapidly. The majority of ships in use had been built prior to 1920 as part of the large maritime construction program undertaken at the outbreak of World War I and were no longer economically viable. The slump in shipping created by the depression had forced a large number of these vessels to be laid up causing a virtual stoppage of new construction. Over 91 percent of the ships in the U.S. merchant marine were approaching twenty years of age by 1936.¹ Most were obsolete and would not be capable of keeping up with the fleet in wartime should the need arise.

Throughout this period, the navy had continually expressed its concern over the deterioration of the merchant marine and the need to provide suitable vessels that would be able to "fulfill the requirements of naval auxiliary service in the event of war."² In early 1934, the War Plans Division prepared a comprehensive list of the merchant ships required by the navy in the event of a major war.³ Listed were large numbers of passenger ships, cargo vessels, and tankers that would be converted into naval auxiliaries; all were arranged by class and categorized according to speed. As can be seen in table 6, the total number of ships amounted to well over one thousand merchant vessels.⁴ Since few existing vessels were suitable for the navy's needs, war plans proposed a merchant shipbuilding program, which would permit "the constant replacement of existing vessels in the United States Merchant Marine with modern vessels of gradually increasing speed capabilities."⁵

This proposal was included in the annual "Estimate of the Situation" prepared for the chief of naval operations on 31 March 1934.⁶ Admiral Standley had taken an early interest in the merchant marine and was already involved in promoting a merchant shipbuilding program, having written to the director of the National Recovery Administration (NRA) on 19 March in an effort to encourage the establishment

TABLE 6
Merchant Shipping for a Naval War of Maximum Effort

Class	Converted type	No.	Gross tons
Passenger/Passenger-cargo (high speed--above 18 knots)	Cruisers	12	150,000
	Admin. Flagships	2	10,000
	Aircraft Carriers	12	240,000
Passenger/Combination or Three deck cargo (speed 12 to 18 knots)	Transports	132	1,120,000
	Coastal Transports	31	140,000
	Hospital Ships	8	45,000
	Destroyer Tenders	12	75,000
	Submarine Tenders	8	50,000
	Aircraft Tenders	12	88,000
	Mine Layers	3	15,000
	Aircraft Transports	2	15,000
	Ammunition Ships	18	93,000
	Mine Depot Ships	8	30,000
Oil-burning cargo (speed 10 to 12 knots or better)	Cargo (various types)	246	1,254,000
	Animal Transports	50	289,000
	Submarine Rescue	2	10,000
	Repair (various types)	14	92,000
Tankers now in existence (10 to 12 knots)	Oilers	323	2,404,000
	Gasoline Tankers	12	114,000
Tankers, if available (15 to 18 knots)	Oilers--18 knots	14	126,000
	Oilers--15 knots	50	600,000
	Oilers--12 knots	30	360,000
	Gasoline Tankers	12	114,000
Reefers (15 knots or more)	Provision Ships	20	101,000
Coal-burning cargo (10 knots)	Colliers	38	189,000
Special types	Net layers	1	2,600
	Salvage vessels	2	1,800
	Minesweepers	154	43,000
Total		1,022	4,053,400
SOURCE: "Policy in Regard to Merchant Vessels," General Board File 422, RG 80, NA.

of such a program.⁷ This information suggests that it was Standley who initiated the program for the standardization of merchant vessels authorized earlier in the month, although he himself did not conceive the standardization concept. The man behind this idea appears to have been Rear Adm. Hutchenson I. Cone, USN (Ret.). A former chief of the Bureau of Steam Engineering, Admiral Cone had previously served on the shipping board and was instrumental in establishing the first research efforts aimed at creating standard designs for shipping.⁸ He was then chairman of the committee advising the secretary of commerce as to issues concerning the administration and operation of the U.S. Shipping Board Bureau (formerly the U.S. Shipping Board). This arrangement would have placed him in the ideal position to suggest, if not actually author, the comprehensive plan proposed in J. W. Barnett's report of 28 February 1934. Nevertheless, Admiral Standley was obviously the driving force behind the navy's policy to foster and encourage the development of a strong merchant marine

during this period. That the department desired "the continuous addition to the American Merchant Marine of vessels which [were] valuable to both the commerce of the United States and the national defense" can only be attributed to his efforts.⁹

