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U.S. Merchant Marine Academy, Kings Point, New York, October 28, 1970
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U.S. Merchant Marine Academy, Kings Point, New York, October 28, 1970
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The original documents are located in Box D30, folder "U.S. Merchant Marine Academy,
Kings Point, New York, October 28, 1970" of the Ford Congressional Papers: Press
Secretary and Speech File at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box D30 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
U.S. MERCHANT MARINE ACADEMY, 6:00 P.M.
WEDNESDAY, OCT. 28, 1970, AT KINGS
DIRECTIPOINT, NEW YORK.
NEW Reform
Potal willfact
70s
Tax IT IS INDEED AN HONOR TO BE HERE
Crime- 2.R.S
TONIGHT WITH THE STAFF AND STUDENTS OF
THE U.S. MERCHANT MARINE ACADEMY.
THE TOPIC THAT COMES IMMEDIATELY
TO MY MIND AS I SPEAK TO YOU TONIGHT IS
THE NEW MARITIME PROGRAM WHICH PRESIDENT
NIXON SIGNED INTO LAW ON OCT. 22. IT IS
WONDERFUL TO BE ABLE TO STAND HERE AND
EXPRESS ENTHUSIASM AND HOPE CONCERNING
THE MERCHANT MARINE AFTER YEARS OF
MOURNING ITS DECLINE THROUGH APPALLING
NEGLECT.
I AM ENTHUSIASTIC AND HOPEFUL
BECAUSE THE NEW MARITIME PROGRAM COULD,
IN THIS DECADE, GENERATE THE LARGEST
FORD & LIBRARY GERALD
PEACETIME SHIPBUILDING PROGRAM EVER
-2-
UNDERTAKEN IN THE UNITED STATES.
WHY IS THE UNITED STATES FINALLY
EMBARKING ON THIS AMBITIOUS NEW PROGRAM,
AN EFFORT WHICH I AND OTHERS IN THE
CONGRESS HAVE BEEN URGING FOR YEARS:
ONE REASON IS THAT THE SOVIET
UNION IS MOUNTING A NEW THREAT TO THE
UNITED STATES AT SEA - A THREAT WITH
WHICH OUR NATION WILL BE FACED LONG AFTER
THE LAST AMERICAN TROOPS HAVE BEEN WITHDRAWN
FROM VIETNAM.
THE SOVIET NAVY TODAY IS SECOND
ONLY TO THAT OF THE UNITED STATES, AND
THE MODERN SOVIET MERCHANT MARINE SOON
WILL BE LARGER THAN THE PREDOMINANTLY
OVER-AGED AMERICAN MARITIME FLEET IN BOTH
NUMBERS AND TONNAGE.
LET US HEED THE LESSON OF HISTORY
FORD
WHICH TELLS US THAT THE NATION WHICH
GERALL
LIBRARY
-3-
BUILDS THE SHIPS SHIPS,/CARRIES / CARRIES THE CARGOES AND
KEEPS THE SEA LANES CHURNING WITH
COMMERCE HAS A BIG VOICE IN THE WORLD.
THE RUSSIANS RECOGNIZE THIS, AND
SO WE HAVE BEEN WITNESSING A RUSSIAN
REVOLUTION AT SEA.
THIS PAST DECADE HAS SEEN THE
SOVIET UNION SURGE TO PREEMINENCE AS A
WORLD MARITIME POWER WHILE THE UNITED
STATES HAS DRIFTED TOWARD OBLIVION ON THE
HIGH SEAS.
PRESIDENT NIXON IS ALL TOO AWARE
OF THIS, AND SO HE HAS ADOPTED THE GOAL
OF KEEPING THE UNITED STATES A FIRST-RATE
SEA POWER WITH A NAVAL FLEET SECOND TO
NONE AND A MERCHANT FLEET AS MODERN AS
THOSE OF OTHER PRESENT-DAY MARITIME NATIONS.
THE MAZE OF ABORTIVE PROGRAMS AND
FORD
STUDIES WHICH HAVE CHARACTERIZED THE
-4-
UNITED STATES APPROACH TO MARITIME
AFFAIRS IN THE PAST DECADE HAS BEEN MOST
DISCOURAGING, ESPECIALLY WHEN CONTRASTED
WITH RUSSIA'S STEADY PROGRESS.
THE SOVIET EFFORT TO DEVELOP A
NAVY OF FIRST RANK MUST BE CONSIDERED
IN THE LIGHT OF ITS POTENTIAL THREAT TO
OUR NATIONAL SECURITY. THE CREATION OF
A VIABLE SOVIET MERCHANT MARINE SHOULD
BE VIEWED PRIMARILY AS A CHALLENGE - A
CHALLENGE WE CAN AND MUST MEET.
A MODERN SOVIET MERCHANT FLEET NOW
CONFRONTS US ON EVERY SEALANE OF THE
WORLD. THIS IS AN HISTORIC DEVELOPMENT
SURPASSED ONLY BY THE UNITED STATES' GREAT
SHIPBUILDING PROGRAM OF WORLD WAR 11.
EIGHTY PER CENT OF THE RUSSIAN
FLEET IS NOW LESS THAN 10 YEARS OLD AND
INCORPORATES THE LATEST TECHNOLOGICAL
FORD & LIBRARY GERALD
-5-
DEVELOPMENTS IN WORLD SHIPBUILDING
RELEVANT TO THE SOVIET UNION'S MARITIME
NEEDS.
