Joseph Hansen


Militant Bares $6-Billion Ship Steal

(12 January 1946)

Source: The Militant, Vol. X No. 2, 12 January 1946, pp. 1 & 2.
Transcription/Editing/HTML Markup: 2018 by Einde O’Callaghan.
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What will undoubtedly go down as one of the greatest single legislative steals to date in the history of the United States was slipped through Congress just a few days before the Christmas adjournment.

The Merchant Ship Sales Act of 1945, as the steal is labelled, had already passed the House. It was kept in Senate Committee for months and then rushed through the Senate at record speed. The total discussion during the few days required for its passage did not amount to more than six or eight hours. The act is now in conference between the two houses.

This haste is quite understandable. Some $10,000,000,000 (billions) in public funds was involved and the Senators didn’t want publicity.

Senator Radcliffe of Maryland explained the Act. Back in 1936, he said, “when conditions in Europe ... threatened the peace of the world,” the Government began expanding the fleet preparatory to plunging the country into the then looming Second World War.

The productive capacity of American shipyards exceeded all expectations. Not counting fighting ships, the merchant marine alone now totals about 6,000 ships, nearly 58,000,000 tons. The ships are Government property. Built on practically a cost-plus basis with public funds, they cost the people a minimum of $15,000,000,000 (billions). This expensive fleet is large enough to carry the entire world trade at 1929 boom levels.

The Government intends to lay up one-third of the ships as a reserve for the Third World War. But the two-thirds left still constitute the largest fleet ever constructed since the German, Japanese and Italian fleets have been sent to the bottom of the ocean or taken as reparations, and the other great maritime power Great Britain, with its satellites such as Greece and the Scandinavian countries, suffered war losses. The U.S. is thus now the world’s greatest maritime power.

Getting “Rid” of Them

What to do with this colossal fleet? Operate it as a public service like the postal system? Place it under the control or management of the trade unions? Not while Wall Street dominates Congress.

“Allow me to emphasize,” declared Senator Radcliffe, “that what we want to do is to get the United States Government directly and indirectly out of the ownership and operation of ships. The theory of the bill is that we should, in every way possible, foster private ownership and operation.”

“Fixing” the Cost

The number of ships is so great, however, that “our problem is, and is going to be,” declared Radcliffe, “a big problem to get rid of these ships.”

Congress, however, worked out an ingenious method of solving this problem. The fleet is to be sold to private owners – but at greatly reduced prices.

First came the problem of arriving at a basic cost figure. Since the cost of building ships during the war shot sky high under practically a cost-plus system of profiteering, a much lower “pre-war” production cost figure is arbitrarily selected by the representatives of the shipping interests on the Maritime Commission. This naturally amounts to a tremendous discount.

But this discount is only the beginning. The “prewar” figure in turn is discounted 50 per cent!

Sounds like a pretty good bargain for virtually brand new ships. Congress, however, was in a most generous mood. On top of the fantastic 50 per cent discount, the buyer takes another five per cent for each year the ship has been in operation!

Scraping the Bottom

Since the Government has paid for the upkeep of these ships under charter, most of them are in excellent condition. But just in case the buyer and his representatives on the Maritime Commission agree they aren’t in top-notch shape, the Act provides for still another discount – the cost of putting a ship in “condition.” This naturally will not apply to the ships still under construction in the shipyards.

The price is getting pretty low. It would seem possible for the shipping interests to relieve the Government of these modern ships at such give-a-way prices. The shipping trust, moreover, isn’t exactly poor. It made staggering profits during the war, not to speak of the years of scandalous subsidies, outright steals on hauling Government goods, and the high-smelling practice of buying ships from the Government for a song and then selling them back to the Government at incredibly high prices.

But the bottom of the pork barrel isn’t in sight yet. Still another discount is added – a juicy three per cent for each year the ship was operated during the war. Wear and tear, you know.

Remembering how, following the First World War, the public was scandalized by the notorious ship steal then perpetrated, draw a line. The bottom price of these ships cannot be set below 42 per cent of the actual cost for tankers and 35 per cent for freighters. The vast fleet of Liberty ships, however, is to be given away for 31½ per cent.

This minimum line, it must be added, is pretty shaky, inasmuch as the Act is written in the most obscure and tangled language of any legislation greased through Congress in years. The proponents of the measure not only admitted this, but pointed out the ambiguous sections over which the lawyers can haggle.

The $10,000,000,000 (billions) worth of ships can thus be knocked down for about three and a half billion dollars - a clear steal for the shipping interests of $6,500,000,000 (billions)! This is more than three times the total cost of the Spanish-American war.

Still More to Come!

There is still more to come, however. The shipping barons don’t have to pay cash for these bargain-counter ships. All they need to put on the line is 25 per cent of the sales price. The balance can then be paid off in 20 easy yearly installments. This burden is all the lighter since the Government with certain qualifications subsidizes the operating costs of ships sometimes to the tune of 50 per cent.

And on top of this, if the buyers want to trade in an old ship as part of the 25 per cent down payment, the Government will grant them a most generous allowance. In fact, the trade-in allowance may be greater than the down payment!

A 24-carat, diamond-studded Christmas gift like this out of the public treasury ought to satisfy the greediest profit-hog. But some of the shipping interests wanted still more. Senator White of Maine, for instance, objected because the trade-in allowance for ships wasn’t high enough! He also disliked the minimum sales price – he thought the ships should just be presented to the highest bidder without any further rigamarole.

Generous Congress

Senator Magnuson of Washington also tried to amend the Act. The Alaska shipping outfits, it seems, want a brand new fleet to replace their present ships. But they don’t like the ultra-modern ships still coming down the ways. They want the Government to build ships to exact specifications for their needs and then turn them over on the same basis as the fleet now up for disposal.

Outside of White and Magnuson, no one proposed any changes worth noting. The Act passed the Senate without a roll call vote. The handful of Senators present turned over this stupendous amount of wealth to the private shipping interests with the same speed with which they carry out any other routine job for Wall Street.


Last updated on: 19 September 2018