The navy's endeavors to encourage a strong merchant shipbuilding program were partially rewarded with the passage of the Merchant Marine Act of 1936. Signed into law by President Roosevelt on 29 June 1936, the act established the development and maintenance of a strong merchant marine as the declared policy of the United States in accordance with the following statement incorporated into the legislation:

It is necessary for the national defense . . . that the United States shall have a merchant marine . . . capable of serving as a naval and military auxiliary in time of war or national emergency . . . composed of the best equipped, safest, and most suitable types of vessels, constructed in the United States and manned with a trained and efficient citizen personnel.¹⁰

The Merchant Marine Act, which the contemporary press referred to as "The Ship Subsidy Bill," contained provisions for financial assistance to the maritime industry through a series of government subsidies and/or payments including: (1) a construction differential subsidy, (2) an operating-differential subsidy, and (3) the payment of the cost of national defense features incorporated into a vessel.

The operating subsidies to private enterprise were intended to make up for the difference between the costs of American shipping companies and their European competitors. The construction differential was designed to compensate American owners for the higher costs of building ships in American yards. If an American-owned shipping company wanted to purchase a new ship, it could apply for a construction subsidy equal to the difference between the building costs in a U.S. yard versus the costs of building in a foreign yard, provided that the design was approved by the navy. Companies operating passenger ships or freighters could apply for an operating subsidy as long as the route served was deemed essential and the operating company had an acceptable plan for replacing its old ships with modern ones. Because these subsidies replaced the ocean-mail contracts previously awarded by the post office, passage of the bill was opposed by traditional shipping interests and was hotly debated in the Senate. Offered as "the lesser of two evils," the bill was finally passed after an unsuccessful filibuster attempt by four senators failed to defeat it.¹¹

To administer the various provisions of the new act, the law provided for the establishment of the United States Maritime Commission, which was to be composed of five commissioners appointed by the

president. The first three temporary commissioners, Rear Adm. Henry A. Wiley, USN (Ret.), Rear Adm. Montgomery M. Taylor, USN (Ret.), and George Landick, Jr., were appointed by Roosevelt on 23 September 1936 and sworn into office three days later.¹² The commission began formal operations on 26 October when it issued the first of several executive orders establishing its authority over "the functions, powers, and duties" previously administered by the U.S. Shipping Board, the Merchant Fleet Corporation, and the Department of Commerce.¹³

As one of its duties, the maritime commission was charged with the establishment of a "long range building program" set forth as follows:

It shall be the duty of the Commission to make a survey of the American merchant marine, as it now exists, to determine what additions and replacements are required to carry forward the national policy declared in section 101 of this Act, and the Commission is directed to study, perfect, and adopt a long-range program for replacements and additions to the American merchant marine.¹⁴

The commission was directed to cooperate closely with the navy in designing ships that could "be readily and quickly convertible into transport and supply vessels in time of emergency."¹⁵ Plans and specifications for all vessels that were to be built with the financial assistance of the government were to be submitted to the Navy Department and approved by the secretary of the navy before construction could be authorized.¹⁶

The Issue of Speed as a National Defense Feature

The Bureau of Construction and Repair continued to develop plans for the fleet oiler, which was planned for the proposed auxiliary building program of 1937. Since the bureau did not have any recent design experience with this type of vessel--the bureau had not designed an oiler since the Kanawha class of 1915--Admiral Land thought it prudent to request details of the latest design developments being implemented within the maritime community. A leading active member of the Society of Naval and Marine Engineers (SNAME), Land knew of the many changes that had taken place in tanker design during the intervening years. During the spring and fall of 1936, he judiciously contacted a number of shipbuilders and commercial operators of tank ships requesting the latest information on "the design and development of bulk oil carriers" thereby insuring "that the design of the new navy tanker [would] embody the latest and best of these new developments."¹⁷