THE RUSSIANS SAY THEY INTEND TO
DOUBLE THEIR PRESENT FLEET BY 1980. IN
VIEW OF THEIR PAST PERFORMANCE AND THE
FACT THAT ONE-FOURTH OF THE SHIPS UNDER
CONSTRUCTION IN THE WORLD TODAY ARE FOR
SOVIET REGISTRY, I SEE NO REASON TO DOUBT
THAT STATEMENT.
RUSSIAN GROWTH FIGURES FOR THE
PAST DECADE INDICATE THAT WATER
TRANSPORTATION FOR THE SOVIET UNION NOW
ACCOUNTS FOR ABOUT 20 PER CENT OF ALL
DOMESTIC CARGO MOVEMENT AS COMPARED WITH
6.6 PER CENT IN 1958. THE SOVIET FLEET
HAS CARRIED MORE THAN HALF OF THE SOVIET
UNION'S FOREIGN OCEAN-BORNE COMMERCE
SINCE 1968.
GERALD FORD LIBRARY
-6-
WHAT HAS HAPPENED TO THE U.S.
MERCHANT FLEET AND TO OUR OCEAN-BORNE
TRADE?
AT THE CLOSE OF WORLD WAR 11, THE
U.S. MERCHANT FLEET OF 3,696 SHIPS WAS
THE LARGEST IN THE WORLD AND THE PRIDE
OF THIS NATION.
IN THE YEARS SINCE THAT TIME,
HOWEVER, THE U.S. FLAG FLEET HAS STEADILY
DECLINED. THE PRESENT FOREIGN TRADE
FLEET NUMBERS ONLY 650 SHIPS AND RANKS
FIFTH IN THE WORLD.
IN 1968, THE VALUE OF U.S. EXPORTS
AND IMPORTS WAS $67 BILLION, ONE-THIRD OF
THE WORLD'S TRADE. BUT ONLY 6 PER CENT OF
THE TOTAL TONNAGE OF THAT TRADE WAS
CARRIED BY AMERICAN FLAG SHIPS.
ONE FACT IS UNMISTAKABLY CLEAR.
WITH THE GROWTH OF U.S. TRADE DEPENDENT
-7-
UPON EFFICIENT AND REASONABLY-PRICED
OCEAN TRANSPORTATION AND THE SECURITY
OF THE NATION CONTINGENT UPON THE MOVEMENT
OF MEN AND SUPPLIES, THE AMERICAN SHIPPING
AND SHIPBUILDING RECORD MUST BE DRASTICALLY
IMPROVED.
HOW HAVE WE SUNK TO THE ABYSMAL
LOW WE NOW OCCUPY? IN 1958, WHEN
PRESIDENT EISENHOWER SPOKE OF AN ECONOMIC
WAR FACING THE UNITED STATES IN WORLD
TRADE CIRCLES, THE FIRST CONTRACTS WERE
EXECUTED UNDER AN AMBITIOUS PROGRAM THAT
WOULD HAVE REPLACED THE ENTIRE SUBSIDIZED
LINER FLEET.
DURING THE DECADE THAT FOLLOWED,
OUR PLANNED SHIP REPLACEMENT PROGRAM
NEVER GOT OUT OF FIRST GEAR. THE
HIGHEST PERFORMANCE POINT WAS REACHED IN
1963 WHEN CONTRACTS FOR 27 SHIPS WERE
REFORD is LIBRARY GERALD
-8-
EXECUTED. FROM THAT POINT FORWARD, THE
PROGRAM DECELERATED TO AN AVERAGE LEVEL
OF 10 TO 11 SHIPS PER YEAR, WHERE WE HAVE
SINCE REMAINED.
DURING THIS PERIOD, THE MEAGER
EXPANSION OF OUR PRIVATELY-OWNED MERCHANT
MARINE WAS OFFSET BY A SUBSTANTIAL DECREASE
IN THE RESERVE FLEET. THIS RESULTED IN
A NET DECREASE OF 7.5 MILLION TONS. AND
DURING THIS SAME TIME SPAN, THE AVERAGE
AGE OF THE ENTIRE U.S. MERCHANT FLEET
LENGTHENED FROM 14 TO 27 YEARS.
I REPEAT -- 27 YEARS
!
DURING THE CRITICAL DECADE OF
THE SIXTIES, THE NATION'S MARITIME
PROGRAM DRIFTED AIMLESSLY IN A SEA OF
GOVERNMENTAL NEGLECT AND CONFUSION.
THE EISENHOWER SHIPBUILDING PROGRAM WAS
SCRAPPED AND THE AMERICAN MERCHANT FLEET
DR.FORD VIBRARY
-9-
WAS VIRTUALLY SCUTTLED - OVER THE VIGOROUS
AND REPEATED PROTESTATIONS OF THE CONGRESS.
PERSONALLY CALLED REPEATEDLY FOR
A REDIRECTION AND RESTORATION OF OUR
MARITIME PROGRAM.
IN OCTOBER 1969 PRESIDENT NIXON
PROPOSED A COMPREHENSIVE LONG-RANGE
MERCHANT SHIPBUILDING PROGRAM TO RESTORE
THIS COUNTRY TO A PROUD POSITION IN THE
SHIPPING LANES OF THE WORLD.
LEGISLATION INCORPORATING THE
PRESIDENT' S PROPOSALS WAS INTRODUCED BY
ALL MEMBERS OF THE HOUSE MERCHANT MARINE
AND FISHERIES COMMITTEE.
WE NOW ARE ABOUT TO SEE THE FIRST
FRUITS OF THAT LEGISLATION -- A NEW
MARITIME PROGRAM THAT WILL BUILD
300 MERCHANT SHIPS OVER THE NEXT 10 YEARS
FORD
AND WILL EXTEND OPERATING SUBSIDIES TO
-10-
ALMOST THE ENTIRE FLEET.
THE NEW SHIPBUILDING PROGRAM WILL
TRIPLE THE CURRENT OUTPUT OF 10 SHIPS A
YEAR WHILE SLOWLY REDUCING THE GOVERNMENT S
SUBSIDY FOR EACH NEW VESSEL FROM THE
CURRENT 55 PER CENT OF THE SHIPYARD
PRICE TO A MAXIMUM OF 35 PER CENT.
THE PURPOSE OF THE PROGRAM IS NOT
SIMPLY TO PRESERVE OUR MERCHANT FLEET BUT
TO MODERNIZE IT.
COST OF THE NEW PROGRAM OVER THE
NEXT 10 YEARS IS NEARLY $2.7 BILLION.
THERE MUST BE JUSTIFICATION FOR THAT KIND
OF AN OUTLAY -- AND THERE IS.
THE FOREIGN TRADE OF THE UNITED
STATES HAS REACHED TRULY STAGGERING
PROPORTIONS. IT NOW ACCOUNTS FOR ONE-THIRD
OF TOTAL WORLD TRADE AND IS VALUED AT
ABOUT $70 BILLION.
-11-
THERE WAS A TIME WHEN THE UNITED
STATES WAS REASONABLY SELF-SUFFICIENT
IN TERMS OF BASIC RAW MATERIALS. THAT
TIME IS GONE FOREVER. THE UNITED STATES
CAN NO LONGER RELY EXCLUSIVELY ON DOMESTIC
SOURCES FOR OIL, IRON ORE, BAUXITE, AND
THE MYRIAD OTHER RAW MATERIALS FROM
WHICH INDUSTRY FASIONS THE GOODS OUR
ECONOMY DEMANDS.
PRESENTLY, OUR LINER TRADE INVOLVES
THE CARRIAGE OF ABOUT 46 MILLION TONS
ANNUALLY, WHILE OUR BULK TRADES ACCOUNT
FOR ALMOST 350 MILLION TONS.
AT THE END OF THE PRESIDENT'S
PROJECT 10-YEAR SHIPBUILDING PROGRAM,
OUR LINER TRADE WILL HAVE INCREASED TO
PERHAPS 60 MILLION TONS A YEAR, AND OUR
BULK TRADES WILL HAVE INCREASED TO
BETWEEN 550 MILLION AND 600 MILLION TONS.
DR.FORD LIBRARY
-12-
OUR ABILITY TO SUSTAIN OUR ECONOMY
WILL BECOME MORE AND MORE DEPENDENT UPON
THE AVAILABILITY OF FOREIGN RAW MATERIALS.
HEREIN LIES THE ANSWER TO THE BASIC
QUESTION: WHY A MARITIME PROGRAM NOW?
IF AMERICAN-FLAG SHIPS ARE NOT
BUILT TO TRANSPORT A REASONABLE PERCENTAGE
OF OUR EXPANDING FOREIGN TRADE, WE WILL
BE TOTALLY DEPENDENT UPON FOREIGN
SHIPPING INTERESTS TO MOVE THOSE GOODS.
WE CANNOT AFFORD THAT, DEPENDENCE.
WE KNOW THAT FREIGHT RATES IN THE
WORLD SHIPPING MARKET ARE SUBJECT TO
TREMENDOUS ESCALATION WHENEVER NORMAL
TRADING PATTERNS ARE UPSET. THE CLOSING
OF THE SUEZ CANAL WAS THE CLASSIC
EXAMPLE OF THIS IN RECENT TIMES.
A COUNTRY WHICH BECOMES
INCREASINGLY DEPENDENT UPON FOREIGN RAW
FORD VIBRARY
-13-
MATERIALS IS IN DOUBLE JEOPARDY IF IT
LOSES COMPLETE CONTROL OVER THE MEANS OF
INSURING THE FLOW OF THOSE RAW MATERIALS.
WE MUST, THEREFORE, HAVE A
MERCHANT MARINE WHICH INSURES THAT AT
LEAST OUR MINIMUM NEEDS CAN BE MET.
SOMETHING THAT IS GENERALLY
OVERLOOKED IS THE FACT THAT THE DIRECT
INVESTMENT WE WILL MAKE IN OUR SHIPBUILDING
PROGRAM OVER THE NEXT 10 YEARS WILL BE
ALMOST ENTIRELY OFFSET.
THESE SHIPS WILL EARN ROUGHLY
$2 BILLION, MONEY WHICH WOULD OTHERWISE
BE PAID TO FOREIGN-FLAG CARRIERS.