On 30 October, Admiral Land wrote the Standard Oil Company of New Jersey to request copies of the specifications and the general arrangement for their latest tanker.¹⁸ Standard Oil was then in the midst of a large building program for new tankers having just completed two

such vessels, with eight more on the ways.¹⁹ Land addressed his letter to Robert L. Hague, general manager of the Marine Department at Standard Oil. Hague had worked for the shipping board during World War I and was a commissioned officer in the Naval Reserve. He had been appointed director of construction and repairs on the Pacific coast at the beginning of the World War I. Later he was transferred to Washington, D.C., and placed in charge of repairs to all shipping board vessels. Hague joined Standard Oil of New Jersey when the war ended and was soon appointed manager of its marine department.²⁰

Both men were prominent members of SNAME at the time of Land's letter. Whether or not they were close friends is unknown. Since no earlier communications between them have been uncovered, one can only speculate as to the exact nature of the discussions that transpired between the two.

Hague had already expressed an interest in building 18-knot tankers, however, having previously requested an opinion on the legality of obtaining a subsidy for these vessels under the Merchant Marine Act of 1936 from Ira A. Campbell, general counsel for the American Steamship Owners Association. Campbell responded with a fourteen-page letter to Hague on 28 September 1936.²¹ In Campbell's judgment, the Merchant Marine Act provided the commission with the authority to grant aid in "the construction of high speed tankers as a feature of national defense, by absorbing the cost of the construction incident to the attainment of such speed, provided the Navy Department agrees thereto."²² Hague sent a copy of Campbell's letter to Admiral Standley on 13 October with a short cover letter requesting the opportunity to meet with Standley during the following week for the purpose of discussing the tanker issue.²³ Although there is no record of the meeting, Land's letter of the thirtieth indicates that such a meeting took place, probably with Land in attendance. It is likely they compared notes as to the relative tanker designs then under consideration by both parties. Admiral Land, who was extremely adept at cultivating valuable friendships, would certainly have used the meeting as an opportunity to further his relationship with Bob Hague.

How Hague became interested in, and why he wanted to build, 18-knot tankers is not clear, especially since they would cost more to operate than the new 12-knot ships just entering service with the company. He was probably motivated by a combination of pride and patriotism. At the time, Japan was known to be building two 17¹/2-knot tankers: The Tatekawa Maru and the Nippon Maru. Hague was an extremely influential and important man in the tanker business and it would have been quite natural for him to have wanted "his" ships to be the fastest in the world. Although we don't know very much about his personality, he must have been an ambitious man, for during his tenure as general manager of the Marine Division, Standard Oil's

tanker fleet experienced phenomenal growth. While Hague was in charge, the number of ships in the Standard Oil fleet grew from 85 to 205 and its overall tonnage from 897,000 to 2,150,000 gross registered tons.

Campbell's opinion "anent the construction of 18 knot tankers" made its way to the desk of Commissioner Montgomery Taylor, the former war plans director (see chapter 3). After reviewing Campbell's opinion, Commissioner Taylor wrote the chief of naval operations (addressed to Admiral Standley) requesting information about the speed and general characteristics the navy desired in the various classes of merchant vessels to be built with the aid of the maritime commission.²⁴ Though a temporary appointee, Taylor was genuinely concerned with the added costs of the additional features desired by the navy. "You must remember," he wrote, "that in the consideration of these ships we cannot forget that they are planned for commercial purposes, with a view to their use in national defense, and too great a refinement in their construction, as to compartmentation, speed, etc., may militate seriously against their value for purely commercial purposes."²⁵ From his experience in war plans (the refueling plan was distributed under his signature), Taylor was acutely aware of the navy's dire need for large numbers of merchant tankers in the event of war, but he obviously feared that the added cost burden of the additional features wanted by the navy were likely to discourage commercial operators--a prophecy that was very nearly fulfilled. "If carried too far," Taylor continued, these features "would often lead to a greater first cost of the ship and a greater cost of operation than for a ship designed only with commercial characteristics."²⁶

Taylor's vigor in this regard may have been influenced by the work previously accomplished by the Joint Board for the Standardization of Merchant Vessels. The board had found it so difficult to design vessels suitable for the dual criteria required that it advised the navy to "weigh any inherently desirable naval characteristics [which the navy might deem necessary] against the possible failure of the ship throughout its life to compete successfully with our own and foreign merchant vessels of the same type."²⁷ This information was contained in a memorandum attached to the set of tanker plans distributed by the board just a few months earlier. Commissioner Taylor would have had ready access to these plans since the maritime commission, as successor to the shipping board, had assumed responsibility for continuing the activities of the joint board.