OUR BALANCE OF PAYMENTS WILL,
THEREFORE, BE SUBSTANTIALLY IMPROVED BY
OUR SHIPBUILDING PROGRAM.
IN ADDITION, THE FEDERAL GOVERNMENT
WILL REALIZE BETWEEN ONE-HALF AND
-14-
THREE-QUARTERS OF A BILLION DOLLARS IN
INCREASED TAX REVENUE.
THUS THE NET COST OF THIS PROGRAM
OVER A 10-YEAR PERIOD WILL BE MINIMAL.
NOW LET ME SPELL OUT IN SOME
DETAIL JUST WHAT THE MARITIME ACT OF
1970 PROVIDES.
BROADLY SPEAKING, IT WILL ENCOURAGE
THE DEVELOPMENT OF BULK-CARRYING CAPACITY
UNDER THE AMERICAN FLAG BECAUSE IT WILL
ENABLE THOSE CARRIERS NOT NOW RECEIVING
OPERATING SUBSIDIES TO ACCUMULATE THE
CAPITAL NEEDED FOR SHIP CONSTRUCTION
THROUGH DEFERRAL OF TAX ON EARNINGS
DEPOSITED IN CONSTRUCTION ACCOUNTS.
IT WILL RATIONALIZE THE
COMPUTATION OF OPERATING SUBSIDY THROUGH
THE ESTABLISHMENT OF A WAGE INDEX SYSTEM
AND WILL ELIMINATE MUCH OF THE RED TAPE
GERALD FORD LIBRARY
-15-
BUILT INTO THE MARITIME ACT OF 1936.
IT PERMITS PAYMENT OF THE
SHIPBUILDING SUBSIDY DIRECTLY TO THE
SHIPYARD INSTEAD OF HAVING IT PASS
THROUGH THE SHIP OPERATOR AS AT PRESENT.
UNDER THIS SYSTEM, IT IS ENVISIONED THAT
THE SHIPYARDS WILL DEVELOP THEIR OWN
EXPERTISE IN THE DESIGN OF SHIPS AND WILL
ACTIVELY COMPETE TO SELL THEIR PRODUCT
TO THE SHIP OPERATORS.
THE LEGISLATION ESTABLISHES A
COMMISSION ON AMERICAN SHIPBUILDING WHICH
WILL BE APPOINTED BY THE PRESIDENT AND
WILL MONITOR THE SUCCESS OF THE PROGRAM.
I BELIEVE THE MARITIME ACT
OF 1970 PROVIDES THE FOUNDATION FOR A
VIABLE AMERICAN-FLAG FLEET FOR THE NEXT
TWO DECADES.
GERALD FORD LIBRARY
I MENTIONED AT THE OUTSET THAT I
-16-
NOW SPEAK OF THE MERCHANT MARINE WITH
HOPE. IT IS THIS LANDMARK LEGISLATION
WHICH GIVES ME THAT HOPE. IT IS
SPECIFICALLY DESIGNED TO REMEDY THE MANY
DEFECTS I HAVE TOUCHED UPON. AND SO THERE
IS GOOD CAUSE FOR OPTIMISM AS TO THE
HEALTH OF THIS NATION' S TRIED AND TRUE
FRIEND, ITS MERCHANT MARINE.
LET ME SPEAK NOW OF THE FUTURE OF
THE U.S. MERCHANT MARINE ACADEMY. THAT
FUTURE is, AS A RESULT OF THE NEW
MARITIME PROGRAM, CONSIDERABLY BRIGHTER
AND BROADER.
ALTHOUGH WE WILL BE BUILDING
300 NEW SHIPS, WE WILL BE MOTHBALLING
MORE THAN THAT NUMBER OF OBSOLESCENT
VESSELS. OUR FLEET WILL ACTUALLY BE
SMALLER IN NUMBER BUT IT WILL BE LARGER
IN CAPACITY.
GERALD FORD
-17-
NOW WHAT DOES THIS MEAN FOR THE
U.S. MERCHANT MARINE ACADEMY? WE ARE NOT
GOING TO BE CUTTING BACK AT THE ACADEMY.
WE ARE GOING TO BE BROADENING OUR SCOPE.
WE ARE GOING TO TRAIN OUR MERCHANT MARINE
OFFICERS IN NEW WAYS - TO BE
OCEANOGRAPHERS, FOR INSTANCE.
CONGRESS HAS BEEN LOOKING INTO
THIS MATTER AND THE NEXT CONGRESS WILL
GO INTO IT IN GREATER DEPTH. WE WILL BE
UPDATING THE FEDERAL LAWS DEALING WITH
THE U.S. AND STATE MERCHANT MARINE
ACADEMIES.
MILLIONS OF AMERICANS ARE AWARE
THAT THE MERCHANT MARINE HAS A VITAL ROLE
TO PLAY IN THE FUTURE GROWTH OF THIS
NATION.
THEY KNOW THAT LONG BEFORE THERE
WAS A U.S. FLAG THERE WAS AN AMERICAN
FORD is LIBRARY GERALD
-18-
MERCHANT MARINE PLYING THE TRADE ROUTES
OF THE WORLD. THEY KNOW THAT THE MERCHANT
MARINE SERVED THE NATION VALIANTLY DURING
THE REVOLUTIONARY WAR, THE WAR OF 1812,
WORLD WARS I AND 11, THE KOREAN WAR AND
NOW THE VIETNAM WAR.
THE MARITIME ACT OF 1970
RECOGNIZES THIS LONG AND PROUD HISTORY,
AND I CONGRATULATE YOU HERE TONIGHT.
AMERICA OWES THE MERCHANT MARINE
A DEBT OF GRATITUDE AND LOOKS WITH FOND
FAVOR ON THE OFFICERS TRAINED IN THIS
FINE ACADEMY.
I LOOK FORWARD NOW TO THE COMPLETE
REVITALIZATION OF OUR MERCHANT FLEET AND
TO NEW DAYS OF GLORY FOR OUR GALLANT MEN
WHO GO DOWN TO THE SEA IN SHIPS.
END : :
BERALD FORD LIBRARY
Distribution
GRP
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in
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10/27/70 a.m.
20 copies a/ Thr. Ford Ford
maffice
Copy
AN ADDRESS BY REP. GERALD R. FORD, R-MICH.
REPUBLICAN LEADER, U.S. HOUSE OF REPRESENTATIVES
BEFORE THE U.S. MERCHANT MARINE ACADEMY
KINGS POINT, NEW YORK
6 P.M. WEDNESDAY, OCTOBER 28, 1970
FOR RELEASE AT 6 p.m. WEDNESDAY
It is indeed an honor to be here tonight with the staff and students of the
U.S. Merchant Marine Academy.
The topic that comes immediately to my mind as I speak to you tonight is the
new maritime program which President Nixon signed into law on Oct. 22. It is
wonderful to be able to stand here and express enthusiasm and hope concerning the
merchant marine after years of mourning its decline through appalling neglect.
I am enthusiastic and hopeful because the new maritime program could, in
this decade, generate the largest peacetime shipbuilding program ever undertaken
in the United States.
Why is the United States finally embarking on this ambitious new program, an
effort which I and others in the Congress have been urging for years?
One reason is that the Soviet Union is mounting a new threat to the United
States at sea -- a threat with which our Nation will be faced long after the last
American troops have been withdrawn from Vietnam.
The Soviet navy today is second only to that of the United States, and the
modern Soviet merchant marine soon will be larger than the predominantly over-aged
American maritime fleet in both numbers and tonnage.
Let us heed the lesson of history which tells us that the nation which builds
the ships, carries the cargoes and keeps the sea lanes churning with commerce has
a big voice in the world.
The Russians recognize this, and so we have been witnessing a Russian
revolution at sea.
This past decade has seen the Soviet Union surge to preeminence as a world
maritime power while the United States has drifted toward oblivion on the high seas.
President Nixon is all too aware of this, and so he has adopted the goal of
keeping the United States a first-rate sea power with a naval fleet second to none
and a merchant fleet as modern as those of other present-day maritime nations.
The maze of abortive programs and studies which have characterized the United
States' approach to maritime affairs in the past decade has been most discouraging,
(more)
-2-
especially when contrasted with Russia's steady progress.
The Soviet effort to develop a navy of first rank must be considered in the
light of its potential threat to our national security. The creation of a viable
Soviet merchant marine should be viewed primarily as a challenge -- a challenge we
can and must meet.
A modern Soviet merchant fleet now confronts us on every sealane of the
world. This is an historic development surpassed only by the United States' great
shipbuilding program of World War II.
Eighty per cent of the Russian fleet is now less than 10 years old and
incorporates the latest technological developments in world shipbuilding relevant
to the Soviet Union's maritime needs.
The Russians say they intend to double their present fleet by 1980. In view
of their past performance and the fact that one-fourth of the ships under
construction in the world today are for Soviet registry, I see no reason to doubt
that statement.
Russian growth figures for the past decade indicate that water transportation
for the Soviet Union now accounts for about 20 per cent of all domestic cargo
movement as compared with 6.6 per cent in 1958. The Soviet fleet has carried more
than half of the Soviet Union's foreign ocean-borne commerce since 1968.
What has happened to the U.S. merchant fleet and to our ocean-borne trade?
At the close of World War II, the U.S. merchant fleet of 3,696 ships was the
largest in the world and the pride of this Nation.
In the years since that time, however, the U.S. flag fleet has steadily
declined. The present foreign trade fleet numbers only 650 ships and ranks fifth
in the world.
In 1968, the value of U.S. exports and imports was $67 billion, one-third of
the world's trade. But only 6 per cent of the total tonnage of that trade was
carried by American flag ships.
One fact is unmistakably clear. With the growth of U.S. trade dependent
upon efficient and reasonably-priced ocean transportation and the security of the
Nation contingent upon the movement of men and supplies, the American shipping and
shipbuilding record must be drastically improved.
How have we sunk to the abysmal low we now occupy? In 1958, when President
Eisenhower spoke of an economic war facing the United States in world trade circles,
the first contracts were executed under an ambitious program that would have replaced
the entire subsidized liner fleet.
(more)
-3-
During the decade that followed, our planned ship replacement program never
got out of first gear. The highest performance point was reached in 1963 when
contracts for 27 ships were executed. From that point forward, the program
decelerated to an average level of 10 to 11 ships per year, where we have since
remained.