Admiral Standley remained concerned about the lack of merchant ships suitable to the navy for wartime use. He continued to exercise his influence as both acting secretary and chief of naval operations whenever possible to help foster the development of the merchant marine while following closely the progress of the standardization

board. Using his authority as acting secretary, Admiral Standley wrote the secretary of commerce in June strongly urging the Commerce Department to extend the contract of George G. Sharp, the naval architect in charge of developing designs for the standardization program.²⁸Sharp, originally engaged in March 1934, was leaving the shipping board bureau in order to devote more time to his private practice.²⁹Expressing his views on the significance of the standardization program, Standley stated "that the work involved is of great importance, not only to the proper peace time development of the Merchant Marine but [is] also a vital part of the preparation of this country to meet a national emergency."³⁰ The foregoing provides further evidence of Standley's behind-the-scenes effort on behalf of the merchant marine.

After passage of the Merchant Marine Act, a number of owners and/ or operators, including Standard Oil, had expressed an interest in constructing tankers having higher speeds than had been customary in the past. This information made its way to Standley who believed "that the Navy should exert every influence in the direction of higher speed for [the] country's tanker tonnage ... in the future."³¹ Stand-ley's first action was to instruct the Bureau of Construction and Repair and the Bureau of Engineering to cooperate with potential builders by furnishing them engineering data relating to the tanker design studies the navy had already completed. These instructions, issued via memorandum on 14 November 1936, included the following statement concerning the speed intended for the new ships:

If the Navy desires the new vessels to have higher speed than 12 knots (which is the usually accepted economical speed given to these ships for commercial use), it should avail itself of the provisions of the Shipping Act of 1936 to have them constructed for a sustained sea speed of 16-1/2 knots fully loaded, or possibly more.³²

Admiral Standley was convinced of the need to include speed as a national defense feature in any construction program authorized by the maritime commission. He felt strongly that "the United States Government should not give subsidies or pay for national defense features unless the ships were well adapted for use as auxiliaries."³³Nevertheless, Standley realized that the requirement for excess speed might detract sufficiently from the commercial usefulness of these vessels to preclude their construction. If the navy insisted on the need for high speed, none of the merchant ships that it desired might ever be built, thus defeating one of the main purposes of the Merchant Marine Act--the creation of an adequate well-balanced merchant marine. In view of the importance of the need to have commercial vessels suitable for conversion to navy auxiliaries, Standley directed the General Board "to study this question and to recommend the minimum

characteristics that various types of merchant vessels should have in order to be acceptable auxiliaries in time of war."³⁴

Before the General Board could respond to Standley's request, Admiral Land and his counterpart in the Bureau of Engineering, Rear Adm. Harold G. Bowen, issued a joint endorsement outlining the two bureaus' recommendations for merchant tankers.³⁵ Although the document was signed by both men, it appears to have been written primarily by Land with very little input from Bowen.³⁶ The fact that the Bureau of Engineering had not even begun to investigate the engineering requirements of the new tanker indicates something about the way Bowen ran his bureau. It is likely that Bowen, who was then deeply engrossed in the controversial development of very high pressure machinery for destroyers, was not very concerned, nor particularly interested in the machinery requirements of the new oiler. Land, on the other hand, was busy directing the bureau's (C&R) efforts in designing the new fleet oiler intended for inclusion in the auxiliary building program of FY 1938 and had been interested in the design of tankers since the question of their characteristics had first surfaced.