During this period, the meager expansion of our privately-owned merchant
marine was offset by a substantial decrease in the Reserve Fleet. This resulted in
a net decrease of 7.5 million tons. And during this same time span, the average
age of the entire U.S. merchant fleet lengthened from 14 to 27 years. I repeat --
27 years!
During the critical decade of the Sixties, the Nation's maritime program
drifted aimlessly in a sea of governmental neglect and confusion. The Eisenhower
shipbuilding program was scrapped and the American merchant fleet was virtually
scuttled -- over the vigorous and repeated protestations of the Congress.
I personally called repeatedly for a redirection and restoration of our
maritime program.
In October 1969, President Nixon proposed a comprehensive long-range merchant
shipbuilding program to restore this country to a proud position in the shipping
lanes of the world.
Legislation incorporating the President's proposals was introduced by all
members of the House Merchant Marine and Fisheries Committee.
We now are about to see the first fruits of that legislation -- a new
maritime program that will build 300 merchant ships over the next 10 years and will
extend operating subsidies to almost the entire fleet.
The new shipbuilding program will triple the current output of 10 ships a
year while slowly reducing the Government's subsidy for each new vessel from the
current 55 per cent of the shipyard price to a maximum of 35 per cent.
The purpose of the program is not simply to preserve our merchant fleet but
to modernize it.
Cost of the new program over the next 10 years is nearly $2.7 billion. There
must be justification for that kind of an outlay -- and there is.
The foreign trade of the United States has reached truly staggering
proportions. It now accounts for one-third of total world trade and is valued at
about $70 billion.
There was a time when the United States was reasonably self-sufficient in
terms of basic raw materials. That time is gone forever. The United States can no
(more)
-4-
longer rely exclusively on domestic sources for oil, iron ore, bauxite, and the
myriad other raw materials from which industry fashions the goods our economy demands.
Presently, our liner trade involves the carriage of about 46 million tons
annually, while our bulk trades account for almost 350 million tons.
At the end of the President's projected 10-year shipbuilding program, our
liner trade will have increased to perhaps 60 million tons a year, and our bulk
trades will have increased to between 550 million and 600 million tons.
Our ability to sustain our economy will become more and more dependent upon
the availability of foreign raw materials. Herein lies the answer to the basic
question: Why a maritime program now?
If American-flag ships are not built to transport a reasonable percentage of
our expanding foreign trade, we will be totally dependent upon foreign shipping
interests to move those goods. We cannot afford that dependence.
We know that freight rates in the world shipping market are subject to
tremendous escalation whenever normal trading patterns are upset. The closing of
the Suez Canal was the classic example of this in recent times.
A country which becomes increasingly dependent upon foreign raw materials
is in double jeopardy if it loses complete control over the means of insuring the
flow of those raw materials.
We must, therefore, have a merchant marine which insures that at least our
minimum needs can be met.
Something that is generally overlooked is the fact that the direct investment
we will make in our shipbuilding program over the next 10 years will be almost
entirely offset.
These ships will earn roughly $2 billion, money which would otherwise be paid
to foreign-flag carriers.
Our balance of payments will, therefore, be substantially improved by our
shipbuilding program.
In addition, the Federal Government will realize between one-half and
three-quarters of a billion dollars in increased tax revenue.
Thus the net cost of this program over a 10-year period will be minimal.
Now let me spell out in some detail just what the Maritime Act of 1970
provides.
Broadly speaking, it will encourage the development of bulk-carrying capacity
under the American flag because it will enable those carriers not now receiving
operating subsidies to accumulate the capital needed for ship construction through
(more)
-5-
deferral of tax on earnings deposited in construction accounts.
It will rationalize the computation of operating subsidy through the
establishment of a wage index system and will eliminate much of the red tape built
into the Maritime Act of 1936.
It permits payment of the shipbuilding subsidy directly to the shipyard
instead of having it pass through the ship operator as at present. Under this
system, it is envisioned that the shipyards will develop their own expertise in
the design of ships and will actively compete to sell their product to the ship
operators.
The legislation establishes a Commission on American Shipbuilding which will
be appointed by the President and will monitor the success of the program.
I believe the Maritime Act of 1970 provides the foundation for a viable
American-flag fleet for the next two decades.
I mentioned at the outset that I now speak of the Merchant Marine with hope.
It is this landmark legislation which gives me that hope. It is specifically
designed to remedy the many defects I have touched upon. And so there is good
cause for optimism as to the health of this Nation's tried and true friend, its
Merchant Marine.
Let me speak now of the future of the U.S. Merchant Marine Academy. That
future is, as a result of the new maritime program, considerably brighter and
broader.
Although we will be building 300 new ships, we will be mothballing more than
that number of obsolescent vessels. Our fleet will actually be smaller in number
but it will be larger in capacity.
Now what does this mean for the U.S. Merchant Marine Academy? We are not
going to be cutting back at the academy. We are going to be broadening our scope.
We are going to train our merchant marine officers in new ways -- to be
oceanographers, for instance.
Congress has been looking into this matter and the next Congress will go into
it in greater depth. We will be updating the Federal laws dealing with the U.S.
and state merchant marine academies.
Millions of Americans are aware that the merchant marine has a vital role to
play in the future growth of this nation.
They know that long before there was a U.S. flag there was an American
merchant marine plying the trade routes of the world. They know that the merchant
marine served the Nation valiantly during the Revolutionary War, the War of 1812,
(more)
-6-
World Wars I and II, the Korean War and now the Vietnam War.
The Maritime Act of 1970 recognizes this long and proud history, and I
congratulate you here tonight.
America owes the merchant marine a debt of gratitude and looks with fond
favor on the officers trained in this fine Academy.
I look forward now to the complete revitalization of our merchant fleet and
to new days of glory for our gallant men who go down to the sea in ships.
###
GRP + TU in GR
20 capies of Mr Ford
Office Copy
AN ADDRESS BY REP. GERALD R. FORD, R-MICH.
REPUBLICAN LEADER, U.S. HOUSE OF REPRESENTATIVES
BEFORE THE U.S. MERCHANT MARINE ACADEMY
KINGS POINT, NEW YORK
6 P.M. WEDNESDAY, OCTOBER 28, 1970
FOR RELEASE AT 6 p.m. WEDNESDAY
It is indeed an honor to be here tonight with the staff and students of the
U.S. Merchant Marine Academy.
The topic that comes immediately to my mind as I speak to you tonight is the
new maritime program which President Nixon signed into law on Oct. 22. It is
wonderful to be able to stand here and express enthusiasm and hope concerning the
merchant marine after years of mourning its decline through appalling neglect.
I am enthusiastic and hopeful because the new maritime program could, in
this decade, generate the largest peacetime shipbuilding program ever undertaken
in the United States.
Why is the United States finally embarking on this ambitious new program, an
effort which I and others in the Congress have been urging for years?
One reason is that the Soviet Union is mounting a new threat to the United
States at sea -- a threat with which our Nation will be faced long after the last
American troops have been withdrawn from Vietnam.
The Soviet navy today is second only to that of the United States, and the
modern Soviet merchant marine soon will be larger than the predominantly over-aged
American maritime fleet in both numbers and tonnage.
Let us heed the lesson of history which tells us that the nation which builds
the ships, carries the cargoes and keeps the sea lanes churning with commerce has
a big voice in the world.
The Russians recognize this, and so we have been witnessing a Russian
revolution at sea.
This past decade has seen the Soviet Union surge to preeminence as a world
maritime power while the United States has drifted toward oblivion on the high seas.
President Nixon is all too aware of this, and so he has adopted the goal of
keeping the United States a first-rate sea power with a naval fleet second to none
and a merchant fleet as modern as those of other present-day maritime nations.
The maze of abortive programs and studies which have characterized the United
States' approach to maritime affairs in the past decade has been most discouraging,
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-2-
especially when contrasted with Russia's steady progress.
The Soviet effort to develop a navy of first rank must be considered in the
light of its potential threat to our national security. The creation of a viable
Soviet merchant marine should be viewed primarily as a challenge -- a challenge we
can and must meet.
A modern Soviet merchant fleet now confronts us on every sealane of the
world. This is an historic development surpassed only by the United States' great
shipbuilding program of World War II.
Eighty per cent of the Russian fleet is now less than 10 years old and
incorporates the latest technological developments in world shipbuilding relevant
to the Soviet Union's maritime needs.
The Russians say they intend to double their present fleet by 1980. In view
of their past performance and the fact that one-fourth of the ships under
construction in the world today are for Soviet registry, I see no reason to doubt
that statement.
Russian growth figures for the past decade indicate that water transportation
for the Soviet Union now accounts for about 20 per cent of all domestic cargo
movement as compared with 6.6 per cent in 1958. The Soviet fleet has carried more
than half of the Soviet Union's foreign ocean-borne commerce since 1968.
What has happened to the U.S. merchant fleet and to our ocean-borne trade?
At the close of World War II, the U.S. merchant fleet of 3,696 ships was the
largest in the world and the pride of this Nation.
In the years since that time, however, the U.S. flag fleet has steadily
declined. The present foreign trade fleet numbers only 650 ships and ranks fifth
in the world.
In 1968, the value of U.S. exports and imports was $67 billion, one-third of
the world's trade. But only 6 per cent of the total tonnage of that trade was
carried by American flag ships.
One fact is unmistakably clear. With the growth of U.S. trade dependent
upon efficient and reasonably-priced ocean transportation and the security of the
Nation contingent upon the movement of men and supplies, the American shipping and
shipbuilding record must be drastically improved.
How have we sunk to the abysmal low we now occupy? In 1958, when President
Eisenhower spoke of an economic war facing the United States in world trade circles,
the first contracts were executed under an ambitious program that would have replaced
the entire subsidized liner fleet.
(more)
-3-
During the decade that followed, our planned ship replacement program never
got out of first gear. The highest performance point was reached in 1963 when
contracts for 27 ships were executed. From that point forward, the program
decelerated to an average level of 10 to 11 ships per year, where we have since
remained.
During this period, the meager expansion of our privately-owned merchant
marine was offset by & substantial decrease in the Reserve Fleet. This resulted in
a net decrease of 7.5 million tons. And during this same time span, the average
age of the entire U.S. merchant fleet lengthened from 14 to 27 years. I repeat --
27 years!
During the critical decade of the Sixties, the Nation's maritime program
drifted aimlessly in a sea of governmental neglect and confusion. The Eisenhower
shipbuilding program was scrapped and the American merchant fleet was virtually
scuttled - over the vigorous and repeated protestations of the Congress.