The "Joint Endorsement," like other documents with which he was involved, shows that Land had an uncanny knack for getting to the essence of a problem. In this reply to Standley's original request, Land explained that although preliminary plans were available for a naval tanker of the following dimensions: 520 ft long, 74-ft beam, 30-ft draft, 15,250 tons deadweight, and 16¹/2 knots, "they would not be of any particular value to commercial operators" since a vessel designed "for purely naval use would have many features that would militate against the success of this ship in the commercial field."³⁷ To keep subsidy costs as low as possible, Land recommended "that commercial materials and procedures" be used as far as practicable in order to keep costs as low as possible. Since the normal economical speed of commercial tankers was between 12¹/2 and 13 knots, the bureau was of the opinion that increased speed should be subsidized as a national defense feature. Based on this discussion, the bureau, at Land's direction, suggested that the following characteristics be used as the basis for the design of any commercial tanker subsidized by the maritime commission:

(a) Speed of 16¹/2 knots under normal sea conditions and with normally foul bottom. It is considered that to insure this, power should be provided in an amount 25 percent in excess of the Model Tank requirements for 16¹/2 knots.
(b) Deadweight not less than 10,000 tons.
(c) Two-compartment subdivision.
(d) Machinery and other appliances to be modern, of efficient commercial type, and satisfactory to the Bureau of Engineering.

(e) Trials to be conducted at sea, although not necessarily on the measured mile, such trials to be conducted by the Board of Inspection and Survey.
(f) Other features to be in accordance with good accepted commercial practice.
(g) Stiffening for gun emplacements.
(h) Paravane skeg.
(i) Gyro compass--This item should not necessarily be regarded as an item justifying subsidy.³⁸

Land forwarded this information to Standley on 11 December 1936. Two and one-half months later, on 27 February 1937, the General Board issued a comprehensive report concerning the department's policy with regard to merchant vessels. In contrast to the bureau's endorsement, which could be considered quite controversial in some quarters, the board's recommendations concerning the characteristics that should be incorporated into merchant vessels suitable for conversion to naval auxiliaries was rather noncommittal. After a long and somewhat irrelevant discussion concerning the provisions of the Merchant Marine Act and the history of the Joint Board for the Standardization of Merchant Vessels (including a complete list of all merchant ships prepared by War Plans), the General Board concluded that there were two classes of merchant ships that could be converted to naval auxiliaries: (1) those generally "acceptable to the Navy as auxiliaries in time of war," and (2) a special class of fleet auxiliaries that would be needed "to accompany the Fleet in time of war."³⁹

The board realized that it would be economically impossible to build large numbers of merchant ships with all of the special characteristics needed by the navy. In time of war or national emergency, it would probably be necessary, therefore, to acquire ships with less-desirable features and slower speed. Vessels suitable for conversion into transports and supply ships would only need to have such characteristics as would enable their conversion into readily adaptable naval auxiliaries. Merchant vessels in this category would be "acceptable" to the navy for general use. On the other hand, the navy needed certain auxiliaries capable of accompanying the fleet. These would need to have characteristics, "particularly as to speed, radius [of action] and structural strength, to permit their operation with the Fleet." Included in the board's report was a list of "fleet" auxiliaries needed by the navy along with the speed characteristics by the board for each type (see table 7). For merchant ships to be acceptable to the navy as auxiliaries to accompany the fleet in time of war, the General Board concluded, they would need to have those characteristics, particularly as regards to speed, "which would conform to the military characteristics of the naval auxiliaries into which they would be converted." It recommended that designs for such ships be developed by the Joint Board

TABLE 7
Speed Characteristics for Fleet Auxiliaries

Aircraft tender	18 knots
Patrol plane tenders	18 knots
Small patrol plane tenders	20 knots
Destroyer tenders	16.5 knots
Submarine tenders	16.5 knots
Oilers	16.5 knots
Hospital ships	18 knots
Repair ships	16.5 knots
Ammunition ships	16.5 knots
Provision storeships	16.5 knots
Transports	18 knots
Minesweepers	18 knots
SOURCE: "Policy in Regard to Merchant Vessels," General Board File 422, RG 80, NA.

for the Standardization of Merchant Vessels, but left it up to the secretary of the navy to determine the number of vessels to be built under such designs.

By the summer of 1937, the question of providing aid for the construction of high-speed oil tankers had been the subject of considerable discussion within the maritime commission. The commission's own counsel recommended against providing financial aid for increased speed. It was his opinion that the express provision for the construction of tankers and the payment for excess speed thereof, which had been included in the original drafts of the Merchant Marine Act, but which were subsequently deleted, mitigated against the adoption of such actions.⁴⁰ The Navy Department disagreed.

Several months earlier, the department had assigned Warren McLaine of the judge advocate general's office to assist the bureaus in the preparation of the report requested by Standley in his memorandum of 14 November 1936.⁴¹ McLaine concluded that the commission "could assume the cost of constructing eighteen knot tankers over the cost of building tankers of lesser speed."⁴² McLaine prepared a memorandum on this subject to the judge advocate general of the navy, which was then transmitted to the secretary of the maritime commission, who in turn forwarded it to the commission's acting general counsel.⁴³

At least one operator, the American Tanker Corporation, had earlier applied to the commission for payment of increased speed (16 knots instead of 11 knots) as a national defense feature. Although there was still some question as to the legal aspects of this issue at this time, Commissioner Taylor wrote to Secretary of the Navy Swanson requesting "the speed desired by naval requirements and the probable number of such tankers needed."⁴⁴ Swanson's reply, dated 31 March 1937, established as policy the "fast tanker" program implemented by the

maritime commission to encourage the construction of high-speed tankers during the next four years.⁴⁵ The following statements taken from Swanson's letter leave no doubt as to the navy's position on tankers:

The Navy Department considers that tankers having 15 knots speed, such as is contemplated in the standard design, would be "acceptable to the Navy as auxiliaries in time of war."

In the special case, in which the construction of a tanker is not financed by the government, and the government assists only to the extent of paying for "national defense features," the Navy Department is of the opinion that the speed in this case should not be less than 16¹/2 knots, in a fully loaded condition, provided of course that speed can be paid for as a "national defense feature." [Note the uncertainty concerning the possible payment for extra speed as a "national defense feature."]

In a war of maximum effort, the Navy will have a need upon mobilization for twenty fast tankers "to accompany the fleet." To assemble these twenty fast tankers in a reasonably short time, there will, of necessity, have to be a greater number of such vessels under American registry at the time.

Further action by the maritime commission on the issue of tanker speed, however, would have to await confirmation of its permanent members then under review by the Senate.

Meanwhile, the lack of modern oilers continued to hamper the fleet. In the spring of 1937, maneuvers conducted during Fleet Problem XVIII again emphasized the need for fleet auxiliaries capable of maintaining a suitable speed. The auxiliaries in the Base Force had been hard pressed to maintain a maximum speed of just 14 knots throughout the four days of the exercise.⁴⁶ Speed was a vital necessity, not only because it allowed a vessel to reach its destination sooner, but also because it reduced the time exposed to potential enemy attack thereby limiting possible losses through attrition. As a result of Fleet Problem XVIII, Rear Adm. William J. Cluverius, commander of the Base Force, recommended that "in the future, Fleet auxiliaries of all types be designed for a sustained speed of at least 18 knots."⁴⁷ Adm. Claude C. Bloch, commander of the Battle Force, concurred and passed this recommendation on to Adm. Arthur J. Hepburn, commander in chief, United States Fleet.⁴⁸

In August, the Bureau of Construction and Repair issued a "pilot letter" to the various bureaus requesting comments on the plans and characteristics for the fleet oiler that had been included in the auxiliary construction program recently authorized by Congress.⁴⁹ The characteristics contained within the bureau's pilot letter had specified a sustained speed of 16¹/2 knots for a fully loaded vessel. Again Admiral Bloch repeated his recommendation that all new fleet auxiliaries be

capable of 18 knots. Admiral Hepburn passed this information directly to Adm. William D. Leahy, the new chief of naval operations, calling particular attention to Bloch's comments and emphasizing the need for increased speed.⁵⁰ Admiral Hepburn believed "that a sustained speed of 18 knots when fully loaded and four months out of dock [was] by far the most important characteristic to be included" in the design of an oiler and "any less speed would severely handicap the operations of the Fleet."⁵¹ By the time this information reached the Bureau of Construction and Repair, however, the task of building the first new oiler in twenty years had been taken over by the maritime commission.

Contents
Previous Chapter (6) ** Next Chapter (8)