I personally called repeatedly for a redirection and restoration of our
maritime program.
In October 1969, President Nixon proposed a comprehensive long-range merchant
shipbuilding program to restore this country to a proud position in the shipping
lanes of the world.
Legislation incorporating the President's proposals was introduced by all
members of the House Merchant Marine and Fisheries Committee.
We now are about to see the first fruits of that legislation -- a new
maritime program that will build 300 merchant ships over the next 10 years and will
extend operating subsidies to almost the entire fleet.
The new shipbuilding program will triple the current output of 10 ships a
year while slowly reducing the Government's subsidy for each new vessel from the
current 55 per cent of the shipyard price to a maximum of 35 per cent.
The purpose of the program is not simply to preserve our merchant fleet but
to modernize it.
Cost of the new program over the next 10 years is nearly $2.7 billion. There
must be justification for that kind of an outlay -- and there is.
The foreign trade of the United States has reached truly staggering
proportions. It now accounts for one-third of total world trade and is valued at
about $70 billion.
There was a time when the United States was reasonably self-sufficient in
terms of basic raw materials. That time is gone forever. The United States can no
(more)
-1+-
longer rely exclusively on domestic sources for oil, iron ore, bauxite, and the
myriad other raw materials from which industry fashions the goods our economy demands.
Presently, our liner trade involves the carriage of about 46 million tons
annually, while our bulk trades account for almost 350 million tons.
At the end of the President's projected 10-year shipbuilding program, our
liner trade will have increased to perhaps 60 million tons a year, and our bulk
trades will have increased to between 550 million and 600 million tons.
Our ability to sustain our economy will become more and more dependent upon
the availability of foreign raw materials. Herein lies the answer to the basic
question: Why a maritime program now?
If American-flag ships are not built to transport a reasonable percentage of
our expanding foreign trade, we will be totally dependent upon foreign shipping
interests to move those goods. We cannot afford that dependence.
We know that freight rates in the world shipping market are subject to
tremendous escalation whenever normal trading patterns are upset. The closing of
the Suez Canal was the classic example of this in recent times.
A country which becomes increasingly dependent upon foreign raw materials
is in double jeopardy if it loses complete control over the means of insuring the
flow of those raw materials.
We must, therefore, have a merchant marine which insures that at least our
minimum needs can be met.
Something that is generally overlooked is the fact that the direct investment
we will make in our shipbuilding program over the next 10 years will be almost
entirely offset.
These ships will earn roughly $2 billion, money which would otherwise be paid
to foreign-flag carriers.
Our balance of payments will, therefore, be substantially improved by our
shipbuilding program.
In addition, the Federal Government will realize between one-half and
three-quarters of a billion dollars in increased tax revenue.
Thus the net cost of this program over a 10-year period will be minimal.
Now let me spell out in some detail just what the Maritime Act of 1970
provides.
Broadly speaking, it will encourage the development of bulk-carrying capacity
under the American flag because it will enable those carriers not now receiving
operating subsidies to accumulate the capital needed for ship construction through
(more)
-5-
deferral of tax on earnings deposited in construction accounts.
It will rationalize the computation of operating subsidy through the
establishment of a wage index system and will eliminate much of the red tape built
into the Maritime Act of 1936.
It permits payment of the shipbuilding subsidy directly to the shipyard
instead of having it pass through the ship operator as at present. Under this
system, it is envisioned that the shipyards will develop their own expertise in
the design of ships and will actively compete to sell their product to the ship
operators.
The legislation establishes a Commission on American Shipbuilding which will
be appointed by the President and will monitor the success of the program.
I believe the Maritime Act of 1970 provides the foundation for a viable
American-flag fleet for the next two decades.
I mentioned at the outset that I now speak of the Merchant Marine with hope.
It is this landmark legislation which gives me that hope. It is specifically
designed to remedy the many defects I have touched upon. And so there is good
cause for optimism as to the health of this Nation's tried and true friend, its
Merchant Marine.
Let me speak now of the future of the U.S. Merchant Marine Academy. That
future is, as a result of the new maritime program, considerably brighter and
broader.
Although we will be building 300 new ships, we will be mothballing more than
that number of obsolescent vessels. Our fleet will actually be smaller in number
but it will be larger in capacity.
Now what does this mean for the U.S. Merchant Marine Academy? We are not
going to be cutting back at the academy. We are going to be broadening our scope.
We are going to train our merchant marine officers in new ways -- to be
oceanographers, for instance.
Congress has been looking into this matter and the next Congress will go into
it in greater depth. We will be updating the Federal laws dealing with the U.S.
and state merchant marine academies.
Millions of Americans are aware that the merchant marine has a vital role to
play in the future growth of this nation.
They know that long before there was a U.S. flag there was an American
merchant marine plying the trade routes of the world. They know that the merchant
marine served the Nation valiantly during the Revolutionary War, the War of 1812,
(more)
-6-
World Wars I and II, the Korean War and now the Vietnam War.
The Maritime Act of 1970 recognizes this long and proud history, and I
congratulate you here tonight.
America owes the merchant marine a debt of gratitude and looks with fond
favor on the officers trained in this fine Academy.
I look forward now to the complete revitalization of our merchant fleet and
to new days of glory for our gallant men who go down to the sea in ships.
###